15/09/2014 Asia Business Report


15/09/2014

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doctors' advice and went to Spain. Now on BBC News, all the latest

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business news live from Singapore. Going global. From start`up to

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worldwide giant, Alibaba get set to list in the US stock market. But can

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it take on its American rivals? How one tiny island in the Indian

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Ocean has made it a successful financial hub. Thank you for joining

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us for this edition of Asia Business Report on BBC World News, I am Rico

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Hizon. It is a big week for Alibaba as

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shares go on sale on the New York Stock Exchange at the end of the

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week. Early estimates indicate it could raise $20 billion. The Chinese

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juggernaut has bought up companies (the right, centre and generates

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more revenue than American online retailers Amazon and eBay combined

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`` left and right. Richard Taylor reports on how much of a threat

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Alibaba poses to its peers. Ride sharing San Francisco style.

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These are the hallmark of Lift, the hallmark of this smartphone app.

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Since its launch, the start`up has been on quite a journey, recently on

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Alibaba's journey, a key investor in the $200 million funding round

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earlier this year. That was just the latest in a spending spree.

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Alibaba's venture in mobile spreading way behind transport into

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areas as diverse as communications, gaming, and app search. So what is

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driving these investments? This Silicon Valley venture capitalist

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himself invested in Alibaba a decade ago. Jack is very astute, an

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operator and investor. I think they are trying to learn as much as they

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came, understanding that they are Chinese, they are trying to learn as

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much as they can about the US market. The tech market type economy

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in general. And obviously many of them have a strategic aspect, where

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they are trying to bring back into China and using them here as a

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beachhead to expand here in the US. And those potentially expansionist

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intentions are getting some in Silicon Valley concerned. Right now

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Alibaba's e`commerce presence is subtle or stop its retail outlet

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doesn't so much as carry any Alibaba ranting. `` branding. Some of

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observers say it e`commerce ambitions could eventually pose a

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real threat to established companies like eBay. Alibaba knows they can't

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come to the US and drop. They want some of their services in the US and

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they expect it to work. They will take a long`term approach and try to

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introduce other services slowly but surely into the US. But they have a

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ton money and experience and you can never discount Alibaba.

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But for start`ups needing investment in their quest to become the next

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big thing, Alibaba's investment positively welcome. Chinese funding

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these days is seen as a badge of credibility.

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It is clear that Alibaba's presence here in Silicon Valley is not a

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1`way street. Many established US firms may fear what they see as the

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encroachment by the Chinese Internet giant on US soil. But for

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others it is a gateway into China itself. Not just in new market, but

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the world's guest. `` world's biggest.

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Alibaba might be a household name in China, but this is not necessarily

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the case beyond its borders. In part of his ambition, the CEO's wants to

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raise awareness of the company among consumers in North America and

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Europe. I spoke to a representative from advertising giant McCann, who

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shared his insights into what Alibaba needs

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consumers in these markets. It is known for the best

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transaction. That is what it does. One site has it all. The reality is

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it will have to make some changes if it wants to build within those two

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geographic locations. Do you think that Alibaba has what it takes to be

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able to break into the American market and give American consumers

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that sense of experience? I would never underestimate the CEO. He has

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proved to be an incredible businessman and an incredible show

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man. He knows what it takes to find the consumer. The question is

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whether he wants to do that. He seems to believe that the best

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marketplace is one which is very successful. Today looking at the

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results in China, ears right. The question is whether he will have to

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adapt for the United States. I think in the long`term if you want a

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significant part of the market you will have to make changes. If he

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makes that adoption? What if he adapt to what the US consumers want?

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Can he beat the Amazon and the eBay is? `` eBays? He is not just looking

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to see whether he can eat those companies, he is in a race against

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Walmart, against a lot of individually oriented brands who

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have good consumer presence right now on the web and to have managed

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to find a way for consumers to find their goods. `` who have. Many

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consumers still prefer shopping with those companies. He is a

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marketplace, they are brand specific areas. I think this is a race with

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which still has a lot to be run. `` that still has.

