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EU Launches Estimated €400M Blockchain, AI Fund to Avoid Lagging US, China

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A new fund has been set up with the aim of preventing the EU falling behind nations like the U.S. and China on blockchain and artificial intelligence (AI) innovation.

The European Investment Fund (EIF) and the European Commission have together put up €100 million (over $110 million) for a dedicated investment scheme that will make capital available to AI and blockchain projects via VC funds or other investors, EIF, an EU agency set up to indirectly fund SMEs, said in a blog post on Wednesday.

With the “cornerstone” funding in place, the EIF said private investors are expected to bring up to €300 million ($331 million) into the fund, while the total could rise further from next year, with national promotional banks being able to co-invest under the scheme.

Sifted reports that the fund could ultimately raise up to €2 billion ($2.2 billion) under the InvestEU Programme.

According to the post, the EU already spends plenty on blockchain (expected spending for 2019 is $674 million), but that is mostly directed toward research and proof-of-concepts.

The U.S. is the biggest spender, with a $1.1 billion expected spend, and China is second with $319 million, according to cited numbers from the International Data Corporation.

The new fund is aimed to address the fact that not so much is spent in the EU on developing “larger scale projects.

“Investing in a portfolio of innovative AI and blockchain companies will help develop a dynamic EU-wide investors community on AI and blockchain. By involving national promotional banks, we can scale up the volume of investments at a national level,” the EIF said.

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Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

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Predicting a Recession

It’s overdue. Predicting the onset of a recession is difficult, but a downturn likely will arrive soon, with the current economic expansion now more than 10 years old, long by historical standards.

Signs of overleverage in the corporate sector, combined with geopolitical uncertainty – including the China-US trade war, Brexit and economic instability in some European countries – suggest the next recession is not far off.

For corporate leaders, however, the exact timing and duration of a recession matter less than being ready to seize the moment early, when they have more options. Getting ahead of the curve avoids the painful alternative – being forced to react hastily in a crisis. Bain & Company research shows that well-prepared companies emerged as winners during and after past recessions. They managed a strong defense and offense in parallel, reining in costs while simultaneously reinvesting in growth.

The next downturn will figure as just one element roiling the global economy. Several structural changes will combine to sound the starting gun to a new business cycle, including:

The end of the nontech business.

An array of evolving technologies will substantially alter customer behavior and demand in many sectors, disrupting both volume and price. In the automotive industry, shared mobility services and the shift to autonomous and electric vehicles could gut the economic returns of many manufacturing plants and assets in six to eight years – just one product cycle. In retail, digital-first insurgent brands with healthy balance sheets may take even more market share in a downturn, compounding the damage to many traditional retailers.

At the same time, new technologies are ramping up efficiencies in areas such as supply chain and manufacturing. Automation technologies, in particular, will accelerate to help companies address the dwindling supply of labor as more baby boomers move into retirement and labor force growth slows.

The end of low-interest rates.

Interest rates still hover near a six-decade low (see Figure 1). Even if central bankers hold rates low during a downturn to help stimulate their economies, we expect to see rates eventually rise. This potential change in the interest rate environment will be a new regime for most management teams and should prompt them to take a multiyear view of their capital structure and the timing of investments. A higher cost of capital will put pressure on capital spending, so if companies want to invest in technology, growth opportunities or acquisitions, the time is now.

Downturns Upend the Playing Field

These long-term trends will harden the divide between winners and losers, favoring those who act before the downturn. Headed into the global financial crisis a decade ago, a group of almost 3,900 companies worldwide that we ran through Bain’s Sustained Value Creators analysis posted double-digit earnings growth, on average, from 2003 to 2007. As soon as the storm hit, performance diverged sharply: The winners grew at a 17% compound annual growth rate (CAGR) during the downturn, compared with 0% among the losers. What’s more, the winners locked in gains to grow at an average 13% CAGR in the years after the downturn, while the losers stalled at 1%.

Read more at Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

Gravity Supply Chain Solutions: Mitigating the risks of trade wars and tariffs

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As trade wars heat up, businesses need to protect their profit margins from increased tariffs. Gravity Supply Chain Solutions CEO, Graham Parker, explains how this can get achieved by digitising the supply chain.

Optimism over an end to the trade war between the U.S. and China seems to have grown further following an extension to the original 90-day trade deal truce, which was due to expire at the beginning of March. However, the U.S. government alleges that the CFO of the Chinese telecoms giant, Huawei, has broken U.S. trade sanctions, and accuses the company of acting as a backdoor for the Chinese government to access U.S. trade secrets, subsequently passing a law that bans federal agencies from buying their products. Huawei, in return, now intends to sue the U.S. government.

