Rabobank - Technology and Innovation 2012 (How Nezlomny is the World)

8/2/2019 Rabobank - Technology and Innovation 2012 (How Nezlomny is the World)

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The role of technology and innovation

Hw riiti th wrd?


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Preface 4

Futuregrowthengine 6

WhatistheinnovationcapacityoftheNetherlands? 11

China:frommanufacturertoinnovator? 16Interview Weiming Jiang, president DSM China 20

Howcantechnologicaladvanceshelptheglobalfoodsupplyin2050? 24

Interview drs. Ben Tax RA and dr. Kees Reinink, directors of Rijk Zwaan 28

Socialmedia:closertothemarket,oranewbubble? 32

Interview Frank Volmer, director Telegraaf Media Nederland 36

Concludingremarks 40

Colophon 42

Disclaimer 43

Tble of onTenTs

1

2

3

4

5

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Hw riit i th wrd? Outlook 2012


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imp a it i chagig, rt eiti viw

citiic ivati appi quay t ivati

ad tchgica advac i th ui wrd.

Ivati ad tchgica prgr ar tia

t th urviva amt ay ui. Particuary i

tday chagig cmic cimat, it i crucia t

a t divr th hight-quaity prduct ad

rvic at th wt pi pric. t th amtim, th xiiity ui wr i ctiuuy

put t th tt, ad ivati ad tchgica

prgr ar urgty dd t vrcm th

myriad chag humaity ha acd vr th

cturi. sm th chag ar y t t

icra, uch a th dwidig ga d uppy,

g-trm d curity, cimat chag cupd

with th ga rgy iu, ad th imitd

avaiaiity ca air ad drika watr. Udr th

right circumtac - which ca cratd maiy y

impmtig th crrct pici - capacity r

ivati ca ctriut i mr way tha :

uccu ui crat mart prduct ad

ivativ prc i rdr t id uti t th

majr prm ur tim.

Whi w ar awar that a cmprhiv pictur

th r ivati ad tchgica prgr i

yd th cp thi cci tudy, w hav

highightd m th mai apct ivvd. Th

tudy t, r xamp, that th ri i prductivity

thrugh ivati i icraigy cmig th

drivig rc hid cmic grwth i ur agig

city. Thi grwth i idipa r uidigiacia trgth i th wak riig gvrmt

dt v wig th rct cmic cri.

I rdr t trgth th nthrad ivativ

pwr, it i thrr tia t icra ivtmt

i rarch ad dvpmt (R&D) ad imprv th

quaity ur highr ducati ytm. thr ky

pririty i th dimiati kwdg ad

xprti thrugh puic-privat partrhip. Th

harig kwdg ca a hp t grwth

urthr i hia ad Idia. Th cutri ar

attmptig t mak th traiti rm a idutria

t a utaia, ivativ cmy. I trm th

ga d uppy ad d curity, th pd

ivati i ig wd dw y actr uch a

iadquat acc t ga dataa ctaiig

gtic data aut pat pci. thr actr i

that m dvpmt i itchgy hav mt

with thica jcti rm crtai rgaiati.

PRefe

To raise new questions,

new possibilities, to regard

old problems from a new angle,

requires creative imagination

and marks real advance

in science.

4

Outlook 2012 Hw riit i th wrd? Prac


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bid th may imprvmt that ca mad

y makig xitig tchgi mr rady

appica, w ca a xpct urthr advac i

th mt rct rakthrugh tchgy, amy

th IT rvuti. fr , w t th pttiay

cidra addd vau th appicati

cia mdia, which ar arady ig ud t

ttr adapt prduct ad rvic t cumrdmad thrugh mr icit ad ctiv

marktig tratgi. thugh cia mdia hav

icrad th imprtac radig, thir

dwid i th pttia damag thy may iict

crprat imag.

ovra, w a wrd that prvid pprtuiti

r crativ, ivativ uti, ad that act a

hud giv yu, a a trprur, a

ptimim. Raak ha mad ivati a kytratgic pririty. W hav th markt adr

with ur paymt rvic r may yar, icudig

th att trd ctact paymt. W hav

prvidd th ui markt with a grwig

umr pprtuiti t ik markt irmati

t prduct thrugh a ivativ patrm -

RaTraact - ad t itatauy cvrt thi

it th traacti rquird. naturay, w a hav

a itrt i aciitatig ivati r ur cit.

o xamp i th Ivati la itrducd y

Raak Rttrdam. My hud vr a

arrir t ivati, that what w tad r.

supprtd y aciitatig ad timuatig pici,

crativity ad ivati ca prvid th riic

w d urgty. g with ur macr-cmic outk 2012, thi thmatic puicati

prvid a itgratd viw th iacia-

cmic wrd prcivd y th Raak. our

vii i uppmtd y itrviw with practica

xprt rm variu trpri, wh accut ar

icudd i thi puicati. W wud ik t thak

th pria r gruy harig thir

tim ad xprti with u.

I hp yu jy radig thi puicati, ad wudik t wih yu a uccu, hathy ad happy 2012.

SipkoSchat

Executive Board

Rabobank Group

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Hw riit i th wrd? Outlook 2012 Prac


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fUTURe RoWTH enIne

For many centuries, innovation and technological advances have been

instrumental in increasing prosperity. While economic growth is a major

factor in this change, its impact is significantly wider. Key problems in

the sustainable use of scarce raw materials were addressed and can

continue to be addressed in the future by using innovative solutions

and increasingly sophisticated technologies. This also applies to

challenges related to the food supply for the growing world population

and challenges related to adapting the supply of goods and services to

consumer preferences. From an economic perspective, considering the

current government debt worries and the poor demographic prospects,

we believe that innovation and technological advances will become an

increasingly important source of growth in the future.

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Outlook 2012 Hw riit i th wrd? futur grwth gi


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Productivity,technologicaladvances

andinnovation

ecmic grwth is asd thr pillars: grwth

f th wrkig ppulati, icras i th stck f

capital gds, ad tchlgical advacs, asrflctd i th grwth i prductivity. Th

sigificac f this prductivity grwth as a surc

f cmic grwth is st t icras caus it will

cm icrasigly mr difficult t rais th supply

f laur i ur agig scitis vr th xt

dcads. This will xplaid i mr dtail i th

paragraphs lw. bsids th challg f icrasig

th mplymt rat, thr is als a clar challg i

prmtig prductivity grwth thrugh targtd

ivstmts. haptr 2 csidrs Dutch ivativ

pwr frm this agl. itratial cmparis

f th varius factrs that mak up th ivativ

capacity f a cutry clarly shws i what aras th

nthrlads ca k th iggst gais.

Hwvr, th pttia impact tchgica

prgr ad ivati xtd w yd

cmic actr a: thr ar a ky chag

ratd t th d uppy ad d curity, cimat

chag i cjucti with th ga d iu,

ad th imitd avaiaiity pta watr.

mpai dvpig prduct ad rvic ar

a cuig icraigy th pciic d

cumr, a prc aciitatd i part y advaci itrt ad cmmuicati tchgy (IT). I

that rpct, ivati ad tchgica prgr

rv t y t icra prductivity ut a t

mak cmic activity mr utaia ad ttr

match prducti with dmad.

Th ara ar a th cu rarch ad

dvpmt (R&D), i rdr t rv prm

r igiicaty rduc thm. umr th

ara ar highightd i thi puicati.

haptr 3 dicu th chagig traiti

acd y hia i trarmig it cmy rm

th wrd argt mauacturig ctr it a

utaia ad ivativ cmy. gait thi

ackgrud, DsM xpai hw it ha adaptd it

ui md t th hi dvpmt.

haptr 4 i dvtd t th ga d iu,

ccudig that ivativ uti ar th ky

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Hw riit i th wrd? Outlook 2012 futur grwth gi


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t dig th ga ppuati, which wi icra

t vr 9 ii i 2050. Dirctr pat d

cmpay Rijk Zwaa xpai hw thi ga ca

achivd y awig mr cp r ivati

i th idutry. fiay, haptr 5 dcri th

uu cia mdia, th cquc th itrt rvuti th 1990. Tgraa

Mdia rup hd ight hw cia mdia ca

hp cmpai markt prduct ad rvic t

cumr a ctivy a pi.

