SKR – the Corporate Advisors

China breaks new ground against the Western walling-off   The more China and the West, led by the USA, clash, the more important the role of non-aligned countries in world trade becomes. They are becoming a bridge between the rival powers. This is confirmed by a recent study by the International Monetary Fund.   This development is being driven by Washington and Brussels, which are increasingly using tariffs and export controls to protect themselves from unwelcome competition from China. In order to circumvent these measures, Chinese companies are now changing their strategy: they are opening more and more branches in non-aligned third countries. This gives them easier access to large free trade zones. Big players are leading the way. For example, Alibaba, Bytedance, and Shein have moved their headquarters to Singapore.   Destinations such as Vietnam, Ireland, Hungary, and Mexico are also increasingly becoming 'connectors' between the blocs, through which ever more trade with China will flow in the future.   However, it remains to be seen how successful China's efforts will be to establish a new BRICS payment system dominated by the renminbi yuan as an alternative to the leading currency, the US dollar. The prerequisites are indeed good, as China is the largest trading partner for more than 120 economies. But experts say no country, least of all India, is ready to accept China's supremacy in the international currency scenario.   The fact is that the global trade and investment landscape is changing significantly under China's influence. For the non-aligned countries, this ultimately means: new opportunities.   #china #trade #markets

Danger of the debt trap is growing worldwide   The global mountain of debt is piling up higher and higher: in the first half of 2024, total debt rose by 2 tn. US dollars compared to the previous period to around 312 tn. US dollars, breaking all earlier records. This jeopardises future economic stability.   The debt ratio in the emerging markets is particularly worrying. There, it has now reached 245% of GDP – an increase of over 25 percentage points compared to pre-pandemic times. China and India are the main contributors to this. Countries such as Singapore, South Africa, and Croatia have also seen rapid growth.   Not only there, but also elsewhere, the pressure from government borrowing and the swelling debt service are increasingly slowing down productivity growth and diverting funds away from productive investments.   Government debt alone accounts for almost 92 tn. of the world's 312 tn. US dollars. And it will not stop there: according to the Institute of International Finance, government debt is expected to grow to almost 200 tn. by 2030 and possibly even to over 440 tn. US dollars by 2050. The main cost drivers are new industrial policies in the fight against climate change. In fact, around half of all climate financing is currently provided by governments or quasi-governmental organisations.   This makes it all the more important for the state to focus on its core tasks and promote private investment and innovation through smart regulatory policy and market-based instruments. This would not only reduce government burdens but also lead to greater efficiency, productivity, and sustainable economic dynamism.   #economics #growth #productivity

Europe is falling behind – what needs to be done?   Becoming the most competitive region in the world – the EU is a long way from achieving this goal it set itself in 2000. The growth engine has been stuttering since 2010 in particular. Gross domestic product per capita has risen by just 1.0 % per year to 40,800 US dollars (in 2023), compared to 2.9 % in the USA to 81,700 US dollars. The EU Commission's new initiative for greater competitiveness is therefore more than overdue.   But where to start? The problems are deep-rooted. Research findings are not being sufficiently converted into business ideas, and bureaucracy is holding companies back. New technologies, such as artificial intelligence, are needed to increase productivity. However, strict regulations such as the AI Act and the GDPR prevent the potential from being realised.   We must finally move away from overregulation. Often, ONE (regulatory) legal measure is enough to make a difference – one example is the trading of emission rights in order to achieve climate neutrality by 2050.   In addition, there are still hurdles in the internal market, for example, in the cross-border electricity market. If it worked, electricity could always be bought where it is cheapest. Investment in better infrastructure is needed here, but also for telecommunications systems and fast rail connections.     Yet not only the EU, but also the member states must change their policies. The state has other functions than saving companies. Bureaucracy must be streamlined and the influx of skilled labour made easier. If anything, research and innovation should be promoted, not production. And to ensure supply, companies at the beginning of the supply chain should be supported – more companies depend on them.   Can we compete with the USA and China again in the future? These steps would put us on the right track.   #europe #competiveness #future

