Dienstag, 29. Januar 2013

Bulletin from Davos: Another year, another Davos summit

A final look a this year's WEF at Debrief Davos with CNN:

Bulletin from Davos: Another year, another Davos summit: Bulletin from Davos The last of the journalists are leaving Switzerland following the close of the World Economic Forum Annual Meet...

Another year, another Davos summit

Bulletin from Davos

The last of the journalists are leaving Switzerland following the close of the World Economic Forum Annual Meeting 2013. I can imagine that the city of Davos will slowly settle back into its sleepy ways, as will we participants into our schedules and meetings and deadlines. While the impressions are still vivid, I would like to share what I believe to be the signals from Davos this year:

1. The worst may be behind us
While there is broad agreement that the worst of the financial crisis may be over, there is also a sense of cautious optimism. As IMF Managing Director Christine Lagarde said, "Do not relax." Promoting growth was the most important issue in Davos

2. Europe benefits from an increase in competitiveness
Southern European countries must stay the course in pursuing reforms. Skepticism remained regarding Italy (sustaining the reforms of the Monti government), Spain (unemployment, especially among its youth) and France (recent government decisions, trade unions, employer associations)

My company, Roland Berger Strategy Consultants, launched the study "Rebuilding Europe's Competitiveness", co-produced with the World Economic Forum

3. EU reforms are good, UK secession less so
British Prime Minister David Cameron's call for reforms in the European Union was enthusiastically received, his referendum plan less so, mainly due to the potential harm such an exit from the EU could cause (specifically to FDI and exports; 47% of the UK's exports go to the EU)

4. Scrutiny of the financial sector urged
German Chancellor Angela Merkel stressed the need for further regulation of the financial sector. Others warned that Basel III might create an uneven playing field due to overregulation

5. Manufacturing to return to the US
US companies foresee lower energy costs due to shale gas exploration, which might allow them to bring manufacturing back into the country. However, reservations remain about the American political climate, which has been beset with partisan gridlock
6. A G2 of US and China?
China is expected to continue on the path of stability. With the United States' so-called strategic "pivot" to Asia, there are suggestions that this could be a "G2 century" dominated by the two countries

7. Economy comes first in Russia
Russian business and political leaders in Davos stressed that economic growth and stability are more valued at this time than transparency and legal clarity

8. Bilateral deals are increasingly popular
Bilateral free trade agreements are gaining favor among political leaders. This could result in a tendency toward greater nationalization in industries

9. Energy transition revitalizes the US, confounds Germany
 In the US, this is related to the availability of lower-cost energy sources (e.g., shale gas). In Germany, "Energiewende" is influenced by environmental concerns and refers to energy alternatives. German CEOs predict that energy prices will remain high for some time, posing a dilemma for the chemical and steel industries and prompting the prospect of relocating manufacturing

Roland Berger Strategy Consultants CEO Dr. Martin Wittig and CNN anchor Richard Quest engage in the Davos Debrief, an event co-hosted by Roland Berger Strategy Consultants and CNN in Zurich

Torsten Oltmanns, Global Marketing Partner of Roland Berger Strategy Consultants, with CNN's Richard Quest
Together with renowned news channel CNN, Roland Berger Strategy Consultants co-hosted an exclusive Davos Debrief on Monday, January 28, in Zurich. The brilliant international anchor Richard Quest, a personality known to 238 million viewers worldwide, led the candid post-Davos analysis. Quest and our CEO Dr. Martin Wittig engaged in an off-the-cuff and lively debate on the most relevant aspects of the Annual Meeting. The exchange was both entertaining and illuminating.

The world's business, political, and intellectual elite put their heads together in this quiet alpine city and earnestly discussed the state of the world. But now I wonder: Did they live up to the promise of improving it? It is probably too soon to answer that. For my part, I left Davos with some clarity about what keeps these leaders up at night, what animates their conversations, and what drives them – and all of us – hopefully, forward.

In closing, I would like to express my thanks to the visitors of this blog for your kind readership. It was a real pleasure to share with you my impressions and commentary on the Annual Meeting 2013. If you are interested in business and the economy, follow me on Twitter: @TorstenOltmanns.

Till next year in Davos!


Photos: The World Economic Forum and Lukas Mäder

Sonntag, 27. Januar 2013

ZEIT Online features "Erkenntnisse aus Davos"

Bulletin from Davos

My Davos insights were featured in the political column "Zweitstimme" of the German magazine ZEIT Online on January 26. Read the article here (in German).

Freitag, 25. Januar 2013

Day 3: Key Insights

Bulletin from Davos

Just as there are astonishingly high aspirations in Davos ("improving the state of the world"), the theme "resilient dynamism" might just be the most mocked theme in a decade of Annual Meetings. A CEO of a global bank commented to me this morning that, surprisingly, "economies have proven to be resilient, even without dynamics." Other ironies abound: Where else but in sleepy Davos would someone pay between 500 to 1,000 euros per day for the comforts of a youth hostel? Although the Annual Meeting attracts some of the most sophisticated – and certainly some of the most spoiled – people in the world, the food is, frankly, awful. And, thumbing their noses at the "Green Davos" campaign, are the rows of limousines and SUVs lining the streets of this city, while Smarts and electric cars have to contend with a lot of paperwork and checks to be able to drive up here in environmentally-friendly style.