Technologicalprogressandproductioncapacity

frm a macrcmic prpctiv, ivati ad

tchgica advac rut i icrad aur

prductivity: it i pi t add mr vau whi

uig th am umr mpy. Thi may tak th rm autmatd prducti prc; that

i, mr machi pr mpy. Hwvr, it ca a

achivd thrugh a martr u pp ad

machi, .g. i th rm prc ivati.1 t

th am tim, it i imprtat t rai that icrad

prductivity i maiy a grwth piar r th g

trm; it i t a paaca that wud aw u t

quicky wathr th currt cmic dwtur.

I th immdiat utur, chag i r DmticPrduct (DP) wi dtrmid primariy y hit

i th dmad r gd ad rvic. Thi ma

that DP hvr arud a g-trm trd (see Figure

1), dtrmid y th uppy id th cmy, i..

prducti pttia. Thi pttia dpd th

avaia umr wrkr, th tck capita

gd, ad th v prductivity. I th hrt

trm, t, prducti grwth ca dcrid

ad th actr (see Figure 2), athugh th

dvpmt ar t dtrmid much y what

i pi, ut rathr y what i actuay ccurrig i

viw th dmad r gd ad rvic. fr

xamp, i tim w cmic grwth ad

rci, mpymt dcra, cauigprducti t drp a a rut. Thi wa th ca i

th nthrad rm 2002 t 2004 a w a i 2009.

I thi ca, thi i t cau thr ar wr

wrkr avaia, ut cau th avaia aur i

ud . swr ivtmt grwth ha a

rutd i a mr imitd icra i th tck

capita gd. I 2009, thi uppy v hrak,

cau gr ivtmt wr wr tha writ-

dw. Hr, t, th tck capita gd cud

grw atr, ut thi wa prvtd du t th wrgrwth i th dmad r gd ad rvic. fiay,

prducti ca dci much that it i rducd

whi th umr capita gd ad wrkr

rmai th am. r, thi i t cau

prductivity i actuay dw, ut cau

prducti pttia i tmprariy udrutiid.

Th uctuati i hrt-trm prductivity grwth

ar thrr primariy ratd t th udrutiiati

r vrutiiati prducti pttia. ovr th

g trm, prductivity grwth act a a drivr cmic grwth. btw 1996 ad 2008, aua

addd vau grwth i th privat ctr avragd

3.1%, amt ha which wa gratd thrugh

prductivity grwth. Figure 2 hw that th r

prductivity grwth tw 2003 ad 2008 wa

much argr tha durig th prid rm 1996 t

2002. Th imprtac prductivity grwth ha

thrr icrad vr th pat 15 yar.

-6

-4

-2

0

2

4

6

-6

-4

-2

0

2

4

6

96 97 98 99 00 01 02 03 04 05 06 07 08 09

Capital (r) Labour (r) Productivity (r) Added value (l)

% %-point

Growth of added value of commercial sector and itscontributions of production factors and productivity

Figure2:Contributionstoeconomicgrowth

Source: Statistics Netherlands

-10

-5

0

5

10

150

100

200

300

400

500

600

700

48 52 56 60 64 68 72 76 80 84 88 92 96 00 04 08

GDP level Trend GDP growth Trend

billion

%

Dutch GDP in constant prices (2010),

level and trend

Figure1:TrendandfluctuationsinGDPgrowth

Source: Statistics Netherlands, Rabobank

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Theageingpopulationand

governmentdebtissues

Ivati ad tchgica advac wi cm

v mr imprtat vr th xt w dcad.

Prm ratd t gvrmt dt, which ar a

cu thrughut ur outk,2

rquir a icra icmic grwth. Thi wud vtuay crat

ugh icm r th rpctiv gvrmt t

rvic thir dt urd i th utur. a rut

th dmgraphic trd, thi xtra activity wi d t

achivd with wr pp. I additi,

ppuati agig wi ad t a icra i

hathcar rvic, whr th prducti v

ad prducti grwth ar wr tha th avrag

r th rt th cmy.

fr th cmic grwth pttia, it i particuaryimprtat t rai that th pttia wrkig

ppuati (i.. th wrkig ag) i dcraig.

uch, pttia grwth wi w dw vr th

xt w dcad. furthrmr, th gativ ct

th agig ppuati pr capita prducti

i th nthrad i arady tica r th

actua dci i th pttia wrkig ppuati.

Thi i cau th grwth th ppuati a a

wh divrg rm that th wrkig ppuati

(see Figure 3).

Th pitiv ct chag i ppuati tructur

pr capita prducti grwth avragd 0.6

prctag pit rm 1967 t 1994. sic 1994,

hwvr, th ppuati a a wh ha grw atr

tha th wrkig ppuati, ad up t 2011 thi

trd wd dw pttia cmic grwth y

a avrag 0.15 prctag pit pr yar. Thi

d t cariy ma that w wi, y diiti,

cm prpru i trm pr capita

xpditur, ic a prti th pi avig

ar ud. Thi ur that pdig gd ad

rvic rmai at th am v, athugh th

wi icraigy d t imprtd rm arad.Hwvr, cctiv prvii wi d t

iacd y a mar tax a, which ma that

m tugh chic wi d t mad.

ovr th cmig yars, th larg sgmt f th

ppulati r durig th pst-war ay m will

rtirig, causig th wrkig ppulati t dcli

vr th xt svral yars. s a rsult, thir shar i

th ppulati as a whl will dcli v fastr.

ovr th xt dcads, th ffct f th dmgraphicslwdw pr capita prducti grwth will

thrfr v strgr tha it has i th

past dcad. Th nthrlads is t uiqu i this

rspct - th situati will th sam i may thr

Wstr eurpa cutris (see Figure 4).

Bettingontwohorses:

productivityandparticipation

Th dmgraphic utk rct th imitd

pprtuiti r tig th aur uppy. Withith paramtr what w cidr a prductiv ag

r a idividua, th utk idicat hw much

rm thr i r grwth i thi uppy. o cur,

actua chag i th aur uppy ar a

dtrmid y th mpymt rat rutig rm

th pttia wrkig ag ppuati, i.. th rat

participati. Thi attr rat, which rct th actua

wrkig ppuati vru th pttia wrkig ag

-0.5

0

0.5

1

1.5

2

2.5

-0.5

0

0.5

1

1.5

2

2.5

62 67 72 77 82 87 92 97 02 07

Growth potentiallabour force (l)

Growth totalpopulation (l)

Effect of population composition onpotential growth of GDP per capita (r)

% %-point

Figure3:Demographicsandeconomicgrowth

Source: Eurostat, Rabobank

-1.0

-0.5

0.0

0.5

Belgium SpainGerm

any Italy

Netherlan

ds UK

1.0

'80 '90 '00 '10 '20

%-point

Effect of population composition on

yearly growth of GDP per capita

Figure4:Ageingpopulations:achallengeacrossEurope

Source: Eurostat, Rabobank

9

Hw riit i th wrd? Outlook 2012 futur grwth gi


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ppuati, ha icrad harpy i th nthrad

ic th at 1980 (see Figure 5). I th 1990 ad

th irt dcad thi ctury, th dci i th

grwth th pttia wrkig ppuati wa

mr tha t y th highr mpymt rat.

Dpit th dci i th wrkig ag ppuati,

it may pi t urthr utii aur a a

prducti actr i th utur y ma a highr

rat participati. Hwvr, th highr thi rat,

th mr diicut it i t achiv a urthr icra.nt that i th nthrad, it wi pi t

urthr utii th aur pttia v i th rat

participati rmai th am, athugh th cutry

wi d t aad th currt trd wrkig

part-tim t m dgr ad/r xtd th

rtirmt ag. It hud td, hwvr, that

DP y rct wath i a arrw , t

actrig i cmpt uch a iur tim.3

ev with th adjutmt av, it wi a

chag t rgai th impriv grwth i aur

utiiati witd i th 1990, a th ct th

agig ppuati wi w dw thi grwth

igiicaty. a rut - ad a td av - thimprtac prductivity grwth a a urc

cmic grwth wi icra vr th cmig

dcad.

1 Th o Maua (2005) u a much radr diiti ivati, i.. th impmtati a

w r igiicaty imprvd prduct (gd r rvic), prc, a w marktig mthd r a w

rgaiatia mthd i ui practic, xtra rati r a dirt typ rgaiati.2 s Raak outk 2012: Hw riit i th cmy?3 s Raak spcia 11/08 r mr irmati maurig wath ad prprity.

