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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

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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

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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

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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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T

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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ENTERPRISE

FISHING

PHOTO: CORBIS

CAUGHT IN THE CROSSFIRE A pilchard by-catch off the coast of Murcia, Spain

ermen a right to fish which is secure enough to enable them to optimise the use of their vessels and maximise their income,” he said. “[By making] these rights transferable, we could facilitate the long-term adjustment of the fleet and promote an economically selfreliant fishing fleet.” Removing any lingering doubt, he later added: “A number of Member States – Spain, Portugal, Estonia, the UK, Netherlands and Denmark – have ITQs in place for parts or all of their fleets.” Professor Ragnar Arnason of the University of Iceland, a leading expert on fisheries management systems, is even more categorical: “The virtually uniform success of ITQs in a wide range of fisheries all over the world shows there can no longer be any reasonable doubt about its economic efficiency.” Better still for its supporters, business and politics are not the only forces behind the ITQ cause. Environmental groups also see the benefits of a system that could prevent the oceans from emptying. Aaron McLoughlin, head of the WWF’s European Marine Programme, says: “We’re very sympathetic towards ITQs and we’d support them. Europe still has too many boats chasing too few fish... and this is a very effective way of getting the capacity of the fleet down to the right size.” However, his support comes with a caveat. “You could still have the right nominal size [of fleet] but if they weren’t doing the right thing you’d still have the stocks being fished out. You still need fishing nets which don’t catch juvenile cod and of course we wouldn’t support the destruction of coral forests undersea, which is still happening.” Yet if ITQs are seen by many as the way ahead, they are also bitterly opposed by a section of public and political opinion for being a privatisation of the sea. Opponents

ITQs ARE EFFECTIVELY THE PRIVATISATION OF FISHING RIGHTS, WHICH WE DO NOT SUPPORT RICHARD LOCHEAD, FISHERIES SECRETARY, SCOTLAND

also fear the effects on communities if ITQs are sold to boats from other, possibly far-flung ports and there has been anger too at socalled “armchair fishermen”, who lease out part or all of their quota in return for a share of the profits. Scotland’s fisheries secretary, Richard Lochhead, launched a frontal attack on the system as he unveiled a quota management review last year. “The measures I am outlining today will safeguard one of our national assets – our fish quota,” he said. “They will also mean that any prospect of ITQs being introduced is dead in the water. ITQs are effectively the privatisation of fishing rights, which we do not support.” Though such attacks clearly carry some weight, there are good reasons to think they will not carry the day. Costello is one of many experts who rolls with the punches. “Privatisation is a real issue that needs to be discussed and confronted,” he says “But there are different degrees to which you privatise... you can have caps on consolidations, so you don’t have any one entity owning lots of rights, and sunset clauses where every 10-20 years there’s a review of stewardship. The bottom line is the evidence and that certainly suggests that the more control the public sector has – and does not give rights or exclusivity to fishermen – the worse the thing performs.” He believes half of the world’s fish could be landed via some form of rights-based system within 10–15 years and that the key is choosing the right format. It’s a view shared by Arnason, who believes that for the more artisanal fisheries, with low technology, low individual catch rates and primitive landing facilities, the cost of enforcing ITQs is simply too great. For these fisheries, possibly up to half of the global total in terms of value, a form of community rights would be more appropriate. In fact, the success or failure of any rights-based system in saving the world’s fish stocks could come down to the policing and paperwork. Mike Park, a boat owner and chairman of the Scottish White Fish Producers Association, recalls a quota-busting practice known as ‘black’ fish landings, once rife in Scottish waters: “If you were better than your neighbour and caught more than him, you were faced with a dilemma – either you discard it or you land it illegally. Most fishermen chose the latter, which meant that during the 1990s and early 2000s anarchy prevailed.” The introduction of a Register of Buyers and Sellers, which forced fisherman and customer to fully document the catch, stopped the illegality “almost overnight.” Satellite tracking has also proved another effective way of making sure that boats stick to their areas, while fishermen’s knowledge of what each other is up to also has a big part to play in keeping everyone on side. “There’s a degree of peer pressure involved,” says Park. “We now have vessels reporting on other vessels who they think are using illegals gears, for example.” That said, the problem of policing the high seas beyond national 200-mile limits has yet to be solved. As the world’s fish stocks continue to dwindle, there is no doubt that action is needed and the time for simply wringing hands is over. Costello, like many experts, believe that while they cannot solve the problem alone, ITQs have a key role to play. “I think the biggest mistake would be to pretend that everything’s fine and to not do anything,” he said. “We’re heading downhill and we’re going to keep heading in that direction if we do nothing. The second biggest mistake would be to blindly apply only the ITQ tool and to say ‘Gee, they worked in New Zealand, let’s just replicate them everywhere... but I do think that rights-based reforms of many, or all fisheries around the world would dramatically improve their performance.” Clearly, most fishermen, politicians and scientists would welcome that; the challenge, though, is to make it happen.

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ADVERTISEMENT FEATURE ■ DOES MONEY GROW ON TREES? Ruukki Group specialises in industrial refining of certain natural resources and has two focus areas Minerals and Wood Processing

speciality ferrochrome, Ruukki completed a toll manufacturing agreement with the German company Elektrowerk Weisweiler in October 2008, and its South African subsidiary Mogale Alloys has a proven track record of successful operations and competitive cost structure.

Wood Processing: The Business Objectives

EVOLUTION OF RUUKKI GROUP The Finnish Ruukki Group is finding its future in minerals and wood processing...

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pecialising in the industrial refining of natural resources, Ruukki Group has recently focused its operations in two key areas: minerals and wood processing. With the abundant resources of the coniferous zone of Northern Finland, wood processing was always going to be a good bet for the company. The move into the minerals business came in October 2008, when Ruukki acquired a vertically integrated chrome ore and ferrochrome business. Now it has ongoing mining operations in Turkey, furnace capacity in Germany and sales and procurement operations in Malta. In May 2009, Ruukki further expanded its minerals business into South Africa and diversified its portfolio into charge chrome, silicomanganese and stainless steel alloy, acquiring the majority stake in Mogale Alloys, a company engaged in minerals smelting operations. The success of the Group’s strategy is indisputable. Within five years of its re-establishment in 1985, Ruukki was listed on the

Rukki CNBC Sep 09s.indd 49

Helsinki Stock Exchange. “Ruukki has evolved quickly, due to a number of strategic moves: from concentrating on minority stakes in ICT companies and majority stakes in industrial businesses to structuring the company around minerals and wood processing,” says Alwyn Smit, Chief Executive Officer of Ruukki since September 2008.

RUUKKI GROUP AIMS TO INCREASE ITS SHAREHOLDER VALUE THROUGH RESPONSIBLE LONG-TERM OPERATIONS

Minerals: The Business Objectives The company’s Turkish subsidiary, Türk Maadin Sirketi, has a long history in mining and chrome ore enrichment, operating in both surface and underground chrome ore mines. To acquire services in the production and processing of

Ruukki’s wood processing business is divided into the sawmill business, including pallet manufacturing, and house-building. The sawmill business concentrates on processing softwood timber to produce a variety of sawn goods and on the production of wooden components. The company’s sawmills utilise pine and spruce from northern forests. “Ruukki has the tradition of servicing its customers with long-term partnerships. A flexible operational model combined with the ability to provide tailored products gives us a competitive edge,” says Smit. The house-building business manufactures and delivers ready-to-live-in detached wooden houses to predominantly Finnish families. The operational model is based on component deliveries and the prefabrication of house wall components is centralised at the Group’s production facility, while the completion of the houses takes place on the construction site.

Responsible Aptitude In all it does, Ruukki Group respects the aptitude of its employees, observes environmental standards, stands by its social responsibilities and acts in observance with the guidelines of corporate governance. The quality and safety of the company’s products and services are under continuous examination. Ruukki Group aims to increase its shareholder value through responsible long-term operations. “My intention is to make Ruukki one of the top 25 companies in the NASDAQ OMX. Even though we are currently facing very challenging times in the global economy, and especially in the commodities markets, I remain positive about our long-term outlook and our ability to deliver positive results,” says Alwyn Smit. www.ruukkigroup.fi

19/8/09 12:10:57

SMARTPHONES

LAST THROW OF THE DICE

ROB HUNTER

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

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PALM

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triding onto a Las Vegas stage in January wearing a milewide smile and a bright orange shirt, Matías Duarte, announced he would “not do a magic show”. 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 vanish.

Duarte – then Palm’s senior director of human experience and user experience and now the company’s vice president of design – unveiled the Palm Pre, a touchscreen smartphone, he explained, that runs a new interface called webOS. It supported multi-tasking (where you can run multiple apps at once) and aggregated social networking content (for example, combining Facebook and Gmail contacts). Since the Palm Pre’s launch in June it has sold 300,000 units, according to Edward Snyder, an analyst at Charter Equity Research, in a little under one month. That’s approaching Apple-like hysteria – indeed, the Wall Street Journal calls it the strongest rival to the Apple iPhone – and is helping to revive both Palm, which was on the brink of collapse, and Sprint, third largest wireless telecoms network in the US, which was wilting due to poor customer service and lack of a remarkable smartphone. In recent years, the smartphone market has cannibalised the PC industry, leading to record sales – the iPhone 3G has sold almost 50 million units, and has 50,000 apps available. The Pre promises to put a computer in your pocket. “We chose not to take the complexity of the desktop PC with all it’s resizable windows and cram it into a phone,” says Duarte, in an exclusive interview with CNBC Business. “Nor did we believe that, because phones are small, you somehow want less of your internet life.” In designing the Pre, Duarte says the mission was to start over with a smartphone OS. Palm used a series of “mood boards” erected in each workspace. They posted a visual collage of nature photography, high-design furniture, and other stylish imagery. As they designed webOS, they would print out the screen and place it next to these photographs. If the screen design did not measure up aesthetically, they would start over. So far, the design

has spurred vast media attention – and led to a limited inventory. Partnering with Sprint, Palm intentionally kept inventory low instead of manufacturing too many devices. “Keeping up with demand is our top current challenge,” says Sprint CEO Dan Hesse. “We have been able to manage the wait-time to about a week. Palm is producing Pres as fast as they can. We have also done minimal advertising so far, and we hope our new advertising will help keep the momentum going.” Palm, Inc., is based in Sunnyvale, California, in the heart of Silicon Valley. The company invented not only the smartphone category almost autonomously, but the pocket organiser itself, in the mid-90s.

WE DID NOT BELIEVE THAT, BECAUSE PHONES ARE SMALL, YOU SOMEHOW WANT LESS OF YOUR INTERNET LIFE MATÍAS DUARTE

In 2007 and 2008, the company’s market share eroded as Apple emerged as the new kingpin. Sales of the popular Palm Treo stalled, and Palm’s stock price plummeted below $3 a share. (Currently, Palm is trading at about $15 (€10) a share, and rising steadily.) The company needed a rebound. In 2007, Palm hired Jon Rubinstein, who worked on the original iPod at Apple and is now Palm’s CEO. (During the transition, Rubinstein has turned down all media interviews.) With new funding from Elevation Partners and a smart-kid-on-theblock mentality, Palm went to work. The Pre is now the tech darling of the year, only partially obfuscated by the latest iPhone 3GS. SEPTEMBER 2009 I CNBC BUSINESS 27

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SMARTPHONES

PALM

PHOTOS: GETTY

ON HOLD Customers line up at a Sprint store in Washington, DC, on 6 June to buy the new Palm Pre smartphone

“We view the launch as a success due to overwhelmingly positive feedback from Sprint store managers and consumers for the Pre,” says Michael Walkley, managing director and senior research analyst at Minneapolis-based Piper Jaffray. “We estimate about 600,000 Palm Pres will sell by the end of August.” Yet, for those following Palm closely, there are lingering questions: can they make a full rebound? Can the Pre actually save Palm? Most analysts agree that the Pre is a major success. At issue is whether the company can build more momentum, release additional products based on the webOS platform, and capture market share away from Apple and BlackBerry. Duarte is not a magician, but the company does need some magic. “The Pre needs to have quick sales that lead to quick profits,” says Ilya Grozovsky, equity research analyst at New York investment bank Morgan Joseph & Co. “The Pre brought Palm back from the abyss but it remains to be seen if they have the financial ability to endure.” To accomplish a complete turnaround, and reduce a heavy debt load – one that comes due in a few years – most leading analysts agree that Palm needs to diversify, and quickly. “The issue for Palm isn’t necessarily how successful the Pre is – which we think will likely be their most successful phone to date – but instead how well received the core webOS is,” says James E Faucette, senior research analyst for wireless equipment at Portland-based Pacific Crest Securities (PCS). “Increasing the number of SKU’s [stock-keeping units] based on the webOS has always been part of the roadmap and is of vital importance.”

For now, Palm is focusing entirely on the Pre. The marketing spend has been minimal, due to the limited supply. Ads have just started to appear, featuring a young woman surrounded by mystical warriors, with closeups of the webOS and finger-touch control of the interface – the major selling points. “We believe total Pre marketing spend will be over $100m (€70m), but that the majority of this will be spent in the back half of this year and into 2010 to manage demand given current capacity constraints for the product,” says Deepak Sitaraman, a financial analyst with New York-based Credit Suisse Group.

THE PRE BROUGHT PALM BACK FROM THE ABYSS BUT IT REMAINS TO BE SEEN IF THEY HAVE THE FINANCIAL ABILITY TO ENDURE ILYA GROZOVSKY

Spending more on marketing is risky business, however. The company has an extremnely high debt-to-earnings ratio. According to Matt Thornton, an analyst with Avian Securities in Boston, the Palm debt load comes due in 2014. To avoid financial trouble, the company needs more than just a single popular smartphone. Tsvetan Kintisheff, a financial analyst based in Sofia, Bulgaria, says he doubts the company will seek additional funding and that the solution is to raise earnings with new products and thereby create more cash flow.

“We expect Palm to become cash flow positive in the August quarter – about $30m [€20.8m] – and continue to generate positive cash flows going forward,” says Sitaraman. “We expect the company to use the cash generated from operations to pay down debt [currently €275m] over the immediate term.” Another potential life-saver will be a European launch. In July, Palm announced a Europe-wide exclusivity contract with Spain’s Telefonica, whose British subsidiary will sell the phone to the pivotal UK market. No pricing information has been given, only a promise to be on sale before Christmas. Even with the momentum, Jim Suva, a director at Citi Investment Research, rates Palm as a “hold”, citing that the Palm exclusivity at Sprint will likely last only through 2009. “The Pre is a complex device and often cell phone launches need updates and improvements,” he says. Sitaraman sees a brighter future: “We see pro forma revenue growing from $1.1bn [€760m] to $2.1bn [€1.45bn] over the next two calendar years. Based on our proprietary analysis, we believe new products will drive meaningful average selling prices and gross margin accretion, resulting in calendar 2010 operating margin of 10.2% versus -14.0% in 2008. Our view is that additional liquidity will not be needed in the near term.” It’s also possible that Palm could hold on for the ride: the Pre could gain more ground and become the tech story of the year. “The Pre is the first webOS product and we believe it is a compelling enough of a product to return Palm on a path to profitability,” says Walkley.

28 CNBC BUSINESS I SEPTEMBER 2009

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SOUTH AFRICA

CONTINENTAL SHIFT

PHOTOS: PHOTOLIBRARY, CORBIS

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

GOING UP IN THE WORLD Johannesburg is a global city and the economic centre of South Africa

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GLOBAL GROWTH

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

T

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

ime was, not long ago, when South Africa was a pariah, isolated from the world and cut off from international sport, theatre, music and business. Even the Boeing 747s of its national airline were banned from African airspace and had to skirt the continent’s coastline on their long journeys north.

Fifteen years into its new era of democracy, it is back in the fold of the international community. Singers and actors for whom visiting South Africa could have meant career suicide during the apartheid era flock to the country. The 2010 FIFA World Cup is eagerly awaited. And later this month Johannesburg is hosting a world summit on arts and culture, which could as well have been held in Munich, Vienna or Paris. The same is true for the country’s role in the wider business world. Multinational investors are back; but more and more, South Africa is becoming a net exporter of its own companies. This trend has not been halted by the current recession. Although the economy is forecast to contract by 1.8% in 2009, it is still expected to expand by 2.1% next year. Africa’s largest economy has been protected from the worst effects of the global recession by stringent banking regulations and exchange controls, leaving it well placed to make further inroads into international markets. According to African Business magazine, 15 out of the top 16 companies on the continent are South African, as are 54 out of the top 90.