Act – before the crisis! Nothing is as constant as change, as the Greek philosopher Heraclitus said. However: change is not going well for the economy at the moment. Companies are required to adapt to the new environment. The human factor should not be underestimated. It is hard to accept the change and act accordingly. But the new challenges can only be successfully mastered with change. This requires tough decisions and stringent implementation. SKR brings together financial strength and top senior executives under one roof, who are able to analyse companies honestly, make clear recommendations, and also implement them. SKR is committed to providing the support needed in order to put the company on a new footing in good time in line with market developments. Only the right strategy and consistent implementation make success possible. Or as the American basketball player Kobe Bryant said: Winning takes precedence over all. There's no gray area. No almosts. (From left to right:) Christian Herrlich, Mel Tomlin, Erik Lueders, Rico Back #business #management #consulting

Cyber insurance – more companies should have it   Companies are still not protecting themselves enough against cyber risks: in a recent global study by Munich RE, 87% of managers surveyed stated that their company was not adequately protected. At the same time, cyberattacks are becoming more frequent, and the financial losses are reaching ever greater dimensions – especially for small and medium-sized companies.   This makes it all the more important to have cyber insurance as a strong pillar of risk management. Virtually every company benefits, regardless of size and sector.   The premiums depend on the insurer and the chosen tariff. The decisive factors are the amount of the percentage excess, the sum insured, the insurance benefits, company size, number of employees, sector, and term.   The sums insured are generally based on the annual turnover and are usually between 100,000 and 2 million euros. Long-term consequential losses such as data loss, disruption to business continuity, or project cancellation with financial losses should also be considered.   Typically, the insurance covers financial and personnel support in the event of data loss and recovery, the costs of IT experts and forensic specialists, the deployment of specialists in acute cases, and the provision of crisis managers and PR experts.   Cyber insurance policies often not only cover personal losses, but also financial losses caused to third parties by default. The consequences of business interruption, damage caused by blackmail, judicial and extrajudicial costs, and fines under the GDPR can also be covered.   Conclusion: cyber insurance should be part of a company's risk management. However, defence and preventive measures are still indispensable. With most insurance policies, they are even a condition in the event of a claim.   #cybersecurity #cybercrime #cyberattacks #cyberthreat

Logistics start-ups: investors are pulling out – but not everywhere   In 2021, worldwide investment in logistics newcomers reached a record high of 25.6 billion US dollars. However, by 2023, funding plummeted by almost 90% to 2.9 billion US dollars – the lowest level since 2015, according to a recent McKinsey analysis. In addition to high interest rates, the weakened global and online trade as well as volatile freight rates also had an impact.   But it can also be seen that some logistics sectors continue to attract more investors. Last-mile start-ups increased their share of the remaining venture capital by 5 percentage points to 40% in 2023. Nevertheless, this is below the average for the years 2010 to 2020 (46%). Software and system start-ups, on the other hand, clearly reached their peak value. After an average of 10% between 2010 and 2020, 25% flowed into this segment last year – demand for digitalisation and AI solutions in logistics is booming.   Another new development is that US start-ups were able to raise the most money internationally (43%), replacing Asian founders (excluding China and India) as the longstanding champions. Indian start-ups also caught up with Europe for the first time – doubling their share to 19%.   It is a fact that venture capital in particular finances innovation and drives growth. It is therefore all the more important that these investments increase again. In view of the cost pressure and fragmentation of the logistics sector, however, rapid financial profitability is becoming increasingly important.   At the same time, the current situation also offers opportunities for established logistics companies. They can strengthen their position through partnerships – or through takeovers, which have become more affordable due to the reduced valuations of start-ups.   #investments #logistics #venturecapital

