CPA Congress,

Asia Pacific

Chairman & Chief Executive, Catalyst Managerial Group

Chief Executive, Venture Catalyst Africa
Chairman, Pacific Power Limited
Chairman, International Association of
Outsourcing Professionals, Australia
This Presentation is in 4 Parts
1 Globalisation Today

The Emerging / Emerged Forces in

2 the Globalised World

Financial Crisis or Changing World Order

3 A Wake-up Call for the Developed World

Opportunities and Strategies for Operating

4 in the Globalised World
Part 1

1 Globalisation Today

The Emerging / Emerged Forces in

2 the Globalised World

Financial Crisis or Changing World Order

3 A Wake-up Call for the Developed World

Opportunities and Strategies for Operating

4 in the Globalised World
Part 2
1 Globalisation Today

2 The Emerging / Emerged Forces in

the Globalised World

Financial Crisis or Changing World Order

3 A Wake-up Call for the Developed World

Opportunities and Strategies for Operating

4 in the Globalised World
Economic Growth in China

In mid-2010, China became the world's second largest economy,

surpassing Japan's economy and second only to the economy of the
United States.

In the second quarter of 2010, China's economy was valued at $1.33

trillion, ahead of the $1.28 trillion that Japan's economy was worth.

China could become the world's largest economy (by nominal GDP)
sometime as early as 2030.
China as the Emerging Super Power
China as the Emerging Super Power...
China as the Emerging Super Power
Shanghai
Infrastructure in China
Infrastructure in China
Infrastructure in China
Maglev LineLightening Speed - 430kms/h
Three Gorges Dam

The Three Gorges Hydropower Plant(TGHP) has total installed capacity amounting to
18200MW, so the TGHP ranks the biggest one in the world.
Economic Growth in China
Top Motor Vehicle Producing Countries
Economic Growth in India
India

The forces of globalisation set the stage for a rapid rise of the Indian
economy. Some of Indias key advantages include:

1.15 billion people 2nd largest labour force: 516.3m people

Approximately 2.5 million college graduates per year

Those with graduate degrees and above have risen from 20.5 million in
1991 to 48.7 million in 2004
The New India
Microsoft Office
Cybertecture,
Mumbai,
Sustainable IT
Building
The New India
The New India
Economic Growth in India
Economic Growth in Africa
Africas Economic Development and Growth
is Building Momentum Rapidly
Electricity Power in Africa
Chronic Shortage
Electricity Power in Africa -
Current Chinese Hydroelectric Projects
Foreign Investment in Africa

As a percentage of all foreign

direct investment (FDI) globally,
Africas share (3 per cent) has
remained the lowest in the world.
But in absolute terms the value of
such flows to Africa is significant,
and has been rising sharply.
According to estimates by the UN
Conference on Trade and
Development (UNCTAD), Africas
inflows of FDI jumped from just
$17-18 bn in 2003-04 to $53bn in
2007, their highest level ever.
Economic Growth in Africa
Oil Industry

Major new discoveries in a number of countries. Significant

increase in investment in exploration activities.

Downstream operations run by African owned and operated

companies eg Oil Libya

Oil & Gas

Fuelling Growth

32
Africas Emerging
Telecom Market

Africas telecom industry in now one of the fastest growing in

the world and attracting big investment from global telecom
companies... Bharthi paid $10 billion recently for Zains
operations in Africa

33
Africa hosts about 30% of the planet's mineral On track to extract value
reserves, including 40% of gold, 60% of cobalt from proven quality
and 90% of the world's PGM reserves - making
it a truly strategic producer of these precious
deposits of minerals and
metals. precious metals, Africa
has it all.
Mining
Africa produces more than 60 metal and
mineral products and is a major
producer of several of the worlds most
important minerals and metals
including Gold, Platinum, Diamonds,
Uranium, Manganese, Chromium,
Nickel, Bauxite and Cobalt