And the companies in the former apartheid state are flexing their muscles and finding new markets in Africa and across the world. “South Africa is probably the leading economy in the world,” says Dr Martyn Dav-

THE ABILITY OF SOUTH AFRICAN BUSINESSES TO ADAPT TO A CHALLENGING ENVIRONMENT IS EXTREMELY GOOD DR MARTYN DAVIES

ies, chief executive of Frontier Advisory, a research and strategy company working in frontier and emerging markets and director of the Centre for Chinese Studies at Stellenbosch University. “No other country of our size and economic ranking has produced as many globally successful Fortune 500 companies as we have. The only comparable country is South Korea. There is a phenomenal ability for South African companies to grow and go global from South Africa. No other compara-

bly sized emerging market has been able to succeed in doing that; not even the Chinese, not even the Indians.” Many South African companies, particularly when the post-apartheid era dawned in 1994, turned their attention first to Africa. “We see Africa as a business opportunity. Sure it’s risky, sure it’s tough, but we have a saying: Africa’s not for sissies,” says Davies. “And the ability of the South African businesses to adapt to a challenging environment in Africa is extremely good, probably better than anyone else.” Current success stories include Standard Bank, presently in 17 African countries and in a further 19 worldwide; SAB Miller, which dominates the continent’s beer brewing industry and is number two brewer in the world; Naspers, South Africa’s largest media company; Shoprite Holdings, Africa’s largest food retailer; fellow food retailer Nasmart; mobile phone operators MTN and Vodacom; and ABSA Bank. All are seeing annual growth of around 40% year-on-year despite the economic crisis, a phenomenon Davies attributes to the rise of the African consumer, which, he says, “used to be an oxymoron; now it’s a reality”. Jacko Maree, chief executive of Standard Bank, points out that South Africa represents 0.6% of the world’s GDP, yet there have been times when the market capitalisation of the Johannesburg Stock Exchange was in the top 10 in the world; it now ranks at between 13 and 14. South Africa, he says, has “always SEPTEMBER 2009 I CNBC BUSINESS 31

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SOUTH AFRICA

had a sophisticated market system and has punched above its weight”. Standard Bank expanded first into Africa, including Nigeria, Uganda and Botswana, and then turned its attention to emerging markets worldwide, including China. “It was the cherry on the cake when the biggest bank in the world, ICBC, decided to take a strategic 20% investment in our bank,” says Maree. It was the biggest investment ever taken by a Chinese bank outside China and signalled clearly that China was interested in Africa. Standard Bank has also announced a strategic partnership with Troika Dialog, the largest independent investment bank in Russia. One of South Africa’s most successful companies is Media24, the print media arm of its oldest publisher Naspers, whose best-known newspaper is the once infamous national daily Die Burger, mouthpiece of the apartheid regime. Naspers has reinvented itself and now, in addition to the print business, has a pay TV arm and wide-ranging global internet interests. Like the Standard Bank, it has bought into the world’s biggest market, via a stake in Tencent, China’s largest instant messaging platform, which has 230 million users. It has also acquired Tradus, the Eastern European equivalent of the online auction company eBay. Francois Groepe, chief executive of Media24, says there are two reasons to expand into Africa and worldwide: “Much of the growth will be in developing countries, where the underlying economic growth is

GLOBAL GROWTH

typically higher than the rest of the world.” Equally important, he says, is that advertising spend as a percentage of GDP is often lower in developing countries: “Over time, one would assume that the gap would narrow; therefore we find the developing countries very attractive – the markets we focus on are African countries, sub-Saharan Africa, the BRIC countries – Brazil, India, Russia, China – where we focus on not only the print media but also on the technological side.” So is South Africa especially entrepreneurial? “South African business, because of the sanctions era, had to become very inventive,”

THERE IS A CANDO ATTITUDE, PARTICULARLY WITH ROLLING OUT INTO AFRICA, THAT STANDS US IN GOOD STEAD FRANCOIS GROEPE

says Groepe. “There is a can-do attitude, particularly with rolling out into Africa, that stands us in good stead.” And there’s another benefit, he adds: “We are seen as far less of a threat. We don’t come with the geopolitical baggage that other players would come with.” The initial move abroad for South African companies came after sanctions ended and was born out of a need to diversify currency

risk. Moving money into Africa was easier than abroad as it was encouraged by the Reserve Bank. Most companies pushed into several countries, working at higher operating margins in order to balance the operational and currency risks. Retail expansion across Africa has been particularly successful. As Investec portfolio manager Rob Forsyth says: “The African continent is very brand loyal; with low disposable income, you need a high degree of certainty that the product will deliver what it says.” It’s not that South Africa has been without its rivals. China and India have swept into Africa; and now homegrown African companies are taking back some market share. Nevertheless, “the fact that South Africa’s GDP, at an estimated $239bn (€168bn), is nearly 40 times that of the average African country makes it no surprise that South Africa has become one of the biggest investors on the continent in a decade,” says African business specialist Dianna Games. Meanwhile, at home, despite the prevailing economic climate – which has led to some agitation spilling onto the streets – the planning minister Trevor Manuel recently reaffirmed that the government’s five-year infrastructure investment programme announced in 2006 is still on target to halve poverty and unemployment by 2014. Manuel, formerly the ANC government’s popular finance minister, said the far-reaching programme would help to pull the country out of its first recession in 17 years. THE HIGH LIFE SA distributors of SABMiller products are benefitting from the firm’s #2 global position

SETTING THE STANDARD From its Johannesburg head office Standard Bank has expanded across the continent and internationally 32 CNBC BUSINESS I SEPTEMBER 2009

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LET’S

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INNOVATION

RECYCLING

BAGS OF OPPORTUNITY

From lunchboxes to shower curtains, TerraCycle’s waste-to-working-product business model is good for the environment, its founder, big business, and the individual recycler too. Josephine Moulds reports om Szaky’s eureka moment appears to have emerged through a haze of dope smoke. The idea for his $40m (€28m) company, TerraCycle, was apparently inspired by his friends’ success in growing marijuana plants. Carefully distancing himself from the scene, Szaky explains that while he was off studying in the US, his friends back in Canada were experimenting with growing their own dope.

T

“Serendipitously, they started feeding worm poop to their plants and they started doing very well. It was them having this great success because of worm poop, which was made from garbage, that got me thinking about this whole concept of making products from waste.” And so the company’s first product was born: a wonderfully organic and effective plant food. In a genius stroke of marketing, Szaky packaged the liquidised worm castings (to use the technical term) in recycled fizzy drink bottles of varying shapes, covered by the TerraCycle logo. By all accounts Szaky could have charged a premium for this achingly ethical product. But he resisted the temptation and undercut his rivals. After all, the raw materials were virtually free. Armed with this attractive, if unusual, product, the then 22-year-old Szaky went straight to some of the largest retailers in the US to see if they would stock it. One of the biggest challenges, he says, was getting them to meet him. “We called 10 times a day for 30 days straight. That persistence helped.” Once they were in, the Princeton dropout

ECO WARRIOR Tom Szaky founded TerraCycle while still at university

clearly impressed the suits, and both WalMart and Home Depot started stocking the product throughout Canada and the US. Plant food was just the start. TerraCycle’s product range has now stretched to kites made out of “upcycled” biscuit packets, lunchboxes from juice cartons, and shower curtains from coffee bags, among many other items.

Raw materials are better than free as big brands actually pay TerraCycle to help them deal with their waste. From this, Terracycle pays consumers $0.02 (€0.01) per item of rubbish they send in, plus post and packaging. Szaky says TerraCycle will earn around $6m (€4.2m) this year simply by collecting the materials it needs to make its products. SEPTEMBER 2009 I CNBC BUSINESS 35

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INNOVATION

In August, TerraCycle announced a deal to upcycle waste packaging from confectionary giant Mars Inc’s US operations into products ranging from cell-phone holders and laptop sleeves to messenger bags. Mars will also sponsor TerraCycle Brigade programmes, through which organisations can raise money by collecting used packaging from participating brands and sending it to TerraCycle. Szaky says: “Our experience with companies similar to Mars shows it’s possible to reduce packaging waste through partnerships such as this by upwards of 3,000 tons a year.” TerraCycle has also doubled its manufacturing facility staff to almost 25 people to handle the new influx of materials, while Mars says it intends to expand the collection programme and the sale of TerraCycle products overseas very quickly. In the US, the company already has five million people collecting rubbish every day. “It’s the average people that do it, that’s what I like about it,” says Szaky. “I’m sure there’s the eco-hardcore people too, but there’s just a lot of people who don’t like throwing things out sending us their trash.” In September TerraCycle is launching in the UK, Mexico, Brazil and Canada and is in talks with potential corporate partners. In the UK, the company has already struck a 12month contract with Kraft Foods, one of its partners in the US. Later, Szaky hopes to start selling its plant food and other products in major retailers such as Asda, owned by their old friends at Wal-Mart. Business is booming, despite the pain most retailers are going through. Sales are forecast to top $12m (€8.4m) this year, and a staggering $40m (€28m) in 2010. Szaky expects to record the company’s first profit this year.

HOW REFRESHING TerraCycle produces a range of bags from recycled drinks containers

RECYCLING

SELLING POINT Wal-Mart was one of the first large companies to stock TerraCycle plant food

I THINK WE CAN STILL MAINTAIN A 100% GROWTH RATE FOR A WHILE. TOM SZAKY

Some retailers have cut their orders, he says, but the crunch has not been a major issue. “I think we can still maintain a 100% growth rate for a while. I would like to maintain or beat that over the next few years,” he adds, with the cocky assurance of a young man already worth $3m (€2m). Szaky started his first business at the age of

14, building websites when the internet was first starting. He and some friends earned up to $20,000 a year. Now 27, his aim is to build TerraCycle into a billion-dollar company. “In five years time we’ll be somewhere along the path,” he laughs. “Maybe 10,” he adds seriously. But Szaky is contradictory. Unlike the Google founders, who were determined to remain independent and build their company to the size it is today, Szaky says he would happily sell up. Perhaps unsurprisingly, he has already had plenty of offers, specifically from investment groups. But will the company’s ethical stance survive such rapid growth, or even a takeover by faceless investors? Szaky believes the company culture is so extreme it will be easy to maintain. TerraCycle does not only have gleaming green credentials; it also takes care over its social impact. The company set up its factory in one of the poorest cities in the US – Trenton, New Jersey. The location was picked for commercial reasons, with the added benefit that it created some desperately needed jobs. Partly as a result of this, TerraCycle has chosen not to check the criminal records of its employees. Szaky explains: “It’s hard to grow up in this city without having a criminal background, that’s just the nature of living in a very poor city.” Nor does the company impose random drug tests on employees. Whether that is a question of human rights, or for fear of stunting their employees’ creative juices is anyone’s guess.

36 CNBC BUSINESS I SEPTEMBER 2009

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What we do better Region Zealand and all its municipalities are committed to contribute to the necessary action for climate change – and have formulated a joint climate strategy. Through this commitment it is our goal to be regional pioneers creating innovative steps towards development and solutions for climate change. Region Zealand works hard at integrating capacity building into the trial and improvement of practical solutions within eco-innovation and sustainable energy; this gives us the double advantage of producing solutions to our regional climate changes and at the same time encouraging a signi¿cant export potential.

Cleantech is one of Region Zealand’s most important eco-industrial initiatives. Today we already have a variety of testing ¿elds for sustainable energy. Cleantech industries are one of the region’s major prospect projects –there is already a large potential in cleantech clusters; a potential that will be developed further in the future together with The Capital Region of Denmark. Come and visit us at The Bright Green Exhibition in Copenhagen during the COP 15. We are – in more ways than one – on the road to Copenhagen. Find out more at www.regionsjaelland.dk and www.vfsj.dk

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HOTELS

GOING PLACES Dubai’s Jumeriah Group has 14 hotels under construction, including this property in Guangzhou, China

38 CNBC BUSINESS I SEPTEMBER 2009

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GLOBAL PICTURE

CHAIN REACTION

Rates and occupancy are shrinking for the hotel industry. But then so is the planet, reports Boyd Farrow otels collectively earn more from adult pay-per-view movies than they do from mini-bars, laundry and room service combined. Of course, if you believe hotel guests, nobody has ever watched one. Anyone trying to make sense of the hospitality sector right now faces an equally vexing variance: hotels admit that occupancies in general have tanked — a 30% downturn say insiders — and yet talk to the manager of any individual property and they’re doing just fine, thank you. It’s always the other guy who has just lost the 3,000 rooms a year from Daimler or that big

H

Siemens launch. Similarly, despite the inboxclogging array of “seasonal offers”, weekend deals, upgrades and extras, many hotels resolutely deny they are slashing tariffs. Listen to the analysts though and things sound far more desperate. Jason Harris, director for hotel relations at BCD Travel, says rates could tumble by as much as 30% by 2010, compared with 2008, in some key cities, while Patrick Ford, president of Lodging Econometrics (LE), says: “It could be the middle of the next decade until 2008 levels of occupancy are reached again.” And this assumes that the general economic conditions — not to mention the prevailing attitudes towards business travel — will embolden firms to pump up their punctured travel budgets. Christopher Hartley, CEO of Global Hotel Alliance, a marketing umbrella for several independent brands, sighs: “Our big worry is that once the recession is over, the pricing will not recover.” This leads to an even bigger issue: the sheer number of hotels in the pipeline, a consequence of the easy credit and giddy development environment of the last few years. In 2007 — when private equity group Blackstone orchestrated a leveraged buy-out of Hilton for $26bn — global hotel transactions topped $120bn. Hotel giants queued up to sell properties to real estate companies in return for management deals, which gave them annual fees and a slice of revenues. Property developers could not raise funds fast enough to market multi-use builds — shopping malls, golf courses, etc — topped with a reassuring hotel sign. The hospitality giants’ collateral was their lifestyle brands. Now the house of cards has collapsed. Jones Lang LaSalle reckons there will be a mere $12bn (€8.3bn) worth of hotel transactions this year, while Ford says construction has halted on an

unprecedented number of ventures because “the capacity to borrow has diminished”. He says the industry is in the middle of a “topping out formation”. Nevertheless, it is as hard for a hotel giant to deviate from its course as it is a super tanker. Frits van Paasschen, Starwood’s chief executive, for example, says this year the company will open 80 to 100 hotels, projects that were well advanced by the time the credit markets imploded. LE predicts that 2,774 hotels will still open this year — 41% in the US — and a further 2,428 are scheduled to open in 2010.