0

1

2

55 60 65 70 75 80 85 90 95 00 05 10

56

58

60

62

64

66

68

70

Gross participation rate Potential labour force Actual labour force

%

%

growth, 5-year average

Actual labour force as a percentage of potentiallabour force, 5-year average

Figure5:Participationdrivesuplaboursupply

Source: Statistics Netherlands

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WHT Is THe InnoTIonPIT of THe neTHeRlnDs?

Chapter 1 describes the importance of innovation for

sustainable economic growth. Governments in advanced

countries see innovation as a way of keeping up the growth

figures they experienced in the last decades, while emerging

countries see it as a way of catching up with the industrialised

countries. Sadly, not all countries are equally successful in

spurring innovation. This chapter compares the innovation

performance of the Netherlands with some major economies

according to our recently constructed Rabo Innovation Index

(RII). Besides this international perspective, this chapter

elaborates on appropriate policy measures for the

Netherlands to bolster innovation going forward.

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Hw riit i th wrd? Outlook 2012 Th ivati capacity th nthrad


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Measuringinnovation

Maurig ivati i a rm that i uu r

picy purp ha prvd particuary chagig.

Th ctra prm i that tw ivati ar

aik. sm ivati (.g., th ivti th

tph r th pra cmputr) crat whw markt ctr whra thr ar uu ut d

t puh th rtir urthr ut (.g. th upgrad

iPad1 t iPad2). apturig ivati crt

tatitica chag a w. fr , dirct icia

maur that wud quatiy ivati utput ar

rquty t avaia acr may cutri. Thi i

particuary tru i cidr a rad ti

ivati, a uggtd y th o Maua rrrd

t i a tt i chaptr 1. What mr, thr i

car udrtadig which actr itract ipciic cutry ttig. May actr may t

prat i a idtica mar acr dirt

cutri. th chag twithtadig, w

iv it i ti uu t maur ivati i rdr

t a t cmpar ad ctrat cmi. T

thi d, w hav ctructd a cmpit idicatr,

which w hav chritd RII -th Ra Ivati

Idx (RII)- t taih a jctiv ramwrk r

maurig ivati. Mr pciicay, w wih t

rak th majr cmi4 rm mt t ativativ ad a cti idicatr.

br dicuig th mthdgy ad th rut, it

wud imprtat t tr that thi xrci i y

ma aw. miig variu mtric it a

imp maur ivati r a cmy i

raught with may cmpxiti, pciay wh

cidrig cmi that ar t vaty dirt

i iz, ppuati, ad tag cmic

dvpmt. Mrvr, y ctig a t

idicatr ad xcudig thr, m irmati

may t. fiay, th ac a trg

thrtica a rgardig th wight ach

idicatr rc u t giv qua wightig t achidicatr. Thi may t uy rct raity whr

m varia ar prhap mr imprtat i m

ttig wh it cm t aig a cutry

ivativ capacity.

Introducingourindex

tr kig at a ht varia, w ttd t

idicatr tak rm a varity urc that w

iv ca rughy maur a cutry ivati

capacity.5

trad- tw prcii ad cutrycvrag wa t mad i ctig th idicatr

t icudd i th RII. Th RII ri tw

u-idic, th ivati iput u-idx ad th

ivati utput u-idx (see figure 6). rgard

th rmr, tw piar captur mt th

atia cmy that a ivativ activiti:

(1) huma capita ad rarch ad (2) itituti

ad virmt. Th irt piar i th v ad

tadard ducati ad rarch activity i a

cutry, which ar th prim dtrmiat thivati capacity a ati. r th cd

piar, urturig a ititutia ramwrk that

attract ui y prvidig gd gvrac ad

th crrct v prtcti ad ictiv i

tia t ivati. Th ui ad pitica

virmt ar a utmt imprtac t attract

ivativ irm ad a high kid wrkrc. Th

ivati utput u-idx captur actua

12

Outlook 2012 Hw riit i th wrd? Th ivati capacity th nthrad


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vidc ivati utput. It icud thr

idicatr that ar th rut ivtiv ad

ivati activiti.

oc th varia ar ctd, giv a thir

kw ctrait, w ummari thm it aidx cr i rdr t a t itrprt th

cutri rativ piti (table 1). T ch-

mark ur RII rakig, w hav cmpard it with

th rakig prvidd y th InseD ui

ch, th bt utig rup (b) ad

th ecmit Itigc Uit (eIU).6

RII:Ourmainfindings

Wh gacig thrugh th ta, a umr

itrtig rvati catch th y. Th mt

twrthy rvati i that th nrdic cutri

(xcudig nrway) dmiat th tp 5 piti i

th RII. t ar th rativy high rak rth Us ad switzrad i th RII a w a i th

chmark idic. o th thr id th

pctrum, th suthr eurpa cutri (spai,

Prtuga, Itay ad rc), which ar currty

grappig with a dt crii, ar th at ivativ

advacd cutri i ur amp p. Thi i agai

vry much i agrmt with th rakig prvidd

y th chmark idic. Irad i th y crii-hit

priphry cutry that ha a rativy trg

ivati capaiity (w hav xtivy dicudthi i th pat - ur ecmic Quartry Updat

09/2010, Irad: a trg cmy atr). frm th

bRI, y hia maag t utprrm m

th advacd cmi i ur amp y crig

highr tha th suthr eurpa cutri.

Uurpriigy, brazi ad Ruia ar i th ttm

th ta.

RII:Dutchinnovationperformance

r th nthrad, th cutry cm i 9th ith vra RII rakig. Thi i a tuch w th

rakig giv y th chmark idic. Figure 7

hw th Dutch prrmac a idividua

idicatr. thugh th cutry d t tp ay

idividua idicatr, it pac withi th tp 5 i thr

idicatr (PIs cr at 4th, ru aw ad patt

appicati at 5th). Whr th cutry prrm

rathr pry i th rativy w R&D itity (12th),

Figure6:RaboInnovationIndex-indicators

Source: Rabobank

R&D expenditure

(%-GDP)

Human capital & research

Innovation input

RII

PISA score: math, science

& reading

Tertiary education

(% gross)

Venture capital deals

(%-GDP)

Institutions & environment

Innovation output

University/industry

collaboration

Intensity of competition

(survey)

Rule of Law

Scientific publications

(%-GDP per capita)

Patent application

(%-GDP)

High tech exports net of

re-exports

13

Hw riit i th wrd? Outlook 2012 Th ivati capacity th nthrad


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Table1:RaboInnovationIndex

Source: Rabobank

Ranking based on:Country RII INSEAD BCG* EIU**

swd 1 2 6 5

fiad 2 3 3 3

switzrad 3 1 1 2

Uitd stat 4 5 4 4

Dmark 5 4 7 8

Uitd Kigdm 6 7 9 13

rmay 7 8 12 6

Japa 8 12 5 1nthrad 9 6 8 7

Irad 10 9 2 14

bgium 11 14 15 11

nrway 12 10 11 12

frac 13 13 13 10

utria 14 11 10 9

hia 15 15 16 21

spai 16 16 14 16

Prtuga 17 17 17 18

Itay 18 18 18 15rc 19 22 19 17

Idia 20 21 20 22

Ruia 21 20 21 19

brazi 22 19 22 20

* Boston Consulting Group

** Economist Intelligence Unit

which ha drppd utatiay ic th ary

1990. Privat xpditur R&D rm 1.1%

DP i 1990 t 0.9% DP i 2009. ccrdig t ur

RII th thr mai wak th Dutch ivativ

capacity i th w trtiary ch rmt (11th).

Dpit thi w rakig, th prprti pp

havig attaid trtiary ducati ha icrad y

rughy 10%-pit t arud 33% durig th attw dcad. fiay, th nthrad cr quit

pry uivrity/idutry carati (9th),

athugh figure 7dipay that th nthrad

ighty utprrm th oeD-cutri. I act, i

2008, y 36% ivativ Dutch idutria

cmpai wr ivvd i puic ad/r privat

carati, which i quit w i yu wat t

icra th cmmrciaiati citiic rarch.7

InnovationpolicyintheNetherlands

I th nthrad aim t th tp iv

kwdg cmi i 2020, a i apird y th

Ivatipatrm, 8 th th icra th aic

quaity trtiary ducati ad th prprti

th ppuati with trtiary ducati hud gt

pririty.

