Web economy 'to double by 2016'

27 January 2012 Last updated at 06:30 GMT By Tim Weber Business editor, BBC News website, Davos More and more people are accessing the internet via mobile devices The value of the web economy in G20 countries will nearly double by 2016, according to Boston Consulting Group.

Driving the spurt from $2.3tn (£1.5tn) to $4.2tn (£2.7tn) will be the rapid rise of mobile internet access.

The study, supported by web giant Google, assumes that in four years 3bn people will be using the internet, or nearly 50% of the world's population.

The research suggests that the UK is one of the most advanced e-commerce economies.

Right now, every year about 200 million people are going online for the very first time.

However, traditional internet access via a copper wire and a desktop PC will fade into the background.

The rapid fall in the cost of smartphones - with cheap versions now costing about $100 - means that by 2016 about 80% of all internet users will access the web using a mobile phone.

The research does not even account for web access using so-called feature phones.

The 'new' internet

These numbers look impressive, but they are still just a fraction of the global economy.

Continue reading the main story

We don't fill empty holes on websites any more, we engage customers”

End Quote Michael Lazerow Chief executive of Buddymedia In 2010, the internet economy in the G20 group of leading nations was worth $2.3tn - larger than the economies of Italy or Brazil, but a mere 4.1% of the total size of all G20 economies.

The Boston Consulting Group researchers speak of the emergence of a "new internet" where:

web access will not be a luxury any morethe majority of web users will live in emerging markets (within four years, China is expected to be home to 800 million people using the internet; that is more than the United States, India, France, Germany and the UK taken together)about 80% of all internet users will access the web from a mobile the internet will go social, and allow customers and companies to engage with each other

This trend will be coupled with another huge technology shift that will fundamentally change the nature of how to run a business - the rise of the so-called "internet of things", where all kinds of devices from sensors to cars to radiators will be connected to the web.

Continue reading the main story

Understanding the economic potential of the web should be an urgent priority for leaders”

End Quote Patrick Pichette Google chief financial officer Technology giant IBM estimates that by 2015, one trillion devices will be internet-connected.

Online is also reaching into the offline world. The BCG researchers say that every household already researches about $3,000 worth of goods online before buying them in traditional stores.

Digital, the researchers say, cannot be an add-on. Businesses have to adapt their people, processes and structures for the digital economy.

Paul Zwillenberg of BCG says that entrepreneurs building a digital business are outperforming rivals who do not embrace the web economy.

However, what the research fails to capture is the balance of employment between new, more efficient digital companies and old-style businesses.

The winners

Google, who supported the research, is obviously one of the companies set to gain most from the rapid growth of the internet.

"Understanding the economic potential of the web should be an urgent priority for leaders... [with] a powerful case for countries and companies to get online and reap the rewards of an age of data," Patrick Pichette, Google's chief financial officer, says.

However, the report suggests that Google will not be the only winner.

The researchers identify several "internet ecosystems" that will try to tie users in to their customised part of the internet, among them Amazon, Apple, Facebook, Google, Baidu and Tencent in China and Yandex in Russia.

What is digital?

A problem with BCG's research is obviously that it is difficult to define what is actually part of the digital economy.

"During the research we discovered very quickly that there is no approved way of measuring the internet economy," says David Dean, a managing director at BCG.

Official statistics simply do not capture the sideways move of old technologies into the digital world, for example when a widget maker starts upgrading its devices so that they can be hooked up to the internet.

But if the report's predictions are correct, then speaking of a "web economy" will soon sound about as comical as speaking of an "electricity economy".

David Dean believes that the G20 countries could reach this moment as early as 2020.

Bank scraps charity credit cards

28 January 2012 Last updated at 00:05 GMT By Bob Howard Reporter, Money Box Halifax and Bank of Scotland charity credit cards have helped raise millions of pounds Halifax and Bank of Scotland charity credit cards will be withdrawn from the end of February.

Lloyds Banking Group which manages the card schemes says they are no longer a cost-effective way of donating to charity.

In 2009 the cards raised around £1.1m for Cancer Research UK, the NSPCC and the Scottish SPCA.

The charities say they are disappointed with the decision, but hope to explore other opportunities with the bank.

The Cancer Research UK donation credit card was launched 23 years ago in 1988 and the NSPCC card was first issued 17 years ago.

