28 european business magazine autumn edition 2017

europeanbusinessmagazine.com

AUTUMN EDITIONՍ|Ս2017

EUROPEAN BUSINESS

MAGAZINE o_-m ubmh;m0;u] CEO OF NORDIC GUARANTEE PUTTING HIS STAMP ON THE INSURANCE INDUSTRY

BitCoin / ArtiȨcial Intelligence / Reinsurance Industry / CEO ProȨles - Johan Brinkenberg, Freddie Achom, Torbjörn Sjöström / FDI Focus - South Carolina, Edinburgh / Electric Car Revolution / Private Aviation / Border Control / Berlin and Olav Gutting MP / European Start Up’s / Catalunya / The Omnia

Surrounded by its marvellous scene,

THE OMNIA, remain never to be forgotten.

This is THE OMNIA.

THE OMNIA, Zermatt – Switzerland, Phone +41 27 966 71 71, www.the-omnia.com

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SUCCESS WHERE

GOES TO LIVE HAPPILY EVER AFTER

Why has the number of bioscience companies in Iowa grown more than 141%*?

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DRIVE MEANINGFUL

CHANGE IN YOUR ORGANIZATION.

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WESTERN FRANCE

PAYS DE LA LOIRE REGIONAL INVESTMENT AGENCY 8 GOOD REASONS TO INVEST IN FRANCE PAYS DE LA LOIRE

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CONTACT: Mrs Nadia CHIBOUTI International Development & Inward Investment Advisor

ȁ A CULTURAL AND CREATIVE BREEDING GROUND

Tel: +33 (0) 240 48 83 05 e-mail: n.chibouti@agence-paysdelaloire.fr Web: www.invest-western-france.com Twitter: @InvestWF

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Table of Contents

14

Ceo Shuffle

46

Investing In The U.S.A - Your Perfect Partner

16

Latest Technological Gadgets 2017

48

South Carolina’s Next Big Thing

18

Bloomberg’s New One Billion Pound European Home

50

New 3D-Printing Prototyping Lab Is Iowa’s Play To Take A Share Of The $140B Medical Device Industry

19

Ford Gets A Lyft 53

19

Ex Facebook President Sean Parker Admits Social Network Manipulates Human Psychology

Bank Admits Fiat Currencies Are Failing And Cryptocurrencies May Replace Them

54

Torbjorn Sjostrom

56

62 Insane Facts About Bitcoin

69

The Business Of Border Control

71

Is The Rise Of Bitcoin Sustainable?

74

Electric Fiat Currencies And Cryptocurrencies - Where We Are At?

20

22

Fintech Firm R3 And World’s Biggest Banks Build Blockchain System The Digital Future Of Europe

26

European Startups

29

Investment In Uk Startups To Continue Depsite Brexit 76

The Luxurious Mountain Lodge

31

Berlin The New Central Hub Of Europe

78

“Russia-Gate” Spreads To Europe

34

Navigating The European Aviation Market

80

36

Weathering The Storm

Slow Time Is Here: A One-Handed Watch For Those Who Want To Live Slow

38

Johan Brinkenberg - Ceo Nordic Gurantee

82

Europe And The Electric Car Revolution

85

About Research And The Art To Describe And Explain

88

Catalunya A Task For Courageous People

41

Scotland’s Flourishing Investment Scene

43

Edinburgh A Historic City, Shaping The Future Today

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EUROPEAN BUSINESS

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MAGAZINE

Publishers Note

W

elcome to another issue of European Business Magazine where we will be covering quarterly topics on the European Business Scene with our normal vigour.

As with nearly all stock market trading it is very much inYuenced by demand which by its very nature is inYuenced by conCdence. What has a signiCcant impact on both, is the poliঞcal /economic environment and those who are actually wriঞng about it – i.e. journalists. What has been trading and being commented on with equal intensity globally is BItcoin.

What has been fascinaঞng is the recent rise of Bitcoin. If you have missed this, it is possible you have been lying in a bunker somewhere. Some call it the next revoluঞon and some well-established journalists are e@ecঞvely calling it a scam of huge proporঞons. Either way, it is dividing the scepঞcs from Max Keiser, a wellknown Cnancial analyst and contributor on Russia today who advises that Bitcoin will be trading at $40,000 by the end of 2018, to John McAfee who at the ঞme of going to print is predicঞng that Bitcoin will be hiমng the $1 million mark by 2020 and not $500,000 as he originally predicted. However on the Yipside, you have many scepঞcs including the CEO of JP Morgan (Jamie Dimon) who said in September 2017 Bitcoin was a fraud which would eventually blow up. As we go to press a well known Dutch columnist has just come under Yak for urging readers to sell their bitcoins because they’re “dangerous”. In a widely shared op-ed, the writer asserts that “bitcrash” is dangerous because it has no Cnancial insঞtuঞon to monitor it and is a menace to the economy. He is not alone, but for the last three months, Bitcoin has been doubling each month and the doubters seem to have gone back to their corner while Jamie Dimon has teams buying up and trading cryptocurrencies at various stages. And as we speak, Venezuela has just launched the Crst oil-backed cryptocurrency - ঞme will tell if it can help overcome its troubled state and ঞme will only tell of whether Mr McAfee’s predicঞons ring through.

In other areas of Europe, it seems that the ongoing Casco of Brexit and the political divorce of Britain is coming down to the Irish border. The EU’s insistence on erecঞng a hard border between Northern Ireland and its southern neighbour has caused fury and is now the main sঞcking

point threatening to derail the talks. As we go to print, no deal has been reached.

Another space to watch very closely.

Across the pond, Trump has not been failing to keep up his lively twi er account retweeঞng videos of the far right to his 45 million followers. Parliament nearly came to meltdown - everyone came out of the woodwork in fury, and there was World War 3 - not too sure Trump heard anything. Anything at all.

Moving on to what we have in store and we have looked at Bitcoin and its tenyear history and Cryptocurrency. In our usual Foreign Direct investment, we are looking at our close neighbours, Scotland, and the ever-growing city of Edinburgh, followed by the investment scene in the USA with a close look at South Carolina.

We also take a closer look at the European Startup Scene, The Digital Future of Europe the Private Aviaঞon Industry in Europe, and the Electrical Car Revoluঞon.

CEO proCles considers the serial startup investor Fred Achom, as well as CEO Torbjörn Sjöström, who is running the market research agency Novus in Sweden.

We also catch up with Member of Parliament, Olva Guমng, who gives us his views on why Berlin is becoming one of the leading hubs in Europe.

Finally, we have a personal account of a local Catalan giving us an invaluable insight into the troubling region of Catalunya in its failed Cght to gain independence.

All in all, a read I hope you enjoy. And hopefully, you may learn something new from our Autumn issue.

Publisher Nick Staunton Editor Katie Winearls Deputy Editor Anthony Gill Associate Publisher Brad Adams Features Editor Patricia Cullen Head of Production Marija Hajster Head of Design Vladimir Mladenovski Subscriptions Manager Rebecca Hill Head of Business Development Paul Matthews Advertising Sales Brad Adams Tara Duckworth Advertising Sales Tara Duckworth, Mike Ray, Andy Ellis, Mark Holburn Contributing writers Patricia Cullen, Richard Fitzpatrick, Bala Murali Krishna, Shilpa Meen, Argee Laraya, Aimee Ni Mhaolcraibhe, Gordana Ristic, Jonathan Hooker, Jose Ignacio Latorre Head of Digital Stephen Scott Photographer Ben Fisher NST Publishing Ltd, 19 Leamington Spa (studio 1) Leamington Spa,Cv324tf, UK

Nick Staunton Publisher

The information contained has been contained from sources the proprietor believes to be wholly correct however no legal liability can be accepted for any errors. No part of this publication can be reproduced without consent of the publisher.

CEO SHUFFLE

European Business Magazine gives the low down on some of the recent reshuffles amongst the highbrow in the business world AEGON ASSET MANAGEMENT

Jon Sharpe - Incoming Ceo VML

Marঞn Davis, who has served as the CEO for Kames Capital for four years, will see Aegon AM Netherlands, TKP Investments and Kames Capital come together under one board under his management. The change will be come Cnal on January 1.

Martin Davis

VML Jon Sharpe will be focusing on growth as the new European CEO of the markeঞng agency.

Sharpe lead Y&R to success with Chanel No5, Premier League, Lombard Odier, JD Williams and the Department of Transport. He begins his new posঞng in January.

Former Julius Baer CEO

PICTET Former Julius Baer CEO, Boris Collardi, has moved over to the Geneva-based compeঞtor of his former employer. His new role sees him as one of six partners at the company, which will begin mid-2018. He has been replaced by interim CEO Bernhard Hodler, Julius’ Chief Risk OLcer. Collardi was CEO of the company since 2009.

14 europeanbusinessmagazine.com

Charlotte Hogg as CEO of European Operations

VISA The credit card company has appointed Charlo e Hogg as CEO of European Operaঞons. The move also places Hogg as a member of the company’s global execuঞve commi ee. She joins the credit giant from her former posiঞon as CEO of Bank of England.

XPO LOGISTICS Malcolm Wilson moves up to CEO, replacing Troy Cooper. Wilson originally joined the company in 2007 while it was known as Norbert Dentressangle. He took over as the MD supply chain in Europe in 2015. The move was done in September.

Malcolm Wilson

Yoshihisa (Bob) Ishida

SHARP Yoshihisa (Bob) Ishida has been appointed CEO of Sharp in Europe.

Ishida moves to his new posiঞon from his current role as Execuঞve Vice President for the company.

He has a long background in consumer electronics that includes sঞnts at Sony Corporaঞon, LG Display Japan Co and Rakuten Corporaঞon.

CEO SHUFFLE Adam Toms

MD INTERNATIONAL Min Doktor has high hopes of further European expansion with its appointment of Laurens Leurink as its newest CEO. Leurink leaves his Senior Vice President post at Amadeus IT Group. He has also worked at Booking.com, heading that company’s internaঞonal growth.

ORCHARD THERAPEUTICS

OPENFIN Adam Toms is the new CEO in Europe for the Cnancial desktop apps’ operating layer OpenFin. Adam has previously been the CEO of Insঞnet Europe as well as his most recent job on the board of RSRCHXchange.

Allianz Real Estate Ceo Alexander Gebauer

Mark Roithera - newly appointed Ceo of Orchard Therapeutics

Laurens Leurink

VERIMI Donata Hopfen has le[ her post as publishing director and head of the management board at BILD to become CEO of Verimi. The move coincides with the company’s plan to launch a digital master key in 2018 that is expected to make web services more secure. Hopfen has been with BILD since 2003.

Mark Rothera, a 28-year veteran of the biopharma industry, has been appointed CEO for Orchard Therapeuঞcs. Rothera’s work history includes ঞme at PTC Therapeuঞcs, Aegerion Pharmaceuticals and Shire Human Geneঞc Therapies.

Hironobu Kurosaki

Donata Hopfen

NEC ALLIANZ REAL ESTATE As of October 1, Alexander Gebauer has taken over as CEO of the West Europe region of the real estate company. The role is focused on France, the Netherlands, Belgium, Luxembourg, Spain and Portugal.

Hironobu Kurosaki has taken on the role of CEO for the Japanese technology company’s European division. Kurosaki has been with the company since 1983. He has most recently held the ঞtle of general manager for NEC in America and EMEA. europeanbusinessmagazine.com 15

Latest Technological Gadgets 2017 Samsung Gear Sport The mobile electronics giant has announced three new wearables users can pair with its line of smartphones.

The Gear Sport and Gear Fit2 Pro were announced by the company at Europe’s biggest trade show, IFA. The Gear Sport and Gear Fit2 Pro have been designed for C tness-minded users. Not to menঞon they both come with GPS, 5ATM water-resistance making them a racঞve to swimmers.

Gear Sport has a 42-mm watch case and is available in two colours: black and blue.

It features a 1.2-inch Super-AMOLED screen. The company has cleverly created a variety of band opঞons with matching watch faces for users to select from, enabling users to custom design their look.

The Gear Sport also includes several Ctness-tracking features such as a digital cardio workout guide and a calories consumed mode. The cost is £300.

SanDisk 400GP microSD card

16 europeanbusinessmagazine.com

The Gear Fit2 Pro is less smartwatch and more Ctness band. It too features a 5ATM water-resistance and GPS, a heart rate sensor and be er ba ery life. The price tag for this digital device is £209.

It must be said that the capability to store a vast amount of data for digital devices is priceless and SanDisk have outdone themselves.

The small storage card has a video speed of C10, U1 and A1, runs up to 100 MB per second, which allows for the moving of 1,200 photos per minute.

It also promises faster app launch with A1-rater performance and comes with SanDisk Memory Zone app that o@ers quick and easy viewing and access to your data as well as the ability to back up your Cles e@ortlessly.

Prior to their latest addiঞon to the microSD market, the biggest card only o@ered an extra 256 GB. When you consider that the 400 GP card is the size of a Cnger ঞp, the amount of data that you can store is impressive, making the esঞmated £180 price tag worth it.

The drawback is that it only works for Android devices.

LG V30 phone LG has recently released its latest smartphone and the Android device is an impressive one.

With two back-facing cameras that can be used together or individually the LG V30 is a powerful visual tool. Featuring a 16-megapixel and 13-mexapixel sensors, alongside f/1.6 lenses and a 5-megapixel front camera there is no end to the capabiliঞes of this 6-inch device.

LG has also given users 4 GB of RAM and 64 gigs of storage in their latest release. The phone includes facial and voice recogniঞon technology, making it one of the top tech tools in the European market.

The LG V30 is available in Cloud Silver or Moroccan Blue, is waterproof, features wireless charging and comes equipped with Android’s Nougat OS.

Acer Spin 7 Convertible Notebook

One of the latest and most powerful compuঞng devices to hit the market is Acer’s Spin 7 Converঞble Notebook.

The 14-inch machine runs on the Intel Core i7-7Y75 Processor and comes equipped with Windows 10. Boasঞng

up to eight hours of ba ery life as well as wireless and Bluetooth capability this carry-along compuঞng device weighs 1.60 kg, includes two USD ports and operates on a lithium ion ba ery. It will set you back £1,199.99. europeanbusinessmagazine.com 17

Bloomberg’s New One Billion Pound European Home

Innovation Highlights ĹŽ m|;]u-|;7 ;bŃ´bm] -m;Ń´vÄš ;vroh; integrated ceiling panels combine heaাng, cooling, lighাng and acousাc funcাons in an innovaাve petal-leaf design. The system, which incorporates 500,000 LED lights, uses 40 percent less energy than a typical Yuorescent oLce lighাng system. ĹŽ )-|;u omv;uˆ-|bomÄš !-bm‰-|;u from the roof, cooling tower blowo@ water, and grey water sources, like basins and showers, is captured, treated and recycled to serve vacuum Yush toilets. These use net zero mains water for Yushing. Overall, water conservaাon systems will save 25 million litres of water each year, enough to Cll ten Olympic swimming pools.

B

loomberg’s new European headquarters is set to be the world’s most sustainable oLce building, a The building achieved an ‘Outstanding’ raাng against the BREEAM sustainability assessment method, with a 98.5% score. This is the highest design-stage score ever achieved by any major oLce development.

Michael R. Bloomberg, founder of Bloomberg L.P. said: “We believe that environmentally-friendly pracাces are as good for business as they are for the planet. From day one, we set out to push the boundaries of sustainable oLce design - and to create a place that excites and inspires our employees. The two missions went hand-in-hand, and I hope we’ve set a new standard for what an oLce environment can be.â€?

The cost is a staggering £1 billion and will be the new European headquarters iwith enough space for over 4,000 sta@.The 1.1 million sq [ site — based in two buildings joined by bridges — is located between the Bank of England and St Paul’s Cathedral in London’s famous Square Mile.

It also features a giant 210 metre ramp at its heart that aims to encourage collaboraাon between workers Compared to a typical oLce building, the new Bloomberg building’s environmental strategies deliver a 73% saving in water consumpাon and a 35% saving in energy consumpাon and associated COĆ™ emissions. Innovaাve power, lighাng, water and

18 europeanbusinessmagazine.com

venাlaাon systems account for the majority of energy savings. Designed to uাlise waste products, respond to the building’s external environment and adapt to its occupancy patterns, many of these soluাons are Crst-of-a-kind.

Norman Foster, Founder and Execuাve Chairman, Foster + Partners, said: “In some of our Crst discussions on the project, Mike Bloomberg and I arrived at a ‘meeাng of minds’ on how the design of the new Bloomberg headquarters should incorporate the highest standards of sustainability. The project evolved from thereon into a building that is one of the most sustainable in the world. The deep plan interior spaces are naturally ventilated through a ‘breathing’ façade while a top lit atrium edged with a spiralling ramp at the heart of the building ensures a connected, healthy and creaাve environment.â€?

The building is designed to use 73 per cent less water and 35 per cent less than a standard oLce building. “We believe that environmentally friendly pracাces are as good for business as they are for the planet,â€? said Bloomberg’s founder Michael Bloomberg.â€?From day one, we set out to push the boundaries of sustainable oLce design – and to create a place that excites and inspires our employees,â€? he added.â€?The two missions went hand-in-hand, and I hope we’ve set a new standard for what an oLce environment can be.â€?

ĹŽ -|†u-Ń´ (;mাlaাon: When ambient weather condiাons are temperate, the building’s distinctive bronze blades can open and close, allowing the building to operate in a “breathableâ€? natural ventilation mode.

Reducing dependency on mechanical venাlaাon and cooling equipment signiCcantly reduces energy consumpাon. Ů "l-u| buYow: Smart CO2 sensing controls allow air to be distributed according to the approximate number of people occupying each zone of the building at any given াme.

The ability to dynamically adjust airYow in response to occupancy hours and pa‚erns is expected to save 600-750 MWhr of power per annum, reducing CO2 emissions by approximately 300 metric tonnes each year. ĹŽ ol0bm;7 ;-| Ĺ&#x; o‰;uÄš m omĹŠvb|; Combined Heat and Power (CHP) generaাon centre supplies heat and power in a single, eLcient system with reduced carbon emissions.

Waste heat generated from this process is recycled for cooling and heaাng and, in use, is expected to save 500-750 metric tonnes of CO2 each year.

Environmental impact management has helped Bloomberg eliminate nearly 700,000 tonnes of COĆ™e (41% of COĆ™e intensity reduction) and avoid $95 million in operaাng costs since 2008.

With the addiাon of the new London building, Bloomberg has 34 LEED or BREEAM-cerাCed projects globally. By the end of 2017, nearly 70% of the company’s 19,000 employees will occupy an environmentally cerাCed oLce

Alan Yates, Technical Director of BRE Global’s Sustainability Group said: “What sets the Bloomberg building apart is its relentless focus on innovaঞon and its holisঞc, integrated approach to sustainable construcঞon and design. Projects like these are really important in giving conCdence to the industry to experiment.”

Designed in mind to have sustainable pracঞce in place daily such as

rainwater from the roof and grey water from basins and showers in the building is recycled by the vacuum Yush toilets, a system that the architects say will save 25 million litres a year .

Disঞncঞve bronze blades on the side of the building can be opened and closed according to the weather.

This natural venঞlaঞon system will take the pressure o@ more energy

intensive air-condiঞoning systems.

Bespoke ceiling panels with a petal design have been inset with 500,000 energy saving LEDs. The panels also combine heaঞng, cooling and acousঞc funcঞons.Smart sensors adjust airflow according to the number of people in each building zone at any one ঞme, a system expected to reduce CO2 emissions by 300 tonnes a year.

Ford Gets A Lyft

A

t Start of October Ford and Ly[ announced a new partnership in which both companies will work together to bring self-driving cars to the ride-hailing service and its users.

In order to achieve this goal, teams from both companies will begin working together to develop so[ware that will allow Ford’s vehicles to operate with the Ly[ mobile app.

Ford’s self-driving vehicles, as well as its tradiঞonal vehicles, will be added to Ly[’s network, but users won’t be able to use the former just yet. Over at Medium, Sherif Marakby, Ford’s Vice President of Autonomous Vehicles and ElectriCcaঞon, explained that autonomous vehicles won’t be available “unঞl we are certain our technology delivers a posiঞve, reassuring experience where we can gain meaningful feedback.”

Marakby did not provide a ঞmeframe for when the self-driving cars would be accessible, but the end goal is for autonomous cars and human drivers to operate side-by-side.

Ford isn’t the only automaker Ly[ is working with, as the company has also partnered with GM to build a separate

Yeet of self-driving vehicles; which is also di@erent from Ly[’s own self-driving iniঞaঞve that’s already arrived in San Francisco.

“We strongly believe that leaders across industries should work collaboraঞvely to introduce self-driving technology in a way that posiঞvely impacts our ciঞes,” said Ly[ in a blog post. “Our two companies share a core belief that the future of transportaঞon will meaningfully reshape how ciঞes are designed, and improve the lives of people who live there.”

Ex Facebook President Sean Parker Admits Social Network Manipulates Human Psychology

By Aaron Kesel

F

acebook’s Crst president, Sean Parker, accused the social media giant of exploiঞng human “vulnerability” using psychology, warning “God only knows what it’s doing to our children’s brains,” Axios reported.

