Using the Downturn to Prepare for the Upturn - Webinar IST


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  • Intro Going to talk about London’s Window of Opportunity, but where exactly is it, is it still open, and is it going to close? You probably all know the wall, where that window is built in – it’s called global economic downturn and some of you probably have run against it a couple of times in the past months. This economic downturn affects most or all developed markets and many emerging ones. London is not off this wall, it’s on it, together with all other major economies - but….it is where the window is. We believe that London offers overseas investors the best opportunities to both survive and thrive through difficult times. For some, the current circumstances will bring opportunities to exploit. Others will use it to establish a base to take advantage of recovery as it emerges. There is talk of recovery – but will that recovery close that window that opened up in London through the downturn? We’ll probably not be providing a definitive answer to the ‘end of recession’ question at this event, but we will consider how you can locate and possibly jump through that window. At the end of this session you will be able to identify these opportunities in London, and have a better understanding on how to capitalise on them. And you will have learnt why there is no better time to be investing in the world capital of business.
  • To briefly summarise who Think London are and what we do… Think London is the official inward investment agency for London. We are a not-for profit, public/private partnership - stakeholders and funding from local & national government & business partners We offer consultancy services to advise clients on why and how to locate their businesses in London Our experts work with government and the business community to provide access to the best people, places and opportunities in the city. We connect international businesses to London, helping them set up, succeed and grow. Our service is comprehensive, confidential and funded — and therefore free to our clients.
  • Since 1994 we’ve helped over 1400 companies from over 40 countries set-up or expand into London Just a few examples here – some names you’ll know, some you don’t Represent the spectrum of company size and sectors we can add-value to
  • Let me introduce you now to the speakers of today’s event: First off will be Mark Davies, Executive Director at Think London. Mark will start the conversation with some thoughts about London’s window of opportunity and why companies should set up in London right now. Then Bill Crowley, Senior Vice President International of technology media company TechTarget and a Think London client, will share his story of setting up and doing business in London and the European markets with you. And finally Mike Curran, who is not only a tax director at PricewaterhouseCoopers’ London office, but also the author of a publication called ‘Doing Business in the UK’, will give you a heads up on planning for the upturn and on London technology and creative sector opportunities. (TBC)
  • I know we currently have xx people on the line, and a really interesting mix of sectors and geographies such as sectors xxx, yyy, zzz from countries xxx, yyy, zzz . To provide us all with some flavour of attendees’ thinking in this virtual room here, can I do a quick poll. The question for all of you is – Have you forwarded, postponed of maintained your expansion plans to Europe or London in the past 12 months? I’m assuming most of you have had some discussion about expanding to Europe or more specifically London at one stage… Comment on quick poll results… Thanks for doing this exercise which has brought really interesting results. So, to get right into it, let me ask you, … (go to next slide)
  • Why London and why now? It’s probable that many if not most of you have already answered the first part of the question Strategically you’ve recognised that London is able to support your globalisation imperative maybe you’re looking for market access , maybe it’s resource s, (natural, human, capital) or even operating efficiencie s … that have made London a ‘destination in principle’ for your business But we recognize that the scale of uncertainty and disruption in the global economy has caused many to stop and take their bearings ( Refer to the quick poll results if appropriate ) So whether you’re at the point of IF London or WHEN London , let’s take a look at the key factors we believe make the compelling case for London NOW
  • Think Value We believe in straight talking so want to be very clear about the most compelling reason to act NOW in taking advantage of all that London offers We’re all in business to create a return for our investors, and return is all about value If our costs of creating that return are lower, then the value is higher Current market conditions are creating unique investment opportunities – unique because the premium destination benefits of London have never been such great value.
