Category Archives: Uncategorized

Am I the only person that can do this?

Before you start on a task, ask yourself the question “Am I the only person who can do this?”

If you answer that question with a yes, you can then apply Eisenhower’s model to prioritise your workload. If you answer no, delegate the task to someone else.

“What is important is seldom urgent, and what is urgent is seldom important.” – Dwight Eisenhower

If you classify your workload into the boxes below:

Eisenhower

Then you can apply this set of rules to manage your time.

Box C should be done immediately

Box A should be scheduled for a time that suits you. Friday afternoon is when I write my  newsletters, for example.

Box D If it is not important why are you doing it? Outsource it or delegate it.

Box B Don’t do it unless you really want to. That’s an indulgence, in the business world.

It’s worth considering these rules every six months or so. Tasks that are not important have a sneaky way of finding themselves back on your desk every few months.

Spend your time in boxes A and C to have the most impact on your business – and actually an easier life.

The right kind of customer?

In many businesses there no real selection or filtering of customers.

The focus of the business is on attracting prospects through marketing, and then converting those prospects into customers through the sales process.

Good marketing will (of course) be targeted or aimed at a particular customer type or group (and if your marketing is not focused, it will be less effective) but that doesn’t mean you won’t have prospects that don’t meet the criteria for that target group.

Some of those “wrong” prospects will become customers.

Some of those customers may be the wrong kind of customer.

Some time ago, I ran a business that operated a support desk. We had some customers who were so troublesome and took so much time to support that we actually didn’t make any money from selling to them.

The Pareto rule will probably apply; 20% of your customers are either low profit or unprofitable.

Your customers will fall into one of the 4 categories:

Before you analyse your profitability by customer, you might want to draw up the profile of your ideal customer, the one you believe will fit in the top right quadrant.

In the top left quadrant, you may well find that you are doing business with an ideal customer, but not enough business to make it worth-while.  Your focus should be on increasing the business you do with that customer.

In the lower left quadrant, you can change the way you handle the low profit customers. In the business I ran, we changed the support offering – limited the amount of free telephone support we offered, and backed that up with an extensive knowledge base to facilitate self support.  You may need to change your pricing model to drive those customers away, or at least improve their profitability.  We increased delivery charges on small orders for just this reason.

In the lower right quadrant, look to automate as much as possible. If you can automate dealings with a customer, from the order through to the cash, your costs of servicing the customer for that order will be very low. You will still need to review after sales support.

The customer in the top right quadrant are your stars, the ones you want to hang on to, the ones who are the most important to your business. You need a spread of customers here – Ideally no one customer should be worth more than 20% of your business.

Retaining your star customers is about building and sustaining a relationship with them. find ways to show your appreciation for their business, listen to their needs and wants and adjust your business to meet those needs.

Try to discover why your star customer buy from you, not the competition. We had one customer who bought from us because we were on his way home, but more seriously another showed great loyalty because one of our engineers met him at his customer’s site with the part he needed, enabling him to provide fantastic service to his customer.

Compare the profile of your real star customers to the profile you drew up before you started. Use that comparison (and the reasons why your customers buy from you) to inform and adjust your marketing.

 

Size matters – in acquistions

A few months ago the news was full of stories about the Co-Op bank. They acquired acquired Britannia building society, and trouble lay ahead. The newspapers love to report the negative news and the disasters –

There’s an old story about a foreign correspondent for the BBC who was on assignment in the heyday of telegraphy After long silence from the reporter, the BBC wired him to ask: NEWS? The reporter wired back: UNNEWS. The BBC, seeing no point in paying him if he wasn’t working, retorted: UNNEWS, UNJOB.

And this really was a disaster. The co-operative bank has being sold to its creditors in a rescue deal after the regulators insisted that fresh capital was required. The Co-Operative group has lost control of the bank.

So why did this deal go wrong?

Successful acquisitions are not easy to achieve but they all start with the planning & strategy phase, and I think you can point to a failure of strategy, which has led to a failure of execution.

In this case, I think it is clear that the Co-Op bank was just not big enough or strong enough to take on the Britannia. That meant that the leadership were out of their depth, did not have enough understanding of the potential pitfalls and that due diligence was not good enough.

