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Innovation in Fashion to Transform the Fashion Industry at $20 Billion to $30 Billion Annually

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Innovations emerging in the fashion industry in response to sustainability pressures present unprecedented investment opportunities, which Boston Consulting Group (BCG) and Fashion for Good estimate at $20 billion to $30 billion annually, according to their new report, Financing the Transformation in the Fashion Industry: Unlocking Investment to Scale Innovation, which is being released today.

Sustainability is at the top of the fashion industry’s agenda, as leaders recognize the urgent need to move toward responsible practices under growing consumer and regulatory pressures. The question is how the industry will transform to achieve a sustainable operating model. A step change requires disruptive innovation in the form of new materials, processes, technologies, and business models.

The fashion industry has historically engaged in a cost-driven race to the bottom, giving little attention to radical new technologies. However, a perfect storm of innovation and opportunity is now forming, and investors and companies that can capitalize on sustainability and impact-driven innovation will transform the industry. The study calculates that transitioning toward sustainability yields a $20 billion to $30 billion financing opportunity per year to develop and scale disruptive innovations. The latter case requires innovation to emerge at a faster pace before 2030, which in turn calls for investments to increase by a factor of three or more over their current levels.

With its $2 trillion market size, the fashion industry offers major untapped opportunities for investors and companies. But to bring the necessary solutions to scale, all players—fashion brands, supply chain partners, investors, and others—need to step up to accelerate innovation. The clock is ticking for the industry to advance, and companies and investors that act boldly and rapidly will lead the transformation and ultimately win.

“While the first steps have been taken, fashion needs to embrace and accelerate innovation to future-proof the industry. Doing so opens up major untapped returns for those who can capitalize on the upcoming technological disruption,” said Sebastian Boger, a BCG managing director and partner.

“Disruptive solutions that can offer major leaps forward toward circularity exist today, and the opportunities to invest and scale them within the industry are vast. This seminal study provides powerful insights and a clear call to action for all players to collaboratively drive innovation,” said Katrin Ley, managing director of Fashion for Good.

The report includes the following key findings:

Only a fraction of all available capital has been invested in fashion and textile technology, leaving many innovators stuck in a financing gap that hinders their ability to develop and scale their innovations.
In fashion, nearly half of the $20 billion to $30 billion annual financing opportunity lies at the beginning and the end of the value chain, where raw materials and end-of-use solutions have the highest impact potential.
Innovators struggle to bridge the “missing middle” of finance between early venture capital and late-stage funding.
Orchestration and consortiums are essential to help innovators find the right support and financing, give brands faster access to scalable technologies, and offer investors better opportunities.
In return for helping innovators develop and increase their chances of commercialization, brands benefit through offtake agreements, pilot projects, and direct investment.
Financing will flow into the fashion space if all actors involved build toward conditions that promote attractive returns and measurable impact with manageable risk.

A copy of the report can be downloaded here.

Source: Boston Consulting Group

Survey: Finance Revises Project Analysis, But Cost Of Capital Practices Lag

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Increasing volatility in product lifecycles is causing finance to shorten the time period analyzed for cash flows and demonstrate a preference for non-valuation metrics, according to the 2019 Association for Financial Professionals (AFP) Project Investment Decisions Survey. The survey focuses on the process of project decision-making and how FP&A departments are savvy business partners that deploy corporate capital effectively.

Comparing data from 2019 with that of 2013, the survey revealed that 41% of respondents analyzed less than three years of project investment cash flows, an increase from 11% in 2013. Only 49% reported that they use terminal value (TV) as part of their evaluation, a decrease from 82% in 2013, and 51% of all projects evaluated are 12 months or less in duration.

“The pace of change in the market is so fast—for companies and for products—that FP&A practitioners have changed their evaluation methods to adapt and be more responsive,” said Jim Kaitz, president and CEO of AFP.

Other notable findings:

60% of companies use five or more financial metrics to evaluate projects, and 27% use 10 or more
38% of companies have adopted agile methodologies, but have not put in place all the mechanisms to become truly agile
Operating expense (Opex) projects differ from capital expense (Capex) projects in dollar size, project duration, and the choice of evaluation metrics

One area that did not change was the cost of capital calculation. According to Professor Aswath Damodaran from New York University’s Stern School of Business, finance departments have some catching up to do. Addressing the survey results about frequency of updates, Damodaran observed, “There is a lot of consistency from 2013 to now, in terms of the calculation methodology and how it was applied, but consistency is not always a good thing because the world has shifted. You’ve got distrust of central banks, government and experts. You’ve got interest rates that are lower than the rates you have faced for close to a century. You’ve got macroeconomic shifts, and people are still doing what they used to do. The constructed cost of capital for a company should never be a constant for the whole year.”

Professor Damodaran recommended practitioners stay agile in re-valuing the project cash flows, the cost of capital, and especially the decisions after they are made. “All the numbers in your project analysis are changing,” he said. “We live in a world of change. To think that change doesn’t happen doesn’t make it go away.”

AFP conducted the survey in September 2019. It generated 622 responses from corporate finance professionals across industries. If you are a member of the press and would like a copy of the survey or have any questions, please contact Melissa Rawak at [email protected]

About AFP®
Headquartered outside of Washington, D.C. and located regionally in Singapore, the Association for Financial Professionals (AFP) is the professional society committed to advancing the success of treasury and finance members and their organizations. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in treasury and finance. Each year, AFP hosts the largest networking conference worldwide for more than 7,000 corporate financial professionals.

