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PRE MARKET NERVES IS THIS PALM’S LAST THROW OF THE DICE?

NEW LIFELINE? PRIVATISING FISH STOCKS

VOODOO ECONOMICS CREATIVE LESSONS FROM NIGERIA

ISSUE 50 SEPTEMBER 2009

BUSINESS

WWW.CNBCMAGAZINE.COM

EUROPE/MIDDLE EAST/AFRICA SEPTEMBER 2009

STAYING POWER

THE FUTURE OF THE HOTEL INDUSTRY

CNBC BUSINESS

+ THE TOP

25 BUSINESS HOTELS 2009

IRAQ OPENS FOR BUSINESS P MAKING MONEY FROM GARBAGE AUSTRALIA A$7.95 AUSTRIA €6,50 BELGIUM €4,50 BULGARIA LV9.95 CANADA $6.95 CROATIA HRK35 CYPRUS £C2.50 CZECH REPUBLIC KC120 DENMARK KR42 ESTONIA 80KR FINLAND €4,40 FRANCE €3,95 GERMANY €4,70 GIBRALTAR £3.25 HONG KONG HK$55 HUNGARY FT 1150 ICELAND IKR495 ISRAEL £2.94 ITALY €4,30 JAPAN ¥ 1350 LATVIA LVL3.5 LITHUANIA LTL16 LEBANON 8000LL LUXEMBOURG €4,70 MALTA €4.66 NETHERLANDS €4,70 NEW ZEALAND NZD$9.90 NORWAY NKR40 POLAND Z16,50 PORTUGAL €4,50 ROMANIA L250,000 RUSSIA RUR190 SINGAPORE $7.50 SLOVAKIA SKK175 SOUTH AFRICA SAR27.50 SPAIN €4,30 SWEDEN KR38 SWITZERLAND 8.30FR TURKEY £3.75 UK £3.25 UKRAINE UAH34.5 USA $4.95

01_cover_sept_3.indd 1

12/8/09 16:10:19

Symbol of strength Even the smallest change has great potential – USM adds the expression to each transformation.

Visit our showroom or request detailed information. USA: USM U. Schaerer Sons Inc., 28 – 30 Greene St., New York, NY 10013, Phone +1 212 371 1230 International: USM U. Schärer Söhne AG, 3110 Münsingen Switzerland, Phone +41 31720 72 72 Showrooms: Berlin, Bern, Düsseldorf, Hamburg, Milan, New York, Paris, Tokyo info@usm.com, www.usm.com

No.49005 USM Schaerer Sohne 1pp.1 1

19/8/09 09:39:46

SEPTEMBER 2009

CNBC BUSINESS

Contents DISPATCHES

6

FEATURES

Editor’s letter

18

Birthday buoyant

8

Leadership Egyptian entrepreneur Naguib Sawiris

Radar

19

A round-up of Europe’s geopolitical and economic news

The Good Entrepreneur Competition update

21

10 Business Watch What’s happening in key industry sectors

52

14 Hotspot Fjord City, Oslo’s ambitious new harbour project

16 Business Jungle

21

Fishing Could a system of privatisation be the answer to declining fish stocks?

26 Smartphones Is it the last chance saloon for Palm, with its latest launch — the Pre?

30 South Africa How is South African business placed to deal with the global recession?

Mark Dixon on Regus’ recessionbusting workplaces

35 Innovation From worm waste to blossoming profits. TerraCycle’s global vision.

52 Media Nigeria’s film industry taking the nation and the world by storm

14

57

Iraq The future for the war-torn state now it’s opened the doors to its oil industry

COVER STORY: THE HOTEL ISSUE 38 Global Picture The industry battles the recession with ambitious global expansion

42 Trends

46 Top 25 The best European hotels for the business traveller

COVER ILLUSTRATION : REDSEAL

The latest industry innovations to keep the customers coming

38 SEPTEMBER 2009 I CNBC BUSINESS 3

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SEPTEMBER 2009

CNBC BUSINESS

Contents PURSUITS

CONTRIBUTORS

66

JANICE WARMAN In her first article for CNBC Business, Janice Warman reports on how South African companies are expanding throughout the continent, despite the economic woes back home. South Africanborn Warman is deputy editor of UK magazine Spectator Business. She has also written for British newspapers The Financial Times, The Guardian, and the Daily Mail.

65

Pursuits

70

Diversions for your precious downtime

66

Motoring Downsize your gas-guzzler to one of these new status symbols

70

City Guide Munich musts — that is if you can drag yourself away from Oktoberfest

74

Indulgences The latest smartphones and a luxury offering from Seiko

80

77

Books Crossroads by Peter Nolan and 10 business books for the autumn

78 Indulgences Celebrate September and treat yourself

80 Cultural Diary Event highlights in Europe this month

81

CNBC Schedule What’s on CNBC throughout September

82 Parting Shot Image of the month

TREVOR HUGGINS In this issue, Trevor Huggins writes about how the world’s beleaguered fishing industry may be saved by a novel privatisation scheme. Huggins has covered business and world affairs in a career spanning three decades, including the launch of Europe’s first IT networking magazine in 1985. He has worked in London, Paris and Milan for magazines and major news agencies.

COLIN BROWN In this issue, regular CNBC Business contributor Colin Brown looks at what Western companies can learn from the booming Nigerian film industry. New York-based Brown, a former editor-inchief of Screen International, is a longtime commentator on the media industry for numerous business and consumer publications and television networks.

JOSEPHINE MOULDS In this issue, Josephine Moulds looks at how the ultra-green outfit TerraCycle has gone from a New Jersey purveyor of worm waste products to a cool international brand. Moulds is a regular contributor of articles about investment and the economy for CNBC Business. She also writes for the UK’s Daily Telegraph, covering technology, economics and finance.

