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Five of the Latest Recruitment Trends of 2019

Recruitment, like most industries, is one that is consistently changing. There’s now a need for there to be more creative in this area, especially when the market is led by candidates. Recruiters must be on the ball if they’re to land the top talent, and below are some of the trends we’ve seen in 2019.

 

Artificial Intelligence

Artificial intelligence, more commonly known as AI, has had an impact on multiple industries, so it’s no surprise to learn of its influence in recruitment. As a recruiter, it’s vital to have the latest tech featuring in your toolkit, and AI fits that bill. AI can be useful in a multitude of ways in recruitment, with one being to assess how a candidate answers targeted questions. The technology can also be used to complete video and phone interviews too.

 

Digital applicants

Back in the day, applying for a job would require a paper CV, and in many cases it still does. However, as times are changing, going digital is a trend which has made an impact this year. This is a worldwide trend and includes anyone from Liverpool and London to Sydney and Bangkok. With more and more people communicating via video, streaming and social media, it makes sense for recruitment to move in this direction too. So, video CVs and job applications are now more popular than ever, with many interviews conducted over a video interface such as Skype.

Furthermore, this even extends to leading recruitment sites sending email alerts to notify the candidate of new jobs the moment it becomes available. So for example, anyone interested in any specialised jobs in say, Liverpool, can use https://uk.jobrapido.com/Jobs-in-Liverpool and set up such email alert. Thus, adding efficiency and convenience to the entire process.

 

Mobile

People are spending more time on their smartphones than ever because they’re capable of doing a lot more than they were just several years ago. When it comes to job hunting, using a smartphone is fast becoming the method of choice for many, and this is something which recruiters are capitalising on now. Not only are job sites and the like optimised for mobile, with bespoke apps on the market, a lot of recruiters involved mobile technology in the recruitment process too, such as talking on the phone, or via apps.

 

Social media

Social media is one of the most potent weapons a recruiter has in their arsenal, and when used correctly it can provide fantastic results. We mentioned the recruitment process above, and like everything else in the industry, that too is changing. Therefore, social media has fast become a way to hunt for the top talent to fill vacancies. For example, on Facebook there are groups which likeminded people populate. As a recruiter, infiltrating groups or being active on pages which relate to the industry or sector you’re operating in will allow you to not only find people but learn about them too.

 

LinkedIn

LinkedIn is a more profession version of Facebook in many people’s eyes, and it has now become somewhat of a hangout for recruiters. Not only can job vacancies be posted on the platform, but it’s also a fantastic way to headhunt talent too. With LinkedIn being the place where you can find out the professional history of people when combined with social media platforms such as Facebook, Twitter and Instagram, you have the recruitment world very much at your fingertips.

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7 Advantages Of An Ensured Vehicle

Driving is a necessity in the world today. For many, it is essential to get from one place to the next. It is also essential to have a car to get to school, head to work and do errands. All those who have a car should ideally make sure that it is ensured. An insured car from AUS trade insurance has many advantages. It’s vitally important in an accident, making sure that any company and person can meet all deadlines and ultimately drive on the road without worry.

 

Accident Help

If someone gets into an accident while driving, it can have dire consequences. Someone might be hurt in an accident. They might also be at risk of hurting others in the process. Insurance will cover such costs. This means they don’t fret if they get into any kind of road accident. All financial issues will be taken care of in the aftermath of the problem.

 

Assured Transportation

Transportation to get to is essential. Each person needs to make sure they can get to work on time. When someone gets into a car accident, their ability to get to work can be stymied. An insurance company will come to their rescue. They are there in a car the person can use in the meantime. This means they don’t have to take off from work or miss school because it’s too hard to get there.

 

Ease of Doing Business

Someone may own a company. Part of the ownership and management of any company is having transport. They might need to get goods from one place to the next. When a truck, car or another mode of transport is damaged, it can interfere with the owner’s ability to carry out the functions of their job. Insurance can step in and get it all done for them. An insured vehicle is one that will work to make sure any business owner can stay on track and in business.

 

Low Cost

Insurance for any vehicle is surprisingly inexpensive. For a few dollars, the person can insure many vehicles. Business owners often pay a lot of money for the vehicles they put on the road. A business vehicle is a business expense and something that many companies have chosen to invest capital in. It’s ideal to make sure that such an investment is totally protected. When a business owner purchases insurance, they are making sure their bottom line is protected should something happen when it’s on the road.

 

Fast Service

Working with an insurance company also means fast service. If something goes wrong, there will be someone on the scene to help fix it soon. Insurance companies are well aware of the need to rise to a challenge and assist their clients. Someone waiting by the side of the road after an accident can be relaxed knowing there’s someone from the insurance company ready and willing to help them.

 

Meeting Deadlines

Deadlines are important when it comes to operating a business and in a person’s personal life. Many people need to meet deadlines. They need to get to work on time. They also need to get work done for a client in on time. When a vehicle is not functioning, this can make it hard for them to get things done. The insurance company will make sure that all such deadlines can be met and met with ease even if the vehicle breaks down. A series of deadlines need not stand in their way even if there is a problem with their chosen mode of transport.

 

Worry-Free

Above all, having insurance on hand means that the person who owns the vehicle can head out on the road without worry. They don’t have to fear that a single breakdown can lead to ongoing problems that only get worse. They also don’t have to worry that the vehicle they have invested in so carefully will be damaged and they’ll be unable to replace it. The insurance company is constantly there for them at any time of the day or night. They can relax and totally enjoy the perfect ride anywhere they’re going.

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What is a short squeeze and how to trade it

The term short squeeze is one you may have occasionally come across but not been quite sure exactly what it meant. It typically occurs around a stock was showing a large decline, but then all of a sudden bounced right back. 

It is something that is quite often associated with stock shorting. It is a principal proposition, which declares that stock shorting is high risk. Even so, there are many investors out there that make big money from it. 

Legendary investor, Carson Block, made his name by short selling stocks. It was not just on American stocks where he earned big money, but also on stocks from across the globe. He is one of lots more who have made large profits from basically going short on stocks.

He has stated numerous times that there are many fundamental reasons as to why investors should short a certain stock. There are many different ways they can trade the short squeeze. What he said was most important was making sound observations of the market and getting the basics right.

There are often genuinely very good reasons why an investor should short a stock. This is why selling short is what large hedge funds predominantly focus on. However, it does mean that you need to have lots of funds available in order to withstand the highly volatile market. This is the reason why few retail traders sell short.

Nonetheless, within the daily trading community, selling short is reasonably common. When discussing the short squeeze it is important to remember that it does not, in anyway, meaning that the stock is reversing. It may reverse, but it is not guaranteed that it will be followed by a change in the trend.

However, before looking into that, we must first understand what the psychology is behind the shorting of stocks.

 

The negativity around short selling stocks

To understand this fully, it is helpful to know how stocks can be short sold. Short selling / shorting sees a trader lending shares and then selling them. Once the stock has been short sold, the investor closes the position and returns the stock to the broker. However, there are some risks associated with this, with them including margins. 

Another risk, which is widely portrayed, is the losses that can be made when an investor is short. One famous example is the short position that Joe Campbell held. He was responsible for having a short position on a pharmaceuticals company. In the hope of making a profit, Campbell actually ended up making large losses after the stock rallied overnight by 800% whilst his position was short. This came about as a result of a CEO of another pharmaceutical company taking a major stake in the one Campbell was shorting on. This put him into a margin call and he became heavily indebted to his broker.

 

A short squeeze – what is it?

It is defined as a jump up in the price of a stock and can happen for a variety of different reasons. When short sellers begin to feel the pinch their short positions are close, which leads to a buy. This, therefore, becomes a self fulfilling prophecy, which sends the stock price up.

When lots of short sellers make a move on a stock, the price of the stock tends to go lower. However, when it makes the smallest of moves upwards, those selling short must satisfy their margin calls. With the amount of margin calls going up, those investors selling short cover their shorts by closing their positions. This, therefore, adds to the stock’s demand and so sends the price of the stock up.

One real life example saw a stock value fall from highs of $350 to as little as $250. However, as a result of what was previously explained, a reversal took place. Short positions came in at somewhere between $250 and $270 but after the reversal closed at slightly over $280. This was due to short positions working to cover their bets. This resulted in extra demand for the stock, which then led it to jump up.

 

Why do short squeezes happen?

Short sells are generally dominated by medium and short term investors. These kinds of individuals are not wanting to or are not willing to hold onto the stock during any short term declines in its value. Because of this, those investors are highly sensitive to price fluctuations.