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Can Alibaba educate American consumers with a transaction

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oriented philosophy? Without a doubt, he can bring some things

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which right now are not necessarily the same as in the United States.

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I'm not sure he can educate them, but he can make some of the things

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that Alibaba is doing more appealing for an American audience. There is

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no doubt that he can do that. He still has to then figure out is

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whether it is a sensory, wholesome experience. Do I get the

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experiential satisfaction I get in these other places? Can Asian

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e`commerce sites succeed in the US with their existing business models?

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No, I think they still need to do more about the security of data,

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they still have to engender more confidence about privacy, they still

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need to be more knowledgeable about American consumer experience. Those

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elements which the Asian business sites will have to adapt to. In

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other business is making headlines, China has released fresh numbers

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showing its weakest growth in industrial output in more than five

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years. China's state`owned oil giant China Petroleum and Chemical

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Corporation is set to sell a whopping $17.5 billion stake in its

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retail businesses. Its retail side includes tens of thousands of fuel

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stations and convenience stores. The sale comes as china's government

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looks to restructure and boost productivity in its major

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state`owned companies. Shares are trading lower in morning trade.

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Staying with China, they have released numbers revealing weak

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growth in more than five years. The industrial debt measures output at

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mines, factories and workshops. The numbers released over the weekend

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also revealed slowing growth in retail sales and weaker than

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expected investment in infrastructure.

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Analysts say the new numbers are raising concern over China's current

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economic strength. South Korean conglomerates Samsung

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and LG are in the midst of a strange dispute. Samsung accuses some LG

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employees of deliberately destroying washing machines in stores in

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Germany. Samsung says the vandalism took place earlier this month ahead

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of a major trade fair in Berlin. LG alleges that two machines were

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damaged, but said it was done accidentally. The case is now being

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investigated. Mauritius is a tiny island in the

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Indian Ocean but it is firmly on the map as an offshore financial centre.

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Even so it is thousands of miles from India, the low tax regime makes

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it an attractive gateway for companies investing from there.

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Our correspondent has more from the Mauritius capital.

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It is a tropical paradise with white sand beaches and sugarcane

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plantations, but Mauritius is also a working island, home to a thriving

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financial sector. Billed as an investment gateway to India and

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Africa now, banks have set up shop and businesses have flocked to set

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up companies here. This is the heart of Mauritius' financial sector and

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accounts for 10% of the country's GDP. It is a major employer of the

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island's professionals. It is such an important pillar of the economy,

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yet offshore finance has become the centre of a row with India over

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taxes. Despite its small 1.2 million population and GDP of just over $10

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billion, curiously, this tiny island was the top stores of FDI into India

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between 2000 and 2013, accounting for more than one third of inflows.

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Wolf it's more than 4000 kilometres away `` although it is more than

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4000 kilometres away, Huntony 's have rooted investment into India

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through Mauritius `based holding company is to benefit from the low

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tax regime. `` companies. Mauritius has a double taxation avoidance

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agreement dating back to the 1980s. Some worry India is losing out.

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Mauritius has strict rules in terms of Indian investing in the

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Mauritius. I would think that a lot of it has to do with the sheer tax

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advantage that the Mauritius `India Treaty offers to any foreign

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investor looking to invest in India. Mauritius' finance industry

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is a major pillar of its economy. The tax advantages it offers on

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something `` is something they aren't willing to give up. As for

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India's new administration, it will have to find a balance between tax

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policies that shore up revenues and don't deter business investment. Not

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for Mauritius or from elsewhere. Thank you for joining us. I am Rico

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Hizon. Goodbye for now. Hello. You are watching BBC News.

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The top stories this hour: Britain's Prime Minister David Cameron says

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the UK will hunt down the killers of the aid worker David Haines, whom he

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called a British hero. Queen Elizabeth has made her first

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public comments on the Scottish referendum on independence from the

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United Kingdom. She said she hoped people would think very carefully

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about the future

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