SOURCE: Association for Financial Professionals (AFP)

Overseas Merchants Are Actively Exploring Digitalization via Chinese Mobile Payments to Boost Sales and Customer Traffic

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Alipay and Nielsen have jointly released a new survey on the latest trends in Chinese outbound tourism and the consumption habits of Chinese travelers for the third consecutive year. This year’s survey also finds that overseas merchants are actively exploring digital operations via Chinese mobile payments to increase sales and customer traffic. This is demonstrated by nearly 8 out of 10 (78%) U.K. merchants surveyed saying they are likely to recommend Alipay to their peers, especially for utilizing digital operations to improve efficiency and turnover.

Surveying 4,837 Chinese travelers and 547 overseas merchants, the report finds that Chinese tourists’ usage of mobile payments while traveling overseas continues to increase, with Singapore, South Korea, Japan, Australia, France, Thailand, New Zealand, Canada, the U.K., and the U.S. ranked as the “top 10 countries where Chinese tourists love to use mobile payments in 2019.”

This trend is taking hold, with regions like the U.K. accelerating the acceptance of Chinese mobile payments. Overseas merchants are also going beyond payment to explore more digitalized solutions including digital marketing, with nearly 70% of U.K. merchants surveyed saying they have already utilized additional services other than payment in Alipay. Nearly 9 out of 10 (88%) U.K. merchants surveyed who have used additional services on Chinese mobile payment platforms recognized that these solutions helped market their stores, and 63% believed they improved the efficiency of store management.

Overseas Merchants Are Actively Exploring Digitalization via Chinese Mobile Payments to Boost Sales and Customer Traffic

The report provides a new look at the digitalization trends of the overseas retail sector at a time when online and offline businesses are increasingly merging, and Chinese tourists are poised to have more influence in this industry.

Key findings include:

There is increased outbound tourism by Chinese residents in lower-tier cities. The gap between residents of second-and-third-tier cities and those from first-tier cities is quickly narrowing in terms of per capita outbound destinations, travel expenditure, and future travel budget. On per capita annual overseas travel expenditure, the difference between residents in third-tier and first-tier cities significantly dropped from USD 1,724 in 2018 to USD 606 in 2019.
The transaction volume of Chinese mobile payments continues to increase. On average, Chinese tourists paid via mobile 3.4 times out of every 10 payments in 2019, up from 3.2 times in 2018.
European merchants have accelerated the adoption of Chinese mobile payment solutions. In the U.K., 61% of local merchants surveyed adopted Chinese mobile payment solutions since 2019, and since then, usage among Chinese tourists has risen.
The wider adoption of Chinese mobile payment solutions increases the willingness of Chinese tourist to spend. According to the survey, 92% of Chinese tourists traveling to Europe said they are more likely to pay with mobile phones if more local merchants supported Chinese mobile payment solutions, and 89% said that they are more likely to shop and spend locally.
Mobile payment is more than payment; it also facilitates the digital operations of overseas merchants. In the U.K., where Chinese mobile payments are increasingly embraced, 88% of merchants surveyed recognized that additional services on Chinese payment platforms facilitated the marketing of their stores, and 63% saw improved efficiency in store management.
More overseas merchants may continue to deepen their use of Chinese mobile payment platforms as they go digital. 66% of merchants surveyed hope to carry out more digital store operations and further their stores’ promotional and marketing activities by leveraging Chinese mobile payment platforms.
Nearly 8 out of 10 (78%) U.K. merchants surveyed said that they are likely to recommend Alipay to their industry peers, especially utilizing digital operations to improve efficiency and turnover.
The improved acceptance of mobile payment solutions has also made it possible for Chinese tourists to bring less cash, with data showing that the amount of foreign currency exchanged by Chinese tourists before leaving for Europe in 2019 fell by 16%.
In 2019, 100% of Chinese tourists surveyed have Alipay on their mobile phones while travelling overseas. On average, Chinese tourists surveyed used Alipay in nearly 4 use cases during their most recent trip overseas.

Please find more findings in the attached infographic. To download the full report, please click here.

Source: Nielsen

Nordic Outlook: Short-term relief but long-term risks

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Sweden: Below-trend growth, rising unemployment and key rate pause

The world economy seems to have emerged from last year’s manufacturing slump. Growth is accelerating cautiously, but lingering political uncertainty and supply-side constraints are diminishing the power of the upturn. Central bank signals of low key interest rates for a lengthy period will provide support, but they also raise questions about long-term risks of debt build-up and spiralling asset prices. Fiscal policymakers can play an increased role, but because of rigid fiscal frameworks and weak government finances, the dose of stimulus will still be cautious. In Sweden, sentiment indicators point to weak or even falling GDP in late 2019 and early 2020, but a recovery in household consumption and a turnaround in residential construction suggest that the economy will keep expanding in 2020. Growth will speed up in 2021 as Sweden joins in the international upswing. Continued strong population growth is one reason why unemployment will keep rising during the coming year. The Riksbank will keep the Swedish key interest rate unchanged, even though inflation will fall further below the central bank’s 2 per cent target.

