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Now on BBC News all the latest business news live from Singapore. | :00:00. | :00:14. | |
The US economy is not a bubble ready to burst. Here why the Federal bank | :00:15. | :00:24. | |
chief talk about high interest rates. Consumers hit with a new tax | :00:25. | :00:29. | |
targeting foreign goods ordered online. Good morning Asia. Hello | :00:30. | :00:43. | |
world. It is a Friday. Glad you could join us for this edition of | :00:44. | :00:47. | |
Asia Business Report. The chair of the Federal reserve has been talking | :00:48. | :00:53. | |
up the strength of the US economy adding it is still on track for more | :00:54. | :00:59. | |
rate hikes. She made the comments in a panel discussion in New York | :01:00. | :01:03. | |
alongside the former Federal reserve chief. She said that she rejects | :01:04. | :01:11. | |
that it was a bubble ready to burst and confirmed that she will stick to | :01:12. | :01:16. | |
the plan of higher borrowing rates. We indicated that we thought the | :01:17. | :01:19. | |
path of rate increases would be gradual. And that remains our best | :01:20. | :01:25. | |
expectation that if the economy continues on the path it is on of | :01:26. | :01:30. | |
recovery that further rate increases will be justified but for a variety | :01:31. | :01:37. | |
of reasons, particularly a set of headwinds that from the legacy of | :01:38. | :01:40. | |
the financial crisis that we suffered. And with global growth and | :01:41. | :01:48. | |
a strong dollar that has gone with that the level of rates that are | :01:49. | :01:54. | |
sometimes called the neutral rate, a level of short-term rates that would | :01:55. | :02:00. | |
neither be particularly stimulating the economy holding it back, that | :02:01. | :02:04. | |
that level of mutual rates is quite low. So, yes, there is a | :02:05. | :02:13. | |
accommodation in the monetary policy that we have but we think a gradual | :02:14. | :02:19. | |
part of rate increases will be appropriate. That was the chief of | :02:20. | :02:25. | |
the US central bank. From today, China's consumers could be paying | :02:26. | :02:29. | |
more for foreign goods bought mine with EU income tax that is coming | :02:30. | :02:32. | |
into a defect. There is growing demand for foreign products from | :02:33. | :02:38. | |
cosmetics to baby formula, and until now, if you bought them on the | :02:39. | :02:41. | |
Internet and had then shipped across the border to your door there were | :02:42. | :02:51. | |
next to no taxes. This is a little complex, but overall, the Chinese | :02:52. | :02:55. | |
government is saying that they are changing the tax regime for goods | :02:56. | :03:01. | |
produced abroad. It is trying to level the playing field. For some | :03:02. | :03:05. | |
time now, the regime in place as being preferential for the | :03:06. | :03:12. | |
e-commerce companies in China. There was tax exemption for anything that | :03:13. | :03:19. | |
had a tax liability under $8. And up to the value of $150. You pay tax | :03:20. | :03:29. | |
anywhere between ten and 50%. That is changing and that exemption is | :03:30. | :03:34. | |
going completely and people buying goods from abroad will now be liable | :03:35. | :03:39. | |
to pay the value added tax and any consumption tax. That is likely to | :03:40. | :03:44. | |
mean that the price of some of these goods coming from outside of China | :03:45. | :03:52. | |
will go up. What sort of impact will these changes have the businesses | :03:53. | :03:59. | |
and is it a positive step? Earlier I spoke from a firm on Chinese policy | :04:00. | :04:02. | |
to find out. I think it is a good move. It is not a prohibitive tax | :04:03. | :04:09. | |
and it is simply moving the parcel tax which was administered by the | :04:10. | :04:13. | |
state post bureau. Restructuring at Soders easier for the general and | :04:14. | :04:16. | |
assertion of customs to collect import duties, the value added tax | :04:17. | :04:22. | |
and consumption tax. The main purpose of the tax is to clean up | :04:23. | :04:27. | |
the business to consumer trade segment, which was unregulated. And | :04:28. | :04:32. | |
encourage foreign exporters into more normal business to business. It | :04:33. | :04:39. | |
is basically extending the market. It is basically doing that. The | :04:40. | :04:45. | |
cross-border trade is only about 5% of the domestic e-commerce market. | :04:46. | :04:51. | |
Most central policy coming out is about encouraging the growth of the | :04:52. | :04:55. | |
domestic markets and we are about growing and extending Internet | :04:56. | :05:01. | |
infrastructure and traditional logistics down into the countryside. | :05:02. | :05:08. | |
Really most of the central policy is this is friendly, and it is about | :05:09. | :05:14. | |
growing large-scale enterprises and a handful of large-scale enterprises | :05:15. | :05:18. | |
which will be better equipped to carry the tax burden, deliver | :05:19. | :05:21. | |
