can digital revive the belgian...

Can digital revive the Belgian Economy?

Filiep Deforche

Senior Partner and Managing Director @ BCG

Trends Summer University, June 10, 2016

20160525 - Belgian Internet Economy - F Deforche - BRU.pptx 2

Can digital revive the Belgian economy?

a new world

1

the opportunity

the call for action

2

3


We live in an exponential world

700

79

100

1,000,000

10,000

100

10

1,000

100,000

log (price) ($)

2014 2009

Year

2015

22,000

2013 2008

500,000

2007

40,000

100,000

20,000

3D Printing Drones Industrial Robots Sensors (3D Lidar)

a new world

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjv8ZWy7tnKAhXJWhQKHergDkUQjRwIBw&url=http://3dprintingankara.com/&psig=AFQjCNHwJIrlpbAek8wxGNed7Zj2FrY7xQ&ust=1454529338826115

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjRrJaD79nKAhWCuxQKHWr_DPkQjRwIBw&url=http://australianroboticsreview.com/category/industrial/&bvm=bv.113034660,d.d24&psig=AFQjCNENANPgNPTghaYkW09Rz4b8TRkBvA&ust=1454529552181241

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwilqNeq69vKAhUD_HIKHVmtAI4QjRwIBw&url=http://www.hizook.com/blog/2009/01/04/velodyne-hdl-64e-laser-rangefinder-lidar-pseudo-disassembled&bvm=bv.113034660,d.bGg&psig=AFQjCNFEmREkt6e23lW-WjKpXokS59vSyg&ust=1454592668759062


Digital has many facets

Technology

IoT Cloud Mobile

Social

Analytics 3D printing

AI/ Robots

Augmented

reality

New customer

habits

Multitasking Speed

Simplicity

Safety Pro-sumers Sharing

economy

Personalization

New business

models

Rental

economy Ecosystem Subscription

Freemium On demand Market places

New ways

of working

Exponential

organization

Agile

Customer

centricity

Lean

start up

Open

innovation

Data

Sharing Communication Availability

Consumption

Analytics Collection

Generation

Visualisaton

a new world


E-commerce

Industry 4.0

Services 4.0

(Fintech)

Sharing economy

through digital

platforms

Digital DIY

Digital is reshaping the economy

a new world


E-commerce in Belgium lagging …

5

15

20

10

25

0

4%

9% 9%

6%

4% 5%

13% 13% 13%

2014 share of online retail market in country retail market (%)

23%

9%

11% 12%

14%

16%

13%

a new world A


0

5

10

15

20

25

30

35

12.1

5.0

11.5

2.7

Government

spending

€ Bn (2014)

Exports Imports Internet

economy

Investment

18.6

10.4

Consumption

... leading to an average digital economy

17% 9% CAGR '10-'14

€6.7 Bn

e-commerce1

1. Includes €2.3Bn import and €4.4 Bn Belgian e-commerce reflecting 34% cross-border e-commerce. Note: export/imports include e-commerce and internet share of IT goods and services import and export; E-commerce includes M-commerce Source: EIU, Eurostat, WorldBank, Gartner, Ovum, annual reports, BeCommerce, Ecommerce Europe, UN Comtrade, WTO, BCG analysis

5.2% of GDP

1%

a new world

-1% 9% 9%

A

Ireland 22.8%

UK 8.4%

Finland 8.2%

Sweden 8.2%

Denmark 7.6%

Netherlands 6.8%

Germany 5.1%

France 5.0 %


Key industrial innovations fuel digital economy

Industry

4.0

Advanced Robots

• Robots with integrated sensors

• Standardized interfaces

Simulation

• Simulation and optimization of value networks

• Test and optimize machine settings

Horizontal/Vertical Integration

• Cross-company data integration

• Fully automated value chain

Industrial Internet

• Network of machines and products

• Network objects communication

Augmented Reality

• Maintenance and logistics

• Information display

Big Data and Analytics

• Comprehensive evaluation of data

• Real-time decision-making

Additive Manufacturing

• Spare parts and prototyping

• Decentralized to reduce transport

Cloud and Cyber-security

• Managing data in open systems

• Network security of linked machines

a new world B


Belgian productivity increase lagging Eur average

5

0

6

7

3

4

2

-1

-3

-2

1

Increase in GDP per hour worked between 2010 and 2014

-2.8%

0.3% 0.4% 0.6% 0.6% 0.7%

1.0%

1.7% 2.2%

2.6% 2.8% 3.1% 3.1%

3.6%

5.8%

6.6%

Source: OECD

a new world B


Investments Insurance Enablers Data and

analytics

Payments Financing Security Cash

management

Emergence of strong BE Fintech player landscape

Source: Quid, Crunchbase, Belgium Fintech Group, Sway.com, BCG research

a new world

FinTech Ecosystem

C

https://www.google.be/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiR-7vI9r_MAhWllIMKHegLAEsQjRwIBw&url=https://innovation-awards.nl/concept/assisto/&psig=AFQjCNECG5dYRRbrpEdscPwHFvbmLoy1Cg&ust=1462434316605066


