1. « Profiling large and complex MNEs »: the European ESSnet project National Bureau of Statistics of China, Census center: WorkShop
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2. European ESSnet on « profiling large and complex MNEs »
Present situation of the statistical unit “enterprise” slides to 6
Profiling: definition and process slides & 8
Profiling tested proposals slides to 11
Statistical units proposals slides 12 to 14
An example of potential consequences slide
Consultation, dissemination and future work slide to 18
Annexes slides 19 to 23
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3. - the Enterprise Group (EG)
European ESSnet on « profiling large and complex MNEs » present situation of the statistical unit «enterprise» in Europe (1)
the UNSO in the ISIC and
EUROSTAT in the 1993 European statistical regulation,
define 7 types of Statistical Units, among which ...
3 main “statistical”, used for collection:
- the Enterprise Group (EG)
- the Enterprise
- the local unit
5 derived “analytical”:
the Kind of Activity Unit (KAU); the Local Kind of activity unit (LKAU); the Unit of Homogeneous Production (UHP); the Local Unit of Homogeneous Production (LUHP); the Institutional Unit (IU)
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4. - the smallest combination of legal units
European ESSnet on « profiling large and complex MNEs » present situation of the statistical unit «enterprise» in Europe (2)
from the 1993 European statistical regulation, Enterprise is:
theoreticaly defined as
- the smallest combination of legal units
- that is an organisational unit
- producing goods and services (for the market)
- … with a certain degree of autonomy in decision making
- especially for the allocation of its current resources
largely used, e.g in Structural Business Statistics
included in the newly developed EGR (European Group Register)
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5. - the deepening gap between managerial structure and legal units
European ESSnet on « profiling large and complex MNEs » present situation of the statistical unit «enterprises» (3)
but created nationaly by each NSI,
without international comparability:
- the required level is not specified (national, European or global?)
- standards are not consistent for data collection
- so that the sum of the national parts usually differ from the world total
subject to consequences of the increasing “globalisation”:
- the deepening gap between managerial structure and legal units
- amplifies problems in statistics (intra group flows, M-X port,
split of VA among countries, R&D, ancillary activities etc)
=> national & European statistics are loosing accuracy!
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6. international and national studies for a long time:
European ESSnet on « profiling large and complex MNEs » present situation of the statistical unit « enterprises  » (4)
international and national studies for a long time:
- new “enterprise” units are operational for years in NL and UK
- changes come soon in France (2011/2012 program), etc
- an international 2005 study, under UNSO control, the “MNE project”, aimed at “seeing the whole elephant”: CN, UK, NL, FR, IT, etc
leading to an European (MEETS*) decision to
work on better accuracy and consistency of:
- statistical units for national collection of data
- statistical European aggregates
embedded in the ESSnet** Profiling, part of the EGR*** program, towards an economic definition of enterprises.
* MEETS: modernisation of enterprise and trade statistics
** ESSnet = European statistical system network (of National statistical Institutes)
*** EGR = European Group Register
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7. structure of an enterprise group
European ESSnet on « profiling large and complex MNEs » « profiling: a way towards an economic definition of enterprises » (1)
Profiling is a method:
to analyse the
legal - operational and – accounting
structure of an enterprise group
in order to
establish the statistical units within that group and
their links and
the most efficient structures
for the collection of statistical data
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8. The collaborative work scheme used for profiling: an ESSnet:
European ESSnet on « profiling large and complex MNEs » « profiling: a way towards an economic definition of enterprises » (2)
The collaborative work scheme used for profiling:
an ESSnet:
7 partners representing 70% of the large European groups:
CBS –NL, DESTATIS –DE, ISTAT –IT, ONS –GB, SF –FI, OFS –CH , INSEE –FR (coordinator)
developing a common methodology for the whole ESS
structured into 3 steps:
(work done):
- a positioning paper on feasibility of profiling;
- an input on statistical units as regards to EU regulation
: definition of methodology, tools, guidelines …
: go/no-go decision, then full implementation of profiling, inside EU
with testing throughout the project:
at least on 40 large Groups (4 eyes view), iterations and early results
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9. necessity of confident relations with profiled MNEs
European ESSnet on « profiling large and complex MNEs » profiling: the tested proposals (1)
necessity of confident relations with profiled MNEs
Top-Down approach preferred, in the definition of SU:
accounting “Consolidation” Information System: the starting point for analysis
IFRS for listed companies (stock & bonds)
use of operational segments (“GODS”): IFRS 8
need of extra data (eg intra-group inter-GODs flows)
Statistical units and profiling consistently interlinked:
“global enterprises” (GEs): new statistical units usually derived from operatinal segments
“truncated enterprises” being the national parts of GEs
National collection of statistics
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10. divide the global group in GEs, then in national TEs
European ESSnet on « profiling large and complex MNEs » five options for profiling, with a preferred one (2) option D « with further consideration to option E »
Option A (the “no change” option): doing as presently
Option B: (the “minor change” option): as option A, but applying standards (changes to documentation and use of it)
Option C: arrives at global (highest) level (of consolidation),
delivers country clusters; allowing each NSI to define its enterprises
What kind of checking?
