10/01/2017 Asia Business Report


10/01/2017

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

:00:00.:00:12.

Investors are loving it. Donald Trump sells a $2 billion stake in

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his trainees operations. And we take a look at whether it will be smooth

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sailing or choppy waters for the cruise ship industry in 2017. Good

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morning, Asia. Hello, world. I'm Rico Hizon. Welcome to Asia Business

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Report. It's a Tuesday. Glad you could join us. We start off with the

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fast food giant McDonald's and its decision to sell a controlling stake

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in its business in China and Hong Kong, a sign of another company

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admitting they need help in this huge and unique market. In a $2

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billion deal, the Chinese state owned conglomerate Civic will take a

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stake. Coni Group will take a 28% stake. McDonald's will be holding on

:01:13.:01:20.

to the remaining 20%. Earlier, I spoke to someone and ask them if the

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sale is a good move for McDonald's? This will help them a lot. If you

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look at how McDonald's has performed in China over the last couple of

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decades it has done quite well but is still looking to expand further

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into third and fourth tier markets. They need cash to do that so this is

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how they can do that without the bottomline taking a hit. Has China

:01:44.:01:47.

become a revenue burden for McDonald's? It has. If you look at

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the quick service restaurant space in the last two years consumers have

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been more concerned about their health and safety issues and have

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cut back on spending. That has helped to Mark Hurd McDonald's. But

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growth is coming back a little bit. There is still room to adapt and

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that is what McDonald's is banking on going forward. Do you think these

:02:10.:02:13.

two groups that have no experience in the food and beverage business

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will be able to grow the food and beverage business of McDonald's? The

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challenges they do not have a lot of experience in that market. On the

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flipside, they have a lot of experience in China and have good

:02:27.:02:29.

real estate connections in China. That is the name of the game in

:02:30.:02:34.

China. Can they get good locations and spend the money to refurbish

:02:35.:02:37.

their stores? They have a strong team in the Chinese market. They can

:02:38.:02:42.

use that to adapt the menu. They need the cash to allow them to open

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new restaurants quickly. Do you think the new ownership taking a

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majority stake in the China business will affect customers? I don't think

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the average customer is going to know or care that much. As long as

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the restaurants continue to work well. McDonald's is a good visual

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presence. Ordering is efficient in store. If they can maintain that,

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consumers will be happy to continue to go. China market research in

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Shanghai. Shares of Japanese pharmaceuticals are currently, as

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you can see, they are trailing for the first time and are up 1%. That

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is since they said they would buy another company for 4.7 billion US

:03:30.:03:35.

dollars. They make drugs for patients with rare cancer. They are

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paying for each added share. That is nearly 75% more than the previous

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closing price. It is a big day with Alibaba. 8.6 billion-dollar

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agreement with Hong Kong to privatise the department store. The

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company has accepted the chairman Jack met Donald Trump. The company

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claims it can create 1 million US jobs by helping small businesses

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sell their products to China and Asian consumers. Here is what he had

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to say about the meeting. We talked about small business and young

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people and American agriculture products in China. And we also think

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that China - US relationships should be strengthened and the more

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friendly. That was Alibaba's Jack Ma. The Chief Executive will not

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join the board of the newly created holding company once it has killed

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with Verizon completely. -- made a deal. They are creating a new

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company to handle its purchase of Yahoo e-mail, websites, and

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advertising tools. New figures suggest the association of Southeast

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Asian Nations is making an increasingly important contribution

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to the global economy. This year, it is estimated the combined economies

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of their ten members will be worth 2.6 trillion US dollars, which makes

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it bigger than India, the UK, and France. Also, it makes more than

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twice as much as Australia's economy. I asked what is driving

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this economic growth and will it continue? What we have seen for many

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years is that the ASEAN region has been growing strongly. But it has

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been below investors' radar because until ten years ago, it was less

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than 1 trillion. In the last decade we have seen phenomenal growth,

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particularly because Indonesia is a key driver for us when it comes to

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accounting for 40% of ASEAN. Private consumption is fuelling the growth

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of ASEAN more and more, with the big population is of Indonesia, the

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Philippines, and so on. Domestic consumption is a key driver of

:06:01.:06:07.

growth, but 2017, there will be a lot of red flags, vulnerabilities,

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for the ASEAN economy, like the new Donald Trump policies, Brexit, and

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the slowing Chinese economy. There are headwinds, like last year as

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well. But we expect their GDP to reach 2.6 trillion in this current

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year with a growth rate of about 4.6%. I think exports already were

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facing headwinds in the last two years. Many countries last year saw

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some negative growth in exports. More and more it is depending on

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private consumption and infrastructure investment. Quickly,

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what will be the top three ASEAN economies this year? In terms of

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pure economic rapid growth, it will be the frontier economies, plus the

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Philippines. The Philippines is doing well, which you will be glad

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to hear. Also Vietnam, Cambodia, Laos, they will be very strong. From

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IHS. One industry set to ride the waves of economic uncertainty in

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2017 is the cruise ship industry. 25 million people are expected to

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cruise this year. An increasing number of them are from Asia.

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Karishma Vaswani caught up with the boss of a cruise to find out more. A

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red carpet welcome for every guest. This is the boat here docking in

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Singapore for the first time. Cruising is still relatively new in

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Asia. It is seen as a holiday for retirees. Most of the passengers are

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from the US, Europe, or Australia. This ship, according to the company

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that owns it, is one of the most luxurious in the world. It is on its

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maiden for it to Asia. Asia is a massive market for the cruise liner

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industry. In China has become a particular focus, despite the fact

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that economic growth is slowing down there. Asia is a huge market. A

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large part of it is completely and penetrated, that is China. Plus the

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rest of Asia is growing. The middle-class is growing. Australia

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has been one of the fastest growing markets, growing almost 30% a year

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for the last ten years the bite economies in Asia are slowing down.

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China is still slowing down. Do you feel you have missed the boat? It is

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so and penetrated -- unpenetrated it almost doesn't matter. You can only

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produce so fast. They were unpenetrated. Even though things are

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slowing, there are many millions of people who can still and will

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cruise. It has not all been smooth sailing. A few years ago, more than

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30 people died after one of Carinval's ships, the Costa

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Concordia, thank. It spent years trying to build back its reputation.

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That was eight terrible tragedy. We learned some things from it.

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Something that had nothing to do with us. But we still want to

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examine it closely. We look at every incident that happens anywhere in

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the world. Since that time, of course, we have advanced a number of

:09:27.:09:31.

safety systems on the ships, which we do on a continuous basis anyway.

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Safety concerns do not appear to be dampening their prospects in the

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industry. At least a dozen new ships are set to hit the seas this year,

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and profits are soaring. They are finding new and younger passengers

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willing to take a cruise. But they might find that a challenge. BBC

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News, Singapore. And before we go, let us have a quick look at the

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Asian financial markets. As you can see right now on the screens,

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lacklustre in early Tuesday trading. This is after energy and financial

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stocks weighed on the US markets overnight ahead of the earnings

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season. You have Japan back in action after the holiday break. It

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is currently done by two fifths of 1%. Wall Street, they slept

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overnight by 76 points. The NASDAQ was up wide ten and three quarters.

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Thank you for in the thing your time with us. I am Rico Hizon. The sport

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news is coming up

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