No Confidence in Economy, Next President
By Yi-shan Chen & Yi-huan Tu
From CommonWealth Magazine
Published: December 11, 2015 (No.587)
Following a lackluster business year, Taiwan's CEOs are not only pessimistic about the economy and the investment climate next year, but also issued a vote of no confidence in the leadership potential of Taiwan’s three presidential candidates.
As the end of the year nears and employees eagerly await their year-end bonuses, how do Taiwan’s CEOs, at the forefront of a cutthroat corporate battlefield, view next year’s economy?
The answer is: Pessimistic about the economy and the investment climate, they have reservations about the capability of Taiwan's next president to lead economic transformation. They also loathe political infighting. The outcome of the CommonWealth Magazine Top 2000 CEO Survey on the Economic Outlook and Strategy for 2016 is both shocking and disturbing.
Majority Expects Economy to Grow Less than 2%
As many as 70 percent of company executives declared they are “not optimistic" or “not optimistic at all” about the world economy in 2016, the most pessimistic outlook since the eruption of the European sovereign debt crisis in 2009. (Table 1)
As one would expect, the pessimistic global outlook leads to a very conservative forecast of Taiwan’s economic prospects. As many as 78.2 percent of corporate leaders believe that Taiwan’s economic growth rate will stay below two percent in 2016. (Table 2)
There is clearly a no-confidence vote in the 2.32 percent gross domestic product growth rate forecast for 2016, issued by the Directorate-General of Budget, Accounting and Statistics in late November.
Among the 70 percent of the CEOs who are pessimistic about the economic outlook for 2016, 83.1 percent cite slowing economic growth in China as the main reason for their pessimism, followed by concern that European economies will not show much improvement in the short run.
They are conservative about the Taiwanese economy because this year many companies saw their worst year in terms of results and profits since the inception of the CEO Survey in 2009.
Asked to assess the revenue and profit growth of their companies in 2015, 38.6 percent of the CEOs said their revenue posted negative growth, while 35.8 percent pointed to negative profit growth. These percentages represent the highest and second-highest values respectively in the survey’s seven-year history. (Table 3)
A 7.9-percent share of corporate leaders even expects revenue to shrink further in 2016, whereas nearly half of the respondents anticipate revenue to grow less than five percent next year. Nearly 10 percent expects company profits to shrink, while almost 50 percent foresee low growth rates. (Table 4) “This year has definitely been tougher than 2008,” notes Wang Shyi-chin, executive vice president and spokesperson for China Steel Corp.
Concern over Exclusion from Regional Integration
Wang observes that 2008 was an isolated incident, since the economy bounced back after the crisis as governments around the globe printed money to cover their deficits. But Wang thinks that this time the world economy faces structural problems such as overproduction in China. Reducing excess capacity pertains to economic restructuring. “I am not that optimistic about a [economic] turnaround in the future; it is hard to tell how long it will take," says Wang.
When asked what they consider the greatest challenge to corporate management in 2016, the business leaders cite as top concerns economic trends in China and the world as well as increasingly fierce industrial competition. It deserves attention that half of the CEOs list “Taiwan’s exclusion from regional economic integration” as their third biggest concern. (Table 5)
Pointing to the fact that 30 percent of the CEOs regard exchange rates as the biggest challenge, Chris Hung, director of the Market Intelligence and Consulting Institute under the Institute for Information Industry, says that the problem does not lie with Taiwan but with neighboring countries such as Japan, who keep their currency artificially low to boost exports.
Against the backdrop of a pessimistic economic outlook, most corporate leaders, 54.2 percent, envisage salary hikes of less than 3 percent in 2016 compared to 24.3 percent who do not plan any pay rises. (Table 6)
Nevertheless, prospects in the labor market are bleak for 2016. As many as 10.8 percent of the Top 2000 enterprises plan to downsize their Taiwanese workforce. Among foreign enterprises, the figure stands at an even higher 15.7 percent, the highest ratios since the European bond crisis. (Table 7)
Unable to Spearhead Economic Transformation?
Whom would the CEOs like to see lead Taiwan in these difficult times of economic transformation?
Asked to choose among Taiwan’s three presidential candidates – Eric Chu for the ruling Kuomintang (KMT), Tsai Ing-wen for the major opposition Democratic Progressive Party (DDPP) and James Soong for the People First Party (PFP) – the politician who is "most capable to lead Taiwan's economic transformation" as many as 47.3 percent voiced "no opinion," which means that the CEOs are either undecided or not willing to reveal their preference for a certain candidate. (Table 8)
Wang Yeh-lih, a political science professor at National Taiwan University, regards the high ratio of "undecided" respondents as a result of the “spiral of silence” effect. The spiral of silence refers to the fact that people tend to remain silent when they feel that their views run counter to the perceived majority opinion because they fear isolation or reprisals. Traditionally, the majority of corporate leaders believe that the KMT has more experience handling cross-strait policy and economic transformation. However, it is widely believed that Tsai from the DPP will win the upcoming presidential election in mid-January. Given that the political realities somewhat differ from what they would wish for, the CEOs have certain misgivings about the future.