  • More Talent London’s talent pool has widened and deepened, offering a rich source of quality support to companies in a challenging market place. With supply increasing it’s now a buyers market, ideal for companies looking to get the best, possibly for less Gorilla Nation, the world’s largest online advertising sales representation company headquartered in the US, set up in London in the spring of last year. They were compelled by the talent pool, with a combination of selling skills, a deep understanding of their global business and a real enthusiasm to build business across Europe. Another example is a French company that our head of EMEA met last week. The MD was very happy at the idea that a competitor in the UK was reducing staff and one of the drivers of coming to London was the opportunity of recruiting from that pool.
  • Talent More than half of London’s working population (1.9m out of 3.7m; 53%) is highly qualified , covering senior positions in management, professional and technical occupations, and associate professorships. (ONS, 2007-2008) Furthermore, London boasts access to some of the best graduate talent in the world: c 400k students study in London across 40 higher education institutions. More top 10 universities than any other city With students from over 200 different countries, London's student body is the most diverse in the world. The region also has the highest numbers of higher education students in the UK 17% of 2.4 million UK students (Higher Education Statistics Agency, 2006-07) top three subjects being business studies, life sciences, and creative arts.
  • Cheaper Property Commercial property costs have decreased by up to 30% in the West End from 2007 to 2008. London has lost its status as the world’s most expensive office location for the first time in nine years. According to the Cushman & Wakefield’s ‘Office Space Across the World’ 2009 report, Hong Kong and Tokyo are now the world’s two most expensive locations. The good news for investors is, DTZ expects further falls in rent of 14 per cent in the City and 20 per cent in the West End over the next two years
  • Cheaper pound Sterling’s depreciation by over 17% against the dollar and 15% against the euro in the last 12 months now means London offers better value for money for foreign companies investing in the UK’s capital. Talent and Property are made even more accessible Importantly, the local cost of living that impacts talent supply and their satisfaction with being in the capital is also falling According to EIU London had dropped from the eighth most expensive city in Western Europe to 27 th place
  • Related to the cheaper pound is London’s cost of living which has dropped significantly, and is now ranking 16 th worldwide (down from 3 rd in 2008), below that of New York, Paris, Tokyo or Hong Kong. ( Mercer Cost of Living Survey 2009 )
  • In line with the global megatrend that will see 70% of the world population living in cities by 2050, population growth is key to any city retaining its capacity to deliver a market and a workforce in support of globalising businesses. As Europe’s fastest growing capital city, London will certainly not be standing still. As th chart shows, population growth is expected to exceed 1m over the next 2 decades, actually passing 9m by 2031. That’s like adding 2x Atlanta’s, 1xDetroit or 1xZurich to the city. Most of that growth will happen in East London where Europe’s largest regeneration project is underway. Part of this is due to the London 2012 Olympic and Paralympic Games.
  • London 2012 The London 2012 Olympic and Paralympic Games is a huge business opportunity that you can size up in various ways: From an economic dimension, the Games worth €10.4 bn. From a logistical perspective, organising the Games is the same as hosting 26 world championship sports events simultaneously. It is the largest logistical exercise a country can undertake in peace time. And from a business-related dimension: 2,000 main contracts and a further 75,000 sub-contracts available to companies from all over the World, for example French IT firm ATOS Origin and US marketing agency McCann Ericsson won the respective IT and marketing contracts for the 2012 Games. All contracts available all administered through the transparent Compete4 procurement system there are many opportunities for your business. It is an online procurement website that was established over a year ago to make the procurement around the Olympic and Paralympic Games transparent and open to all companies both in the UK and overseas . There are currently over 50,000 businesses registered on CompeteFor. Thousands of contracts have already been let through this website From several hundred different buying organisations. 100s of new contracts are posted every month, illustrating that momentum is growing amongst the buying community. 