When investors short sell they have taken a margin. This is a risky thing and if they go wrong, the investor has to put in more funds. They other option they have is to make their position liquid. This is referred to as covering the shorts. As a result of their sensitivity to price, investors selling short tend to close the position at the smallest hint of an upward movement in the stock. Over time short sellers become squeezed out, which leads to the demand increasing, thus pushing the value of the stock up.

 

Making the short squeeze work for you

The first step here is to work out where the stock you are interested in purchasing is in a decline or a rally. Once identified you can then look for a short position on it. This will let you know if the position is crowded or not. As the number grows of short floats you are able to anticipate the occurrence of a short squeeze. However, lots of other things are also required to take place for this to happen.

The ratio of short floats works out the amount of shares, which are short compared with the total number of shares that are outstanding, e.g. a company which has 100 million shares that are outstanding and a total amount of short shares of 10 million, has a short float ratio of one percent.

Whenever the ratio of short floats is greater than 40 percent, the market is acting bearish. However, it is not uncommon to see the ratio above 50 percent.

 

What to take away

With all this information you should now have a better understanding of what a short squeeze is and how to spot the signs of one so that you can use it to your advantage in order to make some good profits. 

 

Companies Need to Prepare for Activist Investors

By Rachel Carroll

Companies have always viewed delivering profits, healthy dividend payments and a stable, or rising share as the best way to ensure positive investor sentiment. If companies want to deal effectively with activist investors, communication is key.

 

Activist investors are on the rise. Recent research from asset manager Lazard identified activist campaigns at 226 larger companies globally in 2018, a 20% rise on 2017, with activist funds investing a record $65bn of fresh capital. Meanwhile, the Activist Investing Annual Review 2019, produced by Activist Insight in association with international law firm Schulte Roth & Zabel, noted there were as many as 922 companies targeted in 2018 worldwide compared with 856 in 2017. Asia hit a record high in 2018 with 111 companies targeted, just slightly lower than the figure of 148 for Europe. While such statistics may strike fear in the hearts of some boards and chief executives, having a clear investment research strategy focused on a number of key measures, can combat or even prevent activist investors from taking predatory positions and fomenting unrest. Keeping close to shareholders by constantly communicating with them, monitoring shareholder registers, building relationships with funds or individuals that take up significant holdings, developing strong links to investment analysts and having a strong social media presence are all very effective measures that companies can take to guard against activist investors.

 

Activist investors have a long history

Few companies welcome the arrival of an activist investor. It’s not hard to see why. The emergence of activist investors in the 1980s, saw them aggressively buying up large amounts of shares in target companies often in an attempt to trigger demergers, management changes and share buybacks. Harassed targets occasionally accused raiders of “greenmail” – buying shares in a company and threatening a takeover, forcing owners to buy then back at a higher price – or demanding money as a condition for lifting their siege. And while less common today activist investors still engage in aggressive public attacks, litigation or even proxy battles, with the ultimate goal of many to secure a seat on the board of the target company to influence its future direction and potential growth.

 

Even the largest companies are not safe

This year has already seen a sharp rise in activity amongst activist investors and with Sterling continuing to weaken against a basket of currencies – in particular the US dollar – there have been warnings that many of the UK’s largest companies are at risk of being swamped by activist investors as they fail to satisfy shareholders, with companies including Whitbread, Centrica and Next among 54 businesses identified as being vulnerable. So far this year US-based investor Edward Bramson has already applied pressure on Barclays bank through a stake held by his Sherborne vehicle, in an attempt to muscle his way on to the bank’s board. Elliott Management, Paul Singer’s hedge fund, is making noise about governance and unsatisfactory profit margins at Pernod Ricard, the French spirits maker. Hedge fund ValueAct’s two-year campaign at Olympus, its first Asian investment, resulted in a deal to appoint three non-Japanese board directors and it is reported to be seeking a new Japanese target.

Most recently Crystal Amber, the activist investment fund has threatened printing giant, De La Rue with plans for an emergency general meeting of shareholders to force chairman, Phillip Rogerson to resign. Chief executive, Martin Sutherland has already done so following a torrid year for the company which has seen its share price fall 45% in the wake of several significant setbacks, not least of which was the loss of the government contract to continue to make British passports, while there have also been a number of profit warnings. Crystal Amber, perhaps understandably, is concerned this leaves De La Rue vulnerable to a takeover bid that might harm its investment. In a development that as has surprised the City meanwhile, Elliott Advisers, the UK subsidiary of an aggressive $34bn US hedge fund, has recently taken a 5% stake in the over-50s insurer Saga, a relative minnow given Elliott Advisers normally takes positions in FTSE 100 companies. Such is the level of activity one might be forgiven for thinking no company is safe.

 

Fundamental part of a company’s IR strategy should be to keep very close to shareholders

But activist investors can only thrive in an environment where a company has neglected its shareholder base. While it may sound obvious, maintaining a close relationship with investors is a fundamental part of any approach if a company wishes to avoid activists from hijacking shareholder meetings or calling for new a strategy or, worse still, a change of leadership.

Regular trading updates are vital. They should also be honest: if there are problems within the company identifying those early and communicating how the company intends to deal with them is vital.

Among the actions a company’s board of directors can take to mitigate the threat posed by activist investors is to regularly communicate with their investors as well as the wider market. Regular trading updates are vital. They should also be honest: if there are problems within the company identifying those early and communicating how the company intends to deal with them is vital. It shows leadership, a willingness to be self-critical and a commitment to make improvements. It’s also shows transparency. One of the great mistakes that companies make is that they do not report for months on end. This can lead shareholders to distrust the management team or feel taken for granted, neither of which is helpful.

Treating all shareholders as equal, regardless of how many shares they hold, is also wise. Those with larger holdings –such as pension funds that can claim to represent a large number of smaller investors – may argue that they entitled to a greater amount of information and/or influence but in reality providing information to larger shareholders, while keeping smaller investors in the dark, will only lead to resentment which an activist investor will be able to exploit.

 

Boards need to monitor shareholder register changes and foster new substantial shareholders

Something that many large corporations ignore is their own shareholder register. This is dangerous for two reasons: firstly, it enables activist investors to take a position in the company that gives them potential influence over the direction of the company and secondly boards miss opportunities to build strong relationships with new substantial shareholders. As a case in point, for the past six months Just Eat has found itself under attack from US hedge fund Cat Rock, which has criticised the takeaway app’s ‘unambitious targets and flawed incentive schemes’. The US hedge fund, has built up a 2% stake in Just Eat over the past two years and towards the end of last year began to criticise the company for becoming “the worst-performing public equity in online food delivery”.

In December, Cat Rock urged Just Eat to shed assets, change pay incentives for senior executives and announce three-year financial targets by the end of January. By February Just Eat chief executive, Peter Plumb – after just 16 months in the role – was forced to resign and the company came under renewed pressure from Cat Rock, which this time began calling for the company to merge with Dutch rival Takeaway.com, in which the hedge fund held a 4.9% stake. While Just Eat said it took “communications with all our shareholders extremely seriously” Cat Rock was able, with just a 2%

stake, to apply significant pressure on the company. Soon after Just Eat reported revenue rose 43% to close to £800m last year, reversing losses from a year earlier. It also reported profits of £80m with full-year 2019 revenue expected to be between £1bn-£1.1bn. Yet none of this persuaded Cat Rock to give up its attack on the company.

There followed market speculation that Amazon could take a stake in Just Eat after the Competition and Markets Authority issued an initial enforcement order regarding Amazon’s minority stake investment in Deliveroo, believing there was evidence that the two firms were planning to merge. By July having still not found a new chief executive Just East bowed to the pressure from Cat Rock and announced its merger with Takeaway.com.

Could Just Eat’s predicament have been avoided? We cannot know for certain but if management had kept a closer eye on who was buying the company’s shares and reached out to new and potentially significant shareholders, this would definitely have helped.

 

Investment research can help maintain a strong investor and shareholder profile

Investment research is also a key tool in companies’ armoury to help maintain a healthy relationship with investors. All senior company executives want to communicate a positive narrative around their company’s growth trajectory and future plans. Independent research can support and amplify this. Having the backing of analysts who agree with the underlying business model and believe that the strategy the company is pursing will yield the desired results can help prevent or mitigate activist attacks.

