For companies in the Asia-Pacific region, regulation remains a major cause of complexity, but it is matched by speed of innovation. Among the major emerging economies – Brazil, Mexico, Russia, South Africa, China and India, regulation is the number one cause of complexity.
This suggests that while companies in these countries will share some of the concerns of their US and European competitors over increased government activity, more of their energies are being spent working out how to stay ahead of the new ideas, products and competitors in their markets.
These results are entirely consistent with the conclusions of a 2009 KPMG survey, Never catch a falling knife, which examined how companies around the world reacted to recession. It found that while European and North American companies tended to see the problems of recession as a matter for governments, requiring more regulation and oversight to solve them, companies in other parts of the world saw recession as an opportunity to review practices and find a new path to growth.
Regulation is, however, a fast-developing field. Several of the most impressive economic success stories of the past decade have been accompanied by common complaints. Firstly, that legal systems are not sufficiently reliable for international trade, and secondly that labor, product quality or health and safety legislation is undeveloped in comparison with international standards.
The survey indicates that a majority of the Asia-Pacific and emerging economies believe that speed of innovation could become their biggest cause of complexity in the next two years. However, it is possible that the demands of consumers in other countries, combined with increasing international cooperation on financial regulation, tax legislation and environmental issues, may drive regulation to the top of their list.