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Martin van Roekel took over as CEO of BDO International Limited on 1 October 2011.

CEO INSIGHTS is a forum for online conversations about the accountancy industry in general, including accountancy around the world, standards and regulation and high growth markets


Martin van Roekel is the global CEO of BDO. BDO is an international network of independent member firms that provides advisory services in 138 countries, with 54,933 people working out of 1,202 offices worldwide.  Martin is based in the Netherlands and has over 30 years’ experience in the accountancy profession.

Martin van Roekel - CEO INSIGHTS

CEO Blog


In this latest CEO Insights blog, Martin van Roekel invites Anders Heede, BDO’s CEO of EMEA,  to share his views on why Ethiopia should be on the shortlist for ambitious businesses looking at potential growth markets. Anders reviews the opportunities in Ethiopia and how companies can capitalise on them. This latest blog was recently featured on Beyond BRICs, the Financial Times’ specialist hub dedicated to emerging markets. 

Many emerging markets, especially in Sub Saharan Africa, have seen solid GDP growth in the past decade, driven mainly by natural resources. But with falling commodity prices and Chinese demand dwindling, those with overly resource-dependent economies are being caught short. Companies seeking to invest in emerging markets should be on the lookout for those countries that have invested in diversifying their economies. And those willing to look beyond BRICs and MINTs should have Ethiopia on their shortlist.
In 2012 Ethiopia was the 12th fastest growing economy in the world, according to the World Bank. Hefty state-led investment has kept the economy of Africa's second most populous nation growing at more than 8 percent per year for over a decade. More than that, it has become Africa’s fastest growing non-oil economy. The Ethiopian government’s focus on growing value-added activities has bolstered its transformation towards a diversified economy and, as a result, it is attracting the attention of ambitious businesses and investors alike. We should examine how it has solidified its position and what the opportunities are for businesses.
Most importantly the country has invested in infrastructure. The government has delivered on its five year Growth and Transformation Plan, which has seen it making large investments (around 15% of GDP) in infrastructure projects. At the heart of the programme are railway, road and dam projects to give the landlocked nation cheap power and reliable transport. The programme’s poster child is the controversial Grand Renaissance Dam on the Blue Nile, which will become Africa’s biggest hydro-power plant and turn Ethiopia into a regional power hub. 

At the same time, reforms to business registration and changes to regulatory institutions have simplified rules, improved the quality of business support and considerably reduced the cost of doing business. The time required to clear customs for export and to secure a business licence has been cut to 15 days, from 44 in 2004.

With China slowly running out of inexpensive labour, manufacturers are looking at low-income countries like Ethiopia. Textile manufacturers have already been attracted by the rich local supply of leather and cotton. For example, the multinational retail clothing firms H&M and Primark both source significant amounts of material from Ethiopia. The Ethiopian government has developed specific industrial zones which will see the companies within them benefit from a tax ‘holiday’ of up to 17 years. Chinese shoe maker Hujian Group has already invested heavily in the Chinese-built Eastern Industrial Zone and last year announced its plans to invest a further $2.2 billion in an industrial zone of its own, located in the Lebu area in the South Western outskirts of Addis Ababa. Turkey is currently the leading country investing in Ethiopia – Turkish companies have invested $1.2billion capital in the last decade. Other big names that have recently announced investment plans include Unilever, GE and GSK.

With a growing population of 94 million, urbanisation and rising income levels Ethiopia is also surfacing as an attractive consumer market. By 2020 Coca-Cola hopes to sell 100 million unit cases in Ethiopia, putting it on par with Egypt and South Africa. Meanwhile, Heineken has just inaugurated what it claims is Ethiopia’s biggest brewery to capitalise on figures showing the Ethiopian beer market has doubled over the last five years, with per capita consumption still relatively low compared to other east African countries.

However, the country is not without its challenges and there is some uncertainty ahead. The country will go to the polls on 24 May 2015. The next elections will likely see another win for the ruling EPRDF party that has claimed victory in every election since the fall of the Derg regime in 1991. It will be the first election to be held under the current Prime Minister, Hailemariam Desalegnn, after the death of Meles Zenawi in 2012, who ruled the country for 21 years. The claim from many human rights activists of the growing inequality and demands for freedom of press and political participation are likely to challenge the ruling party.