Thi wi t y rquir a mr icit dpymt th xitig ud, ut a xtra ivtmt i

ducati ad rarch gig rward. fudig

highr ducati hud cu prrmac ad

quaity prgramm ad gratr pririty hud

a giv t avaiaiity ad quaity th

tachig ta. Mr rdm i ttig tuiti

ad a mr cmptitiv virmt r puic

ud hud hac th quaity cur rd

14

Outlook 2012 Hw riit i th wrd? Th ivati capacity th nthrad


15/44

ad prvid uivriti with a ictiv t dvp

mr tair-mad prgramm, rm which th

tudt ad th aur markt wud it.

cd vrridig jctiv Dutch ivati

picy i t imprv th cprati tw

cmpai ad puic rarch rgaiati,pciay uivriti. o way t tr privat-

puic carati i y makig uivrity udig

party dpdt prrmac i diui

kwdg t irm.

T put i riy, thrwig maiv um puic

my t rai th Dutch ivativ capacity i

ithr ugh r dira. fr ivati picy

t uccu, th imprvmt ramwrk

cditi i mr icia i th g ru.

Conclusions

ccrdig t ur Ra Ivati Idx, th

nthrad i t particuary ivativ cmpard

t th majr cmi. I pit th gvrmt

picy, privat ivtmt i kwdg, rarch

ad ivati i th nthrad hav t kpt upwith DP grwth i rct yar ad hav

aggig hid ivtmt i m advacd

cmi. Th gd w i that a umr

apprpriat picy maur ca tr ivati

gig rward. I th nthrad aim t

th tp iv kwdg cmi, ur mai idig

i that th aic quaity highr ad acadmic

ducati d t imprvd ad privat-puic

carati hud urthr curagd.

4 W icudd th majr eurpa idutriaid cutri pu th Us, Japa ad th bRI-cutri (brazi,

Ruia, Idia ad hia).5 Th urc ctai: Uneso, oeD, Thm Rutr, Wrd bak ad Wrd ecmic frum.

fr urthr dtai ad th tatitica dcripti th t idicatr pa rr t Raak spcia 11/07.6 InseD (2011), Th a Ivati Idx. b (2009), Th ivati imprativ i mauacturig. eIU

(2009), w rakig th wrd mt ivativ cutri.7 oeso (2006), oeD ecmic survy: nthrad 2006.8 Ivatipatrm (2010), Ki Ivati gda 2011-2020.

R&D-expenditure

Tertiary education

PISA-score

Venture capital

University / industry

collaboration

Rule of law

Intensity of

competition

Scientific articles

Patent application

High tech exports

OECD average in RII Netherlands

Figure7:Dutchinnovationperformanceininternationalperspective

r t th ctr uggt wr

i prrmac

Source: Rabobank

15 Hw riit i th wrd? Outlook 2012 Th ivati capacity th nthrad


16/44

HIn: fRoM MnUfTUReRTo InnoToR?

Chapter 1 explained that an important aim of innovation is not only

to produce more, but also to produce in a more sustainable way.

The availability of resources is not endless and the negative external

effects of production can be large. The necessity to transform

existing industries holds for many advanced countries but certainly

applies to China.9 The growth performance of the Chinese economy

has been astonishing. Within three decades the country rose out of

poverty and transformed into a middle-income country. Innovation

might help to sustain these growth rates in the future and to realise

these goals without avoidable additional damage to the environ-

ment. However, according to our Rabo Innovation Index (Chapter 2)

in which China ranks 15th, there is still a long way to go.

16 Outlook 2012 Hw riit i th wrd? hia: rm mauacturr t ivatr


17/44

Wheretogofromhere

hia arady mad grat trid i imprvig th

ivativ capacity it cmy. btw 2000

ad 2009, th umr patt awardd t hi

appicat mutipid y 8, whi th umr

hi puicati i itratia scic &

Tchgy jura dud. Mrvr, xpditur

R&D a a prctag DP r rm a avrag

0.8% tw 1996 ad 2001, t 1.3% tw 2002

ad 2007. I cmpari, i th Us xpditur

R&D rmaid ta at 2.7% DP.

Hwvr, what th umr av d t hw

i th quaity th artic puihd ad th

ivativ ctt th patt appicati

maurd. fr itac, hi patt ar tappid t prduct r tchiqu that y dir

margiay rm dr vri. Mr gra, hia

mrgc a a ga cmic ad pitica pwr

ha i part th rut th gvrmt aiity

t rap th ruit dcad ivati i th rt

th wrd, high ivtmt i capita gd ad

puttig t wrk a rrvir chap aur. Up t

w, cpyig, rathr tha ivtig prduct ad

prc ha th mai tratgy tward

dvpig th cmy. Hwvr, i th g ru,th tchgica tac hia wi ivitay

apprach th v adig cutri. I that ca,

th cpycat-md wi cariy trarmd

it a grwth md ad w rarch ad

ivati. bid that, thi grwth md ha

prvd t uutaia a hia ri a th

wrd mai mauacturr ha vry damagd

th virmt.

17 Hw riit i th wrd? Outlook 2012 hia: rm mauacturr t ivatr


18/44

Theneedforpolicychange

I ight th av, hia rward kig

gvrmt markd a rad t icrad

war thrugh ivati. W rv that th

d r ivati tm rm tw ditict ga:

th irt i t upgrad traditia idutri ad

rv may th ttck that ar currty

tructig dvpmt. I rdr t rach thi ga,

hia wi d t id w way t appy xitig

tchgi ad prc. Th cd ga i t

a t cmpt with th wrd mt dvpd

cutri. Dig wi rquir th crati w

tchgi ad prc. T rach th ga

hia hud accmmdat a virmt i

which ivati i ad y a ducatd wrk

rc, th pprtuity t har kwdg ad acutur that rward th that chag th tatu

qu. Th wig dcri th thr chag

i mr dtai.

Theneedforhighskilledlabour

oy a high quaity ducati ytm wi aw r

th accumuati th huma capita dd t

tr ivati. Urtuaty, th hi

ducati ytm i ackig i mr tha apct.

Th prm i t i th umr graduat, utrathr i th quaity ducati prvidd t th

cr tudt graduatig ach yar. Whi

hi uivriti chur ut mr scic &

Tchgy graduat tha thir cutrpart i th

Us, y ix hi uivriti rak th Tim

Wrd Uivrity Rakig (tp 200). I cmpari, 75

mrica ad 12 Dutch uivriti ar itd i thi

rakig. mpait aut ki hrtag, rm

pciay mutiatia, urthr iutrat th

udrprrmac hi uivriti. raduat

ar aid t t yug ad t ixpricd t

mpyd. bid that, i ctrat t ducati i

th Us r eurp, th hi ducatia ytm

rward gd mmry ad dic vr critica

thikig. Thi whi critica thikig ad th aiity t

thik utid th x ar widy rgardd a

prrquiit r ucc i ivati ad cic.

Theneedforknowledgeand

technologicaltransfers

Ivati i uiky t cm aut i iati.

Itad, cmpai that ar tappd it ga

markt ar ttr a t rap th it

xitig kwdg ad tchgi. opigth cmy i rdr t xpit rig xprti

ha th mt ta achivmt

th hi gvrmt. Th itrviw with DsM

hia (xt pag) giv a ic xamp hw

rig xprti ca hp hia t vrcm it

mai tac. hw i figure 8, tw 2000

ad 2010 fDI grw cidray, rachig rughy

3%-DP i 2010.

Theneedforaprotectiveenvironmentev wh cmpai ar uy capa

ivati, thy d th prpr mtivati t

actuay ivat. Th mt imprtat ictiv i,

cur, th prpct xpitig a ivti

ad turig it it a prit. Patt aw ivatr

t d . w gvrd patt ytm i thrr

cidrd a vita prrquiit r ivati. Wh,

i 2002, hia cam a WTo mmr, it rught it

0

40

80

120

160

200

00 02 04 06 08 10

bn USD

Inward FDI Outward FDI

Figure8:ForeignDirectInvestment(FDI)China

Source: EIU



19/44

patt aw i i with itratia tadard.

Hwvr, th mai prm hia Itctua

Prprty (IP) ytm i t th aw, ut rathr th

(ack ) rcmt IP rguati. a rut,

th irigmt IP right rmai a igiicat

prm that dtr pciay rig irm rm

trarrig kwdg t hia, ut ar that

thir accumuatd kwdg wi impy cpid.

