06/02/2017 BBC Business Live


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06/02/2017

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Chinese investment in Europe and the US continues to grow

:00:00.:00:13.

reaching almos $100 billion last year - but can the trend continue?

:00:14.:00:15.

Live from London, that's our top story on Monday 6th February.

:00:16.:00:40.

So why is investment from a nine chain in Europe and the US --

:00:41.:00:48.

mainland Europe and We will also speak to the

:00:49.:01:11.

award-winning business leader who took over a waste management company

:01:12.:01:14.

at the age of 19. Also today - Ryanair

:01:15.:01:19.

profits are down - So do you still have

:01:20.:01:21.

the cheap flights bug? If you are planning your holidays,

:01:22.:01:41.

why not tell us where you are off to?

:01:42.:01:42.

The political events of 2016 may have ignited an unprecedented period

:01:43.:01:46.

of uncertainty for the global economy but one thing that appears

:01:47.:01:49.

to remain unaffected is the growing appetite of Chinese investors.

:01:50.:01:51.

Last year Chinese investment in the US increased

:01:52.:01:53.

Meanwhile, Chinese investment into Europe grew by 90 percent.

:01:54.:02:05.

All of this gives the impression 2016 was a good year for Western

:02:06.:02:12.

economies when it comes to foreign investment.

:02:13.:02:16.

Well the UK is about to begin a two-year period of Brexit

:02:17.:02:22.

negotiations and this echoes wider concerns over the health

:02:23.:02:24.

France, Germany and the Netherlands are all set to head to the polls

:02:25.:02:33.

later this year and Eurosceptic parties are gaining ground

:02:34.:02:35.

And in the US the uncertainty about what the Trump administration

:02:36.:02:40.

means for future deals with China is very unclear.

:02:41.:02:46.

During the recent election campaign he vowed to impose punitive

:02:47.:02:50.

Add to that moves from Chinese authorities to crackdown on money

:02:51.:02:53.

Chinese overseas deals could have been worth billions of dollars more

:02:54.:03:01.

if Beijing had not blocked some 30 acquisitions with Europe and the US.

:03:02.:03:08.

Tim Gee is Mergers and Aquisitions Partner at Baker McKenzie and one

:03:09.:03:11.

He explained why those deals were blocked.

:03:12.:03:16.

Some of the transactions and ousted not complete because the Chinese bid

:03:17.:03:21.

was outbid. The Chinese bid for London City Airport was outbid by a

:03:22.:03:28.

Canadian pension fund. Then you also have regulatory control from the

:03:29.:03:35.

West, particularly in the US. Some deals were blocked there, including

:03:36.:03:45.

European deals. Then you have controls within China, and what we

:03:46.:03:49.

have seen is concern over capital outflow from China, and that has

:03:50.:03:56.

caused some transactions to be pulled as a result of China saying,

:03:57.:03:59.

we don't want this to happen. Linda Yueh is a Fellow in Economics

:04:00.:04:05.

at the University of Oxford and an Adjunct Professor

:04:06.:04:08.

of Economics at London Nice to see you, Linda. This report

:04:09.:04:19.

is interesting on what happened last year, because the numbers are

:04:20.:04:22.

staggering, the amount that was invested in the US and Europe, but

:04:23.:04:27.

also the amount that wasn't. Talk us through a bit more the reasons why.

:04:28.:04:34.

The Chinese are trying very hard to control out what capital movement.

:04:35.:04:41.

There are some economic reasons. One is to stabilise the value of the

:04:42.:04:45.

Chinese currency. Remember, China pegs its currency. They have to

:04:46.:04:53.

control the amount of currency flowing outside its borders. The

:04:54.:05:00.

other reason is they don't want companies companies being bought,

:05:01.:05:08.

but that is how commercial transactions should work. That is

:05:09.:05:11.

more of an excuse. The real reason is that they want to control the

:05:12.:05:16.

capital markets, just as they control pretty much everything else

:05:17.:05:19.

in the financial markets in the country. I wonder what your take is

:05:20.:05:24.

on the future appetite of Chinese investors investing in the US when

:05:25.:05:29.

we have quite convert of statements from Donald Trump, accusing China of

:05:30.:05:33.

manipulating its currency, questioning the one China policy.

