Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report emphasizes the importance of sustainability and climate action, highlighting the need for companies to adopt bolder climate strategies to mitigate global warming and build stronger economies and fairer societies [10][11] - Roland Berger aims to achieve net zero climate impact in line with the Paris Agreement, with a long-term target validated by the Science Based Targets initiative (SBTi) [13][23] - The firm has made significant progress in reducing its emissions intensity by 30% compared to its baseline year [13][165] Chapter Summaries Chapter 1: Empowered People - The chapter discusses the importance of unleashing the full potential of employees through learning, training, and development opportunities, promoting diversity, equity, and inclusion [72][92] - The firm has a global affinity group structure that supports community among colleagues, with a 37% share of female representation globally [74][92] - Various training programs and initiatives are in place to foster employee growth and development, including partnerships with coaching platforms [75][87] Chapter 2: Climate Action and Sustainability - This chapter outlines the firm's comprehensive approach to climate action, focusing on both internal behavior and client support for decarbonization [165][166] - The firm has reorganized its sustainability activities under a new global ESG unit to enhance its impact [167][168] - The report details the firm's emissions overview, showing a total of 40,547 t CO2e in 2023, with a significant portion attributed to Scope 3 emissions [170][177] Chapter 3: Responsible Business - The chapter emphasizes the commitment to ethical business practices, including a zero-tolerance policy for violations of the Roland Berger Code of Conduct [262][263] - The firm evaluates all new clients and provides compliance training to ensure adherence to ethical standards [262][273] - The report highlights the importance of human rights and responsible procurement, with a focus on ensuring suppliers meet the same ethical standards [274][276]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The adoption of Battery Electric Vehicles (BEVs) in North America is expected to be delayed due to regulatory changes under the Trump administration, which may lead to a more gradual transition towards electric vehicles [2][3][12] - The regulatory environment, particularly changes from the EPA and California Air Resources Board (CARB), will significantly impact the electrification forecasts for the automotive industry [4][7] - Traditional automakers will face prolonged profitability challenges as they navigate a mixed powertrain strategy involving Internal Combustion Engines (ICE), Hybrid Electric Vehicles (HEVs), and BEVs [26][27] Summary by Sections Regulatory Impact - The regulatory landscape is a key driver for xEV adoption, with the Trump administration's policies likely to challenge existing emission standards set by the EPA and CARB [4][6][12] - The CARB's Advanced Clean Cars II regulation mandates that by 2035, all new sales must be zero-emission vehicles (ZEVs), but OEMs can only use PHEVs to meet 20% of their ZEV requirements [7][8] Market Scenarios - The report outlines three scenarios for BEV adoption in North America: an upside scenario where current regulations remain, a baseline scenario with relaxed standards, and a downside scenario where ZEV sales goals are pushed back to 2040 [17][22][23] - In the baseline scenario, the Trump administration's policies would lead to a reliance on hybrid vehicles to meet emission targets, highlighting the importance of regulatory support for BEV adoption [22] Challenges and Opportunities - The delay in BEV adoption will create both challenges and opportunities for automotive suppliers, necessitating a reevaluation of product portfolios and capital allocation strategies [14][27] - Suppliers may face difficulties due to declining EV sales, leading to potential market exits for smaller players unable to cope with low volumes and profitability issues [27][28]

Investment Rating - The report does not explicitly provide an investment rating for the automotive industry or specific companies within it. Core Insights - The recent US election results are expected to delay the adoption of Battery Electric Vehicles (BEVs) in North America due to a less stringent stance on emissions regulations under the Trump administration [1][4][10] - The delayed adoption of BEVs will have cascading effects on the entire automotive value chain, prolonging profitability challenges for electrification-focused players while extending opportunities for Internal Combustion Engine (ICE)-focused legacy players [2][12] - The regulatory landscape, particularly changes in the US Environmental Protection Agency (EPA) and California Air Resources Board (CARB) standards, is a significant factor influencing electrification forecasts [3][4][19] Summary by Sections Regulatory Impact - The incoming Trump administration is expected to soften EPA emissions and fuel economy standards beyond model year 2027, which