Conclusions

by icraig it capacity r ivati ad y

appyig xitig ivativ prduct ad prc

t traditia idutri, hia cud avid th

midd-icm trap ad vrcm th variu

ttck that wi thrwi hampr utur

cmic grwth. Hwvr, it wi tak mr tim

ad rt r th a mad i hia, t rpacd y th a ivtd i hia. Th

wig itrviw hw hw rig kwdg

hp hia t pd up thir trarmati prc.

9 fr mr irmati ivati i hia ad Idia pa rr t Raak spcia 11/06.



20/44

Royal DSM is a global science-based

company active in health, nutrition and

materials. Innovation is historically one of

the key drivers to secure DSMs growth.

DSM collaborates with many universities

and business partners across the world.

In the early 1990s the first sales offices and

manufacturing facilities were opened in

China. In 2005 DSM opened a new research

centre in Shanghai to improve its

innovation capability.



21/44

Wimig JiagPresident DSM China

RoWIn MRKeT sHResTTRT R&D To HInWhy did DSM decide to setup a R&D centre in

China?

DSM has always been a very innovative company

in its field, with several research centres in for

example the Netherlands and Switzerland.

Innovation is simply a precondition to survive for

any company, and this certainly holds in thechemical sector. DSM has been operating in China

since the 1960s, at that time still as a government-

owned company, but in the first decades our main

activity in China was business trading. In the last

couple of years our activities in the Chinese and

Asian market have grown rapidly, sales in China

nowadays account for more than 14% of DSMs

total activity. Of course, we are still a new and

relatively small player in the large Chinese market,

but as a company with growing market shares, wemust be able to answer the needs of our Chinese

customers. So the decision to setup a research

centre in China is mainly business driven. In the

first place DSM China tries to make the

transformation of existing products and

production processes, from for example the

European market, into products and production

21 Hw riit i th wrd? Outlook 2012


22/44

processes that serve the preferences of the

Chinese market. Only in the second place we aim

at inventing new products and processes. We hope

DSM China can distinguish itself in the Chinese

market with innovative power, and thereby we can

build on the great experience of DSM as a whole.

Do you foresee other companies to move

their R&D-activities to China?

It is undeniable that China is growing rapidly as a

consumer market. In the last couple of decades the

United States has played this role, but China is

running up quickly. If a multinational wants to

benefit from such a growing market, it has to make

sure that it is able to service the specific needs of

that market. However, this is no golden rule in all

sectors. For example, a strong, luxury brand like a

Swiss watch can simply be exported via foreign

sales channels. But in other sectors local

R&D-activities are indispensible and the chemical

sector is certainly one of those. If you dont adjust

your products and services to a specific market,

competitors will do that for you. Besides that, it iscertainly attractive to use the talent pool in

multiple geographical areas. Chinas technological

education and know-how is rapidly increasing.

Again, if you dont make use of that, you will be

outsmarted by other companies in those specific

markets. However, making use of such a talent

pool is easier said than done. Also DSM China has

had some challenges attracting good employees,

as young Chinese people are difficult to attract if

you dont have a strong brand. Therefore it is

essential to promote yourself in local markets as

a respectable and innovative company.

What is the effect of this R&D inflow on China?

From a global perspective, China is currently not

playing a leading role regarding the level of

technological sophistication. In the coming

decades this might change, especially as the

governments focus is shifting more and more

towards innovation. In the last 30 years China hasbuilt up an incredibly large manufacturing

industry, which has been a massive achievement.

However, criticizers state that this transformation

has come at the cost of the environment and the

restricted usage of resources by future

generations. The current government is aware of

these issues and in its twelfth Five-Year Guideline

(2011-2015) the main theme is innovation and its

possibilities to make the manufacturing industry

more sustainable in the future. This is a historicalturnaround in Chinese policy as it encourages

clean sectors and it restricts polluting industries,

unless they can show a transformation to a more

green production process. The detailed Guideline

includes encouragement of sustainable sectors via

for example financial incentives or research grants.



23/44

However, China needs to spend good energy

to make its industry cleaner and the inflow of

foreign R&D activities might help to find

innovative solutions to address these issues.

When it comes to innovation, people tend to

think about the invention of for example an iPad,

but also the transformation of traditional

industries towards sustainable production

processes requires a huge innovative effort. DSM

China is contributing to this process, by making

use of the know-how and good practices of for

example reduced CO2-emission in Europe.

Translation of DSMs know-how to the Chinese

market enhances the competitive position of DSM

China and shows the added value of the inflow of

R&D activities for China as a country.

Do you see any challenges regarding

future innovation?

I believe the current government policy as

described in the Five-Year Guideline is already

quite extensive. The government can hardly do

more than encourage clean and restrict pollutingindustries, although this policy will take time to

deliver results. In practice it turns out to be

difficult to implement this policy when the

closure of a large company results in massive

unemployment. This shows that also innovation

policy might sometimes be hampered by social

considerations.

Besides the Five-Year Guideline I see room for

improvement regarding the financial incentives

for innovative projects. For example banks could

provide more favourable loan conditions to firms

which are moving to clean processes. The

government might play a role in steering these

financing. Furthermore, it is important to improve

the protection of intellectual property rights.

China is able to produce a huge amount of

intellectual property but the protection of it

should get more attention. However, I believe

that if a country becomes more innovative, the

mindset of the people in that country will

naturally change to the idea that the protection

of intellectual property is important. Also more in

general, I believe that a change in the mindset of

the people is crucial to become the most

innovative power in the coming decades. The

talent pool of young, promising students is

overwhelming, but after 30 years of producing

without too much awareness of the

environmental consequences, you can imagine

that it is difficult to start taking such factors intoaccount. This change of the mindset is very

challenging.



24/44

HoW n TeHnoloIlDnes HelP THe lobl

fooD sUPPl In 2050?

Several sectors are challenged to structurally increase their

production capacity. Faced with an ongoing growth in global

population and prosperity, especially in the emerging markets, the

agricultural sector is certainly one of them. As Chapter 1 suggests,

innovation is key to pushing a sectors production frontier.

Advances in biotechnology increased the productivity and

resistance of plant seeds during the last decennia, which led to

larger harvests of several crops. Besides the importance of

technological improvement in plant breeding, it is essential to

create an enabling environment in which these technological

improvements can prosper.

24 Outlook 2012 Hw riit i th wrd? fdig th wrd i 2050


25/44

Whatarethechallenges?

imprtat drivr hid th xpctd icrad

dmad r d i th grwth i wrd ppuati.

Tta ppuati wi grw y m 40 prct, t

mr tha 9 ii pp i 2050. grat

imprtac, th pp wi ar wathir tha

tday, which pray ma mr utritiu ditary

prrc. pprximaty 70 prct mr d

wi hav t prducd i rdr t d th wrd

i 2050.10, 11 but thr ar thr imprtat dvp-

mt why w hud imprv ur currt

prducti prc. Th wrd i ruig ut

vita atura rurc uch a rti ad, ca

watr, utrit ad a umr -rpaca

raw matria/mta. bid that, th wrd i

crtd with riig grhu ga mii, t

which agricutur i th argt ctriutr.

Th dvpmt highight th d r icrad

ad imutauy mr utaia prducti. o

cur, th awr t ur chag hud t y

cm rm th prducti id. Thr hud a

giv ar mr attti t thr ctriutig

actr, ik iicit ditriuti ad irrpi

cumpti.

Theadvancesinplantbreeding

part th uti t th chag, thi

chaptr cu th dvpmt ad tac

i th pat rdig ctr (see box). succu

ad gig appicati pat cic t pat

rdig ha rapd m impriv rut i

trm imprvd yid ad ad prductivity.

umr w pat rdig tchiqu hav dvpd i th at dcad. Th hacd

udrtadig th pat gtic cd ha

utatiay icrad th pd dvpig

w variti. sic th itrducti th irt

tragic d i 1996, th u gticay

mdiid crp icrad 88 tim uti 2010 (i

trm ud acr). Ky crp that hav itd

rm itchgy ar .g. ya ad cr,

25 Hw riit i th wrd? Outlook 2012 fdig th wrd i 2050


26/44

which th prducti ha icrad rmuy.

Th grwth rat i th prducti .g. what, r

which th appicati th w tchiqu i

it, i ackig cidray cmpard t

armtid crp.