... thanks to strong VC funding

0,020,020,02

0,050,06

0,090,09

0,12

0,00

0,05

0,10

0,15

Relative importance on GDP of VC investments in top 10 countries (%)

PL DE FR NL BE UK IR SE

Note: top 10 countries in Europe considered, Russia and Cyprus excluded. Funding over period 2000 to 2015 Source: Eurostat, Quid, BCG DV, BCG analysis

a new world C

~€ 300M received

VC funding '00-'15



a new world

1

the opportunity

the call for action

2

3


BCG assessment: Internet economy € 37Bn by '20

Belgian Internet Economy at

5.2% of GDP in 2014...

Investment 5.0

Consumption

Internet

Economy 18.6

Imports 11.5

10.4

2.7 Government

Spending

Exports

12.1

5.2% % of GDP

Euro Bn

Note: All growth rates are nominal. i.e. including inflation. Source: EIU, Euromonitor, Eurostat, Broker reports, Agoria, Gartner, Ovum, National Institute of Statistics and BCG analysis

... can grow to 8.4% of GDP in 2020

at 12% growth per year...

8.4%

Internet

Economy 37.3

21.4 Exports

19.0 Imports

Government

Spending 2.7

Investment 5.4

Consumption 26.9

the opportunity

Euro Bn

14%

1%

0%

13%

9%

12%

'14-'20

CAGR


Important local opportunity for e-commerce ...

0

5

10

15

20

25

30

14.2

5.7

14.2

19.9

2014 updated with

average European level of

cross-border e-commerce

12.3 18.6

2014 internet economy

14.2

€ Bn +€ 7.8Bn

26.5

2014 updated with reduced

cross-border and increased

online presence and spend

Rest of internet economy

(excl. e-commerce)

E-commerce

(excl. import and export)

4.4

Share of cross-border

e-commerce 34% 15%

Average spend per

online shopper

Online shoppers as

% of population 54% 68%1

€ 1,100 €1,9001

1. Western European average Source: Ecommerce Europe, BCG analysis

15%

the opportunity


... and Digital Single Market with huge further upside

Increased GDP CAGR per frontrunner country

The

Netherlands

Sweden

Finland

Estonia

Luxemburg

Ireland

Frontrunner Growth

increase

94%

42%

96%

63%

160%

46%

Potential

GDP CAGR

4.3%

3.9%

1.8%

4.1%

7.9%

6%

GDP CAGR

'14-'20

2.2%

2.8%

0.9%

2.5%

3.1%

4.1%

Frontrunners

tot. 2.2% 80% 3.9%

2020 GDP

∆

(B EUR)

Denmark 83% 3.3% 1.8% 26.6

97.3

Belgium 106% 3.2% 1.6% 45.0

35.5

11.3

2.2

18.8

27.2

264.0

Potential for Belgium

~1.6% annual growth

~2.4% annual growth

~3.2% annual growth

2014 2016 2018 2020

400

450

350

500

300

GDP (B EUR)

+106% yoy growth,

from 1.6 to 3.2% p.a.

Business as usual

Full DSM

Full DSM & accelerated digitization

the opportunity

Source: BCG study and report on "Digitizing Europe" – June 2016


BCG assessment: Industry 4.0 with major impact

€ 225 Bn industry

output

€ 5 Bn productivity gains

by 2020

Source: BCG.perspectives: Industry 4.0, BCG analysis

the opportunity

€ 15-20 Bn add'l

revenues by 2020

Translating into €10Bn of additional

GDP by 2020



a new world

1

the opportunity

the call for action

2

3


Realizing potential will require Belgium to create enabling environment

Belgium should persevere on its ambitious Digital Agenda ...

1

… in time for the DSM to expand beyond the Belgian market

2

Support VC and

investments

Establish

eGovernment &

Infrastructure

Harmonize taxes

and policy

support

Develop talent

and education

Build demand,

transparency

and trust

The Digital Single Market will open up international

ecommerce opportunities ...

Provided that we can counter the import/export balance

the call for action


Threat or opportunity? Yes we can

the call for action

Offline to online retail: local or import?

Retail and logistics employment

Export revenues

Delocalisation due to labor arbitrage and productivity issue?

Manufacturing employment, Industry 4.0 products/services

Productivity gains translated in export revenues

New business models in FI

Local bank revenues and employment

Digital bank


Thank you

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