The participants may be taking away some key insights from the Annual Meeting - but the food was nothing to write home about

Some consistent themes have emerged from three days of debates and discussions, and I believe they will set the trends of future conversations. These are my key insights from the Annual Meeting 2013 in Davos:

1.    There is a general sense of relief that Europe has overcome the worst of the crisis. Politicians, such as German Chancellor Angela Merkel, were largely credited for exhibiting the needed leadership and guidance. European Central Bank President Mario Draghi and IMF Managing Director Christine Lagarde were also singled out for doing the difficult but right thing.
IMF Managing Director Christine Lagarde speaks in the panel "Women in Decision-Making" in the Annual Meeting 2013

2.    The "New Normal" is as yet unclear. I perceive that the Davos crowd is still consumed with analyzing the crisis – the mistakes made, the remedies required and how to avert mistakes in the future.

3.    Growth is the main concern on everyone's mind, putting Europe again at the center of the conversations. The outlook for China and the US are quite positive over the short and mid-term, but it seems there is agreement that Europe still faces significant challenges.

4.    Europe is confronted with challenges about its competitiveness compared to other regions of the world as well as within the European Union itself. To overcome these, Europe needs to boost innovations and entrepreneurship, develop talent and enhance mobility, and further improve internal markets. These points came up in the findings of "Rebuilding Europe's Competitiveness", a joint initiative by Roland Berger Strategy Consultants and the World Economic Forum. Most speakers and panelists in Davos agreed with the study's conclusions and are advocating more concrete action. Ms. Merkel already announced yesterday a new European pact on how to eliminate the biggest roadblocks to better markets in every country in the EU.

5.    As can be expected, there was no shortage of controversy around the EU this week. British Prime Minister David Cameron's speech caused business leaders to raise their eyebrows. I believe Cameron's statement cast concern and uncertainty over long-term stability and growth in the UK, and this affects investor confidence. On that note, I was briefly quoted in a German news program last night on the UK's departure from the EU.

6.    On the subject of free trade, it seems the consensus is that the era of multinational agreements is over, and the time has come for more bilateral agreements. As proof of this, China and host Switzerland signed theirs during the WEF event.

7.    Resourcing was a buzzword in Davos, as companies signal they might relocate production to their home countries due to rising costs of labor overseas.

8.    This resourcing trend, which has made reviving production in the US more attractive, is mainly due to sinking energy costs there, owing to fracking. Investors are putting pressure on countries where production is largely based to consider new energy sources, such as nuclear power, or to establish political consensus to allow industries to take advantage of them. German business leaders raised those concerns in Davos, saying that the absence of clear political direction over an Energiewende would wipe out hard-earned competitive advantages.

9.    At this Annual Meeting, many observers say the US, India and China were markedly less energetic in their participation. This could have had the effect of skewing the discussions here more toward Europe and Asia.

10.  Finally, one truly international issue was tackled in Davos and was the centerpiece of Friday's talks: the role of women in business and society. Naturally, there was no one who disagreed with the premises, and no one who said that enough has been done for the world's women.

Today is Day 3 in Davos, and the work continues.

Stay tuned for my Davos roundup, and thanks for reading.


Get real-time updates from Torsten Oltmanns in Davos and follow him on Twitter: @TorstenOltmanns.

Photos: The World Economic Forum

Donnerstag, 24. Januar 2013

Day 2: Europe under Scrutiny

Bulletin from Davos
German Chancellor Angela Merkel spoke in Davos on Thursday and asked the EU to remain steadfast in pushing reforms

It is only the second day of the World Economic Forum Annual's Meeting 2013, but I have to admit I am starting to see traces of the so-called "Davos fatigue" creeping in among the attendees. And it is unsurprising. As the CEO of an automobile company put it, "The meetings are content-heavy, you're interacting round the clock with highly sophisticated individuals and you have to walk around scattered meeting points all over Davos." The intensity of the activities here is slowly taking its toll. Every last spot at the conference venue is being used to host roundtables and meetings. The most unusual location I have seen this year was a (drained) swimming pool converted into a meeting room. There is even a rumor that the most desperate of the Davos participants are organizing meetings in a sauna! Under these conditions, that does seem almost appropriate.

Regarding content, Day 2 finds Europe again at the center of discussion. British Prime Minister David Cameron's Euroskeptic speech yesterday fired a challenging shot across the bow. I have not found a single Briton here who welcomes the prospect of the United Kingdom's departure from the European Union. (We all have heard the rumors that Scotland and Wales could entertain the idea of applying for EU membership if the UK does secede.)