Investors will be keen to find out whether the government plans on loosening its grip on the economy – for example, many sectors remain closed off to foreign investors and even to domestic companies at times. Access to finance for the private sector remains difficult, even more so because of the government’s large infrastructure plans. For the boom to continue, Ethiopia needs a stronger banking sector. The World Bank’s Investing across Sectors indicators show that Ethiopia has above-average restrictions on foreign equity ownership. It imposes restrictions on foreign equity ownership in many sectors, including telecommunications, financial services, media, retail trade and transport.

A broad-brush view might suggest that the glory days for emerging markets are gone – but pockets of opportunity do exist. Emerging markets is too broad a term for what is not a homogeneous group of economies, just as Africa is not one single market, rather a vast and diverse continent with varying challenges and opportunities. Unlocking the potential requires a granular approach drawing on local knowledge of in-market intricacies. With its large scale investments in infrastructure, high growth rates and vast population, Ethiopia is a market worthy of further investigation for those with a long term viewpoint willing to look beyond the BRICS and MINTS.

As one of the largest audit and advisory firms in Ethiopia, BDO supports domestic and international clients in navigating the Ethiopian market and grasping the opportunities there. We see Ethiopia as a major future market for our clients and can support them with deep local knowledge, combined with global expertise and the consistent delivery of exceptional client service.

As billions of people worldwide celebrate the 40 day festival of the Chinese Lunar Year, Martin looks to the Far East and gives his views on the challenges - and opportunities - in China for professional services firms, networks and their clients.

Recent figures from the Chinese culture ministry suggest that revellers in almost 120 countries worldwide will host festivities to mark the Chinese Lunar New Year, which began on 19 February. The bright colours and bold patterns of the celebrations so far have provided stark contrast to the gloomy outlook reported through recent headlines of global business newspapers. With the country in the mass-media spotlight, I would like to share a few of my own thoughts on the challenges and opportunities for doing business in China – particularly for our profession.

Having spent a significant amount of time in the country over a number of years, I’ve seen vast changes as China experienced a boom, surpassing the United States as the world’s biggest economy.  However, latest data tells a different story, with economic growth at its slowest pace since the depths of the global financial crisis - industrial overcapacity, rising debt levels, political tension and a slump in the property sector being cited as reasons for the slowdown. In fact, economists at the World Bank and the International Monetary Fund have suggested that within a year or two, India’s economy might be growing more quickly than that of China. As a result, investors and businesses are being increasingly cautious when looking to China for investment and growth.

Against this backdrop of slowing growth and falling productivity in China, the country nonetheless remains a hotbed for M&A activity. BDO’s latest quarterly Horizons report, which gives a comprehensive analysis of global M&A activity, showed an unprecedented level of deal activity in the market in 2014.  In fact, by the end of the third quarter, deal volumes and values in 2014 had surpassed that of the previous year, and certainly offer continued optimism for the markets going forward.

In terms of the implications for professional services firms there are, in my view, two key factors to achieving success in China in 2015:

The first is that doing business in China fruitfully must be underpinned by a clear understanding of the country’s unique etiquette and ceremonies. This can be quite overwhelming when you consider that China is made up of 23 provinces and 56 ethnic populations. So, in order to anticipate and respond to client’s needs, firms need to have skilled staff with in-depth knowledge and experience of operating in this market. The ability to deal with the nuances and complexities of local ways of working is imperative. According to my opinion, many businesses fail in China because they take a standard approach that isn’t tailored to the needs of clients nor the local ways of working. It sounds simple, but too few companies get it right. That’s why at BDO we give our people the freedom and the flexibility to ensure that client service is right for their clients.

The second – and arguably, most important - factor is that such local knowledge needs to be supported by a strong expertise across key service lines and industry sectors. This approach will enable firms to match clients’ changing demands and in turn, capitalise on growth opportunities. For example in China we are focusing on and expanding our TMT sector, an industry which played a starring role in the first half of last year, as China’s diversified technology giants continued to expand their operations into areas such as mobile phone manufacturing, logistics, entertainment and mobile apps development.

In order to get both extensive expertise and in-depth local knowledge right,   it is important to have a significant presence in the market. This might take the form of establishing an in-market presence through organic growth or it might be achieved through mergers or acquisitions.  BDO Li Xin’s merger with a big part of PKF China in 2013  certainly strengthened our position as the market leader in serving state-owned enterprises and in the last 2 years  BDO China has completed a further four mergers, putting the firm in a good position to take advantage of Chinese economic reform.  This is why BDO was able, late last year, to announce that our revenues in China were up 16%, leading to a CICPA ranking of 4, ahead of EY and KPMG.
Through a relentless focus on delivering exceptional client service, underpinned by in-depth local knowledge, strong sector and service expertise and an efficient global infrastructure, we have been able to accelerate our own growth and take advantage of the opportunities created by our clients’ global expansion in the Asia Pacific region, particularly in China. I’m looking forward to seeing this continue throughout 2015 and beyond.