Sweet Spot

In my experience there’s a sweet spot for the size of an acquisition. If your target is too small, it won’t make that much of an impact on your business, and if it’s too big the risk is too great. You need to be looking at businesses that are no more that 30% of your size, and probably more than 10% to make a significant impact.

As always, there are exceptions – if you are busying technology, for example – but in this case

Size does matter

Quarterly Economic Update – June 2014

This commentary seeks to provide guidance over a 3 -5 year timescale.

Europe

Taking the three big economies of the Eurozone in turn:

The German economy is moving forward quite well, with low inflation and some reasonable growth figures, but is ever more reliant upon non-Eurozone exports. Growth over the last couple of decades has been partly due to the removal of the premium exchange rate attached to the Deutschemark when selling into the Eurozone. There is no growth and little activity in the Eurozone, so Germany has to look elsewhere – most notably east.

Eastern Europe, Germany’s major recent growth opportunity, is still suffering from the disturbances in the Ukraine, and there are some signs of a slowdown in the most recent quarter’s data.  Growth rates for the rest of the year really do depend upon stabilisation of the Ukrainian situation, but are unlikely to top 1.5%. The future is pretty murky, with the Eurozone still in trouble and concerned about deflation it is very difficult to see real growth over the next 3 years.

France is in a poor way. Recent elections have shown just how isolated Hollande is, and the growth rates are minimal. The most recent forecasts I have seen suggest growth of below 1% for 2014, and I cannot see a significant recovery in the next three years.

Italy is also in trouble. The new broom has arrived, but significant political and economic reform is required for real growth. The economy will flat-line at best for 2014 and it is difficult to see where growth will come from. The instability and floods of refugees from North Africa are adding to the pressure. Growth will be minimal, if any.

Overall, there will be little growth in Europe. Political instability in North Africa and Eastern Europe will continue to be a distraction and drain on resources, but at least the worst of the Euro crisis seems to be over.  It’s a stable economic environment now, one of the keys to attracting inward investment, and still a large chunk of the world’s economy.

UK

The main story in the UK is centred on house prices and the fear of an asset price bubble, especially if it is driven by excessive debt. Expect to see significant controls on mortgage lending in the next few months.

Aside from house prices, the economy appears to be showing strength in most sectors. There a process of rebalancing the UK away from the financial services sector (which is considerably smaller than in the peak of 2008-9) which requires that other sectors take up the slack.

The services sector remains by far the largest part of our economy, but manufacturing is showing signs of growth.  Growth of 3.5% for 2014, with a fall of to 3% in 2015-6.

UK Base rates of 0.5% will not be with us in a year’s time, and may be increased as early as Q4 2014 but increases will be “gradual and limited” as the BofE are telling us. There are an lot of “Zombie” companies and households, who have barely survived the recession and would be killed off by any sudden  and large increases in interest rates.

USA

Political turmoil continues with the republican party splintering yet again, following the recent election of a tea party candidate to replace the House Majority leader, Eric Cantor. It seems unlikely that the republicans will mount a sensible challenge to Hillary Clinton at the next election in 2016. In the business world, the lack of political meddling is good news. The shale gas story is driving the US economy, with business “re-shoring” manufacturing on the back of cheaper energy. Unlike Europe, the US demographic profile is favourable with a younger, educated, upwardly mobile population, many of whom are of Latino origin. Growth rates of 3% in 2014 and possibly 3.5% from 2015-2016.

Brazil

The Wold Cup and the Olympics may give a temporary boost to the economy, but it will be minor.

This is very much a story of unfulfilled potential, but until the infrastructure is in place and the social divides are narrowed it seems very likely to remain unfulfilled. Growth rates seem likely to be in the 2-3% range.

Russia

Putin’s antics in the Ukraine have resulted in economic sanctions and made a recession in 2014 very likely. The last few years have seen Russia trading its vast supplies of oil and particularly gas for political and economic advantage, but European political leaders do not want to be beholden to Putin and will reduce their purchases whenever possible. It’s difficult to see an economic upside over the next 3 or more years.