Th it hacd udrtadig th

pat gm ar mutip. nxt t th piiity

t targt highr yid ad r xamp a ttr

tat, it ca r imprtat trait uch a trgr

ritac t drught, ict ad dia ad

mrvr a wr rquird u rtiir. Thi ca

ud t icra th prducti crp i dry

part rica, ut it might a hp t rduc th

mii grhu ga.

Whataretheobstaclestothebreedingsector?

thugh itchgy, i a it appicati, i

ky t dig th wrd i th utur, a imprtat

tac i puic ritac, pciay agait

gtic mdiicati. part rm th thica iu

rgardig payig with th gmic a

rgaim, ca thik thr argumt agait

thi ctrvria tchgy. I th g trm

gtic mdiicati ca ad t a wr dgr

idivrity, which i udira i may igicaad cia rpct. bid that, a cquc

th icrad u gtic mdiicati i that

tchgy ad kwhw rgardig crtai rd

might cm i th had r jut a w arg

cmpai, ic th ivti uprir crp

may driv ut cmptiti ad mpi th

markt. dirt tac r urthr tchgica

advac i th rdig ctr i tructura

udrivtmt y th puic ctr. thugh

privat ivtmt hav ridgd thi gap, pciay

ic th itrducti itctua prprty right

i pat rdig, thi dvpmt ad t a

ituati i which pat rdig cmmrciay

iigiicat crp, ik at, ag hid. I th

itrviw with Rijk Zwaa, a Dutch ad, gay

activ prducr vgta d, th xt pag,

avmtid ad thr tac ar xpaid

i mr dtai.

Innovationsneedanenablingenvironment

uggtd i ur Ra Ivati Idx i

haptr 2, a aig virmt i crucia r

ay ctr t it maximay rm ivati.

i th rdig ctr thr i a trg itrpay

tw vra actr, icudig gvrmt

pici, citiic rakthrugh, armig practic

ad ui tratgy th privat ctr.

Whi citiic rarch rutd i vra majr

rakthrugh i th pat, th addd vau thi

actr dimiihd i rct yar du t puic

udrivtmt. That aid, th d r prpr

gvrmt picy i ti tia, t i th at

wig t th act that uppy ad aty d

ar mattr puic imprtac. furthrmr,gvrmt picy pay a crucia r i trikig a

aac tw prtctig th ruit ivati

via itctua prprty right, whi imutauy

picy hud t hampr ivativ havir y

rtrictig th u rct ivati y thr.

Plant breeding and biotechnology

Inplant breeding many different

techniques are used on plants in order to

be able to produce seeds with desired

characteristics (like taste, use of

resources and resistance against

diseases). Over the last century, several

technological advancements have been

made in this sector. From the earliest

form of breeding through open

pollination, we have now come to an

advanced stage of carrying out breeding

by using genomics as a tool to enable

faster and economical breeding

Biotechnology is a very broad term

which captures several techniques used

in e.g. medicine and the agricultural

sector. In the latter, it both contains

traditional breeding techniques as well

as more controversial techniques like

genetic modification (for a transgenic

seed a gene from another organism is

inserted into the DNA of the targetplant). Biotechnology contributed to the

understanding of the plant genome,

more specifically on the mapping of all

characteristics or traits of a specific

breed.



27/44

Conclusions

svra ctr ar chagd t tructuray icra

thir prducti capacity. facd with a gig

grwth i ga ppuati ad prprity,

pciay i th mrgig markt, th agricutura

ctr i thm. iv th hard rtricti

rgardig th avaiaiity rurc, a th pat

rdig ctr dur a riu chag.

thugh tchgica advac xpadd th

prducti vra crp i th pat yar,

it hud td that t y th v

tchgica phiticati i crucia r ur utur

d uppy. activ r r picy makr i

imprtat t crat a virmt i which

tac t th prducti ad ivati

ca card. Th wig itrviw arat

th tac.

10 oeso-fo (2010), gricutura outk 2010-2019, Pari.11 fr mr irmati th ga d chag pa rr t sutaiaiity

ad curity th ga d uppy chai, Raak, octr 2010.



28/44

Rijk Zwaanis a multinational vegetable

breeding company engaged in developing

high-quality vegetable varieties. As one

of the worlds top 5 vegetable breeding

companies, Rijk Zwaan markets its

products in more than 100 countries.

One of Rijk Zwaans main priorities is

research and development, resulting in

new techniques that enable vegetable

breeding companies to develop new species

faster and more efficiently. In its research

activities, Rijk Zwaan works closely with

other research institutions and universities.



29/44

Dr. b Tax R ad dr. K RiikDirectors of Rijk Zwaan

boosT InnoTIon foR

fooD seURIT

Is vegetable breeding a conservative or an

innovative industry?

We operate in a highly innovative sector. Rijk

Zwaans research activities focus largely on

developing new and improved vegetable species,

for example by increasing their resistance to

disease or by improving yields. Those are major

advantages in a world where food will possibly

become increasingly scarce. However, developing

new crop varieties is a very time-consuming

process - it can take six to twelve years. There is

also a long testing stage involved to make sure that

commercial gardeners can use our vegetable seeds

in different climate zones without any problem.

Is vegetable breeding a science or a trade?

It used to be mainly a trade - youd get

well-trained people selecting crop varieties and

using only the best ones. However, it was a lengthy

and uncertain process of trial and error. Although

experience and a certain amount of luck will always

play a role, vegetable breeding is gradually turning

into a science. We are learning more and more

29 Hw riit i th wrd? Outlook 2012


30/44

about the different genes found in vegetable

crops, and the properties determined by those

genes. Its a bit like a puzzle, where youre trying to

identify the numerous properties of a specific crop

variety. By crossbreeding species, you can combine

several positive properties and eliminate the

unwanted ones to create new hybrids. Thanks to

new technologies, were able to breed new

varieties much faster and more efficiently than in

the past, and the outcome has also become more

predictable.

Its important to make a distinction between

breeding and gene technology. In breeding, you

use the genetic variety of the species youre

breeding, and you also use the variety that can be

found in related, crossable species. Genetic

modification, on the other hand, involves adding

extra genes to a specific variety, which can also

originate from completely non-crossable varieties.

Gene technology is a controversial practice and

the subject of public debate. At Rijk Zwaan, we

dont believe gene technology is necessary to

improve vegetable species. Due to the great

natural genetic variety in vegetables and the

technological advances in breeding, we are able to

solve the current issues through regular breeding.

The use of biotechnology in breeding is very

useful, but it should not be confused with genetic

modification, which is only one part of

biotechnology. For example, there are molecular

diagnostic techniques that make the breeding

process more precise and more predictable, but

that still create completely natural products, only

faster.

So does vegetable breeding provide a solution for

our food security?

Well, we already have the genetic material and

technological expertise needed to provide the

growing world population with a sufficient supply

of vegetables without the use of gene technology.

However, our industry faces two major factors that

undermine this process. First, although there is a

sufficient amount of genetic material available

worldwide, it has become very difficult in recent

years to access international gene banks. The

limited access to genetic material from other

countries has slowed down innovation

considerably. There has also been an ongoing

debate in our industry about the protection of

intellectual property rights. In our sector, these

have traditionally been protected by plant

breeders rights, and since recently also by patent

rights. Were in favour of the idea of protecting

technological inventions through patent rights, as

this rewards inventors for the money and time they

have invested in creating their invention. Having

said that, we feel actually patenting plant

properties would be taking things too far, since it

means you deprive other breeders of the

opportunity to use the crop species to create new,



31/44

superior species. When species were protected by

plant breeders rights, it was permitted to use

species for further breeding, which has resulted in

a highly innovative sector. The current patent

rights prevent further breeding, which

undermines innovation significantly, while

innovation plays such an important role in

securing food supply in the future.

Would you say its up to politicians to change this?

Yes - both these obstacles call for a solution at

the political level. The industry has a common

interest when it comes to gene banks, which is

to gain access to genetic material and thereby

allow room for innovation. However, it takes time

to convince national governments that their

protectionism will backfire in the long run. There

has been considerable debate in the industry

on the issue of patent rights. The different

viewpoints are related to the use of different

business models. We feel that it would be

undesirable for any one player in this industry to

hold too much monopoly power. What if there

were only one company left in the future that

develops tomatoes? Dutch politicians get a lot of

respect in this area internationally. Fortunately,

Henk Bleker, Minister for Agriculture and Foreign

Trade, has advocated an across-the-board

breeders exemption for Europe, which would

make all varieties available on the market eligible

for further breeding.