Option D: profiling global groups
divide the global group in GEs, then in national TEs
enterprises and list of LeU related to them, given to NSIs
for registers & data collection
Option E: manages the group cluster & the GEs
collects data centrally
apportions to national level
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11. Statistical environment at global (GE) and national (TE) levels
European ESSnet on « profiling large and complex MNEs » profiling tested proposals: option D (3) from the legal to the statistical world
Global
Group
TE1
TE2
TE3
TE4
GOD1
GOD2
GE1
GE3
GE2
Legal or operational
(non statistical)
environment
Statistical environment
at global (GE)
and national (TE) levels
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12. European ESSnet on « profiling large and complex MNEs » statistical units (1): proposed new definitions
Enterprise Groups:
a set of legal units under common direct or indirect control (mostly a combination of legal units bound by legal and/or financial links)
(previously wrongly defined as a set of “enterprises” …)
Enterprises produce goods and services, are autonomous for the allocation of their current resources and are either:
a single legal unit
a set of legal units under common control
a part of an enterprise group
SPEs (or combination of SPEs) considered as quasi-enterprises
so that a distinction is made between:
Global enterprises
Truncated (national) Enterprises
both being included in the registers
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13. autonomous entities = GEs
European ESSnet on « profiling large and complex MNEs » statistical units (2): consistency with option D
Main changes:
autonomous entities = GEs
not limited to national boundaries
national entities: TEs “truncated enterprises”
are truncated parts of GEs
often not “autonomous”
GEs and TEs no compulsory related to legal units:
(some) legal units may be split into more than one enterprise
relations from (GEs & TEs) cluster to (LeU) cluster
questions on the “rest of world” (outside EU) unit(s)
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14. European ESSnet on « profiling large and complex MNEs » Statistical Units (4): a scheme convenient for EGR
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15. avoids double counting inside a country (turnover; purchases)
European ESSnet on « profiling large and complex MNEs » potential consequences: example of SBS
European standardisation of Statistical units and data collection
=> better quality of SBS at EU level
Use of “enterprises” with Option D:
avoids double counting inside a country (turnover; purchases)
changes industry structure:
less support activities
less services to business
more manufacturing etc
allows data collection by each concerned NSI
needs to work on classifications
(choose – or be dual - between this of the global enterprise or its own)
Use of IFRS type of data:
ensures much better data comparability between countries
needs to be complemented by intra-group inter-countries flows
Simulations of new rules effects will take place in 2011
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16. Stakeholders continuously consulted on proposals:
ESSnet on « profiling large and complex MNEs » consultation, dissemination and work in progress (1):
Stakeholders continuously consulted on proposals:
Business Register specialists (twice a year)
Foreign AffiliaTes Statisticians surveyors (data on foreign-owned enterprises)
Structural Business Statistics (SBS) statisticians:
- as producers of specific data (e.g on concentration)
- as providers of information for National Accounts
National accountants, directly (including eventual consistency with the 2008 SNA)
Foreign Direct Investments (FDI) (questions about the GGH/UCI and SPEs)
Balance of Payments
European Group Register, as profiling is:
directly in charge of the “enterprise” register for the MNEs
also checking MNEs cluster, structure & principal activities
depending on EGR IT*
EGR again:
sharing the SU scheme
modelling in common the “enterprises” of small & medium size groups
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17. 2011-12 operational program (with provisional 2011 reports):
ESSnet on « profiling large and complex MNEs » consultation, dissemination and future work (2):
operational program (with provisional 2011 reports):
Implementing the operational methods of the profiling model