India

Narendra Modi of the BJP party has been elected on a platform of economic reform, and has approved a numbers of defence related infrastructure projects. That’s a decent start but many problems remain in the civilian world.

Growth rates of 4-6% in the forecast period.

China

The big question over China remains the size of the shadow banking sector. Unregulated or lightly regulated lending has the potential to create instability in the mainstream financial services sector, with consequences that we in the western economies know only too well.

It’s my view that the Chinese authorities will manage the reduction in the shadow sector, and although there will be some casualties they will be relatively minor.

Overall, very positive with growth in the 7-9% ranges.

 “Greater China”

I’m loosely defining this area as the countries surrounding China & supplying Chinese demand, from Vietnam and Thailand /Malaysia /Singapore right though to South Korea. These countries have generally good prospects, decent infrastructure and well educated populations. They cannot but benefit from rising demand in China and most have the political stability to take advantage of it.

The big risk country is Thailand, following the army coup, but there is a history of the army taking power for a few years and then reverting to democracy. In the past, the king has proven to be a stabilising influence but on this occasion he has been very quiet – perhaps through old age and / or ill health.

Myanmar, the former Burma seems more stable in this quarter than last, but it remains only a few months ago that it was a state ruled by the army.

The political risk in this area is conflict with North Korea, which would heavily affect South Korea.

Growth rates could be exceptional at up to 10 – 12%

Japan

Some territorial disputes in the South China Sea have raised their heads again. China, Japan and Vietnam all lay claim to some islands, but of course it is the natural resources surrounding ( and beneath) the islands that is of interest. That’s most likely just a side show.

Sclerotic corporate structures continue to inhibit growth.  The worlds’ 3rd largest economy will continue to grow slowly.

MENA

The main stories in this region remain political turmoil and civil insurrection in Syria, Iraq and Egypt.

The Gulf States have significant natural resources, but Middle East oil & gas is becoming less important to the world economy as Shale Gas, improved efficiency and new discoveries reduce the world’s reliance on the region.

It is difficult to be optimistic for prospects in this region.

Australasia

The Aussies had a good run up until the end of 2012, but I think they have more reasons to be optimistic about the cricket than about their economy for the next few years.

© Tim Luscombe June 2014

Quarterly Economic Update – Mar 2014

This commentary seeks to provide guidance over a 3 -5 year timescale.

Europe

Taking the three big economies of the Eurozone in turn:

The German economy is moving forward quite well, with low inflation and some reasonable growth figures, but is ever more reliant upon non-Eurozone exports. Growth over the last couple of decades has been partly due to the removal of the premium exchange rate attached to the Deutschemark when selling into the Eurozone. There is no growth and little activity in the Eurozone, so Germany has to look elsewhere – most notably east.
Eastern Europe, Germany’s major recent growth opportunity, is suffering from the fear created by the Russian take-over of Crimea and the fear that Putin’s ambitions don’t stop there.

Times are likely to remain difficult for Eastern Europe for some time. Germany will suffer a knock-on effect, but still will be the strongest economy in Europe. Growth of 1.5% seems likely.

President Hollande of France appears to be too busy with the women in his private life to pay much attention to the economy. High taxes, restrictive employment practices and ineffective government are not a recipe for great results. France may stay out of a technical recession, but not by much.

Matteo Renzi has taken over as PM of Italy with some good news to greet him; the country moved out of recession at the end of 2013. That’s been the longest recession post war. Renzi has real ambition to reform Italy’s sclerotic political and economic systems, with the suggestion that all the parliamentarians should vote for their removal. That reminds me of turkeys and Christmas….if he can drive through the returns, it will take a decade or more. Growth below 0.3% seems most likely.

Spain is starting to show some signs of recovery, but it is a long hard road. Youth unemployment remains very high and there are still some political scandals and rumours surfacing. Low growth, still subject to shocks.

Overall, there will be little growth in Europe. Political instability in North Africa and Eastern Europe will continue to be a distraction and drain on resources, but at least the worst of the Euro crisis seems to be over. It’s a stable economic environment now, one of the keys to attracting inward investment, and still a large chunk of the world’s economy.