I would also like to stress that future food security

is not merely a question of innovative solutions:

although all these issues play a key role in the

future capacity of food supply, how we handle

the existing supply is at least as important. A

significant portion of current food production

gets lost due to waste, corruption and poor

distribution.

If we were to put an end to waste in the

Netherlands, we would be able to provide

80 million Africans with sufficient food.

In that sense, weve got our work cut out

for us in the coming years.



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soIl MeDI:loseR To THe MRKeT,oR neW bUbble?

Social media have grown explosively in recent years. This form of

digital innovation adds great value for companies; allowing them to

adapt their business operations increasingly to consumer needs.

Chapter 1 cites this as one of the key roles innovation can play in

matching production with demand. Given the (expected) rapid

increase in the value of new media platforms, a comparison with the

dot-com bubble of the early 2000s is inevitable. Are we witnessing

the birth of a new bubble?

32 Outlook 2012 Hw riit i th wrd? scia mdia


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Web1.0:Inflatedexpectations

Jut vr a dcad ag, at th hight th dt-cm

u, ivtr had vry high xpctati th

piiiti th itrt, ad thr wa v tak

a w cmy. tr thuad dt-cm

tart-up wr auchd acr th Uitd stat i

th at 1990,12 th prig 2000 markd a d tth uyacy, with dt-cm tck ctiuig thir

r a uti mid-2001. Hwvr, th dt-cm ut

aid, th itrt - r, a radr v, IT - did

udutdy grat cmic grwth.

I act, th u w ma irmati ad

cmmuicati tchgi (IT), may thm

itrt-ratd, ha a imprtat urc

grwth vr th pat 15 t 20 yar, ad wi rmai

i th ra utur.

Web2.0:Doesitdeliveronitspromise?

W ar currty at a w tag i th it ret

evuti: Web 1.0 ha trarmed it a

evirmet where uer prvide mt the

ctet - thi i reerred t a Web 2.0 (see box).

scia media cmpaie - mty uded i the

ew mieium - are attractig a icreaig

umber viitr (Figure 9). o the umber

pepe uig the iteret i the netherad i

March 2011, 96% viited a cia etwrkig ite

- up 18% rm the previu year. facebk,

Twitter ad likedI were the atet-grwig

webite. There i cutry i the wrd where

pepe, reativey peakig, ed a may tweet

ad ped a much time likedI a the

netherad. scia media are becmig a ever

mre imprtat patime, ad the ie betwee

33 Hw riit i th wrd? Outlook 2012 scia mdia


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uer pera ive ad wrkig ive are

becmig icreaigy burred.

Companiesareincreasingtheirsocialmedia

presence

grwig umr ui ar a uig cia

mdia. o th tp 100 cmpai i th nthrad,

90% ar currty activ cia mdia patrm,13

up mr tha 30% rm 2010. but what, prciy, i

th addd vau th wit? fr , cia

mdia aw cmpai t cmmuicat with thir

cutmr mr aiy ad mr dircty. Uik W

1.0, whr th cr activity itrt cmpai

wa t crat thir w ctt, W 2.0 i a aut

itracti with ur. scia mdia ar a a way r

ich cmpai t cct with cutmr a vr

th wrd. Thy ca v gathr dack rm

cutmr (r charg) hw t dvp w

prduct, t ur that th prduct - at at

thrticay - ttr match cumr d.

Thr i t y ky addd vau t gaid rm

a crprat prpctiv, ut a rm a gra

cmic pit viw, a matchig prducti

mr cy with dmad rut i icrad

prprity ad icicy. Th itrviw w with

th dirctr Tgraa Mdia nthrad hw

hw cia mdia ca ud a a ma

cmmuicati. thr ky ra r cmpai

t participat i cia mdia i that it aw thm

t mitr ad hac thir crprat imag.

Uig rativy w rurc, cmpai ca u

cia mdia t cduct cvicig ad ctiv

imag campaig.

Socialnetworkingcompanies:Bubble2.0?

I a gra , W 2.0 cary add vau, ut

d thi jutiy th high tck-markt vau

cmpai uch a likdI ad fack? fr a

0.0

0.5

1.0

1.5

2.0

2.5

05 06 07 08 09 10 11

Facebook Hyves Linkedin Twitter

Used queries, underlying scale

by Google Trends

Index

Figure9:Therapidincreaseofsocialmedia

Source: Google Trends

34 Outlook 2012 Hw riit i th wrd? scia mdia


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thir ucc, th cmpai mry r a

patrm, with th mii viitr prvidig th

ctt. What th wit ar tiay aut i

gratig a much traic - ad, y xti,

advrtiig rvu - a pi. Th grat dagr

r cia mdia cmpai i i thi imp rvu

md. thugh a irt-mvr advatag appi tm xtt, du t ay acciiity (th

ivtmt rquird t uid a patrm i rativy

w), cmptiti i th markt i irc. Thi ma

thr wi away thr waitig t tak vr,

upprtd y a trg marktig campaig r a

uprir patrm. sic a patrm imag i vita,

damag t a cmpay rputati, r xamp a a

rut privacy iu, ca driv arg umr

viitr away withi a vry hrt prid. Whi it i t

ary t ay whthr th cia mdia m i yt

athr u, th ctr ui md, y it

vry atur, rut i a ucrtai utk r

xitig patrm.

Conclusions

Thr i quti that cia mdia add vau r

ui, cidrig that th attr ca ctivy

match thir prducti uppy with cumr

dmad. Hwvr, thi d t ma that idividua

patrm ca actuay mt th high xpctati.

Th itrviw w prvid a k hid thc Tgraa Mdia rup. a mdia

cmpay, it i tp cia mdia trd a a way

icraig it markt piti i th utur.

What is web 2.0 / social media?

Web 2.0 is a term that is often

used rather loosely. Usually it refers

to the various technologies that

facilitate efficient interactionbetween people, content and data.

This interaction is not just used

passively, but also to create new

opportunities collectively

(including applications and

networks). This is known as

user-generated content. The

social aspect of social media refers

to the fact that users provide the

content of the media themselves.

Examples of such media include

blogs, wikis, microblogs (i.e. Twitter)

and social networking sites. What

all these online platforms have in

common is that users provide the

content with minimal or no

editorial intervention. In addition,

the users of these sites interact

with each other.

12 Wag, Z. (2007), Tchgica Ivati ad Markt Turuc: Th Dt-cm expric,

Rviw ecmic Dyamic, 2007 v. 1, pag. 78-105.13 ssM (2011), Rapprt scia Mdia Mitr 4.

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Hw riit i th wrd? Outlook 2012 scia mdia


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Telegraaf Media Groep (TMG) is one of the

largest media groups in the Netherlands,

with leading market positions in print media

(newspapers and magazines), puzzle

magazines, online and offline media, and

radio. TMG increasingly operates in new

media (many of them digital) through the

internet/mobile internet and in cross-media

formats. It is also actively involved in social

networking through its subsidiary Hyves.

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frak mrDirector Telegraaf Media Nederland

soIl MeDI HelP Us PTUReTHe Ds MIn neWs sToRIes

How have changes in the media industry affected

Telegraaf Media Group?

The shift from print media to digital media has

obviously had a huge impact on our company.

Theres no telling what the future of print

newspapers will look like, but Telegraaf Media

Group is looking to expand in a number of different

directions. This would include branching out into

television (WNL) and social media (Hyves). Even

though our takeover bid for SBS, fell through

earlier this year, weve definitely still got our sights

set on television. At the same time, despite these

changes affecting the media industry our

companys core competence will remain the same:

a knack for reporting on the days most important

news, disseminating this news, and explaining

complex problems to consumers in an

understandable way. The news we report must be

appealing and credible in order to meet the needs

of consumers. By reporting on the days most

interesting events, we attract consumers and then

take advantage of the time they spend. We charge

consumers for the time they spend reading our

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news, in the form of paid products and services.

Or we share this time with others looking to get

their message across to consumers, in the form

of advertising revenues. New media platformsenable us to further optimise this competence

and use it in other areas as well.

How have these trends affected

your revenue model?