Equally, independent investment research may highlight some areas where improvement is required or where a particular strategy may have unintended consequences and so may help the company to address problems earlier. It may also highlight to the company areas of concern its shareholders may already have, as well as maintain a healthy profile with its retail investors. A common mistake most companies make is believing that performance alone is sufficient to maintaining a strong relationship with investors. While paying a healthy dividend to shareholders and returning value through a rising share price will be appreciated by investors, analyst research that supports the company’s vision or highlights areas for improvement that the board actively engages with will ensure that more difficult periods are dealt with most easily than might otherwise be the case.

 

Boards and senior management need to communicate as effectively as possible with their shareholders. Today this means engaging with using social media. It is not enough to use traditional media or trading updates.

Digital defence – use social media to reach out to investors

Boards and senior management need to communicate as effectively as possible with their shareholders. Today this means engaging with using social media. It is not enough to use traditional media or trading updates. If an activist investor is calling for change, it is vital that senior executives know the view of shareholders. A social media campaign that targets a meaningful sample size of institutional and retail investors can help companies gain that knowledge in advance. This goes deeper than simply looking for social media posts where investors actively complaint about the company. It extends to the use of emoji’s, and Likes. If there is a Facebook page through which shareholders speak to one another and share their concerns it is important that companies are aware of what those concerns might be. Obtaining insights into investor sentiment on key issues can be invaluable. A recent survey by a global communications consultancy found that 90% of buy/sell-side investors used social media to research investments.

For a company already under attack from activist investors, a coordinated approach across multiple online platforms is likely to be necessary. LinkedIn is probably the best way to reach institutional shareholders. Placing ads on Google search to direct investors to a proxy microsite, which can give

answers to questions that shareholders are asking. Targeted ads on Facebook can place key messages into the newsfeeds of retail shareholders and employees. Display ads can appear alongside top-tier news coverage. Having an effective social media strategy does not guarantee victory in a battle with activist investors – but not having one would likely be a key factor in losing it.

Companies have always viewed delivering profits, healthy dividend payments and a stable, or rising share as the best way to ensure investor positive investor sentiment. If companies want to deal effectively with activist investors, communication is key. Fundamentally, companies need to maintain the same attitude they would have once had with their investors, reassuring them that their investment is safe, the company is honest and can be trusted and that is takes the concerns of its investors seriously. To do this they must engage positively with their shareholder base, both through investors relations communications but also through media and social media channels but they must also be equally active in putting an effective investment research strategy in place.

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Rachel Carroll is President, Managing Partner Edison Inc

 

 

References:
1. https://www.irmagazine.com/activism/activist-investors-targeted-922-companies-2018-report-highlights
2. https://www.ft.com/content/ca1f3af2-289e-11e9-a5ab-ff8ef2b976c7
3. https://www.ft.com/content/ab9c770e-0155-11e9-9d01-cd4d49afbbe3
4. https://www.standard.co.uk/business/market-report-just-eat-fattens-up-on-rumours-amazon-may-miss-deliveroo-a4186626.html
5. https://www.forbes.com/sites/goncalodevasconcelos/2018/01/11/3-easy-steps-to-keep-your-investors-happy/#75b3667f68a9
6. https://www.bbc.co.uk/news/business-47466821

How to get installment loans online with instant approval

What are instant loans?

This is a type of short term loan where an individual or business organization borrows a small amount of money from a bank or financial institute with a relatively high rate of interest and receives the cash in a matter of seconds. A large number of service providers will be able to help you to get installment loans online with instant approval. Therefore, you can refrain from the hassle of getting money to your hands. If you want a service provider that offers the fastest approval, you can learn more here about it.

The manner in which Instant Loans are provided

In much developed instances, one has to register online or simply research and gather information and find a trusted direct lending source online and fill out an application or form and meet the lenders requirements for the borrowing of instant loans. You will be able to receive the money in a short time frame leaving no space for any messy and time consuming activity.

Basic requirements for borrowing instant loans

It is true; requirements to borrow instant loans may vary from lending institution to institution but in the country there are set requirements that are applicable to all sources.

The first would be to meet the age requirement. This factor will defer according to the state but in most cases it is likely to be 18 years and above. Next, the individual or borrower must have an active or open bank account. He or she should have proof of income as well as a valid phone number.

Advantages of Instant Loans

It is acceptable and a common understanding that unpredictable things can happen. Supposedly, one is out shopping and once at the cashier comes upon the realization that the debit card does not have enough to cover the expense and in such a situation, what can one do? Simply opt for an Instant loan. The borrowers can receive their instant loan in a maximum time frame of ten minutes. This can save anyone from a lot of time wastage and so on.

In most instances, these instant loans are managed through online means which means the individual or organization in need of the money will not have to go around and waste time in ques. He or she can easily fill out an online application or register online depending on the lender’s requirements and have the money in your bank account via means of an online transfer. This would simply mean that there will definitely be no time wastage or even frustrating paper work one usually has to face when obtaining various other loans.

An added advantage to an instant loan is, depending on the lending source the required amount to borrow may depend. But one can borrow from a mere minimum value from $500 up to around $5,000. This means the individual does not have to take a higher sum of money which he or she will not be able to pay off and borrow just the required amount of money.

For what purpose can you use the installment loans?

You are provided with the chance to go ahead and use the installment loans for a variety of purposes. Here’s a list of some of the most prominent purposes out of them. This can help you to get a better idea on when you can obtain the installment loan.

  • Home repairs

If you need to do some repairs to your home and improve the good looks, you can go ahead with an installment loan. This will help you to refrain from the usage of high interest credit cards. On the other hand, you can also make sure that you are not using your savings to complete home repairs. This is one of the most common reasons why people in today’s world tend to obtain installment loans.

  • Medical bills

When you get sick unexpectedly and when you are provided with some urgent medical bills to pay, you will tend to go for an installment loan with instant approval. Medical debt can be frustrating. However, you can easily settle that by obtaining an installment loan. This can also be considered as the most common method followed by people to wipe out their medical bills.

  • Down payment for your vehicle

If you are trying to buy a new car, you will need to get some money to make the down payment. Even in such a situation, you can obtain an installment loan. It is true that many different options are available for you to cover up the down payment of the car. However, installment loans are less expensive when compared to other options.

  • Debt consolidation

People who have unsecured debts can get the assistance of installment loans to settle them with ease. For example, if you have outstanding debt on multiple credit cards, you can easily settle all of them with a single installment loan. Then you will be able to manage the single regular payment. This is more convenient to manage.

Likewise, you can use the installment loans to cover up all sorts of other expenses that you will come across. No matter what the reason is, you can use it as a survivor and overcome frustrating debts that you have to face with ease. All you have to do is to go through the above-mentioned process and obtain your loan. In the meantime, you need to locate a reliable lender as well.

Here is a list of offline instant loan companies that might help you

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Who regulates the regulator?

By Philip Sinel

How did we get to a position where, for more than a decade, banks got away with aggressively selling ‘ineffective and inefficient’ products? The answer lies in utterly inefficient regulation that, ultimately, throws up huge questions about the way in which the UK’s financial system is governed.

 

It’s hard to argue against the notion that the mis-selling of Payment Protection Insurance (PPI) will go down as one of the most notorious banking scandals in recent years, surprising no-one who owns a mobile phone and has, therefore, been hounded by claims companies. What is surprising, however, is not that the scandal happened in the first place, but that it took so long for the regulator to stamp out PPI once and for all.

Even as the total paid out by UK banks reaches £36bn, and the deadline for submitting claims passes, we still dwell under the ever-growing shadow of the banking sector’s bête noire. The sector has braced itself for additional claims, with Lloyds setting aside a whopping £1.8bn extra funds for such an eventuality, a move mirrored by RBS, CYBG and the Co-Op.

The obvious question, then, is how did we get to a position where, for more than a decade, banks got away with aggressively selling ‘ineffective and inefficient’ products? The answer lies in utterly inefficient regulation that, ultimately, throws up huge questions about the way in which the UK’s financial system is governed. To put it another way: who regulates the regulator?

On the face of it, PPI was innocent enough. Sold as insurance to high street customers taking out loans, the idea behind PPI was that if the customers lost their jobs then their insurers would pick up the balance of the outstanding loan. Ultimately, however, PPI was an inherently flawed product, and one that should have set alarm bells ringing for all but the most negligent of regulators.

 

PPI was not benchmarked in any way, which meant that consumers were left totally devoid of any comparable and were required to buy the PPI given out by the bank selling the loan.