UK

The story in the UK is good news, with growth now established in almost all sectors. The real impact of cuts to public sector employment is yet to be reflected in the employment statistics, and there are still more scandals emerging in the financial services sector.

Private businesses are more optimistic than for many years, with two main constraints to growth, access to finance and access to well trained & qualified staff.

There’s a fundamental reform underway in the business finance market, with new entrants adopting a traditional model (Metro Bank, Aldermore, Virgin Money and many more) but perhaps more significantly the rise of crowd based funding, both for debt and equity. Debt based crowd funding is becoming really effective and simple to deploy.

Growth rates in the UK are likely to be 2.8% in 2014, rising to 3.5% in 2015. Interest rates are likely to rise from 0.5% to 0.75% in the first quarter of 2015, although that could take place in the last quarter of this year.

Increases in interest rate are more likely to be driven by fear of an asset price bubble, both in the stock market and in housing, than any fears of inflation. We may well see controls imposed on property lending to minimise that risk.

USA

Political stalemate continues with President Obama unable to make major legislative changes; the shale gas revolution is the main driver of change in the economy. The low price of shale gas has enabled manufacturers to reverse their policies of outsourcing production to South America and the Far East.

There are no obvious negatives on the horizon and much good news, with the US as a whole likely to be a net exporter of gas in the near future.

The US is certainly the most successful of the developed economies with growth in 2014 of close to 3% and possibly 3.5% in 2015 and beyond.

Brazil

The eyes of the world are turning to Brazil, drawn by the Wold Cup and the Olympics over the next few years, but IMF forecasts for growth in 2014 are still below 3%.
This is very much a story of unfulfilled potential, but until the infrastructure is in place and the social divides are narrowed it seems very likely to remain unfulfilled.

Russia

Everything is back in the melting pot; the Crimean annexation will result in significant isolation, the value of Russian oil is falling and the ability of the government to leverage their supply of natural resources for political gain is weakening (See US shale gas above)
GDP will probably fall in 2014 and flat-line at best in 2015. The real question is how quickly relations with the west return to normal. If the sanctions and isolation continue, recession in Russia is very likely.

India

There’s significant doubt that the long established political party, Congress, will maintain its influence under the latest scion of the Ghandi dynasty. The most likely winner is Narendra Modi of the BJP party, elected on a platform of economic reform. The challenge will be to reform a country and political system where a cabinet minister has just advised his supports to “vote twice” by washing the ink off their fingers and voting in a different district.
Growth rates of 4-6% in the forecast period.

China

The new leadership has settled in and consolidated its hold on power; some of the most obvious abuses of the financial and regulatory systems have been closed off, and recently the hard reality of market forces was allowed to play its part as a company defaulted on its debt for the first time.
Couple this with the reduced number of companies approved for IPO (flotation) and there are some signs of structural economic reform.
Overall, very positive with growth in the 7-9% ranges.

“Greater China”

I’m loosely defining this area as the countries surrounding China & supplying Chinese demand, from Vietnam and Thailand /Malaysia /Singapore right though to South Korea. These countries have generally good prospects, decent infrastructure and well educated populations. They cannot but benefit from rising demand in China and most have the political stability to take advantage of it.
The possible exception to this is Thailand, where the present PM seems unlikely to survive the current unrest. That makes investment decisions tricky, so perhaps Vietnam or Malaysia will benefit.

Myanmar, the former Burma seems more stable in this quarter than last, but it remains only a few months ago that it was a state ruled by the army.

The political risk in this area is conflict with North Korea, which would heavily affect South Korea.

Growth rates could be exceptional at up to 10 – 12%

Japan

It has been a quiet few months for Japan. There’s still the challenge from the Fukushima plant overhanging any prospects for dramatic growth, together with the somewhat sclerotic corporate structures. The worlds’ 3rd largest economy will continue to grow slowly.

MENA

The main stories in this region are of course Syria and to a lesser extent Egypt. Both economies are collapsing, and refugees fleeing Syria (in particular) are impacting on surrounding countries. Factor into that mix the long standing Sunni – Shiite divide where it seems likely that Syria is a proxy for Iran’s ambitions to become the dominant player in the region.