Speaking to the news publicaঞon, the billionaire entrepreneur and current execuঞve talked about what he perceived the dangers of social media are and how it manipulates human psychology. Parker joined Facebook in 2004, when it was less than a year old and was also the former founder of Napster.

He is addiঞonally the current founder and chair of the Parker Insঞtute for Cancer Immunotherapy.

The shocking comments were made during an Axios event at the Naঞonal Consঞtuঞon Center in Philadelphia, about acceleraঞng cancer innovaঞon where he was there to speak on behalf of his insঞtute.

“The thought process that went into building these applications, Facebook being the Crst of them … was all about: ‘How do we consume as much

of your ঞme and conscious a enঞon as possible?’” Parker said.

“And that means that we need to sort of give you a li le dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever,” he told Axios. “And that’s going to get you to contribute more content, and that’s going to get you … more likes and comments.”

Parker added: “It’s a social-validaঞon feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiঞng a vulnerability in human psychology.”

“The inventors, creators — it’s me, it’s Mark Zuckerberg, it’s Kevin Systrom on Instagram, it’s all of these people — understood this consciously,” he said.

“And we did it anyway.” europeanbusinessmagazine.com 19

Fintech firm R3 and world’s biggest banks build blockchain system

E

nterprise so[ware Crm R3 and 22 of its member banks have developed a soluঞon that leverages distributed ledger technology (DLT) to enable fast, eLcient and cost-effective cross-border payments. The prototype will be released by the end of 2017.

While many DLT initiatives have experimented with speciCc use cases within internaঞonal payments, R3 is the Crst to develop a shared infrastructure – built on its Corda pla orm – to facilitate the full payments workYow. The soluঞon works by creaঞng a representaঞon of Cat currencies on ledger, and is programmed to enable interacঞon with central bank digital currencies as they are rolled out.

Domestic payment systems have advanced in many countries to the point of providing real-ঞme funds transfer for customers, highlighঞng by contrast the extremely ineLcient, expensive and slow experience businesses encounter with internaঞonal payments. The soluঞon will improve world trade eLciencies by facilitating instant internaঞonal payments.

It o@ers a direct alternaঞve to current systems that can take days to complete an internaঞonal payment,

20 europeanbusinessmagazine.com

cosঞng businesses millions, slowing down trade, increasing se lement and fraud risks and causing a liquidity drain for banks. Banks involved in the iniঞaঞve include Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Naঞxis, Shinhan Bank, TD Bank, U.S. Bank and Woori Bank.

Corda is a blockchain-inspired platform that removes costly fricঞon in business transacঞons by enabling insঞtuঞons to transact directly using smart contracts, while ensuring the highest levels of privacy and security.

It is the outcome of over two years of intense research and development by R3 and its 100+ members.

David E. Ru er, CEO of R3, comments: “Internaঞonal payments systems have struggled to keep pace with the explosion of global trade and the globalisaঞon of the world’s markets. This marks a signiCcant milestone for distributed ledger technology as we work alongside our bank members to harness its unique a ributes to build the world’s Crst true international payments system. This soluঞon will be a gamechanger for any bank or company whose business relies on making or

receiving cross-order payments, and is a key part of R3’s wider strategy to leverage distributed ledger technology for faster and more eLcient execuঞon of all types of Cnancial transacঞon” Frederic Dalibard, Head of Digital for Corporate & Investment Banking at Naঞxis, comments: “Naঞxis believes in the potenঞal of distributed ledger technology for cross-border payments and is exploring several iniঞaঞves in that space. In our view, R3’s proposal is very promising, because it is built on the right approach, relies on Corda, and sets the project on a path which is relevant – notably by anঞcipaঞng right out of the gate how the proposed architecture could be adapted when central bank digital currencies appear.”

About R3 R3 is an enterprise so[ware Crm working with over 100 banks, Cnancial institutions, regulators, trade associaঞons, professional services Crms and technology companies to develop Corda, its distributed ledger platform designed specifically for businesses. R3’s global team of over 140 professionals in nine countries is supported by over 2,000 technology, Cnancial, and legal experts drawn from its global member base. R3 recently announced the successful compleঞon of the Crst 2 of 3 tranches in a Series A fundraise valued at USD 107 million.

Corda is the outcome of over two years of intense research and development by R3 and its members and meets the highest standards of the banking industry, yet is applicable to any commercial scenario. It records, manages and executes insঞtuঞons’ Cnancial agreements in perfect synchrony with their peers, creaঞng a world of fricঞonless commerce.

europeanbusinessmagazine.com 21

The Digital Future of Europe

What lies ahead for the digital future of Europe? While Europe conঞnues to become more digital, Andrus Ansip, VP for the Digital Single Market, believes that the pace is too slow.

Ansip said, “All Member States should invest more to fully beneCt from the Digital Single Market. We do not want a two-speed digital Europe. We should work together to make the 22 europeanbusinessmagazine.com

EU a digital world leader.” Currently, Denmark, Finland, and Sweden lead Europe when it comes to being the most digital locaঞons in Europe.

Currently, Europe’s digital future is looking bleak because of over-regulaঞon and lack of innovaঞon. Too much regulaঞon sঞYes businesses and turns o@ start-ups. Instead, these

companies will venture to the USA where the business landscape is more supporঞve of their iniঞaঞves.

Europe seems to be on a quest to create a level playing Celd for European tech companies because of large American tech companies like Google, Facebook, and Amazon. There is merit to boosting

Argee Layara investigates what is in store for the future of a Digital Europe of Things (IoT) conঞnues to rapidly grow in importance. It is esঞmated that IoT can generate annual economic beneCts of $11 trillion globally by 2025.

Even digital content remains blocked.

Monique Goyens, director-general of BEUC, a consumer rights organisaঞon, said, “It is regre able that consumers can sঞll be blocked from buying digital products such as e-books and music from sellers based in other countries. TV series, Clms and sports events will also stay o@-limits.”

Andrus Ansip, Vice President in charge of the Digital Single Market of the European Commission, said, “Digital business is global business - we urgently need to address data localisaঞon rules. Data is not only the basis of our digital future and prosperity; it is a valuable resource in itself. Keeping that resource unnecessarily stuck in naঞonal data centers or a parঞcular geographic area means it cannot be used to its full potenঞal.” compeঞঞon by levelling the business environment, but over-regulaঞon of compeঞtors can backCre. Data is the currency of the new economy, and Europe’s digital future will depend on how it approaches data. Will there be protecঞonism or will data be allowed to Yow freely?

While consumer privacy and security

is important, freedom of data movement can improve growth, boost jobs and internaঞonal compeঞঞveness. Regulaঞon must balance these forces to create a producঞve seমng for Europe and its global partners.

Data localisaঞon requirements must not impede the creaঞon of a single digital market in Europe. This is critical as Big Data, and the Internet

Because of this issue on Data Localisaঞon, Ansip referred to the EU as “fragmented Europe” and believes that the message Europe is trying to send to start-ups is: “Stay at home or go to the US.” Paul Meller, the spokesman for the tech trade association DigitalEurope, adds, “If it becomes a legal mineCeld, that is not europeanbusinessmagazine.com 23

a clever way to get a young startup to become the next big business.”

Ansip commenঞng on data localisaঞon, said, “The core of the problem remains the same: naঞonal requirements on processing, storage and transfer of data. If we can get rid of needless naঞonal and local barriers to data Yows, as well as address the underlying uncertainঞes, then everyone stands to gain - companies, governments, and consumers.”

Overregulaঞon can also hurt European tech businesses. Nick Stringer, Director of Regulatory A@airs at the Internet Advertising Bureau UK, the UK trade associaঞon for digital adverঞsing, explains: “There is the concept of ‘one-stop-shop’ in data protecঞon, which means that tech companies only have to comply with the data protecঞon authority of the country they are based in Europe, as Facebook does with the Irish data regulator. A restricঞve approach in this area- and there are discussions about it in Brussels- will hurt European tech businesses more than it will hurt global ones because it is easier for the la er to comply since they operate at scale.”

James Waterworth, Vice-President for Europe for the Computer and Communications Industry Associaঞon, believes that an integrated European digital market will allow homegrown startups to scale up.

Waterworth says, “Mega successes stories in the U.S. and China are ‘unicorns’ ranging between $50 billion and $100 billion, whereas in Europe, they are much smaller at around $6 billion to $7 billion. So Europe’s failure is not that it does not create tech startups, but that it does not allow them to scale up. The right policy response is to build scale, hence the value of the single digital market.”

A study conducted by the European Parliamentary Research Service esঞmates that the lack of integraঞon in cloud compuঞng, online payments, postal and parcel delivery costs Europe between 36 and 75 billion euros annually. By focusing on these gaps, Europe can boost their aggregate GDP by 0.4% annually.

24 europeanbusinessmagazine.com

Jean-Claude Juncker, president of the European Commission, believes that the agreement of a Digital Single Market is criঞcal to rolling out 5G across the EU by 2020. Juncker notes that successful deployment of 5G across Europe can create 2.4 million jobs and bring in around 146 billion euros of economic beneCts. Another area that can deter a bright digital future for Europe is the skills gap regarding necessary digital skills.

At least 32% of the EU working populaঞon needs to invest ঞme in learning basic digital skills.

Esঞmates from the European Parliament suggest that a single digital market could boost the EU economy by 340 billion euros annually. One key reason is that only 15% of online

shopping in Europe is cross-border because of the di@erences in digital infrastructure, business environment, and regulaঞon. For example, E-commerce retailers across Europe pay di@erent VAT rates depending on where they export. In Luxembourg, it is 17% while in Hungary, it is 27%.

Portugal does not have access to content providers such as Ne lix, while VAT exemptions vary across the conঞnent.

A single digital market would allow homegrown startups to expand at home and create new industries.

Esঞmates show that cloud compuঞng could be a 174 billion euro market by 2020.

If the European Commission can tackle these issues head-on, it will

18%. Europe on the aggregate has captured only 12%. The European Commission should allow and encourage telecom providers to harmonise their regulaঞon and security ecosystem to enable development of new businesses within a fair and compeঞঞve landscape.

Regarding supplying digital technologies to the world, America leads the way with nearly 50% of worldwide sales and two-thirds of post-tax profits compared to European Crms making up only 17% of global revenue and 14% of worldwide proCts. The thing with embracing digital technologies is that it can boost jobs and producঞvity. Tools such as broadband, cloud compuঞng, VOIP, social networking pla orms, video conferencing and Cle sharing can allow people to work remotely and across borders. This is in line with the rise of the gig economy where people can market their skills in the digital marketplace and allow Yexible ways of working and earning income for the unemployed and underemployed in the region. McKinsey consultants esঞmate that work-related digital markets and pla orms can boost GDP by as much as 350 billion euros.

boost e-commerce and allow easier cross-border transacঞons. Consumer trust will also be boosted. Innovaঞon can propel Europe into its next trajectory of growth. With Macron at the helm of France and his pro-business and start-up stance, there is a decent chance that Europe can usher in a new era of digital growth through scaling of operaঞons by European companies. It is tragic when only 15% of EU consumers purchase online from other EU countries, and only 7% of Europe’s SMEs sell cross-border.

Also, only 4% of the online services used in Europe are EU-based. Most are US-based.

However, Germany, as one of the leaders in Europe, always preaches innovation, but then ends up over-regulaঞng digital services. Dr.

Colin Blackman, Director of the Digital Forum at the Centre for European Policy Studies (a Brussels-based think tank) said, “Member states proclaim to be in favour of removing barriers, but when push comes to shove they tend to think about short-term impacts and the interests of their own companies. Theoreঞcally, the single digital market is feasible, but it needs the member states to buy into it and recognise that it is in their longterm long interest to move towards this direcঞon.”

There is a tremendous upside for Europe if it embraces the digital economy fully. A Mckinsey report esঞmates that France has only captured 12% of the economic upside of going digital while Germany only 10%. This is compared to America’s

The plan by the European commission to build a new European Open Science Cloud to connect researchers across Europe and allow for storage and free data sharing across borders is a welcoming sign as it will require investment in a new European Data Infrastructure that can store and analyse massive amounts of data in the cloud.

EU’s Capital Markets Union project also has to step up to provide seed funding and scale-up capital to startups. This project is vital in producing tomorrow’s European digital leaders.

This is because non-bank Cnancing is relaঞvely undeveloped in Europe.

Finally, the Privacy Shield agreement, which governs how US companies will handle the data of EU ciঞzens needs to approved so that there remains to be a free Yow of data across the US and Europe. europeanbusinessmagazine.com 25

European Startups

T

he European Startup scene is bustling and thriving. Aside from London, Berlin, and Stockholm, other tech hubs are emerging such as Paris, Munich, Zurich, and Copenhagen. With the surge in tech talent on the conঞnent, tech behemoths such as Google, Facebook, and Amazon are all expanding their European tech hubs.

A study by the Boston Consulঞng Group shows that the Benelux, Balঞc, and Nordic countries of the EU are digital frontrunners and rank well in IT infrastructure, internet access, and government acঞvity in Internet-related acঞviঞes. These countries generate 8% of their GDP from internet commerce. This trend is forecasted to generate 1.6 million to 2.3 million jobs from 2015 to 2020.

In total, the conঞnent has around 57 tech unicorns. Manish Madhvani, the managing partner at GP Bullhound, said, “It has o[en been said that European tech entrepreneurs are focused only on exits, they are too quick to sell, and they are therefore incapable of building serious technology and companies of genuine scale. We believe otherwise. Our research into Europe’s billion-dollar technology companies has shown that there is an army of ambiঞous entrepreneurs building businesses of serious scale across the conঞnent.”

According to data from PitchBook’s Q3 European VC Investment report, Spoঞfy is top regarding valuaঞon, having an astounding $8.84 billion valuaঞon.

United Kingdom UK is home to at least a third of Europe’s tech entrepreneurs and research from GP Bullhound shows that the European tech unicorns are on the rise and may soon have its Crst $50 billion tech behemoth.

The UK has 22 startups with a valuaঞon of $1bn or more, and four of these 22 startups are considered to be unicorns: Deliveroo, the 26 europeanbusinessmagazine.com

food-delivery startup; Improbable, a virtual-world developer; Mimecast, a cloud-based email company; and boohoo.com, a fashion retailer.

Briঞsh startups have been a favourite of Silicon Valley investors. For 2017, a whopping $1.13 billion is expected to be invested in UK startups.

Brexit is not seen to be a threat to the rapidly growing startup scene.

Sherry Coutu who co-founded Silicon Valley Comes to the UK, said, “With some of the best global talent and a strong culture of entrepreneurship, the UK and Silicon Valley are two of the world’s leading places to start and scale a technology business.

While London has grown to become Europe’s largest tech hub, we sঞll have a way to go to emulate the success of Silicon Valley, and there is a lot we can learn from each other. It is no surprise to see that Briঞsh tech Crms conঞnue to a ract more venture capital investment from the Bay area than any other European country.”

The only risk to a hard Brexit is regarding skilled labour. London’s tech startups rely heavily on so[ware and IT developers and engineers from Eastern Europe. Staঞsঞcs show that in London, more than 20% of London startup employees are from other countries.

Germany Earlier this year, Delivery Hero went public on the Frankfurt stock exchange with a valuaঞon of over $5 billion. This made Delivery Hero the second largest IPO that was backed by venture capitalists. This could spur more investments in European tech Crms. Germany has around seven unicorns, and six of them conঞnue to experience rapid growth.

In the mid-2000s, there were less than 30 tech startups. Now there around 2500 startups in Berlin.

Other large startups to hail from Berlin include Foodpanda, Soundcloud, Wooga, ResearchGate, and HelloFresh.

France Paris is a bright spot for startups. With Macron at the helm, he has promised to turn France into a “startup naঞon” by lowering corporate and capital gains taxes. This could spur further venture capital Yows into the country.

Paris has recently opened Staঞon F, which is a startup campus and home to incubator programs such as those of Facebook and Microso[.

Recently, Partech Ventures and Idinvest Partners, which are major venture capitalists in France, have increased their venture funds and are closing major fundraising deals in

the country. Benoist Grossman, the managing partner of Idinvest Partners, said, “The European entrepreneur ecosystem today is just magic.

We are seeing quality people, serial entrepreneurs, younger and younger, all over Europe.” Partech Ventures, on the other hand, has raised 1 billion euros the past year and a half which gives them lots of Cnancial power to back more startups across Europe.

Stockholm Stockholm is also excelling in the startup scene. With its small domesঞc market, its startups are outward

looking and seeking to expand globally immediately. JF Gauthier, CEO of Startup Genome, commenঞng on the Stockholm startup scene, said, “Clearly they have special skills at scaling startups, and we have to say they do so at an amazing rate considering the small size of its ecosystem. Lean and mean they are. Its startups reported challenges with geমng access to talent with startup experience, but that is an issue that can come with fast ecosystem growth.”

Stockholm excels regarding global connectedness, funding quality, and exit values. It has produced successful startups such as Spoঞfy and King

(the developer of the addicঞve app, Candy Crush).

Eastern Europe Eastern European tech hubs are on the rise, such as Warsaw, Krakow, Prague, Budapest, Braঞslava, Tallinn, Riga, and Vilnius. In a span of Cve years, early-stage investment in Eastern Europe has catapulted from $10 million to $283 million. There are around 30,000 startups in Eastern Europe and growth is expected as more accelerators, coworking areas, and VC companies enter the region. The region gave birth to three global unicorns: Skype, Avast, and Transferwise. europeanbusinessmagazine.com 27

Deep Technology Deep tech refers to the kind of arঞficial intelligence innovation that Google’s DeepMind creates. According to London venture capital Crm Atomico, Europe’s tech sector parঞcularly in arঞCcial intelligence is making signiCcant progress. In 2015, $13.6 billion was invested in the sector compared to $2.8 billion in 2011.

Deep tech accounted for $1.3 billion of the total venture investments in 2015 compared to $289 million in 2011.

Research from venture capitalist, Asgard, shows that among European naঞons, the UK has the strongest AI ecosystem and that London is the number one place for this niche.

There are around 121 AI startups in the UK.

Weaknesses of European Startups A knock-on of Europe’s tech sector includes its inability to create a tech giant that rivals the giants of Silicon Valley like Google and apple.

While signiCcant funds are Yowing into European startups, these startups are not getting enough later-stage capital which will allow them to scale and grow faster. US

28 europeanbusinessmagazine.com

Crms get 14 more ঞmes later-stage capital compared to their European counterparts.

Another weakness is the lack of a true European single digital market, unlike US or China. This makes it challenging for tech startups as they have to consider 28 di@erent consumer markets and regulatory pla orms. Karen Boers, CEO of European Startup Network, said, “I see two main reasons why European start-ups do not scale

to their full potenঞal. First of all, the fear of failure which is very much part of our European DNA and secondly, the fragmented markets. Start-ups need to conquer 28 di@erent business environments before they can be fully pan-European.”

Regulaঞon in the areas of data ownership, access and usability, and e-commerce also looks to be a significant barrier to growth for European tech startups.

Investment in UK Startups to Continue Depsite Brexit

T

he start of a new year o[en prompts entrepreneurs, innovators and creaࢼve thinkers to launch a new start-up, unveil a fresh product or look for investment. As we approach 2018, European Business Magazine examines the investment landscape and the hurdles it is currently facing; together with the di@erent types of start-up funding that is supporࢼng exciࢼng enterprise.

We also talk to Freddie Achom CEO of Rosemont Group Capital Partners- a Venture Capitalist Crm based both in New York and London, with a primary focus on seed and early stage investment , who will provide us his insights into the burgeoning industry.

The European investment market is experiencing signiCcant change, not least of all with the potenঞal

withdrawal of the EIF, fears of a talent shortage arising from impending curbs on EU immigraঞon and growing concerns surrounding possible tari@ barriers. Given the precariousness of the investment sector at present, reports that the government is planning to further limit tax breaks for investment does not bode well, and a number of investors are holding back funding since the Brexit vote, hindering economic growth until 2019. However, as Freddie Achom states - ‘Brexit is a new territory for all, founders and VC’s alike, but one thing is for certain, founders will conঞnue to seek investment and VC’s will conঞnue to deploy.’

While certain obstacles may hamper investment in the short-term, any

downturn will be short-lived, and the show will go on.

Europe boasts several high-value companies, but the current poliঞcal situaঞon, the lack of harmony around the economic union and the ongoing ambiguity about the future, generate barriers to investment, making internaঞonal investors wary. The investment sector is also experiencing addiঞonal diLculঞes like regulatory pressures and wrestling with digital technologies. Achom says that for UK entrepreneurs looking to raise capital, ‘the Brexit uncertainty creates a new barrier, one that may have relocaঞon condiঞons a ached. Start-ups may be required to move to the conঞnent if dealing with mainland European investors, looking to protect their europeanbusinessmagazine.com 29

capital. Even when raising from local investors the ability to scale smoothly to the conঞnent may be another barrier due to cross boarder regulaঞons.’

However, it’s not all bad news and investors have become more opঞmisঞc about the conঞnent’s prospects of late, with 2017 set to deliver double-digit earnings growth, generaঞng an encouraging investment outlook, with the market remaining resilient.