EVEN THOUGH THE MARKET WON’T RETURN FOR AT LEAST TWO YEARS, IT IS SUICIDE NOT TO EXPAND. PUNEET CHHATWAL

Yet the industry is planning way beyond the colour of next year’s bed linens. In May, Four Seasons Hotels veteran CEO Isadore Sharp confirmed the company would double the number of its hotels from 83 within the next 10 years and its employees from 40,000 to 80,000. Starwood, whose portfolio includes St. Regis, Le Méridien and Sheraton, insists it is on track to increase its global portfolio by 40% over the next five years, with Simon Turner, global development president, cheerfully talking about “building, opening, converting, renovating and innovating for the recovery and beyond”. Marriott, which manages the Ritz Carlton and Renaissance brands, plans to open 130 hotels in the next four years outside the US — half in China, India and the UAE. Mar-

riot chief operating officer Arne Sorenson roused an industry conference in Berlin in March by whooping: “Within 10 years, one of us will have more than one million rooms in our system!” So why, when cancellations and postponements rose for a fifth consecutive quarter — and with rack rates looking as quaint as chamber pots and cage elevators — are the hotel chains still in such an expansionist mode? Well, firstly, markets are still opening up. The second largest hotel pipeline catchment (behind the US) is the Asia-Pacific region, where 4,918 skyward projects account for 20% of the world’s hotels in development. This region includes three of the ten largest country pipelines: China, India and Thailand. Even though the increase in the number of rooms in China is down to large-sized hotels preparing for Expo 2010 in Shanghai, the country is projected to generate more than 100 million trips a year by 2020. France’s Accor plans to double the number of hotels under its management in China in the next few years, mainly through its mid-market brands and in second- and third-tier cities. Robert Murray, senior vice president for Accor’s China operations, says the group hopes to manage about 180 hotels and 40,000 rooms in China by 2011. There is also a surge of large hotels set to open in Europe, mainly in Russia and the former CIS states, accounting for 10% of worldwide projects and rooms. Then there is Africa, particularly North Africa, and pockets of the Middle East. The second reason is that with one billion people entering the middle classes in the global economy, the chains simply cannot afford to slow down. Take Rezidor, the Brussels-headquartered behemoth, whose portfolio runs from core brand Radisson Blu to the embryonic Missoni boutique chain and which is possibly one year away from overtaking Hilton as the biggest hotel company (by rooms) in Europe. The company’s chief development officer Puneet Chhatwal, says: “Even though the market won’t return for at least two years, it is suicide not to expand. In the midmarket, for example, you cannot stop at 30 properties. You need 300 to become a serious brand — to enjoy economies of scale and be able to pass these benefits to customers.” Chhatwal says that 55% of Rezidor’s future growth will come from Russia and the CIS states, the Middle East and Africa. In the last two years SEPTEMBER 2009 I CNBC BUSINESS 39

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HOTELS

Rezidor has tripled its African portfolio, adding 18 hotels in countries such as Egypt, Ethiopia, Kenya, Libya, Morocco, Mozambique, Senegal and South Africa. This represents an investment in new hotels in Africa of around $800m (€555m), excluding the second Missoni, which will open in Cape Town in 2010 — just in time for the FIFA World Cup tournament. Rezidor’s global strategy is fairly typical for the industry: it aims to brand and manage 75% of its hotels, to franchise a further 15% and to own outright the remaining 10%, some of which may come by picking up “distressed assets in Europe”. The opportunity to scavenge is the third reason the hotel giants are so gung-ho. Every single group believes the recession will bring further consolidation — a euphemism for bankruptcies — and they all believe they can be the ones to profit from the woes of independent operators and smaller chains. As Oliver Bonke, vice president sales and marketing for Starwood, shrugs: “Okay, it doesn’t look good for us if a developer goes under and there is a half-finished building somewhere with a huge Sheraton sign hanging on it. On the other hand, we are well capitalised so the economic downturn could enable us to buy a smaller chain on the cheap.” But the established global players will increasingly find rivals in the form of “local players” who are also investing in the future. Take India’s The Leela Palaces, Hotels and Resorts, which is frenziedly planning mid-market hotels in Chennai, New Delhi, Agra, Hyderabad and Pune, to capitalise on India’s growing number of high-end business and leisure travellers. Leela president Onno Poortier, says his company has the edge over the Western chains, such as France’s Accor, planning a major assault on the Indian market, because of the in-depth knowledge of Indian hospitality. He

GLOBAL PICTURE

says: “We are creating the ‘essence of India’ in our hotels, i.e. the soft touch of being in India.” Poortier says, once the Leela Brand is firmly established in India, “we might consider overseas management contracts”. Already expanding westward is compatriot Taj Hotels Resorts and Palaces, aggressively adding to the 64 hotels in 45 cities throughout India and the 16 international hotels it has in the Maldives, Mauritius, Malaysia, Australia, the UK, the US, Bhutan, Sri Lanka, Africa and the Middle East. The Tata company is now spending $65m (€45m) on a hotel in the business district of Cape Town, the first of a number of hotels for South Africa, with others planned in Johannesburg and Durban.

WE ARE WELL CAPITALISED SO THE ECONOMIC DOWNTURN COULD ENABLE US TO BUY A SMALLER CHAIN ON THE CHEAP OLIVER BONKE

Several Asian players have big plans, including Hong Kong-headquartered group Langham Hotels International, which has just opened the Yangtze Boutique, Shanghai, and Swire Hotels, which is soon opening the 117-room Upper House in Hong Kong and plans to open East, a 345-room property there in January, 2010. Also planned for next year is Swire Properties’ Taikoo Hui, Guangzhou, a mixed-use property project that includes a hotel project for the high-end Hong Kong-based Mandarin Oriental Group. Mandarin Oriental is ramping up its European and US presence, opening in Las Vegas in

December and in Paris in 2010, a destination that Singapore-based Shangri-La Hotels and Resorts has settled on for its first European hotel foray before docking at London Bridge. According to Christoph Mares, Mandarin Oriental’s operations director, the Asian company is also looking at opportunities in Abu Dhabi and Oman. Mares says that spas are regarded as a “key competence” of Asian hospitality and one which puts Mandarin Oriental in a strong position in the West. Another ambitious hotel company is Dubai’s Jumeirah Group, which has 14 hotels under construction and says it is on course to hit a target of 60 hotels under management by 2012. As well as four management agreements in China, Jumeirah also quietly struck deals in the US Virgin Islands, Costa Rica and Argentina. Latin America on the whole, meanwhile, is benefitting from the general undersupply of hotels. Barcelona’s Meridia Capital has been discreetly snapping up hotels in underexploited cities such as Santiago, Chile, and it is also targeting São Paulo and Rio de Janeiro. Bogota, Colombiabased GHL Grupo Hoteles plans to open seven hotels in Colombia, Chile and Peru in the next year. In addition, Brazilian giant Atlantica Hotels began building three new projects in January and claims it is still on target to build 10 properties a year. Brazil accounts for a third of the Latin America pipeline, with 193 projects comprising 32,819 rooms as of year-end 2008, LE reports. Meanwhile, following a huge restructuring, South Africa’s Protea — which owns African Pride, the outfit with luxury properties in South Africa, Kenya and Namibia — promises openings throughout the region over the next few years. Rates and occupancy may be shrinking right now for the hotel industry, but the rewards, and the competition, are set to explode.

ON THE UP Swire Hotel’s Upper House in Hong Kong is opening this autumn

WESTERN PROMISE India’s Tata-owned Taj Hotels has expanded abroad, such as its Vivanta brand in the Maldives

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HOTELS

KEYS TO SUCCESS

Technology and a new generation of cost-conscious business travellers are forcing hotels to rethink how to keep the customer satisfied. Lucy Fitzgeorge-Parker reports on the latest trends in the industry

THE ACE, NEW YORK

Free rooms

RATES OF INTEREST With the recession eating away at the hospitality industry, there are reports of hotels cutting down on freebies such as toiletries, but most are offering anything they can to win business. It is hard to think of an international chain that hasn’t done some variation on the free nights theme. Luxury brands such as Four Seasons and Dorchester Collection have generally gone for the three-for-two model, in the hope of keeping customers on the premises and so spending on those high-revenue extras, while names such as InterContinental have been wooing business travellers with the chance to earn free weekend stays when they’re on the road. Free breakfasts, Wi-Fi and laundry services have also been wheeled out in an attempt to attract customers, as has the promise of the occasional nixed bar bill or some other ‘random act of generosity’ — an idea espoused by the likes of Hyatt and Starwood. The common theme is that, in order to get the benefits, guests have to sign up to a loyalty programme — the hotels’ way of salvaging something from the free-for-all. Of course, although the story from the industry is that these offers are bridging the gap and enabling them to cling on to their headline rates, the reality is a bit different. Quoted prices may stay the same, but those all-important corporate customers are now driving very hard bargains, with many attempting to renegotiate, or lock in new long-term, contracts. For most hotels, the pain is likely to continue for a long time to come.

HYATT REGENCY PARIS

THE WESTIN ATHENS ASTIR

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INDUSTRY TRENDS

HOMES FROM HOME Today’s generation of road warriors aren’t impressed by fussy flunkies and overpriced minibars — they want independence and a decentsized can of Coke. What they want, in fact, is something which looks more like home, which is where select-service hotels come in. With these, you get a bit more space, a kitchenette with a fridge and microwave, and a communal laundry room. The concept has been around in the US for

decades, but 2008 saw a rush by the chains to take it global. Starwood launched the Aloft brand in the US last year (it already has 31 properties in North America and one in Beijing, and plans for a further 100 in the next two years), and its eco-friendly select-service sibling Element, which it plans to roll out to the Middle East and Asia. Meanwhile, Hilton has brought its Garden Inn offering to the UK and Italy, and InterContinental launched its Staybridge Suites in Liverpool and Cairo, and will add properties in Newcastle, Abu Dhabi and St Petersburg by the year-end. Strictly speaking, Staybridge Suites comes in the extended-stay category — aimed at relocators and project workers — and would have been traditionally classed with serviced apartments. But the current enthusiasm for freedom and space has seen an upsurge in demand for these properties for shorter stays. “It’s a different age of travellers: they’re more independent, they provide their own entertainment and work via their laptop and iPhone. All they want is somewhere to sleep and eat,” says Jo Layton of global serviced apartment provider BridgeStreet. “And if you’re in a hotel and order room service, it may come on a beautiful trolley but you still have to

ONLINE AND ON-MESSAGE For hotels, social networking offers the promise of free advertising, targeted marketing and instant customer feedback, and they’re desperate for a piece of the action. Search for any brand on Twitter or Facebook, and chances are you’ll find a friends’ group or a staff member tweeting about the delights of their hotel — join up, or tweet back, and you’ve made an invaluable connection. So eager are hotels to build their online communities they’re offering a range of benefits for early adopters, from discounts to treats.“If a guest tweets

ALOFT, CHARLESTON

eat it on the side of the bed.” Even traditional hotels are taking note — the gargantuan Park Plaza Westminster Bridge in London, due to open early next year, will have microwaves in each of its 1,021 rooms. Rooms in New York’s hippest hotel, The Ace, contain full-size Smeg fridges.

that they’ve had a really hard day and they’re looking forward to a cold beer, we might ‘surprise and delight’ them with a free beer when they get to the hotel,” says Daniel Kerzner, Starwood’s director of marketing for north-west Europe. Social networks can also take the hassle out of complaining. It’s no longer a question of asking to see the manager or emailing when you get home — if you have a lousy experience at reception and tweet about it on your phone in the elevator, you could get an apology by the time you reached your room. According to Kerzner, in a few years’ time social networking will be the driver of customer relations: “I predict we’ll have people dedicated to monitoring the networks and RSS feeds.” The rise of the iPhone has also switched hotels on to the power of YouTube. Once, travellers would share their experiences on TripAdvisor; today, they’re uploading videos showing every detail of their rooms, down to broken shower fittings and hairs in the basin. Now hotels are countering with their own YouTube creations; Starwood even has a TV channel on the site for its Westin brand. Of course, it was only a matter of time before hotels harnessed the power of the iPhone more directly: in August, Hilton launched an app that enables guests to monitor bookings, profiles and HHonors status, as well as linking in to the hotel’s GPS. With iPhones gaining market share, expect to see other chains following suit. SEPTEMBER 2009 I CNBC BUSINESS 43

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HOTELS

INDUSTRY TRENDS

CITIZENM, AMSTERDAM

CONNECTING WITH CUSTOMERS Free Wi-Fi is still the business traveller’s holy grail. High-end hotels, in particular, are holding out, trusting that guests who are already paying through the nose for rooms will keep ponying up €20 a day for connectivity. But these charges are getting harder to justify. Chains huff that free internet access in guest rooms would mean raising rates. They claim that it’s cost-effective in the US, where they deal with only one network provider, but not in Europe. But given that they’ve starting offering it in selected brands — including Hilton’s Garden Inn, Starwood’s Aloft and Hyatt’s Andaz — it seems like it can’t be much longer before they bow to the inevitable. For the moment, the majority of properties are still only grudgingly providing free lobby access, but with growing discontent from the business-traveller community — influential blogs like HotelChatter regularly name and shame the worst offenders — paying for the internet could soon be a thing of the past. New design hotel Roomers in Frankfurt offers a free, slower connection or a faster, paid-for service; chains such as Omni and Hyatt are making access free for members of their loyalty programmes; and there are rumours that some hotels are planning to follow a model in use at airports such as London City and ask customers to add their details to a marketing database in return for free Wi-Fi. Of course, you can increasingly connect to hotels without ever checking in. Companies looking to cut spending will welcome the arrival of next-generation Telepresence videoconferencing suites. Tata Communications, owner of Taj Hotels, has already rolled these out in properties in London, Boston, Manila, and several Indian centres, and recently signed a deal with Starwood to introduce them in some Sheraton and Westin brands in major hubs including New York, LA, Brussels, Paris, Hong Kong, Tokyo and Singapore.

FLYING HIGH The era of the airport hotel as a byword for dismal décor and unappetising food for stranded passengers is finally changing. Airline alliances have dramatically reduced enforced stopovers; global outsourcing and rocketing inner city room rates have made hubs the obvious choice for meetings and conferences; and the deteriorating airport experience has created demand for a relaxing antidote. The result is a new generation of airport hotels, design-led and tailored to the needs of a much wider variety of travellers. Hilton is leading the way, with ultra-sleek spa

properties recently opened in Madrid, Helsinki and Copenhagen, while the select-service Garden Inn brand made its European debut at London Luton and now also has a presence at Rome Fiumicino. Both brands will also launch next year at Frankfurt as part of the new AirRail development, with the Hilton offering a lavish presidential suite and stunning views from its top-floor wellness centre. Other recent high-end additions include the plush Sofitel at Heathrow’s Terminal 5, which has some of the biggest conference facilities in London, and the Radisson Blu at Zurich; while at the budget end Yotel and CitizenM have brought the Japanese pod experience to London and Amsterdam. With airports rapidly transforming themselves into major out-oftown centres, the choice for passengers looks set to get better and better.

YOTEL, LONDON

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HOTELS

6 Roomers

TOP 25 BUSINESS HOTELS 2009

Our annual guide to Europe’s top offerings for the business traveller his year, CNBC Business has refined its criteria for ranking Europe’s best hotels for business travellers. While we still insist upon outstanding service and facilities, in these straitened times, value for money must be considered, too. We’re not necessarily prescribing austerity — an ionised pool and snappy room service would make most business travellers more productive — and luxury and value are not mutually exclusive. Indeed, there is a case that those four-figure thread counts or lobby harpists are good calls for the chronically insomnolent or the highly strung go-getter.

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Nevertheless, the fact remains that the best “business package” currently offered by our top-rated hotel in 2008, The Four Seasons George V Paris – one of the world’s greatest addresses – weighs in at €780 a night. Sure, it includes breakfast and internet access, and is only €50 more than the room-only rack rate but it would take more than a croissant basket and some sweet dreams of Carla Bruni to persuade your financial director that this was your smartest booking in the prevailing climate. Another absentee from our list this year is the Hotel Adlon Kempinski, possibly the best hotel in Europe’s most happening city, Berlin. Staff in the hotel’s fluffy new spa and 24-hour business centre may bend over backwards to

16 Park Hyatt Istanbul

please but to charge €27 for 24-hour in-room Wi-Fi – in a city where free connectivity is as omnipresent as performance artists – is as much bad manners as it is bad business. Other illustrious hotels have been struck from our list for this reason – plus the even bigger outrage of charging for that bedside bottle of mineral water– unless they have really made amends in their pricing policy, rather than simply adorning the crime scene with a pillow menu. So this year we are honouring the best hotels for business in terms of location, service, amenities, style, ambience, and value for money. Oh, and we’ve also considered the ease of website booking – after all, time is money too.