Global growth is accelerating cautiously, after bottoming out in 2019

The US Federal Reserve’s key interest rate cuts and decreased trade risks due to progress in US-Chinese negotiations have led to a resurgence of optimism in financial markets. Manufacturing activity is showing signs of having bottomed out, with small hints of recovery in sentiment indicators. Domestic demand has remained resilient in most countries, sustained by strong labour markets. This has laid a more stable foundation for future growth. SEB economists predict that global GDP growth will increase from 3.0 per cent in 2019 to 3.1 per cent this year and 3.3 per cent in 2021 – marginally better than our forecast in November’s Nordic Outlook. A recovery in emerging market (EM) economies is the main reason for the acceleration, as large countries like India, Russia, Brazil and Turkey gain momentum while China’s economy continues to decelerate. Improved world trade will also help to sustain exports in Europe and elsewhere during 2021, but for various reasons global growth looks set to be lower than the average during recent decades. Many EM economies have reached a degree of maturity that makes it difficult for them to maintain their earlier rapid trend growth. In advanced economies, the lowest unemployment levels in 40-50 years are shifting the focus of attention to supply-side constraints, as downside risks to demand fade. Yet the potential for a further upturn in US labour force participation and a lower equilibrium unemployment rate in the euro area – including reforms in France, Spain and elsewhere – will make it possible to prolong the economic expansion further. Political uncertainty factors also remain, with question marks about US-Chinese trade after their success in reaching a Phase 1 agreement, as well as about trade between the European Union and both the United States and the United Kingdom. Another source of uncertainty is increased tensions between the US and Iran. In all these cases, however, the parties involved have powerful reasons to avoid an escalation.

Extended period of low interest rates and yields raises new questions

Central banks will continue to support their economies in the prevailing low-inflation environment, but there is not much room for new initiatives. An increased awareness of the drawbacks of negative rates and yields has raised the bar for further stimulus measures in the euro area, for example. Signals from leading central banks that they will accept a degree of inflation overshooting − after a long period of below-target inflation rates − meanwhile imply that the threshold to rate hikes will be high. In this environment, fiscal policymakers are expected to play an increased role, for example through public sector investments in infrastructure, climate-related projects and education. Yet in practice, the dose of fiscal stimulus is expected to be limited, given already high US federal budget deficits and rigid fiscal frameworks in Europe. An extended period of low interest rates and bond yields meanwhile raises questions about the long-term risks of debt build-up and spiralling asset prices starting on the day that there may be changes in underlying conditions affecting inflation, interest rates, bond yields and other variables. Special theme articles in this February Nordic Outlook explore the scope of fiscal policy, the high debt levels in China and the US, share valuations and the need for sustainable energy innovations.

Steeper yield curves, weaker USD, better risk climate and share prices

Bond yields have stabilised a bit above their previous lows. In the prevailing low-inflation environment, central banks have an asymmetric reaction function: key interest rate cuts are closer at hand than rate hikes. This pushes down short-term yields and leads to a steepening of yield curves. Our forecast of one more Federal Reserve rate cut this coming autumn will nevertheless contribute to a temporary downturn in long-term Treasury yields. By the end of 2021, 10-year US Treasury securities will yield just over 2.00 per cent, while long-term German government bond yields will be slightly above zero. An improved risk climate, including positive economic growth signals and successful trade negotiations, will cause USD-positive drivers to fade. Because the US dollar is overvalued in the long term, it will gradually depreciate, with the EUR/USD exchange rate climbing to 1.20 by the end of 2021. Slightly better growth and ultra-low bond yields will help to sustain high share price valuations. Our main scenario is slightly positive stock market returns and good performance for both cyclical industrials and structurally favoured growth companies in digitisation and sustainability.

Decelerating Nordic growth, delayed Baltic impact of global slowdown

The Norwegian economy appears to have peaked in autumn 2019. The mainland economy (excluding oil, gas and shipping) will slow towards its trend growth rate as oil investments fall and demand from this sector shrinks. Mainland GDP growth will decelerate from 2.5 per cent last year to 2.0 per cent in 2020 and 1.8 per cent in 2021. The weak krone will push inflation above target this year, but because of increased international risks, slower domestic economic growth and less risk to financial stability, Norges Bank will leave its key interest rate unchanged at 1.50 per cent. Denmark will show faster economic expansion than the euro area, sustained by strong job growth and decent private consumption, yet it will decelerate gradually from more than 2 per cent last year to 1.5 per cent in 2021. Improved consumption and service exports sustained Finnish economic growth last year; it will level off at around 1.5 per cent, supported by somewhat better global economic conditions.

After a lag, the three Baltic economies are now beginning to be affected by last year’s global slowdown. This includes lower industrial production and weaker demand for transport services. Despite slower growth, labour markets remain tight and pay increases are high. Lithuania’s GDP growth will slow from more than 3.5 per cent last year to around 2.5 per cent in both 2020 and 2021. In Latvia, a temporary slump to 2.0 per cent growth this year will be followed by a new acceleration to 2.5 per cent in 2021. Estonia will see a slowdown from last year’s 3.8 per cent growth to 2.0 per cent in 2020, then a rebound to 2.6 per cent in 2021.

Sweden: Below-trend growth, rising unemployment and key rate pause

Despite certain signs of stabilisation, sentiment indicators point to weak or even falling Swedish GDP in late 2019 and early 2020. This weakness is clearest in manufacturing, while domestically oriented sectors are showing signs of some recovery: most apparent in the retail and construction sectors. Progress in US-Chinese trade negotiations suggests that manufacturing sentiment will rebound during the next few months. This is one reason why we have only adjusted our 2020 GDP forecast marginally lower, to 1.1 per cent (November: 1.2 per cent). Our 2021 forecast of 1.7 per cent GDP growth is unchanged. A bit further ahead, there is upside potential. Supply-side restrictions in the labour market are further away than in comparable countries. The krona is weak, and strong government finances will allow room for increased fiscal stimulus measures. There are many indications that higher central government grants to local governments will be part of the upcoming spring budget, but a strict interpretation of Sweden’s official fiscal framework and the gridlock created by the government’s January Agreement on budget cooperation with two opposition parties will have a restraining effect.