  • Open It goes without saying that the many factors that have made London a top global city apply regardless of economic conditions… Just a few weeks ago, The results of the World Bank’s annual ‘Doing Business’ survey confirmed that the UK is the easiest place to do business in Europe. Access London has access to a market of 500 million people across the European continent. 8 million consumers in London , 18 million economic population 25 million consumers within a 90 minute drive (UK) With its time zone and c onnectivity benefits, London continues to be a natural hub to service markets in Africa and the Middle east, even on in to Asia Diversity Evidenced in terms of the many industry sectors with outstanding clusters in the city – Creative Industries in its many guises, Life Sciences and Pharmaceuticals, Technology, Business Services , emerging Environmental businesses – and yes, financial services! This week’s GFCI report, London still #1 Also of course the cultural diversity implicit in the fact that London’s population speaks in excess of 300 languages This openness is underpinned by what has been, and is committed to remain as, one of the most pro-business regulatory environments in the world
  • On top of that, London has also multiple sector strengths and each of those would take a separate webinar to go through. I thought I would just touch on the two key sectors that are mostly represented by our listeners today. (TBC) London is Europe’s creative capital and a world class leader in film, broadcasting, publishing, music, advertising, the arts, design, fashion and the performing arts. The UK advertising industry is the largest in Europe and third largest in the world (after USA and Japan). As for the second strongest represented sector in this webinar (TBC), London’s ICT sector is worth $27 billion It offers the best access to the widest range of requirements for ICT companies i.e.: Customers (telco operators, computer games developers, govt, banks, healthcare - all the big decision-makers for procurement Employees – and future employees i.e. graduates large population of fast adopters Europe’s largest online and end-user markets with a high concentration of businesses in financial and business services, creative industries, life sciences and environmental sectors. IT Software & Services contributes $12.4 billion to London’s economy.
  • So to the question on everyone’s lips – ‘is it really over?’ If not – how much longer will the current downturn, and with it all the favourable investment conditions, last? The straight answer is we don’t know Certainly seeing positive signs of some recovery to the UK and London economy in the past couple of months. Since May, the UK economy has shown signs that the window of investment opportunity for London may close sooner than expected. The first growth in industrial output in more than a year led the National Institute for Economic and Social Research, a respected research group, to say the recession passed its trough in March, with the UK economy returning to growth in April and May. BUT “the end of the recession should not be confused with a return to normal economic conditions“ Furthermore, the UK services sector, has returned to growth in May. A recent business confidence survey by the ICAEW (Institute of Chartered Accountants in England and Wales) suggests that the recession in the UK is over. While rents in London continue to fall, property-services firm Jones Lang LaSalle said that interest for London property is picking up. And at the start of this week, research by property firm Knight Frank forecasts that City prime rents will rise by 4pc next year [to £44] per sq ft, following a 21pc decline this year. The same research predicts that between now and 2013 rents will rise by 37pc to £58 per sq ft in the City and 42pc to £92.50 in the West End.
  • London Now So to conclude, there are certainly indicators that economic decline has halted. The supply of talent and property to the market may well respond in return – so certainly we’d encourage potential investors to maintain or expedite their planning. Given the ongoing interest and enthusiasm of investors from Asia in particular we believe competition for these resources will increase Firms from every region and sector are continuing to invest in London with it’s unrivalled quality, opportunity and value. Over the last few months Think London has worked with each of these firms to support their London set-up or expansion plans Our services have become even more valuable in the current economic environment helping investors take advantage of the opportunities London offers specific sectors Helping them position themselves to take advantage of the recovery.
  • Touchdown London Lastly, as a great incentive to all our prospective new clients, we have launched our enhanced Touchdown London service a couple of months ago which proved a huge success Created in conjunction with one of our commercial partners, the service is managed by Think London. The latest US company to use Touchdown London is TerraCycle, an innovative recycling company from Trenton, New Jersey. They will use London, and their Touchdown London office in the City of London, as a launch pad to build business across the UK and Europe. OUR TOUCHDOWN LONDON SERVICE INCLUDES:   One free desk in a shared, serviced office in West London (Hammersmith) or Central west–end (Hanover Square ), available for up to twelve months (subject to availability) A 25% discount on additional serviced office space at multiple locations across London, to provide you with a seamless and affordable property solution. A dedicated Think London Manager will be on hand to offer our full range of services to help your business set up, succeed and grow in London.   It’s a fabulous opportunity for a low-cost start-up facility that gets you on the ground fast in London. Despite the extension in available desks back in May, the office space is filling up fast, but there are still a couple of desks left.