11 Sofitel Gendarmenmarkt

17 The George

25

The Bloomsbury Hotel, London

24

The Dominican, Brussels

23

Bairro Alto Hotel, Lisbon

Far more restrained than The Doyle Collection’s usual fussy makovers (apart from the treacly-prosed website) this is actually a jewel. For rooms starting at around £115 (€135) a night (and negotiable for businesses) this is The Haymarket-lite, with a much better bar and restaurant than you’d expect, proper business facilites and handy for the Eurostar at St Pancras. doylecollection.com

This design-oriented central hotel, behind a 19th-century façade, is a welcome, well-priced addition to the city. A bar, restaurant, and lobby surround a central atrium. Rooms are well designed (Nespresso machine, free internet, flatscreen TV); bathrooms striking. Sauna and gym. thedominican.be

Yes the new Lisbon Sheraton is great but this groundbreaking (for Lisbon) boutique perfectly blends the in-room comforts (plasma TV, Wi-Fi) with old-world architectural details. Its central location, busy bar, restaurant, gym, and 24-hour room service make this 55-roomer a 46 CNBC BUSINESS I SEPTEMBER 2009

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TOP 25

20 The Andaz

14 Four Seasons Gresham Palace

delight. Special offers are particularly enticing. bairroaltohotel.com

22

Sofitel Brussels Le Louise

Fully refurbished in 2008, the very comfortable Sofitel Brussels Le Louise is in the city’s pricey boutique hub, five minutes from the Eurostar station. Rooms and suites are modern, airy and well appointed (with free Wi-Fi) and the hotel has four meeting and conference rooms and a health club. sofitel.com

21

Radisson SAS 1919 Hotel, Reykjavik

The collapse of the Icelandic economy means it is now possible to stay at a nice hotel in Reykjavik without having to catch your own fish but there is no need to spring for the ultra cool Hotel 101. Better value is the slick 1919, in the centre and within walking distance of the commercial and shopping area. This is a fine hotel well geared up for business travellers, with three-hour Express Laundry and Grab & Run breakfasts. radissonblu.com

20

The Andaz, London Andaz may mean “personal style” in Hindi

2 The Hoxton Hotel

25 The Bloomsbury Hotel

but we noted last year this more-hip-thanhippy Hyatt adjacent to Liverpool Street Station means business. Check-in is with handheld PCs; rooms have Eames chairs and ergonomic desks Rates are inclusive of Wi-Fi, local landline calls and mini-bar juices, water and snacks. Food has consistently proved far better than it needs to be in the five restaurants (there are also five bars) within the hotel, including a traditional Japanese, a marbled seafood bar and the new 1901 restaurant. For business, there are 14 private dining and event rooms (including the slightly creepy Masonic Temple and loft-style Studio space). london.liverpoolstreet.andaz.com

19

ME Barcelona, Barcelona

At the centre of the city’s architectural and cultural must-sees — and also close to the Barcelona International Convention Centre — this is a supremely stylish and well-priced hotel, with an impressive roof terrace, spa, wellequipped bedrooms (with free Wi-Fi) and lavish bathrooms. Despite the slightly groovy Austin Powers vibe, this hotel is serious about business; there are two large-capacity, all-purpose meeting rooms and a whole slew of smaller rooms. me-barcelona.com

18

Cocoon, Munich

17

The George, Hamburg

16

Park Hyatt Istanbul

‘Check in and chill out’ is the mantra here, with every room equipped with a divan-like space for work or napping, bang-up-to-the-minute iPod docks and free Wi-Fi. Dubbed a ‘lifestyle budget boutique’, singles start at €69 per night. The concept may become a fully-fledged chain if founder Johannes Eckelmann has his way. hotel-cocoon.de

With its public areas more of the Shoreditch or Lower East Side lived-in look than the usual design hotels, and guestrooms sleek, modern and well appointed, this is a reasonablypriced gem. Complimentary croissant breakfast is served in the bar or there is the all-you-cancarry buffet for €15. The spa is a real bonus. thegeorge-hotel.de

Located in the fashionable Nisantasi residential and shopping district, and a five-minute walk from Istanbul Convention and Exhibition Centre, this recently opened property this a superb hotel, if not the best in the Park Hyatt’s collection. Modern, well-designed rooms with SEPTEMBER 2009 I CNBC BUSINESS 47

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HOTELS

10 Golden Apple

work areas and high-spec tech kit; spa and outside pool; and full-service business centre. istanbul.park.hyatt.com

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Service is slick and the business and leisure facilities impressive. A corporate package offers breakfast, internet access and spa access for £140 (€165) per night. However the hotel has a less palatable Forte trademark: guests are charged £15 (€17.50) for 24 hours Wi-Fi usage. Non-residents are shown even more disdain: 90-minutes’ lobby surfing costs £10 (11.75) or £3 (€3.50) for 15 minutes. thelowryhotel.com

11

Sofitel Gendarmenmarkt, Berlin

10

Golden Apple, Moscow

Highly regarded boutique with great location, well-equipped rooms, cool gym and rooftop spa. The Aigner Restaurant, open until midnight, gives neighbouring favourite Borchardt a run for its money, while the room tariffs make business sense for those who don’t require the theatricality of, say, the nearby De Rome or The Regent. accorhotels.com

Hôtel Scribe, Paris

Reopened by Sofitel in 2007, this is exactly as you’d imagine a Parisian hotel — elegant and luxurious, nestled between the Opéra Garnier and the Place Vendôme. The fact that it has such a high-quality, modernising refit and an even bigger spa without losing any charm is a bonus. Definitely one to consider as a alternative to the city’s pricey palaces. sofitel.com

14

TOP 25

Four Seasons Gresham Palace, Budapest

This art nouveau landmark, transformed into a hotel offering every modern comfort is one of the jewels in this peerless company’s crown. It is also one of the best priced, proving that luxury and good value can go white-gloved-hand-inhand. It makes you wonder why free lobby coffee and mineral water isn’t available in every hotel. The only blot is the charge for Wi-Fi and the outmoded 3pm check-in time. fourseasons.com

13

Grand Hôtel, Stockholm

12

The Lowry Hotel, Manchester

A genuine grand hotel geared for business, with five-star service and slick, modern facilities to back the promises. Award-winning chef Mathias Dahlgren and designer Ilsa Crawford have recently enhanced the experience. Book 30 days in advance and save 40% off the best available room rate. grandhotel.se

This stylish Rocco Forte venue continues to impress this business-oriented city. Rooms are large, well appointed and well-kitted out.

A five-star boutique is rare for Moscow but the Golden Apple offers a high level of service, design and amenities that the most jaded of business traveller will find refreshing. If you do begin to crave black marble and mink-thick carpets, remember that the cheapest rooms here are a third of the price of those at the Ritz-Carlton. goldenapple.ru

9

Das Triest, Vienna

Maybe not as glam or as central as the equally impressive DO & CO but this stylish and comfortable Conran boutique is extremely wellpriced for Vienna, handsomely equipped for business and designed for indulgence. The superb Silver Bar and courtyard garden deserve special mention. Inquire about the business specials. dastriest.at

8

Room Mate, Madrid

We’re cheating slightly, as there are four Room Mates in Madrid, part of a sunny chain that covers Spain, has New York and Miami offerings, and is opening soon in Mexico City and Buenos Aires. The Madrid Mario — minimalist with colourful splashes, buffet breakfast, free Wi-Fi, and flat-screen TVs — is best situated for the business district. The Business Friend scheme reduces further the already attention-grabbing prices. room-matehotels.com

7

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NOTABLE 2010 OPENINGS

Moscow – Radisson Royal, Grand Hyatt, InterContinental You wait ages for a new luxury hotel in Moscow, then three come along. First up is the Radisson Royal, due to open in December in the Stalinist splendours of the Ukraina building, one of the city’s Seven Sisters group of skyscrapers – and with 507 rooms and 38 serviced apartments, it will be one of the largest in Moscow. It’ll be joined in next year by the 368-room Grand Hyatt, billed as Europe’s tallest hotel — the lobby will be on Level 91 — and the centrepiece of the new Moscow City development to the west of the capital. Finally, next autumn InterContinental returns to Moscow with a 203-room ultra-luxe property in a new-build on Tverskaya, part of a huge retail-commercial development. In all, that’s around 1,000 new rooms — hopefully enough to ease the strain on pricing and also spur some of the city’s older properties into undergoing much-needed refurbs.

Jumeirah, Frankfurt From Dubai to downtown Frankfurt, Jumeirah’s come a long way. Will the Gulf group’s gilt and glitz pass muster in Germany’s banking capital? Well, judging by the futuristic, new MyZeil mall, the locals are already hankering for a bit of Burj bling. This 219-room property in the Palais Quartier development, close by in the heart of downtown, looks set to be a hit.

Shangri-La, Paris Belle Epoque meets Bangkok, as the Asian luxury group makes its first foray into Europe. And what a foray: 16th arrondissement overlooking the Eiffel Tower, 19th-century building that belonged to a Bonaparte, and 109 lavish rooms — half of them suites — rounded off

Jumeirah

Fairmont Hotel Vier Jahreszeiten, Hamburg

This is a truly grand hotel, with impressive spa and large state-of-the-art business facilities and very comfortable restaurants and bars.

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ADVERTISEMENT FEATURE

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on Top ;/, (37: BECAUSE LACK OF SLEEP CAN BE A HAZARD TO BUSINESS Lack of sleep costs managers their health and companies millions, according to research commissioned by Philips, a leading health and well-being company.

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Enjoy the luxury and lifestyle of St. Moritz and experience the perfect mix of Switzerland at its best, Italian lifestyle and International world class. Fulfilling your desires beyond the ordinariness is the motivation of the Kempinski Grand Hotel des Bains. Breathtaking mountains, brilliant sunshine and an air so clear and refreshing that you couldn’t wish for more. Excellent culinary delights and the High Alpine SPA to spoil all your senses. This is travelling in style. High Alpine SPA & Resort ∙ St. Moritz ∙ Switzerland +41 81 838 38 38 ∙ www.kempinski-stmoritz.com

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he majority of managers, Dr. White, Chief Medical Officer for 72%, do not get enough Philips Home Healthcare Solutions. sleep, according to the glo- “Sleep is not optional – it is absobal survey. On average, a manager lutely crucial to people’s health and sleeps six-and-a-quarter hours well-being.” a night – 75 minutes less than the Philips commissioned the surrecommended eight hours. vey to get an indication of people’s The worsening global economy sleep habits and their awareness was blamed as the of the impact of reason for poor sleep on health SLEEP IS NOT OPTIONAL sleep by 40% and quality of life. – IT IS ABSOLUTELY CRUCIAL of respondents. As a health and TO PEOPLE’S HEALTH AND But work woes well-being comWELL-BEING. also contributed pany – and leader DR WHITE, CHIEF MEDICAL OFFICER to poor sleep. in the sleep manFOR PHILIPS HOME HEALTHCARE Nearly a third agement market SOLUTIONS of Americans Philips offers sleep blamed stressful therapy products work for their lack of sleep, fol- that are designed to give lowed by 27% of Germans, 24% of people with disorders the essential Britons, 20% of Japanese, and just sleep they need to be healthy. By 12% of Dutch managers. investing time in understanding Poor sleep was felt most signifi- people’s needs, we’ve created a cantly at work: almost all respond- portfolio of 60,000 innovative patents (87%) said that losing sleep ents that will enhance the quality of had had an impact on their work life for people everywhere. There’s performance in the preceding 12 more where that came from at months. This loss of productivity www.philips.com/because. could be costing the global economy millions. “People simply need to take sleep much more seriously,” said

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HOTELS

If the service were any more polished you’d see your reflection in the receptionist’s teeth. Rooms have just been refurbished to a high standard in a particularly demanding city. Wi-Fi is free and week-in-advance rates start at €150 a night. fairmont.com

6

Roomers, Frankfurt

This 21st-century take on the gentleman’s club — dark, discreet and with a hint of decadence — has neatly designed and elegant rooms, Wi-Fi, and a superb business centre. But once you’ve seen the rooftop spa, you’ll never want to leave; in this after-work haven you can watch Frankfurt’s lights from the comfort of a jet pool. There is an elegant restaurant, a large patio area, and a smoky after hours bar, too. roomers.eu

5

The Virtus, Milan

Self-billed as Europe’s First Urban Luxury Resort, The Virtus (formerly the Chedi) is exactly what Milan needs and pretty much what every business traveller needs in Italy: Asian service. It also has large, particularly well-equipped rooms, a superb spa and a slick range of conference and delegate facilities. Prices are reasonable too. thevirtusmilan.com

4

CitizenM, Amsterdam

Amsterdam’s poddish CitizenM has shown that you can provide innovative design, king-size beds, rain power showers, free ondemand movies, free Wi-Fi, VoiP telephone rates and Frette bed linens plus Eames and Panton seating in the lobby and a 24/7 food and beverage outlet for pocket money. In a city where so many hotels are overpriced and underdesigned this is some feat. We cannot wait for the Europewide rollout to begin. citizenm.com

1 Mama Shelter

TOP 25

3

First Hotel Skt Petri, Copenhagen

In the city centre, a five-minute walk from Stroget, the main shopping street, this sleek, design-focused hotel — wooden floors, white linen, handleless furniture, and white walls adorned with bright blotches — suits business or pleasure. The restaurant is informal but efficient and the cocktail bar is still buzzy six years after it opened. There is a bewildering choice of rooms, from small to the slightly offensive-sounding XX-Large Suites. An event room can seat up to 240, and there are six conference rooms. firsthotels.com

2

The Hoxton Hotel, London

The highest praise we can pay The Hoxton is that it hasn’t introduced any major initiatives this year and it still bounds onto the list. Maybe that’s because its slogan “Luxury where it matters, Budget where it counts” chimes now more than ever. With Frette sheets and duck down duvets, flat-screen TV, Aveda in the bathroom and free Wi-Fi, an exposed-brick lobby has never seemed so welcoming. The meeting area, including self-service Larder” seems good value too. hoxtonhotels.com

1

Mama Shelter, Paris

Vive le credit crunch! With 172 compact rooms set over seven breeze-block baring floors, Mama’s all about witty Philippe Starck style on a budget: tongue-in-cheek, down-home Americana for iPhone-toting creatives. Rooms range from the basic Mama (17m2 from €79) to Big Mama (35m2 with living room and terrace, from €139). By day, communal areas are perfect for working and meeting, with free Wi-Fi throughout. All rooms offer iMacs, TV, radio, Skype, or playing CDs and DVDs. At night, though, the buzzy lounge-bar becomes a great place to unwind. mamashelter.com

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SIX NOTABLE OPENINGS

with a spectacular top-floor presidential villa. Shangri-La is often optimistic about its opening dates, but this one should be open in time for a romantic Parisian spring break.

W Leicester Square, London If there’s one place Londoners loathe, it’s Leicester Square — so Starwood’s decision to locate its luxury lifestyle brand on the space left by Swiss Centre is on the daring side. On the other hand, with 194 rooms, 10 luxury apartments, a signature spa and high-end restaurant — all housed in a sleek glass cubist design — it could turn the area around. The jury’s out until next June.

Rocco Forte, Abu Dhabi Not another new hotel in Abu Dhabi? Won’t that make five this week? Well, yes, but this one will be a bit special. It marks the start of Rocco Forte’s expansion outside Europe (if you don’t count St Petersburg), with Jeddah and Marrakech next on the list. The 282-room Abu Dhabi property will feature a pair of lavish presidential suites, a fifth-floor bar suspended over the atrium and, as you’d expect from Sir Rocco, every last facility for the fitness fanatic.

Peninsula, Shanghai An opening from the ultra-luxury Hong Kong hoteliers is always an event, and this homage to Shanghai’s art deco era won’t disappoint when it opens in October. Its 235 rooms, including 55 outsize suites, promise state-ofthe-art technology and gorgeous views from the Bund-side location, while the spa is said to be inspired by The Great Gatsby — a strange concept, but it’ll almost certainly look better than it sounds.

Rocco Forte, Abu Dhabi

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

A LESSON PHOTOS: CORBIS

IN VOODOO

ECONOMICS It has overtaken Hollywood to become the second largest producer of films on the planet, so what is the secret behind Nigeria’s movie success? Colin Brown reports 52 CNBC BUSINESS I SEPTEMBER 2009

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NOLLYWOOD

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

MOVIE MANIA The latest productions are advertised throughout Nigeria

round 1990, filmmaker Francis Ford UNESCO’s Institute of Statistics. Churning out a combined 872 feaCoppola delivered what became a tures, Nigeria’s filmmaking community trailed only Mumbai’s Bollywood in terms of output in 2006 – although some estimates put West global rallying cry for the digital video Africa’s yearly volume ahead even of India, at a staggering 2,500 films. revolution. Put cheap camcorders in Just as incredibly, certainly to a European film industry that has the hands of the masses and his great grown dependent on public support as their only economic bulwark hope was that “suddenly, one day, against Hollywood, this Nollywood explosion has come without any government aid. And all this in a country where 54% of the 140 some little fat girl in Ohio is going to be the new million population lives on less than a dollar a day. Mozart and make a beautiful film with her The reason the First World has been slow to wake little father’s camera — and for once the up to this phenomenon is that so few of these video NIGERIA quickies ever see the inside of a movie theatre. so-called professionalism about movies Shot on budgets initially of no more than $20,000 TRAILED ONLY will be destroyed. Forever.”