The Scottish SPCA card has been available for 15 years.

The cards have raised £14.5m ($22.8m) for Cancer Research UK and £500,000 ($786,000) for Scottish SPCA.

Baroness Finlay, vice chair of the all-party parliamentary group on cancer, urged Lloyds Banking Group to think of other ways to help the charities which will lose out:

Continue reading the main story

The timing of it doesn't seem very sensitive given there's all the furore around bonuses”

End Quote Baroness Finlay All-party group on cancer Speaking to Radio 4's Money Box programme, she said: "The timing of it doesn't seem very sensitive given there's all the furore around bonuses.

"I think a bank which can produce that amount of additional money to give large bonuses has to look very hard at whether it should be giving back to the society on which it depends for its business."

Until now, charities have earned a one-off donation when their associated card is first used, typically around £20.

Then, in a similar way to credit card cash-back schemes, donations are made each time a cardholder makes a transaction - typically between 0.25-0.5% of the total sum spent.

Not cost-effective

One card holder who contacted Money Box is unhappy with the change.

John from Worcester told the programme: "I'm very disappointed because Cancer Research UK is a charity which is very close to my heart.

"My primary reason for having the credit card was that by having the card I was supporting the charity.

"Presumably the money that was being donated will in future be pocketed by Lloyds Banking Group - hardly an example of UK banking showing a more socially-responsible attitude."

Lloyds Banking Group said it was committed to charitable giving, but the charity credit cards had had their time.

In a statement the bank said: "Following a recent review, which noted the limited demand for charity cards in recent years, we have decided that we will no longer offer a charity credit card.

"It was no longer proving to be a cost-effective method of donating to charity."

Just two years ago, the Cancer Research UK credit card won an industry award and was praised by Lloyds Banking Group in 2009 in its corporate responsibility report:

"We won Best Charity Card Programme at the Card Awards in 2010 for our Halifax Cancer Research UK charity card.

"The charity credit card has now delivered £13m in royalty donations to support the great work done by Cancer Research UK to save lives and achieve their vision to beat cancer," the report said.

A NSPCC spokesperson told the BBC: "HBOS has been a supporter of the NSPCC for many years. We have been very happy with our partnership and we are exploring what other opportunities there are for us to work together in the future."

Cancer Research UK said: "While it's disappointing that the partnership has come to an end, we would like to thank all Halifax and Bank of Scotland staff and customers who have supported us over the years."

Scottish SPCA said: "We are disappointed Bank of Scotland have withdrawn their Scottish SPCA charity credit card.

"Our card was widely used by our supporters and the partnership raised more than £50,000 in 2011 and has raised over £500,000 over the past 15 years."

The cards are to be replaced by standard Halifax or Bank of Scotland alternatives.

Lloyds Banking Group said it will remain committed to charitable giving.

Money Box is broadcast on Saturdays at 12:00 GMT on BBC Radio 4 and repeated on Sundays at 21:00 GMT. You can listen again via the BBC iPlayer or by downloading Money Box podcast.

US economic growth rate picks up

27 January 2012 Last updated at 16:22 GMT US economic growth has been buoyed by American firms stockpiling goods The pace of US economic growth increased in the final three months of 2011, according to official figures.

The economy grew at an annualised rate of 2.8%, the Commerce Department said.

This was up from the 1.8% annual rate recorded in the previous quarter, although it was slightly lower than the 3% rate predicted by analysts.

However, the growth largely came from businesses stockpiling goods they had produced, rather than selling them.

Although the stockpiling lifted the figures, analysts believe businesses will not continue doing this, resulting in a lower growth figure for the current quarter.

The pace of consumer spending picked up to 2% from 1.7% in the previous quarter.

Much of this was attributed to an increase in sales of new cars, which rose by 14.8% over the quarter.

The Japanese tsunami last March disrupted production and delivery of models for major manufacturers, leaving customers waiting for pre-ordered cars.

'Repairing damage'

US Treasury Secretary Timothy Geithner said it was worth remembering that the economy was still recovering from the 2008 global recession.

"I think it's probably worth recognising that we still face tremendous challenges," he told a session at the World Economic Forum in Davos.