In September, European equity was the second best-selling fund sector, with net retail sales of £518m, according to the Investment Associaࢼon. Addiঞonally, the Eurozone is witnessing improved economic growth; unemployment is at its lowest level since 2009 and businesses exhibit robust earnings on the back of the economic recovery, all having a favourable impact on the European startup scene.

More than 650,000 new businesses have been set up in the UK in 2016, up from 608,000 in 2015 and 2017 looks to be an equally impressive year with 84% of entrepreneurs across the UK aiming to raise up to £10 million each over the next year, according to a new report from EY. There have been numerous suggesঞons that Brexit may indicate the end of London as an internaঞonal business hub, but to the contrary, 2017 saw £800m invested in UK start-ups in the Crst quarter, helping the capital to retain its crown as Europe’s number one tech hub for global investors and the World Bank reports that an esঞmated $93bn will be invested by 2050. Likewise, though Brexit may be creaঞng some doubt over the future of the economy, M&A acঞvity in the UK is also gathering momentum. The UK takes the lead in Europe, home to 40% of Europe’s unicorns, a racঞng £28bn in technology investment since 2011, compared with £11bn in France and £9.3bn in Germany, according to the third annual Tech Naࢼon report and the PM has vowed tech will remain a priority when leaving the EU. London’s tech sector a racted more VC investment in the Crst six months of 2017 than any other European city since the Brexit vote and the major tech giants are clearly conCdent in a post-Brexit Britain with Apple and Snap both choosing the capital for their internaঞonal headquarters. In fact a recent survey from Hubspot, a 30 europeanbusinessmagazine.com

leading research pla orm has idenঞCed London idenঞCes London as the conࢼnent’s startup and innovaࢼon hub . The UK’s reputaঞon as an a racঞve desঞnaঞon for inbound investment has remained strong in spite of the challenges, with its trusted legal framework, strong market governance, relaঞvely low rates of corporate tax and a variety of start-up funds all facilitaঞng growth.

Sources of equity Cnance to fund this growth used to be restricted to the likes of angel investors and VC’s but these now face competition from non-tradiঞonal market players such as crowdfunding. Yet, for all its increased popularity, it is sঞll early days in the crowdfunding market and it may tend to support entrepreneurs over investors, with end returns in danger of geমng diluted.

Government grants such as the Start Up Loans scheme can help entrepreneurs get on their way and bank loans can assist SMEs and o@er overdra[s and loan faciliঞes to businesses that meet their lending criteria. However, one of the main tradiঞonal routes to Cnance – VC’s - not only provide funds, but also mentorship, direcঞon, connecঞons in the industry and o@er tailored support for businesses.

There are many familiar VC and investment house names associated

Rosemont Group Capital Partners’ Freddie Achom and Anthony Grant

with the tech industry and numerous worthy subsঞtutes exist outside of the tradiঞonal US tech hubs, especially in Europe. For example, Achom explains that the Rosemont Group is able to ‘open the Cnancial gateway as early as pre seed, nurturing from pre-launch to series A.’ He goes on to say, ‘We don’t just deploy Cnancial capital; we also deploy intellectual and social capital. We are the biggest believers second to the founders; we are passionate as well as Cnancially astute.’ Not your usual moneymen, Rosemont Group Capital Partners, work closely in realising the dreams of the entrepreneurs and visionaries they work with.

The world is acceleraঞng and the entrepreneurial spirit and start-up revoluঞon in Europe is showing no sign of abaঞng. The challenge in 2018 and beyond is to keep pace and Achom suggests that entrepreneurs should dive into the macro sectors; Fintech, Proptech, Regtech, consumer driven enterprises as well as collaboraঞve consumpঞon trends, giving investors the opportunity to disrupt legacy markets and brands.

Doing business in Europe may get slightly more complex in the short term, but equally it will o@er some unique, unparalleled market opportuniঞes for those in it for the long run.

BERLIN The New Central Hub Of Europe B

erlin is fast becoming one of Europe’s major poliঞcal, Cnancial and economic hubs. It is one of the top three ciঞes in the world for start-up capital, coupled with a Yourishing conference industry evidenced

by Meese Berlin attracting huge crowds every year and the record overnight stays from conference delegates: 7.7 million to be exact.

Berlin’s internaঞonal event scene is also booming – with over 27,000 events held in 2015 alone, supported by the growing infrastructure of major airports and hotels.

We head over to talk to Olav Guমng, member of the German Bundestag and local member for Schwetzingen Bruchsal, about Berlin’s great developments over the past 15 years. Having represented his electorate in the naঞon’s capital for more than four electoral terms, Olav has a strong understanding of the poliঞcal and economic imperaঞves a@ecঞng business, in what some would consider, the best city in the world.

Olav Gutting Can you tell European Business Magazine readers more about why Berlin has become such a major internaࢼonal hub in Europe, and why is it a racࢼng so much internaࢼonal business?

To answer these quesঞons, you have to look at it from di@erent perspecঞves.

From a poliঞcal and historical perspecঞve, Berlin is Germany’s capital, therefore its seen as the poliঞcal centre of a leading European naঞon. With Chancellor Angela Merkel’s commitment to the European Union ideal, Germany’s voice is being heard not only in Europe but throughout the world. As the longest-serving European leader, Chancellor Merkel has earnt trust,

not only within Germany but across Europe and the rest of the world.

The Golden twenঞes were Berlin’s heyday, where it shone in the areas of science, humaniঞes, government, diplomacy, Clm, higher educaঞon, industries and military a@airs. Post1945, Berlin emerged from devastaঞon to become the focus of the Cold War era. It was a divided city within a divided Europe.

Since the fall of the Berlin Wall and German reuniCcaঞon in 1990, Germany´s role in the world has changed substanঞally. Berlin´s economy transiঞoned, as you said, to a major internaঞonal trading hub in Europe. europeanbusinessmagazine.com 31

Today, Berlin is seen as a poliঞcal haven – it sits between the many conYicts arising in Europe. And, not to forget, Berlin is home to the most important poliঞcal decision-making bodies in Germany: the Naঞonal Parliament, government administraঞon, embassies and various peak business organisaঞons, all of whom can a@ect policies at both a naঞonal and internaঞonal level.

From an economic perspective, Berlin not only o@ers a perfect central geographic locaঞon, being the gateway to Western and Eastern European markets, it also offers excellent infrastructure and telecommunicaঞon networks that conঞnue to evolve and grow. These factors make Berlin appealing to internaঞonal business investment, as well as a racঞng an ever-increasing number of highly qualiCed professionals from all over the world who contribute to our naঞonal talent pool.

Moreover, Berlin’s high producঞvity and low labour costs, coupled with lower oLce and locaঞon expenses (compared to other major German and European ciঞes) are key factors

32 europeanbusinessmagazine.com

to a racঞng investment. Also o@ering non-discriminatory access to investment, making it easier to establish a business, along with a well-educated workforce, encourages internaঞonal companies to relocate or set up a business in Berlin.

Berlin is also home to one of the largest science centres in Europe, including internaঞonally renowned universiঞes, research insঞtuঞons and modern technology centres.

It is important to note that it is Germany, and not only Berlin, that is internationally renowned for its innovaঞon, advanced technologies and high levels of producঞvity. Therefore, I want to emphasise, that Berlin’s strong economy and its ability to a ract quality businesses owes much to the collaboraঞon and cooperaঞon between the many economic centres throughout Germany. It is this collaboraঞon that has made Germany’s economy the strongest in Europe and one of the largest worldwide.

Two good examples of these economic centres are the Metropol

Region Rhein-Neckar, and the Karlsruhe Technology Region, in which my electorate is located.

The Karlsruhe Technology Region consistently ranks as one of the strongest business locaঞons in Germany, Europe and the USA with its excellent infrastructure, ultra-highspeed data and high-calibre networks and Centres of Excellence. It has a diverse mix of industries, plenty of commercial property and land making it very a racঞve to naঞonal and internaঞonal businesses.

Business aside, one can also enjoy a high standard of living and a cosmopolitan lifestyle in Berlin. The cultural o@erings are world famous live theatres (more than 150 stages), Clm (over 90 cinemas), and the yearly Berlin Internaঞonal Film Fesঞval (Berlinale), which a racts internaঞonal movie stars. For ciঞzens and visitors, there are 180 museums including the UNESCO world heritage Museum Island. For newcomers, Berlin is easy to navigate, and public transport is frequent and inexpensive.

Tax Act) last year. This means a signiCcant improvement for business regarding tax loss carry-forwards when there is an exchange of shareholders. Startups, in parঞcular, will proCt from the new legislaঞon, as they o[en have to deal with start-up tax losses and are therefore depending on the entry of investors which normally results in a change of shareholders.

Furthermore, our naঞonal INVEST grant program works to promote private investors to purchase shares in innovaঞve start-ups by providing an acquisiঞon grant if they meet certain criteria.

Messe Belrin What are the main industries that are thriving in Berlin would you say?

Berlin is home to a wide range of industries. Large industrial Crms with long tradiঞons, along with a strong SME sector contribute to Berlin’s economy and employs a lot of people. High-tech businesses are shaping Berlin’s economic structure. Being one of the most innovaঞve regions in Europe, it is leading in various key technology sectors such as informaঞon and communicaঞon technologies, life sciences, opঞcs, mobility, microsystems engineering, as well as clean technologies. These are actually the sectors in Berlin that are taking the leading posiঞon in Germany.

Are there any specific government schemes or tax incenࢼves for internaࢼonal companies when they choose to relocate to Berlin?

There is generally no disঞncঞon in German law between German and foreign naঞonals regarding investment in or establishment of companies in Germany. The reason for this is the German commitment to

a non-discriminatory society and an economy where everyone should get the same chances regardless of whether they are a German ciঞzen or a non-naঞonal. Therefore, there are no speciCc government or tax incenঞves for internaঞonal companies to encourage relocaঞon to Berlin. The German government provides subsidies and tax incenঞves to both German and internaঞonal companies if they meet the legal prerequisites.

Are there any federal schemes for promoting entrepreneurship and innovaࢼon?

Berlin is Germany’s number one start up hub with more than 40,000 businesses being launched each year. It has also become a hotspot for venture capital, with venture capitalists investing around 1.07 billion euros in 2016 - almost 40 percent of this was from foreign venture capital investors. This shows how popular Berlin is for internaঞonal venture capital investors.

When it comes to federal legislaঞon, we introduced a new legal provision in our Corporate Tax Act (§ 8d Corporate

This means innovative start-ups are supported in their search for an investor on the one side, and private investors are moঞvated to provide venture capital for young innovaঞve companies on the other.

Addiঞonal support programmes are o@ered by the federal government, federal states and the European Union, which usually come in the form of loans. This includes incenঞves such as low interest rates, long terms and someঞmes a redempঞon-free period before the loan has to be repaid.

Does the CDU/CSU parliamentary group plan further legislation with regards to start-ups and research and development spending in the new elecࢼon period?

The CDU and CSU 2017 – 2021 elecঞon programme is commi ed to conঞnuing the improvement of condiঞons for venture capital funding.

We also plan to provide further tax incenঞves so it’s easier for start-ups to access venture capital. We believe there should be tax relief for people who are involved in start-ups. They take on extraordinary risk, provide employment and should be nurtured.

With regards to research and development spending in general, we want to increase spending to 3.5 percent of GDP by 2025. We plan to provide tax concessions for research acঞviঞes in the amount of 2 billion Euros. europeanbusinessmagazine.com 33

Navigating the European Aviation Market

A

ccording to Internaঞonal Air Transport Association Chief Execuঞve OLcer Alexandre de Juniac, the European Aviaঞon market may be forced to consolidate due to the rapid growth of discount airlines such as Ryanair. This situaঞon is similar to Asia where full-service airlines like Japan Airlines and Cathay PaciCc see their proCts plunge because of significant compeঞঞon from no-frills rivals.

Europe is likely to follow the trend in America where consolidaঞon is led by American, Delta, United, and low-cost Southwest according to Stephane Albernhe, the managing partner at Archery Consulঞng. Albernhe adds, “The sector will conঞnue to consolidate because the business models are in the process of changing.” Albernhe also predicts that the process of consolidaঞon will accelerate because of Eঞhad’s exit from Alitalia’s capital. Albernhe adds, “Alitalia will very likely join, either in whole or in part, Air France- KLM, Lu[hansa, IAG or even easyJet or Ryanair.

34 europeanbusinessmagazine.com

Jerome Bouchard, a consultant at Oliver Wyman, believes that European airlines have to Cnd a business model that is proCtable so that they can avoid the fates of Alitalia and Air Berlin which conঞnued to operate despite massive losses.

Bouchard also believes that Europe will run an oligopolistic market structure that will be controlled by Lu[hansa, IAG, and Air France- KLM. In the U.S., the nine major airlines have been reduced to four over the last decade.

However, not everyone believes that the consolidaঞon that Europe is undergoing will be like America. Paul Moore, the spokesman for easyJet, says, “I Cnd it hard to believe that in 10 or 20 years’ ঞme there won’t be a Yag carrier in almost every European state. They might be smaller or part of a European group but they will survive.” He also notes that most European countries are naঞonalisঞc when it comes to their Yag carriers. It also helps that European ownership

rules can boost the odds of carriers surviving.

Also, low-cost carriers like Ryanair and easyJet have been eaঞng up the market share of full-service airlines.

In addiঞon, industry experts highlight the wage factor for Yag carriers. For example, wages for Air France pilots are 20 to 25 percent higher compared to pilots Yying easyJet planes.

There are Cve main players in the European skies: Ryanair, Lu[hansa Group, Internaঞonal Airlines Group, AirFrance-KLM and easyJet. However, there are sঞll smaller aviaঞon companies that carry millions of passengers annually. Cheap fuel is the key reason why smaller airlines conঞnue to remain proCtable. However, once the era of cheap fuel is done, these smaller airlines are likely to be taken over by one of the key players.

Andrew Smith, a principal at global management consultancy Arthur D Li le, shares the same senঞments as Juniac. He believes that the European airline industry has “lagged behind the US regarding consolidaঞon.”

He adds, “In the past few years the European airline sector has seen record-breaking proCtability, but this is mostly down to the very low oil price. It is sঞll a very fragmented market compared to its cousin across the pond. There’s every reason to think there will be more consolidaঞon.”

As for the kind of consolidaঞon, Smith believes it won’t be raining mergers and acquisiঞons. Smith said, “I think there will be more consolidaঞon, but you cannot assume it will be straightforward M&A. Part of the reason is because of anঞ-trust rules, and alliances are quite a convenient way of solving the problem of market access without having to go over the hurdle of buying an enঞre airline.”

Alex Paterson, a transport analyst at Investec, believes that another key reason why further consolidaঞon is likely in the European Aviaঞon market is that European states are unable to subsidise their Yag carriers such as Alitalia and Air Berlin. Paterson also pointed out that Romania’s Tarom is currently being restructured while Poland’s Lot has just entered into a massive reorganisaঞon. Thus, their rivals are likely to beneCt from the increased market share.

He also pointed out that airports are keen on courঞng low-cost airlines due to their high passenger volume.

As such, bigger airlines are struggling to adjust in this kind of environment.

One of the pressing developments in the market right now is the collapse of Air Berlin of which Lu[hansa is the clear favourite to purchase their assets. Eঞhad, which had a 29.2% stake in Air Berlin said that Air Berlin’s business had “deteriorated at an unprecedented pace, prevenঞng it from overcoming its signiCcant challenges.” Air Berlin had many operaঞonal issues including delays and cancellaঞons which resulted in millions of euros paid as compensaঞon to their passengers. In July, passengers of Air Berlin dropped from 3.22 million to 2.44 million.

Discount airline Ryanair’s, chief commercial oLcer, David O’Brien, has blasted this preference saying, “Germany is sঞll the market where you have the lowest penetraঞon of lowcost airlines. It’s the most protected market in Europe. German consumers are also paying the highest fares in Europe.”

Ryanair esঞmates that once Lu[hansa acquires Air Berlin, the combined enঞty will have a monopoly of 60% of the total German market, as well as 96% of the domesঞc air market.

Currently, Ryanair has a market share of 8% of the Germany, and it aims to grab a 20% market share in Germany by 2021.

IATA, represenঞng 275 carriers globally, forecasts a slower drop in earnings for the whole aviaঞon industry. Europe is projected to have a net income of $7.4 billion this year which is $1.8 billion higher than earlier forecasted.

According to Juniac, one of the possible consolidatory moves that Europe’s major airlines should make is to merge their low-cost carriers to lessen Ryanair’s dominance. Ryanair operates 400 planes while easyJet Plc has 250. The low-cost carriers of the major airlines in Europe total just above 100 planes.

Juniac notes that the glut of airlines in short-haul routes has pushed fares down and was a key factor in the bankruptcy Clings of Air Berlin Plc as well as Alitalia SpA. He believes that the European market is not big

enough to support 10 or more discount carriers.

Mark Bobbi, an analyst at IHS Markit, notes, “Worldwide compeঞঞon is so Cerce with yields declining conঞnuously that cost reducঞon is paramount.” As such, John Strickland, a director at JLS Consulঞng believes that mergers, takeovers and joint ventures will conঞnue to increase in importance for the aviaঞon industry.

Possible consolidaঞon targets could be the newer discount carriers such as Wizz Air Holdings, which Crst Yew in 2004 and is now Eastern Europe’s No. 1 discount airline.

Brexit could also trigger potenঞal deals like alliances because of a chance of grounded Yights between the UK and EU. Another rule that could derail UK airlines includes the law that an airline operaঞng in the EU must be at least 50.1% owned by EU naঞonals. Svennson, Lu[hansa’s CEO, notes that they could potenঞally beneCt from Brexit. He says, “Of course, you could say that with Brexit, as such, Frankfurt is probably a winner of the ciঞes, and that helps us being based in Frankfurt.

europeanbusinessmagazine.com 35

Weathering the Storm

I

nsurers are the largest instituঞonal investors in Europe, and the sector contributes signiCcantly to economic growth and development, shaping the backbone of the European Cnancial industry. A comprehensive insurance industry provides the ability to transfer, pool and mutualise risks - keeping a country economically stable and helping it thrive.

Patricia Cullen takes a closer look at the grey industry of Insurance.

Losses from Hurricane Maria, Irma and Harvey and other natural disasters closer to home like Ophelia, the worst storm in Irish history, have been felt by households and businesses worldwide. Leaving a trail of destrucঞon behind them, culminaঞng in an esঞmated £72bn price tag, has led global insurers and reinsurers to issue proCt warnings, prompঞng predicঞons of the costliest year yet.

However, a[er a pricy Q3, the global insurance industry is looking to prosper in 2018 with an improved outlook on previous years, raising 2018 earnings in the sector by 9 - 25%, allowing strengths to fast outweigh negaঞve factors. The mature economies of Europe and North America are moving towards recovery, showcasing be er economic prospects and the emerging markets are also prospering, due to improved standards of living that further increase insurance requirements. That is not to say that the industry is without its diLculঞes, as insurance companies are met with a marketplace that conঞnues to change on a macroeconomic, social and regulatory level, with ongoing challenges including changing business models, cyber-risk and change management acting as persistent hurdles.

As the EU referendum results were revealed on Friday 24th June 2016, the FTSE plummeted as investors feared a long-term downturn. While there is substanঞal change ahead 36 europeanbusinessmagazine.com

for the market and it may be hard to anঞcipate the terms and accurately prepare for the UK’s exit from the EU, or to dampen worries about market disrupঞon, brokers believe it will not hurt London’s market posiঞon as a hub for re/insurance acঞvity.

Nevertheless, the capital’s place in the insurance landscape is certainly changing as the UK’s regulatory and legislaঞve frameworks adjust. It is sঞll unclear how certain laws like the Solvency II Direcࢼve, concentraঞng on minimum capital requirements, will be altered or amended when the UK exits the EU. These changes can o@er an opportunity for the risk adverse insurance industry to review growth prospects in Europe and further aCeld.

Reinsurers who aid insurance payments for large claims for incidences such as storms theoreঞcally do not need passporঞng rights to funcঞon cross-border in the large marine, aviaঞon and transport industries, but because of di@erent naঞonal regulaঞons reinsurers based in Britain may Cnd that it gets more expensive and diLcult conducঞng business with certain EU markets, leading for calls to carry on current guidelines under a future UK/EU trade deal. With a 32% share of the global market, the European insurance industry is the largest in the world and has previously responded to profound challenges with a high degree of agility and innovaঞon, so despite current obstacles like Brexit, we are looking to 2018 with hope and anঞcipaঞon.

Numerous factors impact on the insurance industry, including economic and poliঞcal condiঞons, as well as elements such as economic growth, interest rates, exchanges rates and inYaঞon also having an inYuence on the future outcome and performance of insurance companies. Most insurers are reacঞng to changes outside the industry by modifying their internal operaঞons and commercial tacঞcs

allowing them to remain on the cutঞng edge. For example, the CEO of Nordic Guarantee, Johan Brinkenberg, has implanted numerous changes, transforming a struggling business into a successful one, o@ering bonds and guarantees to over 2,600 clients.