Writing the guidelines, with attention to desk and visit work
Testing on at least 40 MNEs
Describing a data model to introduce GE and TE in the EGR V2.0
Measuring the impact on profiling on SBS
“financial” studies:
Modelling the benefits and costs of profiling (compared to the previous operations) SBS
generalisation of the approach:
5 more countries in 2012 (end testing)
all EU in 2013 and on
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18. Thank you for your attention
ESSnet on « profiling large and complex MNEs » consultation, dissemination and future work (4):
Constant coordination with:
EGR, as previously said
Consistency studies (another ESSnet is on)
studies on globalisation (e.g on value chains)
Other interested countries (China, US, Canada, …)
Any contact person, according to statistical program or on request
Thank you for your attention
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19. ESSnet on « profiling large and complex MNEs » Annex (1): on IFRS
We propose to use (largely) the IFRS (the EU-GAAP):
knowing their pros and cons:
Pros:
Most widespread “administrative” “ EU” standards
A common language with business
Good standardisation of elementary flows and stocks
Compulsory for stock-traded and bond-traded groups
Include “operational segments” (with turn-over, operational results and employment figures)
Cons:
Consolidated data (no displayed national figure if intra-group flows)
Consolidation may be at levels lower than UCI
Value added appearing in data “by nature” (not “by destination”)
No standardised publication tables
Uncertain stability for the operational segments
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20. 1 Group-consistent classification
ESSnet on « profiling large and complex MNEs » Annex (2): classification
Which way use to restore consistency between EU and national statistics?
Is assignment of dual (plural) classifications to statistical units possible:
1 Group-consistent classification
2 Own-activity classification (solves ancillary activities problem and also commercial but not trade activities problems)
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21. What should be the principal activity classification of GEs and TEs:
ESSnet on « profiling large and complex MNEs » Annex (2): classification : territorial classification dilemma now ready to be solved in common with survey statisticians
Spain and France are manufacturers of goods conceived in France and sold in the whole of Europe through a unique French “trade” company
distributed in all EU countries through specialised affiliates
What should be the principal activity classification of GEs and TEs:
The global one? => for GEs
The national one? => basic for TEs
Dual: to reconcile national/global
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22. a “model” of statistical units is essential for successful profiling
ESSnet on « profiling large and complex MNEs » Annex (3): on operational complements (1):
1 Sharing the model:
a “model” of statistical units is essential for successful profiling
all countries need to use the same standards
(for profiling both MNEs and large domestic groups)
2 Dealing with complexity:
deal with all cases is impossible (initially and in the future)
a mechanism to develop rules for new cases rather than a complete set of new rules
To be managed (consistently with BR and EGR)
new rules and mechanism will progressively include treatment of
- holdings, SPEs and SE (European companies),
- off-shoring,
- family closed companies, family groups,
- accountancy firms and other partnerships,
- etc
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23. ESSnet on « profiling large and complex MNEs » Annex (3): on operational complements (2):
3 a process for profiling, first top-down, if necessary completed with bottom-up information:
delineating the global enterprise group by creating a cluster of all legal units belonging to the group
investigating the operational structure (as independently as possible from “legal” or administrative structure)
Identifying, from operating segments, all market-oriented entities (as GEs and basis of the future TEs) and allocating all other entities to these
link (at least try to) all legal units to enterprises (recognising that relationships can be: 1 to1; several to 1; many to many)
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