"As a country, we are still repairing the damage caused by the devastating financial crisis that still has huge lasting impact on the basic fortunes of most Americans."

He said the housing and construction sectors were still weak, unemployment remained a huge challenge and people still had too much debt.

He added it was reasonable to expect the US economy to grow between 2% and 3% in 2012.

The rate of growth depended on two fundamental factors, he said - what happens in Europe and the Gulf, which determines the oil price, and "whether Republicans in Congress decide they want to legislate things that are good for growth in the short term".

'Needs help'

Analysts warned that the headline growth figure for the fourth quarter did not tell the whole story.

"The Commerce Department's gross domestic product (GDP) report confirms the acceleration of growth that had been hinted at by a flurry of upbeat economic indicators and business surveys in recent weeks, but also reveals that the economy is less healthy than the headline growth rate would suggest," said Chris Williamson, chief economist at Markit.

David Watt, senior currency strategist at RBC Capital, said: "It's not that encouraging, but again, it's not going to affect the Fed.

"They're downplaying the recent economic numbers anyway. This seems consistent with the Fed's view that the US economy is going to need all the help it can get."

On Tuesday, the IMF warned that the US, along with other advanced economies, was "susceptible to spillovers" if the eurozone debt crisis intensifies.

The latest US jobs data showed that the unemployment rate dropped to 8.5% in December - the lowest rate in nearly three years - from 8.7% the month before. The Fed believes the rate will drop to 8.2% this year.

Stuart Hoffman, chief economist at PNC Financial Services, said he expected US growth to be "2.4% in 2012, and job growth will average about 140,000 per month, adding up to 1.7 million new payroll jobs over the course of this year".

Davos 2012: Who's afraid of China?

26 January 2012 Last updated at 13:48 GMT By Tim Weber Business editor, BBC News website, Davos Many in the West worry about being overwhelmed by the sheer size and strength of the Chinese economy So, who's afraid of China's economic power?

Mention the topic in polite conversation, and chances are that you'll hear complaints about dumping cheap products, stealing jobs and grabbing resources.

If you talk to politicians and economists, you may hear complaints that China is keeping its currency undervalued. There are worries about the size of its foreign currency reserves - currently approaching a massive $4tn (£2.55tn).

So much economic power creates fear and hostility, especially in countries like the United States during an election year, warns Richard Levin, president of Yale University.

Those worries are only bound to increase.

Rich country, poor country?

China's economy, with its 1.3 billion people, keeps on growing rapidly, at a rate of around 10% a year. Already it is the world's second-largest economy. Some here at the World Economic Forum in Davos wonder whether China can still be called a developing economy at all.

China's economic growth, says Pascal Lamy, boss of the World Trade Organisation, "will bump into public perception problems".

"There is this perception that there is a Chinese official behind every Chinese business person. That China is grabbing resources. That there is a new colonial 'something'. That they are after technology, stealing, transferring it, all these negative things that translate into [a view] that this is a country that doesn't play by the rules."

Mr Lamy does not agree with these perceptions.

But China, he says, has to develop "a better narrative", tell the world what it really does or suffer a backlash.

"The world outside China still wonders whether China is a poor country with lots of rich people, or a rich country with lots of poor people," says Mr Lamy.

Beginner's mistakes

China is changing so fast, it's probably difficult to make that call.

China is already the second-largest economy in the world - and yet most of its population is poor

John Zhao, chief executive of China's largest private equity firm, Hony Capital, reminded the Davos elite that not that long ago, the Beijing government would tell any Chinese travelling abroad "we make you a nice set of suits, so that you don't look poor".

These days, he said, the West sees mainly very wealthy Chinese travelling abroad. "That also gives the wrong impression. They are wealthy, but they are a minority. Most Chinese are still poor."

But what about China's dubious reputation of doing business abroad? Mr Zhao blames it on beginner's mistakes.

The Chinese government did not know what to do with all its foreign reserves, he says, so they did what everybody else did: buy US Treasury bonds.

And yes, while "there are a few bad Chinese companies" that "intentionally commit fraud," most try to learn and follow the rules.

"We have no hundred-year history of corporate governance," says Mr Zhao.

Robert Greifeld, chief executive of the Nasdaq stock market, notes that the West also has a "rich history of corporate misdeeds - from Parmalat to Enron," and reports that Chinese firms have an "insatiable appetite to learn Western corporate reporting standards".