Mining & Minerals

34
Construction Industry

Opportunities to capitalize on the planned large scale real estate

development work in Libya and Africa

Property Development
and Real Estate

35
BRIC
A grouping acronym referring to the countries of Brazil, Russia, India
and China

These countries arent a political alliance but they have the potential
to form a powerful economic bloc

These four countries are among the biggest and fastest growing
emerging markets

Already BRIC accounts for:

o 40 per cent of the worlds population

o 25.9 per cent of its total geographic area

o 40 per cent of global GDP

Dreaming with BRICs: The Path to 2050

BRICs currencies could appreciate by 300%, providing a big tailwind

for investors in BRIC assets

By 2050, BRIC countries are expected to account for over 40% of the
worlds population, and 60% of global GDP

Taken together, the BRICs could be larger than the United States and
the developed economies of Europe in 40 years
Part 3
1 Globalisation Today

The Emerging / Emerged Forces in

2 the Globalised World

3 Financial Crisis or Changing World Order

A Wake-up Call for the Developed World

Opportunities and Strategies for Operating

4 in the Globalised World
A nations wealth is created through many sources including:

economic value add to raw material, eg manufacturing;

exploitation of its natural resources eg mineral, oil and gas; and/or

knowledge-based economies, eg information technology.

To grow this wealth and sustain its economic power base the growth and
development in the above areas must continue.
 If you start to give up the value adding activities, its only a matter of
time before your economic power base will decline.

If you are a resource rich country but do not sufficiently invest or

engage in the value creating activities, you will never sustain your
resource wealth.
The Real Root Cause of the Financial Crisis

The much debated financial crisis that has engulfed much of the world
and caused a heavy blow to economic super powers bringing them to
their knees, is not what it seems to be.

It has much deeper root cause issues than what has been debated.
 Over many decades now, the Western economies have been moving
away from the fundamental economic drivers of wealth creation.

In that process they have enabled other nations like China and India to
take over the economic value creation activities.
From Made in USA to Made in China
- A Road to Economic Disaster

Once upon a time Made in America was a symbol of quality in a broad

range of products in diversified industries

But somehow, in their wisdom the Americans decided that

manufacturing in their own country was not a worthwhile activity - a big
mistake.

This big value creation asset of the country was gradually lost resulting
in trillions of dollars worth of intellectual property given away for free or
lost.

The growth of Chinas manufacturing industry has been quite

spectacular with Made in China now dominating the world and
providing hundreds of millions of jobs for its people, creating new
businesses and attracting massive investment.
The Critical Importance and Value of Information
Technology in this Globalised World

Growth and Development of Information Technology . . .

There is no question that America was the place where it all happened
- the Silicon Valley innovation - R&D commercialisation and generally
the stuff that was changing the world.
The Rise and Rise of the Indian IT Industry

Suddenly a new wave came in the USA and Western world in the form
of offshoring and this high value economic growth driver was given
away to Indians on the back of pursuing low cost destinations and the
rising cost of IT in corporations.

The above trend then was followed by the offshoring of services by

corporations transforming many jobs in administration, clerical work,
accounting and so on, all made possible with the advancement of
Information Technology and communications.
The Growth of the Indian IT Industry
The Growth of the Indian IT Industry
Losers of a Most Valuable Asset
So the Real Root Cause of the Economic Crisis

So while the developing countries became the economic growth

engines, the developed countries sat back enjoying the fruits of their
past accomplishments

Suddenly one day, about three years ago it dawned on me that we

were heading towards an economic crisis in the Western world
Can the Developed Nations Come out of it?
Yes, but with Great Difficulty and Tough Strategies
Develop industry strategies and programs of investment in developing
new age manufacturing e.g. solar systems

Maximise the use of knowledge and innovation to develop products and

services on the ground or at least retain some key value adding
components on the soil.

Become a truly global player

Can the Developed Nations Come out of it? Yes,
with Great Difficulty and Tough Strategies

Further invest in educational institutions and give easier and cheaper

access to higher education to their own students.