will prolong ICE production and hinder EV adoption [11][19] - CARB's Advanced Clean Cars II rule mandates that by 2035, all new cars and light trucks sold must be zero-emission vehicles (ZEVs), but OEMs can only meet 20% of their ZEV requirement with plug-in hybrid electric vehicles (PHEVs) [5][19] Market Scenarios - The report outlines three scenarios for North American light vehicle xEV shares: upside, base, and downside cases, reflecting different regulatory environments and adoption rates [14][20] - In the base case, the repeal of current EPA emissions standards will reduce the need for BEVs, leading OEMs to rely more on hybrids [19] - The downside case assumes a challenge to CARB's ability to set emissions standards, delaying California's 100% ZEV sales target from 2035 to 2040 [20] OEM and Supplier Strategies - Traditional manufacturers must manage a triple powertrain strategy, integrating ICEs, HEVs, and BEVs, while EV-focused OEMs need to compete with hybrids due to anticipated profitability challenges [21][22] - Suppliers are expected to reevaluate their participation in electrification, which may create opportunities, but many sub-scale suppliers may exit the market due to low volumes and profitability issues [23][24]

Investment Rating - The report does not explicitly provide an investment rating for the European chemicals industry, but it highlights significant challenges and opportunities that could influence investment decisions. Core Insights - Europe's chemicals industry is undergoing a major transition towards decarbonization and circularity, requiring over EUR 2 trillion in investments to meet climate and circularity targets by 2050 [3][22] - The industry's share of global investments has halved over the last 20 years, indicating a decline in attractiveness for investors [3][23] - Despite challenges, there are opportunities in resilient value chains and emerging markets driven by strategic autonomy [5][44] Summary by Sections Introduction - The European chemicals industry must transform to address environmental challenges, digital innovations, and geopolitical uncertainties [9] - The transition involves decarbonizing energy systems and reshaping into a circular ecosystem [9][10] Fundamental Changes - The chemicals industry accounts for one-fifth of total energy consumption in Western Europe, highlighting the challenge of decarbonization [12] - Key success factors for decarbonization include replacing fossil electricity with green sources, electrifying processes, and enhancing efficiency [13][15] Transition Challenges - High raw material and energy costs are pushing Europe towards the end of the global cost curve [4][27] - Competition from the US, China, and the Middle East is increasing, challenging Europe's market position [27][41] - Strict regulations without strong incentives hinder investment in the European chemicals sector [27][42] Opportunities for Players - Europe remains the second-largest global producer of chemicals, with strong integrated clusters that can leverage local end-markets [44] - Value chains can be categorized into resilient, disrupted, and emerging types, each presenting unique opportunities [45][46] Recommendations - European chemicals players should understand key value chain pathways, pinpoint the value of a European footprint, and double down on existing strengths [59] - Policymakers must implement targeted incentives and balance regulations to support the industry's sustainable transition [62]

Industry Investment Rating - The report does not explicitly provide an investment rating for the industry, but it highlights India's significant economic potential and challenges [2][3][4] Core Viewpoints - India's economic growth is driven by its demographic dividend, urbanization, and infrastructure investments, positioning it as a potential global economic powerhouse [2][4][13] - The services sector is the main contributor to India's GDP growth, while the manufacturing sector faces structural challenges [10][50][51] - India's labor market is characterized by high informal employment, low female participation, and a skills mismatch, which hinder inclusive growth [35][43][44] - Infrastructure development is a key growth catalyst, with significant investments in transportation, energy, and urban infrastructure [30][31][32] Economic Foundations and Growth Catalysts - India's services sector accounts for roughly 50% of its gross value added (GVA), with industries like IT, financial services, and telecommunications driving growth [10][11] - Domestic consumption is a primary driver of India's economy, accounting for 60% of GDP, while exports play a smaller role at 22% of GDP [12] - India's demographic dividend, with a median age of 28 years and a large working-age population, is a key driver of future growth [14][15][16] - Urbanization is transforming India's economic landscape, with urban centers like Mumbai, Delhi, and Bangalore becoming innovation hubs [21][22][23] - The expansion of India's middle class, expected to reach 60% of the population by 2047, is driving consumption across various sectors [26][27][28] Obstacles and Challenges - India's labor market faces structural issues, including high unemployment (8.4%), low female participation (33%), and a dominance of informal employment (88.8%) [35][37][42] - The manufacturing sector's share of GVA has declined to 12.8%, hindered by low R&D investment, regulatory complexity, and infrastructure deficits [51][55][56] - Regional disparities and social inequalities further complicate India's labor market challenges, limiting access to stable employment opportunities [47][48][49] - India's stagnant FDI inflows (0.8% of GDP in 2023) reflect limited integration into global value chains and regulatory inefficiencies [60][61] Strategic Recommendations for Businesses - Companies should engage in strategic workforce planning to address skills mismatches and capitalize on India's demographic dividend [72][73][74] - Adapting to local markets, including consumer preferences and regulatory environments, is crucial for success in India [75] - Operational excellence, including AI-driven transformation and continuous performance improvement, is essential for profitability in the Indian market [76] Conclusion - India has significant potential to become a global manufacturing hub, but it must address challenges related to land, labor, and law to sustain robust growth [65][66][67] - Policy reforms in land acquisition, labor laws, and bureaucratic efficiency are critical for India's industrial development [68][69][70]

Core Viewpoints - Resilience has become a new paradigm for China's development, requiring flexible adjustments in business and operational models, as well as comprehensive optimization of management and decision-making systems [4] - China's economy is undergoing a profound transformation, shifting from a traditional growth model reliant on labor and large-scale investment to an innovation and technology-driven model [5] - Despite current deflationary pressures and structural issues, China's export-to-domestic production ratio and import-to-trade ratio are declining, indicating a shift towards higher value-added industries and domestic substitution [7] - China's consumer market holds significant potential, with evolving consumer behavior post-pandemic favoring high-quality, safe, healthy, and green products [7] - To sustain economic growth, China must transition from quantity-driven to quality-driven production, enhancing value creation to boost disposable income and consumer confidence [8] - China's aging population poses long-term challenges, with the proportion of people aged 65 and above expected to reach 22% by 2040, necessitating improvements in social security systems [8][9] - China's export model is transforming across three dimensions: destination, product, and trade mode, with a strategic focus on Global South and European markets [11][12] - The "new three" products—new energy vehicles, lithium batteries, and photovoltaic products—are replacing the "old three" (clothing, furniture, and home appliances) as key drivers of China's export growth [13] - China's globalization strategy is shifting towards building production and logistics bases abroad, with overseas greenfield investments tripling in 2023 to $160 billion [14][15] Industry Trends Automotive - The automotive industry is witnessing a shift towards new energy vehicles, with Chinese manufacturers increasingly focusing on global markets and localizing production in regions like Southeast Asia and Europe [52][53] - Supply chain resilience is becoming a core strategic pillar for automotive manufacturers, with a focus on multi-regional manufacturing and digital-driven agile supply networks [53][54] Chemicals & Materials - The chemicals and materials sector is undergoing a green transformation, with companies adopting circular economy models and clean technologies to reduce carbon emissions and improve energy efficiency [56][57] - Leading companies are integrating sustainability into their strategic frameworks, leveraging digital and intelligent manufacturing to reshape value chains [56] Consumer Goods & Retail - Post-pandemic consumer behavior in China is evolving, with a growing demand for high-quality, safe, and green products, creating new opportunities for consumer goods and retail companies [7] - Companies are shifting from price competition to value creation, focusing on product quality and consumer trust to capture market share [7] Energy & Utilities - The energy sector is transitioning towards green manufacturing, with companies investing in zero-carbon factories and intelligent energy management systems to reduce unit energy consumption [56][57] - Renewable energy integration and smart microgrids are becoming key strategies for energy companies to enhance operational efficiency and sustainability [57] Industrial Products & Services - Industrial companies are leveraging digital transformation to improve production efficiency, reduce costs, and enhance product quality, with leading firms achieving 15-25% productivity gains [61][62] - The integration of AI and IoT technologies is reshaping traditional supply chain