'You never know who you might meet': why a Davos veteran keeps going back

The big imbalance

However, the trouble with China is much more than just a matter of perception or company reports, argues Stephen Roach, former chairman of Morgan Stanley Asia and now with Yale University.

It's about real economic imbalances, where Chinese consumers and companies save too much, while the West saves too little.

Mr Levin believes that it is about time for the Chinese government to use some of its foreign reserves to invest in its own people, for example by building up a social safety net or boosting a pension systems under pressure from a rapidly ageing population.

More importantly, Mr Roach said, nobody should ignore the 800-pound gorilla in the room: China's reluctance to free the exchange rate of its currency, the renminbi.

It is a controversial topic. So controversial that Mr Lamy noted to general laughter that his briefing notes told him "to shut up" should the topic come up at Davos.

Still, he listed what everyone generally agrees on: The renminbi is undervalued, should be "internationalised" (which means allowed to float freely).

"But it gets difficult when you ask how much," he said. "5% or 30%?"

And, Mr Lamy asked, how would the Chinese public take it when their government's stockpile of dollar reserves suddenly loses a lot of its value?

Return to normal?

Some old China hands disagree with the whole premise that China is behaving unusually at all.

"China is not grabbing resources, it is investing in resources that otherwise would not be developed, whether its in Brazil or Australia or Africa," argues one Davos attendee.

"Is China investing a lot? No, it's a little. Given that it's the world's second-largest economy, it is not investing nearly enough."

Another business leader reminded Davos participants that today's "prejudices" against China were just the same as those "50 years ago, when the Americans were flooding Europe with their products".

Just as we all became a bit "Americanised, maybe we all are going to be a bit more Chinese, but that doesn't bother me either," he said.

The dating game

Will the Year of the Dragon also lead to new understandings between China and the West?

And what if Chinese companies snap up Western firms?

"More and more Chinese companies are looking at firms like Coca-Cola and General Electric and see their success, so they are learning from them... and are interested in becoming multinationals."

It doesn't always work, though.

Mr Zhao tells the story of a German company that decided to spurn the better takeover deal offered by a Chinese firm and sold the company to a French owner instead.

"They made the right decision," says Mr Zhao. "If they felt they could not operate within the Chinese company, the deal would have been a disaster. So that's why we are telling Chinese companies: work on your corporate culture."

Another Chinese executive compared the corporate relationship between China and the West to courtship: "Before marriage, you should date. And so I hope Chinese companies will open offices around the world, so that they learn the culture."

Win-win

"Get ready for more Chinese investment, it will happen," Pascal Lamy told the Western bosses and politicians in the audience. And turning to the many Chinese in the audience he warned that "for this to be a win-win, China has to address perceptions on both sides, in the West and within China".

Otherwise, China's reputation would end up like that of global trade, where the results "are great, but in politics it's [considered to be] terrible".

The outside world should understand that China is changing, was the impassioned plea of Michael Wong, a young entrepreneur whose company, TouchPal, makes smartphone applications that can be found on 20% of the world's Google Android phones.

Companies like his were pushing for change, for example working hard to ensure the protection of intellectual property.

"The stereotype of China may be true for the past, it may even be true for now, but it will change, much faster than you think, in three to five years," said Mr Wong.

"We are the future of China."

And possibly of the world, he might have added.

IMF issues austerity cuts warning

28 January 2012 Last updated at 16:54 GMT IMF head Christine Lagarde said she had come with her "little bag" to collect funds for the IMF Inappropriate spending cuts could "strangle" growth prospects, the head of the IMF has warned.

Austerity programmes must be tailored to each economy, Christine Lagarde said, and not be "across the board".

The International Monetary Fund has been one of those stressing the need for countries to cut their debts, but some fear this could hit growth.

The correct response to the eurozone debt crisis has been a major debate at World Economic Forum in Davos.

"We are not suggesting there should be fiscal consolidation across the board," Ms Lagarde stressed.

"Some countries have to go full-speed ahead to do this fiscal consolidation, but other countries have space and room. They should explore what to do... in order to help themselves.

"It has to be tailor-made."