For a start, PPI was chiefly sold to self-employed customers who, by definition, could never make a claim as they could not lose their “job”. Secondly, PPI operated as a kind of financial closed shop, or an aggressive cross-sell where without PPI (which is where the banks made the big bucks) no loan could be taken out. What is more, PPI was not benchmarked in any way, which meant that consumers were left totally devoid of any comparable and were required to buy the PPI given out by the bank selling the loan. At the same time, PPI was often underwritten by the banks themselves, so they were getting both sides of the transaction – it was the financial gift that kept on giving, though not to the consumer.

Worse still, anybody trying to claim had to jump through all sorts of hoops. It was questionable whether anybody ever got any money back, with obfuscation delays and red tape thrown up at every opportunity – and that was just for those who were entitled to claim.

None of this should have come as a surprise to a diligent regulator, not least the issues consumers faced with getting money back: the Guardian reported in 2004 that just 15% of claimants actually received any money, almost a full year before the late Financial Service Authority started taking any action, which even then was too little, too late. By 2005, the Daily Telegraph and Citizens Advice had also covered the news, and the FSA finally issued its first report on PPI, noting poor selling practices and lack of compliance controls.

Rather than act swiftly or decisively, the regulator dithered. Despite being alert to problems from at least 2004, it didn’t levy the first fines until 2007, and even then, the focus was on smaller operations.

And that should have been it for PPI: the regulator now aware of a growing chorus of criticism of a product that people had been “duped” into buying, in the words of Peter Vickery-Smith, head of consumer advice service Which? Incredibly, it was not.

Rather than act swiftly or decisively, the regulator dithered. Despite being alert to problems from at least 2004, it didn’t levy the first fines until 2007, and even then, the focus was on smaller operations. For example, Alliance & Leicester was fined £7m in 2008 against a PPI income of £135m. In fact, it wasn’t until 2009 that single premium PPI – one of the most egregious mutations of the product – was banned. The real scandal, then, lies as much in regulatory inertia as it does with the banks flogging a knowingly-flawed product.

To make matters worse, it didn’t need to be this way. How difficult would it have been for the regulator to ban the sale of the product that could never be drawn upon – insurance for the self-employed? To make sure the products were affordable and fit for purpose? To insist on full disclosure to customers, not only of the true costs, but also to disclose that a person did not have to have PPI in order to obtain a loan?

Above all, why did it not prohibit banks from selling their own products where they are self-insuring?

Was the end of PPI caused by regulator? No, it was not; it was caused by those love-them-or-hate-them ambulance chasing claims companies. In other words, the private sector and market forces who finally provided redress – less their cut, of course. The numbers are staggering. Lloyds has been receiving 70,000 PPI claims per week since they started their redress scheme and even this is a drop in the ocean – 64m policies were sold between 1990 and 2010, “but in many cases exclusions meant that customers could never claim.”

That a loose cartel of claims companies ultimately ended one of the most significant banking scandals in recent years, in place of a manifestly deficient regulator, should be a serious cause for concern. How will the FCA react when the next mis-selling scandal inevitably rears its head? I sense, we will almost certainly see history repeat itself.

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About the Author

Philip Sinel is a Jersey Advocate and litigation lawyer. He is the Senior Partner at Sinels. His areas of practice include Commercial Litigation, Professional negligence, Fraud, Trust Law, Banking and Financial Services and Private clients.

Can Political Leaders and Corporate Leaders Lead the Same Way?

By Mostafa Sayyadi

Military leaders often provide what is called “Top Cover” flying above their followers to ensure their mission is a success. Submarines travel with pilot ships to guide them. This is what corporate leaders need to do. The purpose of this article is to answer the question “Can political leaders and corporate leaders lead the same way?”

 

How Political Leaders Can Lead Governmental Organisations?

There are various issues and considerations existing in the leadership literature as the core of the criticism in the literature is that organisations of all sorts (corporations, government agencies, and non-profit organisations) tend to be over-managed (and, in some cases, over-administrated) and under-led.1 Reading all the books on leadership today will cover the gamut of Shakespeare to Geronimo. Not to say that these authors, leaders, and thinkers do not have anything good to say about leadership. It is just that the plethora of leadership literature has sent mixed signals to political and corporate leaders.

When thinking of leadership and politics, a leader has to be a politician but a politician does not always have to be a leader. In American politics in 2016, a crucial year between the democratic and republican parties, this presidential election has shown that there is a direct connection between politics and CEOs, who at least think they are experienced enough to hold the ultimate leadership position. Political leaders are not any different than organisational businessmen. More and more business men and women are becoming political candidates and people are responding positively. The reason being – the two do go together. At the heart of leadership are a large amount of followers. Without the support of followers, leaders will fail. The same thing goes with the political candidate that has to win the hearts and minds of the followers to get elected.

 

There are many more followers than there are leaders and this is more so in the political realm. The question is: Can political leaders and corporate leaders lead the same way? The answer is a resounding “Yes.” For example, Eisenhower, one of the former presidents of the United States in World War II, effectively led both American government and the Allied Forces in Europe in defeating Adolf Hitler. Hitler has been posited as a charismatic leader as he converted many brilliant people to follow him but the difference with his leadership style is that he represents the “Black Hat” of leadership. A leadership status that is not only a failing platform but one that represents destruction as opposed to innovation and expansion. Barring the Hitler-type charismatic leaders, there is hope for leadership at the political level.

Eisenhower’s leadership provides lessons for CEOs in today’s organisational challenges. Eisenhower argued that leaders must care for their people as individuals, always remain optimistic, and place themselves with and for the people, and, most importantly, provide the WHY behind what you ask them to do.

Politics and corporate leadership may merge today. After WWII, leadership theoretical models at Ohio State and the University of Michigan studies stemmed from research based on military leaders and their followers. This was mostly funded by the GI Bill that helped many soldiers pursue academic degrees. Leadership has a critical role in politics because we elect leaders and not politicians.

Therefore, leaders fundamentally affect the way a government performs its functions. Take a look at the nation’s largest health insurer, United Health Care, who out their due-diligence to shareholders, had to cut out Obama-care exchanges, in April 2016, because they were expected to lose one-billion in revenue.

 

How Corporate Leaders Can Lead Business Organisations

Investors recognise the importance of leadership. A good leader can turn a weak business plan into a success, but a poor leader can ruin even the best plan. One example of this comes from CEO Rich Teerlink, who dramatically changed Harley-Davidson in the 1980s, and fundamentally built a different organisation that still prospers today. The success of leadership at the Harley-Davidson Corporation has stood the test of time. For example, Harley-Davidson’s leadership created a more effective organisation built upon three primary principles, focusing on people, challenging norms, and continuing to fundamentally change.2 At Harley, every employee can participate in leadership decision-making.

Another example of business leaders in a highly competitive environment is Steve Jobs, former leader of the Apple, who built a highly effective organisation through taking a change-oriented leadership approach, which highly manifested itself in talent, product, organisation, and marketing.3 As a result, leadership, being the core of management, is crucial to company’s success–both from a performance and management level.

The evidence from these examples suggests that leadership is highly demanding at the corporate level. For organisations to achieve a sustained change and eventually a higher degree of efficiency and effectiveness, selecting a great corporate leader is the key to success. In the absence of leadership, organisations lose their required direction to achieve a high degree of hypercompetitiveness, and cannot implement successful change in order to adapt with today’s global business environment.

As corporate leaders attempt to manage people they find that intellectual capital is the in the forefront of success – Bill Gates once mentioned that if he lost his top 50 people that he would not have an organisation anymore. Corporate leaders develop organisational communications aimed at providing valuable resources for all organisational members. They enhance knowledge sharing among intellectual capital and stipulate knowledge to be shared around the organisation. Sharing the best practices and experiences could positively impact some aspects of non-financial performance such as innovation, providing learning and growth opportunities for employees. Empowered employees can enable organisations to actively respond to environmental changes, which can in turn enhance performance in terms of return on assets and return on sales.

The outcome is success which narrows the gap between success and failure and this can be achieved by the commitment of organisational members and facilitated by corporate leader. When corporate leaders show concern for the employee’s individual needs, individuals begin to show more commitment and they become more inspired to put extra effort into their work. This extra effort improves customer satisfaction, and impacts shareholder value and improves operational risk management.