management, with 85% of global supply chain leaders adopting these technologies [52] Technology & Internet - AI adoption is accelerating across industries, with 70% of enterprises deploying AI technologies in 2024, particularly in marketing, customer operations, and IT departments [39][40] - Generative AI is expected to revolutionize content production, customer service, and operational efficiency, with significant cost reductions in AI model deployment [40][41] Pharma & Healthcare - The healthcare sector is facing increasing demand due to China's aging population, with the proportion of people aged 65 and above expected to rise to 22% by 2040 [8][9] - Companies are focusing on expanding healthcare coverage and improving service quality, with a particular emphasis on elderly care and pension systems [9] Globalization and Internationalization - China's globalization strategy is shifting towards building production and logistics bases abroad, with overseas greenfield investments tripling in 2023 to $160 billion [14][15] - Chinese companies are increasingly focusing on Global South markets, with investments in ports and infrastructure projects under the Belt and Road Initiative [12] - The EU remains a key trade partner for China, despite growing tensions, with opportunities for deeper economic cooperation as the US adopts more protectionist policies [12] - Chinese companies are transitioning from traditional export models to establishing local production and supply chains in key markets, reducing reliance on traditional trade routes [15] Strategic Recommendations for Enterprises - Chinese companies should adopt a clear globalization strategy, focusing on new target markets and overseas investments to mitigate risks and enhance resilience [19] - Building reliable partnerships in overseas markets can help Chinese companies leverage local resources and quickly penetrate new markets [19] - Operational optimization and cost efficiency are critical for Chinese companies to remain competitive, with a focus on improving product quality and innovation [19] - Multinational companies in China should balance risk reduction with market expansion, leveraging China's innovation ecosystem and digital transformation opportunities [17][20]

Economic Transformation and Challenges - China's economy is undergoing a deep transformation from labor and investment-driven growth to innovation and technology-driven growth, facing structural issues such as deflationary pressures and weak consumer confidence[5][6] - China's export-to-GDP ratio and import-to-trade ratio are declining, indicating a shift towards higher-value industries and domestic substitution of imported goods[7] - China's consumer behavior is evolving post-pandemic, with increasing demand for high-quality, safe, and green products, presenting new opportunities for businesses[7] Consumption and Aging Population - China's household deposits amount to nearly 150 trillion RMB, nearly double the total market value of the stock market, reflecting significant consumption potential[8] - By 2040, China's population aged 65 and above is expected to reach 22%, up from 13% in 2020, posing long-term challenges such as rising healthcare and pension costs[8] - China's healthcare expenditure as a percentage of GDP is around 5%, significantly lower than France and Germany's 12%, indicating future pressure on healthcare systems[9] Global Trade and Geopolitical Risks - From 2010 to 2024, global trade interventions reached 14,797 measures, with China being the most affected, facing 5,378 restrictions[10] - The US is expected to adopt more aggressive trade and investment restrictions against China, potentially leading to higher tariffs and broader technology export bans[10] - China's export model is shifting towards global South and European markets, with strategic investments in ports and infrastructure in 43 countries[12] Export and Industrial Transformation - China's "new three" exports (new energy vehicles, lithium batteries, and photovoltaic products) generated 757.8 billion RMB in overseas revenue in the first three quarters of 2024, accounting for 4.1% of total exports, up from 1.5% in 2020[13] - China's overseas greenfield investments tripled to $160 billion in 2023, accounting for 11.6% of global totals, with a focus on global South countries[14][15] Corporate Strategies and Globalization - Chinese companies are advised to adopt global strategies, including overseas investments, partnerships, and operational optimization to mitigate risks and enhance competitiveness[16][19] - Multinational companies in China need to balance risk reduction and market expansion strategies to adapt to the dual nature of China's market: resilience and transformation[17]