For a long time the Swedish manufacturing sector was resilient to weaker conditions elsewhere, especially in Germany. After plunging last September, the purchasing managers’ index (PMI) is now well below the expansion threshold of 50. This was reflected in clear downturns for industrial production and merchandise exports during the autumn, but recovery tendencies in international manufacturing activity suggest that the Swedish downturn in the sector will be brief. As early as the second quarter of 2020 we believe exports will start growing again.

Machinery investments have declined, while residential investments are close to bottoming out. During 2020 we expect a cautious upturn in housing starts, resulting in slightly rising residential investments during 2021. Due to high demand for health care, social services and schooling, the upturn in public sector investments will continue, though at a somewhat slower pace. This is one reason why the downturn in overall capital spending will be only 2.0 per cent in 2019 and 1.0 per cent this year, followed by a 2 per cent increase in 2021.

Household consumption began a slight falling trend in mid-2018 but rebounded starting in Q2 2019. The future outlook is mixed. Job growth and higher real wages and − to some extent − tax cuts have provided support. The same is true of the record-high savings ratio and increasing asset prices, including home prices. A clearly weaker labour market has shaken household confidence, but what worries consumers is mainly the general economic situation, whereas confidence in their own finances has recovered. We expect a gradual upturn in consumption: by 1.3 per cent during 2020 and 1.7 per cent next year. Public sector consumption is decelerating but will be sustained by strong demand for public services and the forecasted higher central government grants.

The Swedish labour market has cooled noticeably. Job growth is continuing, but not fast enough to match an increasing labour supply due to both rising labour force participation and rapid population growth. Our forecast is that job growth will be less than half a percentage point this year and that unemployment will climb to 7.4 per cent by late 2020 and then stabilise at that level. Swedish wage and salary growth has diverged from the international pattern, remaining at a very even rate of about 2.5 per cent yearly. We expect total pay increases to accelerate only moderately to 2.6 per cent in 2020 and 3 per cent in 2021. The ongoing national wage round is expected to result in a slight higher pay hikes than the previous wage round in 2017.

Inflation is below the Riksbank’s 2 per cent target despite a weak krona. Falling electricity prices as well as lower electrical network charges are expected to push CPIF inflation (the consumer price index minus interest rate changes) down towards 1 per cent during the coming six months, before it rebounds to a bit above 1.5 per cent during 2021. CPIF excluding energy will remain just below 2 per cent during the next few months and then fall towards 1.5 per cent as exchange rate effects fade. After hiking the repo rate to zero per cent in December 2019, a majority of the Riksbank’s Executive Board members are signalling an unchanged key rate until mid-2022. The central bank’s increased acceptance of overshooting above its inflation target suggests that very large upside inflation surprises will be required for a rate hike to occur. The December rate hike, which occurred in spite of rising unemployment and below-target inflation, meanwhile suggests that the threshold for a return to negative key rates is high. We see a higher probability of more stimulus measures than normalisation, but our main scenario is a lengthy pause for the repo rate at zero. The Riskbank’s December rate hike removed another negative factor for the krona. A somewhat more positive international environment suggests that the krona can continue to appreciate, with the EUR/SEK exchange rate falling to 10.00 by the end of 2021.

Key figures: International & Swedish economy (figures in brackets are from the November 2019 issue of Nordic Outlook)

International economy, GDP, year-on-year changes, % 2018 2019 2020 2021
United States 2.9 (2.9) 2.3 (2.2) 1.8 (1.7) 1.9 (1.9)
Euro area 1.9 (1.9) 1.2 (1.0) 1.1 (1.1) 1.2 (1.3)
United Kingdom 1,4 (1,4) 1,3 (1,3) 1,0 (1,4) 1,1 (1,5)
Japan 0.3 (0.8) 1.2 (1.2) 0.9 (0.7) 0.6 (0.5)
OECD 2.3 (2.3) 1.7 (1.6) 1.6 (1.4) 1.7 (1.6)
China 6.6 (6.6) 6.1 (6.1) 5.7 (5.7) 5.9 (5.9)
Nordic countries 1.9 (1.8) 1.5 (1.6) 2.0 (1.9) 1.7 (1.8)
Baltic countries 4.2 (4.2) 3.4 (3.4) 2.2 (2.3) 2.5 (2.4)
The world (purchasing power parities, PPP) 3.6 (3.6) 3.0 (2.9) 3.1 (3.0) 3.3 (3.3)
Nordic and Baltic countries, GDP, year-on-year changes, %
Norway 1.3 (1.3) 1.5 (2.3) 3.6 (3.2) 2.1 (2.1)
Denmark 2.4 (2.4) 2.1 (2.1) 1.8 (1.6) 1.5 (1.5)
Finland 1.7 (1.7) 1.6 (1.2) 1.5 (1.6) 1.5 (1.6)
Estonia 4.8 (4.8) 3.8 (3.2) 2.0 (2.0) 2.6 (2.6)
Latvia 4.6 (4.6) 2.4 (2.4) 2.0 (2.0) 2.5 (2.5)
Lithuania 3.6 (3.6) 3.6 (3.6) 2.5 (2.4) 2.4 (2.5)
Swedish economy, year-on-year changes, %
GDP, actual 2.2 (2.4) 1.1 (1.2) 1.1 (1.2) 1.7 (1.7)
GDP, working day corrected 2.3 (2.5) 1.1 (1.2) 0.9 (1.0) 1.6 (1.6)
Unemployment, % (EU definition) 6.3 (6.3) 6.8 (6.7) 7.3 (7.2) 7.4 (7.4)
CPI (consumer price index) 2.0 (2.0) 1.8 (1.8) 1.5 (1.6) 1.6 (1.6)
CPIF (CPI minus interest rate changes) 2.1 (2.1) 1.7 (1.7) 1.4 (1.5) 1.6 (1.6)
Government net lending (% of GDP) 0.8 (0.8) 0.4 (0.3) 0.2 (0.2) 0.0 (0.0)
Repo rate (December) -0.25 (-0.25) 0.0 (0.0) 0.0 (0.0) 0.0 (0.0)
Exchange rate, EUR/SEK (December) 10.17 (10.17) 10.46 (10.50) 10.10 (10.20) 10.00 (10.00)

