The EU ESSnet project on ESSnet on « profiling large and complex MNEs »
Pierre TEILLET
Vincent HECQUET
State of the art /
Crucial questions
ESSnet on « profiling large and complex MNEs »
› the context, approach, programme and actions
slides
3 to 7
› the current state of operations
slides
8& 9
› about definitions of enterprises
slides 10 to 13
› Proposals, questions and options
slide
14 to 18
› examples
slide
19
› next work
slide
20
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ESSnet on « profiling large and complex MNEs »
the context
The profiling necessity is:
› related to two EU 1993 regulations (Statistical Business
registers; Statistical units)
› that did not allow “measuring the whole elephant” (Statistics
Canada report to UNECE / CES 2005)
› and lead to a new BR regulation (2008), including as well MNEs
as “enterprises” .
But we still have to “translate” the previous studies in operational
processes.
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ESSnet on « profiling large and complex MNEs »
the context
The present project is:
› part of the MEETS programme
(Modernisation of European Enterprise and Trade Statistics)
› designed to achieve a streamlined framework of business-related
statistics
› as a part of the system of the EGR (Euro Groups Registers)
› in order to achieve coordinated and meaningful statistical unit
structures for enterprise groups
› (with maximum use of existing knowledge (EU and non EU))
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ESSnet on « profiling large and complex MNEs
the general approach
›
objectives & results structured into 3 steps:
– 2009-2010: a positioning paper on feasibility of profiling;
an input on statistical units for an eventual change of EU regulation
– 2010-2012: methodology, tools, guidelines …
– 2013 & on: full implementation of profiling inside EU
›
throughout the project: testing, iterations and early results
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ESSnet on « profiling large and complex MNEs
the work programme
›
ESSnet, a new way for developing European Statistics:
– a partnership of NSIs
– cooperating to develop a common methodology
– willing to disseminate the results to the whole European
Statistical System
– with the strong support of Eurostat
›
The « profiling » partnership:
– 7 NSIs : CBS –NL, DESTATIS –DE, ISTAT –IT, ONS –GB,
SF –FI, OFS –CH , INSEE –FR coordinator
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ESSnet on « profiling large and complex MNEs
the actions planned under the partnership
›
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WP A. To define the feasibility and the scope of ‘profiling’ large and
complex MNEs.
WP B. To develop a common conceptual framework, methodology, rules
and standards for profiling
WP C. To develop processes / workflows, tools,operational guidelines
and quality control of profiling, organisational and financial models
WP D. To test and implement 'profiling'
WP E. To develop a model for sharing of 'profiles' (including legal
framework)
WP + To disseminate and train
WP M To manage the ESSnet
WP = working package; managed by a leading partner (LP), 1 to 3 working partners
(WP), all others being reviewing partners (RP)
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ESSnet on « profiling large and complex MNEs
current state of operations (1)
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Framework partnership agreement: signed in October 2009
Specific Annual Agreement: signed in December 2009
Kick-off meeting, 3 all-partners coordination meetings
2 Workshops :
– London 13-14 Jan on feasibility - the “why” and the “who”
with the stress on stakeholder views
– Amsterdam 24-25 Feb on Statistical Units
An organised cooperation between Workpackage leaders with
Trilateral meetings
A planned 3rd workshop on “options” in June
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ESSnet on « profiling large and complex MNEs
current state of operations (2)
› Consultation with stakeholders is still ongoing
› When and if trade-off will be necessary, setting
priorities among their wishes could become
unavoidable
› Current list of main stakeholders:
– National Accounts
But do we serve first EU needs or National needs?
– Balance of Payments and Foreign Direct Investments (FDI)
– Foreign Activities and Trade Statistics (I & O-FATS)
– Structural Business Statistics (SBS)
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ESSnet on « profiling large and complex MNEs »
definition of « enterprise »: main issues
In the present EU regulation:
Enterprise, 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
is used at national level, without international comparability:
- the sum of the parts usually differs from the total
- the required level is not specified (national, European or global?)
