27/01/2016 Asia Business Report

Apple forecasts its first sales drop in years because of slowing iPhone

sales. And as Vietnam hosted Communist Party Congress, we look at

the future of the country's state owned enterprises. Good morning

Asia, hello world. Glad you could join us for this Wednesday version

of Asia Business Report. We start with technology and for almost a

decade the iPhone has been Apple's golden goose. One of the most

successful products in history, but shares of the tech giant are nearly

2% down in after-hours trade in the US after reporting lower than

expected iPhone sales and its slowest ever gross in shipments. --

growth. There is concern that Apple is indeed losing its appeal. Earlier

our correspondent gave more details on the results. That is a big worry

for investors, they are depended on the iPhone sales and it is the first

time ever that they are predicted to be down. It has always gone up since

he came out in 2007 but now it seems to be going down. When of the other

problems Apple is facing is with China. Tim Cook said that China

wasn't going to be a problem six months ago, that people were still

going to purchase luxury gadgets, but it seems even they have been hit

by the worries in the Chinese economy. They're predicting loss,

particularly in Hong Kong. I spoke to an analyst and investor about how

worried Apple should be about China. Really what the focus now

is, is China remaining strong? If China falls, so does Apple. They

have really got the house on the Chinese growth opportunity. The

concern people have on the economy, I don't get really applies to

Apple. You were talking about a different kind of consumer when it

comes to Apple. Although there have been lower income levels, you're

still talking about what would be here, mid to upper class. Apple is

starting to feel the pinch, particularly in the softness of the

Chinese economy and we have also seen over the past year, weakness in

the Chinese currency against the US dollar. According to many analysts,

the lackluster revenue is also because of the volatility.

Absolutely. Tim Cook is trying to encourage people to look at the

benefits that will come this year from Apple, who can hopefully turn

around their fortunes. They are hoping that things like the iPhone

seven, despite China having problems, that people will still

purchase new phones. They still have loads of space to grow in China,

there are only 30 Apple stores in the country compared to 53 just in

California. Investors are worried, shares are falling at the moment but

there is a lot Apple can do to turn around. Vietnam's Communist Party is

meeting in Hanoi to discuss the next five years. The Congress has been

unusually divided with the reformist Prime Minister aiming for the top

position. And he has been blocked by his conservative rivals. But he has

driven the opening of Vietnam's economy, in particular pushing for

the selloff of the country's state-owned sectors. There will be

questions as to how far it can go. Now we go to our correspondent.

Factory fitness, Vietnam style. Workers on a men's suit assembly

line take these brakes to keep themselves fresh and efficient. Most

of their output goes for export to the United States or the European

Union. Quality is critical in a cutthroat industry. But there this

is a very old company. It was founded 70 years ago and it is part

of a much larger umbrella company which, like so much of Vietnam's

corporate sector, is state-owned. The company has done much better

than most in reforming itself and may well be able to compete in what

is a brutally competitive global market. But the health of other

state companies, still a big chunk of the economy, is a lot more

shaky. This company has spent the past ten years restructuring

itself, getting rid of unprofitable subsidiaries and slowly reducing the

level of state ownership. But it hasn't been easy. As a state-owned

enterprise, we were bound by many conditions and regulations. A lot

more than a private company. You couldn't just go in and shut

factories down? No, we can't. And yet he still had to try to be

competitive and profitable at the same time. That is why I say it is

remarkable for us to be able to do what we have done and remain

profitable. And it is worth remembering what the victorious

faction said that the Congress party conference last week. That socialism

and the state must remain a part of the economy. A pledge critics

believe is unrealistic in the 21st century. If the state sector plays a

leading role, it is not a competition. In Vietnam is already

deeply integrated into the world economy. Except the TPP and the free

trade agreement, and there are many changes Vietnam most abundant. This

company may be an exception, a state industry that can be competitive and

make money. It may also be privately owned one-day, says its manager, but

it is hard to guess right now whether their Communist Party rulers

will allow that to happen. The end of China's government statistics

bureau is under investigation for alleged corruption -- head. The

national Bureau of statistics head oversees the data on the GDP,

consumer prices and other economic indicators. Staying with China, the

Shanghai composite Index took another beating yesterday, closing

6-.4% lower after oil prices dropped again, reviving concerns about their

growth. Let's look at where markets are at this hour. A volatile day so

far. The -- let Ross over to Hong Kong, where we are joined by our

Asia correspondent -- let's cross. A lot of volatility? That's right. It

looks like it is going to be another one of those days. The Shanghai

market gained at the open but have since surrendered those gains. There

are now in negative territory. A slightly better picture in Hong

Kong. It looks like it is rebounding with the Hang Seng up more than one

and a half %. We will have to see how investors in China and Hong Kong

respond to those industrial profits come at the figures of which have

just been released. Analysts are saying there is not a lot of

conviction in the markets. Generally there is a feeling that they want to

sell on any bad news, and they are not buying on good news. So,

certainly that is why China's markets are down more than 20% so

far this year and it has only been a few weeks of trading so far. Only

yesterday, Shanghai markets ended at the lowest level since December.

There is no obvious reason for it. Traders say it may have been driven

by the fact that oil prices were down again. Low oil prices are good

for consumers, but it suggests continuing weakness in the global

economy. No positive economic fundamentals to support the mainland

market at this point. What about the probe into the data chief and his

practices? Is this impacting the market in any way? This is really

not helping at all. The news that the head of the China National

Bureau of Statistics is being investigated for alleged corruption

came as a real shock and it was especially shocking because he's the

phase of the Chinese statistics bureau and all the data releases. He

was presiding over that GDP Presser last week and barely two hours

before the announcement came that he was being investigated, he was

presenting a summary of 2015 data to journalists in Beijing. There is a

lot of surprise over what is going on and there are perpetually

questions being asked on the accuracy of Chinese data. This news

is definitely not helping the markets. Thank you. Before we go,

here's a quick look at the regional stock markets. It is a tale of two

markets at this point where you have the mainland markets in negative

territory but most of Asia in positive territory. Thank you for

investing your time with us. Goodbye for now.