07/07/2014 Asia Business Report


07/07/2014

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cover`up. Those are the headlines. Let's go to

:00:00.:00:00.

Singapore now. Doing business with China. We will

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have a look at the German trade ties with the world's second largest

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economy. A special report on the Indian auto

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industry and what they want to see from the government in the next

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Budget. Welcome to Asia Business Report.

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China is Asia's biggest economy and journey easier's. So surprised that

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business is at the top of the agenda for Angela Merkel's visit to China

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this week. `` Germany is Europe. Many German companies are looking to

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China to their fortunes. Angela Merkel arrived for her

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seventh visit to China, a measure of the weight she puts on the

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relationship. In the south`western cities, she toured a Volkwagen

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factory. A joint`venture with a Chinese company. This visit is about

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trade. China buys German machinery and the middle`class buys German

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cars. The German economy is kept ticking over by Chinese orders.

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Trade is balanced. Germany sold goods worth $91 billion to China

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last year. China sold goods worth $99 billion. In the past, Chancellor

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Merkel struck a balance between condemning human rights abuses in

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China but not wanting to alienate the leadership too much. It is not

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clear how strongly she will speak out this time. The three`day trip

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started in Sichuan. It has a population of 80 million people.

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Just one province but with the same population as Germany. That is how

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important the Chinese market is. German companies tread carefully.

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They have complained that Chinese companies just copy their ideas.

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China wants glossy Western consumer goods and the Chinese market is too

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big for the West to ignore. Chinese leaders hold a joint session with

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the German Cabinet later this year. It is a profitable relationship for

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both sides. That is the background to the

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business ties between China and Germany. For more of what we can

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expect from the Chancellor's visit over the next few days, we bring in

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Martin patients. We know that Angela Merkel began her trip and usually

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but where is she expected to be today? `` Martin Patience. She was

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in the south of the country and many would see that as the land of

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opportunity as China moves the West to open up less developed areas in

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the country. `` moves westwards. Today is about politics. She will be

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meeting the Chinese Premier and later today, she will hold talks

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with she jinking. Trade business will be at the top of the agenda.

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Unusually for a western country, Germany exports as much to China as

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it buys back. Many would see that as the main reason that the German

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economy has staved off some of the problems that we have seen in other

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European countries. `` she will hold talks with Xi Jinping. The Germans

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have a lot of concerns about the Chinese market, not least

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intellectual property. We heard one German intelligence chief warning

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small and medium`sized firms that they were at risk of industrial

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espionage by Chinese government agencies. Has there been a response

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among the delegation? Has not. It is interesting that it has been raised

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by a German official. What you will often see and hear from China `` in

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China from Western companies is not a lot. They do not want to be

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targeted. They are fearful of consequences if they speak out about

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these issues. There are concerns about industrial espionage.

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Basically, Chinese companies ripping off technology from joint

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enterprises. There is, of course, increased competition from Chinese

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businesses as China moves up the food chain in terms of technology.

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Western companies are then facing more competition. There are also

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concerns from small and medium`sized businesses in Germany that they are

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not being paid in time. That might sound like a small grumble but often

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it is 3`6 months. Some put that down to the tightening of credit within

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Chinese tanks. There are issues on the table. `` Chinese banks. Both

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have stressed that this is mutually beneficial. They are saying that the

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relationship between China and Germany is at the best in history.

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In the latest updates on the visit, you can go to the website.

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High`level British ministers are due in India this week to meet the new

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Prime Minister. The Foreign Secretary William Hague and finance

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minister George Osborne will arrive in Mumbai later today for talks with

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their Indian counterparts. The focus will be on strengthening economic

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ties. Two way trade between India and the UK has reportedly the past

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$15 billion. Speaking of the Indian government,

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they are due to have a busy week because on Thursday, it will unveil

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its first Budget after coming to power. The new finance minister has

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already said that the country cannot afford populist policies is expected

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to announce tax breaks to encourage foreign investment and incentives

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for individuals to save more. We report on one industry which we will

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be watching closely. For hours outside of Mumbai, this is

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a factory at one I's best small car makers. It mainly produces vehicles

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for sale within India. `` at one of India's best small car makers. It is

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looking to the government to get the wheels of the business turning

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again. At the top of the wish list is a simple `` and publication of

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the tax rules. On the current regime we have does not allow us to

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optimise costs. `` simplification. It does not allow us to take the

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right business decisions. Once of the cars or all of the cars roll off

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the factory line, independent dealers have to sell them. The last

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three years, they have been suffering. Earlier, it was very

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affordable. Total has now gone up to almost above $1. That is an

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important factor which affect our business. `` petrol cost.

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This is a potential customer. Over the last few months, he has been

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checking out quite a few cars. With banks charging over 10% to borrow

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money, he has yet to buy one. The government was voted to power with

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the huge mandate and the promise of providing the economy. There is no

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surprise that expectations are running high as the government

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prepares to announce its first Budget. It will be a speech that

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everyone, from big business to the man on the street, will watch with a

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lot of interest. And hope. South East Asia's largest bank hopes

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to expand even though its chief executive says uncertainty in the

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global economy could mean lower growth for many countries in Asia. I

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earlier spoke to one analyst who told the that despite the slowdown,

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there are sectors seeing headway. The property and construction sector

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is one. You will see headwinds for the next couple of years. Steel and

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cement as well. On the other hand, if you look at the exported sector

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in South China, it is benefiting of the European turnaround from `0.5%

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to plus 0.5%. It is doing OK. Some portions of manufacturing are doing

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OK. It is a two speed economy to the next two years. DBS is planning a

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big regional expansion into Hong Kong, China, India and Indonesia

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which goes to the polling booths this week to elect the next leader.

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What do you estimate from that market? Indonesia has the same

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advantages as China and India. A large population which is very

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young, younger than other countries and a growing middle class. The

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Indonesian challenge in the short term is to make sure that it can

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attract enough investment. Savings and investment pools are critical to

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Indonesia's group agenda. In that regard, making sure that the economy

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stays open to the inflow of investment and business investment

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appetite, that is really important. `` growth agenda. What would be best

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for the growth of your business? The market as a general theme would look

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for somebody who is likely to be less nationalistic and more open.

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From a market standpoint, there is an Mac standpoint that one of

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ministration might be more open to investment than another. The truth

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is that it is difficult to really tell from the rhetoric in the last

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month. A quick look at the markets. They

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are all flat this Monday morning. A slow start after the US holiday on

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Friday. That is all for this edition of Asia Business Report. Thank you

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for watching. You are watching BBC News. These are

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the headlines: The Palestinian militant group Hamas says at least

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six of its fighters have been killed in Israeli air strikes on the Gaza

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Strip. It follows days of rocket attacks against Israel.

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