Source: SEB is a leading Nordic financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world. SEB takes a long term perspective and supports its customers in good times and bad. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, the bank’s operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB’s business is reflected in its presence in some 20 countries worldwide. On September 30, 2019, the Group’s total assets amounted to SEK 3,046 billion while its assets under management totalled SEK 1,943 billion. The Group has around 15,000 employees. Read more about SEB at https://www.sebgroup.com

CEO Pessimism Over Global Growth Reaches Record High

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As we enter a new decade, CEOs are showing record levels of pessimism in the global economy, with 53% predicting a decline in the rate of economic growth in 2020. This is up from 29% in 2019 and just 5% in 2018 – the highest level of pessimism since we started asking this question in 2012. By contrast, the number of CEOs projecting a rise in the rate of economic growth dropped from 42% in 2019 to only 22% in 2020. These are some of the key findings of PwC’s 23rd survey of almost 1,600 CEOs from 83 countries across the world, launched today at the World Economic Forum Annual Meeting in Davos, Switzerland.

Tracking CEO confidence & GDP growth between 2008 and 2020. Source: PwC
Tracking CEO confidence & GDP growth between 2008 and 2020. Source: PwC

CEO pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East, with 63%, 59% and 57% of CEOs from those regions predicting lower global growth in the year ahead.

“Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising – even if the scale of the change in mood is,” said Bob Moritz, Chairman, of the PwC Network. “These challenges facing the global economy are not new – however the scale of them and the speed at which some of them are escalating is new, the key issue for leaders gathering in Davos is: how are we going to come together to tackle them.”

“On a brighter note, while there is record pessimism amongst business leaders, there are still real opportunities out there. With an agile strategy, a sharp focus on the changing expectations of stakeholders, and the experience many have built up over the last ten years in a challenging environment, business leaders can weather an economic downturn and continue to thrive.”

CEO confidence in own revenue growth declines

CEOs are also not so positive about their own companies’ prospects for the year ahead, with only 27% of CEOs saying they are “very confident” in their own organisation’s growth over the next 12 months – the lowest level we have seen since 2009 and down from 35% last year.

While confidence levels are generally down across the world, there is a wide variation from country to country, with China and India showing the highest levels of confidence among major economies at 45% and 40% respectively, the US at 36%, Canada at 27%, the UK at 26%, Germany at 20%, France 18%, and Japan having the least optimistic CEOs with only 11% of CEOs very confident of growing revenues in 2020.

When asked about their own revenue growth prospects, the change in CEO sentiment has proven to be an excellent predictor of global economic growth. Analysing CEO forecasts since 2008, the correlation between CEO confidence in their 12-month revenue growth and the actual growth achieved by the global economy has been very close (see exhibit4 in notes). If the analysis continues to hold, global growth could slow to 2.4% in 2020 below many estimates including the 3.4% October growth prediction from the IMF.

China looks beyond the US for growth

Overall the US just retains its lead as the top market CEOs look to for growth over the next 12 months at 30%, one percentage point ahead of China at 29%. However, ongoing trade conflicts and political tensions have seriously dented the attractiveness of the US for China CEOs. In 2018, 59% of China CEOs selected the US as one of their top three growth markets, in 2020 this has dropped dramatically to just 11%. The US loss has been Australia’s gain, with 45% of China CEOs now looking to Australia as a top three key growth market compared with only 9% two years ago.

The other countries making the top five for growth are unchanged from last year – Germany (13%), India (9%) and the UK (9%). A strong result for the UK given the uncertainty created by Brexit. Australia is just outside the top five boosted by its increased attractiveness for China CEOs.

Worries about uncertain economic growth on the rise

In 2019 when asked about the top threats to their organisation’s growth prospects, uncertain economic growth ranked outside the top ten concerns for CEOs at number twelve. This year it has leapt to third place, just behind trade conflicts – another risk that has risen up the CEOs agenda – and the perennial over-regulation, which has again topped the table as the number one threat for CEOs.

CEOs are also increasingly concerned about cyber threats and climate change and environmental damage, however despite the increasing number of extreme weather events and the intensity of debate on the issue, the magnitude of other threats continues to overshadow climate change which still does not make it into the CEOs’ top ten threats to growth.