4 CNBC BUSINESS I SEPTEMBER 2009

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No.46950 Philips 1pp.indd 1

28/7/09 12:42:28

THE EDITOR

SEPTEMBER 2009

Birthday Buoyant

0CA7<3AA

www.cnbcmagazine.com

This month we celebrate our ďŹ fth anniversary, which merits an internal high-ďŹ ve or two, particularly given the white-knuckle media environment of the last few months. Tradition dictates that we should now pause to reect on the deďŹ ning moments of the half-decade since the magazine ďŹ rst launched. Well, like everyone else, we did not predict the revival of the EU constitution; that America would elect its ďŹ rst black president; that Al Gore would get an Oscar and a Nobel prize; and that a man called Simon Cowell would be worth more than several European countries. We also failed, like everyone else, to predict the collapse of the entire Western ďŹ nancial system. We did, however, realise that the world is shrinking, and during our previous 50 issues we have steadily widened our international perspective – more than enough justiďŹ cation to drop the “Europeanâ€? from our title as of this month. So welcome, old and new readers, to CNBC Business and our new website www.cnbcmagazine.com. The big question now, given the last few tumultuous months, is whether the next ďŹ ve years will see further globalisation, another spurt of capitalism and an even more integrated world economy – or the reverse; sharply decreased trade cooperation, tariff walls, local protests, shrinking ďŹ sheries and further spikes in energy prices. Only a fool or an economist would go on record with such a prediction, but we remain optimistic that capitalism will throw up more solutions to the growing catalogue of global ills than it will cause. For example, within a few years, Tom Szaky has turned a company dealing in worm fertiliser into an international multimillion-dollar business (p35). Likewise, an innovative privatisation scheme for marine ďŹ sheries (p21) may prove to be the only way to keep ďŹ sh on the table for future generations. Then there is the biggest underlying issue of our generation: climate change. While emissions have steadily risen, despite governments signing up to headline grabbing targets for cutting back CO2, there are thousands of entrepreneurs wrestling with potentially world-changing solutions (p19). Indeed, the next ďŹ ve years could be society’s most pivotal moment yet.

EDITORIAL Editor Richard Lofthouse Deputy Editor Boyd Farrow Contributing Editor Mark Faithfull Sub-Editor Suzanne Frost Editorial Director Michael Keating

ART Art Director Daniel Di Paolo Picture Editor Julia Holmes

CORRESPONDENTS Amsterdam Joe Figueiredo Brussels Derek Blyth Budapest Neil Barnett Copenhagen Scott Berman Istanbul David O’Byrne Paris Sarah Wachter Prague Lubomir Sedlak Rome Lee Marshall

PUBLISHING Publisher Kevin Rolfe Head of Events & Promotions Yolanda Acuna Ocana Publishing Director Simon Leslie Commercial Director Kevin Rolfe Chief Operating Officer Hugh Godsal Chief Executive Jeffrey O’Rourke

ADVERTISING Email advertising@cnbceb.com Telephone +44 (0)20 7749 6274

DISPLAY ADVERTISING Advertising Executives Helga Schweissguth, Daniel Gwynn, Sophia Silvert, David Levy, Vladimir Lesishin Head of Country Reports Michael Tookey

PRODUCTION Helen Grimley, Antonia Ferraro

Richard Lofthouse CNBC Business Editor

Logistics www.goferslogistics.com

richard.lofthouse@cnbcmagazine.com CNBC Business, periodicals pending, ISSN 1743-6664, is published 10 times per year by eSubstance Ltd. To subscribe to CNBC Business, visit http://subscription.cnbceb.com/ 141-143 Shoreditch High Street, London E1 6JE

SOUTH AFRICA

GLOBAL GROWTH

CONTINENTAL SHIFT NOLLYWOOD

SMARTPHONES

Since the end of apartheid South Africa has become are the country’s businesses a world economic powerhouse. placed to deal with But how the global recession? Janice Warman reports

MEDIA HOLLYWOOD BOUND? Genevieve Nnaji is one of the most successful Nollywood actresses

THE FAST AND THE FURIOUS a home Around 10 sequences of can it video are filmed a day so be completed within a week

Having taken a huge battering hoping its latest smartphone in recent years from Apple and BlackBerry, Palm is will finally reverse its fortunes. John Brandon reports

SUPERMARKET SWEEP South Africa’s growing has helped Shoprite middle class become the country’s largest food retailer

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PHOTOS: CORBIS

ECONOMICS

largest to become the second It has overtaken Hollywood planet, so what is the secret producers of films on the success? Colin Brown reports behind Nigeria’s movie

PHOTOS: PHOTOLIBRARY, CORBIS

IN VOODOO

BOLLYWOOD IN TERMS OF OUTPUT IN 2006

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A LESSON 2009 54 CNBC BUSINESS I SEPTEMBER

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DO RIGHT Shoprite also runs a feeding programme for the country’s poor

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ROB HUNTER

MOVIE MANIA The latest productions are advertised throughout Nigeria

A

PALM

LAST THROW OF THE DICE

SEPTEMBER 2009 I CNBC BUSINESS 33

SEPTEMBER 2009

28 CNBC BUSINESS I SEPTEMBER 2009

S

triding onto a Las Vegas stage in January wearing a milewide smile and a bright orange shirt, MatĂ­as Duarte, announced he would “not do a magic showâ€?. Yet minutes later the jaws of those attending the press conference at the annual Consumer Electronics Show were hanging as if Siegfried & Roy had just made a white tiger

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Extra copies of this issue will be distributed at: Expo-Real 5-7 Oct, New Munich Trade Fair Centre, Germany WEF Annual Meeting of the New Champions 10-12 Sept, Dalian, People’s Republic of China Nordic Climate Solutions 8-9 Sept, Bella Centre, Copenhagen, Denmark 6 CNBC BUSINESS I SEPTEMBER 2009

06_editor letter.indd Sec1:6

17/8/09 12:29:20

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No.43557 Saxo Bank 1pp.indd 1

31/7/09 15:01:53

DISPATCHES

1

The road to Copenhagen

Environment ministers from 190 countries, plus their entourages of advisers, assistants, and interpreters, will descend on Copenhagen for two weeks in December for the UN Climate Change Summit. Hordes of lobbyists and an army of environmental journalists are expected to follow, making this into the biggest industry jamboree to date. A Copenhagen Agreement is expected to include deeper cuts than the 20% agreed under the 1997 Kyoto Protocol; rich countries will be responsible for the bulk of financing for these targets over the next five years, while the actual cuts will occur in developing countries. That will require improved funding systems to pay for climate change adaptation and mitigation in poor nations, more effective cross-border transfer of affordable clean technology and formal support for a scheme to pay developing nations to preserve rainforests in return for incentives. Europe has already shown itself to be committed to emissions reductions and if it can reach an agreement with China and the US other countries are expected to follow suit. However, the biggest potential obstacle is a lack of political will at a national level. In August, India insisted it wants to reach a global agreement on fighting climate change but reiterated its opposition to binding carbon emission cuts. “We are not defensive, we are not obstructionist. We want an international agreement in Copenhagen,” Environment Minister Jairam Ramesh Ramesh told reporters in New Delhi. The minister added though that India “simply is not in a position to take on legally binding emissions reductions targets.” There is also likely to be lengthy discussions in the Danish capital regarding the institutions needed to monitor and verify that reductions are taking place and forests remain intact.

