2016 Chanticleer CEO Outlook Poll: leading CEOs upbeat with a focus on China

Optimism outweighs pessimism in this year's Chanticleer CEO Outlook Poll despite chaos and dysfunction in politics.
Optimism outweighs pessimism in this year's Chanticleer CEO Outlook Poll despite chaos and dysfunction in politics.

Full survey here

The optimism outweighs the pessimism in this year's Chanticleer CEO Outlook Poll despite the continuation of chaos and dysfunction in the political sphere.

Leading chief executives at major companies across a range of sectors are taking every available opportunity to explore growth options whilst using technology to lift productivity and enrich customer service.

One of the strongest themes to emerge from this year's poll was the focus on China as a customer, a supplier of products, a venue for foreign direct investment and a driver of growth in tourism and aviation.

Wesfarmers CEO Richard Goyder summed up the multiple connections between Australian business and China.

"China will provide Wesfarmers and Australian businesses with many opportunities in the years ahead, as will the broader region," he said.

"We will continue to be a significant purchaser of product from China, and assess investment opportunities against our risk adjusted cost of capital."The CEOs of the two big miners, Andrew Mackenzie at BHP Billiton and Jean-Sebastien Jacques at Rio Tinto, believe China's long term growth prospects remain sound.

Mackenzie played down the fears about a credit bubble in China with the following comments: "The central government debt in China is at 20 per cent of GDP," he said. "That is very modest by global standards."

Macquarie Group CEO Nicholas Moore said it has always been challenging to find investment opportunities in China.

"China is clearly a huge market - it's well situated geographically and has substantial attributes that differentiate it from other markets," Moore said.

"In particular, China's fiscal position remains strong, with ample capacity to support demand, and household savings rates remain high with healthy balance sheets."

Ryan Stokes at Seven Group Holdings said there is confidence that the Chinese government can manage its way through fiscal and monetary policy challenges.

"The current changes to the Chinese economy are creating new opportunities for Australian businesses in areas exposed to the Chinese consumer including areas such as media content development," he said.

Mark Steinert at Stockland said rising political and regulatory risks are providing incentives for more Chinese to "seek safe haven investments in stable economies such as Australia".

Darren Steinberg at DEXUS said his company is seeing the Chinese middle class positively impacting the Australian property market through higher foreign investment.

Tourism and aviation are big winners from Chinese burgeoning middle class.

Sydney Airport CEO Kerrie Mather said the recent historic agreement with China to allow unlimited flights between China and Australia will fuel tourism growth in 2017.

"Chinese passengers are now our largest group of foreign inbound passengers to Australia so we're seeing strong demand for these services and have introduced a China Ready strategy at our terminals to support this growing demand," she said.

Alan Joyce and Qantas and John Borghetti at Virgin highlighted the tremendous potential presented by China's outbound tourism.

Joyce said Australia needs to work harder to make Chinese tourists feel welcome.

"Two small examples are the fact we're recruiting more cabin crew with Chinese language skills and we've started a Chinese in-flight magazine<' Joyce said.

A company with a long track record of Chinese investment is SEEK, which owns China's No. 1 online employment site Zhaopin.

SEEK's CEO, Andrew Bassat, said: "The size of the market, and the favourable structural trends we're exposed to including increasing internet penetration and good GDP growth relative to global levels gives us good reason to continue to invest in this market for long term growth."

Brian Hartzer at Westpac Banking Corp and Shayne Elliott at ANZ Banking Group both had insightful answers to the China question in the survey.

Hartzer highlighted the Chinese government's careful management of credit risks while Elliott said only $22 billion of ANZ's $900 billion in assets were exposed to China.

Challenger CEO, Brian Benari summed up the over arching view of US president-elect Donald Trump.

"No point being positive or negative about a Trump presidency," he said.

"Australia is going to have to work with the new US administration and be aware of the impacts of populism in many countries."As usual, the survey included questions about gender diversity in order to keep this issue at the forefront of public debate.

The answers from the CEOs make clear that companies operating in engineering, mining and industrial services continue to have low levels of women senior management ranks. But they are working hard to change that.

The highest percentages of women in senior ranks are in financial services with Commonwealth Bank of Australia leading the way.

Half the Ian Narev's executive committee at CBA are women.

Rio Tinto's CEO Jean-Sebastien Jacques said it is clear that business, governments, and other institutions must be far more diverse.

"This is about gender diversity, it is about ethnic diversity and it is about inclusion – fostering an environment where diverse thought not only survives but thrives," he said.

Nev Power at Fortescue Metals Group highlighted the new frontier for achieving diversity in Australian business with the release of impressive figures on indigenous employment.

FMG's workforce is now 15 per cent indigenous and 22 per cent of these employees are women.

Finally, here is a footnote on gender diversity. In the past The Australian Financial Review has been criticised for not including enough female chief executives in the Chanticleer CEO Outlook Poll.

The original defence against this criticism was that there were hardly any women running top 50 companies. In hindsight, it was a lame excuse because there was glacial progress in breaking down the male domination at the very top of the 50 leading companies by market cap.

To counter this structural problem and provide much needed diversity of opinion the questionnaires were sent to female CEOs of small and mid-cap companies as well as female chief executives of the local subsidiaries of large multi-nationals.

Unfortunately, a dozen female CEOs invited to participate in 2016 either declined because they were too busy or did not bother to respond.

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