Policing cyberspace

While CEOs around the world express clear concerns about the threat of over-regulation, they are also predicting significant regulatory changes in the technology sector. Globally over two-thirds of CEOs believe that governments will introduce new legislation to regulate the content on both the internet and social media and to break up dominant tech companies. A majority of CEOs (51%) also predict that governments will increasingly compel the private sector to financially compensate individuals for the personal data that they collect.

However, CEOs are in two minds as to whether governments are striking the right balance in designing privacy regulation between increasing consumer trust and maintaining business competitiveness, with 41% saying it does strike the right balance and 43% saying it doesn’t.

The upskilling challenge

While the shortage of key skills remains a top threat to growth for CEOs and they agree that retraining/upskilling is the best way to close the skills gap, they are not making much headway in tackling the problem with only 18% of CEOs saying they have made “significant progress” in establishing an upskilling programme. This sentiment is echoed by workers. In a separate survey by PwC, 77% of 22,000 workers around the world say they would like to learn new skills or retrain but only 33% feel they have been given the opportunity to develop digital skills outside their normal duties.

“Upskilling will be one of the key issues discussed this week at Davos and business leaders, educators, government and civil society must work together to ensure that people around the world stay productively engaged in meaningful and rewarding work. Leaders have a key role to play; although people may have fears about the future, they want to learn and develop and they are looking to leaders to provide a trusted path forward,” added Bob Moritz.

Climate change – challenge or chance?

Although climate change does not appear in the top ten threats to CEOs’ growth prospects, CEOs are expressing a growing appreciation of the upside of taking action to reduce their carbon footprint. Compared to a decade ago, when we last asked this question, CEOs are now twice as likely to “strongly agree” that investing in climate change initiatives will boost reputational advantage (30% in 2020 compared with 16% in 2010) and 25% of CEOs today compared with 13% in 2010 see climate change initiatives leading to new product and service opportunities for their organisation.

While views of climate change driven product and service opportunities have remained relatively stable in the US and the UK, there has been a dramatic shift in views in China over the last ten years. In 2010, only 2% of China CEOs saw climate change leading to opportunities whereas in 2020 this has risen to 47%, by far the largest increase of CEOs in any country included in the survey. However, for these opportunities to turn into long term success stories the principles of climate change need to be embedded right across a businesses’ supply chain and customer experience.

Download the report at ceosurvey.pwc.

PwC conducted 1,581 interviews with CEOs in 83 countries between September and October 2019. Our sample is weighted by national GDP to ensure that CEOs’ views are fairly represented across all major regions. 7% of the interviews were conducted by telephone, 88% online, and 5% by post or face-to-face. All quantitative interviews were conducted on a confidential basis. 46% of companies had revenues of $1 billion or more; 35% of companies had revenues between $100 million and $1 billion; 15% of companies had revenues of up to $100 million; 55% of companies were privately owned.

SOURCE: PwC
www.pwc.com

Averna Releases New Smart Data Management Software

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Averna announced they have developed a new off-the-shelf test package manager software solution with the release of Averna Deploy, the latest in their smart data management suite.

Deploy ensures all manufacturing activities remain accurate and reliable with the most up to date software versions installed on systems throughout smart facilities. With this off-the-shelf tool, all updated software revisions are automatically deployed to every test station and asset throughout production plants. In addition, users have the ability to select the code they need on the test station they want. The intelligent software comes with a mechanism to prevent tests from running should a machine be outdated, guaranteeing accurate and consistent data.

“Averna Deploy couldn’t come at a better time,” said Mateusz Jecz, Director of R&D and Innovation at Averna. “It allows you to take control of both legacy and new test assets. With the growth of Industry 4.0 our tools are increasing the value of our customers’ test data.”

Product Highlights of Averna Deploy Include:

Automatically deploying the latest code to all test stations and assets with one tool, saving users time and money.
Prevents inconsistencies with the assurance that the software is up to date.
Easy to integrate into any test setup.
Adds traceability to deployed code with automatic logging of all activities.
Configurable to the users’ needs.

Other Averna test data management tools include industry established, Proligent Analytics for customized reporting, Averna Launch, a dedicated test executive for streamlining and management of information and ConnexThing, Averna’s toolkit to easily link National Instruments’ TestStand to PTC’s ThingWorx.

About Averna
As a global Test & Quality Solution leader, Averna partners with product designers, developers and OEMs to help them achieve higher product quality, accelerate time to market and protect their brands. Founded in 1999, Averna offers specialized expertise and innovative test, vision inspection, precision assembly and automated solutions that deliver substantial technical, financial and market benefits for clients in the aerospace, automotive, consumer, defense, life sciences, semiconductor, telecom and other industries. Averna has offices around the world, numerous industry certifications such as ITAR registration, and is partnered with National Instruments, PTC, Keysight Technologies and JOT Automation. www.averna.com

GumGum’s Groundbreaking Contextual Analysis Solution for Digital Publishers Makes Official Debut

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GumGum, Inc., a technology and artificial intelligence company specializing in solutions for advertising and media, has announced the official release of Verity, a first-of-its-kind content classification and brand safety solution. The product – which analyzes the full publisher content of web pages, including images, where other contextual offerings available today only scan text and metadata – had previously been available only through a limited early release program.

GumGum’s CEO, Phil Schraeder, shared the news with a select audience of top-tier publishers during an invite-only GumGum event in Las Vegas at last week’s Consumer Electronics Show.

