28/07/2014 Asia Business Report

regular sessions in Parliament. The idea would need the approval of the

Speaker of the house to go ahead. `` House. Now, Asia Business Report. Is

Latin America and the new battleground for Japan's Japan's

rivalry with China? Starbucks opens shop in Hanoi. Welcome to the

programme. Japan's Prime Minister has kicked off a 5`nation tour of

Latin America by signing a series of oil and gas deals with Mexico. Japan

has been focused on energy since the Fukushima disaster, which shut down

the country's nuclear reactors. It comes hot on the heels of a trip to

the region by China's premier Xi Jinping. Both China and Japan are

keen to tap into Latin America's natural resources. One of the most

important issues around Asia, including in Japan and China, is

energy and resources. This is where Shinzo Abe is following China on

many accounts. Already into Africa and now into South America. Very

important deals have to be signed on oil and gas, which is so important

in Japan after nuclear power was switched off. Is it a competition

between the two? Is Japan looking for resources as well as other

things? There might be some competition in Asia and even in

Africa but not so much in South America. Everyone is after resources

but for Japan, this is a very important market. When there is a

deal on infrastructure or energy, Japan is much more about selling its

technology, while China is just trying to connect its market to

major projects. We have seen this deal with Mexico. Japan has a

free`trade agreement with Mexico. Now they have signed deals in oil

and gas. Is this the first of many contracts to be signed over the

course of this visit by Shinzo Abe to Latin America? Yes. Mexico is

very important because it is the market that connects Japan to the

US. It is the energy market. In Brazil, it will be security

relations but also energy. The plan was to sell its technology and major

infrastructure projects. And Chile is very important because already

half of Japan's copper comes out of Chile, and you so important for the

electronics industry. Thank you. China's industrial profits continue

to expand at a faster pace than expected, due to strong growth in

June, when profits rose 18% compared to one year before. The US company

that owns the meat supplier at the centre of China's latest food scare

is withdrawing all products made by its subsidiary, Husi Foods. It is

sending its own representative to Shanghai to investigate claims that

Husi Foods sold out of date meet. India's consumption of soft drinks

is well below that of China, the US and Europe, but it is growing

rapidly. In the budget is a plan to add a 5% tax to show brief history

drinks `` to sugary fizzy drinks. Adding some fees to the budget. The

debate over soft drinks and their potential harm in large quantities

has been bubbling over around the world. India's government has now

weighed in, unexpectedly raising taxes on them. I also propose to

levy an additional duty of excise of 5% on aerated waters containing

added sugar. The extra money will not do much to balance the books but

it is certainly an attempt to balance the scales. In the past few

years, more and more Indians have been getting health`conscious and

consulting experts for guidance on what they should eat and drink.

Steering clear of too many fizzy drinks is one piece of basic advice.

But there is scepticism about whether this so`called healthy tax

will discourage the large majority. They want something to make any

impact and to dissuade the public from using fizzy drinks. So, why

don't they prohibit advertising such products? Similarly how we have a

ban on tobacco and smoking and cigarettes and alcohol? India is not

the first country to bring in extra taxation on these products. In

fact, it is a list that has been growing and which includes nations

like France, Germany and Mexico. Compared to other countries around

the world, India is a relatively small consumer of fizzy drinks.

These so`called healthy taxes have been effective in other parts of the

region. It has been shown by sudden researchers that a 10% rise in price

creates a 4% drop in consumption. Monetary changes, increasing

monetary prices, tend to be more effective than the other ways of

trying to prevent somebody will discourage somebody on drinking or

consuming something that would cause future health problems. Those

figures, are they specifically for alcohol or more broadly? We have

seen taxation on fizzy drinks in other jurisdictions. From what I

have seen for alcohol... There is some for tobacco as well. It does

show that in general, price changes tend to be more effective than

things like education, advertisements and so on. What does

this mean for the business bottom line? If it does cut consumption,

does it move that consumption to other products? Businesses will find

a fall in consumption affecting their business, so they will start

producing more healthy things like fruit juices. With alcohol

consumption, the interesting thing is that with heavy drinkers, the

monetary change does not change consumer behaviour. The same with

heavy users of tobacco. Do you see these tax changes is becoming more

common in Asia as governments become more aware of their health budgets?

What we have just seen, this monetary change does affect

consumption. If that reduction in health issues in the future offsets

the dropping consumption, that is something that they want to do but

unfortunately, how much savings will you actually get in the future? Is

too far the future to see and it is too cause. So far, it is an excuse

for them to raise taxes more than really to reduce health issues for

the future. Now, coffee. How does a global chain target a marker that

already has a top products? Coffee is huge in Vietnam. The south`east

Asian nation is the world's second largest exporter of coffee. There

are more coffee shops crammed into Hanoi than probably anywhere on

earth, so opening a cafe in Vietnam's capital could be a bit of

a gamble. But this month, Starbucks is making an aggressive push,

opening three branches in this bustling city, possibly one of its

most challenging markets yet. It is unique and special in that there is

a long and deep coffee history and heritage in Hanoi and many things in

Hanoi happen over coffee. The US copy chain already has 11 outlets in

two other Vietnamese cities but France's coffee legacy is most

visible in the capital. Most city streets overflow with coffee shops

that sell one cup for as little as 50 cents. Black coffee in Starbucks

costs about $2, about half the average daily wage. TRANSLATION: I'm

not concerned about the competition because we have a number of regular

customers. Some have been drinking coffee here for the last 61 years.

Hanoi's first Starbucks drew the crowd on opening day but the

question is if it can keep up the momentum, as many Vietnamese people

feel financially squeezed. The country is mired in debt, hit by

bankruptcies and last year suffered its slowest growth in four years.

Not everybody has the money to spare. TRANSLATION: I think all

types of coffee... It certainly makes things seem more interesting.

But for me, I prefer Vietnamese traditional coffee. The streetside

coffee is more down`to`earth and it suits my wallet. Starbucks hopes to

brew up profits in Hanoi but the coffee giant might just find that it

is not everybody's cup of tea. Now, a quick check of the markets.

Australia has opened slightly weaker but Japan, after opening weaker, has

turned around. That is it for this edition of Asia

Business Report. We are on Twitter, don't forget to follow us there.

Thank you for watching. This is BBC News. The headlines:

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