Transcript Source: Cambashi

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A global market perspective
C a m b a s h i
Allan Behrens
Cambashi
C a m b a s h i
! L N
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COFES 2006
2
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Source: Cambashi
Lies, damn lies and statistics
C a m b a s h i
“The only function of
“Intelligence
economic forecasting is to
maketurns
astrology look
respectable”
uncertainty
John Kenneth Galbraith
into risk”
COFES 2006
3
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Source: Cambashi
World growth
C a m b a s h i
 Growth in the Asia is




significant
US first developed
nation out of the
starting blocks
Japanese
momentum building
Europe still has
challenges
FEB – feast and
famine
COFES 2006
4
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Source: Cambashi
0
1000
-5
-10
0
-15
COFES 2006
5
Europe
3000
2000
2003
2004
2002
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Asia
Middle East
Africa
5000
Asia
5
Commonwealth of
)Independent States (CIS
6000
Europe
10
America
7000
AfricaSouth and Central
9000
North America
(Merchandise)
Middle East
4000
World
10000
Commonwealth of
Independent
)States (CIS
Asia
America
5
South
and Central
Middle
East
10
Africa
15
Commonwealth of
)Independent StatesNorth
(CIS America
20
Europe
25
World
30
South and Central
America
8000
Import
growth % 2002 -2004
Billions of dollars
C a m b a s h i
North America
World
World trade (to 2004)
Export growth % 2002 -2004
40
35
30
25
20
15
0
-5
2003
2004
2002
Imports
Exports
Source : WTO
Source: Cambashi
C a m b a s h i
The world’s most exciting economies!
Where’s the consensus?
 2006 economic growth: Eastern Europe
 South America
 Asia Pacific
 North America
 Western Europe
COFES 2006
6
5
4
4
3
2
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Source: PWC European
Economic Outlook,
November 2005,
www.pwc.com.
Source: Cambashi
4
G8
5
USA
6
Other EM
7
BRICs
8
China
9
India
10
Russia
Brazil
Russia
India
China
Other EM = Average of South Korea, Poland
Argentina, Chile, Columbia, Czech Republic
Hungary, Indonesia, Malaysia, Mexico
Peru, Philippines, South Africa
Taiwan, Turkey, Venezuela
Brazil
C a m b a s h i
What’s in store for 2006?
..everyone wants to talk about
3
2
1
0
Source : Consensus Economics 2005
COFES 2006
7
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Source: Cambashi
1 400 000
1 200 000
1 000 000
800 000
600 000
2000
400 000
2002
200 000
Asia and Oceania
Latin America and the Caribbean
Africa
North America
Europe
8
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South-East Europe and the
Commonwealth of Independent States
)CIS(
COFES 2006
Other developed countries
2004
0
World
C a m b a s h i
Foreign Direct Investment
Inflows ($Millions)
SourceCambashi
: UNCTAD
Source:
More grist to the Asian mill!
C a m b a s h i
 Preferred
locations for R&D
over the next 3
years
 China and
India lead the
way
 US and UK
are high on
the list
COFES 2006
9
Rest of developed
world
Rest of developing
world
India
China
Brazil
Poland
Germany
United States
Japan
United Kingdom
Source : A T Kearney
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Source: Cambashi
C a m b a s h i
Winners and losers
(not such big winners)
Percentage share of developing countries FDI Flows
1999-2005
60%
Emerging Asia
50%
40%
30%
Latin America
20%
Eastern Europe & CIS
10%
Africa
0%
1999
2000
2001
2002
2003
2004
Source : UNCTAD
COFES 2006
10
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Source: Cambashi
Asia’s share in world GDP
(at purchasing price parity)
C a m b a s h i
Is Asia
reclaiming
its
position of
old?
70
60
50
40
30
20
10
0
1820
1870
1913
1950
1973
2001
China India Japan Other Asia
Source : Maddison
COFES 2006
11
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Source: Cambashi
Availability of human resources
C a m b a s h i
Global pool of
workers
Ready availability
of suitably
qualified
personnel leads
to growth in
middle classes
With qualifications
USA
India
India
USA
Germany
Russia
Russia
Brazil
Brazil
Germany
Mexico
Mexico
China
China
Note:
Source:
Survey results: 1=low; 10 = high
IMD world competitiveness Yearbook 2003
Source : NASSCOM-Mckinsey 2002-2003
COFES 2006
12
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Source: Cambashi
Drivers of change
C a m b a s h i
Average wage / year (in thousand US dollars)
30
25
28
25
20
15
10
5.88
5
0
6.4
6.5
7.2
7.2
8
8.9
6
2.4
Romania
India
Czech
Philippines Malaysia
Viet nam
Ukraine
China
Israel
Ireland
Russia
Republic
Source: NASSCOM
Source: CLSA Asia-Pacific Markets
Worldwide mobile phone sales forecast
Source : Galileo analysis, ESYS PLC
COFES 2006
13
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Source: Cambashi
The Largest Economies in 2050?
C a m b a s h i
 Brazil, Russia, India
and China
estimated to grow
from from less than
10% of the worlds’
GDP to over 40% in
the next 40 years
 Combined China
and India in 2004
are the worlds
second largest
economy at ppp.
COFES 2006
14
In $ Trillion
50
45
40
35
30
25
20
15
10
5
0
Ch US In Jpn Br RussUK Ger Fr
It
Goldman Sachs Model Projections
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Source: Cambashi
C a m b a s h i
Additional challenges of the
software industry
 Piracy rates appear to be increasing
 Estimates vary anywhere up to 90%+
 Investment concerns on IP restrict investment
 One answer is that vendors/resellers must be seen
to be adding value to core product
Source : SECOND ANNUAL BSA AND IDC GLOBAL SOFTWARE PIRACY STUDY May 2005
COFES 2006
15
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Source: Cambashi
Asia
C a m b a s h i
 Much of the success