In the wake of these allegations, growing hostilities between the two nations could result in trade wars intensifying yet again. For businesses, this would likely mean more rising tariffs. The immediate impact of the tariffs is that they make it more expensive for American companies, manufacturers, retailers, and suppliers, to import products or raw materials from China. American firms will also find it costlier to export goods into China.

China is the largest trade partner of the U.S. according to the U.S. Census Bureau, which estimated that bilateral trade between China and America, reached US$636 billion in 2017, and given this fact, it is highly likely that the reciprocal tariffs will increase the costs of a large proportion of U.S. based companies.

Many noteworthy U.S. corporations have already attested to this fact. For example, General Electric stated that new tariffs on its imports from China could raise its costs by US$300 million to $400 million. Caterpillar claimed U.S. tariffs on imports from China would increase its material costs by around US$100 million to $200 million in the second half of the year.

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Latest moves of Amazon and Walmart confirm the death of the middle class as we know it

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Amazon, whose Prime service claims more than 70% of upper-income households in the US — those earning more than $112,000 a year — is suddenly going after customers on government assistance who earn less than $15,444 a year for a one-person household.

The retailer on Tuesday announced it would slash the cost of its monthly Prime membership nearly in half, to $5.99 a month, for customers who have an electronic benefit transfer card, which is used for government assistance like the Supplemental Nutrition Assistance Program, better known as food stamps.

“It’s a shot over the bow at Walmart,” said Doug Stephens, a retail-industry consultant. In other words, the strategy is a direct grab for Walmart’s core customers. Nearly $1 out of every $5 in SNAP benefits was spent at Walmart last year, according to Morningstar.

At the same time, Walmart is going after Amazon’s core customers with its $3 billion acquisition earlier this year of Jet.com, which attracts a younger and higher-income group of shoppers than Walmart. The retailer has also recently been snatching up trendy online retailers like ModCloth, Moosejaw, and Shoebuy, and it’s reportedly considering a bid for the high-end menswear brand Bonobos.

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Amazon’s and Walmart’s latest moves confirm the death of the middle class as we know it

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Amazon and Walmart are battling for shoppers at the highest and lowest ends of the income spectrum, leaving the middle class in the dust.

Amazon, whose Prime service claims more than 70% of upper-income households in the US — those earning more than $112,000 a year — is suddenly going after customers on government assistance who earn less than $15,444 a year for a one-person household.

The retailer on Tuesday announced it would slash the cost of its monthly Prime membership nearly in half, to $5.99 a month, for customers who have an electronic benefit transfer card, which is used for government assistance like the Supplemental Nutrition Assistance Program, better known as food stamps.

“It’s a shot over the bow at Walmart,” said Doug Stephens, a retail-industry consultant. In other words, the strategy is a direct grab for Walmart’s core customers. Nearly $1 out of every $5 in SNAP benefits was spent at Walmart last year, according to Morningstar.

At the same time, Walmart is going after Amazon’s core customers with its $3 billion acquisition earlier this year of Jet.com, which attracts a younger and higher-income group of shoppers than Walmart. The retailer has also recently been snatching up trendy online retailers like ModCloth, Moosejaw, and Shoebuy, and it’s reportedly considering a bid for the high-end menswear brand Bonobos.

Read more at Amazon’s and Walmart’s latest moves confirm the death of the middle class as we know it

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Top fashion labels save millions from China’s sustainable supply chain

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A leading group of Chinese textile mills, which create clothing for major high-volume apparel brands and retailers including Target, Gap, Levi Strauss and H&M, are saving $14.7 million each year by adopting simple efficiency measures in their production processes, according to a new analysis by the US Natural Resources Defense Council (NRDC).

These improvements have dramatically reduced the pollution generated by these mills, cutting up to 36 percent of water use and 22 percent of energy use per mill and a total of at least 400 tons of chemicals.

The 33 mills are part of NRDC’s Clean By Design program, a global model for manufacturing sustainability that is working with major fashion retailers and designers to green the fashion supply chain industry-wide.

“Great fashion can also be green fashion. Although apparel manufacturing is among the largest polluting industries in the world, it doesn’t have to be,” said Linda Greer, Ph.D., NRDC senior scientist and director of Clean By Design. “There are enormous opportunities for the fashion industry to clean up its act while saving money, and Clean By Design offers low-cost, high-impact solutions to do just that.”

Over the past two decades, China has become the epicentre of global manufacturing, and it currently produces more than 50 percent of the world’s fabric, totalling more than 80 billion meters annually.

As a result, the country is suffering from increasingly serious pollution problems while also contributing significant carbon into the atmosphere. Textile manufacturing, particularly the dyeing and finishing of fabric, is incredibly water and energy intensive as the process swallows up to 250 tons of water for every 10,000 meters of fabric produced and consumes 110 million tons of coal every year.

Read more at Top fashion labels save millions from China’s sustainable supply chain

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