  • So is the window created by the economic conditions closing ? A couple of headline trends suggest ‘maybe’ Anecdotal evidence and talk about recovery Confidence Currency stabilising/strengthening Investment Property activity levels BUT The talent pool is still growing – unemployment playing out as real economy lags debt/equity markets Still plenty of property available and enticing deals to be had Major opportunities like the 2012 olympics will continue to represent huge opportunties to investors So the message is simple: Now and for the short-term at least London continues to be ripe for foreign investors to take advantage of the opportunities the current market conditions offer. HOWEVER, the rider to this needs to be that it wont last forever…
  • Follow up with regional slides covering: AsiaPac, EMEA, BRIC and Latin America. Then within each region, do a drill down: EMEA (UK, tier-one countries – UK, Germany, France; tier-two-countries: Italy, Spain, Benelux, Nordics); AsiaPac (Japan, China, Australia, India); BRIC (Brazil, Russia, India, China); India only
  • In April we asked ‘so why London now?’ – worth revisiting to see what has and hasn’t changed Let’s look at a few of the factors we considered back than...
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  • Any immediate questions? … .
  • Using the Downturn to Prepare for the Upturn - Webinar IST

    1. 1. London’s Window of Opportunity Using the Downturn to Prepare for the Upturn 24 th September 2009
    2. 2. Presentation title goes here Who we are <ul><ul><li>London’s foreign direct investment agency </li></ul></ul><ul><ul><li>Supported by Government & the business community </li></ul></ul><ul><ul><li>Confidential & comprehensive consultancy service </li></ul></ul><ul><ul><li>Experts on London business </li></ul></ul>
    3. 3. Think London Clients
    4. 4. Our Speakers <ul><li>Mark Davies </li></ul><ul><li>Executive Director, Think London </li></ul><ul><li>Bill Crowley </li></ul><ul><li>Senior VP International, TechTarget International </li></ul><ul><li>Mike Curran </li></ul><ul><li>Tax Director, PwC </li></ul>
    5. 5. Quick Poll
    6. 6. So why London Now ?
    7. 7. Think Value
    8. 8. Presentation title goes here Presentation title goes here Talent ▲ Talent Pool – Deeper & Wider
    9. 9. Presentation title goes here Presentation title goes here 1.9 million Highly qualified workers
    10. 10. Presentation title goes here Presentation title goes here Property ▼ West End Rent decreased by up to 30% from 2008
    11. 11. Presentation title goes here £ ▼ 17.5% against the dollar and 15% against the Euro
    12. 12. Presentation title goes here Presentation title goes here £ Living ▼ From 3 rd to 16 th rank worldwide
    13. 13. Fastest growing capital city Source: GLA DMAG 1 million: Population growth over next 20 years London’s population (000s)
    14. 14. Think 2012 Games
    15. 15. Open for Business Presentation title goes here Presentation title goes here 500 million 300 languages Multi sector
    16. 16. Creative & ICT Capital of Europe <ul><li>World leader in film, broadcasting, publishing, music, advertising, the arts, design, fashion the performing arts </li></ul><ul><li>Advertising industry: Largest in Europe, 3 rd largest in world </li></ul><ul><li>Europe’s most e-enabled city </li></ul><ul><ul><li>Broadband access: 2/3 of population </li></ul></ul><ul><ul><li>7,000+ wireless access points - more than NY & Paris combined </li></ul></ul>
    17. 17. Window of Opportunity Closing? <ul><li>‘ Recession has passed its trough in March 2009’ (NIESR) </li></ul><ul><li>‘ UK services sector returned to growth in May 2009’ (Cips/Markit) </li></ul><ul><li>Surging business confidence - UK recession ‘at an end’ (ICAEW) </li></ul><ul><li>‘ Interest for London property is picking up’ (Jones Lang LaSalle) </li></ul><ul><li>‘ By 2013 rents will rise around 40% on lows’ (Knight Frank) </li></ul>
    18. 18. Presentation title goes here Presentation title goes here London Now!