2 Reykjavik

2

Brussels has welcomed the decision by Iceland’s parliament to give the green light to talks on joining the EU, proclaiming it is proof of the “vitality of the European project.” Iceland’s 63-seat Althingi passed the proposal to start the EU accession process by a narrow majority of 33 votes to 28, with two abstentions. Supporters of the move argued EU membership would help the country, with a population of 320,000, emerge more quickly from the global financial and economic crisis which devastated its financial institutions last year. Opponents of the EU said membership would harm the country’s sovereignty as well as its fishing industry by introducing binding quotas – the two arguments which had stifled previous EU debate. European Commission president Jose Manuel Barroso welcomed the move by Icelandic MPs and pointed out that Iceland is a “European country with long and deep democratic roots.”

1 4

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3 Istanbul

4 London

In an orgy of photoopportunities, Turkish Prime Minister Recep Tayyip Erdogan and leaders of four EU nations, Austria, Hungary, Romania and Bulgaria, have signed a “breakthrough” agreement to transit natural gas through their countries in the EU’s planned Nabucco pipeline project aimed at reducing EU dependence on Russia. Iraq, Syria and Egypt, who said they are willing to supply Nabucco with gas, have now been joined by Azerbaijan and Turkmenistan. A few days after Erdogan hosted the Europeans, he cosied up to Russia’s prime minister Vladimir Putin, who wants Turkish support for his rival South Stream pipeline.

Adspend levels will decline by 9.5% in the Eurozone this year at current prices, compared with a decrease of 12.5% in the US and 15% in Japan, new figures from the World Advertising Research Council and the Advertising Association show. The latest European Advertising and Media Forecast predicts that newspaper ad revenues will plummet by 13% in the Eurozone this year, with magazines off by 14.5%, TV by 10.8%, and radio by 9.7%. Online, on the other hand, will see totals improve by 6.9% in 2009 and a further 11.7% in 2010. Among the continent’s major markets, expenditure in France will shrink by 7% this year, and in Germany by 7.3%.

8 CNBC BUSINESS I SEPTEMBER 2009

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RADAR

6 Berlin

7

Despite rising unemployment, Conservative Chancellor Angela Merkel, looks a shoo-in to win a second term in Germany’s general election on 27 September, as her €85bn in stimulus spending kicks into the economy. In a populist move Merkel plans to give the German banking supervisor powers to dismiss the management of failing banks and suspend shareholders’ rights if re-elected chancellor, according to legislation drafted by her economics minister. Meanwhile, the coalition’s foreign minister, the Social Democrat leader, and Merkel’s challenger, Frank-Walter Steinmeier, has pledged – in a 67-page policy paper – to create four million new jobs by 2020. Steinmeier says the jobs will come from renewable energy, healthcare and services industries.

7 Moscow

3

Russia’s most powerful big-business lobby has declared Skype, the telecoms group that offers free calls over the internet, a threat to national security and is working with the government to regulate it. Leading Russian telecoms executives wailed to Russia’s Union of Industrialists and Entrepreneurs that rapid growth in free voice over internet protocol (VoIP) services such as Skype threatened domestic companies’ profits and could undermine security because they are more difficult to intercept. The telecoms executives, including a representative of Altimo, Alfa Group’s telecoms arm and Megafon, the number three mobile provider, proposed creating VoIP services within their own companies, in order to control them.

5 Madrid

8 Rome

Spain’s unemployment has fallen for three consecutive months, largely thanks to an €11bn public programme designed to create jobs and seasonal jobs in the tourism sector. But although jobless claims fell 20,794 in July to 3.54 million, with a nearly 18% of its workforce unemployed, Spain still has the highest unemployment rate in the EU. However, as in the rest of Europe, there are early signs of economic recovery. Consumer confidence rose to a 17-month high in July and car sales have improved with the help of government subsidies. But much of the recovery in employment is the result of a hurriedly implemented public works programme that has contributed to a rising budget deficit and is unlikely to be sustained for more than a few months.

Italy has introduced a typically confusing raft of measures to regulate the sale of alcoholic beverages and control potential abuse. Milan’s city hall, for instance, has just passed a law that imposes fines on bars and restaurants serving alcohol to anyone under 16. Serving alcohol to minors under 16 has actually been a criminal offence since 1929 although selling alcohol to minors in supermarkets or stores is not. Meanwhile, in Bologna commercial venues that sell alcohol (excluding restaurants and bars) must now close by 10pm. In Florence, there is now a special law to ensure that the city’s tripe vendors could continue to sell Chianti wine to accompany the local delicacy even after a national law stopped street vendors from selling alcohol. In part, the legislative rush before the summer recess sprang from the Italian Parliament’s adoption of a 2006 EU directive intended to assist member states in reducing alcohol-related harm. There is also a growing concern about binge drinking among Italian youth. In the last 20 years, he said, some 10,000 people under the age of 25 have died from alcohol-related traffic accidents and thousands more have been injured. Alcoholism rates in Italy have tripled since 1996 to the current rate of around 60,000, with just over 10% under 29 years of age.

SEPTEMBER 2009 I CNBC BUSINESS 9

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DISPATCHES

BUSINESS WATCH

LUXURY

NEW MEDIA

Puma running on the spot

DST after more of Facebook

Puma, the world’s third-largest sports goods maker, behind Adidas and Nike, posted a smaller-than-expected fall in second-quarter earnings – down 15.6% to €38.5m on €600m turnover –but said it expects a tough second half of the year. Chief executive Jochen Zeitz told journalists that he concurred with analysts’ estimates of a 2% sales decline for 2009. Days earlier, Adidas said it expected its own profits to improve in the second half of the year.