On the other hand, although Wang believes that the general perception is that Tsai will win the election, the economic policy that Tsai would adopt after taking office remains unclear for many. Therefore, they do not know how to compare the three candidates.
Most surprisingly, of those who voiced an opinion a substantial 20.8 percent of the CEOs consider “none” of the three candidates capable of spearheading Taiwan’s economic restructuring, whereas 16.6 percent deem Chu most capable and 11.4 percent Tsai. Among the CEOs of foreign companies, an even higher ratio of 31.4 percent believes that "none" of the three candidates will be able to exercise leadership on economic transformation.
Wang explains that in the past, Taiwanese society generally held that the KMT had more expertise in dealing with economic problems. However, over the past eight years of KMT rule, the public has become very disappointed with the government's performance. For Taiwan’s large enterprises the KMT, which tends to protect business interests, is a familiar player. But they are much less sure what to expect from Soong and Tsai. “The economic teams of Soong and Tsai are not really complete. You can’t find a reason why they would do a better job," Wang says.
Good Administrator vs Cross-strait Whizz
The spiral of silence remains at work when the CEOs are asked to decide who among the three presidential hopefuls "is most capable of handling cross-strait relations?" As much as 45.5 percent of CEOs chose the response "no opinion," whereas 27.8 percent picked Chu, 11.9 percent opted for Soong and just 5.5 percent selected Tsai. (Table 9)
Despite her perceived cross-strait weakness, Tsai came out on top with regard to raising government efficiency. Some 18.3 percent of the CEOs believe that as president, Tsai would be able to improve the government’s administrative efficiency, while 16.6 percent think that none of the three candidates would be able to do so. Only 9.1 percent see such capacities in Chu. (Table 10)
Wang believes this lack of trust in Chu’s administrative abilities reflects the public’s disappointment with the past eight years of KMT rule. There is widespread hope that a fresh wind will blow across the island under the new administration. The ratio of those stating that “none” of the candidates would be able to improve administrative efficiency is only so high because the business leaders are so disappointed with the past, says Wang.
Hung Yao-nan, secretary general of the Cross-strait Policy Association (CSPA), posits that the DPP has consistently performed better than the KMT at the local government level. This works to the advantage of Tsai, who also has held posts in the central government bureaucracy.
As to the survey responses on cross-strait issues, Hung regards these as a reflection of “Communist China’s misgivings about the DPP”. The initiative on cross-strait relations lies with China. The CEOs are not sure yet whether Tsai will be a match for China.
"Presently, the DPP and the CPC [Communist Party of China] maintain a quite reasonable and restrained attitude," Hung points out. For the time being, China is only looking at Tsai’s cross-strait policy without holding her accountable for it; they are not playing the intimidation card. The DPP has also been quite rational about the Ma-Xi meeting, stating that both sides are creating rational interaction and retaining room for future interaction.
Pessimism on Investment
Almost half of all foreign companies believe that political infighting is the foremost challenge to the island's business environment.
The ease of doing business is an important indicator of long-term economic competitiveness. In this survey, the CEOs' pessimism about the investment environment in Taiwan and China has reached a record high. (Table 11)
As many as 71.3 percent of the CEOs – a seven-year high - believe that the environment for investors in China is "rather bad" or "very bad." An even higher ratio, 81.1 percent, are negative about Taiwan's investment climate.
The CEOs listed as the biggest current challenges for Taiwan’s business environment the following issues, in declining order: Industrial transformation and upgrading were cited by 47.4 percent, followed by political infighting with 35.6 percent and talent shortages with 32.5 percent. (Table 12)
Significantly, foreign enterprises cite political infighting as the top concern, which shows that they attach greater importance to Taiwan’s democratic development than domestic companies do.
During a visit to Taiwan last year, Dominique V. Turpin, president of the International Institute for Management Development (IMD) in Lausanne, Switzerland, warned that fighting between political factions could undermine Taiwan’s competitiveness.
"Politics in Taiwan are tense. Taiwan is a very political country,” Turpin stated. He went even further to say that "Parties are very confrontational, I mean, almost destructive.”
For the first time, more than 30 percent of the CEOs point to a lack of talent as a challenge for doing business in Taiwan.
Global human resources consulting firm Towers Watson said in its latest 2014/2015 Global Remuneration Planning Report published in March that base salaries in Taiwan continue to lag even behind those of China.
Base salaries in Taiwan are around 30% higher for support levels. But at the junior management and professional grade level, base salaries in China overtake those in Taiwan. At the high end of the scale, senior executive base salaries in China are about 70% higher than in Taiwan, the report found.