Insurance and guarantees are especially important for the construcঞon sector, where companies o[en need to provide their clients with performance bonds, and the pace of change in this area is unmatched by any other industry. Despite ongoing Brexit-related uncertainঞes around regulaঞon and how insurers operate, near-term prospects for the construcঞon industry have improved with 1.2% growth predicted in 2018 and 2.3% the following year. Technology, drones and augmented reality is changing the face of construcঞon sites and transforming the industry as we know it.

Will our buildings and homes be built

by robots in the future? What e@ect will this have on risk proCles and guarantees? We are currently nearing the end of 2017. Let’s not forget that at the end of 2006 the iPhone, iPad, Kindle, Uber or Android did not even exist, but once technology gets its teeth into a sector it doesn’t let go. Modern insurance companies like Nordic Guarantee communicate and collaborate e@ecঞvely with their clients, embrace technological change and understand the shi[ing nature of claims and correspondingly, premiums, in this ever-evolving industry.

Business insurance is an expense every business, irrespecঞve of its sector, size or stage, needs to include in its budget. Many view it as an avoidable outlay, or as a luxury instead of a necessity, resulঞng in the underinsurance problem we see among many SMEs. However, insurance is an indispensable investment, not an

addiঞonal cost, and needs to be frequently revaluated to ensure companies are protecঞng the expanding scale of the business. Businesses require the support and backing that good industry-leading, innovative bond consulঞng insurance service a@ords them. It is relaঞvely easy for SMEs to Cnd and purchase the policies that largely Ct their needs, but the right partner can add substanঞal value to a business owner. Insurance companies such as Nordic Guarantee that are keen to inform and work with customers on a one-to-one basis, rather than looking for the highest premiums, are the ones you should look to work with.

For almost 100 years the insurance industry had stayed relaঞvely unchanged, but over the past ten years, new digital iniঞaঞves and business models have appeared.

Whilst many industries acknowledge

the need to change, acঞng on it is a huge challenge. No business, including insurance, is exempt from today’s prompt and persistent developments witnessed in technology and customer expectaঞons.

The insurance sector causes a ripple e@ect on other industries, both within Cnancial and non-Cnancial jurisdicঞons, and the European market depends heavily on the health of this central industry.

Insurance companies can’t predict the future, but they can help businesses and SMEs prepare for it. Insurers who understand that all businesses are unique and can anঞcipate and respond quickly to change are the ones to liaise with. Insurance is the key that gives you the peace of mind you need to deal with unforeseeable circumstances, enabling you to take calculated risks and focus on growing your company. europeanbusinessmagazine.com 37

Johan Brinkenberg - CEO Nordic Gurantee

E

uropean Business catches up with our front page and lead focus CEO Johan Brinkenberg of Nordic Guarantee who recently won CEO of the year for the Insurance Industry.

Johan has transformed the company since he was appointed CEO and he gives us the low-down on the Contractual Guarantee Industry and his big plans for the company that is transforming The Nordic Insurance Sector.

38 europeanbusinessmagazine.com

Can tell us in a nutshell what NG actually does and what are your main markets within Europe?

Nordic Guarantee is an insurance company specialised in surety bonds and guarantees. The company was founded in 2003 as a buy-out from one of the largest insurance companies in the Nordic region. From the

beginning, we only had business in Sweden and Norway but today we are servicing the markets also in Finland and Denmark. Our clients are mainly in the Construcাon, Civil engineering and travel industries, but we do business in other industries too. Our main compeাtors are the banks but also other insurance companies selling the same products as us.

Your now CEO of Nordic Guarantee. When did you Crst join Nordic Guarantee (NG) what was your previous background?

I was headhunted to Nordic Guarantee in 2004 as the CFO and join the company just a[er it had been in business for less than a year. More or less in my whole career I have been working with helping Cnancial departments solving process problems and also to build business. Before I joined Nordic Guarantee I was a management consultant with PwC, but I have also worked in private equity and banking in various posiঞons.

My years in private equity gave me insights in how to develop companies and laid the foundaঞon for my interest in organisaঞonal behaviour, which today is an area where I work a lot as the CEO of Nordic Guarantee.

When you Crst joined NG , it was originally struggling.

What skills do you think it provided in terms of experience in terms of turning the company ĂƌŽƵŶĚ͍ ,Žǁ much did the banking industry provide you with in terms of experience?

new structure and culture I wanted to build. So, I had to lay o@ 25 percent of the sta@ and start over again. This is another important skill, to be able to make decisions that might hurt.

I was fortunate I had key sta@ that really supported the ideas we had at that ঞme to change the company and strengthen it. Therefore, I had change agents onboard that could help me developing the culture I wanted.

My experience from other industries needed in the situaঞon of turning Nordic Guarantee around mainly comes from my years in the private equity business and working with development of companies. Look in to the Cnancials, look in to the sta@ situaঞon, Cnd out what the business needs to thrive again, get support from the board and the owners, and decide on acঞons. This is what it is all about. Geমng down to the acঞons needed and do it.

What was iniঞally the Crst major challenge when you joined and how did overcome it?

When I was appointed CEO of Nordic Guarantee, the resigning chairman told me “as long as you look a[er the underwriঞng of clients,

things will go well!”. Well, there was more to do. Each area I looked at in more detail needed to be changed to perform in the way we wanted.

We did not have a uniCed clear picture communicated of where we were heading and what we would like to become. Typical basic areas when building a strong culture for a healthy, proCtable organisaঞon appreciated by its employees. So, I would say that all the details that needed to be changed showed me a bigger need for building the culture.

We have all heard the phrase “Culture eats Strategy for breakfast!” and I would say it is true. You really need to look at your culture before you even consider your strategy. Without having buy-in from your employees on where to go and what to become, the strategy will fail. Running a company is all about dealing with people. And you need to start from the inside to build a reliable and trustworthy communicaঞon when dealing with the market. If your employees cannot convey a trustworthy message, your clients will go elsewhere. Your employees need to feel they are supported and that they understand where to go and what to look for to be able to deliver top quality services to your clients.

I had the luck of been a part of the organisaঞon as CFO for years and therefore knew enough about the business to understand what made it work, in a wider sense. That gave me a head start in understanding what was needed to turn the business around.

According to my experience one of the most important skills in situaঞons of turnaround, is to be able to listen.

Listen to people in the organisaঞon what they believe is needed to make the workplace interesঞng and developing. Without the key sta@, it will be very diLcult to make the business thrive again. Here is another key area of knowledge. Look in to your sta@ to see what you have. Are they right to support you in the turnaround? If not, you need to see to it that you have the right skill set on board. In my situaঞon, it became obvious I had some sta@ that would not Ct in to the europeanbusinessmagazine.com 39

Do you have big markets out of Europe?

Today, Nordic Guarantee is focusing on the Nordic region and clients working here. This means we also do business with European clients doing business in the Nordic countries. What we also have is a partner in South Africa covering the sub-Sahara markets with the same products as us. This gives us a posiঞon in the market that none of our compeঞtors has. Our partner, Lombard Insurance Company, has a strong posiঞon in these markets. Africa is a very interesঞng and growing market, and as both Nordic and European companies are increasing their investments in Africa, we see an opportunity to grow here together with our partner.

Why do you think Crms would choose NG over another compeঞtor?

What is NG’s USP? We interact frequently with our clients. We do not sit in our oLces waiঞng for business to come in. We

40 europeanbusinessmagazine.com

want to be close to our clients, and that is something we value. It is part of our culture within Nordic Guarantee, to meet and greet. We see each other as the individuals we are and the teams we work in. The same goes when working with our clients.

We discuss what is happening in their markets to be er understand their needs and we share knowledge between us. Clients are telling us about their situaঞon in the market, and we share our knowledge to support them with what we can do to help them with their goals. It is all about creaঞng long-term relaঞonships, and our clients see that we are invested in this and engaged to help them succeed in their business. When we recruit people, we o[en get in contact with candidates from our compeঞtors, and we can see they are interested in us due to what they have heard about us and that we are di@erent from the compeঞtors. This is another USP for us; our strong culture, focus on the teams and having fun at work. This is something we use when interacting with both exisঞng and potenঞal clients.

What is in store for NG over the next few years? What side of the business are you looking to develop and where?

We sঞll have not reached our Vision.

This is something we concentrate on, and we will manage it in a few years’ ঞme. We are certain of it. We have taken the posiঞon of The Challenger in the market, and we want to do things di@erently from our compeঞtors. In the future, we will see a larger Nordic Guarantee, but sঞll not becoming bureaucraঞc and sঞ@. We want to stay agile and Yexible. Our sta@ will have fun at work and thrive in their personal development. Our clients will see that we grow with them and that we stay true to our values. Being invested in the industry and engaged in our clients’ success.

Where do you see the biggest opportuniঞes for NG? We sঞll have not reached our potenঞal. We have other industries to look at, new products to add to our portfolio and new geographical markets.

But most of this is so far wri en in the stars - where it will be, what and when.

Scotland’s Flourishing Investment Scene

T

he EY Scotland Attractiveness Survey 2017 showed that Scotland is the second most popular investment zone a[er London in the United Kingdom.

This is the C[h ঞme in a row that the country has been in this posiঞon. More than 50 foreign projects in Europe are located in Scotland.

Scotland has a few resources other Europe naঞons can’t match including one of the most highly-educated workforce in Europe, an internationally-regarded brand and a long-standing status for innovaঞon.

In terms of projects that are being secured, Scotland has three ciঞes represented in the UK top 10, with Glasgow, Edinburgh and Aberdeen featuring in C[h, sixth and seventh place respecঞvely.

2016 for FDI in Scotland wa parঞcularly a good year. 120 foreign investment deals were made over

the course of the year, up from 119 in 2015. In this same year, investment grew by 51 percent while foreign direct investment grew by 2.5 percent; lower than the 7 percent recorded across the U.K. for that year. In this same year, Scotland’s foreign investment from North of the border was 10.7 percent compared to the deals from the previous year which was 11.2 percent.

This year has already been a strong year for Scotland with 21 individual foreign investment projects a racting research and development investment. This was preceded by the foreign direct investment Yows in the second half of 2016 which were boosted by the Anheuser Busch InBev acquisiঞon of SABMiller. What has been interesঞng is following Brexit, the foreign direct investment Yows increased to £197 billion from £33 billion the previous year.

Global Investment In terms of foreign investment from di@erent countries to Scotland in the year 2016, staঞsঞcs shows that the U.S. invested 43 projects which amount to 35 percent, France with 14 projects which amounted to 11 percent, Germany with 7 projects which are 6 percent, Ireland with 6 projects which are 5 percent and China with 5 projects with 4 percent.

In the Crst quarter of 2017, the global Yows of foreign direct investment decreased by 3 percent to $788 billion compared to the global Yows of foreign direct investment of the second half of 2016 but remained above the Cgures of the year 2013 and 2014. In the Crst quarter of 2017, there was an increase in the Yows of direct investment by 3 percent to $416 billion. The overall decrease in the Crst quarter of 2017 was due to the drop in the second quarter of 2017. europeanbusinessmagazine.com 41

Rolling Back the Years In 2013, 521 jobs were created in the manufacturing sector; the contact centre area saw 1,195 jobs created which makes it the highest area in which jobs that are being created; in the sales and markeঞng sectors, 907 jobs were created; in the research and development area, 859 jobs were created; and in the tesঞng and servicing sector, 636 jobs were created. Moving on to 2015, a lot of FDI started to come into Scotland from across the globe with the United States having the largest share of investment with about 36 percent. France followed with 12 percent, then Germany had 7 percent of the foreign direct investment share in Scotland. Norway and Canada had 5 percent and 4 percent respecঞvely while Australia, Japan, Denmark, Singapore, Sweden, Switzerland all had 3 percent each in the foreign direct investment share of Scotland.

Distribution of FDI the percentage of investment made in each sector (2016) was spread

42 europeanbusinessmagazine.com

across various sectors with business (14%) and construcঞon (11%) the big winners. However, 11% was also invested in the so[ware sector showing the burgeoning technology sector. 9% was invested in the machinery and equipment sector, while 6% and 5% were invested in the scienঞCc research sector and food sector respecঞvely. A further 4% was invested in the pharmaceuঞcals, retail and uঞlity sector each.

Central Role Foreign direct investment already plays a central role in Scotland’s economy and is a crucial component of developing growth sectors in Scotland and building stronger supply chains. Foreign direct investment also provides other beneCts in terms of wider employment, transfer of knowledge, technology and innovaঞon and increased producঞvity.

Since 2005, Scotland has a racted an average of 62 new foreign direct investment projects each year creating 3,700 jobs in both manufacturing and services sector. In 2014, 37.5 percent of the projects in Scotland

were from foreign direct investment.

Further in 2016, about 2,300 foreign companies employed 314,000 employees with a combined turnover of £89 billion. Over the last decade, Glasgow has a racted £5.3bn and Aberdeen £2.67bn of commercial property investment – the third and seventh highest level of investment respecঞvely of any city in the UK outside London.

Incentives There are various a racঞve incenঞves given by the Scoমsh Government for Foreign Investors, which include Cscal and Cnancial incenঞves to corporate R&D Human capital development.

The a racঞon of foreign talent is a big focus for the government while enhancing the research infrastructure and promoঞng collaboraঞon and linkage are key processes to keep its industry compeঞঞve. Improving the intellectual property rights regime is also a key Celd as well as its BAIC Posiঞon on Incenঞves is a further area. All in all, Scotland’s investment scene is increasingly on the up and showing no signs of stopping.

O RM U A Historic City , Shaping the Future Today

E

dinburgh is a city of contrasts.

Scotland’s capital since the 15th Century, and home to the Scoমsh Enlightenment, the city’s Old and New Towns combine to create a UNESCO World Heritage Site and one of the most beauঞful cityscapes in the world.

Yet this is a thriving, ambiঞous and forward-looking city, rapidly establishing itself as a technology start-up hot bed and one of the world’s fastest growing Cntech hubs.

It might be anachronisঞc, but the historic beaঞng heart of ‘The Athens of the North’ is pumping a modern lifeblood of entrepreneurialism and innovaঞon in the 21st Century. A

growing populaঞon and unrivalled quality of life complement a proud track record in academic excellence, world-class research and the UK’s highest qualiCed workforce to create an appealing desঞnaঞon for investors, businesses, internaঞonal visitors and new residents.

Edinburgh is a growing city of 507,000 people.

The most prosperous UK city outside of London, with lower unemployment and higher disposable income, as well as the second highest GVA in the UK, Edinburgh packs a powerful economic punch for its compact size.

Entrepreneurial ecosystem According to 2017 research by Expert Market, Edinburgh was named best city in the UK in which to launch a business start-up. The research reYected several key factors, including the survival rates of local businesses, workforce availability, transport links, and the a@ordability of commercial rental properঞes. The Cndings support those of European Business Magazine, which named Edinburgh the best European city for technology businesses to locate to, in 2016.

55.1% of Edinburgh’s workforce is educated to degree level or above – the highest in the UK. europeanbusinessmagazine.com 43

With a cost base approximately 30% lower than London, the availability of quality, well located defurbished oLce space has proved parঞcularly irresisঞble to the Technology, Media and Telecommunicaঞons (TMT) sector in recent years.

Home to one of Europe’s fastest growing tech sectors, and the UK’s largest tech incubator at CodeBase, Edinburgh is successfully leveraging its wealth of graduate talent and renowned assets in the technologies of tomorrow. The University of Edinburgh’s acclaimed School of Informaঞcs helps to posiঞon the city at the forefront of disrupঞve sectors such as data science and digital health. Entrepreneurial Spark, now the world’s largest equity-free, non-sectoral business accelerator, announced in 2017 that it was to expand its Edinburgh hatchery to create a dedicated Cntech accelerator at the global headquarters of the Royal Bank of Scotland.

40.1% of jobs in Edinburgh are highly skilled – the highest proporঞon in the UK. Among the most prized of its many accolades in the past couple of years was being named Briঞsh Entrepreneurial City of the year at the 2016 Great Briঞsh Entrepreneurial Awards.

Innovaঞon and fresh bold thinking have clearly found an ideal climate in Scotland and appear to be feeding a second Enlightenment. Building on the phenomenal success of tech unicorns such as Skyscanner requires the right atmosphere, as well as access to capital and talent, quality of life and an established entrepreneurial ecosystem.

A vision greater than the sum of its parts As the second largest Cnancial services centre in the UK – by a long way – Edinburgh already enjoys an established reputaঞon as an internaঞonally important Cnancial hub. Scale, experience, diversity and compactness remain key to the city’s Cnancial o@er; an o@er that is rapidly evolving 44 europeanbusinessmagazine.com

to embrace new technology and the global transformaঞon in open banking standards.

A new entrant in Deloi e’s Connecting Global FinTech: Interim Hub Review 2017, Edinburgh has its sights Crmly set on becoming one of the world’s top ten Cntech hubs in the near future.

The University of Edinburgh has committed to training 100,000 data scienঞsts over the next 10 years.

The rapid expansion of, and increased internaঞonal investment in, Edinburgh’s TMT sector conঞnues to catalyse investment in digital infrastructure, all with the aim of meeঞng the demands of an increasingly technology-focused and knowledge-led economy.

Today’s smart ciঞes must be futureproofed to meet consumers’ exponentially-expanding appetites for digital connecঞvity. As the UK’s largest Gigabit city, Edinburgh already

beneCts from an extensive 150km gigabit-capable Cbre opঞc network.

Increasing numbers of businesses, as well as every school, library and Council-run site, are connected to the Cbre network, which delivers data speeds of up to 40Gbps.

Irresistible allure The expansion of Edinburgh’s Cnancial and professional services foundaঞon into a strong technology and Cntech focus underlines the city’s agility and adaptability – a fact recognised by internaঞonal investors.

Scotland’s capital ranked as one of the world’s top ciঞes for investment in the latest JLL Investment Intensity Index 2017. The index, which compares the volume of direct real estate investment in 150 ciঞes, over a threeyear period, places Edinburgh behind only Oslo, London and Munich.

Edinburgh topped the global chart when it came to investment intensity in the hotels sector.

its Edinburgh New Waverley development. The business, formed by a consorঞum of South African and Isle of Man-based investors, has made substanঞal progress on delivering 17,700m2 of modern oLce space overlooking a new public square and linked to the city’s historic Royal Mile.

New Waverley was recently selected

by Her Majesty’s Revenue and Customs (HMRC) as the home of its new headquarters funcঞon, which will centralise 2,900 jobs in Edinburgh’s historic Old Town.

A driver for regional growth

Edinburgh St James

Helping to unlock Edinburgh’s vast potenঞal is a considerable infrastructure investment programme that is already beneCমng the enঞre city region economy.

Edinburgh’s young, highly skilled workforce, world-class universiঞes and high quality of life, prove an alluring combinaঞon for internaঞonal investment funds.

The recent opening of the Queensferry Crossing signalled the successful culminaঞon of the biggest infrastructure project in Scotland for a generaঞon. The bridge itself is the keystone of a major investment that has also delivered 13.7 miles (22km) of major motorway upgrades to the north and south of the crossing.

Arঞsan Real Estate Investors are also embracing the modern principles of e@ecঞve place-making with

Further investment in infrastructure has been unlocked with the 2017 announcement of a new £1.1bn Edinburgh – World’s largest arts festival

Edinburgh St James, one of the largest regeneraঞon projects currently underway in the UK, is being delivered by TH Real Estate, in partnership with Dutch pension asset manager, APG. The development will deliver more than 158,000m2 of prime city centre retail and leisure space, as well as high end residenঞal.

Just a few miles away, Edinburgh Airport – Scotland’s busiest internaঞonal gateway – handles more than 12.3m passengers annually and connects to more than 130 desঞnaঞons around the globe. The airport has just begun a new £80m expansion that will deliver new boarding gates and seaঞng areas as part of a £220m million masterplan to meet rising passenger numbers.

Edinburgh and South East Scotland city deal, following agreement between the UK and Scoমsh Governments, six local authoriঞes and regional partners. The deal, which is expected to generate more than £5bn worth of Gross Value Added (GVA) over the next 15 years, includes commitments to invest £300m in world-leading data innovaঞon centres, upgrades to the Edinburgh city bypass, a new £20m world-class concert hall for the city and £65m of funding for housing, to help unlock key development sites.

Edinburgh a racts more than 4m internaঞonal visitors every year, enঞced by a year-round fesঞval o@ering, culminaঞng in August with the largest arts fesঞval in the world.

It’s thanks to its broad appeal that Edinburgh has emerged as one of the UK’s fastest growing ciঞes. The city will host the Eurociঞes Conference 2018, which brings together local governments from more than 130 of Europe’s largest ciঞes. Next year’s conference, enঞtled Creaࢼve Compeࢼࢼve Ciࢼes: Culture as a Smart Investment for the Future will explore the role of culture and talent in driving inclusive sustainable growth in vibrant innovaঞve cites. There could be no be er host for such a topic than the home of the world’s largest annual arts fesঞval.

Edinburgh is open for business. It nurtures and supports ideas. Its beauty is beyond quesঞon (Rough Guide readers recently named Scotland’s capital the fourth most beauঞful city in the world behind Paris, Florence and Rome). It’s a compact, a@ordable and green city, full of parks and vistas that inspire and relax in equal measure.