Facebook’s Russian investor is hoping to increase its holding in the social networking site — by buying shares from the company’s employees. Moscow-based holding company Digital Sky Technologies, run by Yuri Milner, which invested $200m (€140m) in May, has announced a deal to extend its stake by another $100m (€70m) by offering the company’s past and present employees a chance to sell their stock. The May deal valued the site at around $6.5bn (€4.5bn) — significantly lower than the $15bn indicated by Microsoft’s investment in 2007, but nearly twice as high as an internal valuation of $3.7bn that was revealed during a court case last year.

MEDIA Green helps Moss be top bod

CONSUMER GOODS

Kate Moss is set to become the world’s richest model thanks to a lucrative new deal she’s about to ink with British retail mogul Philip Green and the TV producer Simon Cowell. The 35year-old supermodel is joining forces with the two entrepreneurs on a new $1.6bn (€1.12bn) global multifaceted entertainment company, the details of which are hazy. Green owns the Topshop brand, which Moss recently collaborated with for a new clothing collection. Moss will direct the style and image of the as-yet-unnamed empire, as well as give fashion-related branding advice, under the terms of the deal, which could net her up to $80m (€56m) based on profit-sharing arrangements, according to reports. The sum would double Moss’ fortune giving her a net worth of about €112m.

Reckitt Benckiser cleans up

a

NUMBER CRUNCH

At least someone seems to be benefitting from all those unemployed bankers sitting at home. Reckitt Benckiser, the household goods giant, has posted a 23% rise in revenue (to €4.41bn) and pre-tax profit up 40% to €816m, over the first half of this year and has now raised its targets for 2009 as a whole. Europe, its biggest market, delivered 2% more sales than the same period in 2008; North America and Australia expanded by 7%, and its operations in developing markets by 19%. By category, fabric care improved by 1%; surface care, 3%; dishwashing and homecare, 5%; food, 7%; and health and personal care, 14%. Pharma was up a staggering 43%. Marketing spend also increased in H1, with “pure media” outlay rising by 10%, to 12.1% of net revenue.

8.5% $3.4bn 10% The amount Russia’s

economy may shrink this year after exports plummeted according to its economy ministry

News Corp’s biggest ever loss, reported in August

The percentage of German cars that could have been written-off for scrap that have instead been transported to Africa and east Europe by criminals

10 CNBC BUSINESS I SEPTEMBER 2009

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12/8/09 15:11:47

TJDR37238

THE NEW AMERICAN PRESIDENT AND SOME OLD SOUTH AFRICAN GRAPES. All celebrations merit great bubbly, historic celebrations deserve South African bubbly. At his official inauguration president Barack Obama demonstrated his awareness of that fact. A surprise to the reader perhaps, but a confirmation of what we and the select few have always known, South African wines are up there with the world’s finest. With the 2010 Fifa World Cup around the corner, you now have the opportunity to not only come and experience a world-class event, but also some of the world’s most loved wines. Our wine industry is the ninth largest in the world, producing award-winning wines every year. South Africa has excellent infrastructure, competitive input costs and favourable trade agreements. Our booming agricultural industry is testament to the fact that ours is truly a land of unlimited possibilities, where you always have an open invitation to come cultivate your own story. And when you do, you now know just how to celebrate. Find out more at www.southafrica.info/business

No.48884 South Africa Internatio1 1

14/8/09 15:07:04

DISPATCHES

BUSINESS WATCH

AUTOMOTIVE Electric dreams for Nissan Nissan is to make advanced lithium-ion batteries for electric cars at new factories in the UK and Portugal, whose governments have offered financial incentives and other carrots for the investments. The factories will have an annual capacity of 60,000 units each, with the UK facility, located in Sunderland near Nissan’s car plant, serving as the company’s main production site in Europe. The UK government said the company would invest more than £200m (€235m) in the plant, which will create 350 direct jobs. Nissan and its French alliance partner, Renault, plan to begin selling electric cars in the US and Japan from next year and globally from 2012. However, Nissan has not actually revealed where it plans to produce electric vehicles.

RAILWAYS

MANAGEMENT

Eurostar passenger numbers fall

McDonald’s to takeaway HQ from UK US fast food company McDonald’s Corp. is moving its European HQ from London to Geneva this autumn, in a move many interpret as taking advantage of lower corporate tax rates. Other large US companies to make the same move in recent years include Kraft Foods and Yahoo. McDonald’s says the move is to simplify the ownership of intellectual property rights, and that there will be no effect on its tax position. Some UK firms have also moved to Switzerland, openly blaming high taxes.

MUSIC Music makes KKR and BMG come together Private equity giant Kohlberg Kravis Roberts (KKR) has joined with Germany’s BMG Rights Management to develop a global music rights management business. BMG’s heavily indebted parent Bertelsmann’s operating profit fell 54% in the first quarter. Since October 2008, BMG has been buying small music rights catalogues, such as the German-speaking European rights to Kylie Minogue’s UK catalogue. Bertelsmann CFO Thomas Rabe said that with up to €250m from KKR, “we will be able to participate in the expected market consolidation”.

a

$1bn

The amount Wall Street banks and lawyers could collect in fees to help manage and break apart AIG

$280m The amount Abu Dhabi’s Aabar Investments said it would pay for a 32% stake in Virgin Galactic, Sir Richard Branson’s space-tourism venture.

A slump in passenger numbers means Eurostar looks set to miss its target of carrying 10 million passengers a year by 2010, 15 years after the first Eurostar train ran to the continent from London through the Channel Tunnel. The rail service has reported that, despite slashing fares, it carried 4.6 million passengers in the first six months of the year, a 6% fall year-on-year. Eurostar’s half-year revenues have fallen on average by around £4m (€4.7m) a month to £344m (€404m), and the type of passengers using its trains are hurting finances more. The number of business passengers — the most lucrative and highestmargin source of income — has crashed 20%. The number of leisure passengers has risen 4%, but that has been fuelled by European visitors taking advantage of the weak pound and by Eurostar’s decision to expand, by almost half as much again, the amount of tickets at its cheapest price of £59 (€69).