:05:34.:05:39.

Will that affect investors' willingness to pour money in? I

:05:40.:05:45.

think the rhetoric will have some impact, but I wouldn't overstate it.

:05:46.:05:48.

Politically, there has always been a lot of tension between the US and

:05:49.:05:52.

China, but a lot of businesses do deals anyway. The Chinese don't view

:05:53.:05:57.

Donald Trump that negatively. There are some who are worried, but there

:05:58.:06:01.

are others who say, he is a businessman. He welcomed some

:06:02.:06:09.

Chinese companies to make jobs in America. There are only two roles in

:06:10.:06:16.

an American economy, he said - hire American people and by American

:06:17.:06:22.

products. -- purchase American products. . There has been a shift

:06:23.:06:37.

away from... The Chinese Government is attempted to control not just the

:06:38.:06:40.

financial markets but the whole economy. China's growth is slowing.

:06:41.:06:47.

It is one of the reasons why big companies want to invest overseas,

:06:48.:06:51.

to diversify. The Government doesn't want them to put money into things

:06:52.:06:55.

that they don't think will help china's growth. They want

:06:56.:07:01.

innovation, expertise and things like high-end financial services,

:07:02.:07:05.

high-tech manufacturing, so their investment in America and Europe

:07:06.:07:10.

tends to be permitted if it is of that ilk. It tends to be scrutinised

:07:11.:07:15.

if it is more about buying entertainment companies. Thanks,

:07:16.:07:18.

Linda. All was good to have you on the programme. There is more about

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that on our website. Take a look when you have time. Some other news

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now. Apple, Facebook, Google

:07:26.:07:28.

and Microsoft are among 97 companies to have filed an official court

:07:29.:07:31.

document opposing Donald The US President's executive order

:07:32.:07:33.

prevents people from seven mainly Muslim countries

:07:34.:07:38.

entering the United States. On Saturday, the federal appeals

:07:39.:07:39.

court rejected the Trump administration's request

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to reinstate the ban after it was initially

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blocked a day earlier. Ryanair has reported an 8% fall

:07:44.:07:49.

in profits as increased competition forced the Irish airline

:07:50.:07:51.

to cut fares. The company says that average ticket

:07:52.:07:54.

prices may have fallen by as much as 15 per cent over

:07:55.:07:57.

the winter period. Ryanair has warned that 2017

:07:58.:08:01.

will continue to be a difficult year for the industry,

:08:02.:08:06.

but the carrier left its profit Two of Japans biggest

:08:07.:08:09.

automakers have announced Toyota and Suzuki said they'd been

:08:10.:08:22.

working on the deal since October. This is interesting, isn't it?

:08:23.:08:34.

That's right. I just want to mention that Toyota has just released its

:08:35.:08:40.

latest earnings numbers. They have raised their profit forecast thanks

:08:41.:08:44.

to stronger sales. They say they expect profit of 15 billion US

:08:45.:08:52.

dollars in the financial year to March, a 10% increase from the last

:08:53.:08:59.

forecast. Toyota last year lost its title as the world's biggest

:09:00.:09:05.

car-maker to Volkswagen. The industry is getting more

:09:06.:09:09.

competitive. Tidying up with Suzuki is a means to address that. They

:09:10.:09:13.

will develop green cars and other technologies, but it is worth

:09:14.:09:17.

mentioning that both companies have a history of failed alliances, so

:09:18.:09:20.

let's hope that this relationship works out. Thank you very much.

:09:21.:09:27.

Asian markets rose as investors tracked a record on Wall Street.