cheaper prices to the consumer and it will be these enterprises which | :05:22. | :05:25. | |
joint domestic and international markets. But this also means | :05:26. | :05:30. | |
additional revenue for the national government. How much will this add | :05:31. | :05:37. | |
to their pockets? This is an administrator 's tax and all make it | :05:38. | :05:41. | |
easier for them to regulate the quality infrastructure and to ensure | :05:42. | :05:44. | |
that goods are crossing borders is passing through China's quality | :05:45. | :05:52. | |
infrastructure. It is a very generous tax for foreign exporters | :05:53. | :05:56. | |
because they are only paying 70% of the value added tax. Sofa most | :05:57. | :06:02. | |
foreign exporters you are going to an 11% tax from a complete tax | :06:03. | :06:08. | |
avoidance under the parcel tax. And so you still enjoy a 30% subsidy. In | :06:09. | :06:21. | |
telecommunications, one of the most competitive markets has unveiled a | :06:22. | :06:32. | |
new device to challenge Apple and Samsung. It was developed with the | :06:33. | :06:44. | |
German camera maker. To most consumers were a fairly new brand. | :06:45. | :06:50. | |
But we do need to do quite a bit of work in terms of building the brand | :06:51. | :06:55. | |
awareness and ensuring that consumers realise we are high | :06:56. | :07:00. | |
quality and premium as we are. In association with the German company | :07:01. | :07:04. | |
that brings that to the consumer. If you look at yourselves, it shot up | :07:05. | :07:08. | |
14% and more than any of the other major brands, but you are still | :07:09. | :07:11. | |
selling half the number of phones than Apple. If you are going to | :07:12. | :07:18. | |
crack those you're going to have to do well in the US and you have a bit | :07:19. | :07:25. | |
of a brand problem. Surely they are an important market, but today we | :07:26. | :07:29. | |
are already number one in China and that brings a lot of scale to the | :07:30. | :07:33. | |
business. We doing great in Europe and the top three in ten of the | :07:34. | :07:37. | |
European market. We're doing well in a number of another part of the | :07:38. | :07:40. | |
world including Latin America, Asia. The US is important, don't get | :07:41. | :07:47. | |
me wrong, but we can still be very competitive by being successful in | :07:48. | :07:54. | |
the rest of the world. Sailing the high seas on a multimillion dollar | :07:55. | :07:56. | |
yachts is a luxury not everyone can afford. That is why they are setting | :07:57. | :08:02. | |
their sights on the altar wealthy in Asia. Are they buying these boats? | :08:03. | :08:14. | |
The waiting list to dock your boats here is several months long. But | :08:15. | :08:19. | |
given the global downturn, is this a luxury that people are still | :08:20. | :08:22. | |
splashing out on? Let us go find out. I spoke to the organiser of the | :08:23. | :08:31. | |
Singapore yacht show. So two years ago they were more than 90 yachts on | :08:32. | :08:34. | |
display, and this year there are 71. What is happening? It is a bad | :08:35. | :08:39. | |
hammer your tweaking get into this marina. We have on this road alone | :08:40. | :08:44. | |
we are five very big boats and we have a very limited space. Who is | :08:45. | :08:50. | |
buying? They are tycoons, industry leaders and people with a lot of | :08:51. | :08:57. | |
money. Basically millionaires of mainline China and Hong Kong. A lot | :08:58. | :09:02. | |
of companies say they look to Asia the growth and that the Chinese are | :09:03. | :09:06. | |
driving demand, but the fact is we're seeing a downturn taking place | :09:07. | :09:10. | |
and we can't really keep winning our hopes on the Chinese. We're very | :09:11. | :09:17. | |
optimistic about the Chinese markets are several reasons. China has | :09:18. | :09:23. | |
surpassed the US with 500 semi- Ili Inez in mainland China, plus 100 | :09:24. | :09:27. | |
billionaires in Hong Kong and Taiwan. Which is a large number of | :09:28. | :09:34. | |
clients. Last year, three alien dollars worth of yachts were sold, | :09:35. | :09:40. | |
what proportion we seeing of the business coming from Asia? It is a | :09:41. | :09:41. | |
small business coming from Asia? It is a | :09:42. | :09:47. | |
amount and that is a wonderful opportunity that we have. The | :09:48. | :09:54. | |
interest is growing rapidly. Thank you very much. So as you can see | :09:55. | :09:59. | |
there is cautious in industry optimism about Asia, especially | :10:00. | :10:03. | |
given the rising number of ultrahigh networks in the region. If the | :10:04. | :10:09. | |
economic downturn get any worse, who is to say that business will still | :10:10. | :10:17. | |
be smooth sailing? This is where the Asian markets stand. And a safe | :10:18. | :10:25. | |
haven was strengthened against the dollar. Japan and Sydney in the red. | :10:26. | :10:31. | |
Thank you for investing your time with | :10:32. | :10:33. |