Consumer Spending Trends in Asia - Asia's consumer spending is expected to reach $16 trillion in 2024, accounting for 27% of the global market Over the next decade, personal consumption in Asia will grow by $7 trillion, with China contributing 60% of this growth [6][15] - Food, non-alcoholic beverages, and household goods are the top priority categories for most Asian consumers, except in China, where clothing, footwear, and leisure activities are more emphasized [20][31] - Luxury consumption is expected to decline over the next two years, with consumers prioritizing quality, sustainability, and domestic brands [2][8][107] Regional Economic Outlook and Consumer Sentiment - Economic optimism varies across Asia, with countries experiencing GDP growth above 3% showing more positive consumer sentiment India, China, and Vietnam are the most optimistic, while Japan and Korea are more pessimistic [1][16][26] - China remains the dominant driver of Asia's consumption growth, contributing 60% of the region's total consumption increase over the next decade India is also a key growth market, with its private consumption expected to rise significantly [15][28] Consumer Preferences and Behavior - Asian consumers strongly prefer domestic brands, with Japanese and Korean brands associated with quality, Chinese brands with affordability, and Korean brands with fashion trends [3][76] - Convenience, personalized experiences, and safety are driving the growth of online retail, mobile payments, and omnichannel strategies in Asia [21][71][94] - Quality is the most important factor for consumers when purchasing both luxury and fast-moving consumer goods (FMCG), followed by a preference for domestic products and sustainability credentials [8][99][116] Demographic Shifts and Spending Patterns - Asia is aging rapidly, with the proportion of the population over 45 expected to rise from 40% to 55% over the next decade India is an exception, with 74% of its population under 45 [11][24] - Younger consumers (18-25) prioritize clothing, footwear, and personal care, while older consumers focus more on household goods and health-related products [32][34][85] Strategic Recommendations for Brands and Retailers - Brands must adopt localized strategies to cater to unique consumer preferences in markets like China, where consumer behavior differs significantly from other regions [107][108] - Companies should focus on building omnichannel experiences that prioritize convenience, personalization, speed, and safety to meet evolving consumer expectations [123] - Luxury brands need to refocus their marketing strategies on quality and sustainability to regain consumer interest amid slowing luxury consumption [107]

Industry Investment Rating - The report emphasizes the need for Europe to regain leadership in the telecom and technology sectors, highlighting the urgency for strategic actions to address current challenges [3][4] Core Viewpoints - Europe's telecom and tech industries require fundamental transformation to remain competitive globally, particularly against the US and China [3] - Structural fragmentation and complex regulatory environments are major obstacles to Europe's telecom industry's global competitiveness [4] - Lack of unified standards and coordination in spectrum licensing across EU member states limits growth and scalability [6] - Dependence on foreign telecom suppliers raises concerns about strategic autonomy and cybersecurity [7] - Heavy regulatory burdens hinder the development of cross-border B2B services, limiting market expansion opportunities [8] - Europe's AI and cloud industries are lagging due to fragmented strategies, limited public-private collaboration, and insufficient private funding [13][14] - Europe's satellite communication industry is falling behind the US and China, with reduced public funding and insufficient support for the space ecosystem [20][21] Key Challenges and Recommendations Telecom Sector - Market fragmentation in Europe necessitates industry consolidation through relaxed antitrust restrictions to achieve economies of scale [9] - Sharing infrastructure costs with VLOPs (Very Large Online Platforms) could alleviate financial pressures on telecom operators [10] - Unified EU-wide spectrum rules and technical standards are essential to promote cross-border investment and build an integrated ecosystem [11] - Favoring EU-trusted suppliers and enforcing EU security frameworks will enhance digital sovereignty and protect critical infrastructure [11] AI and Cloud Sector - Integrating public and private computing resources can significantly expand Europe's AI capabilities, providing access to high-performance computing and quantum labs [17] - Establishing a unified EU cloud market will promote scalability and competitiveness through standardized public procurement processes and secure data-sharing intermediaries [18] - Strengthening cooperation with the US through clear data security and fair trade frameworks will enhance Europe's position in the global cloud market [19] Satellite Communication Sector - Reforming EU procurement rules will streamline and unify the satellite communication industry, enabling faster and more flexible procedures [24] - Creating an EU space fund with clear priorities, supported by the European Investment Bank (EIB), will strengthen the industry by funding R&D, strategic acquisitions, and SMEs [25] Expected Impacts Telecom - Accelerated domestic consolidation driven by business