One of those expressing concerns about the possible implications of fiscal consolidation at the gathering at the Swiss ski resort was US Treasury Secretary Tim Geithner.

He told the annual meeting of political and business leaders on Friday that there was a risk of a recessionary "cycle" from austerity measures.

"There is a risk that every disappointment in growth will be met with an austerity that will feed the decline, and that is a cycle you have to arrest to solve financial crises," Mr Geithner said.

George Soros has warned that Europe is likely to face a "lost decade"

'Progress'

Crisis-hit countries such as Greece and Spain are implementing deep government spending cuts and raising taxes in order to try to bring down their deficits.

"For parts of Europe for a long time, there will be no alternative to very substantial adjustment in budget deficits," Mr Geithner said.

He is one of a number of leaders who have said this week that the deficit-cutting measures have been an important step in addressing the eurozone debt crisis.

Ms Lagarde echoed those on Saturday: "There is work under way. There is progress, as we see it,"

But some see these policies as potentially very damaging. Financier George Soros told the BBC that the fiscal cuts, which Germany supports, could even lead to a "lost decade" of economic stagnation in Europe.

"This German insistence on austerity could destroy the European Union," he said. "This is reality, this is the harsh reality that we need to face.

"It is not written in stone, the future is not predetermined. We determine the future, so it would be well within the possibilities of the authorities to change it."

A document, reportedly leaked to the Financial Times, has suggested that Germany could be asking for Greece to do more, including giving up the financial control of its tax and spending decisions to an administrator appointed by Brussels.

Firewall Continue reading the main story

For the first time in a while leaders meeting here don't seem to be stalked by the fear that the eurozone might blow up”

End Quote Austerity is only one part of the solution, Christine Lagarde said.

She, and others on the panel, stressed the importance of reinforcing what is being referred to as the "firewall", a much-expanded rescue fund made up of funds pledged by eurozone members.

"It is critical that the eurozone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the eurozone so that the financing needs of that zone can actually be met," she said.

The IMF managing director also spoke of the hundreds of billions of dollars of extra funds she wants to raise to support any crisis-hit countries, especially if a economic downturn takes hold.

Holding up her designer handbag she said: "I am here with my little bag to collect a bit of money."

"There will be needs in the eurozone, no doubt about it, but in central and eastern Europe there will be needs as well. And in other countries including in low income countries, including in middle income countries, there will be needs. Short term for some, long term for others."

The UK has been one of those resistant to pledging extra funds for the IMF to help eurozone countries, but there have been indications in recent days that its stance is softening.

Continue reading the main story

The leaked document is a draft... but it clearly reveals the direction of German thinking: much tighter control of Greek policy-making.”

End Quote Stephen Evans BBC News, Berlin "I think there is a case for increasing IMF resources and I think that will also be a way of demonstrating that the world wants to help... solve the world's problems," UK Chancellor George Osborne told the Davos audience.

But, like his US counterpart Tim Geithner, he said any additional help would be conditional upon Eurozone countries demonstrating they were doing all they could do help fellow members.

"There aren't going to be further contributions to the IMF from other G20 countries, including Britain, unless we see the colour of their money, and I think that's a reasonable request."

Debt deal

For the first time in a while, leaders meeting in Davos don't seem to be stalked by the fear that the eurozone might blow up, the BBC's economics editor Stephanie Flanders reports.

But many of the sessions have been discussing what still needs to be done.

"The fact that we're still, at the beginning of 2012, talking about Greece - again - is a sign that this problem has not been dealt with," George Osborne said.

"The danger here is that the tail wags the dog throughout this crisis. In other words, the inability to deal with specific problems with the periphery causes shock waves across the whole European economy and the world economy," he added.

Talks continued on Saturday between the Greek government and representatives of its private creditors, including banks and hedge funds, to renegotiate the terms of the country's debt.

"Further progress was made, building on the understandings reached yesterday on the key legal and technical issues," a statement from the IIF, the body representing the bondholders, said.

An agreement to reduce its debt burden is a precondition for receiving further bailout funds from European authorities and the IMF.

"Concluding the deal that will lead to a more sustainable situation in Greece, I think actually is fundamental to stability in the Eurozone," Mr Osborne said.

Davos 2012: Where to invest this year?