- the standards for data collection are not consistent either
conceptually or in practice
so that the ultimate question will be one of « global profiling »
versus profiling relative to any kind of territory
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definition of « enterprise »: main issues
Probably necessary to choose between:
– present definition of enterprise (easy to use with legal administrative or
fiscal data, but not consistent with management structure)
– a new one (at least partly) based on group operational segments
or divisions (GODs) (listed in Annual Reports according to IFRS8)
GODs definition usually crosses the national boundaries, and thus
needs a choice between:
– enterprises crossing national boundaries
– GODs split into enterprises within national boundaries
– with a classification dilemma (simplest example next slide)
GODs definition is not directly related to legal units:
– (some) legal units may be split into more than one enterprise
– need to find a way to relate the enterprise to the institutional unit
– need (eventually) to create “rest of world” units for outside EU
There is no role, in the EU, for the local unit.
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definition of « enterprise »
The territorial classification dilemma:
What is
France (UCI
& Distribution)
›
›
global classification?
national classification?
›
›
when France and Germany
distribute GB output
GB
(Manufacturing)
Germany
(Distribution)
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definition of « enterprise »
The territorial classification dilemma:
can be more complex if flows of
manufactured goods are implied
What is
› global classification?
› national classification?
›
›
when 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
FR (UCI, R&D,
Manuf and trade)
Spain
(Manufacturing
and distribution)
All EU countries
(Distribution)
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Two operational proposals:
›
1 Sharing a 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)
– national accounts systems: we recognise that the new UN-SNA
manuals focuses on the legal units; what about the new EU-ESA?
›
2 Dealing with complexity:
– we cannot deal with all cases (initially or indeed in the future)
– we need a mechanism to develop rules based on new cases
(within the BRWG or the EGR Steering Group?) rather than a
complete set of new rules
– new rules and mechanism must include treatment of holdings,
SPEs, off-shoring, family closed companies, family groups,
accountancy firms and other partnerships, etc
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Three operational questions(1) :
›
Do we propose a process with, first, top-down profiling, then,
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 all market-oriented entities (as the basement for the
future enterprises) 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)
›
Which is very different from the present definition (largely bottom-up):
– only way to deal with groups with hundreds of affiliates,
– avoiding time lag and quality problems of administrative data,
– improving the cost /efficiency ratio
But leading to the following questions:
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Three operational questions (2):
› Do we propose to use (largely) the IFRS (the EU-GAAP)?
thus needing to study their pros and cons:
– Pros:
– Most widespread “administrative” “ EU” standards
– 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 national figure if intra-group flows)
and sometimes at levels lower than UCI
– No standardised publication tables
– Uncertain stability for the operational segments
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Three operational questions (3):
›
Do we propose to restore consistency between EU and national
statistics, through assigment of dual (plural) classifications to
statistical units
– Group-consistent classification
– Own-activity classification (solves ancillary activities
problem and also commercial but not trade activities
problems)
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leading to 3 main types of options:
›
›
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1 the so-called “no change” option:
– sticking to the present definition of enterprises
– with necessary operational changes to really apply it
2 the “minor change” option
– clarifying the definition of enterprises (what reference territory: each
country / a zone / the world? what type of relations with legal units?)
in comparison to operational segments of the Group
– introducing either “truncated GODS” as enterprises or “truncated
enterprises”
– with international coordination (list and composition of enterprises)
– Statistical work remaining purely national
3 the “complete change” option
– First global: for the listing of GODs and enterprises
– Statistics mainly based on consolidated information (highest level
possible) or on “consolidation system” at least for FATS data
(ISIC/NACE; turn-over; employment)
– Then allocation to countries (process to be designed)
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the first « examples » studied
›
testing, iterations and early results are objectives throughout the
project
›
but restricted to “examples” until now
›
first “cases” studied in common:
– 4 groups within the motorcar industry (to check their similarities
and differences)
– a list of differentiated MNEs (in industry, trade and services, all
largely widespread in EU, some with SPEs), most of them being
seen from at least two countries point of view
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the future work
›
Next Workshop in Paris in June, main discussion on:
– Options for the profiling
– Draft report on statistical units
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Needed discussion from EU and non EU statisticians
›
For EU members, all papers of the ESSnet on CIRCA / BRnet /
Profiling, for information and comment
Thank you for attention and comments
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