needs rather than antitrust concerns will stabilize and increase retail prices due to reduced competition [28] - New investment in fiber connectivity will be unlocked, particularly in attractive geographic regions, due to copper decommissioning and deregulation of infrastructure investments [28] - Increased spectrum duration will boost telecom operators' EBITDA and valuations [28] - Localization of B2B services will be promoted through pan-European B2B service companies operating from low-cost base countries [28] Cloud and AI - European cloud players will see increased revenue due to EU preferences in public sector tenders [29] - New public-private partnerships in AI/HPC will accelerate, adopting venture capital-like approaches such as equity stakes and public institutions providing computing power to AI startups for returns [29] - Strong vertical industries will further support AI advancements without regulatory and competition constraints [29] Satellite - Increased support and investment in private satellite communication companies and the broader ecosystem will enhance EU sovereignty, focusing on the entire industry rather than just established players [29] Data Highlights - In 2023, only 6% of global AI startup venture capital funding went to European companies, compared to 61% for US companies [13] - The global cloud market is dominated by US hyperscalers (AWS, Azure, Google Cloud), holding 65% of the market share, while European providers are limited to basic IaaS offerings [14] - The space economy is projected to grow from $630 billion in 2023 to $1.8 trillion by 2035, with Europe at risk of missing out due to insufficient satellite communication initiatives [20] - US and China lead in satellite constellations, with Starlink (6,400 satellites by 2024) and G60 (1,300 satellites by 2027), while Europe lacks a dedicated satellite communication constellation [23]

Industry Investment Rating - The report highlights the transformative potential of AI in healthcare, suggesting a positive outlook for the industry [9][10] Core Viewpoints - AI is expected to bring significant benefits to healthcare, including breakthroughs in care quality and unprecedented economic benefits [3] - The adoption of AI in healthcare is seen as both revolutionary and evolutionary, depending on the specific application area [10] - 87% of respondents prefer strategic partnerships with tech giants over in-house development for AI integration [3] AI's Impact on Healthcare - AI is predicted to reshape healthcare systems, drive breakthrough innovations in health research, and improve overall health outcomes [9] - AI will significantly impact business models and processes in healthcare, requiring rapid responses from industry players [10] - Generative AI (GenAI) is particularly highlighted for its potential to innovate solutions for challenges like workforce shortages and cost pressures [9] AI Adoption and Use Cases - AI is already being used in various healthcare operations, with 74% of respondents indicating current use and 15% using it frequently [47] - Key areas of AI application include diagnostics, predictive analytics, personalized treatment plans, and administrative tasks [31][36] - AI is expected to improve operational efficiency, reduce costs, and enhance the quality of care [47] Future Scenarios - The report outlines three potential future scenarios for AI adoption in healthcare: a realistic scenario with mixed results, an accelerated scenario with widespread adoption, and a conservative scenario with limited impact [123][126][127] - In the realistic scenario, AI adoption is partial, with significant improvements in efficiency and accuracy in some areas, while others lag behind [124] - The accelerated scenario envisions widespread AI integration, leading to personalized medicine, reduced administrative burdens, and faster drug development [126] - The conservative scenario predicts slow AI adoption, with rising healthcare costs and stagnant innovation [127] Strategic Recommendations - Organizations should strategically assess the impact of AI on their business models and create unique value propositions [133] - Employees should be supported through AI integration, with training and resources provided to enhance their ability to use AI tools effectively [134] - A patient-centric approach should be maintained, leveraging AI to create personalized treatment plans and improve patient outcomes [135] - Investments in AI technology and infrastructure should be prioritized to ensure readiness for future advancements [137][138] AI's Role in Specific Healthcare Sectors - In hospitals, AI is widely used in diagnostics, with 88% of respondents expecting it to become an industry standard [55] - Health insurance companies are leveraging AI for customer service and claims management, with 75% using AI in active solutions [56] - Pharmaceutical companies are adopting AI in research and development, with 68% already using AI in standard operations [62] - Medtech companies are integrating AI into manufacturing and R&D, with 79% using AI in R&D and 54% in manufacturing [64][66]