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(€14,000) apiece, they are rushed out as DVD and VCD titles within weeks of their conception. Among the country’s 300 fast-and-furious filmmakers, Nigeria’s answer to those B-movie pioneers Roger Corman and Ed Wood – Chico Ejiro – is so famously prolific he supposedly shot two films simultaneously, with cameras pointing in opposite directions. Not long after wrapping their rapid-fire shooting schedules, the resulting works surface on the street-market stalls of Nigeria’s boisterous electronics merchants, where they are hawked for around $2.30 (€1.60) a pop. Either that or shown as rentals in the 200,000 “video parlours”, essentially private rooms where Nigerians can pay to watch a televised film for 30c (€0.20). This guerilla approach to cinema was born of necessity in a nation whose relative oil wealth belies its poverty: GDP per capita is no more than $1,418 (€1,000), says the World Bank. “While other nations have struggled coming to terms with digital video as a means for storytelling, Nigerians had no choice really due to the high cost of celluloid, and the failed distribution and exhibition infrastructure associated

3

BOLLYWOOD IN TERMS OF OUTPUT IN 2006

Two decades later and the godfather of personalised cinema would see little evidence of that creative democracy being unleashed in Ohio, or anywhere else in the developed world outside the odd Blair Witch anomaly. For all their means of production, even well-heeled film students struggle to pay for their graduation movies and launch expensive careers. And while some may point to YouTube as an anarchic breeding ground for amateur videographers, the nearest any of them get to Mozart is a hamster on a piano. But venture 12,500km from his Napa Valley vineyards to Surulere, a suburb of Lagos, Nigeria, and there amid the belch and sprawl of Africa’s largest megapolis is vibrant proof of Coppola’s prophecy. From this chaotic corner of Nigeria’s impoverished economy has sprung one of the business world’s most unlikely success stories, one that is rewriting the script for commercial cinema elsewhere. Welcome, as they say, to Nollywood. In the span of just 16 years, this irrepressible industry has leapfrogged Hollywood to become the second most prolific on the planet, according to figures in May from

SEPTEMBER 2009 I CNBC BUSINESS 53

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MEDIA

NOLLYWOOD STAR MATERIAL Nollywood actress Kate Henshaw has starred in more than 100 films in five years

CONFLICT OF INTEREST Filming in some Islamic areas of Nigeria can cause religious tension

with celluloid films,” says Emeka Mba, chief of Nigeria’s National Film & Video Censors Board (NFVCB). “Such digital democracy also meant that people outside the definition of filmmakers now had access and opportunity to join this new creative economy. This created the problem of increasing waves of poor-quality movies.” Schlocky, perhaps, but these cautionary melodramas of witchcraft, voodoo and comeuppance for the rich, with their dodgy sound quality and poor lighting, are also undeniably popular. Nollywood films typically sell 25,000–50,000 copies, with some blockbusters clearing sales of half a million. Nollywood’s paying audience extends well beyond West Africa and even the continent of Africa. Nollywood’s largely English-language titles are snapped up across the globe, not just among Nigerian immigrant clusters such as London’s Dalston and Hackney boroughs, but across other ethnic groups too including Florida’s Haitian community, and in Belize, Barbados and Brazil. “Nollywood broke the myth that only big budgets can guarantee market success,” says Peace Anyiam-Fiberesima, filmmaker and founding CEO of the African Movie Academy Awards, the continent’s answer to the Oscars. “And that success can be replicated elsewhere if there is a similar vacuum for local content that needs filling.” Sure enough, copycat industries have erupted in Soweto, Uganda, Tanzania, Kenya (“Riverwood”) and Ghana (yes, “Gollywood”), where government patrons and films that talk above audience heads have been ditched in favour of Nollywood’s populist approach. All told, Nollywood’s annual revenues are estimated at $590.2m (€420m) by the NFVCB, although Mba freely admits such figures are at best extrapolations. There is no hard data either for the number of Nigerians who earn a full-time living from the film industry although the consensus suggests a young workforce of some 200,000 professionals and economic benefits to a further one million people in related services – certainly enough to make cinema the country’s second largest employer after farming. Impressive as those numbers might be, Nigerian film experts all agree that the industry still has enormous growth potential. “The distribution structure that we have now is basically informal and has not yet even scratched the surface,” insists Femi Odugbemi, a US-trained filmmaker who was president of Nigeria’s Independent Television Pro-

ducers Association. “We know there is a huge market in Africa and in the diaspora for creative works that tell stories. We know that if we can overcome issues of piracy, these works will outsell anything else. Even though the quality can’t stand beside Hollywood, the content is enthralling. And there’s the feeling of connectedness we have with these films. Regardless of where you put an African, you can’t take Africa out of the man.” Such pent-up indigent demand creates its own problems. A lack of institutional finance for these largely self-funded films has led to insufficient numbers of discs being duplicated. Only too happy to fill the supply gap are local pirates, with access to high-tech Chinese video compression facilities. But, as with so much of Nollywood, an ingenious solution to piracy is now being cooked up. While European distributors are rushing to close the window between the theatrical and DVD release in an effort to thwart illegal copying, Nigeria is thinking of going the other way and building a network of digital cinemas, powered by cheap LED projectors, across sub-Saharan Africa that would expand Nollywood’s addressable audience to some 800 million people. “Intellectual copyright enforcement is never going to be a huge priority in a region with so many other issues,” says Dayo Ogunyemi, a lawyer and business consultant who has been advising the Nigerian film industry on matters of economic development. “But an exhibition window of three weeks might help since it would make offending discs very easy to spot and prosecute. Having box office figures will also make it easier for filmmakers to raise finance since you can demonstrate track records; it helps minimise risks if we can release a movie simultaneously across 3,000 screens.” With one eye on India, a similarly sized market with comparable income characteristics to Nigeria, Ogunyemi is targeting some 12,000 screens across the continent, knowing that India itself can accommodate another 20,000 screens before reaching saturation. Such simple theatre halls, charging no more than $1.50 (€1.05) a ticket and boasting their own generators, provides a solution to another of Nollywood’s challenges: in a country where 80% of the people don’t have reliable electricity, let alone TVs, even watching DVDs is futile during the frequent blackouts. Sometimes, the revolution just cannot be televised.

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NOLLYWOOD BROKE THE MYTH THAT ONLY BIG BUDGETS CAN GUARANTEE SUCCESS 3

54 CNBC BUSINESS I SEPTEMBER 2009

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23/6/09 13:51:49

IRAQ

INVESTMENT

OPEN FOR BUSINESS

Iraq is embracing independent rule, yet its success will depend largely on outside forces. Martin Chulov reports he sprawling concrete flatlands of Basra airport were

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for six years the domain of the British military. Now big business is steadily taking over, with oil barons and prospectors from Europe and the Gulf mustering to assess post-war entrées to Iraq. Around $150 (€105) per night will buy a clean bed in a frugal, air-conditioned hut with

three meals a day and conference room facilities. It is the best spot in southern Iraq for deal-making, and, so far, it is the only place in the country outside

PHOTOS: AP PHOTOS, GETTY

the American military bases where the trappings of fast food are on offer.

Since March, some of Europe’s leading executives have been through here. Chiefs from Amec, Twitter, Foster Wheeler Energy, Halcrow and BP have come and gone, followed by delegations on the hunt for opportunities. All around the base a black oily silt sits on the baking desert sand – a legacy of burnt gas and impurities belched from nearby oil sites and a ready reckoner of the spoils on offer in the region’s most likely investment arena. After the blazing guns of insurgency were largely subdued in most parts of Iraq mid-

A BUYER’S MARKET Shopping in Basra has become a less dangerous activity in recent months

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IRAQ

2008, oil has been the centre piece of the government’s plans for reconstruction and recovery. And, for the first time in 40 years, foreign oil companies are now being actively invited in to cut a share of one of the world’s great hydrocarbon preserves. Industry estimates suggest that six oil fields in Iraq’s north and south contain 115 billion barrels of oil. Only Saudi Arabia, with more than twice Iraq’s reserves, and Iran with roughly the same as its warravaged neighbour, are in the same global league for old-world energy. And Iraq’s fields could well hold tens of billions more barrels than thought. Rigorous scientific assessment has until now been impossible through three decades of despotic rule, three wars, 12 years of sanctions and six years of occupation. Iraq’s leaders now seem to feel that their time – and that of their long-suffering people – has come. They claim Iraq must quickly stake its claim in the planet’s energy heartland. Throughout the government and the ruling class, there is a broad acceptance that the country’s now fragile institutions, so long a bulwark of Marxist bureaucracy, have to urgently change the way they operate. Ministers and trade chiefs have been instructing their underlings that private/public sector partnerships are the only way forward. Suspicious of foreigners throughout the ages – and doubly so now on the eve of allowing an entrée to their country’s only meal ticket – such an overhaul is running contrary to the instincts of many Iraqis, especially among the facilitators needed to make sure that the deals done by their leaders are followed through. There is a feeling in Baghdad that Iraq is only just done with the old world and that the new world of the private sector may be too difficult to control. Finance minister Baqir al-Zubeidi is having none of that. Inside his office in one of Saddam Hussein’s palaces, in the heart of what is now Baghdad’s International Zone, he says Iraq’s hopes hang solely on embracing capitalism and its foreign bearers and getting its oil out of the ground as efficiently as possible. “This is the beginning for Iraq” he says. “It gives us a chance. Iraq needs $300bn–$400bn [€210bn– €280bn] to rebuild, especially for infrastructure. The Iraqi people need more services for all areas of their lives, especially electricity, sewerage and roads and we cannot do this by ourselves.” Outlining the road ahead for a country so starved of services that an estimated 40% of the population has no access to running water and more than 90% of homes have no more than 12 hours of electricity a day, Al-Zubeidi says the experience with oil production should create efficiencies elsewhere. “When I came to this ministry in 2006, we were 97% oil-revenue dependent,” he says. “We are now down to 86.5%. There have been improvements in tax collections for cars and customs as well as revenues from land and minerals like phosphate. But we have a long way to go.” Iraqi government spokesman Ali al-Dabbagh agrees that oil is the centrepiece of Iraq’s 10-year economic plan: “We want to make sure that we do not waste the oil reserves of Iraq. But at the same time there is a need to develop the reserves in the best interests of Iraqis.” For now, it is full steam ahead, with one eye to the south of the country and another to the oil fields of Iraqi Kurdistan in the north, which are also about to come on line. The Kurdish Administration has kept a tight grip on its slice of the country since Baghdad fell in 2003. It has maintained all export lines to Turkey that Baghdad considers illegal. The benefits appear tangible. The clean and largely secure streets of the provincial Kurdish capital, Erbil, are lined with outlet stores and sparkling shopping malls offering top shelf European white goods and electronics, such as Bosch, Kenwood and Bose. There are currently no

INVESTMENT

PIPES OF PEACE? The pipeline from Al-Shiaaba oil refinery in Basra

THERE ARE POSITIVE STEPS BEING TAKEN, BUT THE ATMOSPHERE IS NOT EASY NOW. THAT SAID, WE HAVE TO MOVE FORWARD. THERE IS NO GOING BACK. BAQIR AL-ZUBEIDI

Starbucks or McDonald’s here, but neither would look out of place. In Baghdad, prominent displays of Western consumerism are few and far between. In the relatively wealthy suburb of Karrada, a sports outlet recently opened, selling lines of Nike and Adidas clothes. Its debut made the papers. And so did the fact that it hasn’t been attacked in the three months since. Just up the road from the finance minister’s office is a construction site where a five-star hotel – the first to be approved in nearly two decades – is taking shape. Officials hope that this will soon be a hub for foreign investors tempted to town by the success of the oil bidding process and relatively stable security. Although Iraq remains potentially lethal, and militants have repeatedly shown their ability to ramp up devastating violence on cue, the country believes that banking on two key tenets – security and oil – will eventually foster a broad investment environment. “There are positive steps being taken,” says Al-Zubeidi, “but the atmosphere is not easy now. That said, we have to move forward. There is no going back. Hard decisions have to be taken.”

FAST-FOOD STATION Basra airport is the only place outside of American bases where US fast-food is on offer

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ADVERTISEMENT FEATURE

THE RE-EMERGENCE OF INVESTMENT IN IRAQ The Kubba Group is leading the way in revitalizing the Iraqi economy and infrastructure...

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stablished back in 1953, the Kubba Group is one of the leading conglomerates operating in the Iraqi private sector. Having started out as an industrial group concentrating on synthetic textiles, under the guidance of founder Hikmat Hadi Kubba, the group has transformed into a dynamic international operator, helping to bolster the Iraqi economy and infrastructure. Amongst its most prized contracts is the franchise to produce Pepsi Cola beverages in three factories in Kufa and Basrah. The Kubba Group, in its totality, currently consists of over 25 companies spread throughout the provinces of central and southern Iraq and the group has some 3,000 employees. Operating in a huge variety of industries, its companies produce everything from dairy products and poultry to pastries and flour. Construction and contracting is another key area for the group, with highly experienced engineers and staff having built and renovated hotels, buildings and plants throughout Iraq. Hospitality is a growing sector, with Kubba owning two four-star hotels in Baghdad as well as being in partnership with the Kanoo

Kubba CNBC Sep 09 FINAL.indd 49

Company of Bahrain to operate a joint company for travel and tourism. The Kubba Group is also justifiably proud of its interests in the financial sector: it serves as Chairman of the Credit Bank of Iraq, a partner of the National Bank of Kuwait, and is the main shareholder in the Commercial Bank of Iraq,

THE DOORS ARE NOW WIDE OPEN FOR INCREASED INVESTMENT IN A VARIETY OF THRIVING INDUSTRIES WITHIN IRAQ

many big warehouses and marketing centers, it is capable of distributing the goods of any new agency in most of Iraq’s cities. The Kubba Group has been praised in Iraq – and internationally – for putting all of its resources towards the enormously important task of rebuilding Iraq. It has accomplished so much already and continues to grow in strength and influence – serving as an example to others in Iraq of what can be accomplished with hard work, good strategic decision-making and the requisite commitment. www.kubba-group.net

KAIS KUBBA, CHAIRMAN

partner of Ahli United Bank of Bahrain. And the Kubba Group has excellent relationships with some American and British companies in the critical spheres of reconstruction and security in Iraq. The Group also has a wealth of experience working with agencies. Being the owner of

Hikmet Hadi Kubba & Sons Group, Iraq, Baghdad, Karrada Kharij, Karrada Bldg. +962796868681 Email: kais@kubba-group.net mailbox@kubba-group.net

19/8/09 10:37:38

IRAQ

OIL CONTRACTS

BLACK GOLD RUSH

As troops are slowly replaced by businessmen, the battle for Iraq’s oil is just beginning. Martin Chulov reports aghdad’s Al-Rasheed Hotel was once the domain of Saddam Hussein’s spooks; a towering 80s marble labyrinth of slowly decaying Arab grandeur that had held its own as a clearing house of power through decades of sanctions, war and occupation. Any Western businessman or official allowed into Iraq during the dictator’s 30-year rule would have likely ended up here. The few deals done between Saddam’s Iraq and Europe were mostly fashioned in the Rasheed’s lobby lounge, always with his security men (the dreaded Mukhabarat) lurking nearby.

