How German banks support business

In Düsseldorf with Sandra & Leif at Tollé GmbH, I was also introduced to the business investment routes provided by the German banking system and the federal state. The banking system is dramatically different to that in the UK.

Overall, retail banking in the UK has been consolidated into a small group of large banks with familiar names right across the nation. They work in a highly competitive purify driven market and have been shaken by the financial crisis. British firms are all too aware of the significant drop in willingness to invest in them by the banks. Despite efforts by the government, there was less lending to business so far in 2013 than in the previous year.

The situation in Germany couldn't be more different. Apart from private banks, there are over 420 savings banks and 1100+ cooperative banks. What's more, lending to small and medium sized businesses continued throughout the recession. The savings banks or Sparkassen are each associated with towns and cities. They are not profit oriented and do have an ethos of encouraging both saving and assistance to business start-ups.

At a federal state level, there is also a bank associated with the state of North-Rhine Westphalia (NRW). This channels grants and financial support available from NRW, from the national government and from EU funding. The objective is to support innovation and entrepreneurs. The NRW Bank does not make the funds available directly to businesses. Instead, the funding is open to competitive approaches by the 'Hausbanken', i.e. either the private retail banks, the Sparkassen or the cooperative banks.

Once Germany's banking system was regarded as a quaint parochial system of small banks that should really have been consolidated, as elsewhere in the world. However, these parts of the banking system have survived the past dark years and continued to support small businesses in particular.

Other countries are taking notice.

Other articles arising from June visit to Tollé GmbH:
Tollé GmbH off to a running start
Tollé GmbH: Seeking better solutions for ageing populations

The UK EU Relationship: Divorce, separation or reunion? Discussions at the GBF

I’ve been concerned about the singular lack of any real debate on the proposed UK referendum  on Britain’s role in the European Union. Thus, this year’s annual conference of the German British Forum (www.gbf.com) was a real magnet to me. The topic was “The European Single Market and the Future of British Manufacturing”. High level keynote speakers from both Germany and the UK promised some real relevant information.

The event took place in Stationers’ Hall, a stone’s throw from St Pauls. A little gem in itself, there is an article on the Hall with photos available here: http://miltoncontact.blogspot.co.uk/2013/06/stationers-hall-brief-visit-to-london.html

The event covered four main sections:

1. Competitiveness challenges in the European automotive sector – German and UK industry strategies
2. The vital place of the single market in the new Europe – Keynote speech by Rt Hon Lord Owen
3. The European economy and the importance of the single market
4. The future of the Euro area – What kind of Europe do we want? What kind will we get?

Looking back on my notes, the insights gained came in a slightly different order.

1. The future of the Euro area

There was one clear message here: The current economic crisis was on the one hand pushing the Eurozone harder towards centralisation and on the other, revealing the stress fractures between and within nations. Indeed, there was a clear fear that under the pressure to survive, the Eurozone was dropping economic elements of “competitiveness” and “subsidiarity” and replacing them with a political “harmonisation”. At one particular point I was reminded of the poem by Baldrick of Blackadder fame: “Doom, Doom! Doom, Doom, Doom…”.

This was of course contrasted with the economic realities in the UK and Germany.

2. Competitive challenges in the European Automotive sector

Speakers from major automotive companies and their 1st and 2nd tier suppliers actually had a more optimistic note now after the harsh recession in the past decade. Transport is one of the major industries in the European single market. The German automotive sector is on the up again and Britain’s suppliers to the industry are also increasing trade. Three aspects were seen as of major importance to the future of the industry:

• Major investment in Research and Development
• Training of highly qualified staff
• The need for a period of political stability and longer term thinking.

Moving on, we considered the broader aspects of the UK’s benefits of being within Europe

3. The European Economy and the importance of the single market

This session began with great humour by our Eurosceptic UK delegate, John Redwood; Joking that where before he was seen as on the far right and now he is being criticised for being too middle of the road.

However the highlight for me was the presentation by Dr Rebecca Harding of Delta Economics. Her talk was full of more real data than I could record. Here are just some of the key points:

• 34% of world trade originates in Europe ($55 trillion).
• Europe predominately exports to itself.
• New accession countries like Poland and the Czech Republic are undergoing dramatic growth
• The economics of scale affect logistics and supply, thus the EU dictates patterns of trade in pharmaceuticals, cars and oil globally.
• The EU uses its union to strengthen its global supply chains . 

The remainder of the session echoed the need for longer term political and economic stability. The proposed UK referendum on Europe and the current negative political agitation were introducing a level of uncertainty.

So what was the solution that would address both concerns of the UK’s Eurosceptic majority and allow businesses and the UK economy to benefit from the European single market?

4. The vital place of the European market in the New Europe. A Solution?

Lord Owen’s speech suggested a practical and welcome solution (see further down). Taking us back through some of the EU’s history, Lord Owen reminded us that the current “In or Out” black and white perspective of the EU was inaccurate. The different nations within the EU had always had a plethora of sometimes conflicting attitudes and required solutions. This was reflected by the different agreements in place; from the Schengen free trade area, the EU Customs Union, the Eurozone to the European Economic Area.

Wikipedia has this excellent graphic illustrating this point by author Wdcf:

Lord Owen recognises that

• All European countries benefit from the single market.
• A number of EU countries are working towards political and economic union, as the Eurozone.
• The UK and some other countries wish to retain control over their own political and economic affairs.

The proposed solution is:

• To use the current framework of existing agreements to strengthen the membership and voice of countries within a restructured European Economic Area, as the single market.
• Whilst allowing the economic and political union of the Eurozone members to continue as one major bloc within the restructured EEA.

This requires strong but constructive negotiation by the UK prior to the proposed referendum.

