 In a recent interview to a business daily in Pakistan, you had expressed confidence in Siemens Pakistan and its ability to weather the financial crisis. The first quarter results have proved you right. Do you see this trend extending to the rest of the year and to what would you attribute this success?
In a very difficult environment, Siemens AG has performed very well in 2009 and in our first quarter of 2010 compared to its key competitors, mainly driven by our Energy and Healthcare Sectors, we have increased our profits by 11 percent year-over-year. The strong growth of our green portfolio stabilizes the business in the crisis as we managed to increase our revenue with green products by 11 percent year-over-year to €23 billion in 2009 and intend to push further growth. Although the global economy shows increasing signs of stabilizing, we anticipate that the overall market environment will remain challenging in 2010 and we won't see record levels of 2008 so soon. In Pakistan the economy grew merely by 2 percent in 2009 and Siemens' sales dropped. However, we again scored major successes. For example, Siemens Pakistan set a global standard with the inauguration of the Atlas Power Plant - a 225-MW diesel-fueled power plant in Lahore which provides electricity for more than 1.5 million people - and was therefore designated as our global Competence Center for diesel power plants.
Since you have taken over, the emphasis has been on clean and green business. Can you tell us something about the concrete steps you have taken to pursue these goals?
Siemens is rigorously oriented to global mega trends. These include climate change, which will transform environmental technologies into the leading industry of the 21st century. Green, energy-efficient solutions are already generating a third of our total revenue. Talking about concrete steps, after acquiring our wind power business in 2004 we have rapidly and highly successfully expanded it and today we are number one offshore. We want to repeat this success story in the solar sector where we can build entire solar farms. We are now technology leaders in the solar thermal business. In addition to climate change, I see two other mega trends: shifting demographics and increasing urbanization. Already, today more people live in cities than in rural areas, and life expectancy is continually increasing. Mega cities like Karachi and Lahore have to cope with major challenges. Residents expect a good quality of life. They need clean air to breathe, good water to drink and reliable electricity to power their lives. People need affordable healthcare. They also need to be mobile and have adequate transportation systems in place. Experts predict cities worldwide will invest around €27 trillion in expanding their water, power and transportation systems over the coming 25 years. With our unique green portfolio, we are the perfect partner for sustainable urban development.
Research and innovation are pivotal to healthcare solutions. Can you tell us about Siemens' contributions to these fields?
We are leading the pack because we employ the brightest talents, we listen very carefully to our customers and we invest heavily in new products and solutions. Even in the middle of the crisis, our R&D investment went up by 3 percent and reached some €4 billion in 2009. We currently own more than 56,000 patents and employ 32,500 researchers and developers. Innovation is also key to extending our leading position in the healthcare market, as it provides competitive advantages to our customers, especially in a difficult market environment. For example, Siemens offers the fastest computed tomography system with lowest radiation dose and we sell the most affordable state-of-the-art magnetic resonance systems. In 2009, Siemens Healthcare invested €1.1 billion in R&D. Today, Siemens is number one in imaging and IT with respect to market share, profitability and installed base. In Pakistan we recently landed a number of deals including supply of diagnostics equipment to Al Razi Healthcare in Lahore. The contract includes a broad range of Siemens diagnostic equipment, including the Magnetom Avanto magnetic resonance imaging system and Somatom Definition.
There seems to be growing optimism that the crisis has bottomed out. Do you agree and, if not, when do you think the world economy will get back on track?
The main question remains: does the upward tendency mark the beginning of a longer recovery process in the final markets too, or are customers just building up inventories? From the way the orders are being placed at short notice, especially in the short-cycle businesses, it seems to us that at present it is more a case of building up inventories. The distribution channels have been relatively empty. In the Industry sector, it will be 2011 at the earliest before we return to our 2008 - that is, pre-crisis - market level. However, in some areas I do see light at the end of the tunnel.
Your recent initiative with the World Bank to fight corruption can put you at odds with corrupt regimes across the world. How do you plan to cope with that? Are you willing to lose business to pursue your objectives?
Independent observers consider Siemens to be a model in compliance and integrity. We stand for ethical business, because only ethical business is sustainable. Remarkably we haven't lost business since we introduced our new leadership culture and our strict compliance program. Moreover, we are trying to join forces with competitors to set up integrity pacts and collective action for clean business. We're convinced that if we link arms, we can affect business practices in those markets for the better. To boost our efforts, Siemens will distribute, by 2024, funds totaling US$100 million to nonprofit organizations worldwide that promote business integrity and fight corruption.