In this latest guest post on the CEO Insights Blog, BDO’s Global Head of Natural Resources, Charles Dewhurst discusses how plummeting oil prices are impacting companies in the oil sector. What are the factors determining future outlooks and how should organisations prepare for the future?

Who will pay the price?

This week I’m attending BDO’s International Natural Resources Conference, which will be held in Africa, within our EMEA region, for the first time. As we find ourselves in an unprecedented period of plummeting oil prices, I’m keen to hear first-hand from colleagues around the world about the impact on businesses in their market.  From a global standpoint, although we are facing uncertainty, I believe that the current oil and gas landscape is very interesting and for some there is cause for optimism.
Throughout 2010 until towards the end of last year, oil prices were more or less steady: other commodities had been hit by the stalling Chinese demand over the last 18 months, but oil managed to hold up. Such stability seems a time ago now, as prices have more than halved in the past six months.  Those of us working within the sector are now facing the question: is this the result of structural change, or is simply a case of boom and bust? On one hand we have plentiful supply of energy thanks to new discoveries of shale and on the other the global economy is struggling to pick up the pace and we are seeing dwindling demand. From my conversations with colleagues, clients and peers, it seems many people would be happy if the price point makes it back up to $80 a barrel. As a result, I believe we are seeing an important change in the oil and gas sector and I’m not convinced the price has bottomed out.
Producers large and small are being buffeted by a combination of surging US production, slow economic growth in many markets – and, of course, the fact that OPEC is not slowing down supply, rather believing that lower prices will stimulate demand. But, as prices continue to fall steeply, producers must attempt to navigate an ever more uncertain environment.

What are the future-determining factors for oil and gas companies?

The first is size: in this situation, size matters because it provides room for insulation from financial risk. For example, at the end of last year BP announced plans to restructure, including the loss of hundreds of back office jobs, many of them in the US and UK.  Royal Dutch Shell has also said it will cut $15bn from its global investments – no doubt impacting the likes of jobs and exportation in new territories. For smaller companies, there is far less scope or capacity to accommodate such cost-saving moves to rebalance the books in the face of falling prices.

The second factor is efficiency- or more importantly, the lack of it. As the cost per barrel reaches new lows, lifting costs are under scrutiny and the priciest extraction techniques are set to suffer. This is particularly relevant in the North Sea where high production costs are draining what little profits are possible at this time.  In some markets shale might be the answer. For example, in the UK, Prime Minister David Cameron has been supportive of exploring the shale option and, given issues around security of supply, Poland and Ukraine might also be tempted to investigate. In addition, Russia may well be investigating shale further because, with or without shale, the country faces a difficult balancing act. Russia loses around $2bn worth of revenue every time a dollar is shed from the oil price but is at the same time refusing to cut production in a bid to shore up prices. The worry is that such a reduction in production would see Russia lose its foothold with importers.

Looking elsewhere, Canada and Venezuela are among other markets being hugely impacted by the current situation. Although the Canadian oil sands are not the most efficient, they have been well managed and so far successful, because Canadian crude supply to the US has resulted in a squeezing of the Saudi supply. But now there’s a risk that the oil sands could be victims of their own success and are in danger of being priced out by a sustained period of low prices. Against this background, the debate in US Congress over whether or not to approve the Keystone XL pipeline from Alberta down to the US continues, with both environmental and economic concerns at the heart of the debate.

Looking further South in the Americas, Venezuela’s Ministry of Petroleum and Mining reported in January that prices had halved from their June 2014 peak. This is decimating the Venezuelan economy and inflation is over 63%, and as a result China has had to pledge $20bn in financing.
What might the coming months hold?