Corporate strategy can be also employed by corporate leaders to enhance goal achievement. Corporate strategy includes four dimensions: analysis, pro-activeness, defensiveness, and futurity.4 The first aspect, “analysis,” focuses on identifying the best solutions for the organisational problem. Corporate leaders apply this strategy to create more innovative solutions for organisational problems. The second aspect “futurity” emphasizes the effectiveness of long-term decisions. Corporate leaders employ this kind of strategy to develop a vision of adopting more comprehensive information about the future. The third aspect, “defensiveness” can also be applied by corporate leaders by taking into account the objectives of strategic implication that seeks to decrease organisational costs and redundancies. While corporate leaders focus on implementing changes, a defensive strategy can be used to modify the current processes to enhance organisational efficiencies. The fourth aspect, “futurity” incorporates a pro-active strategy that identifies the opportunities that are available but not always addressed in the business, the global environment, and the political regulation changes. This kind of strategy can be also enhanced by corporate leaders as they adopt a strategic posture that inspires employees to identify better opportunities in both the internal and external environment.

Therefore, corporate leadership  is linked with organisational effectiveness, particularly in terms of achieving goals, decreasing costs, improving innovation, and increasing the rate of responses to environmental changes.

 

Success in politics and business can be more effective when leadership is applied to change attitudes and assumptions. Political and corporate leaders can make a fundamental change in the processes by which organisations serve their clients.

In Conclusion

This article highlights the vital importance of leadership in both political and business areas. Success in politics and business can be more effective when leadership is applied to change attitudes and assumptions. Political and corporate leaders can, in fact, make a fundamental change in the processes by which governmental and business organisations serve their clients.

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About the Author

Mostafa Sayyadi, CAHRI, AFAIM, CPMgr, works with senior business leaders to effectively develop innovation in companies, and helps companies – from start-ups to the Fortune 100 – succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to HR.com and Consulting Magazine and his work has been featured in these top-flight  business publications.

References
1. Mills, DQ, 2005, Leadership: How to Lead, How to Live, MindEdge Press, Waltham, MA.
2. Teerlink, R & Ozley, L 2000, More Than a Motorcycle: The Leadership Journey at Harley-Davidson, Harvard Business School Press, Boston, MA.
3. Elliot, J & Simon, W, 2011, The Steve Jobs Way : iLeadership for a New Generation, Vanguard Press, New York.
4. Venkatraman, N., 1989. Strategic orientation of business enterprises: the construct, dimensionality, and measurement. Management Science, 35(8), 942-962.

How to Pitch Your Tech Idea to Any Investor

By Youness Yaghcha

 

A Brave New World

In the Fourth Industrial Revolution, we have seen the rise of new technologies, including blockchain, fintech, artificial intelligence, biotech, and green tech. In the coming years, we are likely to see more disruptive tech ideas emerge in the global startup ecosystem as investors become more interested in investing in new ideas.

According to PitchBook, an international financial data and software company, VCs invested a total of $53 billion in 2,657 companies globally in the first quarter of 2019. This year also saw the birth of 23 new unicorn companies in different verticals worldwide. However, for many entrepreneurs, raising the capital needed to stay afloat, let alone become a unicorn, can feel like an impossible task.

Recently, I spoke with a successful MENA-based entrepreneur who was deeply frustrated by the fundraising process, especially in the MENA region. He claimed that no matter how successful a startup has been, or could be, that the fundraising process in the region is often laborious, tedious and  bears little fruit. Yet, this frustration is not unique to the MENA region.

For over a decade, I have consulted for startups and investors in the U.S., Switzerland and the MENAT region and I have discovered that the biggest challenge for both investors and entrepreneurs alike is the fundraising process. Investors will frequently complain that global startup ecosystems are nascent or that entrepreneurs are inexperienced. On the other hand, entrepreneurs will complain that investors are too impatient and risk-averse. While the complaints vary depending on the maturity of the startup ecosystem in question, fundraising still remains to be a major pain point.

 

In order to ensure the continued growth of these innovative sectors in the MENA region, tech entrepreneurs need to overcome their negative self-talk and hone their pitching skills so they can pitch their ideas to any investor.

There is one category of entrepreneurs who tend to find the fundraising process more off-putting than most and that is the tech entrepreneur. This group of innovators is frequently faced with the formidable task of pitching avantgarde ideas to investors who might not fully understand the complexities of their value proposition. While it is true that many global investors VCs, angels, and family offices still prefer to invest in traditional business sectors and business models, there is a growing number of investors who are looking to invest in the burgeoning global tech scene.

According to Magnitt, a MENA-based data platform for entrepreneurs, investors, and corporates, a total of $893 million was invested in 366 deals across the MENA’s top eight industries in 2018. Magnitt’s 2018 MENA Venture Investment Summary ranked the industries by the number of deals closed and the top five industries included: fintech (12%), e-Commerce (11%), delivery and transport (8%), IT solutions (8%), and F&B (7%). In order to ensure the continued growth of these innovative sectors in the MENA region, tech entrepreneurs need to overcome their negative self-talk and hone their pitching skills so they can pitch their ideas to any  investor.

 

1. Adopt the “less is more” mentality

Any good investor will do due their diligence before approaching a startup. So, if an investor is listening to a startup pitch, they probably already know that the startup team in question is capable and they trust them to do whatever is necessary to make the technology work. However, when most tech entrepreneurs pitch investors, they mistakenly think that investors need to understand everything about their technology in order to invest. In reality, most investors are not interested in understanding the nuts and bolts of a tech entrepreneur’s technology. In fact, most of the world’s most successful investors do not back new technology, they invest in new business models.

If an investor sees potential in a tech entrepreneur’s business model, typically all they want to know next is how much capital they need to invest and how much their return on investment will be. Nevertheless, not all investors are the same, therefore tech entrepreneurs need to be prepared to customize their pitches and pitch decks to satisfy the curiosity of each investor they engage with. At the end of the day, raising funds is all about relationship-building, and if an entrepreneur is not willing to put in the effort to build a relationship with an investor they should not feel entitled to their money.

 

2. Understand who you are pitching

Before pitching to an investor, entrepreneurs need to research their prospective investors and gather as much information as they can about their professional career and investment history. This is important  because it gives tech entrepreneurs the opportunity to build pitching personas for each kind of investor they encounter. Ultimately, pitching tech ideas to a baby boomer investor (born between 1946 and 1964) is not like pitching tech ideas to a Generation X investor (born between 1965 and 1980) or a Millennial investor (born between 1981 and 1996). That being said, while there will inevitably be generational and cultural differences between investors, all investors have one thing in common: they want to make a return on their investment.

Again, no matter how old an investor is or where they come from, they do not need to understand every aspect of an entrepreneur’s technology. They do, however, need to know enough about the technology to remain financially and emotionally invested. In addition to researching an investor’s professional and investment history, tech entrepreneurs should also seek to learn as much as they can about a prospective investor’s life story, as these details will undoubtedly help entrepreneurs craft a more personalised pitch for their investor. The more relatable the analogies and stories that entrepreneurs use in their startup pitches, the more likely it is that an investor will invest, or at least consider investing, in an entrepreneur’s startup idea.

 

3. Be a willing teacher and student

Sometimes, tech entrepreneurs can develop a defensive attitude about their technology, especially when they have to explain it to “non-techie” people. This attitude often drives tech entrepreneurs to avoid situations where they might feel criticised, inevitably costing them valuable investment opportunities. That being said, the fear of criticism is not the only thing that prevents tech entrepreneurs from pitching their ideas. Sometimes, the fear of their technology being “too complicated” to explain to “non-techie” people keeps tech entrepreneurs from pitching their ideas to investors. Either way, the fear of feedback, especially negative feedback, often keeps tech entrepreneurs from developing themselves and their technology.

However, if tech entrepreneurs really want to make their technology available to their target markets and secure long-term investments, they have to be willing to teach investors about their tech. They also have to be willing to take criticism about their business and “be coachable.” Just as an investor does not know or understand everything there is to know and understand about an entrepreneur’s technology, entrepreneurs do not know or understand everything there is to know or understand about product development and running a successful business. Therefore, tech entrepreneurs need to be willing to learn from their investors and leverage the knowledge, resources, and networks they have to offer to support the long-term growth of their startup.

 

The Institutional Family Office

At the top end of the wealth and complexity spectrum are the family offices that look after some of the world’s most successful families. These are the family offices that make the headlines and are probably what most people associate with when they hear the term. In reality, however, these make up a small minority of the family offices that exist in practice.

These organisations will typically hire a team of professionals over a period of time and see themselves as the peers of private equity funds and principal investors. While they may still outsource certain services, there will usually be an in-house expert to oversee each asset class from financial investments, private equity and commercial real estate through to yachts, planes and art work. These will be accompanied by a CFO, lawyers, tax specialists, a team of administrators and, in some of the largest, their own HR or IT functions.