:09:28.:09:31.

That was fuelled by a better than expected jump in US jobs.

:09:32.:09:38.

Financial stocks in particular have been boosted by Donald Trump's

:09:39.:09:40.

He's likely to relax the tighter regulations that were imposed

:09:41.:09:45.

on banks after the 2008 crash to try and prevent a repeat of that.

:09:46.:09:53.

In Europe the main markets opened a shade higher - but fairly flat.

:09:54.:09:59.

Some things to watch out for this week -

:10:00.:10:01.

investors will be looking at the results from BP and Total

:10:02.:10:07.

They are two of Europe's biggest energy companies.

:10:08.:10:11.

Will their results reflect the rebound in oil prices?

:10:12.:10:16.

And Samira Husain has the details about what's ahead

:10:17.:10:18.

If the last two weeks were anything to go by, we could see another busy

:10:19.:10:33.

week. It will also be a busy week per business news, as companies

:10:34.:10:38.

continue to report earnings. General Motors will release results on

:10:39.:10:44.

Tuesday and it is expected to have a record year. Coca-Cola is also

:10:45.:10:50.

reporting this year. Fizzy drinks are going flat as consumers look for

:10:51.:10:53.

a healthier options. The company has been trying to diversify away from

:10:54.:10:58.

sugary drinks into coconut and vitamin water, but it hasn't been

:10:59.:11:03.

enough -- but has it been enough? Wall Street is -- twitter is

:11:04.:11:13.

reporting as well. Joining us is Trevor Greetham,

:11:14.:11:18.

Head of multi asset A lot going on, as usual. We'd been

:11:19.:11:31.

touching on some of the issues. Let's talk about travel, because

:11:32.:11:34.

that seems to be impacting trade in Asia, with shares doing well.

:11:35.:11:42.

Perhaps an executive order on financial regulation coming up soon?

:11:43.:11:51.

Yes, and you will generally here Donald Trump using the short form of

:11:52.:11:56.

the consumer protection act. He wants to deregulate the American

:11:57.:12:05.

market generally, which would mean getting banks... Wasn't the

:12:06.:12:13.

regulation brought in to protect us against another 2008 - style crisis?

:12:14.:12:19.

Yes. It is that a question about whether it will be a good thing or a

:12:20.:12:24.

bad thing, but it will have to go through Congress. There will be

:12:25.:12:29.

opposition. Generally, we are testing America's separation of

:12:30.:12:33.

powers. Donald Trump will say stuff and then see what happens. The

:12:34.:12:41.

challenge to immigration. Companies now joining the legal case to try

:12:42.:12:46.

and get the travel ban overturned. From his point of view, he can't

:12:47.:12:50.

lose, because he says, I will ban people from these countries, and he

:12:51.:12:54.

is then stopped from doing it, but he can say to his supporters, I

:12:55.:13:00.

tried and I was stopped by so-called judges and so-called politicians. He

:13:01.:13:05.

has nothing to lose. There is a continual war in the markets between

:13:06.:13:08.

what it sees good, such as stimulus, and what they see as bad, all the

:13:09.:13:14.

crazy stuff. Other crazy stuff coming up this week - what are you

:13:15.:13:20.

watching? Amongst all this political noise, the world economy is strong,

:13:21.:13:24.

which is good. Markets. China is strong this year, whereas it was

:13:25.:13:32.

weak for four or five years. Maybe they don't want to slam the brakes

:13:33.:13:40.

on, so it will stay quite strong. Thank you for joining us.

:13:41.:13:41.

Still to come: We'll speak to the woman who unexpectedly took

:13:42.:13:44.

over the family firm at the age of 19 and turned it into

:13:45.:13:47.

You're with Business Live from BBC News.

:13:48.:13:55.

Let's tell you a bit more about Ryanair reporting and 8% fall in

:13:56.:14:07.

profits. They said average fares fell to ?28 per customer, a fall of

:14:08.:14:15.