What are you waiঞng for?

For further informaঞon visit www.invesঞnedinburgh.com

europeanbusinessmagazine.com 45

Investing in the U.S.A - Your Perfect Partner The fundamentals that make the United States a great place to invest – markets, a climate of innovation, rule of law, and a motivated, skilled workforce – are stronger than ever.

arket Fundamental 1: Top Destination for Business Investment The World Bank consistently ranks the United States among the best markets in the world to start, operate, and expand a business – and in an increasingly competitive global marketplace, the United States continues to be the world’s leading destination for foreign direct investment.

Indeed, at more than $3.7 trillion, total FDI stock in the United States equals 17 percent of gross domestic product (GDP) – a larger share by far than that of any other country.

Market Fundamental 2: Growing Investor Confidence In 2017, for the fifth year in a row, the United States has topped the A.T. Kearney Foreign Direct Investment Confidence Index. The Index is

46 europeanbusinessmagazine.com

an annual survey of global business executives that ranks markets most likely to attract the most investment in the next three years. Moreover, nearly half of business investors were even more optimistic about the United States than they were last year.

Market Fundamental 3: European Companies are Voting with their Dollars (and Pounds, Euros, and Francs) The latest available data (2015) from the U.S. Bureau of Economic Analysis (BEA) reveal that at $1.92 trillion, European foreign direct investment (FDI) accounts for more than half (61.2 percent) of total foreign investment into the United States. Indeed, eight of the top ten largest sources of FDI in the United States are European countries. This and much more FDI data is available on SelectUSA Stats, a free online data visualization tool.

There are many reasons why investors from Europe and around the world choose the United States as the place to launch, grow, and succeed in their business endeavors.

Here are just a few: The United States is the single largest market in the world – with an annual GDP of more than $18 trillion, a diverse population of 325 million, and the highest household spending on the planet. Companies tapping into this substantial market find that locating manufacturing and distribution facilities closer to their customers enables greater quality control, improved responsiveness to customer demands, and reduced lead times.

Perhaps this is why U.S. affiliates of foreign companies exported US$425 billion worth of goods in 2014 – more than one-quarter of all U.S. goods

The U.S. workforce is diverse, skilled, innovative, and mobile – and its workers are among the most productive in the world. In fact, U.S. workforce output per hour is 36 percent above the OECD member country average.

The federal and state governments offer a wide array of resources – from training programs to tax incentives – to support employers in their quest to find, train, and retain the best talent.

Businesses operating in the United States are powered by abundant resources, including independent, stable, low-cost energy sources, raw materials, and the most developed, liquid, flexible, and efficient financial markets in the world. All companies – from growing tech startups to established multinationals – can find the resources and capital needed to take their firms to the next level.

And the future looks even brighter As a stable democracy with a transparent and predictable legal system, the United States treats foreign and domestic firms equally under the law. At the local level, economic

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The United States is a leading destination for innovators, offering seven of the top 10 universities, 27 percent of global research and development (R&D) spending, and the most robust intellectual property protections in the world. The innovation culture in the United States – with deep roots in collaboration and knowledge-sharing, respect for diversity, adaptability, and flat organizational structures – catalyzes opportunities. By encouraging entrepreneurship, risk-taking, and even the risk of failure, this culture offers an added competitive edge to the business community.

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exports. Moreover, the “Made in the U.S.A.” brand is internationally renowned for innovation, quality, and reliability, giving U.S.-made goods a competitive edge in global markets – and it is more timely than ever that President Trump declared July 17 – 21 “Made in America Week.”

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development organizations from every corner of the country promote and facilitate business growth and investment. And at the federal level, steps are being taken to create an environment in which companies can flourish – including reducing burdensome regulations, simplifying the tax structure, and investing in infrastructure initiatives.

“We came to [the United States] more than four decades ago and it’s been nothing but success… [We are] part of the fabric of this country, and I dare say we call it our second home.”

Ludwig Willisch, President, CEO and Chairman of the Board, BMW (U.S.) Holding Corp.

SelectUSA Investment Summit, June 19, 2017

What’s Next?

For companies ready to take the next step, SelectUSA is here to help.

Housed within the U.S. Department of Commerce’s International Trade Administration, SelectUSA promotes and facilitates business investment into the United States. SelectUSA offers a range of services to help investors find the information they need to make decisions; connect to the right people at the local level; navigate the federal regulatory system; and find solutions to regulatory issues related to the federal government.

The annual SelectUSA Investment Summit convenes companies from all over the world, economic development organizations from every corner of the nation, and other parties working to facilitate business investment in the United States. The next SelectUSA Investment Summit is scheduled to take place on June 20-22, 2018 in the Washington, D.C. area.

For more information, visit www.selectusa.gov. europeanbusinessmagazine.com 47

South Carolina’s next Big Thing

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nown as one of the most business friendly states in the U.S., companies have flocked to South Carolina over the past several years. Once arriving in the state, they have seen their companies flourish as S.C.’s prime location centrally located on the U.S. Eastern coast offers a logistical advantage that few other states can match.

But as more and more companies have sought to locate in the state, the demand for real estate has gone up as well, driving up costs and limiting the amount of space available within and near the state’s major cities.

Recognizing this, the North Eastern Strategic Alliance (NESA), a regional non-profit economic development organization in the northeastern corner of S.C., has set their region up to be the next big boom area of the state by working with its county partners to develop and complete due diligence on multiple industrial sites and identifying several available buildings throughout their nine county region.

With available land at affordable prices, direct access to the Port of Charleston via rail and 4-lane highways, two major interstates, a highly skilled and available workforce, and the region’s newest logistical asset, Inland Port Dillon, NESA can offer companies seeking to join South Carolina’s strong business climate a better solution at a fraction of the cost they can find anywhere else.

48 europeanbusinessmagazine.com

LOGISTICAL ADVANTAGES Having quick and easy access to domestic and global markets is a must for international businesses. The NESA region offers the best of both worlds.

Located on the eastern coast of S.C., the NESA region is exactly halfway between New York City and Miami on Interstate 95. The region is also the eastern origin of Interstate 20 allowing access as far west as Texas. These two major interstates give the NESA region access to over two-thirds of the U.S. population within a two-day drive. Additionally, a robust network of 4-lane divided highways make moving people and freight to/from interstates very easy.

With Inland Port Dillon, the NESA region offers companies a resource that is unmatched anywhere else in the county. Shippers to the inland port will enjoy the convenience of scheduling shipping to and from the inland port in the same manner that they schedule shipping to and from major seaports. Additionally, the inland port, and in turn the NESA region, has direct access to the deep water port of Charleston via Class A CSX rail and is strategically located at a railroad “T” with mainline access north/south and west and will be able to service markets in the Northeastern and Midwestern sections of the country.

The region is also home to two commercial airports, the Florence Regional Airport and Myrtle Beach International Airport, and are a short drive from the Charlotte Douglas International Airport, Charleston International Airport, and the Columbia Metropolitan Airport.

Last, but certainly not least, the NESA region offers over 350 miles of rail and is home to one of only two CSX rail yards in South Carolina. The CSX facility in Florence is the headquarters for three states and is the largest rail yard in the state. Numerous cargo handling services are available via the Florence rail yard, making it possible for companies to receive increased frequency in their service.

AVAILABLE LAND AT AFFORDABLE PRICES Where in the world can one find available and affordable land literally next door to a port?

At a very competitive average industrial land price of $17,000 per acre, the NESA region can.

Seeking property with interstate frontage or easy access to interstates?

The NESA region has multiple industrial sites and buildings available on major interstates and with quick and easy access via their four-lane highway system.

SKILLED AND AVAILABLE WORKFORCE If an experienced, well-trained, skilled and available workforce are what your seeking, look no farther than the NESA region. Employers use this region’s productive workforce to churn out all-terrain vehicles, pharmaceuticals, food additives, frozen meals, steel, packaging products, and much more. The region is home to companies that engage in world-wide distribution, refurbish airplanes, and are on the cutting edge of their highly specialized fields. With a population of nearly 2.2 million and an available workforce of nearly 1 million within 60 miles of the region’s geographical center, the region has a very robust labor pool to draw from.

WORKFORCE TRAINING The region offers a variety of workforce training resources to companies. One such resource is the state’s premiere workforce training program, ReadySC. Working

together with the South Carolina Technical College System, ReadySC develops, implements, and manages custom workforce training programs to support smooth, rapid start-up operations. ReadySC works with companies to screen, recruit, and train employees to meet their demands and ensures that companies have a ready-towork workforce the day business opens. The training is done at no cost to companies that commit to creating at least 10 new jobs.

Another unique resource is the Southeastern Institute of Manufacturing and Technology (SiMT). It is the first facility of its kind in the United States and is located on the campus of Florence-Darlington Technical College. SiMT is an advanced manufacturing center that provides the support needed by area and future industries, advancing the region’s ability to provide a highly trained workforce. SiMT exists to partner with businesses to provide training and manufacturing technology solutions. The facility contains an Advanced Manufacturing Center, 3-D/Virtual reality Center, 3-D printing lab, and National Robotics Center.

SiMT offers open-enrollment, onsite, and customized training.

Francis Marion University’s Industrial Engineering program, a first of its kind in the NESA region, will meet the engineering needs of many existing companies within the region.

The university also offers undergraduate and graduate programs in business. FMU has a long history of producing outstanding graduates who become leaders within their companies and communities. Also in the region is Coastal Carolina University, recent winner of the national baseball championship, a four-year university with several graduate programs as well. CCU attracts students from all over the world and many of those students stay here upon graduation, adding diversity and international flavor to the region’s workforce.

In addition to these great workforce training resources, the NESA region has an extensive public and private school system and is home to the South Carolina Governor’s School of Science and Mathematics (GSSM). GSSM is the only high school in the state that offers a residential experience focused on the mastery of science, technology, engineering and math (STEM) education. It is recognized as one of the nation’s top 24 elite public high schools. The region is also home to seven colleges and universities that prepare graduates for careers in a variety of fields.

europeanbusinessmagazine.com 49

New 3D-printing prototyping lab is Iowa’s play to take a share of the $140B medical device industry Idea to concept prototype in less than a week speeds commercialization

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Lcially opened in May, the MERGE coworking space in Iowa City, Iowa, has the trendy touches: A siমng area features mid-century modern couches and arm chairs, bicycle rims serve as wall accents, there’s a painঞng of Tupac with his trademark bandana kno ed in the front and free quality co@ee (La Colombe). It’s in a downtown locaঞon o@ the city’s pedestrian mall, surrounded by bars, restaurants, a hotel and the city library.

It’s all comfortable and inviঞng, but not unexpected for the accelerators, coworking spaces and incubators, proliferaঞng across the country.

It’d be easy to take a cursory look and peg MERGE as just that – another coworking space (albeit a very nice one), laudable for a community of this size, if not unique. But there’s a room in the back, not much bigger than a maintenance closet, and it’s in this room that local leaders think they have the catalyst for a new local industry. It’s called Protostudios and its part of Iowa’s strategy to take a share of the medical device industry, a U.S. market the Department of Commerce says is worth $140 billion.

A small community with an oversized medical specialty Iowa City has been home to the University of Iowa (enrollment 33,000) 50 europeanbusinessmagazine.com

since 1847, and it is a quintessenঞal university town. On a fall a[ernoon, students stroll to class through a tree-lined quad called the Pentacrest, with the golden-domed Old Capitol at its center, a relic from the 11 years from 1846 to 1857 when Iowa City was the capital of Iowa.

The town’s small downtown area, with restaurants, bars, and bouঞque shops, is immediately across from the Pentacrest and do ed with university buildings. There is no delineaঞon between where campus starts and the city begins: it’s a physical state that reYects the reality of life in the university-centered community.

The University of Iowa is world-famous for its creaঞve wriঞng graduate programs at the Iowa Writer’s Workshop, which has produced so many respected authors that the United Naঞons named Iowa City a “City of Literature” in 2008, a designaঞon that, at the ঞme, had only been granted to Edinburgh, Scotland, and Melbourne, Australia.

Less famous, but important for the area’s local economy, is the University of Iowa Hospitals and Clinics (UIHC), a massive, ever-expanding teaching hospital on a blu@ over the Iowa River. Recently, UIHC opened an almost $300 million expansion

to its Stead Family Children’s Hospital across the street from and overlooking the university’s 70,000 seat football stadium. UIHC has garnered ŶĂƟ ŽŶĂů ĂŝƌƟ ŵĞ this fall as fans in the stadium have begun waving to the young paঞents in the new hospital tower at the end of the Crst quarter of every game.

This new tradiঞon underscores the prominence UIHC, and the University of Iowa’s Carver College of Medicine, have in the Iowa City area. Together, they are the pillars of a medical economy that far surpasses what one may expect from a metro area of slightly more than 160,000 people, or even a state of just over 3.1 million.

Researchers in the medical school receive hundreds of millions of dollars in funding annually, and nearly 1,000 doctors pracঞce medicine at UIHC. Over the last three decades, state and local leaders have sought ways to transfer research from these stateowned enঞঞes into private, locally-based enterprises. Incubators in the university’s o@-campus research park have been home to nearly 100 companies spun out of university research. However, economic development oLcials worried they were sঞll missing opportuniঞes, speciCcally in the medical device Celd.

Why making fast, affordable prototypes matters for economic growth Ma Howard, MD, an accomplished neurosurgeon, professor and Department of Neurosurgery Chair at UIHC, has started four medical device companies. Like many people who work with their hands, he’s conঞnually thinking of ways he can improve upon the tools he uses.

“You see a clinical problem that needs to be solved and Cgure out a soluঞon,” Howard said. “It goes from a rough concept to one that you reCne and reCne unঞl you’ve got something that works.”

This new “something” is a medical device. Although the term “medical device” may conjure mental images of complex electronic implants, it can also mean something as simple as a tube or even a tongue depressor. Dr. Howard is the type of person state and local oLcials had in mind when

they decided to invest in building a medical device prototyping lab.

These days, when Dr. Howard thinks of a new idea for a surgical instrument, he meets with Chuck Romans, 3D design prototyping director at Protostudios. Romans is a product designer with a master’s of Cne arts degree from the University of Iowa.

He’s an expert in creaঞng products that are funcঞonal for users and aestheঞcally pleasing. Howard and Romans discuss the idea and Romans heads back to the prototyping lab, the closet-like space in the back of MERGE. In Protostudios, Romans has a single computer with computer-aided design so[ware (CAD). A few feet away are three 3D printers, a Stratasys J750, a Stratasys F370, and a Markforged Mark Two. Using these tools, Romans can design and manufacture a fully-funcঞonal prototype for Howard, someঞmes in less than 24 hours.

This new, fast, a@ordable prototyping capability is what leaders in Iowa City, and economic development research Crms with which they contracted, saw was previously missing in Iowa.

It was not something missing in the Twin Ciঞes, which is less than a Cvehour drive from Iowa City and home to the largest medical device economy in the country. Previously, when someone in Iowa City came up with an idea, they moved themselves, their idea, and their potenঞal future company, to the Twin Ciঞes (o[en at the suggesঞon of early-stage investors).

There, private companies will build medical device prototypes — for a considerable price, or potenঞally some of the intellectual property (IP) rights.

Other than its Iowa locaঞon, that’s what makes Protostudios di@erent from the private prototyping labs. It retains none of the IP for prototypes it creates, and as a not-for-proCt, o@ers its services at a rate that is generally several ঞmes less expensive than private companies in the Twin Ciঞes.

europeanbusinessmagazine.com 51

“It’s less expensive and radically easier working with Protostudios than working with a company in Minneapolis,” Howard said. “They not only build it out but they make it be er.”

An asset for all Iowans – and entrepreneurs everywhere In addiঞon to Romans, the sta@ at Protostudios includes Engineering Prototype Director Neill Quellhorst, an experienced engineering professional with a 38-year private sector career, a master’s degree in engineering and an MBA. Together, Quellhorst and Romans can provide a range of services, from consultaঞon and training, to design and manufacturing. In addiঞon to their 3D printers and CAD so[ware they have addiঞonal prototyping resources in a building which houses the university’s physics department.

Further augmenঞng their abiliঞes are a number of on-campus workshops available for their use, as well as workshops and sta@ at the state’s two other public universiঞes, Iowa State University in Ames, and the University of Northern Iowa in Cedar Falls. Even more, all companies in Protostudios have access to free market analysis as well as Cnancial consulঞng from the University of Iowa’s John Pappajohn Entrepreneurial Center and OLce of Research and Economic Development.

52 europeanbusinessmagazine.com

A[er all, Protostudios is a statefunded facility, which means its success is a state-wide priority. Protostudios received a $1.5 million grant from the state’s economic development agency, the Iowa Economic Development Authority (IEDA), which envisions the prototyping lab as not only a creator of new companies, but a potenঞal source of business for the state’s large manufacturing base. Ideally the process would go like this: An entrepreneur’s idea leads to a prototype made at Protostudios, which then leads to a company based in Iowa. Then, when the new Iowa company needs to mass produce the product, Protostudios refers it to an exisঞng Iowa-based manufacturer, which picks up a new customer.

If that wasn’t enough, the IEDA also sees Protostudios as a potenঞal way to keep skilled workers graduaঞng from the University of Iowa from leaving the state. Quellhorst and Romans plan to hire student interns from a number of disciplines, and then lease the labor of those students to Protostudios customers. Then, if all goes to plan, the startups working with Protostudios have ready-made employees to hire when the students graduate, and the students have a job in Iowa lined up.

Protostudios is not just for Iowans making medical devices, or working at

the University of Iowa, either. Romans said right now his work is about 75-80 percent medical devices, but can be as unrelated to medicine as a device he recently 3D-printed for livestock containment for a customer in a rural part of the state almost 300 miles from Iowa City. It’s a lab that can be used to make any prototype requiring small, precision parts, at an a@ordable rate – for Iowans and non-Iowans alike. In fact, during a September state-sponsored trade mission to Israel, several Israeli companies expressed interest in working with the Iowa lab. For now, at least, Protostudios sta@ and state oLcials say they’re ready for innovators from anywhere.

“With Protostudios, we have created a service that helps entrepreneurs create their products conveniently, economically and, most importantly for us, in Iowa,” Debi Durham, the IEDA director said. “The value proposiঞon for entrepreneurs is clear: Come to Iowa and we can help you make a prototype a@ordably and conveniently in an absolutely wonderful place to live.”

For more informaঞon on doing business with Protostudios, visit mergeic. com. To learn about the low cost of doing business, and innovaঞon economy in the state of Iowa, visit iowaeconomicdevelopment.com.

Bank Admits Fiat Currencies Are Failing and Cryptocurrencies May Replace Them

By Shaun Bradley

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s the transition towards a blockchain-based economy continues, the established Cnancial powers are desperately trying to stay relevant. In an a empt to boost their credibility, analysts at Deutsche Bank are Cnally admitঞng that State-run Cat currencies are becoming obsolete. For years, blockchain entrepreneurs and other criঞcs of central banking have been branded either conspiracy theorists or criminals. But recently, those controversial opinions about the inevitable changes coming to the world’s Cnancial system are being echoed by mainstream pundits.

Deutsche Bank’s top strategist, Jim Reid, recently arঞculated a view on the economy that is shared by many but rarely talked about: The most surprising part came when he acknowledged the crucial role cryptocurrencies may play in the move away from unbacked paper money.

The people’s trust in centralized control of currencies has never been directly challenged on this scale before. Compeঞঞon in the emerging digital economy between di@erent cryptocurrencies has introduced an alternative monetary system that empowers the individual and rewards based on merit, not special interests.

Any paradigm shi[ like this is guaranteed to have growing pains, but those who refuse to adapt will su@er most.

Even though Bitcoin, Ethereum, and countless other blockchain applicaঞons may create tremendous value for years to come, the current volaঞlity is sঞll more than most can stomach. One of the Crst things new people in the space love and hate is the tendency toward massive swings in price that occur seemingly at random. Those who do decide to get involved need to make their primary focus self-educaঞon. Trying to

stay objecঞve without understanding the fundamentals behind issues like scalability, forks, di@erent algorithms, and mining incenঞves will be nearly impossible. The reacঞons driven by ignorance, greed, and fear are all ampliCed in these new unregulated markets, meaning there is no safety net for amateurs. These wild Yuctuaঞons will eventually level out as broader adopঞon occurs and the ability for major players to manipulate price diminishes. Before building a large posiঞon in crypto, it may be more important to develop a strong understanding of the technology and history.

Many have seen recent a empts by China and the CFTC (Commodity Futures Trading Commission) to regulate ICOs as a negaঞve sign, but in reality, these acঞons only signal the insঞtuঞonal gatekeepers’ acceptance of this new asset class. The growing acceptance of Bitcoin payments has driven the blockchain revolution

thus far, but the technology is just beginning its potenঞal to reform the economy. Major retailers conঞnue to accept payments in cryptocurrencies, and pla orms like Exodus are dealing with the complexity that burdens the user experience. Soon, the average person will be able to safely get involved in this new Cnancial fronঞer without having any technical knowledge or dealing directly with thirdparty exchanges.

