European profiling and the EGR Wiesbaden Group on Business Registers Tallinn, 27 – 30 September 2010 Session No 3: Profiling (Costs and Benefits) Sept-2010 European profiling and the EGR

Outline of the presentation Why profiling is needed for The MNE organisation … …makes the statistics more difficult to compile and less relevant What is the right level to produce statistics? Some remaining issues What would be the benefits for the countries A new statistical model… …to improve the relevance of national statistics… …and increase the efficiency of the production of statistics How the EGR could support profiling EGR is a platform to support statistics… …that should disseminate a single information on groups and their entities EGR should be a place for coordination Sept-2010 European profiling and the EGR

The annual report of the group: a very important tool The show case of the group Text analysis A starting point for profiling Segment information A relative homogeneity of presentation (IFRS) A source of information for additional information Information to update the EGR (global employment, global turnover, global decision center…) Sept-2010 European profiling and the EGR

Why profiling is needed for Changes in the organisation of the production in the frame of the MNEs Allotment of the production function into several legal units Globalisation of the economy The MNEs organise themselves at the global level…with attention to the local level Result of the text analysis: 27 annual reports analysed 54 occurrences related to the global dimension (average) 50 occurrences related to the local dimension (average) Global dimension: refers to the strategy of the group Local dimension: refers to constraints Sept-2010 European profiling and the EGR

The globalisation of the economy Sept-2010 European profiling and the EGR

The globalisation of the economy Reasons for this organisation Increase their competitiveness Increase their profit Decreasing their costs Sept-2010 European profiling and the EGR

The MNEs organisation Some examples Unilever Heidelberg cement Sept-2010 European profiling and the EGR

The MNEs organisation The annual report: A first step in the profiling process Sept-2010 European profiling and the EGR

The MNEs organisation The annual report: A first step in the profiling process Result of an analysis of 40 annual reports Sept-2010 European profiling and the EGR

The MNEs organisation The annual report: A first step in the profiling process The segment: a level to report financial information Sept-2010 European profiling and the EGR

Business statistics and globalisation The statistical representation of the MNE may be different from the MNE’s own vision Example of Siemens France: allocation of the French employees according to the statistical activity and to the group segments Sept-2010 European profiling and the EGR

Business statistics and globalisation To take into account the global dimension may change the statistics and the economic analysis Sept-2010 European profiling and the EGR

Business statistics and globalisation The usual collection units may become irrelevant to produce statistics or indicators of a good quality In some European countries, the legal unit is used as a proxy of the enterprise In the frame of groups, this may lead to meaningless indicators Case of indicators which relate 2 economic variables which are not “managed” in the same legal unit Turnover, employment, R&D expenditures, assets… Labour productivity, R&D expenditures/turnover…. At the micro economic level: some indicators cannot be computed At the macro economic level: can lead to a wrong interpretation Sept-2010 European profiling and the EGR

Business statistics and globalisation The right level to produce statistics? Find a balance between the global dimension of the economic units and the need to produce national statistics The group: A too global entity (by activity and geographically) The enterprise: two levels The global enterprise The national enterprise The object of profiling Some issues remain to be treated How to consider support activities: R&D, transportation, administration, human resources management, Investments, wholesale or retail trade How to allocate them by country when the serve the global group? How to compute national indicators in such cases? Sept-2010 European profiling and the EGR

The benefit of multinational profiling for the countries A new model for statistical units… The actual “enterprise” unit is not homogenously defined in the European countries Sept-2010 European profiling and the EGR

The benefit of multinational profiling for the countries …to improve the relevance of national statistics To promote the need to take into account the international dimension of the economic entities To increase the comparability of statistics in Europe …and increase the efficiency in the production of statistics Gain for European NSIs to approach the MNEs at their global level One (or a few) NSIs as contact points for the groups One (or a few) NSIs to define the global enterprises Sept-2010 European profiling and the EGR

The benefit of multinational profiling for the NSIs Number of subsidiaries in the TOP 500 MNE by countries of location according to the country of the UCI Source: EGR-2008 Sept-2010 European profiling and the EGR

The use of EGR in the profiling process The EGR: a platform to support statistics Survey frame for the collection of information Access to the global group not only to the truncated information Access to the enterprise level Sept-2010 European profiling and the EGR

Information available in the EGR Sept-2010 European profiling and the EGR

The use of EGR in the profiling process A single information on the groups and their entities To be used by all the statistical compilers A place for coordination between NSAs Coordinate the production of statistics At the group level Determination of the UCI Share of information like UCI At the enterprise level Share of profiles Sept-2010 European profiling and the EGR

Thank you for your attention Sept-2010 European profiling and the EGR