Big tech monopolies – the dangers are growing   It is almost impossible to escape the power of the global tech giants. Google, Meta, Amazon, Apple, and Microsoft decide what we see on the internet. They control access to economic opportunities. And impose one-sided conditions on users regarding the use of their personal data. This makes it increasingly difficult to regulate data protection, fake news, and cybercrime.   It is true that we benefit from free access to information and mobile communication. However, what weighs heavily is that the winners in the market can take all and easily outdo potential competitors.     The EU has already tightened its regulation and passed laws on digital markets and digital services. Countries such as the UK and India are following the model. The problem has also at least been recognised in America. Google was recently declared a monopolist in search systems by a US court – a groundbreaking antitrust enforcement judgement.   However, actually creating fair competition without stifling economic growth remains a difficult endeavour. The first companies are already exploiting loopholes in the new EU digital laws. Nevertheless, a drastic step such as breaking up tech companies is not an option. This would destroy prosperity, as the large networks have become part of our infrastructure.   A more promising approach is to completely separate platforms from the business they broker. The US Department of Justice is already examining such a solution. It would certainly not be easy to implement. But the market economy would remain functional.   #freemarketeconomy #techcompanies #competition

Back to Europe: Great Britain wants a security pact   The Labour government's new start is in full swing. In his 2021 strategy paper "Global Britain", Boris Johnson announced a shift towards Asia. Now Prime Minister Keir Starmer wants to intensify security cooperation with the EU – all the way to a pact.   Labour's main aim is to further improve relations with the EU. Security is a good starting point for this. It does not require as many compromises as trade issues. The new government has a broad definition of security and wants to include issues such as climate change, cyber security, and migration.   For the EU, on the other hand, cooperation with strong European partners is more necessary than ever. Especially because it must take on more responsibility for its own defence. The British defence industry, which is one of the largest of the continent, can make an important contribution to this. The UK has so far been denied the opportunity to participate in continental European defence projects. A pact could close this gap in cooperation and noticeably strengthen the defence capabilities of the Western Alliance.   Both sides would do well to maintain the current momentum of rapprochement. However, expectations should not be too high. A jointly declared commitment to deeper cooperation combined with regular meetings would already go a long way. First of all, the essential building blocks and trust must be created – then security cooperation can be deepened step by step.   #internationalrelations #eu #uk #security #defence

Sustainability reporting – new obligations also apply to SMEs   The bureaucratic burden on Europe's economy is growing: in future, not only large companies will have to report comprehensively on sustainability aspects, but also all companies listed on the stock market, with the exception of micro-enterprises. This is the intention of the EU-wide Corporate Sustainability Reporting Directive (CSRD). It is estimated that the number of companies affected will rise from just under 12,000 to around 50,000.   The expansion will take place step by step. From 2026, all legally large companies will have to report on the 2025 financial year for the first time. This means, anyone with a balance sheet total of 25 million euros or more, an annual turnover of at least 50 million euros, or 250 or more employees. Listed SMEs will also be required from 2027.   Companies have a lot of work ahead of them. Up to 1,144 quantitative and qualitative data points must be collected in a standardised manner in the areas of environment, social affairs, and governance.   A double materiality assessment will determine exactly which ones. For one thing, the impact of the company's activities on the three areas of sustainability is analysed. For another thing, it looks at how sustainability factors, such as climate change, have financial impact on business success. In order to avoid coming under pressure, companies should already start addressing the issue this year. This also applies to organisations that are not obliged to report on sustainability until later due to their size. The reason: large companies are increasingly demanding that their partners and service providers also fulfil the requirements.   #csrd #esg #europe #business #sustainability

New phase of competition between systems In an increasingly multipolar world, the EU needs to rethink, also economically. It needs to reduce dependencies, plan for the long term, and strengthen its defence as a credible deterrent. That is because, whether politically or economically, autocracies are increasingly challenging the West. This includes that the global South is increasingly pursuing its own independent strategies. It is a race against time. China and Russia are also facing challenges. The Middle Kingdom is heavily in debt, has relied on ineffective state subsidies for far too long, and is suffering from an ageing society. Russia, on the other hand, has to deal with the economic consequences of a war economy, sanctions, and war deaths. However, the liberal democracies are also weakened from within. They are equally affected by demographic change. Even more worrying, however, is the fact that autocratic tendencies are on the rise in both the EU and the USA. Whether the democratic West will still manage to maintain its own systems unscathed remains the exciting question of the coming years. #economy #eu #freedom #democracy