Mr. Schraeder stressed the product’s unique technological advantage over other contextual analysis solutions. Built around GumGum’s proprietary computer vision and natural language processing deep learning systems, Verity offers the most granular, content-level insight to digital publishers wanting to maximize the value and utility of their ad inventories by expanding available contextual categories and identifying brand suitability and safety concerns.

“Looking ahead to a cookieless future, we saw that publishers would need greater insights about their content to facilitate the potent, safe contextual targeting experiences that will drive revenue,” Schraeder explained. “Those insights can’t come from basic text and metadata search, because the web is visual. You need to see the pages the way users do if you really want to understand what they’re about. With Verity, we’re giving you the whole picture, so you can get the greatest value out of your content.”

To deliver that contextual picture, Verity features a robust set of machine learning capabilities for keyword, named entity, object and hate logo detection, as well as contextual taxonomy, major event, scene, threat, and sentiment classification.

Verity’s classification and brand safety/suitability functions meet and exceed industry measurement standards, including IAB Content Taxonomy v1.0 and v2.0, and the 4A’s Advertising Assurance Brand Safety Framework. Sentiment analysis algorithms allow Verity to capture attitudes, opinions and emotions expressed online, adding an additional layer of insight to its brand safety and contextual evaluations.

Mr. Schraeder noted that Verity’s lightweight API integrates seamlessly with all traditional CMSs and DMPs and comes with GumGum’s white-glove customer service and technical support.

“Verity is a consummation of ten plus years developing leading-edge machine learning expertise for content analysis,” concluded Schraeder. “We’re pleased to be sharing that expertise with publishers now––the moment when contextual targeting and brand safety are becoming absolutely vital to the health and survival of the online publishing ecosystem.”

To learn more about Verity, visit: gumgum.com/verity-for-publishers

About GumGum
GumGum is a technology and media company with a focus on computer vision and natural language processing. Our mission is to solve hard problems across media by teaching machines to see and understand the world. Since 2008, the company has applied its patented capabilities in the advertising, publishing and professional sports industries. For more information, please visit gumgum.com

Stanford ICME Announces WiDS Datathon to Predict ICU Mortality: Global Competition Encourages Women to Advance Data Science Skills

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The Women in Data Science (WiDS) initiative today announced that its 2020 datathon will focus on Intensive Care Unit (ICU) data to help predict patient mortality. The WiDS datathon is part of the WiDS global initiative, which reaches more than 100,000 people worldwide each year through a technical conference at Stanford and at 150+ locations around the world, plus online through live streaming and a podcast series. WiDS is part of the Stanford Institute for Computational and Mathematical Engineering (ICME) and aims to inspire and educate data scientists worldwide, regardless of gender, and to support women in the field. ​

“WiDS brings together some of the best and most creative data scientists in the world,” said Karen Matthys, Stanford ICME Executive Director, External Partners, and Co-Director of the WiDS Conference. “This year the datathon participants are seeking patterns and insights in data to find ways to reduce ICU deaths. There are approximately 500,000 ICU deaths annually in the U.S. alone. Our data scientists will race each other and the clock to find insights for addressing ICU mortality.”

The WiDS datathon encourages women to hone their data-science skills through a predictive analytics challenge focused on social impact. The WiDS datathon participants receive access to an ICU mortality dataset on Kaggle, the leading platform for data science competitions, and can compare the accuracy of their models through a public leaderboard. The WiDS datathon greatly increases the percentage of women participating in a Kaggle competition from less than 20 percent for normal competitions to 50 percent for the WiDS competition.

The WiDS datathon brings people together across borders to work in teams, solving global challenges. Participants from previous competitions came from dozens of countries across six continents, including the US, India, Sweden, the UK, Nigeria, Tanzania, and Bolivia. The datathon winners will be announced at the WiDS Conference at Stanford University on March 2, 2020.

“The WiDS datathon always focuses on topics with significant social benefit,” said Matthys. “We believe that data science and machine learning can help improve ICU care for all patients and ultimately reduce ICU deaths.”

Participation is free and open to anyone who qualifies for a Kaggle competition. Tutorials are available for people who are new to data science, and workshops will be hosted by select WiDS ambassadors worldwide. Participants can register on the WiDS datathon page where registrants can also sign up for the WiDS datathon mailing list and follow a link to create a Kaggle account.

The WiDS datathon is a collaboration led by the global WiDS team at Stanford ICME, the West Big Data Innovation Hub, and the WiDS datathon committee, and is made possible by the Global Visionary Sponsors: Facebook, Intuit, Walmart Labs, and Wells Fargo.

About WiDS
The Women in Data Science (WiDS) initiative aims to inspire and educate data scientists worldwide, regardless of gender, and to support women in the field. ​WiDS started as a conference at Stanford in November 2015. Now, WiDS includes a global conference, with approximately 150+ regional events worldwide; a datathon, encouraging participants to hone their skills using a social impact challenge; a podcast, featuring leaders in the field talking about their work, their journeys, and lessons learned; and ongoing education initiatives. ​

About the Institute for Computational & Mathematical Engineering (ICME) at Stanford University
ICME is a home at Stanford for an increasingly critical multidisciplinary field that uses advanced mathematical and computing capabilities to understand and solve big, complex problems. ICME provides a degree-granting program for MS and PhD students who apply their studies to a wide range of domains, supported by more than 50 affiliated faculty from 20+ departments across the university.