The Gulf States have significant natural resources, but Middle East oil & gas is becoming less important to the world economy as Shale Gas, improved efficiency and new discoveries reduce the world’s reliance on the region.

It is difficult to be optimistic for prospects in this region.

Australasia

The Aussies had a good run up until the end of 2012, but I think they have more reasons to be optimistic about the cricket than about their economy for the next few years.
© Tim Luscombe March 2014

Newsnight & the Flowers interview – where were the regulators?

Watching Paul Flowers, the ex-chairman of the Co-Op bank, being grilled by Paxman on Newsnight last night, I wondered again how on earth he was ever approved to chair a bank.

 

It is bad enough that the co-op groups internal appointment process unanimously selected Mr Flowers (just how unqualified were the other candidates?) but then he was interviewed by the regulators and approved by them as well.

I’m reminded that amongst all the fury at the banking industry and the vilification of anyone even remotely connected to the banks, the regulators seem to have escaped all consequences and most of the blame. How is this possible?

Where were the regulators?

Perhaps this is unconnected, but I noted that the past chairman of the FSA, Hector Sants, took up a post in Jan 2013 with Barclays as Head of Compliance and Government and Regulatory Relations. By October 2013 he was suffering from “exhaustion and stress” and in November 2103 he resigned.

Do you have any faith in the regulators ability to prevent future crises?

 

 

 

Is the valuation of AO too high?

The business news this last week has included quite a big story about the valuation of AO, the online white goods retailer formerly known as Appliances Online.

For those that missed it, here’s what was in the Guardian (other papers took a similar view)

“But even the £1.2bn valuation is daft. AO last year made bottom-line profits of only £6.8m on sales of £275m. Punch those numbers through the calculator: 175-times earnings and 4.5-times sales for a distributor of low-margin electrical goods.”

There’s no arguing with that – these numbers are way out of kilter.

So is this the city gone mad? Possibly, probably. Too many people getting caught up in the hype of a success story that plays really well – the “£1 bet in the pub that turned a kitchen salesman into a multi-millionaire”

Valuations are an art form, not a science & investors are looking to the future. If a business can take on a mature market, like white goods, and apply some game changing methodologies to create a new business model and capture a decent market share in no time, perhaps it can do the same in other markets?

Is AO the new Amazon? There are some similarities. Amazon shook up a moribund market (bookselling) and has extended the business model and the technology to many markets and products. Maybe that’s what investors think could happen with AO?

Personally, I doubt it. I suspect that AO may be a target for Amazon, if they continue to show good progress and have some ground-breaking technology, but for now I think I’d rather sit on the side lines & watch than invest.

Not for Profit may not mean what it seems

I learnt a few days ago that we were unsuccessful in a bid for a local government contract.

Oh well, I thought, never mind. We learn by our experiences.

Out of curiosity I looked up the winning bidder, to find that they were vastly more experienced in working with local government, and had worked with this authority before. No surprise that we were not the preferred bidder.

They are a not-for-profit limited company.

I told my wife, and she said “Oh well, you lost to a charity….”

No. Not for profit doesn’t mean a great deal, really. If the company makes a surplus, that surplus should be put to the good cause the company supports.

Long before the company makes a surplus, it has to pay for its staff, its directors, its expenses….

I am not for a moment implying that there is anything underhand in this, or any other case.

Just be aware that not for profit ≠ charity

 

So you want to buy the business you work for?

Many people dream of running their own business and sometimes you’ll be in a position to think about buying the business you work in.

There’s a whole raft of things to think about along the way but here are a few to consider.

If you are successful in buying the business, that’s just the start. What are you going to do with it, and do you have the skills, knowledge and experience to successfully run the business? One way to think about that is to write down all the functions, then assign names to them from your team. You might want to get the existing owner to do the same thing; there may be some surprises for you!

Do a SWOT analysis on your team; be prepared to hire the skills you don’t have in-house

As an employee, working for the owner, you have an established relationship.  If you are going to make an approach to buy the business, you will change that relationship. There’s a risk that if you make an approach, and it does not work out (for whatever reason) you will not be able to continue in your role.