At the meeting itself, I was initially sceptical of the proposal.  This was primarily because it may be difficult to get the message across to a Eurosceptic electorate. The current public thinking is simplistic in terms of “in or out of the EU referendum”.

Now, I am gradually coming around to the idea.

Conclusion

For the UK business community, it is essential that we give our political leaders a clear message: The UK economy is far better off within a European single market with a UK voice, than out on a limb on our own.

This meeting of the 18th Annual Conference of The German British Forum was a timely event prior to the run up to the future UK referendum on Europe.

Recommended reading: “Europe Restructured” by David Owen- For a more considered view of Lord Owen’s arguments than could be presented here. http://www.amazon.co.uk/dp/B00994MZS8

Stationers' Hall, A brief visit to a London Gem

A rare sunny day in London as I walked past st Paul's cathedral. Tourists were picnicking in the festival gardens and chatting on the west entrance steps. Just around the corner was Ave Maria lane, but I had to ask a nearby doorman where to find the Hall of the Worshipful Company of Stationers and Newspaper makers. The unassuming gateway led to a secluded courtyard and the cool shadow of the hall.

I was attending the annual meeting of the German-British Forum. Arriving early, and with permission of the manager in charge, I had the great opportunity to wander around and take pictures from the stock room, the main hall and the court room where the event was to take place.

If the slideshow below does not play on your device, visit the image collection here: https://picasaweb.google.com/107595387761034666575/StationersHallLondon


The current hall was rebuilt over 1670-1673 after the Great Fire of London in 1666 and has gone though several internal decorations. Glowing stained glass, rich panelling and the shields carried by Liverymen in the Lord Mayors procession of 1749 are some of the images I captured in that short half hour.


As a publisher and writer, it was a particular pleasure to visit the Stationers' Hall. The Stationers ' Company was formed in 1403, when the scribes and lymners (book illustrators) were granted the right to a single trading company to oversee their affairs. They set up their stalls in St Paul's Churchyard and were known as 'stationers', for being at a fixed site rather than itinerant vendors.


Later, the stationers, obtained a royal charter from Queen Mary in 1557 giving them the exclusive right to print and sell books. The right to control all printing and the need for all new books to be authorized by the company meant that a register of approved books was held at the hall - a system of control and censorship for the government. This right continued through till 1695.


In 1710, the Copyright Act came into effect and this gave those who registered their books with Stationers' Hall protection, along with a requirement to provide a legal deposit in one of the copyright libraries. This tradition of mandatory and then after 1911, voluntary registration with Stationers' Hall finally came to an end in 2000, ending 450 years of tradition.


Now the company continues its other long interest, the administration of charity through the Stationers' Foundation. This assists young people with the cost of education and helps schools with printing equipment etc. They also offer help to those in the industry suffering hardship.


The fact that these premises can be hired is an additional benefit to the lucky visitors who can enjoy the preserved heritage.


A special thank you to Stationers' Hall which let me take these quick snapshots of one of London's gems. Please do visit their pages at http://www.stationers.org/

Think Global for your IP (intellectual Property) Strategy!

This was the tenet running through an excellent presentation at the St John’s Innovation Centre, by Zeev Fisher (FreshIP, Cambridge) and supported by Cliff Hyra (Symbus Law Group, USA).

A key point to reiterate before the rest of the article: If you think you have an idea worth protecting DO NOT TALK ABOUT IT OPENLY TO OTHERS. Ensure that when you do discuss the ideas, you have a non-disclosure agreement in place. Otherwise all your later efforts will be for nought! Get an IP/Patent Expert involved as soon as possible.

IP (Intellectual Property) is the core element of any innovative company and yet strangely undervalued or overlooked in the UK. The US experience is that typically, a granted patent has an average value of $300,000 and can form up to 75% of the company’s market value. Not only can IP become a revenue stream, it can support lending.

The processes of patent applications have moved on in the decade since I was involved in them as part of a research company. Whilst it is still important to determine where in the world your existing and potential markets are, patent offices are beginning to communicate more effectively. For example, there is now the Patent Prosecution Highway (PPH) to speed up patent processes for further countries - if your claims have been found patentable in one country.

Patents are also covered by a variety of conventions, such as the Paris Convention and PCT. It is important to know whether your target markets are inside these or not as this can also impact on applications. This can work to your benefit as follows: If you submit a patent application to the European Patent Office (EPO), you have a years grace to submit in another country outside of the EPO if it is under the Paris convention. If the new countries are also part of the PCT, then you may also have an additional 1.5 years within which to apply.

However, in this supposedly increasingly globalised world, the examination of your patent will still undergo examination and processing specific to each country or at best, regional block. The differences and experiences can be significant. Getting expert help to navigate the potential pitfalls is essential.

Good news for micro-businesses though (Less than 500 employees and $150,000 income). If you are below this threshold, you can submit 4 patents with a 75% reduction in fees in the US!

We also had a good introduction on the potential uses of IP for defensive and offensive purposes. Using IP to protect your assets is the process we are most familiar with. Using IP more proactively to secure a market presence and protect against future encroachment of the competition into your areas included some novel strategies that I had not considered before.

Whilst patents and trademarks are familiar to most businesses, I was interested to learn of another  form of IP used in other countries, “utility models”. Utility models provide protection for functional designs – relevant in manufacturing. Whilst not used in the UK, utility models are used in Germany and very extensively in China as a form of IP.

At the end of the 2h Seminar, Zeev and Cliff had given me new insights into applying IP globally – and a healthy respect for their expertise. If you are working in the field of Medical devices, Electronics, Optics, Software and Cleantech and have IP queries, I recommend getting in touch with Zeev  Fisher in the UK at zeev@freship.co.uk and Clifford D. Hyra in the US at chyra@symbus.com.