New survey finds evidence for shift in balance of global economic power. These conclusions come from a global survey of corporate investment plans carried out by KPMG International. Corporate investment strategists from over 300 of the largest multinational companies in 15 major economies were asked where they plan to invest in the next 12 months and in five years' time.

INTRODUCTION:

To offer our member firms clients and guests an opportunity to think beyond the present, see beyond borders and debate how things might be different, we have devoted the whole of our 2008 European, Middle East and Africa Tax Summit, taking place in Barcelona, to discussions on how the global economic game is changing, and what the new rules might be.

As a contribution to these discussions, we have commissioned a research project covering 15 countries around the world, asking over 300 corporate investment strategists, plus representatives of private equity funds and sovereign wealth funds, where and how they expect to be investing the funds under their control both in the next 12 months, and in the next 5 years.

The countries covered were the U.S., U.K., Germany, Spain, Netherlands, Switzerland, Ireland, Russia, India, Australia, Canada, China, Brazil, Mexico and South Africa.

This is our report on what these people told us about their expectations for the world economy and their future plans. We think it gives some very clear indicators of the future direction of corporate capital flows, and raises some fundamental questions about how governments and corporations can and should react.

We hope that delegates to KPMG’s 2008 EMEA Tax Summit, as well as company leaders, government officials, commentators, and anyone with an interest in the future direction of the world economy, will find this an interesting and thought provoking debate, helping them to make decisions now that may add long-lasting value.

Sue Bonney
KPMG's Europe and EMA Head of Tax

Visit Global Corporate Capital Flows, 2008/9 to 2013/14 KPMG Web Page

A study of the investment intentions of companies in 15 countries around the world.
June 2008, KPMG.

CONTENTS:
1 Introduction
2 Commentary
7 Country by country
8 The United States
9 China
10 United Kingdom
11 Germany
12 Russia
13 India
14 Brazil
15 Spain
16 Mexico
17 South Africa
18 Australia
19 Canada
20 Ireland
21 Switzerland
22 Netherlands

Download Global Corporate Capital Flows, 2008/9 to 2013/14

PDF format, 933KB, 28Pages.

CHINA:

Today, China’s greatest strength seems to lie in the industrial products sector, where its share of investment plans this year is 43 percent, rising to 48 percent in 5 years. But this influence is clearly extending rapidly into other sectors. By 2013/14, respondents expect to be placing China equal first with the U.S. in consumer services, equal second with the U.K. in business services, third after the U.S. and U.K. in financial services, joint first with these two countries in IT and telecoms, second to India in manufacturing, and first in mining and utilities.

The process of developing influence in a sector naturally follows after these investments have been made and have begun to bear fruit. But here, too, China is expected to make remarkable progress. In overall influence, respondents expect the country to take second place after the U.S., displacing the U.K.. Respondents also believe China will continue to dominate in industrial products, will take over the leading place IT/telecoms and mining/utilities, and will be second in business services, consumer services, manufacturing, and property and transport.

The investment plans of China’s own corporate sector look remarkably stable. This year Russia is the choice of 40 percent, India is chosen by 25 percent, and Brazil by 20 percent with the U.K., Germany, Singapore, Mexico, South Africa and Indonesia all on 15 percent.

Looking ahead, Russia’s share increases to 45 percent, India’s goes up to 35 percent, Brazil stays on 20 percent and the U.K., Germany and South Africa stay on 15 percent.

In marked contrast to many of the other countries surveyed, it’s clear that the U.S. is not a favored place for Chinese corporate investors. Only 5 percent from this study plan an investment in the U.S. this year, and none at all in 2013/14.

Facing local and global challenges needs the ability to think beyond the present and act now.
KPMG tax professionals are attuned to your needs and can work with you and your business:

• Addressing local issues, but with a global mindset
• Thinking beyond tax, to provide insightful business opinions
• Helping you make decisions now, that can add long-lasting value

Across KPMG’s global network of member firms, we have 22,000 tax professionals. The insights they offer - both in local tax knowledge and cross-border tax skills - provides organizations, both large and small, with clear and defendable advantage in the immediate and long-term. And crucially, through the deep industry knowledge of our people and multi-disciplinary approach, we are able to help our firms’ clients to think beyond the present, see beyond borders and achieve long-lasting success.

For further information please visit www.kpmg.com

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