27 January 2012 Last updated at 14:03 GMT By Tim Weber Business editor, BBC News website, Davos The room in Davos was set out like a casino - a lack of self-awareness or a bit of humour from the attendees? The year is 2012.

The global economy is in turmoil. Exchange rates are swinging wildly. Politicians have to organise bailouts galore. Interest rates are absurdly low - or absurdly high if you find yourself out of favour with the financial markets.

So what would you do with $1bn (£640m) that you're given to invest?

That's the premise of a fascinating workshop called Investment Heatmap, run every year at the World Economic Forum in Davos. It's an opportunity for top investment managers to network, discuss strategy, try their skill and have fun.

More importantly, it gives some insight into how top investors think, where they would put their money - although you'd probably need some $10m or $20m to buy your way into these funds.

Walking into the room where the workshop is held is not for the faint of heart. Assembled before you are women and men who between them manage hundreds of billions of dollars. If there's one thing that's not lacking, it's confidence and self-belief.

Under Davos rules, I can't name names, but think of some of the biggest names in the world of private equity, and investment and hedge funds.

And every year, the organisers ratchet up the difficulty of the task to solve.

This time, we were given at random

• a region where to invest,

• two industries to choose from where we could put our money,

• assigned a fund type (private equity, hedge fund etc), and

• given a choice what kind of top talent to recruit to run the fund.

Then we had 20 minutes to develop an investment strategy and work out a pitch to persuade investors to give us their money.

Finally, our six groups were given $1bn to "invest" in the best "fund" that had just pitched at the event.

By the way, not everybody in the outside world will chuckle with appreciation that the workshop had been fitted out like a casino, replete with images of slot machines and poker cards.

Remember that, for many in the room, $1bn is not a lot of money.

Continue reading the main story

With Russia you know there's corruption at the top, so that's more like a tax. In India there's corruption at every level”

End Quote Davos banker That's especially true if, like our fund, the luck of the draw turns you into a private equity firm wanting to invest in India's infrastructure (we discarded the option to invest in mining straight away; there would have been just too much hassle with environmentalists and bureaucrats).

Our team leader, one of the most respected veterans of the US private equity industry, cut to the chase: "We don't need a strategy, we need talent" and rushed to the board where we could select the kind of person we'd want to run our fund. He opted for "ex-chief executive" and "corporate superstar executive".

"We'll surround the two with MBAs and a few veterans from our firm," he quipped.

And so we went to work. It was fascinating to join a group of top-end investment professionals at work. Expertise in our group of 10 was identified, discussions were short and sharp, pros and cons were clearly laid out, there was little hesitation making decisions.

And so we launched the India Future Fund, specialising in infrastructure investments (providing high-voltage power transmission), and led by an ex-CEO as chairman, ideally a well-known Indian industrialist who would be able to cut through bureaucracy, understand the market and appease all sides of India's lively political spectrum.

His sidekick would be an experienced industry executive, maybe poached from a company like ABB.

We agreed that doing business in India would not be easy, but were confident that our Indian ex-CEO would resolve any problems.

We promised our investors not a crazy rate of return - just 18-20% a year - but returns would be steady and arrive in the near-term.

If this were real life, I'd put all my money in our fund, said our private-equity-veteran team leader. But there were five other teams to compete with.

This team hailed Brazil as "the best of the BRICs" with huge growth potential. This private equity fund decided to bet on Brazil's rapidly growing middle class, investing heavily in the food and beverage sector, as well as sports.

"Brazil's middle class is exploding," argued the team, and said it would recruit an ex-president who'd proven to be an excellent deal maker (no prizes for guessing who they meant).

Would you fancy being a venture capitalist in Russia? This team tried to have a go at it.

For starters they solved any political crisis Russia might have, and lured former (and future?) President Vladmir Putin to lead their fund (he'll know how to get things done, they said with a wink and a hint at heavy-handed tactics).

A well-known Russian industrialist rounded off the talent pool.

Internet usage was growing rapidly in Russia, they said, so a hefty share of the billion would go into web ventures.

And as the wealth of Russia's oligarchs trickles down, the team predicted a rising demand for financial services and healthcare services. They painted visions of chains of dental clinics, hospitals and cosmetic surgeries.

But a cruel jibe from one of the competing fund managers deflated their balloon: "Will the clinics treat bullet wounds as well?"