Cameron's speech made many in Davos uneasy, as this could create uncertainty among investors as well as British firms reliant on tight networks with the rest of Europe. My impression is that Cameron tried to smooth some ruffled feathers today, pointing out that he actually does not want the UK to "turn its back on the EU", but rather he was only pressing "for a more competitive, a more open, a more flexible Europe." While Cameron's announcement of a referendum could be regarded as a political tactic with an uncertain outcome, I must say, his assessment of the state of the EU is widely shared.
Roland Berger Strategy Consultants CEO Dr. Martin Wittig spoke in "The Europe Context" panel on challenges and transformations in Europe's leadership role WEF
Europe is losing ground in terms of innovation and competitiveness, and this is a common refrain in Davos. Roland Berger Strategy Consultants addresses this issue in an Insight Report entitled "Rebuilding Europe's Competitiveness" that we jointly produced with the WEF. This report has identified best practice competitiveness measures across Europe that can serve as an inspiration for countries willing to reform. For me, the key points of the competitiveness study are: (1) develop and mobilize talent, (2) enhance innovation and support entrepreneurship and (3) use the full potential of liberalizing product and service markets.

The analysis of the competitiveness study may be shared by Davos participants, but the fundamental question always is: How? According to the report, the "How" requires the concerted efforts of politics and business to include all stakeholders and ensure consistent implementation.
Roland Berger Strategy Consultants Executive Committee Member Bernd Brunke at the press conference to launch the report "Rebuilding Europe's Competitiveness"
German Chancellor Angela Merkel said that "budget consolidation and economic growth are two sides of the same coin", and warned against reducing the pace of reforms in the eurozone. She also remarked that the Annual Meeting's theme of "Resilient Dynamism" was "fitting" because it echoed her own calls for a system that could withstand economic upheavals.

Ms. Merkel probably did not offer anything new in her speech today, but as we've already established, in Davos and elsewhere, actions are still more valued than words.

Keeping on watching this space for more bulletins.


Get real-time updates from Torsten Oltmanns in Davos and follow him on Twitter: @TorstenOltmanns.

Photos: The World Economic Forum

Mittwoch, 23. Januar 2013

Day 1: Treading Carefully

Bulletin from Davos 
Greetings from Davos! The eyes of the world are trained on the city right now for the Annual Meeting of the World Economic Forum.

The best footwear to navigate Davos (from @HermanB)
The thousands of participants that descended on Davos were aware that the Annual Meeting is usually a place where one is tested intellectually. Many newcomers discovered, however, that they would also be confronted with a different set of challenges: Davos has simply given up clearing its streets from the deluge of snow. Participants sliding their way to the conference have become a common sight. One can distinguish the veterans from the greenhorns by their choice of footwear. The first-timers are in leather shoes and high heels, while the more experienced are pairing their suits with trekking boots, which makes for an odd-looking but practical combination to survive Davos unscathed.

Here are some other practical observations from my perch in Davos.

The World Economic Forum is often criticized for getting their assessment of the big issues wrong and addressing them too late. Let's hope that this time, that criticism will prove unfounded. Compared to last year's Annual Meeting, the atmosphere this time around has greatly improved.

Last year, each session and, more importantly, the lobby talk centered on whether the euro, the European Union and the entire world economy were headed for failure.

This year, there is a growing sense that the worst of the euro crisis is over. This sentiment was echoed on the panel "The Global Financial Context", most prominently by Axel A. Weber, Chairman of the Board of Directors at UBS, Switzerland and James Dimon, Chairman and CEO at JPMorgan Chase & Co. There was widespread praise for European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde and German Chancellor Angela Merkel for the "resilient dynamism" they exhibited in handling the crisis.

While the outlook is considerably less gloomy, people remain cautious. The questions emerging now pertain to the growth prospects of the world economy. Once again, Europe has been thrust to the forefront. In a speech in London on Wednesday, British Prime Minister David Cameron offered Euroskeptics a concrete alternative by pushing for a referendum in five years to leave the European Union or to stay on under new terms.

Apart from discussions about growth, other topics that animated today's Davos chatter were the phenomena of re-sourcing, in which companies relocate their production back to the West due to diminishing labor-cost advantages; and de- or re-globalization, in which policies of regulation and economic necessity push countries toward greater nationalization of industries. 
Roland Berger Strategy Consultants CEO Dr. Martin Wittig agrees that Europe is going to be a driver of growth. In a workshop entitled "The Europe Context", he called on the EU to increase its regulation of financial institutions and to focus on service industries, which can be an engine of job creation.

It has been a fascinating first day of discussions and ideas. I suspect that in the coming days, just like the uninitiated in Davos, we will soon find sure footing.
Check back periodically, there's more to come.


Get real-time updates from Torsten Oltmanns in Davos. Follow him on Twitter: @TorstenOltmanns.

Photos: The World Economic Forum and Herman Betten on Twitter.