17%. Traffic was up 16% on last year. The chief financial officer of

:14:16.:14:22.

Ryanair joins us now. It's an interesting time for you as a

:14:23.:14:27.

company, as many of your rivals. More people travelling but you're

:14:28.:14:30.

making less money per passenger and your profits are going down. Good to

:14:31.:14:35.

talk to you. We're having a relatively good year, to be honest.

:14:36.:14:40.

Our profits in the first nine months were up. As you said, passenger

:14:41.:14:51.

numbers were exceptionally strong. We had record load factors of 95%.

:14:52.:15:01.

An average fare of ?28. Fares could be down as much as 15% in the fourth

:15:02.:15:08.

quarter. We have maintained our guidance of 1.35 billion, which

:15:09.:15:13.

would be record profits for Ryanair this year. It really is an issue for

:15:14.:15:18.

you, isn't it? We have heard you will sustain those low prices the

:15:19.:15:21.

rest of this year and probably the first quarter of next, so your

:15:22.:15:24.

profits will be more and more squeezed, when they? -- won't they?

:15:25.:15:32.

We have the lowest fares of anyone out there, and we announced this

:15:33.:15:36.

morning that our total costs will be down by 4%. When you consider that

:15:37.:15:42.

our next nearest competitor's 's 40% higher than ours, and yet we're

:15:43.:15:49.

looking at unit cost reductions, excluding fuel, that puts is in a

:15:50.:15:52.

strong position relative to everyone else. We're better hedged next year

:15:53.:15:56.

compared to competitors. We have compared to competitors. We have

:15:57.:16:01.

which is our biggest cost, and there which is our biggest cost, and there

:16:02.:16:06.

will be significant savings on fuel. We are very good at cutting costs in

:16:07.:16:09.

the businesses and keeping competitive advantage. We grow

:16:10.:16:16.

profitably on the back of it. Next year, our plan is to deliver 130

:16:17.:16:18.

million customers. That's the chief financial officer.

:16:19.:16:28.

More detail is on our website on Ryanair's earnings and other

:16:29.:16:29.

companies out with news. Our top story, Chinese direct

:16:30.:16:33.

investment into the US and Europe more than doubled to a record

:16:34.:16:38.

$94 billion last year. Lawyers Baker McKenzie say

:16:39.:16:40.

that was despite $75 billion worth A quick look at how

:16:41.:16:46.

markets are faring. This is how they're looking after a

:16:47.:16:59.

fairly flat open. The FTSE is up a shade. The DAX and the Cac down

:17:00.:17:04.

slightly. In the UK alone, the industry

:17:05.:17:10.

is worth more than ?0.5 billion. But it is in a predominantly

:17:11.:17:20.

male-run sector, Jacqueline O'Donovan stands

:17:21.:17:22.

out as a rare female leader. At the age of 19, Jacqueline took

:17:23.:17:27.

over the family business 30 years on and O'Donovan Waste

:17:28.:17:30.

Disposal is a fast-growing firm It employs 160 people

:17:31.:17:37.

and mostly operates in London and the South East,

:17:38.:17:43.

a complex and very Jacqueline O'Donovan,

:17:44.:17:45.

Managing Director Tell our viewers about the beginning

:17:46.:18:01.

for you. Because your father died suddenly when you were just 17. He

:18:02.:18:04.

was running the company? He was, yes. He had a successful business

:18:05.:18:09.

and he died back in 1985 when I was 17 and I'm the youngest of four. The

:18:10.:18:13.

youngest of four? The youngest of four. But it fell on your shoulders

:18:14.:18:18.

to run the business? It fell on all our shoulders, but it took a couple

:18:19.:18:23.

of years to stabilise and once it stabilised, we picked our role and

:18:24.:18:26.

mine was managing director. How did you manage that at such a young age?

:18:27.:18:31.