Stop the brain drain from their countries as a result of lack of

opportunities for highly qualified value creators and the high taxation
regimes that really penalise this group of people. The American and
Australian talent is easy and cheap to buy on the global market.
The Future in a Globalised World brings Many
Opportunities and Challenges

All players need to think through their strategies to compete, invest in

the future, and make policies that sometimes may go against the free
market or popular economic philosophies

Governments should incentivise high performing growth industries like

mining, rather than penalising them with additional tax burdens

The Australian mining industry is under great threat from increasing

competition from Africa and South America
Part 4
1 Globalisation Today

The Emerging / Emerged Forces in

2 the Globalised World

Financial Crisis or Changing World Order

3 A Wake-up Call for the Developed World

4
Opportunities and Strategies for
Operating in the Globalised World
The Australian Brand is Highly Valuable in the
Global Markets
Excellent reputation, but weak in marketing to the new and emerging
markets
o Done well in China

Australia has tremendous leveragable attributes

o Great country with huge mineral wealth

o Great education system

o Excellent use of technology in Industries / Government e.g. mining,

financial, eGovernment, electricity

o Innovation

o Sporting achievements
The Australian Brand is Highly Valuable in the
Global Markets

High profile Western country without the baggage

o Other than the Iraq war and Afghanistan both seen as failures by the rest
of the world

World class professional business bodies CPA, AICD, Industry

Associations etc
Australias Business Development and Growth
Experience Highly Relevant

Knowledge and experience in high demand

o Great shortage of experienced CPAs the Accounting profession is not
well developed in the emerging markets (perhaps except in India) This is
an area of gap and an opportunity for CPAs
Business and commercial skills / expertise are greatly lacking
Opportunities and Strategies
Create a global brand with strong ties to Australia
Leverage communication technology
Expand relationship networks
Travel to key target locations
Understand cultures and the way of doing business in different parts of
the world:
o Show respect without losing your own identity
o Dont compromise on business fundamentals they are essentially the
same everywhere
Dont try to become a local player, your worth will be devalued
considerably and it will be hard to standout from the crowd.
Developing a Global Strategy
The Catalyst Case Study
Australian firm operating globally for selected clients
Leverage Australia Becoming a Global Player
Developing a Global Strategy
The Catalyst Case Study
John Howard is very well known globally
Developing a Global Strategy
The Catalyst Case Study
David Murray is now a legend in the world due to his global
Chairmanship of the International Forum of Sovereign Wealth Funds
Developing a Global Strategy
The Catalyst Case Study

Tony Abbott recently received some good publicity overseas

Developing a Global Strategy
The Catalyst Case Study

Global Brand Positioning

BHP
Woolworths
Commonwealth Bank
State Grid Corporation of China
GE Health
Al Ghurair Group
Libya Africa Investment Portfolio
Developing a Global Strategy
The Catalyst Case Study

International network of offices

Excellent marketing material brochures / website

Face to face meetings / presence

Relationship management and continuous communication

Developing a Global Strategy
The Catalyst Case Study
Developing a Global Strategy
The Catalyst Case Study
Developing a Global Strategy
The Catalyst Case Study
Developing a Global Strategy
The Catalyst Case Study

Pitfalls / Lessons Learnt

Secure financial payments / recovery

Plan carefully the level of investment that is justified in business

development activities

Contractual jurisdictions are important

Strong local partner(s) / JVs

Developing a Global Strategy
The Catalyst Case Study

Pitfalls / Lessons Learnt

Short term v. longer term if you are not getting the results in the short
term, you wont get anything in the long term

People change positions in emerging markets rapidly, so dont rely on a

few critical relationships and / or handshake deals well documented
contracts / agreements with well documented paper trails are needed

Dont make people feel too threatened due to their lack of knowledge
and experience
 Chairman & Chief Executive, Catalyst Managerial Group
Chief Executive, Venture Catalyst Africa
Chairman, Pacific Power Limited
Chairman, International Association of
Outsourcing Professionals, Australia