    19. 19. Touchdown London
    20. 20. Bill Crowley, TechTarget International
    21. 21. TechTarget – Fastest growing IT media company <ul><li>Media company with IT Decision Makers as our audience and technology companies as our advertisers </li></ul><ul><ul><li>7.5 million worldwide members </li></ul></ul><ul><ul><li>1000 advertisers </li></ul></ul><ul><li>Growth company </li></ul><ul><ul><li>Founded in 1999, IPO in 2007 </li></ul></ul><ul><ul><li>$100M in revenue in 2008, online business still growing in 2009 </li></ul></ul><ul><li>Leaders in lead generation and targeting </li></ul>
    22. 22. TechTarget’s Audience Reaches Around the Globe NA = 4,033,000 APAC = 1,794,000 EMEA = 1,493,000 7.5 million IT Buyers Latin America = 225,000
    23. 23. Why did TechTarget invest in London during recession <ul><li>Readiness </li></ul><ul><ul><li>Enough reference-able customers in US; enough membership/visitors in Europe </li></ul></ul><ul><ul><li>Earning very small % of our business from European buyers </li></ul></ul><ul><li>London/UK offers workplace terms most similar to US </li></ul><ul><li>Customer access – London metro area has most UK offices of tech companies or their European headquarters. Ad agency community is strong </li></ul><ul><li>Time zone / travel advantages </li></ul><ul><ul><li>London is best place to overlap a workday with most of our office locations. Offices - Boston, San Francisco, Mumbai and Beijing. </li></ul></ul><ul><li>Talent pool – Availability of people with tech/media experience </li></ul>
    24. 24. Advantage of starting now – Can get deals and access to people to build the business <ul><li>Real estate prices are at historic low and lots of serviced office options </li></ul><ul><li>Personnel salary expectations are down, availability of people for consulting assignments </li></ul><ul><li>Suppliers willing to work with a smaller customer or to make deal to earn the business </li></ul>
    25. 25. Challenges in UK right now <ul><li>Market is tough </li></ul><ul><ul><li>Budgets have been cut and UK specific competitors are fighting for business VERY hard and to protect their business. Especially difficult as a company trying to break into the market. </li></ul></ul><ul><ul><li>Recovery may lag the US </li></ul></ul><ul><ul><li>Interest rate fluctuations make it difficult to set a rate card </li></ul></ul><ul><li>But we need to do this now </li></ul><ul><ul><li>If we waited to start this business until recession over, we would not be known by our customers and prospects and not in a position to benefit from the upturn </li></ul></ul>
    26. 26. Mike Curran, PWC London's window of opportunity - how much longer?
