American Express unveiled the results of its inaugural Global Business Spend Indicator (GBSI), which highlighted a bullish sentiment among global businesses, with 70% companies surveyed sharing an optimistic outlook for the next 12 months.
The survey also found that overall, companies have been increasing business spending since the beginning of the year across all the core categories of business-to-business (B2B) spending and they anticipate further increases in 2021.
Tony Tsai, VP & General Manager, Global Commercial Services, Hong Kong and Taiwan, Foreign Currency Solutions, Asia Pacific, American Express, said:
“While the COVID-19 pandemic has indeed posed challenges, overall optimism and rising B2B spending should give Hong Kong companies the confidence that the recovery is well under way.”
The GBSI – which was conducted by the Centre for Business and Economic Research (CEBR) – is designed to explore the importance of business spending in both the global and local economies.
This is done based on a survey of more than 3,600 businesses of all sizes and across industries in the UK, Australia, Canada, Japan, Mexico, and the U.S. For this report, B2B spend is classified as goods and services that a business purchases from another business to keep their business running.
The survey looked at nine B2B spending categories, and three additional categories of taxes, people/workforce, and travel, entertainment and expenses, for a robust look at the dynamics and impact of overall business spending.
Investment in digital transformation will thrive in the new environment
The GBSI found that the technology spending category showed strong growth globally. 37% of businesses across the six countries surveyed increased their technology expenditures over the past year.
On average, businesses are increasing investment in technologies such as automation and e-commerce by more than 10% between Q4 2020 and Q2 2021.
These showed that businesses are eager to facilitate and enhance remote working and online commerce as new ways of operating since the pandemic.
According to the survey, spending on online advertising has also seen strong growth, which was more than twice as fast compared to the spend on print advertising quarter-on-quarter.
Businesses across the six countries surveyed plan to spend an average of 2.6% more on advertising, sales and marketing in Q2 2021 as compared to Q2 2020, reflecting businesses’ prioritizing securing new businesses.
Flexibility growingly important across operations and in supply chain
The pandemic has highlighted the importance of being flexible and adaptable to unexpected developments, and changes to supply chains were used as a key method to build in greater flexibility.
Over the past 12 months, 22% businesses surveyed have simplified their network of suppliers to increase the flexibility of their operations, 21% avoided long-term commitments to purchase from specific suppliers, and 22% had chosen suppliers with more flexible payment terms.
Global businesses also faced significant cash flow pressures during the pandemic, which had continued to impact business spending in Q1 2021.
In the survey, 86% of businesses across the six countries surveyed found their cash flow over the past 12 months at least somewhat problematic.
Global businesses are no longer in survival mode and are more focused on growth. The surveyed businesses pointed to ‘increasing profitability’, ‘securing new business’, and ‘staying competitive’ as their top three business imperatives this year, and these have been reflected in how they plan to spend.
“Businesses in Hong Kong, like the global businesses surveyed, have set their eyes on driving growth and are in need of better cash flow as they emerge from the pandemic.
It is crucial for them to secure alternative source of funds and greater credit flexibility during this critical time, which will enable them to strengthen resilience and take advantage of growth opportunities ahead,” concluded Mr. Tsai.