Deutsche Bank, J.P. Morgan, Bank of America, and other pillars of the Cnancial world will conঞnue to play catch-up in this dynamic process of decentralizaঞon. If the public conঞnues to wait for the opinions of these so-called experts, they will miss the opportuniঞes that lie on the cuমng edge of the blockchain market. As the new currencies around the world cut ঞes with the central banks, it’s crucial for individuals to not leave their Cnancial fate to the once trusted investment experts.

europeanbusinessmagazine.com 53

TORBJORN SJOSTROM European Business Magazine heads to Sweden where we catch up with Tobjorn Sjostrom (recent winner of Swedish CEO of the year) who gives us the latest from the world of Market Research while running Novus , the country’s leading market research firm.

1

Can tell us exactly what Novus does and what are your most prominent markets are?

Novus is a market research company; we work with all types of research, all methods. We are most wellknown for our poliঞcal and societal research. For instance, we have a deal with Swedish naঞonal television, the biggest news outlet in Sweden, to provide poliঞcal polling. However, it is market research for private companies that is the biggest market if we look at revenue.

What is market research then? The lowest common denominator for all our customers is that they seek answers to the quesঞon HOW - how do we get more customers, increase our members base, and so on. But to answer that you need Crst an answer to WHAT - what is the support/market, etc. today. When you know that you can focus on WHY - why is the support/market, etc. at the level they are. When you know the answer to WHAT and understand WHY you can get to work with HOW. That is the core in all research we do.

It is not numbers, but knowledge.

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2

You are now CEO of Novus.

When did you begin your career with Novus and what was your previous background?

I literally grew up in the market research industry. My dad was one of the most respected market researchers in Sweden. For instance, he owned Gallup in Sweden for 10 years and was the founder of Novus.

I Cnanced my studies working in the call centre making telephone interviews, but I was not planning to work in this Celd. I wanted to be an inventor, but got a Master’s degree in so[ware engineering and worked with mobile technology in Ericsson and Symbian. I later started a couple

of so[ware companies, but then my father died, and I had to reprioriঞse, so I closed my engagement in my company where I only owned a fracঞon of the shares and took over Novus. In April next year, it will be seven years since I took over. And I am just geমng started.

3

When you Crst joined Novus, what skills do you think it provided in terms of experience in terms of turning the company around?

Growing up with market research and being a computer nerd is an interesting combinaঞon, to say the least. Add to that the fact that I had to start my Crst day by informing the press,

market and employees that my dad, the CEO and majority owner, died yesterday. I honestly think that most of our compeঞtors were convinced that Novus would die as well.

But I think my knowledge of the cra[ of market research and a true understanding of the digitalizaঞon is a unique talent for a CEO in a market research company. Add to that the fact that I really felt I had nothing to lose.

I have thought about this a lot and I think that ingredient was quite vital to our success at that ঞme. The digitalizaঞon was a true disrupঞon in our industry at that ঞme, and you needed to take that head-on. Something that is not at all typically Swedish.

What iniঞally was the Crst major challenge when you became CEO and how did overcome it?

I think I touched that in the previous quesঞon, but the biggest challenge was that I inherited the role in the worst possible way. I had to prove everything. I had to become an authority externally and at the same ঞme gain the trust of all my colleagues. I had to do most things right.

But I think the most notable thing was wriঞng arঞcles. The Crst 3 years I got more than 30 arঞcles published in the

4

major Swedish newspapers, describing the research industry and explaining the poliঞcal landscape. That laid the foundaঞon that I later could use to become the spokesperson for the knowledge company that Novus is.

5

What is the speciality of Novus?

Our greatest asset is our brains. That is not just the success of humanity but that is also true for Novus. We describe and explain the situaঞon to our customers. We are not just providing numbers and charts. Sure, we use them, but we use them as tools to explain and describe the thing our customer needs help with. That may not sound very unique, but most of the industry misinterpreted the digitalization as an industrialization.

That is not the case. If it is anything it is an individualizaঞon. But mainly it makes everything move much faster.

Here we can provide understanding and answers to what, why and how. And in this fast-paced world, you cannot a@ord to guess. You also need help understanding what informaঞon is relevant and what is useless in understanding your customer and your market. That is what we do, mainly by using our knowledge about

the collecঞve human behaviour. And we never forget that the customer is sঞll a human with human emoঞons. I really think a lot of business models are forgeমng that.

6

What is the focus for the next two years for Novus and what side of the business are you looking to develop and where?

Actually, we will keep doing good research. Describing and explaining to our customers about their markets.

The challenge is to be focused on this issue, gain the trust of our work and give true value to our customers.

7

Where do you see the biggest opportuniঞes for Novus and you as a CEO?

The fact that you can shape your future is something many seem to forget. And if you understand which bu ons to press and in what direcঞon you want, you can shape the future and the world around you to be the one you want. We are doing that for the market research industry in Sweden. And I think we are alone in doing that. That is probably the answer to why I am geমng prices like this.

europeanbusinessmagazine.com 55

62 Insane Facts About Bitcoin

B

itcoin is a virtual currency that uses Blockchain technology for secure payments and storing money electronically, without requiring a bank or a person’s name.

Satoshi Nakamoto created this cryptocurrency back in 2009. The biggest advantage of Bitcoin is that it’s not under control of central authority, government or private company, so people are free from paying transacঞon fees. It can be used for booking a hotel or Yight, or purchasing products online, as many online stores and companies accept Bitcoin now.

Today, there are 1354 Bitcoin ATMs in 55 countries around the world and about 5.8 million users that have digital wallets. The price for one Bitcoin at the moment is $5,602 and it’s growing conঞnuously, proporঞonally with the interest for digital money.

Take a look at this infographic, created by the team behind BitcoinPlay, that illustrates in details some interesঞng facts about this incredibly popular virtual currency.

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The Business of Border Control

I

f there is a business you are thinking of taking a dip in investment-wise, never rule out security and never rule out the border control industry.

Europe spent €17 billion on stopping immigraঞon from 2014 to 2016 according to a report by the Briঞsh think-tank Overseas Development Insঞtute (ODI). For ODI managing director Marta Foresঞ, the principal change in strategy to arise from the immigraঞon crisis of 2015, when a million would-be refugees entered Europe, is an economic one. Laura Femmine Finds reports.

The budget of the European Union border agency Frontex has increased

dramaঞcally from just €6 million in 2005 to €254 million in 2017. This was mainly in terms of surveillance and the creaঞon of border fences, and in terms of aid.

Theodore Baird, a researcher at the University of Amsterdam, has observed that the control of European borders has become more restricঞve and militarised since the 1990s and so the rise of such equipment has skyrocketed.

And to support this restricঞve regime, a European market has grown up driven by a number of companies that parঞcipate in the design, producঞon and supply of security technologies and border surveillance.

Corporate giants such as Ericsson, Airbus, German conglomerate Siemens, Italy’s Leonardo S.p.A. (formerly Finmeccanica), Briঞsh Crm G4S, as well as Spain’s Indra and Thales, don’t just provide tools and physical equipment but they o@er integrated services to European Union states and agencies. They also stand in as experts in the drawing up of EU reports on the future of the security industry. The Security for Sale invesঞgaঞon, carried out by 22 European journalists in 11 countries, noted that security companies make €30 billion per year in the EU with Indra and Airbus among the top 10 recipients of European security funds. europeanbusinessmagazine.com 69

“There are di@erent forms of privaঞsaঞon in terms of migraঞon equipment and material, and obviously outsourcing is linked with budgetary concerns,” says Yves Pascoau, Director of Migraঞon and Mobility Policies at the European Policy Centre, a Brussels-based think-tank.

“In France, for example, private Crms have taken over visa processing as they [the companies] are faster in collecঞng applicaঞons and this streamlines the process,” Pascoau says.

Subcontracঞng and outsourcing are common pracঞces in the business world, but there are serious issues when it comes to applying these methods to immigraঞon. Angolan ciঞzen Jimmy Mubenga died in 2010 when security agents with private Crm G4S wrestled him to the ground a[er he protested while boarding a Briঞsh Airways Yight during deportaঞon proceedings.

That tragic episode, told by France’s Claire Rodier in her 2013 book Xénophobie Business, exemplifies the dilemma of privaঞsing immigraঞon services. The cause of death of Mubenga, who, according to witnesses, su@ocated, was never established by authoriঞes.

G4S subsequently lost their security contract but no one was disciplined, and work pracঞces were not changed. Another company took on the unpleasant but lucraঞve role.

In Spain, Air Europa last year lost a contract which saw it repatriaঞng 70 europeanbusinessmagazine.com

undocumented migrants in what were dubbed “Yights of shame.” Evelop Airlines, Orbest, and Air Nostrum went on to bid to become the providers of the service which also includes providing transfers of those migrants within Spain, and will be worth €11 million over 18 months.

Spain “has inspired” some of the key pillars of the EU’s security procedures including the building of walls and the installaঞon of intelligent surveillance systems, according to Virginia Rodríguez, a researcher with the Spanish foundaঞon PorCausa that carries out research on migraঞon and poverty issues.

The walls that separate Spain’s North African exclaves of Ceuta and Melilla from Morocco – which cost €72 million from 2005 to 2013 according to Amnesty Internaঞonal – along with Spain’s coastal surveillance

system SIVE – which had a cost of €230 million from 2000 to 2008 – are the clearest examples of this.

Firms including Spanish companies Indra and Dragados are behind these projects.

The ODI report also says that since the fall of the Berlin Wall in 1989, a total of 1,200 kilometres of border fence have been constructed in Europe. The esঞmated total cost of seven of these – those built in Greece, Bulgaria, Hungary, Austria, Slovenia, Latvia, and Estonia from 2011 to 2016 – is €300 million. In 2013, the EU installed a system similar to SIVE to provide surveillance of its fronঞers using drones, sensors and satellites. A further €244 million is due to be spent on the project up to 2020.

In addiঞon, in 2003, Spanish Crm European Security Fencing patented the concerঞna wire used on the border fence separaঞng the country’s North African exclave of Melilla from neighbouring Morocco. That product is now also used on the Serbia–Hungary border.

According to esঞmates cited by Baird, the global border security industry, this will be worth €50 billion in 2022 but he warns the Cgure is decepঞve.

There is no oLcial accounঞng as to how much migraঞon control costs, and it is not clear which acঞviঞes are covered by the sector and which are not. “There is very li le transparency,” conCrms Foresঞ.

Is the Rise of Bitcoin Sustainable? europeanbusinessmagazine.com 71

I

f 20 years ago someone would have said that in a near future we will have an absolutely new currency, just a few of us would’ve actually believed those words. Now, when we are witnessing the rise of the bitcoin, which can also be named as the biggest revoluঞon in the whole Cnance sector roughly in the last hundred years, most people around the globe sঞll stay skepঞcal. However, economists and experts, as well as investors, are excited about this phenomenon. Rasa Butrim reports.

Yes, bitcoin truly is a phenomenon, as it has no government, and yet, is a currency. Some are even calling it “e-cash“, and that is suitable, as bitcoin is purely and absolutely digital. Founder and chairman of the X Prize Foundaঞon, Peter Diamandis described bitcoin as “a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transiঞons… all good things.” And we couldn’t agree more, although some people may need a li le more ঞme to establish conCdence in it. However, isn’t that a case with all disrupঞve innovaঞons around the globe? Besides reaching an absolute investment craze with 10 thousand dollars price, bitcoin’s value has moved up to 11 million per cent in the last Cve years, and its total value increased to 100 million dollars, which stands for the last 12 months’ grow to unbelievable 600 percent.

As numbers speak for themselves, some criঞcs tend to stay suspicious and call bitcoin “a bubble of all bubbles“, referring to the fact that it’s not the only digital currency out there, and has no internal value a[er all.

The biggest quesঞon is bitcoin’s sustainability now, and almost everyone is wondering what will happen with the bubble in the long run. Looking from the most general sense, it’s actually pre y easy to clone or improve bitcoin’s technology. However, this cryptocurrency shows an extremely strong lead in credibility right now, which stands for a meaningful factor. The process also strongly depends on government’s posiঞon and consideraঞon on whether they are going to tolerate the so called “anonymous payment systems“. Experts say that it’s one thing to allow small transacঞons with digital currencies, but collecঞng taxes or measuring criminal acঞviঞes can become quite tricky at some point. Another important quesঞon related to bitcoin’s sustainability, is what would happen with its price if governments would be able to observe all digital currency’s transacঞons? Such transacঞons now happen extremely fast and overall fees, if compared to tradiঞonal billing instruments, reach just a few cents, which makes it the fastest and cheapest internaঞonal transacঞon out there. Experts say that in this case bitcoin would sঞll beat the 2 percent bank’s charge on cards, although some improvements would be needed.

Analyzing bitcoin’s behaviour in the past few years, Sax Bank’s analyঞc K. V. Petersen saw it coming: the incredible rise of the cryptocurrency for more than 165 percent. At

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that ঞme many were surprised and even more skepঞcal by such forecast. Now Mr. Petersen says that it is very probable for the bitcoin’s market capitalizaঞon to overcome 1,75 trillion dollars in the next ten years. Interesঞngly, bitcoin is actually considered a limited currency, and only a certain number of 21 million units will be released. It is predicted that this number will be reached unঞl the year 2140. Experts say it is very likely that we will see the rise of 2 or 3 other cryptocurrencies which will take place in the market, and even so, bitcoin will sঞll remain the most popular one simply because of being the Crst, as well as demonstraঞng an amazing e@ect of prevalence.

Having the biggest perspecঞves, bitcoin is also a currency that brings certain threats to world’s economy. Many countries and governments are truly afraid of bitcoin because it has enormously high level of compeঞঞveness potenঞal, which can also cause some serious damage to states’ sovereignty. You may ask, how is that possible?

Well, simply by displacing naঞonal currencies out of the market. Central banks of biggest governments note that

if bitcoin will start to compete with tradiঞonal regulaঞve amount of money, that can decrease the whole eLciency of money poliঞcs. Along bitcoin’s rising value, it is possible to witness deYaঞon in the real market, and if the digital currency would start to fall in price, it would cause a really quick devaluaঞon of currencies.

However, although there are many di@erent opinions about bitcoins and whether they will pass the test of surviving, investments to Tesla, Snap or Uber also tend to be called risky and even unproCtable, as investors are loosing money over them. Clearly, someঞmes no match between the necessity, usefulness or project’s ability to raise money can be found.

This also means that there’s no need for skepঞcs to treat bitcoin as something that deCnitely has no future. What is more, it already caused a sensaঞonal value increase of electronic commodity, and as the bitcoin investors are raising and constantly improving the technology behind it, bitcoin is actually improving and becoming even more

fashionable day a[er day, as well as more interesঞng and relevant for Cnancial insঞtuঞons and even governments.

When you look at it, the whole bitcoin’s system reminds of a Cnancial pyramid in some way, which can work e@ecঞvely as long as there are people interested in its existence. And how can there not be?when such factors like economical status of the state, currency wars, devaluaঞon and even poliঞcs have no power to inYuence bitcoin? This is why investors keep coming back. It a racts. Clearly, bitcoin is alive just because of it’s uncondiঞonal trust and belief that it will actually rise in price. Even chances of sudden changes cannot frighten investors, and day a[er day we are witnessing a new era of bitcoin’s Yourishing.

Well, some people simply love the fact that they can be absolutely free and independent from everything, and as bitcoins can actually provide this opportunity, they gladly take it. That’s why, when talking about bitcoin’s future and its sustainability, the chances are in favour of seeing this digital currency phasing into the mainstream and reaching the ঞpping point. europeanbusinessmagazine.com 73

Electric Fiat Currencies And Cryptocurrencies- Where We Are At? With all different types of digital money these days and accounts represented electronically, people often wonder what’s the difference between traditional electronic currency issued by banks and permissionless cryptocurrencies like Bitcoin.

The Push for a Cashless Society Over the past few years, there’s been a lot of discussion concerning the world’s progression towards a cashless society. Furthermore, bureaucrats and government authoriঞes worldwide have also bolstered the idea further by removing individual notes of tender from circulaঞon by demoneঞzing cash reserves. Before the sevenঞes, cash was a dominant form of money, but since then most people now transact with an electronic representaঞon of their local currency in their day to day lives.

For instance, only 8 percent of the world’s money is represented by 74 europeanbusinessmagazine.com

physical notes, and everything else is a form of digital Cat. Countries everywhere around the world have slowly been progressing towards a cashless society. In the U.S. the pracঞce of electronic deposits into bank accounts became popular in 1975, and a decade later people were using these balances with debit cards.

The Glaring Differences Between Electronic Fiat and Cryptocurrencies

Now throughout a few parঞcular countries, large denominated notes like the $100, $500, and $1,000 bills are becoming rarer as governments are removing them from circulaঞon.

One country, in parঞcular, India is su@ering from a cash crisis as leaders started a demonizaঞon process last year. The use of cash within India

There are significant differences between the tradiঞonal digital currency in your bank account and cryptocurrencies like Bitcoin. One of the biggest contrasts between the two is bitcoin’s deYaঞonary a ributes which is backed by the currency’s 21 million capped supply. Many economists believe this is a great beneCt

is becoming less visible as Indian authoriঞes are pushing hard for a cashless society by replacing it with digital Cat.

as the public knows that there are only so many bitcoins, which causes people to save, and purchasing power usually increases.

With tradiঞonal digital Cat reserves, there is no telling how much money is circulaঞng, and no one knows if the central banks are prinঞng money on a whim. Economists who are against this type of monetary pracঞce, such as those from the Austrian school, believe the world’s ciঞzens are experiencing a silent robbery called inYaঞon due to central planners prinঞng vast amounts of Cat reserves. Someঞmes central bank’s like the Federal Reserve tell the public they are creaঞng more money with concepts like quanঞtaঞve easing and the recent bank bailouts.

Another reason the world’s tradiঞonal Cat currencies are no good is because the electronic form is also used to monitor the public’s wealth.

Cash is harder to track, and governments can keep a keen eye on funds moving around their electronic databases. Furthermore, other government agencies such as the UK’s GCHQ, the NSA, the FBI, and the CIA have been known to being spying on ciঞzens and the world bank’s monetary movements.

With this power, central authoriঞes can censor people’s privileges to move money in any way they see Ct. There are clear examples of banks, credit card companies, and Paypal freezing peoples funds or halঞng

operaঞons because of reasons they don’t parঞcularly agree with.

Censorship Resistance and Unstoppable Tax Protests With bitcoin, people can move their wealth in a permissionless way using their individual sovereignty. Bitcoin users can uঞlize the decentralized currency for operaঞons that are typically frowned upon by third party forces. This includes online storefronts selling pornography, illicit drugs, and other black market acঞviঞes. Cryptocurrencies can also be used to avoid taxaঞon as it leaves the decision of reporঞng to tax oLcials up to the user.

The infamous whistleblower Edward Snowden has agreed with this senঞment explaining to his Twi er followers on November 13 staঞng;

Coincidentally, new technologies raise the possibility of unstoppable tax protests Because the public is embracing bitcoin and blockchain-based permissionless currencies authorities worldwide are trying to co-opt the technology. Rather than be disrupted, central monetary planners believe adding the word “blockchain” to the incumbent databases used today will lure more people towards a cashless society. One that will sঞll be monitored, controlled with censorship, and even “editable” for those trying to erase fraudulent behavior.

There is a big di@erence between the electronic money used by banks today and bitcoin, as the la er is far superior for those who embrace freedom.

europeanbusinessmagazine.com 75

Omnia Zermatt - Switzerland

Chrisঞan EcKert MD Omnia Zermat

The Luxurious Mountain Lodge :H ZHQW WR YLVLW WKH &KULVWLDQ (F.HUW 0DQDJLQJ 'LUHFWRU RI WKH 2PQLD =HUPDWW LQ 6ZLW]HUODQG ZKR V GHGLFDWLRQ WR KLV FXVWRPHUV KDV ZRQ WKH KRWHO OHDGLQJ DFFRODGH RI %HVW /X[XU\ +RWHO 6ZLW]HUODQG ZKLFK LV VRPH IHDW FRQVLGHULQJ WKH QXPEHU RI ILYH VWDU OX[XU\ KRWHOV LQ 6ZLW]HUODQG 6RPH UDQN DV VRPH RI WKH EHVW LQ WKH ZRUOG 6R ZH ZHQW WR ILQG RXW ZKDW WKH IXVV ZDV DOO DERXW

You are MD (Managing Director) of The Omnia. When did you begin your career in the hospitality industry and how long have you been working for The Omnia?

I started to work in the hospitality industry in 2006. A[er graduaঞon I had made a deliberate choice not 76 europeanbusinessmagazine.com

to go to hotel management school straight away: I wanted to learn the trade from the bo om up. I started by doing a hospitality apprenঞceship and was employed by the Kempinski Group for a number of years before starঞng hotel management school in Lucerne. In the meanঞme, I have been working at The Omnia for three years.

When you Crst joined The Omnia, what did you feel needed changing?

Thanks to our previous Managing Director Philippe D. Clarinval’s excellent preliminary work, there was nothing that needed to be tackled straight away.

