Asia Pacific tech enterprises fear rising protectionism

More than one third of Asia Pacific technology companies now fear the rising wave of protectionism by governments as a threat to enterprise expansion, according to new research.

More than one third of Asia Pacific technology companies now fear the rising wave of protectionism by governments as a threat to enterprise expansion, according to new research by PricewaterhouseCoopers (PwC).

The PwC report 'Globalisation: a business imperative' has found "a perceived hostility of presence in foreign markets has led to worries over government backlash beyond tariff increases, hindering globalisation plans".

The research has found an increased fear of protectionism by one-third of companies in the Asia Pacific, up from one-quarter before the global financial crisis.

According to the newly released report, "inefficient infrastructure and legacy challenges in target markets has always been the top barrier to expanding presence overseas".

"But the senior technology executives surveyed also reveal buyer hostility to foreign products and curbs on talent mobility as two areas technology companies are increasingly more worried about, especially as markets seek economic recovery amid uncertainty," said Greg Unsworth, PricewaterhouseCoopers LLP Asia-Pacific technology industry leader.

Severe brake on recruiting top IT talent

"The technology sector has constantly sought the brightest and best individuals to work within the industry," said Unsworth. "If protectionism continues to increase, it will severely curtail the ability of global technology companies to attract, retain and move talent around the globe and attracting individuals to work in the sector will prove extremely challenging."

Unsworth said the global recession has brought to the fore challenges to operating models in technology companies.

"Globalisation strategies are considered important to reduce operating costs, grow revenues, secure market share and gain access to key talent," he said.

"However, the perceived risk of a backlash, arising from hostility in other markets, will impact companies wanting to leverage on globalisation to transform business models.

"Globalisation as a more attractive strategy in the downturn to contain cost, has been cited by more than half of the respondents to be a top priority and key driver for globalising Asia Pacific technology companies in the post-downturn environment."

Unsworth said before the crisis, the need for positioning in lucrative new markets or gain market share in existing ones, was cited as a top priority.

Fall in priorities

"However, longer-term positioning such as access to research and development (R&D), or taking advantage of a less demanding regulatory environment, no longer appear to be pressing issues, declining further in importance in the survey rankings," he said.

"Intense cost pressures as a result of economic uncertainties are making the driving forces behind globalisation strategies more short term."

Commenting on the worrying phenomenon, Unsworth said: "A successful globalisation strategy requires a thorough understanding of the markets and a willingness to stick to a long-term plan, even while adjusting to the immediate risks and opportunities of the temporary economic turmoil."

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