"The critical reason for low pay is the conservative salary increase philosophy of Taiwanese enterprises,” said Sambhav Rakyan, Data Services practice leader at Towers Watson, who was in charge of the report.
He noted that even as Taiwanese enterprises are attempting to go global or transform from manufacturing to services, their remuneration philosophy remains unchanged. As a result, Taiwanese businesses face a serious talent retention issue. “If talent can find the same remuneration and value domestically, their first choice is definitely to stay in the local market,” remarks Charles Wang, general consultant of Towers Watson Taiwan. He believes Taiwanese enterprises need to ask themselves why they are failing to retain talent.
Impact from Regional Trade Blocs
Which trends and innovations will have the greatest impact on Taiwan's economy in the coming five years? Almost one half, 45.9 percent, of the CEOs point to “the formation of regional trade blocs such as the TPP [Trans-Pacific Partnership] and the RCEP [Regional Comprehensive Economic Partnership],” while 43.2 percent worry about the rise of the so-called red supply chain, which refers to import substitution in China. (Table 13)
Another rather alarming fact is that, although most CEOs cite the launch of regional trade pacts as the most important trend, nearly 30 percent admit that they “don’t understand much” or “don’t understand at all” about the TPP and are therefore unable to assess its impact.
Translated from the Chinese by Susanne Ganz
CEO看經濟 對新總統投不信任票
作者：陳一姍、杜易寰 2015-12-08 天下雜誌587期
過完經營慘澹的一年，台灣CEO面對二○一六，不但看壞景氣、看壞投資環境，更讓人緊張的是，他們對未來領導人帶領經濟轉型的能力，投不信任票。
年關將至，決定你我年終獎金、在第一線殺戮商場的CEO，如何展望明年景氣？
答案是，看壞景氣、看壞投資環境、對於未來領導人經濟轉型能力保留、痛恨政黨惡鬥。《天下》兩千大CEO「二○一六年經濟景氣預測與戰略」調查展現出的絕望，令人心驚，也令人心傷。
七成八預測 台灣經濟明年不保二
調查結果顯示，七成的CEO對二○一六全球景氣表示「不樂觀」或「非常不樂觀」，創下歐債風暴以來新高。（見表一）
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影響所及，對台灣經濟前景也非常保守，認為一六年台灣經濟成長率在二％以下的比例，竟高達七八．二％。（見表二）
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這無異是對主計總處剛剛發布的預測值二．三二％，投下不信任票。
對明年景氣不樂觀的七成CEO中，有八三．一％的CEO認為，中國經濟成長放緩，是全球景氣悲觀的首要理由，其次則擔憂歐洲經濟短期難以改善。
在評估自家企業二○一五年營收、獲利成長率時，三八．六％總經理坦承今年公司業績負成長，三五．八％表示獲利負成長。分別創下七年新高與次高。（見表三）
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展望明年，認為公司業績會衰退的還有七．九％，僅成長五％以下，將近五成。認為公司獲利會縮水的則近一成，低成長者超過五成（見表四）。「今年的確比○八年還要嚴峻，」中鋼執行副總經理兼發言人王錫欽認為。
超過半數憂心 台灣被擋在區域整合門外
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他分析，○八年是單一事件，風暴過後反彈，全球印鈔把經濟救回來了。但這次是結構問題，中國產能大過剩，想要有效清理掉，調整整個結構需要時間，「未來反彈的時間也比較不樂觀，很難講要多久，」王錫欽說。