What was iniঞally the Crst major challenge when you became MD? Naturally, the level of responsibility changed signiCcantly from one day to the next, and suddenly the guests focused on me in a di@erent way.

What is it you try and insঞl into the team you have? How do you inspire them?

We value our team very much: they are the key to The Omnia’s success because they idenঞfy 100% with The Omnia as a product and demonstrate this every single day. Personally, I try to lead by seমng a good example and share this philosophy with my sta@.

I also take input made by the team

very seriously and try to take this into account when I make decisions.

Where are your biggest markets?

Where do guests come from?

What do guests love about The Omnia in your mind? Why do you feel they come back?

Our biggest market is made up of our loyal Swiss guests, followed by the UK and then the US/Canadian market.

Our guests love being able to feel totally at home here. This is a major strong point that The Omnia prides itself in. Our guests forget their daily worries, and this allows them to relax completely. They arrive as guests and return as friends.

What do you most like about working in this industry?

What is an average day for you as MD? Each day is di@erent and varied. I really love that about my job, and it moঞvates me afresh every day. Being here for our guests and employees alike is my most important consideraঞon every single day.

The daily contact with guests and sta@ who come from such a diversity of countries. Our guests’ feedback is our daily bread and bu er and spurs my team and me on to the highest performance.

Next two years - is there any special focus for you and the hotel?

Any next stage developments?

All I can reveal at the moment is that our next steps will involve spa facility renovaঞons. europeanbusinessmagazine.com 77

“RUSSIA-GATE” SPREADS TO EUROPE

E

ver since the U.S. government put a mere $160 million last December to combat Russian propaganda and disinformaঞon, unknown academics and obsessed think tanks have been lining up for a shot at the loot, an unseemly rush to proCt that is spreading the Russia-gate hysteria beyond the United States to Europe.

Now, it seems that every development, which is unwelcomed by the Establishment – from Brexit to the Catalonia independence referendum – gets blamed on Russia!

Russia! Russia!

The methodology of these “studies” is to Cnd some Twi er accounts or Facebook pages somehow “linked” to Russia (although it’s never exactly clear how that is determined) and complain about the “Russian-linked” comments on poliঞcal developments in the West. The assumpঞon is that the gullible people of the United States, United Kingdom and Catalonia were either waiঞng for some secret Kremlin guidance to decide how to vote or were easily duped.

Oddly, however, most of this alleged “interference” seems to have come a[er the event in quesঞon. For instance, more than half (56 percent) of the famous $100,000 in Facebook ads in 2015-2017 supposedly to help elect Donald Trump came a[er last year’s U.S. elecঞon (and the total sum compares to Facebook’s annual revenue of $27 billion).

Similarly, a new Briঞsh study at the University of Edinburgh blaming the Brexit vote on Russia discovered that more than 70 percent of the Brexit-related tweets from allegedly Russian-linked sites came a[er the referendum on whether the U.K. should leave the European Union.

But, hey, don’t let facts and logic get in the way of a useful narraঞve to suggest that anyone who voted for Trump or favored Brexit or wants independence for Catalonia is Moscow’s “useful idiot”!

This week, Briঞsh Prime Minister Theresa May accused Russia of seeking to “undermine free socieঞes” and to “sow discord in the West.”

What About Israel?

Yet, another core problem with these “studies” is that they don’t come with any “controls,” i.e., what is used in science 78 europeanbusinessmagazine.com

to test a hypothesis against some base line to determine if you are Cnding something unusual or just some normal occurrence.

In this case, for instance, it would be useful to Cnd some other country that, like Russia, has a signiCcant number of English speakers but where English is not the naঞve language – and that has a signiCcant interest in foreign a@airs – and then see whether people from that country weigh in on social media with their opinions and perspecঞves about poliঞcal events in the U.S., U.K., etc.

Perhaps, the U.S. government could devote some of that $160 million to, say, a study of the Twi er/Facebook behavior of Israelis and whether they jump in on U.S./U.K. controversies that might directly or indirectly a@ect Israel. We could see how many Twi er/Facebook accounts are “linked” to Israel; we could study whether any Israeli “trolls” harass journalists and news sites that oppose neoconservaঞve policies and poliঞcians in the West; we could check on whether Israel does anything to undermine candidates who are viewed as hosঞle to Israeli interests; if so, we could calculate how much money these

“Israeli-linked” acঞvists and bloggers invest in Facebook ads; and we could track any Twi er bots that might be reinforcing the Israeli-favored message.

If we had this Israeli baseline, then perhaps we could judge how unusual it is for Russians to voice their opinions about controversies in the West. It’s true that Israel is a much smaller country with 8.5 million people compared to Russia’s 144 million, but you could adjust for those per capita numbers — and even if you didn’t, it wouldn’t be surprising to Cnd that Israel’s interference in U.S. policymaking sঞll exceeds Russian inYuence.

It’s also true that Israeli leaders have o[en advocated policies that have proved disastrous for the United States, such as Prime Minister Benjamin Netanyahu’s encouragement of the Iraq War, which Russia opposed. Indeed, although Russia is now regularly called an American enemy, it’s hard to think of any policy that President Vladimir Puঞn has pushed on the U.S. that is even a fracঞon as harmful to U.S. interests as the Iraq War has been.

And, while we’re at it, maybe we could have an accounঞng of how much “U.S.-linked” enঞঞes have spent to inYuence

poliঞcs and policies in Russia, Ukraine, Syria and other internaঞonal hot spots.

But, of course, neither of those things will happen. If you even tried to gauge the role of “Israeli-linked” operaঞons in inYuencing Western decision-making, you’d be accused of anঞ-Semiঞsm. And if that didn’t stop you, there would be furious editorials in The New York Times, The Washington Post and the rest of the U.S. mainstream media denouncing you as a “conspiracy theorist.” Who could possibly think that Israel would do anything underhanded to shape Western aমtudes?

And, if you sought the comparaঞve Cgures for the West interfering in the a@airs of other naঞons, you’d be faulted for engaging in “false moral equivalence.” A[er all, whatever the U.S. government and its allies do is good for the world; whereas Russia is the fount of evil.

So, let’s just get back to developing those algorithms to sni@ out, isolate and eradicate “Russian propaganda” or other deviant points of view, all the be er to make sure that Americans, Britons and Catalonians vote the right way. -From Zero Hedge. europeanbusinessmagazine.com 79

Slow time is here: A one-handed watch for those who want to live slow

A

one-handed watch with no visible logo has been created by people who like to live life slow.

Called the slow watch, it has just one hand, drawing inspiraঞon from the days when man told the ঞme by sundial.

The Swiss-made watch comes in 15 styles. Each is unisex, 100m water resistant and exquisitely cra[ed in stainless steel.

“We created the slow watch to simplify our lives. Everyone around us wants to break away from the pace of constant clock-watching, living with a sense of ঞme rushing by, and the slow watch allows us to do that,”

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explained Christopher Noerskau, one of the founders of the brand.

With a 24-hour face, the hour hand on the slow watch appears to move at half the speed of a 12 hour watch, whilst keeping the correct ঞme.

Although the watches are not outwardly branded, there is a discreet logo, hidden underneath the case of the watch, that simply says ‘slow’.

Corvin Lask, co-creator of the slow watch, said: “By keeping our logo hidden, our wearers are brand-free.

By losing the minute hand, they have an even greater sense of freedom. As the slow community grows, we want men and women to know they can take things easy wherever they are,

restoring the balance in their lives by keeping ঞme without watching every minute.”

With its understated design and a@ordable range, slow watches are a style statement that men and women can e@ortlessly make.

Every slow watch has a Swiss made GMT-precision quartz movement with a 24-hour dial, allowing wearers to see the enঞre day in one view.

Available in silver, black or goldplated stainless steel, the watch comes with either a cream, black or silver face. Stylish and interchangeable straps are available in stainless steel, Italian calf leather, canvas and nylon.

Prices, inclusive of shipping, start at £190 for a slow watch with canvas or nylon strap, to £200 for leather and £230 for a stainless steel band.

The substanঞal, but not oversized, watch suits both men and women and can be matched with both formal and casual aমre. Weight is between 65g (for leather, canvas and nylon straps ) and 125g (for metal straps).

Dimensions: 38 w X 42.5 h x 8.2 d. slow watches are available from www.slow-watches.com Further informaঞon, product shots and samples are available from jo@slow-watches.com europeanbusinessmagazine.com 81

Europe and the Electric Car Revolution The electric car revolution is here and is here to stay.

In 2016, global sales for electric cars soared by 36%, translating into actual numbers a quarter of a million electric cars were sold worldwide, the biggest demand for which coming from China.

European Business Magazine looks into the revolution

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T

esla is and has been the hot topic in the electrical car industry .It took the lead in making electric cars with its luxury Model S which has made electric cars look powerfully cool. Its CEO Elon Musk hasn’t been short of PR either and has brought huge a enঞon to its vehicles with large numbers on it’s waiঞng list.

Other global automakers like General Motors are following suit. Ford and General Motors are aiming to produce more than 30 models of electric cars (combined) by 2023 while Volvo aims to go all-electric by 2019.

Tesla and Volkswagen aim to make more than a million electric vehicles annually starঞng 2025. Volkswagen will invest around $40 billion on electric cars, autonomous driving and

new mobility services by the end of 2022. It is targeঞng around 80 new electric cars by 2025.

In less than a decade, electric cars will be as a@ordable as current gasoline cars. In Europe, electric cars are expected to account for almost 5% of vehicle sales by 2021. Patrick Hummel of UBS said, “The shi[ to electric cars will come faster and in a more pronounced way, fuelled by the diesel demise in Europe, ba ery technology advancements and regulaঞon in China and Europe. Europe will have the largest electric vehicle penetraঞon approaching 30% of new cars sold.” Norway is already leading the way. Only last year ( 2016), a third of the cars they sold were electric. Bergen, one of the ciঞes in Norway, had electric cars comprising 50% of the 2016’s total car sales.

One of the current drawbacks in mass producing electric cars is the ba ery manufacturing component, however there have been steps to double and even triple current producঞon so that the ba ery prices would plunge in able to meet the growing demand for electric cars. One of which is Tesla’s gigafactory that will spearhead the producঞon of car ba eries. By 2030, improvements in car manufacturing and conঞnuous improvement in ba ery energy density will lead to a fall in ba ery car prices by more than 70%.

BNEF’s lead advanced-transportaঞon analyst Colin McKerracher said, “Lithium-ion ba ery prices are going to come down sooner and faster than most people expect.” The cost of lithium-ion ba eries has dropped signiCcantly from $1,000 per kWh in 2010 to only $300 today. Analysts think that this could fall to $73 by 2030.

According to BNEF, Europe, China and America will lead the charge for electric cars as they have been proacঞve in giving subsidies and creaঞng charging points that will facilitate the electric car revoluঞon. BNEF projects that in 2040, 67% of the new cars sold in Europe will be electric cars.

The planned phasing out of non-electric cars has been instrumental to the rapid growth in electric car producঞon. The UK and France aim to phase out the selling of non-electric cars by 2040. Norway wants to phase it out by 2030.

What has been a key factor in the rise in the electric vehicle market has been the trend towards renewable energy . Jon Moore, the chief execuঞve of BNEF, said that the rise in electric cars “will come about during a ঞme when the power system is also undergoing a revoluঞon towards cleaner, more distributed generaঞon.” The UK and France have placed a ban on new petrol and diesel cars by 2040. Europe also has imposed penalঞes for driving europeanbusinessmagazine.com 83

and parking restricাons for combusাon engine vehicles.

Adopাng electric cars is a key strategy to Cghাng climate change, and the Internaাonal Energy Agency has calculated that electric vehicles should be at least 40% of passenger vehicle sales by 2040 to meet the climate goals set in the Paris Agreement.

Other trends such as on-demand transport like Uber and conাnuous tesাng of autonomous vehicles are helping the electric vehicle market.

One advantage that electric cars over their internal combusাon engine counterpart are their lack of mechanical complexity and easy maintenance.

This means they are compaাble with the driverless technology. Francesco Starace, CEO of Enel SpA, said, “I do not see driverless being pushed into internal combusাon engine vehicles.â€?

Regarding the ever tricky situaাon of charging electrical cars, Europe is looking to build a network of public charging staাons to make sure a

84 europeanbusinessmagazine.com

power source is always nearby. This electric highway of ultra-fast charging staাons will connect Norway to Italy. It will have 180 ultra-fast charging staাons that allow for a charge rate of 150kW that could later go up to 350kW. Royal Dutch Shell in collaboraাon with Ionity will help Shell’s largest petrol staাons (around 80) to be able to handle the charging of electric cars in as li‚le as Cve to 10 minutes.

7HVOD RQ WKH RWKHU KDQG LV ORRNLQJ IRU ZD\V WR UHGXFH WKH WLPH LW WDNHV WR UHFKDUJH D GHSOHWHG EDWWHU\ Charging batteries are probably going to one of the biggest hurdles for electric cars to dominate. Highly urbanised and dense urban areas and massive traLc could deter eLcient charging for cars.

Belgium looks to be a bright spot regarding providing criাcal infrastructure for electric vehicles to Yourish.

According to i-Cleantech Vlaanderen, Belgium has more than 20 charging

staাons per 1,000 km and is currently ranked 4th in Europe. Netherlands is at the top with 150 staাons per 1,000 km followed by Switzerland and Luxembourg. Norway is 10th in Europe regarding charging staাons.

Car dealers also need to be educated and given incenাves to sell electric cars as many car salespeople are not equipped with the knowledge needed to market electric vehicles and because these vehicles are low maintenance, servicing incomes are likely to drop for car dealerships that provide repairs and maintenance.

Only াme can tell how fast the adopাon of electric vehicles will be. It could be gradual, or it could be fast, just as all mobile phones sold eventually were all smartphones. Reda Cherif of IMF said, “Adopাon of a new technology like electric cars may seem slow or look like it is never going to happen unাl it passes a threshold, and then it just takes o@.â€? The odds are that it will eventually take o@.

About research and the art to describe and explain There is a common misconception that opinion polling and market research is about providing statistics, numbers, and charts.

I

n part, we as an industry have helped in creaঞng this misconcepঞon - look at the poliঞcal polling, usually presented by the latest Cgures and commented by a news anchor.

We provide numbers, and others analyse and create values. No wonder that this image is being spread to all market research. What happens when these numbers seem to be wrong? Take Brexit, as an example. The actual polls were quite accurate, it was an extremely ঞght race, but this turned into a sure thing for the stay side in the media. The stay voters stayed at home, glad not have to vote on the ridiculous thing. But a[erwards, the polling industry got the blame for someone else’s misinterpretaঞon.

The same with the president’s elecঞon in the US. Did you know that the polls conducted with proper methods were the most accurate in 40 years? Probably not.

There was just a li le catch to the polls; they measured the wrong thing. Basically, they focused on something that is usually good enough - popular votes. But europeanbusinessmagazine.com 85

for the second or third ঞme in history (depending on what really happened in Florida when Al Gore ran), the candidate with most votes did not win the electoral college. But measuring the electoral votes with proper polls is extremely expensive compared to popular votes.

about advanced mathemaঞcal models and complicated staঞsঞcal calculaঞons. And sure, we do that, but o[en the analysis being made is in the head of the researcher, based on accumulated knowledge about the context, human behaviour, and the facts collected.

What I have done in Sweden over the last six years is regularly tried to educate and explain to the media outlets what we do, and when our research becomes news, we also explain the result. We give our analysis, what kind of conclusions you can draw, and put the research in context. That has made a big di@erence in Sweden, and it has also created a posiঞve trend that the rest of the market needs to step up and do the same to a greater extent. Don’t just ask us for the numbers, ask us what the research means.

Einstein only used pen and paper to explain gravitaঞon, the theory of relaঞvity, etc. An amazing feat of analysis and yet there is sঞll a huge amount spent on computer calculaঞons and the brightest scienঞsts to prove his theories right. And so far, they seem to be. But Einstein’s analysis was mainly in his head. Albert Einstein described and explained how a big part of the universe worked.

Research is a method and a process to gain knowledge.

That applies to all sorts of research, and market research and opinion polling are no di@erent.

The goal of research is not to collect data, that is just a vital step to gain knowledge. Without facts, it is not possible to gain knowledge. Sounds simple, of course, but in our industry, it is something that is o[en forgo en by both us as market researchers and the customers.

We use statistics, numbers, and charts as references and tools to be able to describe and explain, to share knowledge.

This is o[en referred to as data collecঞon and analysis. But think about those words; what associaঞons do you get when you hear the words data analysis? About the word analysis?

The words as such may not be wrong, but they lead the thought wrong, it gets complicated, sterile, and in many cases overly pretenঞous. When I think of the word analysis, I think 86 europeanbusinessmagazine.com

I am not saying that we are all like Einstein, that might be pushing it a bit, but it is a good example that analysis does not need to be an advanced computer model.

To describe something, you need reliable informaঞon. A broken thermometer is a bad tool to measure the temperature. And it is pre y useless to describe the weather based on that as one of your data sources.

It is the same with our data collecঞon; you need the tools you can trust, no ma er what method you use – webbased, phone survey, focus groups, online forums, eye tracking and so on.

You need to use methods that give reliable data. You must be skilled in the tools used, and you should use methods based on science and proven experience. And they do exist in our Celd of work. However, this may not be the cheapest way to provide some numbers. But bad data is useless if you want to gain knowledge.

That is why the data collecঞon is vital.

And that is why we as an industry need to spread our knowledge about what works and what doesn’t.

But just to describe something is not enough, you do not get knowledge and understanding about the inner workings of the issue just from a descripঞon.

The explanation is the key.

Explanation is probably a better word than analysis. I feel it leads the thought in a be er direcঞon. To be able to explain, you need knowledge about the market, the context, experience, psychology and human behaviour, more than advanced models and formulas. For a knowledgeable, experienced researcher, the explanaঞon o[en comes naturally. It is hard to say how the di@erent knowledge is combined into a good explanaঞon. It hardly feels like work. But the work is based on a long career accumulaঞng the knowledge, mastering the tools of the trade, and a talent to sort, Clter, and summarise a large number of facts to a correct and understandable explanaঞon.

This work is needed every step of the way, from formulaঞng the quesঞons to gathering relevant informaঞon to

old. And we react, think, and feel the same way we always have. Maybe faster, maybe seemingly more irraঞonal, but we are sঞll humans, and we are sঞll a collecঞve that our customers need to understand.

The goal is to understand human behaviour - the logic and the feelings.

Both as an individual and as a collecঞve. That is where Novus comes in. We describe and explain human behaviour.

Done correctly, it is the greatest job on the planet. We get to work with all types of industries, and we help management teams with their strategies.

We help poliঞcians and governments understand the people whose trust they rely on to exist.

And when you understand, you can also start changing things. Therein lies the great value of what we do.

The companies that understand the true meaning of good research will be successful.

being able to describe and explain correctly. In the end, an extensive and very expensive market research project is summarised by a few sentences. It may look simple, but that is the beauty of it.

Insights are o[en talked about as goals for market research. We provide key insights into understanding the customer journey. But it is also o[en a misleading word, maybe even more so than analysis.

An insight is o[en obvious when formulated. Most people can see that it is true and agree once it is formulated. It looks so simple and obvious. But the road to an insight is long, winding, and Clled with obstacles. And the goal, the insight looks so inconspicuous that it is o[en missed, and its value greatly underesঞmated. But when you Cnd them and see them for what they really

are, they are invaluable. An insight is rarely reached without a lot of work.

And you o[en miss the forest for all the trees.

How do you value accumulated knowledge and intelligence? How do you set a price tag on that? As with all experঞse, it looks so easy when a professional does it, but an amateur trying it will likely hit pi alls and make rookie mistakes. And becoming a true expert probably takes more than 20 years of on the job training.

There is also a trend that knowledge can be outcompeted by technology.

Big data and ArঞCcial Intelligence will be be er than real intelligence. Digitalizaঞon has changed everything.

The customer is not a customer anymore; they are the product, etc.

But anyway, think about this: we are sঞll human, our brain is 40,000 years

I will end with two insights that have proven invaluable for me and for my company;

Number one: The collecঞve view of every issue is created through the tradiঞonal media. Even if that image is wrong, the collecঞve view will be the collecঞve truth. That truth will be truer than the facts. You cannot a@ord to ignore the collecঞve truth.

Number two: If you are in the same industry as a scandal, although you are not doing the same thing, if you do not publicly distance yourself from that scandal, you risk being dragged down with the others. You need to show the world that you are not doing the same thing.

Torbjörn Sjöström CEO Novus europeanbusinessmagazine.com 87

CATALUNYA A Task for Courageous People

A Critical Reflection From A Personal Journey

By Andres Munoz

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I am Catalan, I am Spanish; I am “charnego” some people would say (1). I sঞll get thrilled by Spain, there is no shame for me, but some years ago I understood what Jorge Luis Borges put superbly into words in one of his histories: I clariCed that I myself was Colombian.

“What is ‘being Colombian’?”

“I’m not sure,” I replied. “It’s an act of faith.”

“Like being Norwegian,” she said, nodding.