    27. 27. Mike Curran Director - SME Inbounds 24 September 2009
    28. 28. <ul><ul><li>Our approach to inbound market: </li></ul></ul>Introduction September 2009 Slide Director - SME Inbounds <ul><ul><li>Doing Business guide </li></ul></ul><ul><ul><li>Economic outlook </li></ul></ul>
    29. 29. <ul><ul><li>Technology Executive Connections </li></ul></ul><ul><ul><li>Focus on 5 areas </li></ul></ul>Introduction September 2009 Slide Director - SME Inbounds <ul><ul><li>Pathfinder </li></ul></ul>
    30. 30. <ul><ul><li>Total Tax Contribution Survey </li></ul></ul><ul><ul><li>50% tax band – the elephant in the room! </li></ul></ul><ul><ul><li>Enterprise survey results </li></ul></ul><ul><ul><li>What works: </li></ul></ul><ul><ul><ul><li>Research & Development </li></ul></ul></ul><ul><ul><ul><li>Corporation tax rate </li></ul></ul></ul><ul><ul><ul><li>Withholding taxes </li></ul></ul></ul><ul><ul><ul><li>Stock option rules </li></ul></ul></ul>No.1: Taxation September 2009 Slide Director - SME Inbounds
    31. 31. <ul><ul><li>Total Tax Contribution Survey </li></ul></ul><ul><ul><li>50% tax band – the elephant in the room! </li></ul></ul><ul><ul><li>Enterprise survey results </li></ul></ul><ul><ul><ul><li>42.9% of technology companies felt the current UK tax regime is quite/very supportive and encouraging at supporting enterprise in the UK. </li></ul></ul></ul><ul><ul><ul><li>76.5% of technology companies felt that 50% tax rate would have no impact on their business. </li></ul></ul></ul><ul><ul><ul><li>68.5% of technology companies felt business situation in next 24 months would be a little or a lot better. </li></ul></ul></ul>No.1: Taxation September 2009 Slide Director - SME Inbounds
    32. 32. <ul><ul><li>Total Tax Contribution Survey </li></ul></ul><ul><ul><li>50% tax band – the elephant in the room! </li></ul></ul><ul><ul><li>Enterprise survey results </li></ul></ul><ul><ul><li>What works: </li></ul></ul><ul><ul><ul><li>Research & Development </li></ul></ul></ul><ul><ul><ul><li>Corporation tax rate </li></ul></ul></ul><ul><ul><ul><li>Withholding taxes </li></ul></ul></ul><ul><ul><ul><li>Stock option rules </li></ul></ul></ul>No.1: Taxation September 2009 Slide Director - SME Inbounds
    33. 33. No.2: Current research overview September 2009 Slide Director - SME Inbounds
    34. 34. No.2: Current research overview September 2009 Slide Director - SME Inbounds
    35. 35. No.2: Current research overview September 2009 Slide Director - SME Inbounds
    36. 36. No.3: SME September 2009 Slide Director - SME Inbounds
    37. 37. No.4: People September 2009 Slide Director - SME Inbounds
    38. 38. No.6: Property September 2009 Slide Director - SME Inbounds
    39. 39. No.6: Property September 2009 Slide Director - SME Inbounds
    40. 40. <ul><ul><li>Where the market will go </li></ul></ul><ul><ul><ul><li>Timing </li></ul></ul></ul><ul><ul><ul><li>Globalisation </li></ul></ul></ul><ul><ul><li>Doing business in London </li></ul></ul><ul><ul><ul><li>Clear focus helps </li></ul></ul></ul><ul><ul><ul><li>Costs manageable </li></ul></ul></ul><ul><ul><ul><li>Great access </li></ul></ul></ul>Conclusion Slide September 2009 Director - SME Inbounds
    41. 41. <ul><ul><li>PwC support </li></ul></ul>Conclusion Slide September 2009 Director - SME Inbounds <ul><ul><li>Essentials </li></ul></ul><ul><ul><li>Vision to reality </li></ul></ul>
    42. 42. Conclusion Slide September 2009 Director - SME Inbounds <ul><ul><li>Tech Media </li></ul></ul>
    43. 43. Thank you <ul><li>This document has been prepared for the intended recipients only. To the extent permitted by law, PricewaterhouseCoopers LLP does not accept or assume any liability, responsibility or duty of care for any use of or reliance on this document by anyone, other than (i) the intended recipient to the extent agreed in the relevant contract for the matter to which this document relates (if any), or (ii) as expressly agreed by PricewaterhouseCoopers LLP at its sole discretion in writing in advance. </li></ul><ul><li>© 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. </li></ul><ul><ul><li>Mike Curran </li></ul></ul><ul><ul><li>Email: [email_address] </li></ul></ul><ul><ul><li>Tel: +44 (0)207 213 8190 </li></ul></ul>
    44. 44. Quick Poll
    45. 45. Think Now - Think London Any Questions?