Inflight Magazine of Brussels Airlines

Business trends

Boyd Farrow rounds up what’s happening in the business world across Europe

Drawing board

Taxing dilemma
In a bid to capitalise on the economic crisis that has strained EU public budgets, the European Commission has proposed a system to boost the fight against tax fraud by allowing national authorities to directly access taxpayer data in other countries.

Introducing the proposed structure, the EC’s tax commissioner, Laszlo Kovacs, said he wanted to provide national tax officers with “all technical and legal means to take action” and protect other states’ tax revenue “as effectively as their own”.

The scheme’s key element is the creation of the catchily named Eurofisc, which would allow rapid exchange of targeted information to which the authorities from all 27 EU member states would have direct access, in order to “stop fraud and catch fraudsters”. The idea is to prevent “carousel” fraud over value-added tax, which occurs when someone gets VAT-free goods in one country and sells them on VAT-included terms in another state, but vanishes before paying the tax.

According to estimates, Europe’s governments lose up to 10% in VAT receipts each year, worth €250bn. But the scheme could face tough opposition as it requires unanimous support and EU governments aren’t crazy about divulging information regarding their tax affairs.

Upgrade your trip

Improvement for rooms
More hoteliers look set to release smartphone applications designed to pick up travellers in transit. Choice Hotels International, the company behind global chains Comfort Inn and Clarion Inn, reports that its free app, the Choice Hotels Locator, has been downloaded more than 225,000 times in 73 countries in its first five months. The app lets users book rooms by employing the Apple iPhone’s GPS technology, which enables all nearby properties’ images, amenities and rates to be displayed. Rooms can be booked directly via the app, which also provides point-to-point directions and street-view images. According to the company, within 45 days of launching the app was generating about 10% of Choice Hotel’s total mobile revenue.

Another hotel giant, Starwood, has just launched its iPhone app, which allows property searches and bookings and helps guests to keep tabs on their loyalty programme. The app makes account and reservation information available offline and lists customer service phone numbers. Starwood says around 2,000 copies of the app are being downloaded each week and similar versions are on the way for BlackBerry and Palm devices.

Radar

Mini drives major change
The world’s largest mobile phone maker, Nokia, has re-entered the PC market with a mini laptop, the Booklet 3G, as it faces renewed pressure from RIM’s BlackBerry and the Apple iPhone. The Finnish giant pulled out of the PC market in 1991 after failing to compete with the likes of Dell, but the declining mobile market has forced it to diversify.

Nokia wants to make the computer “more social, more helpful and more personal”, according to Kai Öistämö, the company’s product chief, by adding its Ovi suite of services to the device. As well as access to Nokia Music Store and allowing syncing with Nokia phones, the Booklet includes Ovi Maps and assisted GPS. Selling additional services is a key plank of Nokia’s longer-term strategy. It hopes to have 300 million services customers by 2012, up from fewer than 60 million today.

Nokia’s move came a week after Dell revealed plans to enter the smartphone market. According to analysts Gartner, mobile phone sales fell 6.1% in the second quarter of 2009 compared with 2008, but smartphone sales were up 27%. Nokia’s market share fell from 39.5% to 36.8%.

Growing gains

Tunnel visionaires
Siemens and Deutsche Bahn, Germany’s national railway operator, have announced they are to enter the US high-speed rail business together. Both companies hope to benefit from President Barack Obama’s plans to invest up to €5.6bn in the US rail sector, which will create up to 10 new high-speed rail routes between major US cities, with trains travelling at top speeds of over 240km/h. For the 2010 budget, President Obama has proposed a separate €5bn investment in high-speed rail services.

As part of the proposed joint effort, it has been reported that Siemens would supply highspeed ICE-3 trains and transport technology, while Deutsche Bahn would be in charge of operating the rail links. The Spanish railway operator RENFE already uses Siemens ICE-3 trains and a number are on order from both China and Russia.

However, the companies have one issue to deal with before this proposed collaboration gets their full blessing. Siemens and Deutsche Bahn are in dispute about who will foot the bill for the replacement of faulty parts on ICE trains, which caused a train to derail last year in Cologne.

Traffic report

Life’s a beach
Now we’re back at our desks after the summer holidays, it’s a good time to ask if our time off has done us any good. And it seems the answer is a resounding “yes”, at least according to analyst firm Mercer and the Organisation for Economic Cooperation & Development (OECD).