The Middle East and Northern Africa (MENA) is a tricky region. Comparatively small, but in parts very rich, it requires a good strategy to crack.

The team called itself the Souk Fund, after the Arab word for market place, and as the name suggests the team planned to bet on the retail sector.

The money would got into chains of electronics and mobile phone stores, with a sideline in ecommerce.

The key, though, would be talent and they resolved to poach the boss of Goldman Sachs in Dubai, who would bring along his friend, the MENA chairman of consulting firm McKinsey to run the business.

This fund were "strategy consultants", planning to invest heavily in young companies well beyond the stage of "seed investment", with the hope of selling them on within three to five years.

Their ex-Goldman man would have the experience to bring growing companies to the stock market.

"This is an exit-driven fund," they said, listing top banks who had lined up to take their charges to the stock market.

No investment discussion is complete without at least considering China.

This was a "global macro hedge fund", that would keep plenty of money on the side "for liquidity and hedging, which is important in these times" and once again bet on the rapid growth of the country's middle class.

Goldman and McKinsey people are clearly in high demand, because this team was also determined to find its talent within these companies.

They planned to put about 80% of their money in securities of public firms, and leave the rest "liquid" for some light macro hedging.

Finally, we had US focused team, that was keen on riding the wave of the current social media boom.

It would invest $100m to build up a website that would be a social network for professionals, and they claimed - to howls of laughter - to have recruited no less than Facebook founder Mark Zuckerberg to lead their team.

However, this so-called "macro" hedge fund also claimed to have a young superstar trader who would have free reign with the remaining $900m to generate a great rate of return.

We were six teams, we had six investment strategies to pick from, and in the second phase each team had $1bn to distribute among the funds. There was just one rule: you could not invest in your own fund.

It didn't take the teams long to allocate the money.

During the countdown we also discussed the strengths and weaknesses of each fund's strategy.

Poor Mark Zuckerberg: MacMe came bottom of the pile, attracting just $100m. The reasons were obvious. Social network MacMe would have to face an entrenched competitor, LinkedIn.

More importantly, though, the rest of the money was in the hands of a single trader, and that was just too high a concentration of risk in these difficult economic times.

And spare a thought for the Russian fund. It received a mere $600m - and that's only because the Brazil team had injected $400m.

"Did you invest in the weakest proposition to hurt your rivals?" asked the workshop's official investment strategy adviser - and got knowing chuckles from the Brazil team in response.

So why did so few dare to invest? "I'm worried about getting my money out," said one. "The guys in charge after Putin are sure not to like him," ventured another.

Next up was the Chinese fund, which got $800m. Why so little money? Surely, China is a one-way bet?

Well, it's all about pitch and strategy, and the heavy hitters in the room worried about China's bubbly property sector, increasing regulation - and the fund's reliance on public securities.

"This fund is just short on execution, and they have to fire their head of marketing," said an investor.

My team, the India Future Fund, was runner-up, attracting investments worth $1.1bn.

India has infrastructure needs of $3tn, said a man who runs an India-focused fund in real life, "it's a very safe bet".

Others were not so sure. "India is a very capricious environment," one said. "With Russia you know there's corruption at the top, so that's more like a tax. In India there's corruption at every level."

Another investor had even harsher words for India: "The Indian government has just condemned thousands of children to die, because they refused to liberalise the food market. As a result, things will continue as before, with 40% of India's food going to waste in an inefficient supply chain."

That left Brazil the runaway winner, attracting a massive $2.3bn investment.

Still, many in the room were left feeling queasy.

"This is not the Brazilian Growth Fund," said one, "it's the 'Not China, not Russia, not India, not LinkedIn, Not Middle East Fund'."

Another urged the team running the fund not to invest in food manufacturing. "If you make stuff, it will be difficult to make money. If you move it or market it, you'll be fine."

If you add up the numbers, you'll notice that $600m were left on the table - to hedge our respective investment strategies. We all had been mandated to put at least $100m into a hedge, but there clearly was no appetite to go beyond the minimum requirement.

Brazil may have been the winner, for some reason there appeared to be a lack of enthusiasm for BRIC countries. Maybe they were spooked by the uncertainty that's haunting even these high-growth countries.

One would hope they feel more certain when they put real money on the table.