Davos corporations swallow sharp increase in fees

25 Jan 2015 | Author: | No comments yet »

5 highlights from World Economic Forum in Davos.

It looks as though Klaus Schwab can rest easy. TEHRAN – Iranian Foreign Minister Mohammad Javad Zarif and his Swiss counterpart Didier Burkhalter met on the sidelines of the World Economic Forum in Davos where they discussed the nuclear talks between Iran and the major powers. Apparently agreeing to leave finger-pointing behind, trade ministers from many of the world’s biggest economies have agreed to push this year to complete an elusive trade round launched in Doha, Qatar, in 2001.

German Chancellor Angela Merkel calmly took the stage midweek and spoke in vague and measured tones about European unity while offstage the entire European financial community waited with bated breath for the European Central Bank to make a decision on monetary stimulus. In October, the WEF sprang a 20 per cent increase in the cost of “strategic partnership”, its highest corporate membership category, on 120 multinationals, causing concern among some chief executives that the elite gathering’s appeal had peaked. In a model of German efficiency, Merkel stepped offstage at precisely the moment the ECB announced it would purchase 60 billion euros in bonds every month — the plan amounts to about $1.3 trillion in total — to ward off inflation and kick-start growth across the 19 nations that share the euro currency. 2. But despite the recent sudden appreciation of the Swiss franc, which has made membership and the ancillary entertainment, travel and accommodation costs even more expensive for non-Swiss companies, none of a dozen strategic partners the Financial Times contacted during last week’s conference said it was planning to pull out.

From July, if they resubscribe, strategic partners will have to pay SFr600,000 ($680,526) annually to send five people to the Davos conference, the 2015 edition of which concluded on Saturday. He hoped the stimulus, which is designed to boost the ailing eurozone economy, will give governments the space and encouragement to embark on a raft of structural reforms such as making job markets more flexible.

Ukrainian President Petro Poroshenko made an emotional speech in which he again accused Moscow of being the aggressor in a conflict that has killed close to 5,000 people. But equal opportunity for women is high on the agenda here, with a dozen public and private panels, meals, and other events devoted to the issue, and celebrity champions such as the actor Emma Watson (of Harry Potter fame). Some in Europe, particularly in Germany, are worried however that the ECB’s bond-buying program may ease the pressure on governments to reform their economies. The chief executive of one European multinational — speaking on background, as they all did — said: “The process [of announcing the fee increase] wasn’t well handled, prices are increasing, and security costs are significantly higher.

Veteran Davos attendee Rick Goings, CEO of Tupperware, says that gender issues were never mentioned during his first year at the forum, a dozen years ago. Sitting in silence on a chair and thinking of nothing is not something you’d think people come to do at Davos, a famous Swiss ski resort and a haven for a business networking.

Finnish Prime Minister Alexander Stubb said Merkel and Poroshenko speak frequently with Russian President Vladimir Putin to push him toward a diplomatic solution. 3. A lot got discussed behind closed doors with world leaders and bigwig CEOs, including Jack Ma from China’s Alibaba and John Chambers of Cisco, that we can’t tell you about. Her current stock has been discounted, although January sales means this is usually the norm, but she said that her next batch would be priced 20 percent lower.

World leaders engaged in backroom talks, too, including French President Francois Hollande and Iraqi leader Haider Al-Abadi, who continued to press international supporters for more arms, ammunition and airstrikes for his country’s fight against the Islamic State. Most executives said that coming to Davos, even at the higher price, was less costly than flying to meet far-flung clients, who instead come to Switzerland for an intense few days of meetings.

This is the kind of clear business message that resonates with the Davos crowd, and one that’s not always apparent amidst the platitudes in the forum’s public sessions. But will anything come of it, or is women’s equality just the latest Davos fad, to be displaced next year by another equally worthy and intractable cause?

Several leaders including Malaysia’s Prime Minister Najib Razak and King Abdullah II of Jordan had to leave early to attend the funeral of the Saudi king. President Obama, who was not here, confirmed that he, too, would travel to Saudi Arabia on Tuesday to pay his respects to the family of King Abdullah. Instead, they schedule back-to-back meetings with customers, suppliers and media at the surrounding hotels during the day, and host and attend corporate dinners and receptions by night. I’ve now got a group of people around me who are also all-in on this—we watch what they’re doing and they see what we’re doing.” Those initial connections were made in the Alps. “That’s why Davos matters,” he says.

Off the record, a few executives — including ones at lower corporate membership levels — said they had not yet decided whether to resubscribe, or were keeping the decision under review. Among concerns voiced privately were that the “fringe” events run by companies in hotels, restaurants and offices around the main congress centre threaten to overwhelm the main event.

With a Swiss franc that’s now around 30 percent stronger against the euro than it used to be, there’s a real concern that these tourists won’t be flocking anywhere near Switzerland, let alone the town of Davos. The forum also told strategic partners in October that “the average Editorial Marketing Value” of the 2014 summit — in other words, the news generated by the many journalists attending Davos — was alone worth $440,000.

In another attempt at accelerating gender parity, a female protester disrobed on Davos’ main strip while shouting, “Women need change.” During a panel Saturday, panelists including Melinda Gates and Rwandan President Paul Kagame urged more action on the topic. Among the many financial services companies attending, executives said they still thought it was the most cost-effective way to meet clients, regulators, and peers. But then — a bit like the legend that when the ravens leave the Tower of London, the UK will fall — if the bankers quit Davos, Mr Schwab’s empire really will be doomed. The retailers are now all anxiously waiting on whether the hotel rooms will stay full during the year and for next season, with the summer traditionally being a quieter period for tourists.

At the check-in desk at the Hotel Europe Davos, in the center of town, there was no talk of cutting prices and with the policy announcement by the Swiss National Bank only last week, it’s still too early to tell whether the holiday goers have been put off. In the local supermarket the mood was very different, selling mainly Swiss food and drink, prices had not gone up or down and were unlikely to anytime soon, according to staff at the Coop. And with a slew of supermarkets in the town – including the German discount supermarket Aldi, it looks like the grocery industry used to fighting tough battles.

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