04/11/2013 World Business Report

Those are the latest headlines from BBC World News. Now for the latest

financial news in World Business Report.

A 10% jump in profits is expected at Europe's biggest bank, HSBC, as it

cuts costs and avoids damaging fines.

Rare earth row ` China and the WTO on a collision course over the

export of minerals that are crucial to our favourite tech devices

Welcome to World Business Report. I'm Sally Bundock. Also in the

programme: What's behind IKEA's sudden success in China? We find

out. But first, banking giant HSBC is

expected to report a 10% rise in quarterly profit in a few hours.

Europe's biggest bank has benefitted from cost cuts and the absence of a

big provision to cover a fine last year. HSBC is expected to report a

pre`tax profit of $5.5 billion for the three months to the end of

September, according to the average of 13 analysts polled by the bank.

That compares to $5 billion a year ago, excluding losses from changes

in the value of the bank's own debt. How has HSBC managed to move on from

the grim headlines and costly bills? Saranjit Leyl is in our Asia

Business hub in Singapore. We hope the profits come through. Tell us

more. That is right. It is expected to see a rise in earnings, mainly

because of cost cuts. The chief executive has, in the past three

years, sold or exited 54 businesses. He has cut $4.1 billion in annual

cost. HSBC makes a big chunk of its money in Asia. There is still a lot

of trade going on. We know it is facing a lot of challenges. There

are tougher regulations, squeezing profits. Investment banking has seen

its income drop. There is a return on fixed income investments. There

might be more litigation over things bank has done in the past. The

results are expected to compare will specifically with last year, when

bank was fined a record $1.9 billion for compliance failings over in

Mexico. HSBC set aside $100 million in the third quarter last year to

cover the fine. There have been huge attempts made sense to try to

improve compliance within the bank. The industry remains under lots of

close scrutiny from regulators. The Fed has put the HSBC's aching arm

under tough stress test. `` banking arms. JPMorgan says there are core

operating `` operator with authorities in the alleged

manipulating of currency markets by major banks. HSBC already had to pay

over $1 billion to settle with a US regulator over allegations it is

sold mortgage bank bonds during the housing bubble. `` Mr sold.

`` mis`sold. After floundering for years in

China, IKEA is starting to pull in some real profits and it's also

expanding at a rapid pace, opening three stores a year. The Swedish

home furnishing chain IKEA is often associated with flat`pack furniture

that customers put together themselves. But, in China, millions

of people use IKEA in their own way ` and that's causing the store to

adjust to their way of shopping. 45 million visitors passed through

IKEA's China locations last year. From Beijing, Celia Hatton explains.

The doors have just opened in this IKEA store in Beijing. Even in the

morning, this place has packed. Many in China treats IKEA as a furniture

theme park, a place to spend hours picking every item in the store for

a spin. Chinese has been the `` consumers are used to hearing the

word, no. You can take a photograph. No, you cannot lounge on any server

or bed in the store. In the store, they have learned to say yes. They

have relaxed policies on almost everything. They are keeping the

store is busy from morning to night. TRANSLATION: It is a store of the

people. They have everything ordinary people use. Every time I

come here, I stay for the whole day. Thousands come to IKEA to browse in

the morning. It accused `` cafeteria at lunch and then put their feet up

for a while. IKEA's first stores in China could not accommodate all the

shoppers. The new outlets have wider aisles and extra room displays. If

they build it, IKEA has realised that the crowds will come. This

store, about 15,000 visitors from a weekday every day. On the weekends,

25,000 to 30,000 visitors. Products have been redesigned with Chinese

customers in mind. Little things like deep bowls so they can hold

rice. Crucially, prices were slashed by an average of 50% across the

store is. Often by productions within China. When we entered the

market, we realised our prices were too expensive. It took years for us

to really continuously reduce the toll prices. To really let the

people afford them. `` retail prices. Finally, IKEA's adaptations

to China are improving. Sales are up 17% this year, making China one of

the retailer 's fastest growing markets. Chinese people like to hang

out at IKEA. Now the luck to spend money there as well. `` they like to

spend money. Do you use dysprosium or lanthanum?

What about Scandium? Well, if you use a smartphone, energy efficient

light bulbs, or a hybrid car, then chances are you rely on these

substances to make your device work. Problem is, the world's major

supplier of these so`called rare earth metals is China. And,

according to complaints lodged with the World Trade Organisation, China

has not been too forthcoming in letting the rest of the world get to

them. Gareth Hatch is founding principal of Technology Metals

Research and he joins me now from Carpentersville, Illinois via

webcam. Tell us more about this. This discussion has been ongoing for

a long time, about China's dominance. These elements are used

for a wider range of users. There have dramatic effects in terms of

performance and other technical aspects. The geology of rare earth

metals is such that in the last 20 years, 30 years, we have relied on

China to provide these materials. Over 95% of these come from China.

We are dependent on those exports coming from China to allow the

industries outside to work. What is the report going to tell us? China

has responded to reports. But the official ruling stopping made yet.

Tell us about that. It appears to have been leaked one of the

complaining party 's, Europe, Japan and the West. They failed this

complaint in March last year, against restrictions, unfair

practices, minimum export prices. China has responded. They said, we

need to restrict the export of these materials to reduce pollution, to

safeguard natural resources. From the news report that have come out,

it seems the case has been lost by China. If that is the case, they

will have the opportunity to see how this will play out and to see how

the exports, the prices, the availability will be affected. Thank

you. It is a huge debate. There is a lot to discuss.

Japan has closed for the public today. Elsewhere, the markets are

falling. `` public holiday. The CBI's annual conference begins

in London this morning and Britain's membership of the European Union

will likely be on the agenda. Business leaders believe that being

part of the EU is overwhelmingly in Britain's interest. The CBI has

examined the advantages and disadvantages of EU membership. It

concluded that Britain should stay in but says urgent reforms are

needed. The economy is recovering. The

service sector is up, so too is can destruction and manufacturing. ``

construction. CBI believes the economy will grow by 1.4% this year,

up from the previous forecast of 1.2%. Next year, it thinks GDP will

be 2.4%. By 2015, it thinks Britain will grow by 2.6%. CBI is not