To minimise this risk, make the approach very carefully and be as subtle as you can. Be prepared to take your time and give the owner time to adapt to your suggestion.

Money matters. The chances are that you cannot pay as much for the business as a third party, with deeper pockets, can afford. Be open with the owner about your finances, and be prepared to go “all-in”. That may mean putting your house on the line, risking your pension…is your partner or family prepared to take the risk?

For the existing owner, there are a number of benefits to selling to the team and you’ll need to emphasise them. You probably cannot compete on price, so compete on the emotional appeal of looking after the business and the team. There’s also the avoidance of a protracted sale process involved in the sale to a trade buyer.

Get help early on to advise you; there may be more sources of funds available than you realise, and the conversations with the owner may be more fruitful if both sides can express opinions untainted by the (probably many years) experience of working together.

Quarterly Economic Update – Dec 2013

This is my personal view, based upon many years researching and reviewing the work of others “standing upon the shoulders of giants”

This commentary seeks to provide guidance over a 3 -5 year timescale.

Europe

Taking the three big economies of the Eurozone in turn:

As expected, Angela Merkel was re-elected and is forming / has formed the grand coalition with her political opponents. From an economic guidance perspective, this means little change to the status quo – perhaps some adjustments in the social and benefits arena – but nothing to derail the progress of the German economy.

In France, president Hollande appears to be making fewer blunders but is not addressing the challenges of the bloated state, generous retirement provisions and onerous individual and corporate taxes.

In Italy, the Berlusconi era has finally drawn to a close – although there is a rumour that his friend, President Putin of Russia, might appoint him Russian ambassador to the Vatican! That would give the former PM a diplomatic passport and immunity from house arrest. Politically, there’s no strong leadership and economic reforms are not happening. There will probably be yet another election in 2014, but it’s likely to be just another shuffle of the same pack of cards.

The southern fringes will continue to be influenced by the North African troubles; Egypt is unstable, Syria in the middle of a brutal civil war. There will continue to be a drain on Turkey, in particular but also continued refugee crises across the Mediterranean. Economic news from Portugal, Spain, Greece and Cyprus is minimal, which is good news. It may be time to call the end of the Euro shocks.

My forecast:
Over the forecast period, the Eurozone as a whole will probably show modest growth rising to perhaps 2.8% in 2016, but individual countries will still perform at markedly different rates. All of the Latin countries are still in the recovery ward, but showing signs of better health. Germany is likely to be more stable, with growth gradually improving from 2014 – 2016/7, perhaps peaking at 3.5%. I would not be surprised by some relatively disappointing growth figures for Germany in a couple of quarters of 2014. Real growth for Germany requires more of a recovery in the southern fringe.

France continues to struggle and 2014 does not look to have a favourable out-turn. Recovery will require political change, either of leadership or of direction.

Italians are used to weak / no government and growth of 1.5 – 1.8% should be achievable in 2014 with gradual improvement through to 2016.

Smaller countries, particularly those in Eastern Europe, offer real potential for growth. Ireland appears to have weathered the crisis and has a positive outlook, and general acceptance of their fate (albeit still with some political upheaval) is appearing in Spain, Greece & Portugal.

UK
Despite the headlines screaming about the good economic news from the last few months, we are not completely out of the woods yet. In my June commentary I referred to further problems emerging in the financial services sector and they were duly uncovered. It will take several years for that sector to return to pre-crisis levels of contribution to the economy.
The recent statistics do show improved activity across almost all sectors, which is good news, but there is a disconnection between the employment statistics and the output statistics. The implication is that we are now much less productive than was the case in 2007. The Bank of England has set a “knock-out” for increasing interest rates only when unemployment falls to 7%. It may be that productivity increases absorb some of the growth before businesses take on more staff; interest rates are likely to remain at present levels through 2015.
The longer term significant risk is energy supply and policy; we’re heavily reliant upon imported gas, have not developed new nuclear and the environmentally friendly generation is slow to fill the gaps. Shale oil & gas would appear to be favoured technology.
Growth rates of 2.5% in 2014 and 2.8% in 2015 seem likely.
USA
Prospects in the US remain very positive, largely due to shale gas. The most positive politico-economic news in several years is the recent agreement, yet to be passed by the legislators, to withdraw the sequestration imposed by the fiscal cliff and replace it by planned savings.
President Obama has not shown a great interest in business and that seems unlikely to change, so there will be little government stimulus to the economy.
Manufacturing operations are being relocated from formerly low-cost environments (South America, China) to the US to take advantage of the low oil and gas prices. The knock on effect of this transition can be nothing but positive for the US as a whole, with a young, well educated population.
Growth rates of 3-5% during the period to 2016-7

