Asia-Pacific CEOs look to generative AI to drive growth
Artificial intelligence or AI is all the buzz nowadays and the digital world is beaming but somewhat “chaotic” with how this “phenomenon” in technology is revolutionizing the digital landscape. In fact, AI is transforming how people live and work. Market leaders leverage this new wave of AI innovation to gain a competitive advantage.
Conscious of its potential to disrupt their own business models, almost all Asia-Pacific CEOs (98%) are making or planning significant investments in GenAI. To fund these investments, 74% are re-allocating capital from other investment projects or technology budgets and 15% are raising new capital.
But investing in an AI-enabled future is easier said than done: more than a quarter (28%) of CEO respondents say concerns around the risks of deploying AI is the biggest challenge to making capital allocation decisions on GenAI initiatives. Two-thirds (68%) also believe a surge in companies claiming to have AI expertise complicates decisions about identifying and implementing credible ecosystem partnerships and acquisition targets.
Yew-Poh Mak, EY Asia-Pacific Strategy and Transactions Leader, says: “The potential for GenAI to reinvent the way companies operate cannot be ignored, and Asia-Pacific CEOs are making bold investments in the technology to solidify their competitive advantages and future-proof their organizations. However, CEOs know that companies with genuine GenAI capabilities can become game-changing allies or acquisitions, but the relentless hype around artificial intelligence has clouded their view of the landscape.”
Despite challenges, CEOs are investing in the future of the workforce to accelerate GenAI initiatives — a majority (88%) have either completed or are in the process of hiring new talent with relevant GenAI skill sets. Many are also establishing pilots and partnerships with multiple companies.
As business leaders continue to grapple with macroeconomic headwinds, regulatory changes, and geopolitical volatility, many still anticipate high levels of growth in the near term and are doubling down on investments in R&D and capex.
The EY survey reveals that Asia-Pacific CEOs continue to be on the offense when investing for the future, with a clear majority (84%) planning some kind of transaction in the next 12 months. However, M&A deal intentions have dropped significantly, with only 23% of Asia-Pacific CEOs planning M&A in the next 12 months (compared to 56% in July 2023). The appetite to pursue M&A is far higher in the US (52%), reflecting the strong uptick in dealmaking involving US companies seen in 3Q23.
Despite the downcast sentiment toward M&A, just over half of Asia-Pacific CEOs (53%) plan to expand operations in the next 12 months outside of their headquartered location. With a strong preference for expansion within the wider region, Asia-Pacific CEOs have identified China, Australia, Japan, India, and South Korea as their top five destinations when asked where they would look to outside of their headquartered market.