371,000 Number of

jobs axed by US companies in July

12 CNBC BUSINESS I SEPTEMBER 2009

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12/8/09 15:12:17

There’s More to Cyprus than Meets the Eye

More than a holiday destination, Cyprus can cater to your business needs ranging from registering your company and setting up operations to manage your EU, North Africa and Middle East clients at considerably lower costs. An EU country and member of the European Monetary Union since 2008, Cyprus offers beautiful blue skies and 300 days of sunshine as well as a

CYPRUS

INVEST WITH CONFIDENCE

transparent legal and regulatory system. Cyprus , apart from pristine white sand beaches , is also on the OECD Whitelist of jurisdictions that have substantially implemented the internationally agreed tax standard. With the Lowest Corporate tax rate in EU of 10%, efficient business services and a commitment to sustainable growth, Cyprus welcomes both visitors and investors to live and work here. So if you are searching for a new business base, consider Cyprus. There’s more to it than meets the eye.

Severis Bldg 9 Makariou III Ave. 4th Floor Lefkosia 1065, Cyprus

No.46580 CIPA.indd 1

P.O.Box 27032 Lefkosia 1641, Cyprus

Tel + 357 22 441133 Fax + 357 22 441134 www.cipa.org.cy info@cipa.org.cy

11/5/09 12:21:03

DISPATCHES

Fjord City, Oslo It is being described as Oslo’s most adventurous harbour renewal project ever. Scott Berman finds out why.

OSLO

ON THE WATERFRONT The luxury flats built at Sørenga pier will go on sale next year 14 CNBC BUSINESS I SEPTEMBER 2009

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HOTSPOT

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candinavian understatement be damned: Fjord City, the €2.8bn cluster of waterfront developments underway in the Norwegian capital, is a bold, complex project designed to slap a fresh, cosmopolitan and cultural face on the country while addressing 21st-century needs for business space and housing. As well as housing Oslo’s Opera House, which opened to great fanfare last year, the waterfront will encompass improved art museums, a library, residential and commercial properties as well as new green spaces and promenades — all with environmentally friendly designs. As the port facilities are concentrated to the south of the city centre, the trophy waterfront will be accessed via a harbour tunnel that will submerge a busy section of motorway. One waterfront area, Tjuvholmen, the former site of an industrial pier near Oslo’s city hall, is undergoing a complete transformation, thanks to renowned Norwegian architect Niels Torp. Tjuvholmen now is the site of high-design residential, office and commercial projects; the first two phases are complete, three more are underway. Four architectural firms have been brought in to create a Tjuvholmen streetscape varied in design — several buildings reference the old pier with corners resembling a ship’s bow and old pier buildings will be replaced by high-end flats, an art museum and a green buffer. Of course, there have been some rough patches along the way — including plenty of debate in design-conscious Norway about the architecture, cost and impact of the overall project. There’s also been grumbling over using so much prime waterfront for exclusive properties, and what some residents see as Oslo’s fleeting concentration over the years on alternating sections of the city. Additionally, the global financial downturn has slowed sales of flats at Filipstad, which abuts Tjuvholmen, but as of yet, the downturn’s impact on Norway and the project itself has been relatively muted. “It’s a different world up here,” says Rolf A. Johansen Rolid, a spokesman for Oslo’s Waterfront Planning Office, referring to Norway’s general affluence, which is enabling things to steam ahead. Developers, moreover, are looking to 2010, when flats on Sørenga pier, to the south, are set to go on sale for around €10,000 per m2, according to Rolid. Nothing, however, signifies the unfolding changes and vision more than the environs of the Opera House. Lording over the Bjørvika section of the waterfront, the landmark building, designed by Norwegian architectural firm Snøhetta, is the city’s biggest draw, and will soon be joined by a new library, two museums, and the aforementioned Sørenga residences. Providing new access to this area is another big project. The problem: the busy European Route E-18 runs between the city centre and Bjørvika, and to reach the Opera House pedestrians currently have to use a narrow steel bridge to cross over the motorway. The solution: place this section of the motorway in a 1,100m-long submerged tunnel in the Oslofjord, a couple of hundred metres into the water from the shoreline. The €510m tunnel project, expected to be completed in 2010, is being constructed by the Norwegian Public Roads Administration, which will finance it with local tolls. The current motorway space will be made into a street among three new parks and a mixture of apartments and offices. Officials are also touting Fjord City’s sustainability and a goal of zero netenergy use. Among the features that will help make this happen: a heat exchange system using seawater, and a tram service throughout. Engineers and architects are also hard at work on a colossal new central train station planned for the city, just a few minutes’ walk from the Opera House. Construction of the station, a provocatively designed, mixed-use skyscraper projected to be twice the size of Oslo’s current one, is slated to start in 2013 and take about €320m and 10 years to complete. JANUARY/FEBRUARYSEPTEMBER 2009 I CNBC 2009 EUROPEAN I CNBC BUSINESS BUSINESS 15 9

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DISPATCHES

STEP INTO MY OFFICE Mark Dixon, chief executive and founder of Regus 16 CNBC BUSINESS I SEPTEMBER 2009

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Office manager The recession may be forcing companies to ditch city centre office space, but for Mark Dixon of Regus these are good times. Boyd Farrow reports