has been driven by
under-cutting
manufacturing prices
 Malaysia loses to
China, India and
Thailand
BUT No one can
compete on price alone
 VW’s recent
consideration of
Angola for vehicle
manufacture
COFES 2006
16
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Source: Cambashi
Asia
C a m b a s h i
 Need to extend the

value chain beyond
prices to differentiation
 We’re seeing this
in companies such
as LG, Lenovo and
TATA
Promoting a move up
the value chain to
value differentiation (as
opposed to price)
COFES 2006
17
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Source: Cambashi
China
Manufacturing
value
add
Cost of
housing
C a m b a s h i
 Impressive
1950 12,5%
87,5%
1955
14,2%
85,8%
growth continues
unabated
 Consumption
growth benefits
others regions
 Beurocracy and
piracy
 Property prices
1960
16,0%
84,0%
1965
17,6%
82,4%
1970
17,4%
82,6%
1975
17,4%
82,6%
1980
19,6%
80,4%
COFES 2006
18
1985
1990
1995
2000
2010
2015
2020
2025
2030
Salaries
Availability of
72,6% local
68,6%
workforces
23,0%
77,0%
27,4%
31,4%
35,8%
64,2%
45,1%
49,5%
53,6%
57,2%
60,5%
54,9%
50,5%
46,4%
42,8%
39,5%
Source : Inco
Source :United Nations Population Database
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Source: Cambashi
India
C a m b a s h i
 IT services sector is the
jewel in the crown
Rapidly changing composition of GDP (%)
 Others are out to120
Infrastructure investments
Transportation, Electricity, Telecom etc.
steal the crown 100
38
80
41
47
48
51
 Manufacturing
60
16
20
expanding
22
40
27
27
 But still let down by 20 46 39 31 25 22
0
beaurocracy,
FY-71
FY-81
FY-91
FY-01
FY-04
Agriculture
Industry
Services
allegations of
corruption and poor
Global IT outsourcing study
infrastructure
Source : Diamondcluster
20.00%
% of GDP
16.00%
12.00%
8.00%
4.00%
1999
2000
China
2001
2002
India
Source: CLSA Asia-Pacific Markets
COFES 2006
19
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Source: Cambashi
Japan
C a m b a s h i
 Influence of China
 Economic growth

energises industry
such as steels,
automobile,
construction
equipment
Stock market rebound
 Increasing
confidence and
low interest rates
drive investment
COFES 2006
20
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Source: Cambashi
Japan – Global ageing threat
C a m b a s h i
 The challenge of baby
boomers hits home in
Japan
 Skills loss
(~2007)
 Pension issues
(~2012)
 Extend pension age
 Contract back in retired
resource
 Female population
COFES 2006
21
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Source: Cambashi
Europe
C a m b a s h i
The European
Innovation scoreboard
The
InputsEU
: education,
is often
investment in innovation, etc
seen as a
 Outputs : turnover from new
products, employment in
high tech sectors, patents,
infrastructure
with
etc
unnaturally high
 Germany, Sweden and
degrees
Finland leadof
the way
 Many of the FEB nations are
laggards
measurement
regulatory
administration and
Source : CORDIS, Merit
1
COFES 2006
22
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Source: Cambashi
R&D investment
C a m b a s h i
 2005 figures show that EU


R&D intensity is close to
stagnation.
Growth of R&D investment
as a % of GDP has been
slowing down since 2000
and only grew 0.2%
between 2002 and 2003
While China has lower R&D
intensity (1.31% of GDP in
2003) its investment grew at
about 10% a year between
1997 and 2002. If these
trends continue, China will
be spending the same share
of GDP on research as the
EU in 2010 – about 2.2%.
COFES 2006
23
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Source: Cambashi
Former Eastern Block and Russia
C a m b a s h i
There are many factors that
influence economic growth
 Exports
 Availability of money for investment
 Individual actions and initiatives
COFES 2006
24
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Source: Cambashi
Former Eastern Block and Russia
C a m b a s h i
 Russia






Robust continuous growth. Electrical, electronic and
optical equipment sub sectors particularly strong.
Poland (EU)
 Foreign investment continues
Czech Republic (EU)
 Growth of public sector research and development
Hungary (EU)
 Private sector accounts for over 80% of economy
Slovakia (EU)
 Government subsidies assist growth
Romania (EU 2007)
 Stability and growth in SMB
COFES 2006
25
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Source: Cambashi
World-wide Engineering Applications - Geographic split of
vendor revenues
8
7
6
5
$ bn
C a m b a s h i
Engineering applications
forecast
Asia/Pacific
N. America
EMEA
4
3
2
1
0
2001
2002
2003
2004
2005e
Growth by Region
Worldwide
26
2001
2002
2003
2004
2005e
Source:
Cambashi
Ltd , 2006
2006f
1.7%
-5.9%
5.1%
14.3%
13.7%
7%
-0.9%
-5.0%
13.6%
16.2%
10.0%
7%
N. America
3.0%
-7.4%
-2.9%
13.6%
14.2%
6%
Asia/Pacific
4.0%
-4.1%
6.8%
11.9%
20.2%
11%
EMEA
COFES 2006
2006f
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Source: Cambashi
Summary
C a m b a s h i
 We must look at differing viewpoints
 The world is globalising but is not yet


globalised
 Just because there’s a MacDonald's it
doesn’t mean the MO is the same as a
western country’s
Having a stay at home attitude will be
limiting or uncompetitive in the future
 Even the smallest business will suffer
Willingness to change business models is
essential
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Source: Cambashi
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