Weve seen an undeniable shift in the source of

our revenues. Currently, around 8% of our income

is generated by non-print activities, although this

share is expected to rise rapidly. Our revenue

model works largely the same across new media

platforms, although we are gradually seeing new

opportunities on how to benefit from our

consumers time and attention. The revenues of

the free daily newspaper Spits and the website

Dumpert, for example, are based on the same

revenue model: providing free services funded

by advertising revenues. Although we expect that

our digital business will account for a larger share

of our revenues, this does not mean this market is

not under threat. The costs involved in entering

this market are low, which means competition is

very high. Also, there are a number of issues which

are related to protecting consumer privacy,

particularly at the political level. An example is

the recent debate on the Cookie Act in the Lower

House of the Dutch Parliament. The current bill

states that internet providers must ask consumers

for their prior consent to store cookies. This limits

the use of targeted advertising, as well as taking

the fun out of using the internet for many

consumers. Several Dutch politicians have

obviously not done their homework properly.

How do you stay ahead in this industry

in terms of innovation?

The business structure of the Telegraaf Media

Group includes a separate, coordinating branch

dedicated to innovation in several departments.

The purpose is to facilitate and speed up the

innovation of a number of specific services.

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We also dont have a clear-cut path when it

comes to creating innovative solutions. We are

seeing a number of trends in the media industry,

to which were trying to respond by offering awide range of products and services. The

direction were taking is clear, but its currently

impossible to say whether weve chosen the

right concept. You kind of learn what works and

what doesnt as you go along; it seems to me that

the best strategies are conceived after the fact.

Something you actually can do to make an impact

is provide room for creative and innovative ideas

from within your own organisation. A good

example is GeenStijl. Its a website launched bythe editors of De Telegraaf newspaper, which

created the financial conditions to continue the

initiative. Unfortunately, not everyone has the

ambition or the talent to initiate such projects,

so when you do spot it, you instantly need to

recognise it for what its worth, make it happen,

and help turn it into a success.

How does the acquisition of Hyves

play into your strategy?

Social media play a very important role in our

business operations, because they allow us to

reach more consumers and advertisers in a more

targeted way. You can use social media to

effectively gather information about current

events and actually encourage the debate as well.

What are people talking about? What do they

enjoy? Never mind all the stories going around

about Hyves and the heavy international

competition from the likes of Facebook - itsessentially a healthy, stable company. Besides,

Hyves clearly adds value to the more traditional

media divisions of our company. Following

discussions on this platform makes it easier for

our editors to write up-to-date and appreciated

articles. But its a reciprocal thing - Hyves also

benefits from our large network, which makes it

possible to post videos from the Dumpert website

on the platform. Hyves was already very valuable

in providing corporate services, through itsend-to-end services. Hyves allows companies

to interact with consumers directly, without any

intermediaries. One organisation that took

advantage of this service is the Donorstichting

(Donor Association), in its search for new donors.

It shows that social media are an entirely new way

to help advertisers attract consumers attention.

We like to help them find the right way to do that,

and Im convinced that this is only the start of a

new development.

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onlUDIn ReMRKs

Due to the ageing population, innovation and technological

development are becoming increasingly important drivers of

economic growth. However, from an international perspective

the Netherlands has some way to go in terms of innovative

power. In particular, the country needs to improve the quality of

its universities and other institutions of higher education, as well

as boost public-private partnerships. Although the importance

of innovation and technological progress is vital to economic

growth, their impact extends well beyond growth alone. As well

as being able to take on different guises (see the definition used

in Chapter 1), they also serve different objectives, including

more sustainable production.

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Ivati i th ky t makig prducti prc

mr utaia - thi appi t aythig rm

grhu ga mii t utur idivrity.

Th iu utaia cumpti mrit th

am dgr attti, particuary a it rat

t utur d curity. Ivativ appicati

itrt tchgi, icudig cia mdia,

ca ud i rdr t ttr match uppy ad

dmad, thry urig that prducti ca

ud mr icity.

Th thr ia chaptr ad th ratd itrviw

prt a umr ky idig.

Dpit th wid varity idutri ivvd, thr

ar umru imiariti with rgard t th piti

ad prm ivati ad tchgica

prgr. firt, th itrviw hw that thr i a

aut itti t ivat, uuay driv y ticmptiti. Th trprur itrviwd rgard

ivati a vita t achivig a trg piti i

th markt. Th gra mphai utaiaiity

ad th rtrictd u atura rurc hw that

thr ar diit imit t th wrd riic. frm

thi prpctiv, t, th itti th ui

cmmuity t ivat i dut a pitiv

dvpmt. Hwvr, a m th chaptr

hw, th wiig t ivat mtim mt

with ritac r tac, m which ca idutry-pciic. Th tac may pitica r

mra, ut thy ar dm tchgica i atur.

ovr th pat dcad, tchgica prgr ad

th pprtuiti it crat ha icrad igiicaty

acr may idutri. Th prm td t

ratd t t th prc xitig r w

tchgi, ut rathr t thir imitd appicati.

Th thr chaptr a dicu th appa t picy-

makr t imiat th prm. tatd i

haptr 2, gvrmt pici ar digd t

much t t ivati dircty a t crat th

right cditi ad rduc pttia prm. It i

y thrugh thi typ partrhip tw th

privat ad puic ctr that w wi a t u

th wrd riic i a utaia way thrugh

ivati ad tchgica prgr.

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Editors

Michi rduij

ard bruihdWim btra

eric rtgh

Thanksto:

Chapter 1:

Tim lgir, ecmic Rarch Dpartmt,

Raak ndrad;

a: Raak Thmaricht 11/30

Chapter 2:

shahi Kamadi, Daija Pijic ad Michirduij, ecmic Rarch Dpartmt, Raak

ndrad; a: Raak spcia 11/05

Chapter 3:

uk Ruhaak, ecmic Rarch Dpartmt,

Raak ndrad;

a Raak spcia 11/06

Interview Weiming Jiang, President DSM China

Chapter 4:

Dirk Ja K ad Rakhi shrawat, fd & gri

Rarch, Raak Itratia

Interview drs. Ben Tax RA en dr. Kees Reinink,

directors of Rijk Zwaan

Chapter 5:

Ha stgma, ecmic Rarch Dpartmt,

Raak ndrad

Interview Frank Volmer, director Telegraaf Media

Nederland

Graphics

Ry d Haasma Hijkamp

Designedandcreatedby

ick mmuicati, Utrcht

Interviewphotos

Ir ijwik, Ptagram hrry tgrai, Utrcht

Printedby

Kat, mtv

Paper

rctic um Whit fs

Address

Raak ndrad

ecmic Rarch Dpartmt

Tph: + 31 30 216 26 66

e-mai: [email protected].

www.raak.cm/cmic

www.raak.cm/utk2012

oloPHon

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Th txt thi puicati wa cmptd 19 octr 2011. I cratig th txt, w ud urc w cidr ria.

Th data wr icrpratd it ur aay with car. Raak ndrad accpt iaiity whatvr i th vt that

ay data r rcat ctaid i thi puicati ctai ay iaccuraci. U th ctt, r part th ctt, thipuicati i prmittd y prvidd that th urc ar itd.

Th irmati prvidd y Raak* i th outk dcumt r thrugh it wit d t ctitut a r,

ivtmt advic, r ay thr typ iacia rvic. Whi th irmati prvidd y Raak i ad urc

cidrd ria, th accuracy r cmpt thi irmati cat guaratd; it rprt gra irmati

that i ujct t chag.

n right ca drivd rm th irmati prvidd. Pat prrmac d t guarat utur rut. Raak ad

ay thr parti prvidig irmati i thi puicati ad th wit itd thri accpt iaiity whatvr r

th ctt thr r irmati prvidd r thrugh th wit. Raak accpt iaiity whatvr r th

ctt thi puicati r wit it d t maitai it ad t which thi puicati rr r that rr t

Raak wit.

Th ur th irmati i rpi r th chic irmati ad ay u thr. Th irmati may y ud

y th ur pray. Thi ur i prhiitd rm trarrig, rprducig, ditig r dimiatig th irmati. Th ur

i rquird t cmpy with th itructi prvidd y Raak rgardig th u th irmati. Th aw th

nthrad appy.

Dcmr 2011 - *prativ tra Raii-brak b.., Th nthrad.

DIslIMeR

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Rabobank - Technology and Innovation 2012 (How Nezlomny is the World)

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