I

t might sound a bit reckless when a chief executive of a FTSE 250 Now Regus is trying to get these business lounges into airports — it company admits that his business will never be the same, even already has 12 worldwide including Amsterdam’s Schiphol — and places when the global economy picks up. Especially when that company close to airports. In the US the Regus “drop-in offices” are close to whiteis Regus, the world’s largest provider of furnished office space. But collar housing developments. In the UK, it is the market towns. “There is Mark Dixon is as confident a self-made multimillionaire as you’ll ever your company head office, your home and a third place, which is what we meet. And if he didn’t exactly enjoy the various financial derailments can become,” he says. “We’re going back to the pre-train era. It’s a full he has faced over the years, he sounds like he is actually relishing the cur- circle: people working close to where they live. We can see new, efficient rent market challenges. industry appearing out of this. Virtual companies use less fixed staff and “Recessions are like going into battle,” says Dixon, looking, somewhat people will be pulled together for projects. Our centres can be an alternadisconcertingly, like a chunky Napoleon in his navy suit as he is PR-marched tive to Starbucks for new types of businesses.” through a legion of camera fodder at the opening of Regus’s flagship “busiIronically it was during the latte-fuelled dotcom boom that Regus really ness centre” in Mayfair in June. “In the good times everyone thinks this can caught fire, expanding at 90% per year during the 1990s, which led to a just carry on but we all know the saying ‘when the tide goes London flotation valuing the company at £2bn. But in the ensuing out’..... Well, I’ve seen the Asia crisis, SARS, the currency dotcom crash and recession, Regus’s US business crashed crisis in Argentina, two Brazils, the Russian crisis, into Chapter 11 bankruptcy protection. Dixon was forced 2002 — which was a near-death experience”. to sell a majority stake in the company’s British opOUR CENTRES CAN “What’s happening today,” he continues, “is erations to private equity group Alchemy Partners. a 100-year thing. We’re in the eye of the storm This time around, instead, Regus’ downsizing BE AN ALTERNATIVE but the same rules apply. It’s a time to refresh office solutions are boosting revenues, although TO STARBUCKS FOR skills, to be at your most creative and take risks.” the collapse of sterling has also helped by inflating Indeed, Dixon claims Regus has cooked up more overseas earnings. Sales in the four months endNEW TYPES OF new products in the last year than in the previous ing 30 April, rose 16%, to £387m (€450m), as firms BUSINESSES 20. “Normally you have a five-year or a three-year looked to cut property costs. During that period, Regus plan — now it’s 12 months”. added 1,485 business units, making a total of 160,606. The “drop-in” business centre, where individuals can Sixteen new locations were also added to the internaspend a day for less than the price of their bus fare and get free tional portfolio, including an 18th facility in Manhattan. caffeine, newspapers and broadband is one of these microwaved innovaLike many entrepreneurs, Dixon has a colourful backstory. He left school tions. A new BusinessWorld swipe card, modelled on the Oyster cards used at 16 and in 1976 set up Dial-a-Snack to make sandwiches, which he delivon London transport, buys individual customers access at any of the Re- ered on a bike. After spells working abroad, including a stint in an Australgus centres in 450 cities in 75 countries for £199 (€230). An even cheaper ian iron ore mine, he bought a burger van. When he had trouble with the corporate version of the card can be bulk-bought by large companies and supply of buns, he set up a bakery. In 1988 he sold the Bread Roll Company early adopters include carmaker Nissan and soft drinks company Britvic. for £800,000, moved to Brussels and a year later set up Regus. He says The new Mayfair centre boasts a surprisingly cheerful mixture of office he is unimpressed when every profile of him starts by referring to him as a spaces, meeting rooms and even work pods that look like they’ve been un- former burger seller. “There is still the Tall Poppy Syndrome in the UK,” he screwed from a spaceship. Indeed it is hard not to think that you are com- snorts. Now Dixon divides his time between Britain and his French vineyard manding the Starship Enterprise in the room kitted out for world-straddling Château de Berne, one of the biggest producers of rosé wine in Côte de “telepresence” meetings. The room costs £299 (€350) an hour and similar Provence, where his neighbours include Johnny Depp. services are available in Regus offices in Singapore, New York and Paris. While you suspect he is not someone easily seduced by glamour, Dixon Dixon says there is a growing market for business centres like these as says he has learned a lot from many people, adding “there is no monopoly companies restructure and outsource. “A lot of companies don’t want of- on good ideas”. He says he cannot select a guru but admires Carlos Ghosn, fices for their sales people,” he confides. The numbers work for Regus be- the CEO of Renault and saviour of Nissan for “shaking things up”. cause enough users pay to hire meeting rooms or “virtual office” services. He says that the overriding lessons he has learned are to “question ab“We had no idea so many people were looking for something else than solutely everything” and have great people working around him. “You have office space,” Dixon shrugs, explaining that the “recession-busting” serv- to keep reassessing what you’re doing and why you’re doing it. And in difice was simply borne out of the roaring years of 2007/8 and was a way for ficult times you must act quickly and make sure everyone in your business the company to market suddenly unwanted space. “What surprised us is is facing the right direction. A major part of my job is going around and listhe number of corporations expressing interest in signing up thousands of tening. A lot of ideas have come from our customers and our people. That their staff at a time. Which is why we believe it is a permanent change and translates to the way we run the company. The job of an entrepreneur is to we are a good indicator.” reinvent what is out there.” JANUARY/FEBRUARYSEPTEMBER 2009 I CNBC 2009 EUROPEAN I CNBC BUSINESS BUSINESS 17 9

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NAGUIB SAWIRIS

LEADERSHIP

TALK LIKE AN EGYPTIAN

Naguib Sawiris, chairman of Orascom and Weather Investments, talks to CNBC’s Simon Hobbs

Is your boldness in business due to your beliefs as an Egyptian Coptic Christian?

You must have known you would be attacked for that.

It’s a function of my belief in God; it is not a function of being a Christian, Muslim or a Jew. I believe God is on my side — my opponent may not be in the same situation.

I am a guy you can’t scare. I view God as on my side. What about one year in, when gunmen kidnapped two of your Egyptian engineers from the Baghdad office and then four more the following week?

Your focus is getting the best people. How do you balance delegating with your selfconfessed perfectionism?

I always believed I would get them back. But it was a tough time. I had the families with me and I felt I owed it to them. We got them out. We did it by shutting the network down for a few hours to say, “look, we are here to do a service”. Terrorists and kidnappers need to use the phone too! What other weapons did I have?

I delegate but stay involved. In Egypt you can’t always depend upon people to do what they say they are going to do. It may put a burden on you, but you will avoid failure. Do you struggle to tame your impatience? It’s a weakness. I sometimes lose out because of it when making a deal. I’ll not want to wait for someone to make a decision so I might propose a deal that is actually better for my opponent than one he would have suggested. You’ve also said you are too emotional. I am a person who, when his heart and mind are divided, will follow his heart. I could never do a deal with someone I didn’t like. When did you join your father in business? A friend and I started a small commercial company; at the same time, I was helping my father in his business. One day he said I had proven myself and invited me to join him. I said: “Ok, but I am going to do my own stuff.” I began with railways and IT and then went to telecoms. Did you have a eureka moment when you realised that in developing countries, if you employ locals and keep a tight rein on costs, you can sell telecoms to people on low incomes and make better margins than in Europe?