I think it’s safe to assume that we aren’t going to see a rise in oil prices any time soon. With producers and their suppliers under mounting pressure, companies need to take action now to get themselves fit for the immediate and long term future. Small and mid-sized companies in particular must prepare: without the insulation that scale provides, many may need to consider debt financing, mergers and acquisitions to survive. However it’s not all doom and gloom. Yes, the world in which we operate is fundamentally changing, but there are also tremendous opportunities for ambitious businesses operating in the natural resources sector around the world. Demand for efficiency, for resources, for improved access to credit and technological innovation is fuelling growth opportunities, particularly for those focused on non-conventional resources – whether harnessing the power of technology for responsible shale fracking or capitalising on the potential of liquefied natural gas to answer energy needs. Midstream and exploration are two areas in particular where we’ve seen opportunistic companies capitalising. In particular, mid-caps and majors with the financial resources and infrastructure, are increasingly entering joint ventures in a bid to expand their portfolios.  In fact, I’m already starting to see our teams around the world increasingly being called on to help facilitate these partnerships or deals, whether making the introductions or undertaking the necessary due diligence.  I predict it’s something we’ll only see continue as more companies look to capitalise on the current climate. 

By Julian Frost, leader of BDO's Global Technology Team 

In this latest blog post, leader of BDO's Global Technology Team ,Julian Frost discusses the impact of Alibaba’s mega float on the global technology sector.

In the days and weeks leading up to the Alibaba flotation, the sector held its collective breath, waiting to see how the market would react. This meant something of a pause on deal activity, but now the dust has settled on the deal, has the way been laid open for a rush of listings, mergers and acquisitions?
BDO’s latest TECHtalk report examines the health of the tech sector in the months after the float. It provides the most comprehensive analysis to date of the Alibaba Effect; its impact on the markets in Q4 2014 and what it means for the global tech playing field in early 2015.
The IPO floodgates failed to open

Immediately following the flotation the market cooled as companies delayed their listings for fear of interest being detracted by the megadeal, and also to see how the market would react.  This has meant IPO activity is currently down 25% year-on-year.  With the dust having settled on the Alibaba deal and it being deemed a success, many expected a resurgence in tech IPOs – many of which didn’t materialize because of macroeconomic uncertainty, volatility in the markets and political instability.

However, it’s not all doom and gloom. We’ve seen a much-needed festive flurry of deals lined up in December and we predict the year end figure will only show a 14% slide compared to 2013. This pre-Christmas pipeline of activity looks promising, and will hopefully stem the December drought we’ve seen so far, with only 20 IPOs announced this month, compared with 28 in December 2013.

Has the ripple effect brought any benefits?

Despite this constrained deal activity, we have seen some evidence of an Alibaba boost in some tech subsectors – in particular in application software. There have been 56 IPOs in this subsector already over the course of the year – and, given there were 61 in total in 2013, we expect this total to be surpassed within the closing weeks of 2014.

2015 should be a more positive year for IPOs as a whole, as a number of companies, which delayed their 2014 flotations against a backdrop of market volatility, look to make a means in the New Year. The highest profile of these is cloud storage vendor The Box - due to float in October, it has now delayed until 2015 – certainly one I’ll be watching with interest.

Tide of M&A growth also held back… but not for long

In a similar story to IPOs, a combination of macroeconomic uncertainty and Alibaba-induced caution has meant that 2014 has been a poor year for numbers of tech M&As. With investors’ eyes on how Alibaba would perform, Chinese venture capital fundraising plummeted to $403million in Q3, a fraction of the $3.78billion raised in Q2.

As of mid-December, 1910 deals have been completed this year, compared to 2139 in 2013. Although numbers of deals are down, the value of the M&As hit $2.66bn for the first three quarters of 2014 – a 60% increase on the same period in 2013.

Looking ahead to next year, we predict that tech M&As will have a brighter 2015. Individual subsector hot spots have been prominent in driving M&As in Q4 and we expect this to continue into Q1 2015. Chief amongst these in the final quarter of the year has been FinTech – the tech payments sector is coming to the fore with Apple launching Apple Pay in November. In addition, Proxama acquired Aconite Technology Ltd, an EMV enablement and smart product management software provider which is likely to kick-start a number of similar acquisitions.
Riding the wave: The watch-out for tech firms

As we reach the end of the year, it’s clear that the Alibaba Effect hasn’t been as positive as many hoped in sparking new tech deals. In fact, many companies have found themselves in unchartered waters with caution sweeping the markets and macroeconomic uncertainty compounding uneasiness. A successful flotation in the Alibaba aftermath hasn’t been as easy as saying ‘open sesame’.
Many factors come into play here but it’s clear there’s been a lag in the wake of the mega-flotation as some firms have either held back their deals or preferred to secure new backing to remain private. At BDO, we are hopeful for a more positive 2015, but while the overall outlook remains unclear, careful consideration is as important as ever.