Brazil
The run up to the sporting events has attracted to worlds attention to the country and given the disadvantaged of the population a platform to protest. There’s an outcry against building football stadia whilst the countries hospitals, roads and housing are in dire need of investment.
A large young population, significant natural resources and gradually improving infrastructure, no doubt given a step change by the World Cup and the Olympics give cause for optimism. I note with interest that Jaguar Land Rover announced a manufacturing facility in Brazil recently. I think that’s a very early move.
Growth rates of up to 6 or 7% are possible in the period to 2016 with the Olympic effect but I’d expect to see a slow- down in 2017-2018, with growth falling back to 4-5%.

Russia
Continues to benefit from significant natural resources and will show good growth in the mid to medium term. There’s a substantial middle class that don’t have a political voice and any attempt to represent their opinions is met with repression. Doing business in Russia is challenging and requires that you have the right connections.
Over the medium term, growth of 5-6% is likely. Over the longer term, the big question is what will happen on the political front when Putin goes. That could cause major instability.

India
Faces challenges from its own political system; it remains a country of great potential with excellent education, the use of English as a business language and a young population. There is vast inequality between the richest and most influential and those who are not so fortunate. It’s noticeable that a court found a colonial era law applicable (it happens to be about homosexuality) overturning a more recent ruling. Businesses face some interesting challenges! Growth rates of 4-5% in the period to 2017

China
The relatively new leadership have taken some significant steps to eliminate or reduce corruption; there are fewer ostentatious displays of wealth by the political elite and domestic IPO’s (initial public offerings) have been frozen whilst investigations into some very doubtful public companies are carried out. There’s a new atmosphere and some more rigour applied to standards and procedures.
All of this helps to reduce the risk of political disturbance between the haves and the have-nots, so the outlook continues to be positive.
Growth rates of 7-9% are most likely

“Greater China”
I’m loosely defining this area as the countries surrounding China & supplying Chinese demand, from Vietnam and Thailand /Malaysia /Singapore right though to South Korea. These countries have generally good prospects, decent infrastructure and well educated populations. They cannot but benefit from rising demand in China and most have the political stability to take advantage of it.
The possible exception to this is Thailand, where the present PM seems unlikely to survive the current unrest. That makes investment decisions tricky, so perhaps Vietnam or Malaysia will benefit.
Myanmar, the former Burma seems more stable in this quarter than last, but it remains only a few months ago that it was a state ruled by the army.
The political risk in this area is conflict with North Korea, which would heavily affect South Korea.
Growth rates could be exceptional at up to 10 – 12%

Japan
It has been a quiet few months for Japan. There’s still the challenge from the Fukushima plant overhanging any prospects for dramatic growth, together with the somewhat sclerotic corporate structures. The worlds’ 3rd largest economy will continue to grow slowly.

MENA
The main stories in this region are of course Syria and to a lesser extent Egypt. Both economies are collapsing, and refugees fleeing Syria (in particular) are impacting on surrounding countries. Factor into that mix the long standing Sunni – Shiite divide where it seems likely that Syria is a proxy for Iran’s ambitions to become the dominant player in the region.
The Gulf States have significant natural resources, but Middle East oil & gas is becoming less important to the world economy as Shale Gas, improved efficiency and new discoveries reduce the world’s reliance on the region.
It is difficult to be optimistic for prospects in this region.

Australasia
The Aussies had a good run up until the end of 2012, but I think they have more reasons to be optimistic about the cricket than about their economy for the next few years.
© Tim Luscombe December 2013