The argument was that in markets here in Egypt, people will consume $4 or $5 a month so how can you make money with that? But, if you have one guy in Europe consuming $20 and five people here using $20 and using the same bandwidth, you’ll get the same result because, in the end, you are selling bandwidth. Why have you gone for local branding? Local partners are annoying and greedy and want to throw you out of the business that you helped them in. So if you don’t want that you need to act local, have a local brand, and do local good. In Iraq we are called “Our Iraq”, in Tunisia we’re named after Tunisia. It is important to speak to local people locally. Within six months of the Iraq invasion you were queuing to set up a network there. After the war, there was no infrastructure in Iraq. There was a bit of “good doing” in going there. But again, I went for the money! It’s not like I’m Mother Theresa.

Your people were caught in the middle between the insurgents and the Americans — how did you deal with that? In these areas you don’t know who to please. My way is this: never interfere in politics, do your business, be loyal to the people of the country, be honest and don’t get involved. Let’s talk about North Korea. How did you make it work, being an entrepreneur working in a Communist country? We already have 40,000 subscribers in North Korea in the first six months. But it’s very difficult and we have to deal with them on a daily basis to make sure they respect what we have agreed to. In essence, though, it is a low financial risk for a very high reward. What are you most proud of in your career and what was your biggest mistake? That I created all this from scratch. I didn’t inherit it — my father wasn’t in telecoms. My mistake? Overexpanding.

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GREEN START-UPS

ENTREPRENEURSHIP

ONTO A WINNER

CNBC’s Steve Sedgwick considers the myriad Good Entrepreneur entries as short-listing takes place

he world is but a canvas to our imagination,” noted Henry David Thoreau, the 19th-century writer and environmentalist. This philosophy appears to be alive and well if the entries to CNBC’s Good Entrepreneur competion are anything to go by. In June, CNBC and Allianz launched the competition to find the brightest and best ‘green’ entrepreneur in Europe, with the serious incentive of a prize worth more than €250,000. The initial trickle of entries was followed by a deluge of ideas in the final few days up to the 31 July deadline. In fact, as one entrant explains, there was a poker-like mentality going on among some contenders: “I decided to delay until the final hour, having had ideas nicked in my lengthy past. Once bitten, always shy.” When you consider the billions currently being thrown at green entrepreneurialism by major corporations it is a huge challenge to find room for genuine innovation at a startup level. However, that is just what the hundreds of entries believe they have got: real money making ideas with true environmental credentials, ranging from solar-powered ‘velomobiles’ to schemes putting lime into oceans to absorb carbon dioxide. Popular themes included electric transport ideas, energy-saving software and hardware, insulation in the construction sector, including retro-fitting. Others focused on energy use in the developing world, which, in turn, sparked a furious debate on the CNBC website message boards over whether it is ‘patronising’ to tell countries in Africa to use solar cookers when they are little used in the West. In fact, what began as a competition, soon morphed into a bigger platform for debate on the rights and wrongs of the whole nature of entrepreneurialism and the environment. Many entrants focused on popular concepts, such as wave generation; kinetic energy from walking or running; ride-sharing using smartphone apps; and geo-engineering

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ideas such as biochar as carbon sequestration. There were even sustainable consumerism innovations, including making luxury items from recycled materials. Inevitably, among the wide array of proposals, were the weird and the wonderful. Consider the ‘personal cleaner’ – a water bottle with a fine jet spray for use instead of toilet paper. Or perhaps the electricity gener-

ating seesaws – kits for rural villages where playground games are channelled into an electrical battery charge. Small children creating energy? Didn’t we leave that one behind with the Victorians? Now the really tough task – with Thoreau’s maxim, “Be not simply good, be good for something,” ringing in our ears – is to find a winner.

Join the debate Get involved in the discussions on The Good Entrepreneur website. The site features discussion forums, exclusive stories, insights from leading business executives and advice for budding entrepreneurs, including a Q&A from Sir Richard Branson, where he sheds light on what he thinks makes an entrepreneur. Branson on what makes an entrepreneur “Generally something you will fall into by accident and, if you’re lucky, the time and the place are right. It’s also about valuing and trusting the people you work with — as the very nature of entrepreneurialism means taking calculated risks, being innovative and exploiting gaps you see in a market that others are often too cautious to exploit — hence why finding good people to work alongside is one of the most important things an entrepreneur needs to understand.” The finalists of The Good Entrepreneur competition will be announced on 2 September. The Good Entrepreneur is a result of a partnership between CNBC and Allianz. The competition’s three finalists will feature in a CNBC TV series that will be broadcast across Europe, the Middle East, Africa and South-East Asia in the autumn. The winner, who will be announced in the series finale in November, will walk away with a prize package worth more than €250,000. Read the full Branson interview on the website goodentrepreneur.com

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ADVERTISEMENT FEATURE users to access advanced data applications and personal content from anywhere in the WiMAX coverage area, on any WiMAXenabled device at broadband speeds. ZTE has unparalleled expertise in building WiMAX networks,” said Mr. Yu Hongkai, Head of ZTE Ukraine. “Working with FreshTel on this very important mobile broadband initiative in the CIS is a great validation of the power of our comprehensive solutions,” said Ms. Julia Koldicheva, PR manager of Huawei Russia. “FreshTel had very demanding requirements; we have consistently demonstrated our ability to fulfill these requirements as the company moves forward with its aggressive plans for rolling out WiMAX-based services. We look forward to further supporting FreshTel on this challenge.”

What is WiMAX?