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NO OIL PAINTING A mural of Saddam Hussein is drenched in the crude oil that the government is now banking on

However, it had never seen anything like the gathering of oil men and business chiefs who arrived in late June to literally stake their claims in Iraq’s financial future. In late June, Iraq officially overturned almost 40 years of policy banning foreign companies from extracting or exploring for oil in Iraq. Before seizing the presidency, Saddam Hussein nationalised the oil industry, believing it would one day transform Iraq from a regional backwater to a global gas pump. His instinct was right; but his timing was way out. On offer at the 30 June meeting were eight contracts – six oil and two gas fields – to partner with Iraq’s state-owned oil companies to start extracting up to 115 billion barrels of oil from Iraq’s north and south. In May, Baghdad had signed an accord with the Kurdish administration allowing for limited development of two northern oil fields along pipelines it controls, Tawke and Taq Taq, the spoils of which would be shared three-ways, between the central government, which will take 73%, the Kurds, who will pocket 15% and private companies that had struck renegade deals directly with the Kurds accounting for the rest. The new contracts were structured around offering the foreign companies a set fee per barrel, which would only kick in once a daily target was reached. Throughout the past six years, Iraq had determined it could not increase oil production by itself. Its oil infrastructure was in places 50 years old and it needed to find efficient ways of getting oil out of the ground before it could pay for new rigs, drills and pipelines. Around 30% less oil is currently being extracted in Iraq than when Saddam Hussein seized power. The June auction, televised live from a sweeping function room was the culmination of 18 months of cajoling in the parliament and assuring stakeholders throughout Iraqi society that the elected government was not about to give away the nation’s inheritance. Up to 40% of Iraq’s total reserves were up

60 CNBC BUSINESS I SEPTEMBER 2009

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IRAQ

OIL CONTRACTS

TIME FOR AN OIL CHANGE Iraq is hoping foreign investment will improve its ageing oil infrastructure

for grabs. Up to 31 foreign firms were in town, among them European and American heavyweights, Exxon Mobil and Shell, as well as South Koreans, Indians, Indonesians and Chinese. Chinese firms made bids in every tender, but were only prepared to sign on to one – the BP consortium. The interest of Asia’s largest economy was not lost on the Iraqi government, which knows well that the insatiable demand for old world energy from the developing industrial powers of Asia will drive demand and help push along the shaky global oil price. “China was decisive in entering the sector at any cost,” says Iraqi government spokesman, Ali al-Dabbagh. “Even if they were not making a profit they just want to buy in.” The lead up to deal day was tense, with even some of the Iraqis who had signed on to the doctrine of private sector partnerships fearing they were about to lose control of the only natural resource Iraq had. “It came down to personal pleas from some of the big players in Iraq, (prime minister Nouri) al-Maliki included,” says one senior Iraqi oil ministry employee, who identifies himself as Abu Kareem. “We knew that Westerners and their science and technology was the only way we could do this, but there was a huge reluctance among all levels of the society, even members of the government who lived in the West during exile. “We don’t have any fallbacks and we don’t have much leverage except the price we will pay for each barrel.” The vice-chairman of the Iraqi parliament’s Economic and Investment committee adds: “We could no longer compete with technological developments around the world, especially in oil industries. We had lost all Iraq’s expertise and our fields are dilapidated. We can’t extract, transfer and refine oil efficiently. This is the shortest route to raise the production ceiling.” As it turned out, the oil ministry misread its first large-scale dealings with cashed-up Western corporations, refusing to budge on per barrel prices that most companies deemed were too low to entice their bids. The much anticipated oil tender process led to only three signed contracts, the largest between a consortium led by BP and Chi-

WELCOME TO IRAQ Prime minister Nouri al-Maliki addresses potential bidders at the 30 June auction

na’s CNPC to develop the giant Rumaya oil field near Basra. The BP consortium signed on at a fee of US$2 per barrel, which will kick in once the extraction of barrels reaches a minimum output of 2.85 million barrels per day. BP had initially had an asking price of $3.99. To its competitors, the BP deal was way too cheap. However, BP executives said at the auction that they were happy with the deal, which will give the company access to close to 18 billion verified barrels. They have six years to reach minimum output levels. Despite being bit players in Middle Eastern oil until now, Iraq appears to have learned the market lessons. It knows that global energy demand is likely to increase thanks, in no small part, to the burgeoning economies of India and China. It also knows that the global oil price, which fell to around $35 per barrel last year, is on its way to a sustainable recovery. Iraqi budget forecasts were predicated on an oil price of around $80 and a daily production of around $2.5m (€1.7m). The government feels that both those targets are again in site, but it also knows it must drop its hardball approach in order to lure back Western bidders for a second auction. “We need to learn the lessons of the first conference to make sure that the second conference will be more effective,” says alDabbagh. “That will encourage the other companies to review their prices and return to look at the other fields. Some fields are shallow, some are deep. The bidding process will be different from field to field. But when BP starts to operate, it will be a big incentive for other companies to start producing as well. “Three to four million barrels per day will help build Iraq. The second round will be totally different.”

BID AND BREAKFAST Famed Al-Rasheed Hotel hosted the recent auction

62 CNBC BUSINESS I SEPTEMBER 2009

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Pursuits

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Motoring DOWNSIZING WITH STYLE

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Richard Lofthouse finds less is now more in changing car fashions

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ould you really trade your prize-fighting gas-guzzler for an ecobox? The evidence is that scrappage schemes designed to boost the car industries in Germany, Britain, Italy and France have convinced people to do just this, with Korean car maker Kia reporting instances where Porsches and Range Rovers are being traded for tiny city cars, with 53 Mercedes-Benz cars being traded for the mass market Korean brand in the UK alone. The fact is, luxury and sports cars designed a decade ago have virtually no second-hand value today because of sky-high running costs. Whatever their status, they’re going to the scrapheap in droves. Our provocative downsizing suggestions (right and p.70) aren’t so crazy when

ASTON MARTIN PLANS TO BUILD A TINY CITY CAR BASED ON THE TOYOTA iQ you consider the shock news of the summer, supercar-maker Aston Martin’s announcement that it is going to build a tiny city car based on the Toyota iQ, called the Cygnet. What looked liked a hoax turned out to be a deadly serious attempt to reduce fleet CO2 emissions to comply with EU regulations. Suddenly, the responsible thing to do is to drive your gas-guzzler on special days, while pottering about in the Cygnet, the automotive equivalent of a tender to a superyacht. Whether judged in terms of CO2 g/km, savings on fuel costs or simply what’s cool in 2009, all our suggested replacements could save you a fat pile of euros without any corresponding loss of face.

All of them road-tested at some point this year, the suggested replacements surprise on a number of fronts. First off, the Fiat 4x4 really is astonishingly capable off-road, and if you don’t believe the comparison to a Range Rover then watch the brilliant head-to-head on YouTube, care of UK programme Fifth Gear. Secondly, the Kia Soul Burner does most things brilliantly and is cool to boot. It might not have 4x4 capacity but it has an SUV’s ride height and large wheels while matching the Volvo XC90’s performance. As for trading in the Porsche, we think the Renault Clio Cup is the perfect sports car for a recession. Whether or not you choose to get it in brash Alien Green (which comes bizarrely close to the famous, 70s’ Porsche 911 Viper Green) it blends into any traffic jam without provoking envy, graces all but the worst potholes and shuns luxury for a spartan interior. Yet for sheer driving prowess there’s nothing like it, with an astonishing chassis from Renault’s motorsport division. The rest of our comparisons speak for themselves, the broader point being that even within a given model range it’s becoming more important than ever before to cherrypick the right engine. There is a world of difference between the older VW-group turbo diesel units and their new, jewel-like TSI petrol units which are by themselves a wonderful instance of downsizing, offering as much as 160ps from just 1.4 litres of capacity and the sort of economy that even diesel units struggled to attain just a few years ago. Another star engine for our money is the one inside BMW’s new 116d. Despite wearing an eco-badge on its sleeve, the car handles like a dream. Finally, our suggestion to ditch the car altogether in the city isn’t an instance of losing our marbles. By slightly widening the track of its award-winning, two-frontwheeled scooter, aptly called the MP3, Italian scooter maker Piaggio has qualified it across Europe as a trike. That means that you can ride a seriously capable motorbike without getting a motorbike licence....

URBAN SUV VOLVO XC90 2.4 D5 SE L KIA SOUL 1.6 CRDi BURNER Why? The Kia is a sweet drive with the high ride position of an SUV and plenty of cool Why Not? Looks and branding of the upstart Korean not to everyone’s tastes, luggage space is stingy and the Kia is not a 4x4 Verdict Korea’s rising son Also Consider Toyota Urban Cruiser; Suzuki SX4; Škoda Yeti; Fiat Sedici Top Speed 185 vs 181 Acceleration 11 vs 10.7 Fuel Economy 8.3 vs 5.2 CO2 219 vs 137 Weight 2.2 vs 1.3 Price €40,000 vs €17,500 KEY Top Speed = km/h Acceleration= seconds Fuel Economy = litres per 100km CO2 = grams per km Weight = tonnes

66 CNBC BUSINESS I SEPTEMBER 2009

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PURSUITS SUPERCAR

RANGE ROVER 4.2 V8 SUPERCHARGED VOGUE L FIAT PANDA MULTIJET CROSS Why? If you need to drive off-road, the Fiat is as supremely capable as the Rangie Why Not? The Fiat drags its feet on the road and doesn’t pretend to be luxurious Verdict Not as stupid as it sounds, particularly if you live up a steep, dusty track in Tuscany — in which case you might already own the first generation Panda 4x4 introduced in 1983 Also Consider Škoda Yeti; Ford Kuga; Nissan Qashqai Top Speed (km/h) 209 vs 151 Acceleration (seconds, 0-100km/h) 7.1 vs 18 Fuel Economy (litres/100km) 16.6 vs 5.2 CO2 (g/km) 376 vs 136 Weight (tonne) 2.4 vs 1.1 Price €83,000 vs €14,000

PORSCHE 911 CARRERA 3.6 L RENAULT CLIO RENAULTSPORT 200 CUP Why? They’re totally different cars, but the Renault serves up more thrills Why Not? If you’re a Porsche fan then nothing else will do Verdict There’s not a lot of difference between Viper Green and Alien Green Also Consider Fiat 500 Abarth, used Porsche

Boxster or Porsche Cayman Top Speed 289 vs 226 Acceleration 4.9 vs 6.9 Fuel Economy 9.6 vs 8.2 CO2 225 vs 195 Weight 1.4 vs 1.1 Price €72,000 vs €18,000

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Motoring

PURSUITS

CABRIOLET BENTLEY CONTINENTAL GTC SPEED CONVERTIBLE L FIAT 500C 1.4 16V LOUNGE Why? The Fiat is simply this year’s must-have accessory — preferably in Cha Cha Cha Azure blue metallic with a red roof Why Not? It won’t be as exclusive as the Bentley a year from now Verdict Why spend a fortune to get the wind in your hair?

Also Consider: Mazda MX5; BMW 1 Series Convertible; Porsche Boxster Top Speed 321 vs 181 Acceleration 4.5 vs 10.5 Fuel Economy 16.6 vs 6.1 CO2 396 vs 140 Weight 2.5 vs 1 Price €180,000 vs €16,000

EXECUTIVE SALOON

CITY CAR HYUNDAI i10 1.2 CLASSIC L PIAGGIO MP3 LT Why? A top-flight scooter for the price of a budget car, and no need to get a motorbike licence because it’s classed as a tricycle in Europe Why Not? The Piaggio is relatively expensive Verdict Scooters are growing up Also Consider Smart Fortwo CDI, Toyota iQ, Fiat 500 with stop-start technology; a beautiful pair of shoes

or a top-flight racing bike Top Speed 152 vs 140 Acceleration 13.8 vs c. 7* Fuel Economy 5.0 vs c. 5.0* CO2 119 vs 42 Weight 0.9 vs 0.26 Price €8,200 vs €7,600

*Approximate figures only. Performance varies depending on rider weight and wind

LEXUS 600H L BMW 116D SE Why? The BMW is greener and far better to drive Why Not? Stick to the Lexus if you are chauffeur driven! Verdict Hybrid technology is a bridge technology and not as green as it claims Also Consider BMW 5 Series

(replaced next year); Seat Exeo; BMW 3 Series Top Speed 226 vs 199 Acceleration 6.3 vs 10.2 Fuel Economy 9.3 vs 4.4 CO2 219 vs 118 Weight 2.4 vs 1.4 Price €99,000 vs €23,000

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Downtime in

I

n a few weeks all eyes will swivel towards Berlin and the 20th anniversary of the fall of the Wall. Yet Munich’s Oktoberfest, which begins on 19 Sept.,

Recharge As a leading conference and trade show destination, Munich is expensive for hotels compared to grungy Berlin but

has attained such status that it’s nicknamed Bavaria’s “fifth season”, with

it is half the price of Paris. (Try getting a room next

more than six million visitors expected to attend. However the city’s sky-

month during the international property show Expo Real). But away from the bottlenecks, for a true

high confidence in regard to culture and business is evident year-round. This is

grande dame experience try the Bayerischer Hof

emphasised by the new avant-garde Brandhorst museum, which houses a re-

or the Vier Jahreszeiten Kempinski, which are

markable collection of contemporary art; the imminent opening of the world’s first nanotechnology museum in the Deutsches Museum and the fact that the city’s vibrant new tech park is already filled with dynamic start-ups.

both cosily Bavarian but flamboyantly luxurious. For a more overtly international display of opulence (but less history and flavour) head for the Mandarin Oriental or Rocco Forte’s The Charles, the latter very close to the main railway station. There are then dozens of familiar, mid-budget brands, but

POOL WITH A VIEW The Mandarin Oriental hotel’s roof terrace can now be savoured by non-residents

don’t miss the design-themed Motel One, which has four Munich properties. Best value for money might be Cocoon, a brand-new ‘budget’ lifestyle concept by Munich hotelier Johannes Eckelmann. Situated about 15 minutes’ walk from downtown, it’s sensational value, with singles from €69 a night. Eckelmann says he wants his mostly business guests to “arrive like caterpillars and leave like butterflies.” Another favourite budget property is

MY MUNICH CHRISTIANE ZEILLER, 40, FREELANCE ART CURATOR

Best and worst things about living in Munich Best: Munich is half Italian; beer gardens; Worst: Lack of affordable property. Best way to get around Bicycle. Favourite secret place The 18th-century cemetery in Bogenhausen (east Munich — exit U-Bahn at Max-Weber-Platz). Best place to exercise Running in Nymphenburg park. Best place to relax Banks of the Isar River or Englischer Garten. Best place to refuel Augustiner Bräu in Munich’s Westend (huge atmosphere in a former stable); also Das Blaue Haus, near the theatre. Most inspirational building The café in the Glyptothek, the museum which houses Ludwig I’s Greek antiquities; also St Michael’s Church.

BEST WAY TO ARRIVE

Best tip Try the less-well-known Unertl wheat

Munich’s award-laden airport, Franz Josef Strauss, is a fine gateway to the city. Clean, light and airy, it takes just 10 minutes from disembarkation to exit. Connecting two terminals is the Munich Airport Centre, a shopping, business and recreation area. The Service Centre in the Zentralbereich has a bank of PCs; left luggage; information desk and a dry cleaning service. Although a taxi downtown takes 45 minutes and costs €55, the S-Bahn is more reliable and €10 gets a one day Gesamtnetz ticket for the whole public transit system.

beer, brewed at Haag, just outside the city. Worth noting The Viktualienmarkt (main food market, downtown) is a very Bavarian place.

70 CNBC BUSINESS I SEPTEMBER 2009

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PURSUITS MY MUNICH

BAVARIA’S MOTOR BMW Welt offers a powerful statement of global power and buildings to match

GEORG LAUE, 41, ART DEALER, PUBLISHER AND OWNER OF THE KUNSTKAMMER GEORG LAUE

Best and worst things about living in Munich Best: Cultural facilities and superb nature. Worst: Never enough time to enjoy all of it. Best way to get around Take the Straßenbahn (tram) as well as the bike.

NEW ADDITION Museum Brandhorst houses one of the world’s largest contemporary art collections

Favourite secret place Müllersches Volksbad (art deco swimming pool & sauna). Best place to exercise Englischer Garten. Best place to relax Go to one of the lakes around Munich, such as the Ostersee in Iffeldorf. Best place to refuel Schumann’s Bar am PAGODA IN THE PARK The Chinesischer Turm is one of Munich’s favourite beer gardens with seating for 7,000, set in the English Gardens.