A Mercer study shows the average time off in EU countries is now 34.4 days, compared with just 25 in the US. And yet, according to the OECD, Belgium and the Netherlands, which encourage employees to take 30 and 28 days off respectively, are almost 2% more productive than the US, while Luxembourg, with its 32-day holiday allowance, is 27% more efficient. And by focusing on high-value manufacturing, such as luxury goods, even France is a mere 2% less productive than the US, despite them taking 40 days off a year and working, on average, 37 hours a week.

Even in Europe’s largest economy, Germany, productivity is only 7% behind that of the US, despite the fact that Germans work five fewer hours per week than their American counterparts and take five more days’ vacation each year. Clearly, we should waste no time planning our Christmas breaks.

Radar

This year’s model
Change Capital Partners, the UK private equity firm headed by former Marks & Spencer and Carrefour chairman Luc Vandevelde, has acquired the Hamburg-based womenswear retailer Hallhuber from Milan’s Stefanel. This is CCP’s first deal in almost three years and has been seen by some as an indication that the worst of the credit crunch may be over. CCP’s last deal was to purchase Unopiù, an Italian furniture maker, in 2006.

Hallhuber, which has 89 stores across Germany and a handful in Austria, the Netherlands and Switzerland, had proved resilient to the economic downturn, with sales up 13% in the first half of 2009. The brand, which competes with Spanish mid-market champions Mango and Zara, reported a turnover of €58m last year.

CCP says it intends to double the number of German stores and develop other markets. The private equity firm has enjoyed success in Germany, turning around German designer fashion label Jil Sander, which it bought from Prada for about €70m and sold last year to Japan’s Onward, making a three-fold profit.

Why are we here?

Buying in tripe in Florence
Italy has served up a cocktail of confusion with new measures to regulate the sale of alcohol. In Bologna, for example, commercial venues that sell booze – excluding restaurants and bars

– must close by 10pm. In Florence, however, a special law has been introduced to ensure the city’s tripe vendors can continue to sell chianti, even after a national ruling banned street vendors from selling alcohol. And Milan has just passed a law that imposes fines on bars and restaurants serving alcohol to anyone under 16. OK, this last one sounds sensible – but serving alcohol to under-16s has actually been a criminal offence since 1929, although it’s fine for shops to sell alcohol to minors.

Adding to EU-driven efforts to control alcohol consumption are growing concerns about binge drinking among Italian youths. It’s claimed that in the past 20 years, around 10,000 Italians under 25 have died from alcohol-related traffic accidents. Alcoholism rates in the country have tripled since 1996 to around 60,000, with just over 10% under the age of 29.

Not really…

Zooming ahead
The EU has re-established its lead over the US in the use of high-speed internet connections, making Europe “the world leader in broadband”, according to Viviane Reding, European Commissioner for Information Society and Media. This, she says, will help power the European economic recovery and create two million jobs by 2015.

But despite the initial good news, a third of EU citizens have never used the internet, and only 7% have bought goods or services online from a vendor based in a neighbouring country. Reding also acknowledged that many young internet users were reluctant to pay to download music and movies - a factor that could scupper the economic gains from increased network access.

Europe’s broadband lead over the US narrowed to just 1% after 2004, when poorer countries from Eastern Europe joined the bloc, but that lead is now 3% , with 23% of European homes and business using fixed-line broadband. Denmark has 37% of homes and businesses fitted with highspeed internet, the highest percentage in the world, followed by the Netherlands, Sweden, Finland and Luxembourg, according to EC figures. The US ranks 17th globally. Since 2004, the number of European homes connected to the internet has increased to from 41% to 60%. Of those, 80% enjoy high-speed connections, up from 33% over the same period.

Traffic report

Strength in numbers
According to Eurostat, the EU’s statistical office, Germany’s birth rate is the lowest of the 27 EU member states. But with Germanic fears that a shrinking population will lead to a weaker economy, a row is brewing between Brussels and Berlin.

Jens Flosdorff from the German Federal Ministry for Family Affairs claims the Eurostat figure of 675,000 babies born in 2008 is “either wrong or outdated”. According to Eurostat, only

8.2 children were born for every 1,000 inhabitants in Germany in 2008, a decrease of 0.1%. The German Federal Statistical Office, however, insists 682,524 children were born last year, which means the German birth rate is relatively stable.

Whoever is right, it’s kind of a moot point: there was a rise in the German death rate from 10.1 deaths per 1,000 inhabitants to 10.3 in 2008. According to Eurostat, this means the nation’s population declined by 168,000.

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