07/07/2014 Asia Business Report


07/07/2014

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Now on BBC News all the latest business news live from Singapore.

:00:00.:00:15.

Doing business with China, we will look at Germany's treatise with that

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world is second largest economy. And the special report on what India's

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auto industry wants to see from the government's next budget.

:00:27.:00:33.

Welcome to Asia business News. China is Asia's largest economy and

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Germany is it your's though, perhaps, it is no surprise 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. The delegation includes representatives from some of

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Germany's leading companies, all looking to secure their fortunes.

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Our reporter has more. Angela Merkel arrived for her second

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visit to China, a measure of the week she puts on the relationship.

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In the south`western city of Chengdu, she toured the Volkswagen

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factory. 3`D tour is all about trade. China and Germany are the

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world's champion exporters. China buys machinery and its rising middle

:01:24.:01:30.

class buys German cars. Germany's economy has been kept ticking over

:01:31.:01:33.

by a Chinese orders. Trade is pretty balanced.

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In the past, Angela Merkel struck a balance between condemning human

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rights abuses in China but not wanting to earlier nectar leadership

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too much. It is not clear how strongly she will speak out too much

:01:55.:02:05.

`` alienate the leadership. It is just one province, but with the same

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population of Germany. That is how important the Chinese market is.

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German companies tread carefully. They have complained that Chinese

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companies just copy their ideas. China once glossy, Western consumer

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goods and the Chinese market is too big for the West to ignore. It is a

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profitable relationship for both. Angela Merkel began her visit to

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China, not in Beijing or even Shanghai, not even close. She

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actually kicked off a trip about 1000 kilometres from either city in

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Chengdu. Earlier, I spoke to someone from the German chamber of

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commerce. We have been going on with the go West policy for about one

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decade and during that time, several new German companies moved into this

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region. Some were here before but they had quite different time to get

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into this market in the 1990s. These companies, who are based here now, I

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getting into a market that is I fire market saturated `` by far. This has

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become more and more visible to the German side. We, with the Germans

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Consulates, have provided information over the years we have

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been here now. It is close to five years. This city is getting more and

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more into the focus of being a new hub. In spite of the promises that

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China holds, you heard in the report, concerns about copies and

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intellectual property with the German intelligence chief warning

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that more than medium`sized firms were at risk of industrial

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espionage. How concerned should German companies be by that,

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particularly in Chengdu? This is not a new concern and the Chinese

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culture and habit of doing business over the last 30 or 40 years, there

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is no way to calm down these worries. Of course, from the other

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point of view, it always depends how and which structure you put up the

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firm in China. This is why lots of companies still do not move into

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this region, neither into the western region or others, or they go

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here with products and not taking out or putting out their key

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competencies so that they could be copied.

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Matter is recalling more than 42,000 cars produced in China due to issues

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over airbags `` Mazda. That company is at the heart of massive recalls.

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Mazda said the faulty airbag in the front passenger seat may fail to

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work and even lead to fire. High`level British ministers argue

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in India this week to meet the country's new Prime Minister.

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Foreign Secretary William Hague and Mr George Osborne will travel to

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Mumbai later today for talks with their Indian. The focus will be on

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strengthening economic ties to link trade between the UK and India. The

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new Indian government is due to have a busy week because on Thursday it

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will unveil its first budget after coming to power. Venue finance

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minister `` the new is expected to announce tax breaks as an incentive

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for individuals to save more. Our reporter has more.

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Four hours outside of Mumbai, this is a factory of one of India's

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Westcarr makers. `` best car makers. However, it is

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looking to the government. To top its wish list is a simplification of

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the tax rules. The current taxes we have does not allow us to optimise

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our other costs and therefore, the current tax system does not allow us

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to make the right business decision. Once the cars roll off the factory

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line, independent dealers have to sell them. But, for the last three

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years, they have been suffering. In the early days, they were as

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affordable as the two 70 cents a litre. Now it has gone up to over

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$1. That is the most important factor that affects our business.

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This man is someone who is a potential customer. Over the last

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few months, he has been checking out quite a few cars but with banks

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charging over 10% to borrow money, he hasn't bought one yet. The

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government was voted to power with a huge mandate and the promise of

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improving the economy so it is no surprise that expectations are

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running high as the government prepares to announce its next

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budget. It aims to please everyone from this business to the man on the

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street. 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 a lower growth or many countries in Asia.

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Earlier I was told that despite China's slowdown, there are sectors

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that are seeing headwinds. The property and construction centre is

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definitely one. Steel, cement, and so on. If you look at the export

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sector in south China, it is clearly benefiting from Europe's

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turnaround, so that is doing OK. Some portions of manufacturing are

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doing OK. So, I do see it. DDS is planning an expansion, to places

:09:15.:09:21.

like Indonesia. What you anticipate from that market? Indonesia has the

:09:22.:09:26.

same advantages that China and India do. A large, young population, and a

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growing middle class. Indonesia's challenge in the short term is

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making sure that they can attract enough investment. Savings and

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investment are critical to Indonesia's economy. In that regard,

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making sure that the economy is as open and open to business

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investment. Which of the candidates to you think will be better for your

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business? I think the markets, as a general theme, would look for

:10:02.:10:08.

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

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market", there is an expectation that the government might be more

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open to investment ideas. The truth is, the rhetoric in the last month

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has made it difficult to say. Thank you for watching.

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You are watching BBC News. The top stories this hour: The Palestinian

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militant group Hamas says at least six of its fighters have been killed

:10:46.:10:48.

in Israeli air strikes on the Gaza Strip. It follows days of rocket

:10:49.:10:51.

attacks against Israel. US officials have given details of

:10:52.:10:54.

the new security measures they want implemented at some foreign airports

:10:55.:10:56.

which have direct flights to the United

:10:57.:10:58.

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