 

The Real “Dream Killer”

Last year, I met a man from one of the wealthiest families in the MENA region who told me a story that fundamentally changed the way that I think about investment. In 2018, this man, who I will call Mustapha henceforth, attended one of the United Arab Emirates’ most popular annual entrepreneurship events to explore new investment opportunities. At this event, it is customary for participants to wear a badge that indicates whether they are an entrepreneur, investor, government official or visitor in order to facilitate the networking process. However, when Mustapha came to register for the event, he was given a visitor’s badge instead of an investor’s badge.

Loath to waste time correcting the minor error, he decided to enter the event hall where hundreds of entrepreneurs stood in their booths pitching their startup ideas to the passing multitudes. Mustapha seamlessly blended into the bustling crowd, thanks to the visitor badge that he had received at the registration desk. He anonymously began to explore all the event’s different startup booths, until one particular booth caught his eye. Interested in learning more about the startup, Mustapha made his way to the booth to ask the founder some questions.

When he arrived at the booth, the startup founder took one look at Mustapha’s visitor’s badge, sighed inwardly, and proceeded to give him a rushed pitch so he could make himself available for “more important” guests at the event. After listening to the entrepreneur’s clumsy pitch, Mustapha walked away from the booth feeling offended and annoyed by the entrepreneur’s belittling demeanor towards him.

If Mustapha had been wearing an investor’s badge, that conversation might have gone very differently. However, the mistake was not Mustapha’s, but rather the entrepreneur’s. While Mustapha just so happens to be a wealthy many with a passion for investment, not everyone who invests in a business has to be rich or have a long investment history. All you need to be an investor is some savings and the willingness to invest. So, essentially, everyone can be an investor.

The moral of Mustapha’s story is that an entrepreneur’s ego and over-inflated sense of self can do more damage to their entrepreneurial dream than any tech jargon or math algorithm will. Although many tech entrepreneurs might feel that their complex tech ideas are deterring them from raising capital, that is not always true because even simple, non-tech startup ideas can be pitched poorly. The success of a tech pitch is not defined by how complex or simple an entrepreneur’s idea is, it is defined by their ability to gain an investor’s trust and simply convey their added value.

Over the past two hundred years, we have seen a rapid advancement of technology. Having said that, what is considered to be “cutting edge” is constantly evolving. That is why tech entrepreneurs who want to be successful need to focus on establishing startups that provide innovative solutions and unique business models. If a tech entrepreneur can do that, there is no reason why a prospective investor should not want to invest in their seedfunding round, or successive rounds of funding.

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Youness Yaghcha is a serial entrepreneur with more than a decade of experience in financial services, investments and management consulting. I’ve worked with large financial institutions in private banking and technology and I’m a specialist in business strategy and M&A. After years of working in Europe and the MENA, I’ve developed a complex understanding of various investment and entrepreneurial ecosystems.

 

Overlooked Strategies for Surviving the US-China Trade War

By Dan Prud’homme and Mark Cohen

The trade war between the US and China has escalated to a point far beyond the expectations of many. In what started as volleys of tariffs and a WTO complaint against China’s “forced” technology transfer policies, now involves expanded export controls, inbound investment restrictions, restrictions on labor mobility, an FBI task force on economic espionage from China, visa limitations, and an embargo (albeit a temporarily relaxed one at the time of writing this article) against Huawei, a leading Chinese telecom firm. The supply chain disruptions from the trade war are immense.1 And Western firms are increasingly fearful of regulatory reprisals in China.2 While reconfiguration of manufacturing supply chains involving China has been on the forefront of many managers’ responses to the trade dispute,3 currently available advice is sometimes ill-informed about how to best do so. Further, intellectual property (IP), innovation, and non-market strategies – some of which also involve reconfiguring supply chains, others which are distinct – are less discussed but critical for many firms to survive the tensions.

 

Attempts to redraw manufacturing supply chains so that companies’ goods will be classified as originating from a country other than China, and therefore avoid the latest round of Trump tariffs, are fraught with risks.

Reconfiguring manufacturing supply chains the right way

Attempts to redraw manufacturing supply chains so that companies’ goods will be classified as originating from a country other than China, and therefore avoid the latest round of Trump tariffs, are fraught with risks. In some cases, it may be possible to reduce US tariffs to zero if a firms’ goods undergo a sufficiently high level of manufacturing or other transformation in a country that enjoys duty-free treatment under a free trade agreement or other preferential arrangement with the US. However, in order for products to be eligible for US non-punitive “most favoured nation” tariffs, firms will usually need to perform a “substantial transformation” of their product components in a country outside of China and prove the country of origin of such transformation. Separate rules regarding the country of origin may also apply if the product is subject to antidumping or countervailing duties. Additionally, US export control laws have separate rules regarding incorporation of US technology into foreign-manufactured products.

Under long-standing case law, a product is “substantially transformed” if it obtains a new “name, character or use” in that third country. Generally speaking, mere assembly or packaging is not enough to achieve substantial transformation, and each country may have its own country of origin rules governing such transformation. In other words, if a company thinks it can install the last screw in an electronic device in Vietnam and thereby avoid US tariffs on Chinese goods, it is misguided. Much more substantial forms of manufacturing need to take place. If the country of origin is misrepresented to US Customs, US law provides for a range of penalties, including significant rewards to whistleblowers who report on fraudulent behaviour.

 

Intellectual property strategies

Restructuring IP transactions

IP rights are among the least expensive assets to reposition to reduce US duty rates owed to the trade war. This repositioning can be achieved in one of two ways.

First, firms may relocate their IP rights in a new country of manufacture. In certain cases, IP rights could help “transform” the manufactured goods sufficiently to qualify corresponding goods as originating from that country. Before undertaking any significant change of a supply chain, guidance should be obtained from US Customs.

Similarly, strategies for sourcing and integrating computer software, including that protected by IP rights, into products can alter the country of origin or US customs’ duty valuation of those products. For example, embedding software into computer memory in a device in a country outside of China may be sufficient to transform that device from a memory device into a product having a new “name, character or use”, such as a device to perform certain functions in a computer, and therefore able to avoid new US customs duties. In addition, if the software is not “sold” with the medium in which it is embedded rather the customer is only granted a right to use the software, the value of the software may not be factored into the US customs’ duty valuation of the product.    

If relocating IP rights and production outside of China is not feasible, a second strategy is to restructure payments for IP rights to reduce the customs valuation of the goods when imported into the US. Companies that import goods from unrelated parties in China usually pay duties based on the “transaction value” or price actually paid for the imported goods. This transaction value can be adjusted to account for the licensing fees and royalties from the IP rights that the manufacturer of the products needs to pay, which is called a Customs “assist.”

One way to reduce the amount of “assists” is to pay license fees directly to third party licensors rather than have the manufacturer incorporate the license and royalty fees into the costs of goods sold to an importer.4 Importers can obtain guidance from Customs on valuation of their goods or contact their Customs broker for suggestions on additional strategies.

Based on current information, if a firm’s imported products originate from China and are on the 25% tariff list of the Trump Administration without any exclusion from relief, they will be subject to duties of 25% as will their corresponding royalties.5 As of September 1st 2019, an additional round of products is expected to be subject to 10% duties.6 Of course these duties may change.

 

Leveraging China’s improved IP regime

In 2019, a significant number of legal reforms – largely due to the trade war – were made to China’s IP regime that make it less risky for Western firms to license to China, collaborate with Chinese partners, and otherwise engage in IP-intensive operations in the country.7 However, these important reforms have received insufficient attention in multinationals’ strategizing for the Chinese market.

In March 2019, China’s Foreign Investment Law was revised to explicitly prohibit “forced technology transfer” (FTT) policies and establish penalties for government officials involved in misappropriating foreign trade secrets. Also in March 2019, the Chinese government abolished controversial provisions governing the import and export of technology as well as controversial technology-related provisions governing Sino-foreign equity joint ventures. In April 2019, the Administrative Licensing Law was revised to prohibit the state from making technology transfer a prerequisite for granting business licenses in China.