FRESHTEL: THE WIRELESS FUTURE The only 4G operator in Ukraine prepares to introduce the revolutionary WiMAX wireless broadband around the globe

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reshTel, the only national 4G operator in Ukraine and a top two operator in Russia, offers high-speed Internet services to individual consumers, and small-to-medium size enterprises. The company is capitalizing on the growth of Internet usage in the CIS and its ability to offer easy-to-use WiMAX wireless broadband access - similar in price and quality to fixed-line access such as DSL or cable. FreshTel’s network is designed to support over 30 million customers in both countries and cover about 40 percent of the population. The company’s long-term strategy is to expand to South-East Asia and Africa and in particular to countries where fixed network infrastructure is currently limited, resulting in weak broadband capabilities. Strategic investors in FreshTel include Icon Private Equity, a leading fund in Russia and Ukraine with over $1 billion under management, and Intel Capital, the ven-

ICON CNBC Sep 09S.indd 50

ture capital arm of Intel Corporation. The company selected Huawei and ZTE, the leading Chinese vendors, to provide base station equipment and subscriber devices for its networks. “Building on the success of our technology, we are focused on providing our partners

WIMAX WILL DELIVER A SIGNIFICANT BOOST TO THE MOBILE INTERNET IN RUSSIA AND UKRAINE

WiMAX (Worldwide Interoperability for Microwave Access) is a wireless digital communications technology based on the IEEE 802.16 standard, known as Broadband Wireless Access (BWA). WiMAX operates on the same general principles as WiFi, where a computer equipped with a WiMAX device receives data from a transmitting base station. However, WiMAX provides faster wireless broadband access with speeds up to 70 megabits per second (Mbit/s) and covers a wider radius with distances up to 50 kilometers from an individual base station. WiMAX customers are able to access highspeed wireless Internet from various devices, including laptops, net-books, mobile phones and desktop computers. The technology is based on point-to-multipoint architecture, making it ideal for carriers that want to deliver broadband access to locations where fixed-line connections would be difficult or costly. Because WiMAX access does not depend on cables to connect each endpoint, deploying WiMAX to an entire high-rise building, rural community or campus can be done in a matter of days, saving significant amounts of time and money. With over 400 networks and 2.8 million subscribers currently in the world, WiMAX is fast on its way to becoming the industry standard in high-speed wireless Internet access. www.freshtel.com.ua www.iconpe.com

with a cost effective and proven solution that will enable them to strengthen their business model and generate more revenue from their networks,” said Mr. Zhang Haibo, President of Huawei Russia. “WiMAX will deliver a significant boost to the mobile Internet in Russia and Ukraine, allowing

19/8/09 12:59:30

ENTERPRISE

FISHING

IN DEEP WATER

The EU’s Common Fisheries Policy lies in tatters, as fears grow that fish stocks are reaching crisis point. Could a controversial system of fishery management be the saviour of an industry all at sea? Trevor Huggins reports ordes of jellyfish are floating aimlessly in a clear, sunlit sea and there is not a single fish in sight. The underwater camera shows a Mediterranean that has been transformed into a saltwater void, a damning indictment of greed and bureaucratic incompetence. This is not science fiction, but a haunting image from The End of the Line, a campaigning documentary about the plight of the world’s crumbling fish stocks and an industry in crisis. Fishing, particularly in Europe, is in deep trouble.

PHOTO: PHOTOLIBRARY

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In a humbling admission of the failure of its Common Fisheries Policy (CFP), a Green Paper from the European Commission said in April that a staggering 88% of the continent’s stocks were over-fished and that 30% were in danger of collapse. In the North Sea, 93% of all cod are being fished before they can breed. Meanwhile, breeding stocks of bluefin tuna, a predator of the jellyfish and a prime source for Japanese sushi, will collapse within

RAW DEAL Breeding stocks of bluefin tuna, a staple of sushi, may collapse in 3 years if action isn’t taken

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ENTERPRISE

three years without drastic action, according to the WWF. Faced with the crisis, the Commission is looking for answers and environmental groups are demanding action. A possible solution, though controversial, is beginning to emerge: Individual Transferable Quotas (ITQ). Already well-established in countries such as Australia, New Zealand and Iceland, an ITQ entitles a fisherman to catch a given annual quota, typically from a fishing ground within his country’s 200-nautical-mile limit, though it could extend into vast areas of open sea for migratory species. For shrimps, an ITQ might cover a few square miles, for fish it could be 100,000 square miles or more. The right is usually given indefinitely, or for a long period of time, while the ‘T’ in ITQ means he can sell all or part of his quota, either to retire or simply get out of the industry. The system has immediate implications; the main one being that the fisherman now has an asset whose market value is closely tied to the state of the fish stocks that swim beneath his boat. Suddenly, the poacher becomes gamekeeper. Armed with an ITQ, he now has a vested interest in laying nets that only catch mature fish, thereby allowing the stock to recover, and using his time, money and equipment more efficiently. Since ITQs are sold to fellow fishermen, the number of boats tends to reduce while the profits of those left tend to rise. It’s a sharp contrast with the blunt instrument of limiting fishing to certain times of the year and pitching boats against each other in an often dangerous race against the clock. Fridrik Arngrimsson, chief executive of the Federation of Icelandic Fishing Vessel Owners and an ITQ advocate, has seen both approaches at work. “ITQs have really made a difference compared to 20 or 30 years ago,” he says. “I was a fisherman when I was studying at university and it was just a race to get as much as possible in as short a time as possible. It was a waste of money and energy. Now the think-

FISHING

ITQs HAVE REALLY MADE A DIFFERENCE COMPARED TO 20 OR 30 YEARS AGO… IF YOU HAVE A SECURED RIGHT YOU ARE WILLING TO REDUCE THE FISHING EFFORT TO BUILD UP THE STOCK BECAUSE YOU WILL BENEFIT FROM IT WHEN IT RECOVERS FRIDRIK ARNGRIMSSON

ing has completely changed. Although quantity is important, we are focusing more on the quality and value of what is caught. And now the interest of the vessel owners and the management of fish stocks go hand in hand. If you have a secured right you are willing to reduce the fishing effort to build up the stock because you will benefit from it when it recovers. We have seen that in many cases in Icelandic fisheries.” Ad-hoc evidence that stocks recover has been around for some time. What helped get the ITQ bandwagon rolling was a detailed study co-authored in September 2008 by Professor Chris Costello of the University of California, Santa Barbara, which proved that stock collapse can be prevented by ITQs. Separate research by other scientists showed that stocks then recover and the bandwagon has gained further momentum thanks to EU Fisheries Commissioner Joe Borg, who wants to reform the CFP. Having launched a period of consultation until December, Borg cannot appear to pre-judge its outcome. However, reading between the lines of his speech to the German Bundestag two months after launching the Green Paper is not a taxing exercise. “An effective management system building on individual rights relies on giving fish-

PHOTO: PHOTOLIBRARY

NET ASSET Dolphinfish is one of the Mediterranean species covered by the CFP

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