You're running a company, what sort of business experience did you have

:18:32.:18:34.

at that stage and were you just winging it? I was winging it. I ran

:18:35.:18:41.

out of school at 16. I couldn't wait to get out the gatesment I had a job

:18:42.:18:47.

as a childminder in Germany which I didn't take on and the rest is

:18:48.:18:51.

history. What reaction do you get from friends when you tell them your

:18:52.:18:55.

line of work? They say what line of work are you in and I say, "I bet

:18:56.:19:00.

you can't guess." Which they can't! It is a difficult business to be in

:19:01.:19:04.

anyway, I imagine 30 years ago, at the age of 19, being a woman running

:19:05.:19:08.

this company in London it was extremely tough. What kind of

:19:09.:19:11.

barriers and difficulties did you face? First of all, the biggest

:19:12.:19:16.

barrier was I was a female in a male dominated industry which I think

:19:17.:19:19.

bothered the men more than it bothered me. Then I didn't play

:19:20.:19:24.

golf. That was also a bit of a hurdle especially when it came to...

:19:25.:19:29.

Do you play golf now? No, no time to shop or golf. That was a hurdle. But

:19:30.:19:34.

I just saw them as challenges and worked my way over them each and

:19:35.:19:39.

everyone. How did you overcome them? Was it by proving to people that you

:19:40.:19:43.

could hold your own and you were just as able to grasp this industry

:19:44.:19:46.

as they were? I didn't really think about it at all. It wasn't something

:19:47.:19:51.

that I thought about, oh, my gosh, I'm a woman in a male dominated

:19:52.:19:55.

industry. It was something I took as a challenge. I enjoy a challenge and

:19:56.:19:59.

I got on with it. The males felt more intimidated than I did.

:20:00.:20:04.

The actual industry itself has changed in that period of time? Oh,

:20:05.:20:10.

massively. We just chuck everything away in one bag and you guys would

:20:11.:20:14.

take it away. I imagine in the UK many viewers around the world have a

:20:15.:20:20.

similar experience, we're separating our waste, we might get fined if we

:20:21.:20:24.

don't do it properly and it is left behind. It has completely changed.

:20:25.:20:28.

What has that meant for your business? It brought us to the fore

:20:29.:20:34.

front. 20 years ago if you were at a social event with regards to

:20:35.:20:37.

business you would tell people you were in waste disposal, it was right

:20:38.:20:40.

move on to the next question or the next subject. Now, they want to know

:20:41.:20:44.

how you do it, what equipment is involved, whether people are still

:20:45.:20:48.

involved, and people are more interested in how it's done. Is it

:20:49.:20:53.

harder to make money now? Oh, yeah, without a shadow of a doubt because

:20:54.:20:58.

it takes a lot more money, a lot more equipment to recycle more. So

:20:59.:21:03.

yeah, the prices have gone completely. What's your ambition for

:21:04.:21:07.

the business. Where do you take a waste disposal business in the

:21:08.:21:11.

future? Bigger and better things. I would like to try different waste

:21:12.:21:16.

streams. We would like to expand as a family. So yeah, bigger and

:21:17.:21:22.

better. Are we sitting on a waste time bomb in London? I imagine any

:21:23.:21:26.

capital city around the world in terms of waste is a big problem? I

:21:27.:21:30.

wouldn't say it is a time bomb. I think it is very well handled.

:21:31.:21:37.

Behind the scenes what normal people don't see is very well handled. How

:21:38.:21:41.

much is landfill and how much in terms of percentages? We are 100%

:21:42.:21:45.

diverted from landfill and we have been for years. The old landfill,

:21:46.:21:49.

the biggest issue is food waste going to landfill. That's the next

:21:50.:21:53.

hurdle for the food waste industry. I could talk to you for hours,

:21:54.:21:58.

couldn't you? Yes. Fascinating. We can't. Thank you for coming in.

:21:59.:22:03.

Really good to have you on the programme. Thanks.