These reforms join a wide range of others in 2018 and 2019 that transform China’s IP regime into a less risky institution for Western firms. Foreign ownership restrictions were removed on new energy vehicle (NEV) operations in China as of 2018, reducing the significant risks caused by a 2017 FTT policy requiring transfer of three core technologies to foreign-Sino JVs as a precondition for foreign firms to produce NEVs in China. In January 2019, a long-awaited national-level specialised IP appellate tribunal was established in China’s Supreme People’s Court to provide greater uniformity in adjudication of technology-oriented IP disputes. This tribunal, which is similar to the US Court of Appeals for the Federal Circuit,8 joins recently established specialised IP courts in China that hear cross-regional appeals and therefore help correct local protectionist tendencies. In April 2019, both the trademark law and the law governing trade secret misappropriation and other types of unfair competition were strengthened. Numerous other improvements have recently been made to China’s IP regime.9

Unfortunately, improvements in China’s IP regime have ironically come at a time when supply chains are being disrupted and the US is making it more difficult to engage in technology collaboration with China. Nevertheless, Western firms should capitalize on the recent IP reforms in China – looking past many of the criticisms about China’s IP regime that initially fueled the trade war – with corporate-level-driven adjustments to their technology and IP management strategies. For example, foreign licensors can now more easily transfer their technologies to unrelated parties in China. US trade data reflects this change: unrelated party transactions now dominate US-origin technology transfer to China. More generally, the recent IP reforms in China make conducting IP-intensive operations and enforcing IP rights in China less risky for multinationals.

Some US firms and government officials have assumed that pushing for even more reforms to China’s IP regime will bring even greater benefits. Indeed, other reforms would be helpful to further reduce risks of innovating in China.10 However, paradoxically, further ratcheting up the current trade war in an effort to squeeze even more IP reforms from the Chinese government may lessen the willingness of the authorities to actually effectively implement the important reforms that have already been made. This would be a lost opportunity for Western firms.

 

Navigating technology export controls

Firms investing in the US will need to find smart ways to maintain business continuity in the face of a more powerful Committee on Foreign Investment in the United States (CFIUS) and an expansion of US export controls, which can block mergers and acquisitions involving Chinese firms or technology transfers involving vaguely-defined “foundational”, “critical” or “emerging” technologies.11 There are also export restrictions aimed at Chinese firms and a recent ban (albeit one temporarily relaxed at the time of writing this article) on selling semiconductor chips and software to Huawei in particular.

Varied IP and R&D responses are needed to address these challenges. As export control laws generally do not cover publicly-disclosed documents such as published patents,12 firms should often still be able to license their US-derived patented technology to related or unrelated parties in China in the face of a more rigorous export control environment. Nonetheless, additional care may be necessary when licensing to Huawei and certain other companies placed on the US “entity list”, which can set restrictions potentially involving patents, such as participation in technical standards-setting bodies. At the same time, R&D-intensive US companies that patent in China and elsewhere may face additional challenges from US export controls if US-derived proprietary technology is involved. Companies will need to closely monitor changes in US and other countries’ export control regimes to see if their R&D programs will be subject to further regulation, if more liberal export control requirements are available for R&D activities conducted outside the US, and if company procedures for obtaining approval to file patents resulting from such R&D overseas need to be altered. Some firms, such as Oracle, have already had to significantly alter operations in China in light of some of these challenges.

 

Innovation strategies

From one perspective, Western firms and research organisations have seemingly benefited from the trade war effectively blocking innovative Chinese competitors out of the US market. However, despite these near-term advantages, Western firms must realize that Chinese innovation cannot be contained in the long-run. In fact, Chinese firms are already innovating in a range of industries and will become even more competitive in the future.13 For example, Tencent and Baidu are innovating in Internet business models, Haier is highly competitive in innovative consumer goods/white goods, DJI is engineering excellent drones, Huawei and Xiaomi are producing high-quality and affordable telecommunications equipment, Huawei is a leader in 5G standards setting, Alibaba is offering popular and inexpensive cloud data services, BYD is making competitive NEVs, BGI is advancing in genome sequencing, and Cloudwalk is developing advanced artificial intelligence facial recognition technology. Many of China’s innovative companies achieve startling growth targets by leveraging the rapid growth of the local market, incredible scalability and lightning-fast time-to-market, improving local IP protection, and government support and some local regulatory barriers against foreign competition.

Additionally, even if the trade war further fragments global markets, it will not prevent Chinese firms from being both domestically and internationally competitive.

Even in industries built upon decades of Western talent and research, where Western firms have sizeable experience curves and lead-time advantages, Chinese firms are making headway. For example, HiSilicion, owned by Huawei, is making competitive smartphone semiconductor chips, and Cambricon and Horizon Robotics are making competitive artificial intelligence (AI) chips. Further, despite the trade war, there will be considerable temptation for Western firms to collaborate with increasingly capable Chinese firms and research organisations to advance next-generation technologies that no one dominates at present – ranging from various applications of AI to new energy vehicles.

Additionally, even if the trade war further fragments global markets, it will not prevent Chinese firms from being both domestically and internationally competitive. Chinese firms will inevitably leverage their growing presence not just in China but in other emerging markets, which account for almost two-thirds of world economic growth and more than half of new consumption over the last fifteen years.14 And China’s Belt and Road Initiative (One Belt, One Road) might help secure these important sources of future demand.15

Western firms need to respond not by remaining technologically complacent behind the protectionist barriers established during the trade war. Instead, to compete in the long-run they must ramp up investment in R&D.

Further, the trade war has already emboldened a heighted sense of nationalism in the form of a feverish quest for technological “self-reliance” in China.16 This neo-techno-nationalism appears to be contributing to faster mobilisation of state and private resources that might enable Chinese firms to catch up to foreign counterparts in a range of industries, both emerging and more mature.  Huawei, for example, is relying more extensively on its own CPU and modem for its cell phone sales in China and has recently launched its own operating system, named “Harmony”, for its cell phones.

Western firms need to respond not by remaining technologically complacent behind the protectionist barriers established during the trade war. Instead, to compete in the long-run they must ramp up investment in R&D, and trim down internal organisational barriers slowing time-to-market of new products and services, allowing quick and powerful responses to a more complex regulatory environment as well as to nimble, innovative, and increasingly global Chinese competitors.

 

Non-market strategies

Surprisingly restrained beforehand, official state propaganda and Chinese social media has turned uglier in 2019 as a result of the trade war. Anti-US pledges have arisen on the Internet and other Chinese media outlets to “fight” against US “bullying” by boycotting American products.17 Chinese outbound tourists, a massive source of revenue for some foreign firms, might increasingly focus their cash on “more welcoming nations” than the US.18 And the growing trend of skilled Chinese workers preferring to work for Chinese rather than foreign firms may very well quicken with the added incentive of increased US investigations into Chinese economic espionage. Although it is unclear if these burgeoning trends will be more serious in the future, to be safe, Western multinationals need to respond with smart non-market strategies.

European firms might capitalise on decreases of Chinese tourism to the US by ramping up marketing for European destinations.

Firms should engage directly with the US government and via US industry associations to ask for a more measured approach and resolution to the trade war. Some firms have already adopted this strategy: in May 2019, 173 Western firms together wrote to President Trump arguing that “It is time to bring this trade war to an end”.19

In the Chinese market, strategies should be adopted to present the best face possible to the Chinese government, suppliers, alliance partners, and household consumers. Western firms’ messaging, both via trade associations and on social media (e.g., Weibo and WeChat), may wish to strategically establish a measured distance from the US governments’ and some US firms’ more heavy-handed tactics. Corporate social responsibility (CSR) activities across China could also be ramped up in the instance that the trade war increases perceptions that Westerners at large are becoming aggressors towards China. 

 

Surviving the trade war

While redrawing manufacturing supply chains has been on the forefront of many managers’ responses to the US-China trade tensions, effectively doing so is more complicated than many believe. Further, smart intellectual property, innovation, and non-market strategies are also critical to weathering the long-term battle that appears to be at hand. Some of these strategies may also be useful to firms facing other trade wars in the future – a probable prospect in an era of rising neo-populism and protectionism.20

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About the Authors

Dan Prud’homme (EMLV Business School) is an associate professor at EMLV Business School in Paris, France. He is also a non-resident research associate at Duke University’s Kunshan, China campus. Previously, for a year after his doctoral studies, Dan was a visiting research fellow and a teaching fellow at University of Oxford (UK). Prior to joining academia, he worked in the private sector in Beijing and Shanghai, China. Dan’s research interests include intellectual property and innovation strategies, global strategy, and strategies focused on the Chinese market.