Hofgarten, Odeonsplatz. Most inspirational building Architectural ensemble of the Königsplatz with the so-called Propyläen. The best moment is the evening

Hotel Carlton, which is tucked into a brilliant

schweinhax’n (pork shank) and beer in the informal

when you can watch the sunset while sitting

location at the heart of the university and museum

and entirely convivial atmosphere of a beer garden,

between the columns.

district on the corner of Theresienstraße and

also a good option if dining alone. City centre beer

Best tip Go to the Englischer Garten. Rent a bike

Fürstenstraße — 30 seconds from the Brandhorst

gardens include the oldest one of all, the

and discover the city.

and minutes from Schellingstrasse.

Hofbräuhaus, off Maximilianstraße, but another favourite is the taxi-accessible Chinese Tower in

Refuel As ‘the northern most city in

the English Gardens, with its 7,000 seats and iconic

Italy’ (reflecting its Savoyard history),

pagoda. For lunch, consider any of the Pinakotheks,

Munich is not short of good food at very reasonable

the cluster of art galleries 10 minutes’ walk north of

cost. Many a business dinner is conducted over

the Hauptbahnhof. They offer excellent value in

Worth noting Forget Neuschwanstein (the fairy-tale castle outside Munich) and go to the Schatzkammer (treasury) in the Munich Residence.

ON THE MAP: SHINY ZAPPY PEOPLE Munich’s vibrant wealth comes not just from brewing but from automotive technologies (the home of BMW), advertising, media, bio-technology and technology. The latest development is a brand new Technology Park (Münchner Technologiezentrum — MTZ), with 57 companies renting offices and a waiting list of would-be tenants. Chief executive Cristina Mann (pictured) points to a large plot of land that will eventually enable tenfold expansion over the next decade. The secret behind its success, she believes, is low rent (€400 per month average for a 22m2 office) and Munich’s enviable record in supplying high-net-worth angels and tech-focused venture capital. Not to mention a state-of-the-art building with a photovoltaic roof, natural ground water cooling instead of air conditioning and tech-loaded, naturally lit

offices, designed by Stuttgart architects H4A. Mann also presides over a ‘try Munich out’ programme for foreign businesses called Touchdown Base. You can have an office for anything between two weeks and three months for €500 per month, inclusive, with no obligation to stay. Tenants at MTZ wax lyrical about their new offices. At one end of the building Bernhard Kreymann, formerly a physician, is developing a new liver dialysis technology for his company Hepa Wash, while at the other end Andreas Wiedmann is taking satellite mapping to new heights of detail (United Maps); in the middle you find iPhone app meisters Thomas Kern, Philipp Döschl and Markus Görl, who’ve set up their entertainment company around several hundred thousand downloads of Parachute Panic, a leading iPhone game...

SEPTEMBER 2009 I CNBC BUSINESS 71

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Downtime in PURSUITS beautiful surroundings. Museum Brandhorst ANOTHER NEW ADDITION Munich’s new technology centre is a fully automated eco-building

offers great food too, and is opposite a new and evidently very popular ice cream parlour, BallaBeni.

MY MUNICH ALISTER SHARMAN, 56 ANTIQUE DEALER AND RESTORER

Just down the street is another old favourite, Brasserie Tresznjewski at Theresienstraße 72. A favourite with the business community is Schumann’s Bar am Hofgarten on Odeonsplatz — a must-see site owing to the Field Marshal’s Hall, designed by Friedrich von Gärtner after the Loggia

Best and worst things about living in Munich

dei Lanzi in Florence, in 1841. There you won’t be left

Best: Clean and safe; spacious; lots of green.

in any doubt about the Italian connection. Also

Worst: Dog excrement on the pavements.

consider Literaturhaus for drinks and food, across

Best way to get around On foot; by bicycle;

the road from Siemens at Salvatorplatz. But don’t

using the excellent public transport.

miss the beer gardens if your trip is in the summer.

Favourite secret place The centrally located Hofkapelle and its charming Rosengarten.

Relax

URBAN LUNG The English Gardens are a hit with locals and visitors alike

Visit the Oktoberfest for a thoroughly Bavarian experience (19 Sept — 4 Oct); if your trip is in December don’t forget the legendary Christmas market at Marienplatz (27 Nov — 24 Dec). Current events include a Tutankhamen exhibition at Olympia Park (until end Oct). Next year will witness the 10-yearly enaction of the Passion Play at

Best place to exercise Englischer Garten or along the banks of the Isar River. Best place to relax As above, plus Nymphenburg park. Best place to refuel For tea/coffee The Sconery in the Fünf Höfe (very central and in a pedestian zone), Brown’s tea house — Amalienstraße

Oberammergau, with a cast of 2,000 (15 May — 3 Oct).

near the university.

The BMW Welt is an extraordinary architectural

Most inspirational building Alte Pinakothek,

statement and worth a visit even if cars aren’t your

and the Pagodenburg in the grounds of

thing. Maximilianstraße is the place for lavish

Schloß Nymphenburg.

brands and boutiques, but arguably more flavour is

Best tip Visiting the public galleries, museums,

to be had in adjacent streets — visit Dallmayr in

and concerts and walking everywhere.

Residenzstraße, and Lodenfrey in Maffeistraße.

Worth noting You can take a bike on the

Bikes can be rented from Radius on the north side of

S-Bahn beyond the city , where beautiful

the main railway station. Alternatively rent a car for

lakes await

the day and drive an hour to the Alps.

COMPASS 6

GRANDE DAME Independently owned Bayerischer Hof is one of the great hotels of the world

13

3 10

9 8 4

N

12

7

14

1

11 2

15

5

1 Marienplatz (city centre) 2 Theresienwiese (Oktoberfest ) 3 Museum Brandhorst 4 Bayerischer Hof hotel

5 6 7 8

Cocoon hotel Hotel Carlton Dallmayr Radius bike rental

9 Schumann’s Bar am Hofgarten 10 English Gardens 11 Viktualienmarkt

12 13 14 15

Maximilianstraße Chinese Tower (beergarden) Hofbräuhaus (beergarden) Isar River

SEPTEMBER 2009 I CNBC BUSINESS 73

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Indulgences Inndulgences Indulg In dulg du lggeencceeess THE SMART SET

Almost like a futuristic vision from a comic strip of 50 years ago, every business traveller in the world now carries in a spare pocket or a corner of a handbag a global communications device. Indeed, these extraordinary machines actually do more than even sci-fi writers envisioned. Not only can we use them to speak to practically anyone on the planet, but we can send them messages, pictures, video and documents, download and watch music and films, navigate, shop, and read books, magazines and newspapers wherever we may be. But the competition between smartphones is keen. Which is the smartest? Jonathan Margolis looks at the three current top offerings.

BlackBerry Bold 9000 Canadian pioneer BlackBerry invented the idea of the business smartphone when it introduced live, real-time email to mobile phones a decade ago. One of its latest, and by general consensus its greatest, is the BlackBerry Bold 9000, which retains the squashed-fruit look (it explains the BlackBerry name) but adds enough fun features to make the Bold respected the world over. The Bold is the complete corporate package and is easy for your IT department to integrate into a secure company network, and maintain remotely. You can work on Microsoft Word and PowerPoint on the move — and listen to downloaded music files while you’re doing so. It will pick up local Wi-Fi networks to make web use even faster and has a

passable 2-megapixel camera for taking photos and video clips. The camera has built-in flash and a digital zoom. You can add extra memory with a microSD card The Bold also has satnav capability, which saves having to carry a separate satnav with you on business trips when you don’t want to be laden with gadgetry like a technological pack horse. Smartphones do such a lot that they suck the life out of batteries at a sometimes alarming rate. Apple in its wisdom (see iPhone 3GS) seals the battery into its product, so when it runs out of juice, you’re out of contact. Not so BlackBerry; you can carry as many previously charged batteries as you please. A basic but incredibly practical touch.

Palm Pre Long before smartphones, when a blackberry was still a fruit, we had pocket-sized PDAs – personal digital assistants. And the biggest name in these was Palm, originators of the mighty Palm Pilot, that road warrior icon of the 1990s. Palm didn’t quite disappear at the turn of the century, but it lost its edge and was largely forgotten. In spite of a steady stream of nice-butno-cigar smartphones, it’s taken until this year for Palm to make its big comeback with this, its eagerly-awaited, if oddly named, Pre, which has been welcomed as the biggest threat yet to the dominance of BlackBerry and iPhone. The Pre is like a small, highly polished stone that magically slides apart to reveal its inner

workings. Its brain is actually a bit bigger than its competitors’ and it’s possible to keep three or four programmes working simultaneously — more like on a PC than a phone. The Pre’s screen is smaller than the iPhone’s, and you may prefer the way it looks with video on-screen. Among the many wonders of the Pre is an easily learned system of finger gestures, which make using the phone as sensuous a pleasure (if you are into this kind of thing) as the iPhone. On the other hand, the keyboard has actual keys, unlike the iPhone’s on-screen keys, which some people can’t abide. Do beware the Pre’s battery life, though — it’s not brilliant. Otherwise fine technology all round.

74 CNBC BUSINESS I SEPTEMBER 2009

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iPhone 3GS Techie style guru Apple bided its time for years before safari-ing out into the mobile phone jungle. But when it entered with its first — and still outrageously beautiful — iPhone two years ago, it managed to bring technical pizzazz and chic together into a smartphone. The iPhone’s mission was to combine business with pleasure — to help us do all the important stuff we need during the day, and then keep us entertained in the evening or on long journeys. And how Apple succeeded. This 2009 version of the iPhone sold a million units within a week of its release in June. Apple has ironed out several of the irritations that marred earlier models and the new phone manages to be a pleasure to use even when you’re doing boring stuff. Internet access is now as fast as it’s currently possible to achieve via phone networks (which, let’s be honest, isn’t very fast). Battery life is fractionally better, although the battery is still non-removable, which means anyone wanting to work all day with an iPhone will need an external battery; many such devices exist. There’s no point pretending that the iPhone is the ultimate in pure business smartphones. Part of the fun of the iPhone has been the vast array of downloadable applications, from wine tasting guides to language tutors to spirit levels. There are business travellers who will need phones that run more hairy-chested business software and less amusing applications. But if you can get away with an iPhone, it has more chic than any other competitor.

TO INFINITY AND BEYOND Richard Lofthouse sees sense in Seiko’s leap into luxury

This month witnesses a milestone in the history of Japan’s largest watchmaker Seiko: the launch of its first luxury range sold globally. Called Ananta (the Sanskrit word for infinity), the timepieces range in price from €2,000 to €5,500, sending Seiko into the rarefied atmosphere usually associated with top Swiss brands such as Rolex and Breitling. The move is not to be confused with Seiko’s Kinetic innovation from the mid-1980s, which used the movement of the wearer’s wrist to generate an electrical pulse allowing quartz accuracy without batteries. Nor is it to be confused with the introduction four years ago of Spring Drive, heralded as a revolution in horology based around combining elements of quartz technology with a mechanical movement, which was initially produced in tiny quantities for very high prices — $100,000 in the case of the inherently collectible Credor Spring Drive Sonnerie, sold under the Credor brand in Japan only. This time Seiko has brought a refined Spring Drive movement to the affluent masses by combining it with luxury designs themed around

the shapes and styling of a samurai Katana sword, which, in particular, influences the shape of the lugs, which are striking. There are three mechanical calibres, an elegant GMT with a power reserve of 72 hours, plus two completely new movements — a chronograph and a double retrograde. This may be enough to whet the appetite of even the most hardened Swiss-watch snob, still appalled at the way that the Seiko’s invention of the quartz watch in 1969 nearly brought the Swiss industry to ruin. Very few industry observers thought that Seiko would bring the price point of Spring Drive so low so quickly, and no one really expected the king of quartz to so rapidly match (and surpass, depending on your point of view) the Swiss at their own mechanical game. Seiko’s market timing appears to be propitious, seeing as its offerings undercut in price many Swiss rivals while focusing relentlessly on engineering quality and longevity and what could be the new watchword for a recessionary atmosphere: ‘tangible luxury’. SEPTEMBER 2009 I CNBC BUSINESS 75

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Indulgences Indu In dulg lgences BOOKS

CROSSROADS By Peter Nolan

Marshall Cavendish €25 ISBN 9780462099682 This book is likely to make the rounds, as it moves on from ‘how I/we/they caused the credit crunch’ narratives to a much broader consideration of ‘the meaning of it all and where we’re headed’ – or, as the subtitle puts it: The End of Wild Capitalism & the Future of Humanity. In the second half of the book the author settles on the benign scenario of cooperative

PURSUITS

dialogues between America and China and America and the Islamic world. Many of the less palatable alternatives, including nuclear war with China, are explored at sufficient length to be hair-raising. The first half of the book sets up the ‘crossroads’ by providing a thematic history of capitalism — the goods and wonders it has produced and then, inevitably, all its wild excesses and contradictions. Lingering on the disastrous recent history of finance, the author has no immediate solutions, merely citing the need for global regulation of the global financial system — and the effect is to undermine his earlier assertion that the era of wild capitalism is over. To the same extent his insistence on a ‘collective’ alternative never really materialises, and by the end the author

is happily quoting the historian E.H. Carr on the fanciful nonsense of “collective security” and how the illusion of it (in the League of Nations) helped bring on the Second World War. Reminiscent of Paul Kennedy’s Preparing for the Twenty-First Century (1993), the overall effect of Crossroads doesn’t quite expel the air of an elegant study somewhere in Cambridge (the author holds a chair at Judge Business School), a publisher’s deadline and the absence of solutions except on paper, where human beings bury their silly differences and grasp the pragmatic. Fittingly, by the end, Nolan chooses to retreat into a private epilogue to his father, who belonged to a simpler, more honest age and “like Thoreau, …was essentially a mystic, enthralled by the immensity of existence”.

THE FIRST CROP OF THIS SEASON’S BUSINESS BOOKS... HOW THE MIGHTY FALL

THE UPSIDE OF THE DOWNTURN

How companies typically decline, following success but also how this can be guarded against or reversed. By Jim Collins Random House €20 ISBN 9780977326419

Advocates 10 management strategies to prevail in the recession and even thrive. By Geoff Colvin, Nicholas Brealey Publishing €20 ISBN 9781857885286

GROWTH MANAGEMENT

GLOBALISATION LAID BARE

Explores the need for businesses to fulfil two roles — both delivering cash today and providing sustainable growth. By Andrew Lester Palgrave Macmillan €29 ISBN 9780230577503

Diverse experts including Alan Greenspan, former Federal Reserve chairman, and eco-feminist Dr Vandana Shiva address ethical globalisation. Introduction by Richard Branson, Gibson Square Books €14 ISBN 9781906142339

THE BACK OF THE NAPKIN

THE MYTH OF THE RATIONAL MARKET

A guide to using simple drawing to synthesise concepts, solve problems and sell ideas by an expert in visual thinking. By Dan Roam Marshall Cavendish €15 ISBN 9780462099477

History disproves that investors are always rational and that markets are always right. By Justin Fox Harper Business €20 ISBN 9780060598990

THE 50TH LAW

CHANGE BY DESIGN

Hip-hop superstar 50 Cent joins best selling author Robert Greene to provide strategic counsel on winning in business and life. No fear is the credo! By 50 Cent and Robert Greene, Profile Books €17.50 ISBN 9781846680687

How design thinking can meet people’s needs and what is feasible in technical, commercial and social terms. A relevant tool for social challenges like energy saving. By Tim Brown, Harper Business €20 ISBN 9780061766084

THE FALL OF THE HOUSE OF CREDIT

CAN CAPITALISM SURVIVE?