:22:04.:22:08.

And now for the latest instalment of our ongoing CEO secrets series

:22:09.:22:11.

we're going to hear from the head of a family company that's now

:22:12.:22:14.

Paul Symington is chairman of the Portuguese wine company

:22:15.:22:17.

This is the business advice he wishes he had been given

:22:18.:22:21.

If you were going to have a big row, leave it for the really important

:22:22.:22:26.

things and don't have arguments over the small things.

:22:27.:22:28.

We're a family business that goes back into the 19th century.

:22:29.:22:39.

A family business that is united is unbeatable and there

:22:40.:22:43.

is incressing evidence of the success of family businesses

:22:44.:22:46.

Put aside the little irritations because they're not important.

:22:47.:22:52.

Take a deep breath, sleep on it, come back and then

:22:53.:22:54.

If you let small niggly things get in the way,

:22:55.:22:59.

you really break up a really, really fantastic business.

:23:00.:23:09.

There you have it. Loads of top tips from bosses on the programme today.

:23:10.:23:16.

Let's see what other stories are being talked

:23:17.:23:18.

We have to talk about Brexit. It is on the front page of the FT today. A

:23:19.:23:30.

survey which indicates big quota companies are negative on the UK

:23:31.:23:33.

following the vote to leave the European Union. Which is hardly

:23:34.:23:38.

surprising given in the run-up in the campaign most of these people

:23:39.:23:42.

would have campaigned in favour of Remain. That's despite all the data,

:23:43.:23:48.

you know, proving them perhaps wrong? Yeah, it shows the UK is

:23:49.:23:54.

growing reasonably at the quarter it was 0.6% one of the best of the G7.

:23:55.:23:59.

Are they wrong? Well, it matters if they have a negative outlook because

:24:00.:24:01.

they are the ones who drive investment into the UK. They are the

:24:02.:24:05.

ones who provide jobs for the k. I must say also the survey is at odds

:24:06.:24:12.

with the ones I've talked to, most business people are prag pattic

:24:13.:24:16.

about life. Most business people I speak to are let's get on it. Some

:24:17.:24:19.

companies will have to move people, but by and large business people are

:24:20.:24:24.

flexible and adaptable, I think. Let's talk about this fascinating

:24:25.:24:28.

story about the boss of Tiffany. He was shown the exit door in a kind

:24:29.:24:33.

of... He has been in the job for two years. He got the boot on Sunday

:24:34.:24:39.

night they announced it. Just before the Super Bowl when Tiffany had one

:24:40.:24:45.

of its first time ads? Tiffany sells upmarket jewellery. Tourists going

:24:46.:24:49.

to New York, you know, it costs them more to buy Tiffany jewellery, if

:24:50.:24:54.

you know New York, Tiffany's main store is right beside Trump Tower.

:24:55.:24:58.

They said it was getting hard for them to get people in and out of the

:24:59.:25:02.

door because of the motorcades arriving, it is a double Trump

:25:03.:25:08.

thump. Why get rid of the boss? That's not his fault? It is often

:25:09.:25:14.

the boss that carries the can. It is difficult for Tiffany. All the up

:25:15.:25:18.

market brands are flying on the edge. One mistack and you can easily

:25:19.:25:21.

fall out of favour. There you go. On the ropes. He's looking for a new

:25:22.:25:28.

job. Thanks Dominic. That's the end of another packed show. It flies by.

:25:29.:25:32.

There will be more business news throughout the day on the live page

:25:33.:25:34.

and on world business report. We will see you soon. Take care.

:25:35.:25:36.

Bye-bye. Hello there. The week has started on

:25:37.:26:10.

a cold note with quite a widespread frost this morning. The week will

:26:11.:26:14.

end on a cold note as well as I'll show new a moment, but we have a wet

:26:15.:26:19.

and windy interlude to get through first and that's heading our way

:26:20.:26:20.