 

Mark Cohen (University of California, Berkeley)  is a Chinese-speaking Intellectual property and commercial attorney with over 25 years experience in emerging markets. Former US government and US Embassy (Beijing) official, former Fulbright Professor (Republic of Slovenia). Extensive experience in management of patent porfolios, IP enforcement campaigns, government and media relations, international trade matters (including WTO issues), and public policy efforts, including antitrust advice. Educated thousands of leading Chinese public and private sector officials on IP matters, and have lectured before business and academic audiences throughout the world. I have also served as an expert witness on intellectual property matters involving Chinese companies.

References
1. AmCham China Member Survey, May 22nd 2019, available at https://www.amchamchina.org/about/press-center/amcham-statement/
2. US firms in China fear ‘retaliation’ against Huawei curbs: Am Cham, available at https://www.bbc.com/news/business-48361689, citing an interview with AmCham Chairman Tim Stratford
3. Maidment, P., 2018. How Western multinationals are responding to the escalating U.S.-China trade war. Harvard Business Review, available at https://hbr.org/2018/12/how-western-multinationals-are-responding-to-the-escalating-u-s-china-trade-war
4. It should be noted that, generally, trademarks are not added to the transaction value for assists.
5. For a list of the various tariff tranches see Section 301 Trade Remedies to be Assessed on Certain Products from China available at https://www.cbp.gov/trade/remedies/301-certain-products-china.
6. See https://twitter.com/realdonaldtrump/status/1156979446877962243
7. Cohen, M. 2019. Unpacking the Role of IP Legislation in the Trade War, available at https://chinaipr.com/2019/05/19/unpacking-the-role-of-ip-legislation-in-the -trade-war /; Prud’homme, D., von Zedtwitz, M., 2019. Managing “forced” technology transfer in emerging markets: The case of China. Journal of International Management; Prud’homme, D., Zhang, T., 2019. China’s Intellectual Property Regime for Innovation: Risks to Business and National Development. Springer; Prud’homme, D., 2019. Reform of China’s ‘forced’ technology transfer policies. University of Oxford Business Law Blog, available at https://www.law.ox.ac.uk/business-law-blog/blog/2019/07/reform-chinas-forced-technology-transfer-policies
8. Cohen, M, 2019, A Federal Circuit with Chinese Characteristics: The launch of China’s New National Appellate IP Court,   see https://chinaipr.com/2019/01/04/a-federal-circuit-with-chinese-characteristics-the-launch-of-chinas-new-national-appellate-ip-court-%E4%B8%AD%E5%9B%BD%E7%89%B9%E8%89%B2%E7%9A%84%E8%81%94%E9%82%A6%E5%B7%A1/
9. Prud’homme, D., Zhang, T., 2019. China’s Intellectual Property Regime for Innovation: Risks to Business and National Development. Springer.
10. Ibid
11. Bureau of Industry and Security, Review of Controls for Certain Emerging Technologies, 83 Fed. Reg. at 58202 (Nov. 19, 2018).
12. See Export Administration Regulations (EAR), Sec. 734.3(b)(3) , which provides that the following types of information are not “subject to the EAR,” regardless of their content: (i) “published” information; (ii) information that arises during, or results from, “fundamental research;” (iii) information released by instruction in academic institutions; (iv) information in patents and published patent applications; (v) information that is a non-proprietary system description; and (vi) certain types of telemetry.  See also Sec. 734.10 on patents specifically.
13. Prud’homme, D., von Zedtwitz, M., 2018. The changing face of innovation in China. MIT Sloan Management Review, https://sloanreview.mit.edu/article/the-changing-face-of-innovation-in-china/; Greeven, M., Yip, G., Wei, W., 2019. Understanding China’s next wave of innovation. MIT Sloan Management Review, https://sloanreview.mit.edu/article/understanding-chinas-next-wave-of-innovation/
14 McKinsey Global Institute, 2018. Outperformers: High-growth emerging economies and the companies that propel them, available at https://www.mckinsey.com/~/media/mckinsey/featured%20insights/innovation/outperformers%20high%20growth%20emerging%20economies%20and%20the%20companies%20that%20propel%20them/mgi-outperformers-full-report-sep-2018.ashx
15. Scheve, K., Zhang, R., 2016. One belt one road: Chinese strategic investment in the 21st Century. Harvard Business Review Case Studies, available at https://hbr.org/product/one – belt – one – road – chinese – strategic – investment – in – the – 21st– century/P87 – PDF – ENG
16. China’s Xi Jinping revives Maoist call for ‘self-reliance’, 2018, https://www.ft.com/content/63430718-e3cb-11e8-a6e5-792428919cee
17. For example, see: Chinese media calls for ‘people’s war’ as US trade war heats up, 2019, https://edition.cnn.com/2019/05/14/asia/china-us-beijing-propaganda-intl/index.html; China’s propaganda machine takes aim at U.S. over trade war, 2019, https://www.nytimes.com/2019/05/14/world/asia/china-propaganda-trade.html; China’s latest weapon in the trade war: Karaoke, 2019, https://www.bbc.com/news/world-asia-china-48359002
18. Trade war is putting Chinese tourists off US, with many opting for ‘more welcoming’ nations, 2019, available at https://www.scmp.com/tech/big-tech/article/3010145/ctrip – ceo – says – trade – war – putting – chinese – tourists – us – many – opting – more
19. FDRA Open Letter to President Trump, May 20th 2019, available at https://fdra.org/wp-content/uploads/2019/05/2019-Footwear-Tariff-Letter-1.pdf
20. Prud’homme, D., von Zedtwitz, M., Arreloa, F., 2019. Strategic responses to neo-populism. The European Business Review, available at https://www.europeanbusinessreview.com/strategic-responses-to-neo-populism/

6 Things to Know About Options Trading

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When it comes to investing your money to make a return, the stock market is a go-to method. It allows for many different types of options that you can utilize to achieve the wealth that you want. A popular method that those investing in the stock market utilize is options trading.

What Is Options Trading?

Before we can define just what options trading is, we need to first explain to you what options are. According to business24-7 an option, in regards to the stock market, is defined as a contract that allows an investor to sell or buy a security at a predetermined price for a specified period of time. These options are bought or sold on the options market. Many people are actually making a good passive income doing Nadex binary options trading.

There are two main terms that you’ll need to understand when it comes to options trading. When you go to buy an option, then it’s referred to as a call option. If you go to sell an option, then it’s referred to as a put option. It’s important to note that options don’t give you ownership or stock in a particular security. It’s the exercise of an options agreement that allows you to get ownership.

What Is Exercising An Option?

As you learned above, an option is a contract that allows you the opportunity to buy or sell a security. Let’s say you purchased an option to buy 100 XYZ stock at say $5.00 per share for the next 30 days. On day 26, the price of the stock is up to $10.00 per share.

You can exercise your option to buy 100 shares of the XYZ stock at the $5.00 price instead of the market value of $10.00 per share. Executing your contract is called exercising in the options market. You’re not required to execute any options agreement that you enter into.

What Is The Strike Price?

When you enter into an options agreement, there are many specifics laid out. One of these agreed-upon terms is the strike price. The strike price is defined as the agreed-upon purchase price for the underlying security. If you have a call option, then the strike price is the price you agreed to buy the stock at. If you have a put option, then the strike price is the price that you agreed to sell the stock at.

What Is An Options Premium?

When you enter into these beginner options trading contracts, you’ll need to purchase them. The premium is the price that you pay for the options agreement. This changes daily and is a percentage of the overall value of the asset. The seller of options agreements will utilize both the current trading value and the strike price of the options contract to determine what its premium will be.

Most Contracts Are For 100 Shares

When you’re first starting in options trading, you must realize most contracts are sold in groups of 100 shares. So, if your contract is to buy a share at $5.00 apiece, you’ll actually be buying 100 shares that will cost you a total of $500.00. You should be very careful when first investing to ensure that you know just what your options contract states as there is a wide difference in paying for 100 shares compared to 1 share.

Understanding Stock Option Quotes

When you go to the options market, you’ll receive a stock option quote in a specific way. Understanding the components of the quote and how to read it is vital to your overall success in options trading. Let’s take a look at an example stock quote below.

You get a stock quote that shows the following:

XYZ December 1, 2019 70 Call AT $4.00
XYZ – This reveals that stock that the options agreement is for.
December 1, 2019 -This is the expiration date of the options agreement.

70 – This is the strike price for the contract.

Call – This indicates this option to be for buying securities.

$4.00 – This is the premium per share. Based on 100 shares for the option, that’s $400 for the contract.

Hopefully, you now have a better idea of what options trading is. Options trading is a great area to start as a beginner as it’s very simple to understand and allows you to invest with less risk than traditionally purchasing stocks.

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