You believe that future focus of economic growth will be in the Middle East and China. On what do you base this assumption, especially in the light of problems Dubai is facing?
The recent developments in Dubai demonstrate that the global crisis in the real estate and financial markets is not yet over. However, there is no doubt that half of the overall global growth between 2008 and 2014 will derive from emerging markets such as the BRIC countries and also the Middle East. Siemens is already very well positioned in these countries and we've been growing strong in the past. We see good chances to further benefit from the massive business opportunities - in particular with energy efficient and green products.
Alternative energies are the talk of the day. How can Siemens provide cheap alternate sources of energy to the third world?
By 2030, renewables are expected to account for 40 percent of the worldwide investment in the power plant market. Over the last 20 years, the cost for one Megawatt wind power onshore has dropped from 3 million to 1 million euro. And this is certainly not the end. If you build in favorable conditions, even onshore wind farms can be profitable nowadays as we've proven in New Zealand. The same is true for solar energy. The aim of parity between the generation costs of solar electricity and consumer price is reachable in the near future. The Asian Development Bank has committed $510 million to Pakistan's renewable energy rollout and we would be glad to support the country on its renewable path. However, you have to develop a reasonable energy mix which includes fossil and renewable energy. For example, our brand new gas turbine is not only the largest ever built but also the most energy-efficient. Once the gas turbine has been connected to a steam turbine as a combined-cycle plant, its output increases to more than 570 megawatts and makes it capable of providing electricity for some 3.4 million people. Two of these turbines could supply nearly every household in Lahore and this would certainly be a relief for Pakistan's energy problems with an average of only 16 hours of electricity per day.
At the beginning of the economic crisis you said in an interview that it will provide opportunities for Siemens. Has this assumption materialized?
It certainly does - although momentarily it is far early to draw a final conclusion. Why? As a consequence of the financial crisis, there will be a re-industrialization trend in many countries. In this process, the frequently overriding importance of the banks and financial sector will decline. There are initial signs that many countries once again want to strengthen the role of industrial production in their national economies. This must be done in an eco-friendly way. And the first moves point in the right direction. In recent months, governments throughout the world have announced stimulus programs in which some 40 percent is earmarked for "green" infrastructure investment projects. We are clearly witnessing a paradigm shift in the U.S. And look at China - the government intends to spend €100 billion for green infrastructure. We anticipate orders globally of some €15 billion from these stimulus programs, over the next three years and we've already signed a number of contracts.
There is a worldwide emphasis on diversity in Siemens. Can you explain this concept and how Siemens benefits from this?
In the past we launched a number of projects to ensure that we can attract the best and brightest employees worldwide over the long term, regardless of gender, nationality or religion. We also kicked off our Diversity Initiative to provide greater diversity in our company's management and set up work groups with top talents from around the globe including people from Siemens Pakistan. The number of women we hire for new positions is constantly on the rise and, by the way, our eight global management board members come from four different countries. And in Pakistan we are the largest employer of engineering graduates, including women.
How do you compare yourselves with other global corporations in terms of job retention during the recession?
Depending on the specific situation, in each and every country and industry we are active in, we decided carefully whether we had to adjust our workforce or not. We currently employ some 400.000 people globally - compared to 398.000 employees before the crisis in 2007. Our workforce in Pakistan also remained more or less stable although the industrial output of the country dipped by 8.5 percent in FY 09.
How does Siemens view its relationship with customers? Do you do anything different to retain your customers?
You've just mentioned a crucial point for our business. Firstly, innovation is crucial in order to maximize the customer's benefit. And being close to the customer is our lifeblood. In Pakistan we've been listening carefully to our customers' needs ever since we built the telegraph line from London to Calcutta via Karachi in 1870. Our customers see us as a reliable, innovative and excellent partner for their business.
What would you say is the single most important ingredient for success in any business?
The findings of the current plight underline my personal belief that short-term orientation is not the appropriate way of doing business. Therefore Siemens' first priority and overall strategy has always been based on sustainability and integrity - and we intend to further pursue this path. 
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