(Jorge Luis Borges, The Book of Sand, Ulrica)

F

riday 28th of September. A[er almost Cve hours driving, I disঞnguish the Crst buildings of the suburbs of Barcelona. During the twenty minutes that I am circulaঞng before I arrive at my place close to the city centre, I do not feel anything di@erent to any other Friday at the same ঞme: same traLc, same Mediterranean complacency, and no trace of the police. However, at the very Crst touch with local people, I realise that something is di@erent, something that has been there for a long, long ঞme.

I lived my Crst 23 years of life in Barcelona; I spent my childhood and my youth there. I was happy in Catalonia.

Then, I Cnished my career in France where I discovered that I could be happy far away from where I was born; I opened my eyes to new worlds, new experiences, and new people.

A[erwards, I moved to Madrid, where I lived for more than six years. It was there I became an adult and I felt fortunate with the possibiliঞes that Madrid o@ered to me. I have spent the last Cve years in France, in “la Provence”, where I have discovered that if you aspire to happiness, you should Cnd it in yourself; it is not automaঞcally given by the sense of belonging to an idenঞty or to a country. This is specifically and primarily true in the countries where individual freedoms are guaranteed and protected, countries where the rule of law is respected.

And this is true of Spain, and all its territories, including Catalonia.

Spain is a democratic monarchy strongly decentralised where the main regions - 17, called “autonomías” or autonomous region – hold power over important issues such as the administraঞon of educaঞon and the health service. Some of them even have autonomous police (Mossos d’Esquadra in Catalonia), di@erent to the naঞonal police. The quality of Spanish democracy, as well as the power separaঞon (legislaঞve power, execuঞve branch and judicial branch) could be improved, as it could be in all the European countries. However, this democracy has allowed, for instance, some ministers of the party currently ruling the country (Parঞdo Popular, PP, a right-wing party) to be accused of corrupঞon, condemned, and put in jail. Unfortunately, the level of corrupঞon in Spain has been high during the last few decades. It is true that generally speaking this corrupঞon has been common to almost all the poliঞcal parঞes (PP; PSOE, a le[-wing party; CIU, Catalan naঞonalist party; and some other regional parঞes) and it is also common to all the Spanish autonomous regions, from Catalonia to Andalucía, and especially Valencia. In parঞcular, in Catalonia, the party CIU (now PdCat) and the most important Cgure of Catalan naঞonalism, Jordi Pujol, are currently being invesঞgated following more evidence of corrupঞon.

It is very important to say that this political organisation allows the regional parঞes to have double representaঞon (decided by ciঞzens who vote in the regular elecঞons): one in europeanbusinessmagazine.com 89

the parliament of the autonomous region, and the other one in the Spanish naঞonal parliament (called Congreso de los Diputados). This is essenঞal in understanding the current situaঞon. In almost all scenarios a[er an elecঞon to the Spanish parliament the naঞonal Spanish parঞes have needed (and have preferred) the seats of the regional/naঞonalist parঞes if they want to rule the country - they have negoঞated with them in order to reach or stay in the power and o[en these negoঞaঞons have meant more power and competencies go to the autonomous regions.

This poliঞcal system with these characterisঞcs was issued a[er Franco’s death: a tyrannical dictatorship, deeply anঞdemocraঞc (even though ciঞzens could vote, it was not freely) that wanted to make the whole country uniform in terms of Spanishness.

The aim of this regulaঞon was to respect the di@erent historical disঞnguishing elements of the various regions along the Spanish territory, which were stronger in some of the autonomous regions such as Catalonia. More or less, these terms were included in the Spanish Consঞtuঞon, accepted in 1978 by the absolute majority of the Spaniards: 88.5% voted “yes” (67% in terms of parঞcipaঞon) and in some provinces, as for example, Gerona – currently the most important place for pro-independence in Catalonia - more than 90% of people voted “yes” (70% parঞcipaঞon). It is also important to say that this Consঞtuঞon was voted for almost 40 years ago and 60% of the people who can vote nowadays did not do so in 1978 (too young, not in Spain, etc.).

This Constitution, together with some decrees, includes the necessary mechanisms for modiCcaঞon (it is true they are not simple) and even to organise referendums about the internal organisaঞon though this has been never done (2). It is true that the potenঞal reform of the Consঞtuঞon is almost a taboo topic in Spain and that it has never been a empted, especially by the ancient people of the main poliঞcal parঞes, probably 90 europeanbusinessmagazine.com

because they are sঞll aware of the large e@ort needed to reach the necessary consensus to write and approve an amended Consঞtuঞon a[er the Franco regime.

Reaching this point, it is important to understand the contradicঞon in the above described situaঞon: on one hand, Spain has a Consঞtuঞon and a poliঞcal system that does not want to be modiCed by the central power (mainly associaঞons of the right-wing and enঞঞes appealing to the “common sense”); but on the other hand, conঞnuous concessions are given to the naঞonalist parঞes (mainly in Catalonia) that allow them increased control of their autonomous regions and they “get disconnected” more and more from the central state. I have called it contradicঞon, but it could be called disloyalty, hypocrisy, innocence, ignorance… depending on the point of view.

Due to the work and the capacity of Catalan ciঞzens, together with the immigrants of the other parts of Spain - especially Andalucía and Galicia in the 60s, 70s and 80s - Catalonia is now one of the more prosperous regions of Spain and their ciঞzens enjoy a high standard of living and a one of the highest self-government decrees in Europe. Certainly, in Catalonia, individual freedoms are respected and protected, and there are no poliঞcal prisoners (aside from poliঞcians that are prisoners in jail a[er commiমng Cnancial crimes, and only a[er they have been proven guilty and acঞon is taken by a judge).

I was saying, at the beginning of this arঞcle, that this weekend I felt that something was di@erent, but it was something that I have already felt before in my years lived in Barcelona.

These days, the high standard of living, the well-being, the desire for fun… seems as something not important. All the discussions are about the referendum organised on Sunday 1st of October by the government of Catalonia. And what was quickly detected on Friday and Saturday was that society was deeply divided: people who wanted to vote in this

referendum and people who did not want to do it as they considered it illegal or illegiঞmate. Among the Crst ones, there were mainly two kinds of people: those who were manifestly pro-independence and jusঞCed the referendum, and those who “simply” wanted to vote, persuaded that it was a democraঞc exercise. It is true, both of them had common enemies: the government of Spain and the Spanish Media that are “always manipulaঞng and that do not understand what is happening in Catalonia”. I did not perceive a lot of self-criঞcism.

Among the second group, those who wanted to vote but that were not manifestly pro-independence, the main reproaches were that the Spanish government “does not understand the Catalonian people” and that they do not let them “express their thoughts in freedom”. On the other side, those who did not want to vote considered that the referendum was not legal as the government of Catalonia did not have the a ribuঞons to

government is doing things (Catalans not suspected to be Spanish-centralists like the singer Serrat or the Clm-maker Coixet who are also very criঞcal of the Spanish government). It was as if they felt and they feel that they have the moral superiority to do something for our History, something that will be good for our Humanity.

And it is also true that these people could comprise almost half of the citizens in Catalonia (depending on the surveys and the elecঞons, but somewhere between 35% and 50%).

organise it and did it without respecting the procedures, or not legiঞmate as the current government of Catalonia does not have an ample enough majority to do so (the coaliঞon of the three parঞes ruling the government of Catalonia has the absolute majority in seats, but not in votes). Both groups considered that the minimum internaঞonal legal guarantees to organise this referendum were not respected.

Most of the people against the referendum argued that the rule of law should be respected in order to live together in peace, while most of the people in favour of the referendum argued that when the rule of the law is not fair the only possible soluঞon is to rise up against the rulers. This last jusঞCcaঞon was (and is sঞll) supported by the Catalan government and repeated again and again across favourable media outlets by the enঞঞes supporঞng independence (Omnium Cultural and ANC).

Obviously, there were and there are other di@erent views and standpoints between ciঞzens, but those were, for me, the most representaঞve.

But what I definitively saw this weekend were lots and lots of people convinced of what they were doing especially when preparing for the referendum. Many people had a new objecঞve, the highest objecঞve in their lives: to build, from a sort of moral superiority, from a sort of disঞnguishing element towards Spain, a new free and right country. They were convinced of that, excited, touched. They wanted (want) - most of them - the fair objecঞve of giving a be er future to their children, involving them in their acঞviঞes, allowing them not to miss classes to go to demonstraঞons and proclaim slogans for independence (someঞmes o@ensive to the rest of Spain). The end clearly jusঞCed the means, and jusঞCed the insults to Catalans that are criঞcal about how the Catalan

Sunday 1st of October arrived, the voঞng day. It was a “party” for them, and a lot of people felt true excitement when voঞng, especially the older people. I saw people crying when they le[ the ballots in the box.

Then, during the day, the terrible scenes of violence happened between the Spanish anঞriot police who tried to accomplish orders given by Spanish judges (who previously declared the referendum as illegal) and ciঞzens who were there to vote and to “protect” the electoral colleges (in an obvious posiঞon of weakness in front of the anঞriot police agents, perfectly protected and trained with the appropriate tools to carry out the orders and evicঞons). The horrible scenes of pain and the terrible and real suffering of ciঞzens have been, for the moment, the highest point of total disagreement between the Spanish state and the Catalan region. In some of these intervenঞons is impossible to understand how the violence and strength applied were necessary (3).

It is important to add, to Cnish the descripঞon of the facts, that the Catalonian police force (the Mossos d’Esquadra) was in theory in charge of closing the electoral colleges and evicঞng people if necessary, but they disobeyed the orders of the Spanish judges to fulCl direct orders of their superiors (what could be considered as “poliঞcal orders”) by not allowing police agents to use the tools and their capaciঞes to evict people from the public road and buildings.

Finally, the parঞcipaঞon in the referendum was around 43% of ciঞzens, with 90% of them voঞng “yes”.

With this result the government of europeanbusinessmagazine.com 91

day of Catalonia in 2014, more than 1.5 million ciঞzens were mobilised in a manifestaঞon where independence was demanded. Furthermore, also in 2014, the government of Catalonia organised a “popular consultaঞon” with the clear quesঞon (with a non-binding outcome): “Do you want Catalonia to be a new State inside the EU?”

Catalonia is a empঞng to declare independence, despite the fact that less than 39% of Catalans said “yes”.

But how is it possible to reach this point of confrontaঞon, this enormous clash that is apparently irreversible?

The explanaঞons are diametrically opposed on both sides, but I am going to try to summarise them adding my personal experience. Obviously and luckily, there are a lot of streams and nuances on both sides that allow me to be opঞmisঞc, as I will describe below in the possible soluঞon, that I sঞll think does exist.

From Catalonia, it is considered that the rest of Spain (and the non-naঞonalist Catalans of Catalonia) does not respect the “Catalan disঞnguishing element” and they have a uniform view of what Spain is. They also exploit isolated acts of hate towards Catalonia - they do exist and cannot be denied, but there are also demonstraঞons of warmth and admiraঞon towards Catalonia. The quanঞty and quality of one type (insults) or the other type (praise) is very subjecঞve. In the last few years, the “Catalan feeling” has increased as well as the “Catalan disঞnguishing element” (that undoubtedly does exist), and most people have gone from Catalan naঞonalism to pro-independence posiঞons. From Catalonia it is repeated again and again that the desire of independence is just a defence mechanism 92 europeanbusinessmagazine.com

against the intenঞon of the Spanish government to jeopardise the Catalan culture. It is important to remember that the administraঞon of educaঞon is in the hands of the Catalan government, as well as the linguisঞc policy, and that they have the full capacity and responsibility of the decisions taken. Some associaঞons have been created and sponsored by the Catalan government to defend the Catalan culture (especially “Omnium Cultural”) and to discuss how the future independent Catalan republic will be managed (especially the ANC, the Catalonian Naঞonal Assembly). Some historical facts have been discussed and quesঞoned and revision of accepted history has been iniঞated, in order to clarify what is understood as “manipulated history”.

The denouncement of the new Catalan Statute of Autonomy in 2006 by the Parঞdo Popular was understood as o@ensive to the Catalan people.

Since then, the manifestaঞons for independence have increased, and cultural enঞঞes started to strongly support (assisted by the Media who support independence - the autonomous television TV3 and the public Catalan radio - the “Process” for the independence of Catalonia. This was lead by a concentraঞon government composed of one right party (PDCAT), one le[ party (ERC) and an extreme le[ party (CUP). The current arguments for independence are not new; for example, on the Naঞonal

From Catalonia, therefore, the situaঞon, the myth (word not used disrespec ully; Spain is also a myth or an act of faith, as Borges said) of Catalonia has been established and consolidated, with all the necessary elements: an external enemy (Spain, and it really was an external enemy during the Franco regime), Media controlled by the Catalan government, and cultural associaঞons with a huge capacity to mobilise lots of people acঞng following the dictate of the Catalan government. Again, it should be remembered that the competencies of the administraঞon of educaঞon belong to the Catalan government and that from the 90s a dedicated policy for “language immersion” was in place, which had the iniঞal objecঞve to correct the previous policies that could have jeopardised Catalan, but has actually turned into a clear discriminaঞon of the Spanish language within Catalonia’s schools (it is almost impossible to Cnd a primary school in Catalonia where courses are taught in Spanish or mark the shops only in Spanish). This policy is clearly controversial, but it is especially contradictory to the argument that the Catalan language and culture are being a acked.

On the other side, from Madrid and the rest of Spain, the situaঞon is less uniform, less clear; it is not so easy to idenঞfy a major stream, but there are some common points to all of them.

The most important one, from my point of view, is the constant denial of any problem in Catalonia, as well as the deep lack of awareness of the real situaঞon and the Catalan aspiraঞons that have grown and grown.

The country, Spain, has been ruled from Madrid, and the events in Catalonia have been always followed from

there, from the distance, not going to the solid ground as it is always diLcult. With a lack of any signs of real a@ecঞon from the rulers and the party in the government (PP), they seem to show that the Catalan people are not part of them, but a region located “more or less there” that is ruled alone and gives money back. In the best of the scenarios (or worst, it depends) the Catalan people have been considered as people indoctrinated by the manipulated educaঞon that they have received, something temporary that will end one day. This has triggered a real disregard towards the Catalan civil society, as the Catalan people have o[en been seen as “weirdoes” who insist on being different to cause problems, when in fact they do really have some di@erences. All of this has obviously given arguments to the Catalan people and increased a desire for independence.

On the other hand, in an excellent exercise of hypocrisy and disloyalty, several Spanish governments (both from the PP and the PSOE) have conঞnued to Cnd deals and agreements with the Catalan naঞonalists parঞes, always thinking about staying in power more than the consequences of these agreements. It is especially important to highlight the behaviour of José María Aznar (PP) who in 1996 gave the Catalan naঞonalist party all the power they wanted, while nowadays he is defending the unity of Spain, with “Crm hand” if necessary. Also, it is worth menঞoning the case of José Luis Rodríguez Zapatero (PSOE) who in 2003 stated that he would respect the update of the Catalan Statute, “in all the cases”, knowing that it could be against the Spanish Consঞtuঞon, and knowing that he was not ready to modify the Consঞtuঞon. Luckily not all poliঞcians and not all society is as I have described - only the main trends are idenঞCed here.

of silly people only worried about money, who have been indoctrinated, but will want to become real Spaniards in the future. But the reality is that not all Spaniards refer to the Catalans as “putos polacos” (4) and shout “a por ellos oe” (5) when the Spanish police start its mission to Catalonia from other parts of Spain; and neither do all Catalans think all Spaniards are “ignorant fascists”. However, this characterisঞc, this clash between Spaniards is not recent, as a quotaঞon a ributed to Bismarck says: “I am Crmly convinced that Spain is the strongest country of the world. Century a[er century trying to destroy herself and sঞll no success.”

So, for the above reasons and my personal experience and analysis of society, I strongly believe that it is not only the current poliঞcians who are responsible for this situaঞon. Firstly, because they are only the representaঞves chosen by ciঞzens. Secondly, because we should distribute the responsibiliঞes among all poliঞcians of the last 40 years (or even directly blame the Franco regime... or even go further back...). And thirdly, because it is too easy, too superYuous, as well as false, trying to shirk some of the responsibiliঞes that all the ciঞzens in Spain have: our responsibility as a civil society. And it is precisely in civil society where I think we should and we will Cnd the mid and long-term soluঞon to this situaঞon - not the short term one, that will allow us to unblock the situaঞon at this moment

(I am discarding as a possible soluঞon the Independence Declaraঞon, as I think that this will lead to a big crisis, not only economical, but social, and horrible clashes between people).

This can only be given by the current poliঞcal leaders and enঞঞes on both sides, but especially on the Catalonian side, as only they can currently unblock the situaঞon.

But if we want this situaঞon to be unblocked and somehow solved, it is the moment of brave people, but the right brave people, audacious and daring people who may not be recognised as such immediately, but that will be insulted by the most extreme people of their side and treated as betrayers.

But people that have a very clear idea in their mind that it is more important for them to build a society in peace, where people can live together in freedom, than their collecঞve myth, their poliঞcal party or their tribe belonging.

For the short-term soluঞon, these courageous people should appear on both sides, but - as said before - especially in the leaders of the government of Catalonia. I am not referring to people that have to refuse their ideas, but people that put ahead of that a certain idea of compassion and a real desire of living together. That will need a big amount of generosity of their part and very li le public recogniঞon.

Just a[er that, and only if it happens, I would demand that Spanish leaders, especially the president of the Spanish government, o@er a prompt movement of approach towards the

The common negaঞve characterisঞc of both sides is that they always idenঞfy the whole of the opposiঞon with the worst elements of them. On one side they idenঞfy all Spaniards as belonging to a kind of ignorant extreme right, and on the other side, they idenঞfy all Catalans as a kind europeanbusinessmagazine.com 93

Catalans; Catalan people who should be considered by him as a part of him, as a part of Spain! He should consult all the parঞes of the Spanish parliament (not just the easiest ones for him, the PSOE and Ciudadanos) and try to create a temporary government with representaঞves of all of them.

He should also travel regularly to Catalonia - understanding this place as part of his home - and treat the Catalans as brothers, including those that nowadays do not want to be.

These movements would be strongly criঞcised by the extreme members of his party and his poliঞcal career would probably Cnish in a short term, but it would allow the creaঞon of the basis for a mid and long-term soluঞon. I think that with only the pressure of judicial power and police intervenঞons the situaঞon will be even worse, the Catalan government will declare independence unilaterally, and we will see serious social uprisings across the whole country.

The mid and long-term solution should be possible with brave and daring ordinary people who are ready to be insulted by extreme people on both sides. They will be accused of being betrayers and they will lose the recogniঞon that they had unঞl this moment due to their ideas and their loyalty to them. These ciঞzens should come from civil society, from all social classes and across all sorts of associaঞons. Only if the criঞcal number of these people is reached, of these real and anonymous heroes, the soluঞon

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of living together in peace will be found. I hope that some of the people reading this arঞcle idenঞfy themselves with this proCle. Probably some of the other readers are already insulঞng me and therefore giving me the privilege to believe that I belong to those people who can parঞcipate in the soluঞon. I do not know if I will be able, I will try. But many people are necessary.

I am moderately opঞmisঞc; this is a task for courageous people. But the history of Spain, with its parঞculariঞes, and its internal di@erences, with Catalonia as part of these di@erences, has shown us throughout the centuries that there are always brave people in Spain who have solved the biggest issues. A good example of that is the period of transiঞon to democracy where some brave, intelligent and generous people made all the necessary e@orts to allow the Spaniards to end a dictatorial period and live in peace within a democracy for 40 years - not even imaginable in 1978.

As Miguel de Unamuno said, “a mí me duele España” (“I hurt for my Spain”).

I cannot (and I do not want to) avoid it, but Catalonia has hurt me, as I consider it as part of Spain, with its remarkable di@erences. But I know that if I want to live together in Spain, in Catalonia, I must understand that some of my fellow ciঞzens feel more “hurt” for Catalonia than for Spain and they will also have to respect my hurt and my emoঞons towards Spain. For

me, a good example of this respect is the footballer Gerard Piqué, always playing with respect and professionalism in the Spanish team although he has more predominant Catalan feelings. With this aমtude of respect, I have sঞll hope.

I cannot Cnish this wriঞng without a Catalan poet quotaঞon, Salvador Espriu: “La veritat és un mirall trencat en mil trossets, del que cadascú de nosaltres té un pedaç” (“the truth is a mirror broken in thousands of pieces; each of us has one of them”). Each of us in this history (in all the histories) has a piece of the mirror of the truth - do not use it to cut between us but to build the truth of this fantasঞc and diverse country that is Spain.

It would have been easier for me to cut me with my piece and to write an arঞcle blaming the Catalan government for being responsible for breaking the law or staঞng that the people supporঞng independence are just ignorant and manipulated people.

Maybe, it would have made me feel be er for a while, but it would have been useless. It is now ঞme to leave our comfort zone, to quesঞon our own certainঞes, to think about what is really important in life, and not to be carried away by our Crst insঞncts.

Andrés Muñoz, Spaniard born in Barcelona, engineer by profession, passionate about wriঞng in all its forms, interested in journalism and very worried about Cataluny

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