Wharton Research Data Services Adds S&P Global Transcripts, Giving Researchers Transcript Data and Trends on 9,400+ Companies

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Wharton Research Data Services (WRDS), the leading data research platform and business intelligence tool for corporate, academic and government institutions worldwide, is pleased to announce the addition of S&P Global Transcripts to its data offerings. A part of the Wharton School of the University of Pennsylvania, WRDS provides global corporations, universities and regulatory agencies the thought leadership, data access and insights needed to enable impactful research.

Through WRDS, S&P Global Transcripts provides unparalleled insights from management calls and discussions including unstructured textual data in machine-readable format for quicker analysis and unique metadata tagging for each message including Company ID, Speaker ID, Key Development ID, among others. Subscribers can combine call transcripts with earnings, M&A, guidance, existing datasets to create uniquely powerful insights.

Key highlights:

Track event information including dates, times, dial-in and replay numbers, and investor relations contact information
Perform historical analysis on firms, individuals, analysts, or brokers based on call transcripts
Rigorously sourced and reliable data
Coverage from 2000 in North America and 2004 globally

“WRDS is excited to add S&P Global Transcripts to the platform,” said Robert Zarazowski, Managing Director of WRDS. “The unique tagging within the transcript data along with the ability to easily link to other data on WRDS will be extremely valuable for our subscribers. I look forward to seeing how our users incorporate this data into their impact-driven work.”

“We are thrilled to partner with WRDS and offer impactful, unrivaled data for our subscribers. This data will expand university curricula – allowing users to acquire forward-looking perspectives by reading transcripts of earnings calls, perform historical analyses to determine sentiment, all with integration with other datasets,” said Joel Nadelman, Global Head of Academic Solutions.

Recent Research Using S&P Global Transcripts

What’s Really in a Deal? Evidence from Textual Analysis
Wenyao Hu (Rensselaer Polytechnic Institute), Thomas Shohfi (Rensselaer Polytechnic Institute), Runzu Wang (University of Oklahoma)

Which Buy-Side Institutions Participate in Public Earnings Conference Calls? Implications for Capital Markets and Sell-Side Coverage
Andrew C. Call (Arizona State University), Nathan Y. Sharp (Texas A&M University), Thomas Shohfi (Rensselaer Polytechnic Institute)

Does Executive Temperament Supersede Disclosure Content? Evidence from Weather Effects during Earnings Conference Calls
Bill Francis (Rensselaer Polytechnic Institute), Wenyao Hu (Rensselaer Polytechnic Institute), Thomas Shohfi (Rensselaer Polytechnic Institute)

Gender and Earnings Conference Calls
Bill Francis (Rensselaer Polytechnic Institute), Thomas Shohfi (Rensselaer Polytechnic Institute), Daqi Xin (Rensselaer Polytechnic Institute)

Along with best paper awards, research support and the latest data available, WRDS is a leader in enabling impactful research. Through a first-of-its-kind collaboration with SSRN, WRDS is elevating the visibility of universities and researchers working across an array of fields. The WRDS Research Paper Series is a searchable repository of all papers submitted to SSRN that cite WRDS in their work, which will increase researcher visibility and build a specialized research base that will advance shared knowledge. In addition, the organizations have launched the WRDS-SSRN Innovation Award to honor emerging business schools in North America, Asia-Pacific, and EMEA. Learn more about how WRDS is driving impact.

ABOUT S&P GLOBAL MARKET INTELLIGENCE
At S&P Global Market Intelligence, we integrate financial and industry data, research and news into tools that help track performance, generate alpha, identify investment ideas, understand competitive and industry dynamics, perform valuation and assess credit risk. Investment professionals, government agencies, corporations and universities globally can gain the intelligence essential to making business and financial decisions with conviction. S&P Global Market Intelligence is a division of S&P Global (NYSE: SPGI). For more information, visit www.spglobal.com/marketintelligence.

About WRDS
Wharton Research Data Services (WRDS) provides the leading business intelligence, data analytics, and research platform to global institutions — enabling comprehensive thought leadership, historical analysis, and insight into the latest innovations in academic research.

WRDS provides researchers with one location to access over 350 terabytes of data across multiple disciplines including Accounting, Banking, Economics, ESG, Finance, Healthcare, Insurance, Marketing, and Statistics. Flexible data delivery options include a powerful web query method that reduces research time, the WRDS Cloud for executing research and strategy development, and the WRDS client server using PCSAS, Matlab, R and more. Our rigorous data review and validation give users the confidence to tailor research and create a wide range of reliable data models. WRDS unique array of Services offer access to a suite of analytics developed by our doctoral-level research team, tutorials, research support, and Classroom by WRDS — a teaching and learning toolkit designed to introduce business concepts in the classroom.

An award-winning data research platform for 50,000+ commercial, academic, and government users in 35+ countries, WRDS is the global gold standard in data management, innovative tools, analytics, and research services — all backed by the credibility and leadership of the Wharton School.

About the Wharton School

Founded in 1881 as the world’s first collegiate business school, the Wharton School of the University of Pennsylvania is shaping the future of business by incubating ideas, driving insights, and creating leaders who change the world. With a faculty of more than 235 renowned professors, Wharton has 5,000 undergraduate, MBA, executive MBA, and doctoral students. Each year 13,000 professionals from around the world advance their careers through Wharton Executive Education’s individual, company-customized, and online programs. More than 99,000 Wharton alumni form a powerful global network of leaders who transform business every day. For more information, visit www.wharton.upenn.edu.

Technology Analysis Digest, Issue #1132359136

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