BELGIUM IN THE NEW GLOBAL ECONOMY Forum beternational

1. BELGIUM IN THE NEW GLOBAL ECONOMY Forum be.international A study commissioned by FEB-VBO and Deloitte Belgium

2. Emerging markets : centers of growth and essential trade partners for exports and imports • Growing networks across countries : technology and flows of goods and services • Scarcity of resources and ageing population • Negative public opinion towards globalization • Where is Belgium in the new global economy? • Part 1: worldwide exports • Part 2: internationalisation of value chains Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

3. Position of Belgium in globalmarkets • Belgium is losing market share % of Belgium in worldtrade in goods Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

4. Position of Belgium in global markets • Activity in fast growing markets Share of BRIC in exports of goods Share of BRIC in exports of services Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

5. Position of Belgium in global markets • High-tech goods in Belgian export Share of high-tech in total exports of goods Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

6. Position of Belgium in global markets • Product specialization Belgium's share in world exports by sector Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

7. Who exports? • Multinational enterprises in Belgium Industry Net Trade Balance Industry share of employment by multinational enterprises Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

8. Who exports? • Multinational enterprises in Belgium Industry Net Trade Balance Industry share of employment by multinational enterprises Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

9. Who exports? • Intermediategoods Exports Imports Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

10. Who exports? • Belgium as “middle-man” in global supply chains Value added of trade Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

11. Who exports? • Large vs. small firms • Newly exporting SMEs Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

12. Survey results Need for internationalization support and support received Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

13. Policy recommendations • To the business community • Make international expansion part of the strategy from the start. • To public authorities • International competitiveness: improve business climate • Focus on companies that are not yet internationally active • Develop expertise centers and international business development programs • Develop extensive (credit) guarantee and risk insurance programs Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

14. Zoom into services • Survey on international sourcing of services • March – May 2012 • 80 companies in Belgium • Merged with Offshoring Research Network dataset • 5073 cases of imported services • 430 from Belgium • 2755 from the United-States • 2420 from other European countries (Netherlands, Germany, UK, Denmark, Spain…) • 74 Belgian companies that do not source services abroad Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

15. What services are sourced abroad? ‘Business processes’ = finance, accounting, human resources, marketing and sales, procurement, legal, and other back office functions ‘IT & Software’ = development and maintenance of IT infrastructure, development of software ‘Technology’ = R&D, product design and engineering services ‘Contact centers’ = inbound and outbound contact centers Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

16. Top 5 strategic drivers Source: ORN global survey (average score on 1-5 scale) Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

17. Barriers (what would make you consider international sourcing?) Source: ORN global survey (average score on 1-5 scale) Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

18. Missed opportunities ? • Outcomes Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

19. At least 3 explanations • Conservative sourcing practices • Lack of sourcing strategy • Weak global service delivery structures Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

20. Conservative practices – Country choices Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

21. Conservative practices - models Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

22. Lack of strategy 50% of Belgian respondents do not have a BU / corporate level sourcing strategy Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

23. Weak global delivery structures 80% of Belgian respondents do not optimize their global service delivery structures Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

24. Risks of international sourcing Top 5 Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

25. Experience gains Source: ORN global survey Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

26. Key messages to managers • Don’t be afraid to look abroad to source services • Important gains • Competitiveness, organizational flexibility, productivity, focus on core business, and access to qualified personnel • To maximize the gains • Develop corporate sourcing strategy and optimize global delivery structure • Develop skills and capabilities in strategic planning and change management, risk assessment and mitigation, cross-cultural and virtual management, and contract and supplier relationship management • Continuum of sourcing options with usual risk / benefit tradeoff • Internal nearshoringfarshore outsourcing Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)

27. Despite positive growth of exports we are losing shares in global markets • High-tech, knowledge intensive product and services • Fast growing markets (BRICs) • Importance of ‘born globals’ and SMEs • Generate new exports, create value and employment • Specific needs for public policies • Int’l sourcing as road to competitiveness • Lower gains compared to USA and European neighbours • Need for strategy, structure, and update in skills and capabilities • Should we learn to lose control and work with other cultures? Belgium in the New Global Economy Prof. Dr. Sleuwaegen (Vlerick) and Prof. Dr. Peeters (Solvay)