在回答「二○一六年，企業經營面臨最大的挑戰是什麼？」時，全球與中國的經濟動向及產業競爭加劇都排行在前。值得注意的是排名第三的「台灣被排除在區域經濟整合之外」，一半的CEO擔心這個問題。（見表五 ）
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資策會產業情報研究所主任洪春暉指出，有三成CEO視匯率變數為最大挑戰，問題不在台灣，而是鄰近國家，如日本把匯率當成進出口工具。
在普遍看壞景氣的情況下，一六年採取的薪酬策略，五四．二％表示會加薪三％以下，二四．三％表示不變。（見表六）
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不過，坦言會縮編台灣員工人數的企業有一○．八％，外商甚至高達一五．七％，明年的就業市場並不樂觀。（見表七）
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五成CEO沉默了 帶領台灣轉型，候選人都不行？
面對比金融海嘯更嚴峻的經濟轉型難題，兩千大CEO認為誰最有能力帶領台灣經濟轉型？
在國民黨朱立倫、親民黨宋楚瑜、民進黨蔡英文三位總統候選人與「都不行」、「無意見」五個選項中，高達四七．三％的CEO表示無意見。可以說CEO在此時還未決定，或者是不願意表態。（見表八）
台大政治系教授王業立分析，不表態的人近五成是一種「沉默螺旋」效應。傳統上，多數企業都認為國民黨處理兩岸政策與經濟轉型比較有經驗，但這次大家都認知蔡英文很有機會當選。當主觀認知和未來期望上有落差，CEO比較會有一些顧忌。
另一個解讀，王業立認為，大家都認知蔡英文會當選，但對於蔡英文當選後的經濟政策並不清楚。所以不知如何做比較。
最令人意外的是，表態的CEO中，有二○．八％選擇「都不行」，高於朱立倫一六．六％、蔡英文的一一．四％。其中尤其以外商選擇「都不行」的比例最高，高達三一．四％。
回答「都不行」的比例竟然最高。王業立解讀，過去，台灣社會普遍認為國民黨比較在行處理經濟議題，但過去八年讓大家很失望。
比起跟企業配合度較好的國民黨，企業更不知道宋楚瑜和蔡英文會怎麼做。「宋楚瑜與蔡英文的經濟班底都不太完整，看不出會做得比較好的理由。」
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CEO看藍綠候選人 蔡強在施政、朱強在兩岸
沉默螺旋效應在「三位總統候選人中，誰最有能力處理兩岸關係？」上也發酵。四五．五％CEO選擇「無意見」，其餘依序為朱立倫二七．八％、宋楚瑜一一．九％、「都不行」九．三％，蔡英文五．五％。（見表九）
相較於兩岸關係的弱項，提升政府效能則是蔡英文的強項。一八．三％CEO認為蔡英文當選能提升政府效能，一六．六％認為都不行、朱立倫敬陪末座只有九．一％。（見表十）
王業立認為，政府效能的調查結果反映了對國民黨八年執政的失望，期望新政府上台會有新的做法。也因為是反映對過去的失望，所以選「都不行」的比例也很高。
兩岸政策協會秘書長洪耀南則解讀，過往民進黨地方執政績效一向比國民黨好，這讓也有官僚系統經驗的蔡英文受惠。
至於兩岸關係議題，洪耀南解讀，這其實反映的是「中共對民進黨的疑慮」。兩岸關係主導權在大陸，企業CEO還不確定蔡英文能不能搞定中國。
「目前民共兩黨都保有相當的理性和克制，」他觀察。中國目前對蔡英文的兩岸政策只問不責，沒有打恐嚇牌。民進黨對馬習會的態度也比較理性，表示雙方都在營造理性互動，保留未來互動的空間。
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超過八成看壞 台灣投資環境惡化創新高
在涉及台灣長期經濟競爭力的投資環境議題上，兩千大企業CEO對於台灣與中國投資環境看壞度，均創下歷史新高。（見表十一）
認為中國大陸的投資環境「偏壞」與「非常壞」者，加總高達七一．三％，創下六年新高。對台灣投資環境看壞比例更是高達八一．一％。
兩千大CEO認為，台灣目前經商環境最大的挑戰依序為：產業轉型與升級四七．四％、政黨惡鬥三五．六％、人才不足三二．五％。（見表十二）
值得注意的是，外商企業把政黨惡鬥選為第一，顯然比台灣企業更關切台灣民主政治的發展。
去年洛桑國際管理學院院長杜道明訪台時直言，台灣是非常政治的國家，政黨惡鬥幾乎毀了國家競爭力。
人才不足也是第一次有超過三成CEO視為經商環境的挑戰。
人力資源顧問公司韜睿惠悅最新調查顯示，相較於中國，台灣後勤人員薪水高出三成，但是基層管理與專業職人員的薪水已經落後。中國高階主管薪水甚至高出台灣七成。
調查負責人睿洋直言，台灣薪酬低的關鍵因素就在於企業保守的加薪哲學。
台灣企業國際化或轉型服務業化，但薪酬哲學從未改變。使得台灣企業面臨嚴峻的留才困境。
「人才如果能在本土找到一樣的報酬與價值，第一選項一定是本土，」韜睿惠悅台灣總經理王伯松指出，企業該反思，人才為什麼不留下來？
放眼未來趨勢 區域經貿圈成型最重要
至於哪些趨勢與創新，將對台灣未來五年經濟影響最大？四五．九％的兩千大CEO選擇「TPP、RCEP區域經貿圈成形」、四三．二％擔心紅色供應鏈崛起。（見表十三）
值得警戒的是，雖然認為區域經貿圈成形最重要，分別有近三成CEO回答對TPP不太了解或完全不了解，且尚無法評估。（英文版同步上線www.cw.com.tw/english）
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調查說明
本次調查係針對2015年《天下雜誌》1350大製造業、650大服務業、100大金融業CEO發出問卷。調查時間自11月4日起至11月27日為止，扣除未聯絡上與拒絕者，共寄發1198份問卷，回收616份有效問卷，回收率51．42％。
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