A haunting expose of the hows and whys of the banking crisis, coupled with an argument for restoring oldfashioned terms of credit. By Alistair Milne, Cambridge University Press €23 ISBN 9780521762144

Discover why the renowned economist says it can’t, while outlining the heart of his philosophical ideas. By Joseph A. Schumpeter Harper Collins €7 ISBN 9780061928017 SEPTEMBER 2009 I CNBC BUSINESS 77

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Indulgences Inndulgences In dulg du lgences f Vita Audio R2i The quirky British makers of ‘serious small audio’ have done the sensible thing and reworked their R2 to include the universal iPod dock, formerly available only on its larger and more expensive cousin, the R4. Hey presto, the R2i is born — a bargain at current exchange rates if you’re paying with euros for a product priced in pounds. €330 vitaaudio.com

PURSUITS j Agua de Colonia

This unisex eau de cologne has stood the test of time and remains a bastion of old-world pricing too. A favourite of Madrileños since Alvarez Gómez launched it in 1912, the fragrance effuses extracts of Spanish lavender, lemon, geranium, eucalyptus, rosemary and bergamot. For the first time it is available in the UK and Ireland. €28 alvarezgomez.com

j Coach Transatlantic Large Leather Commuter

f NITE MX10, MX05

Coach’s new collection includes this handsome, large capacity briefcase. Made out of retro glovetan leather, with a fabric lining, it offers a large outside back pocket, and an outside front pocket with zip closure business card and three credit card pockets, not to mention the ubiquitous cellphone pouch, and other multifunction pockets. €350 coach.com

Shown in two sizes, this watch looks as quietly authentic as any swanky bluechip brand, but comes without the multi-thousand-euro price tag. The British watchmaker is an official military supplier, and the models shown have their own NATO code on the watch back. The rest is pure function with a twist — a Swiss quartz movement, four-year battery, waterproofing to 100m, sapphire glass, anti-reflective coating and a USP in the form of tritium illuminated hands that glow brightly in the dark. €185 nite-watches.co.uk

i Dromarti Starda This steel beauty is made in a three-man workshop in Treviso, Italy, that produces only two or three frames a week to order. Recreating the past, with its Tuscan cream and red paintwork, it’s a far cry from the almost disposable mentality of carbon fibre that has come to dominate pro-cycling. Think Fausto Coppi, not Lance Armstrong. €1,200 (frame only) dromarti.com

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The world’s property market in Asia Pacific

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Key names - key contacts - all at the key real estate event in Asia.

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ET O O G N

ET O NE O G

Professor Fan Gang, Director, National Economic Research Institute – China

Jun Ma, Chief Economist, Greater China, Deutsche Bank

Chun Ying Leung, Chairman, Asia Pacific, DTZ

These faces are some of the reasons why MIPIM Asia 2009 is the essential venue for real estate investment and development in Asia Pacific. Here at MIPIM Asia, the only International Exhibition and Conference Event in the region, you will have full access to key players in the industry over three intensive days. They will deliver keynote speeches and be available for face-to-face meetings. With them you will be helped to make the deals and form the partnerships that will overcome an uncertain economic future. Register now via our web site www.mipimasia.com or contact us on + 44 (0) 20 7528 0086.

Companies attending MIPIM Asia 2009 Aedas AET Flexible Space AIG Global Real Estate Angelo, Gordon Asia Ltd APG Asset Management APREA Arquitectonica AXA Reim Benoy BSH Home Appliances Co Ltd Chapman Taylor Llp Citco Citic Capital Deutsche Asset Management (HK), Ltd. DTZ Eagle Asset Management (CP) Ltd EPAD Euro Asia Management Group Fan Ya Tai Asset Servicing Consulting Co. Four Seasons Hotels & Resorts Gaw Capital Partners Givenchy China Co., Ltd. Grosvenor Gucci Group (HK) Ltd HKR Asia-Pacific Pte, Ltd. Hong Kong Institute of Architects Hong Kong Resorts IBM China / HK Ltd. ING Real Estate Investment Management Invesco Real Estate Asia Jeju Free International City Development Centre (JDC) Jeollanamdo Provincial Government Jerde Partnership Inc KPMG Langham Hotels L’Oreal China Doasia M3 Capital Partners Marco Polo Hotels Marriott International, Inc Merrill Lynch Millennium Asset Management Morgan Stanley Nvidia Outlets (China) Group Outrigger Enterprises Group Pacific Star Pamfleet Philips Pramerica Real Estate Investors Profimex Province of Shaanxi Quill Capital Management Real Capital Analytic Real Estate Capital Asia Partner Redevco Asia Ltd. Regal Hotels International Rhombus International Hotels Group Russell Investments Seb Investment Gmbh Starbucks Coffee Stefanel Swire Properties The Royal Bank of Scotland TMF Treasury Holding China Ltd. Triumph International US SITQ Vinacapital Wal-Mart Asia Westmont Hospitality WPP Asia Pacific Wyndham Hotel Group Xiamen Land Development Center Yardi Systems

18-20 November 2009 Hong Kong Convention and Exhibition Centre, Hong Kong SAR

www.mipimasia.com

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Culture

PURSUITS

CULTURAL DIARY LONDON FUTURISM Until 20 September 2009 Tate Modern tate.org.uk/modern/ Celebrating a century of Futurism, the exhibition highlights works debuted at the movement’s first show in Paris in 1912. Key Futurists Giacomo Balla and Umberto Boccioni’s are represented, as are trends like Vorticism that developed in reaction to Futurism.

ISTANBUL

VENICE

AMSTERDAM

VENICE INTERNATIONAL FILM FESTIVAL

VAN GOGH’S LETTERS: THE ARTIST SPEAKS

2—12 September 2009 Venice Lido labiennale.org BAARÌA, by Oscar winner Giuseppe Tornatore, opens this highlight of the festival calendar. Lifetime achievement awards will go to John Lasseter and other Pixar directors in tandem with world premieres of Toy Story I & 2 in 3D.

9 Oct 2009 — 3 Jan 2010 Van Gogh Museum vangoghmuseum.nl Some 120 original letters will be exhibited alongside the artistic works referred to. The letters are rarely on public display because of their fragility and sensitivity to light, so this offers a rare insight into the Dutch master’s verbal talents.

WASHINGTON, DC

PRAGUE

WHAT KEEPS MANKIND ALIVE

1934: A NEW DEAL FOR ARTISTS

PRAGUE AUTUMN MUSIC FESTIVAL

12 Sept — 8 Nov 2009 International Istanbul Biennal — various venues iksv.org Named after a Bertolt Brecht song, the 11th edition of this art show explores questions of economic and social urgency. Curated by What, How and for Whom, there are 120 projects by 69 artists from 40 countries.

Until 3 January 2010 Smithsonian American Art Museum americanart.si.edu Responding to an economic situation similar to today’s, President FD Roosevelt created the first federal government programme for the arts. A selection from the Public Works of Art Program is on show.

12 Sept — 1 Oct 2009 Rudolfinum pragueautumn.cz Pure indulgence for the ears at a event that has fast gained a reputation for attracting eminent classical musicians. The Prague Philharmonic and Symphony Orchestras, perform works from the last 200 years.

BRUSSELS REPROMOTION Until 13 September 2009 Centre for Fine Arts (Bozar) bozar.be A leading figure on the contemporary Belgian art scene, Jan De Cock, presents a striking series of sculptures and photographs, shown in a series of rooms, each of which is intended to be experienced as a sequence in an imaginary film.

LONDON COLDPLAY 18—19 September Wembley Stadium wembleystadium.com Grammy-winning Brit rock band Coldplay play the final two dates of their 2009 Viva la Vida Tour, which has taken them across Europe, North America, Asia and Australasia. The Wembley dates are the band’s biggest UK headline shows to date.

BERLIN

MADRID

BERLIN INTERNATIONAL LITERATURE FESTIVAL

SPARTACUS — THE BOLSHOI BALLET

9—19 September 2009 Berliner Festerspiele berlinerfestspiele.de Arundhati Roy (The God of Small Things) is to open the 9th edition of the festival. Boasting more than 100 contemporary novelists, writers and poets from across the globe, “The Arab world under the spotlight” is this year’s special focus.

5—10 September Real Teatro teatro-real.es Yuri Grigorovich’s legendary Spartacus is brought vividly to life by the Bolshoi Ballet. The production is accompanied by the Madrid Sinfonica, the theatre’s resident orchestra, and conducted by Pavel Sorokin.

PARIS LOUIS COMFORT TIFFANY, COLOURS AND LIGHT 16 Sept 2009 — 17 Jan 2010 Museé du Luxembourg museeduluxembourg.fr An opportunity to admire this stunning collection of exquisite stained glass windows, lights, decorative objects and mosaics by the American maestro of glass Louis Comfort Tiffany, son of the founder of the famous jewellery brand.

MILAN L’ORFEO 19 Sept — 6 Oct 2009 Teatro alla Scala Teatroallascala.org A brand new production of Orpheus will resound through this celebrated venue. Italian early music specialist, Rinaldo Alessandrini, is to conduct, joining creative forces with director Robert Wilson, whose staging is inspired by a famous Titian painting.

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Schedule

PURSUITS

CNBC delivers fast-paced, real-time coverage of the financial markets. Its programmes provide in-depth analysis of the news and trends affecting the region’s business community EVERY WEEKDAY (ALL TIMES CET) 06:00 Capital Connection Co-anchored from London and Singapore, Capital Connection provides the perfect look ahead to the European day, with analysis and reports on the Asian markets and a summary of Wall Street’s close. 07:00 Squawk Box Europe CNBC’s signature show in Europe, Squawk Box Europe is a pre-game show for the markets, leading up to the opening bell across Europe. 10:00 Worldwide Exchange Tri-anchored from London, Singapore and New York, CNBC’s daily business news programme, delivers in-depth analysis of worldwide trends that are influencing investors across international markets. 12:00 US Squawk Box A mix of business news with an unscripted and fast-paced exchange of banter as the trading day begins on Wall Street. Strictly Money (UK only) Viewers in the UK can tune in to Strictly Money, a new programme for the UK focusing on you and your money. 15:00 Squawk on the Street Mark Haines and Erin Burnett anchor Squawk on the Street from a set overlooking the floor of the New York Stock Exchange giving viewers a look at the action as the opening bell rings on Wall Street. 17:00 European Closing Bell Join Guy Johnson and Anna Martin for a new one-hour, fast-paced dynamic wrap-up of the trading day. Reporters at all of the major European markets will guide you through the closing bell. 18:00 Europe This Week (Friday) Europe This Week looks back at the week’s top stories across Europe and the world and sets the

agenda for the coming week. The definitive wrapup of the European business week. 18:00 US Power Lunch (Monday – Thursday) Take an up-close-and-personal look at the companies, people and hot trends driving the markets and influencing Wall Street. 19:00 Europe Tonight (Monday – Thursday) A comprehensive review of the business day, with in-depth interviews with CEOs, business and political leaders on the day’s most important stories and events. 20:00 Street Signs (Monday – Thursday) The top stories of the day with Erin Burnett, live from CNBC’s global headquarters, offering detailed analysis of everything from mergers and acquisitions to trends in online advertising. 20:00 Europe This Week (R) (Friday) Europe This Week looks back at seven days of action in Europe’s financial arena and sets the agenda for the coming week. 20:30 World Business (Friday) A team of international correspondents cover every corner of the globe, tracking the business trends that are going to affect you. 21:00 US Closing Bell Closing Bell guides viewers through the last 60 minutes of the trading day, offering a complete wrap-up of the day and insight into the next day’s market. 23:00 Europe Tonight (R) (Monday – Thursday) Complete coverage of the day’s events in the financial and business world, with interviews with political and financial leaders, live from London. 00:00 The Tonight Show with Conan O’Brien The showbiz extravaganza that gives an update

on who’s who and what’s what in the fast-paced world of Hollywood. 00:30 NBC Nightly News Brian Williams reports nightly from Rockefeller Plaza with all of the day’s most newsworthy national and international events. All times are CET. Times are subject to change. For more information, go to europe.cnbc.com. (R) Repeat programming

PROGRAMMING HIGHLIGHTS Executive Vision Tune in to CNBC in September for Executive Vision, a new weekly series hosted by CNBC anchor and reporter Melissa Francis. Five CEOs will offer perspectives into the past, present and future of their respective fields. Visit CNBC.com for airing times.

World Economic Forum, Meeting of the New Champions 10-12 September, Dalian, China Join CNBC for live reports from the Meeting of the New Champions. Geoff Cutmore will be speaking with business leaders, executives and government officials about reviving the global economy in a manner that is sustainable in the long-term.

G-20 Summit 24-25 September, Pittsburgh, PA, USA CNBC will be live at the G-20 Summit, chaired by President Obama, speaking to leaders from across the globe to review the progress made since the London summit.

CNBC Life, CNBC’s weekend programming provides viewers with the very best in travel and leisure, sport, luxury, entertainment and current affairs. Broadcast from 14.00 to 23.00 CET each Saturday and Sunday. Current affairs Catch up with the latest topical business feature programming from CNBC including favourites such as World Business and Gateway to the Middle East.

81_CNBC schedule.indd 113

Sports CNBC offers fans a front-row ticket to some of the biggest sporting events around the world. Tune in for the latest in cricket, tennis, golf, equestrian games, motor sports and much more.

Travel & Leisure CNBC, together with The Travel Channel, brings viewers a selection of programmes every Saturday and Sunday from some of the world’s most fascinating destinations.

Entertainment Catch up on the best US entertainment programming, including Late Night with Conan O’Brien, every Saturday and Sunday evening.

Luxury CNBC, with The Luxury Channel, brings viewers what’s new in luxury. September features the latest from luxury brands, art collections, fashion houses and style-makers.

12/8/09 16:07:43

PHOTO: GETTY

Parting shot

BACK TO THE FUTURE

1 October will mark 60 years since the People’s Republic Of China was proclaimed by Mao Tse-tung. The image here of a billboard advertising White Kitten cloth was captured on 1st January 1948 and emphasises that capitalism came to China long before Communism suppressed it

OCTOBER ISSUE ON SALE 24 SEPTEMBER i WRITING ON THE WALL How Berlin became Europe's most dynamic capital within 20 years

i DUBAI NOW, PAY LATER How Middle East investors are learning from the property crash

HULU'S GLOBAL HOOP How the online video site hopes to run rings around YouTube

DOWNTOWN IN....ISTANBUL Get the best out of the city that's serious about business... and partying

82 CNBC BUSINESS I SEPTEMBER 2009

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No.46821 Consus.indd 1

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Innovative business ideas grow in innovative capital markets. Think ahead today, move the world tomorrow. The IPO success of innovative companies requires an innovative environment. Deutsche Börse strategically positions your company alongside international peers. This way you join first class sector coverage, experience investors longing and high valuation, and participate in the most exciting market for leading innovative industries. Add to this our modern primary market segments and cutting edge trading technology, worldwide investors, and you’ll understand why Deutsche Börse is your most fitting match for a successful future. ‫ॿوူך‬ᄲ੻௴֑լᇀ‫وူך‬ዊӊชթ! ๔৬॥໢‫و‬སੂLj༚‫ڑ‬෺ज़‫و‬ட໢ă‫ူך‬ವჟ֑‫وޢ‬ฑ‫ާ״‬৚ۢှၖექ‫࡯وူךޔ‬অă‫ن‬ ᄌበयᄁຑሁଞ၂ٜෳఀ‫ާو‬๖Ԍ઼ᅢ߶࣠ቌணༀှăༀ෫Ljఀटࣩ൩ქૣ‫و‬ှჟ‫ܕ‬ཙLjᅘዅ ॿႵ‫وݙܡ‬༊ዊሣࠧ‫޼ݽ‬቗LjჾࣆԸᅳዮ૚൉္‫وܜ‬૘࿘ࣆ‫ޠူך‬ჟăࣩ൩‫྄ف‬୯࿦‫وࡧؠ‬ ქ࣌ชթࠧᄽᅘࣸ‫࣒ڭ‬ฯ‫و‬यᄁ౿ພLjᅳ෺ज़‫ޕ‬ٜ‫و‬༊ዊሣे‫׋‬Ljఀटட҅ཛྷ෬ଡ଼‫ن‬ᄌበय ᄁຑกఀ‫ך‬ᇒ֑‫ޢ‬སੂ‫و‬ዮࠩค‫و‬ၭᇗă ഋᅳ྄୯‫و‬ฑ‫ާ״‬৚ۢှከࣨખ࿅Ljჾࢩട‫ޚ‬࿺࿈‫ྲဳو‬ă For more information please contact our IPO experts. ٫ࡨ!+49-(0) 69-2 11-1 88 88 ٫ዓᅒऔ!issuer-relations.china@deutsche-boerse.com, www.deutsche-boerse.com /china Deutsche Börse Listing: Welcome to Your Future སੂ‫!;ࡵࡎو‬ᇀ‫ن‬ᄌበयᄁຑණช

DB_AD_Solar_CNBC_(3.1).indd 1 No.49091 Deutsche Borse 1pp.indd1 1

18.08.2009 19:26:14 Uhr 19/8/09 09:13:37

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