:00:00. > :00:19.BBC News, all the latest business news live from Singapore. Lower
:00:20. > :00:23.sales, South Korea's Consumer Electronics Show giant Samsung
:00:24. > :00:28.signals a 25% drop in quarterly earnings. And Japan's Prime Minister
:00:29. > :00:35.Shinzo Abe arrives in Australia with hopes of signing a trade agreement.
:00:36. > :00:43.Thank you for joining us on Asia Business Report on BBC World News.
:00:44. > :00:51.Samsung electronics's profit likely fell to around $7 billion in June,
:00:52. > :00:55.25% lower than a year ago. That has mainly been due to slowing growth in
:00:56. > :00:59.the country's one star performing division the smartphone business.
:01:00. > :01:06.The company is estimating a 10% fall in sales. Our correspondent reports
:01:07. > :01:09.on the challenges facing the tech giant. This is the gadget which has
:01:10. > :01:17.helped Samsung become a household name along around the globe. It has
:01:18. > :01:21.become the world's biggest mobile phone maker. Such has been expressed
:01:22. > :01:25.that the mobile phone division now accounts for more than of Samsung's
:01:26. > :01:28.overall profits. While that was a good thing until a few months ago,
:01:29. > :01:33.it is now becoming an area of concern. That is because the base of
:01:34. > :01:38.growth of the smartphone market has been slowing down. At the same time,
:01:39. > :01:42.prices are falling, which is eating into the profits of manufacturers.
:01:43. > :01:45.To make matters more, credit, competition in the sector is heating
:01:46. > :01:51.up, with new players coming up with various strategies to keep their
:01:52. > :01:55.cost, and as a result the prices of their gadgets, low. One of the
:01:56. > :01:59.fastest`growing names in the region doesn't even sell its phones in
:02:00. > :02:03.stores like this one. Instead selling them directly to customers
:02:04. > :02:08.via its website. The strategy seems to be paying off. They sold more
:02:09. > :02:13.than 26 million phones in the first few months of the year. Even though
:02:14. > :02:17.that is far less than Samsung's or Apple's numbers, the fact is that
:02:18. > :02:20.low`cost manufacturers are slowly but steadily eating into their
:02:21. > :02:25.market share. While few doubt Samsung's ability to maintain its
:02:26. > :02:28.market lead, many are concerned that its dominance may not translate into
:02:29. > :02:37.a healthy profits that investors have been used to. Samsung will
:02:38. > :02:40.unveil its actual earnings at the end of the month. If the results are
:02:41. > :02:44.indeed in line with the guidance numbers, it will be the company's
:02:45. > :02:49.third straight quarter of decline in operating profit. Earlier I spoke
:02:50. > :02:55.with a correspondent from frost and Sullivan and asked if Samsung had
:02:56. > :02:59.passed its heyday. What has it happened is that the smartphone
:03:00. > :03:03.business was the one driving the operating profit for the past 12
:03:04. > :03:07.quarters, and if you look at impaired to two years back, 2011, if
:03:08. > :03:13.I compared the financial statements, the operating profit was
:03:14. > :03:16.close to 40%, and last quarter it was close to 17%. The smartphone
:03:17. > :03:21.business has been focused on the high end segment. Has that already
:03:22. > :03:25.been saturated? Yes, what we are seeing in most of the mature
:03:26. > :03:30.economies, the high end smartphone market is already mature. Consumers
:03:31. > :03:33.are now less inclined to pay a premium for increased features of
:03:34. > :03:37.the new smartphone as opposed to what they are already holding. So
:03:38. > :03:42.the incremental value for consumers has declined. And there are so many
:03:43. > :03:47.competitors now. Earlier it was just between Apple and Samsung. Are they
:03:48. > :03:51.realising it has been saturated and they should now focus on the low`end
:03:52. > :03:55.market and maybe diversify to other consumer electronic products? That
:03:56. > :03:57.is another challenge. It is usually propagated. You have not just the
:03:58. > :04:03.traditional players but those from China, and new smartphone
:04:04. > :04:07.manufacturers. An Indian manufacturer is marketing one for
:04:08. > :04:10.less than $50. So that is propagated. But what Samsung now
:04:11. > :04:14.realises is that the traditional high end market smartphone business
:04:15. > :04:18.will not be the way to move forward. They either need to look at some new
:04:19. > :04:26.forms of devices, or maybe even take a good look at the portfolio. Can
:04:27. > :04:30.they revitalise it? Shinzo Abe is in Australia as part of a week`long
:04:31. > :04:35.trip to the Pacific including a stop in New Zealand. Shinzo Abe is the
:04:36. > :04:40.first Prime Minister to visit Australia in 17 years. A key item on
:04:41. > :04:44.Shinzo Abe's agenda is the signing of a trade accord between the two
:04:45. > :04:48.countries. I spoke to our Sydney correspondent Phil Mercer. We expect
:04:49. > :04:51.him to sign this free trade agreement with his Australian
:04:52. > :04:55.counterpart Tony Abbott, details of that agreement were thrashed out in
:04:56. > :04:58.April of this year. And the Australian government believes that
:04:59. > :05:05.that free trade agreement will be an absolute economic bonanza for this
:05:06. > :05:09.country. It will be also not only trade on the agenda, but also
:05:10. > :05:15.defence ties as well. Both leaders expected to sign an agreement to
:05:16. > :05:23.share military equipment. And the resource industry, still a major
:05:24. > :05:30.back bone of the Australian economy. And Shinzo Abe will be travelling to
:05:31. > :05:37.Western Australia, a centre of the mining. Yes, it gives you an
:05:38. > :05:42.indication as to what is playing on Japan's mines in terms of coming to
:05:43. > :05:45.Australia. This is one of the resources hubs of the Asia`Pacific
:05:46. > :05:55.region. The pill region in Western Australia is at the heart of the
:05:56. > :06:00.iron ore trade free sample. `` Pilbara. And remember it is not just
:06:01. > :06:03.China. Back in the day, Japan's interest was helping to spark the
:06:04. > :06:09.industry long before the present boom. So a very big`time for
:06:10. > :06:14.Australia as it seeks to further its trade with Japan. Ministers here are
:06:15. > :06:18.trying to brush aside concerns that closer economic ties with Japan
:06:19. > :06:21.could upset Australia's biggest trading partner China. Australia
:06:22. > :06:28.says it can be friends with both, and it isn't taking sides. Phil
:06:29. > :06:34.Mercer in Sydney. Britain's Foreign Secretary William Hague and George
:06:35. > :06:41.Osborne have continued their visit to Delhi. Where they are visiting
:06:42. > :06:46.Narendra Modi. Our correspondent has more. The two British ministers have
:06:47. > :06:50.made no bones about why they are here. And that is to build a
:06:51. > :06:54.relationship with the new government, because of the landslide
:06:55. > :06:57.victory that it saw in elections just a few months ago. Speaking to
:06:58. > :07:01.business leaders, not far away from here, they said that they could feel
:07:02. > :07:06.sentiment about India had already changed, and that within the party
:07:07. > :07:09.here, they could feel abuzz of excitement in the country. Among the
:07:10. > :07:14.major announcements, perhaps the biggest was the signing of a defence
:07:15. > :07:18.contract between the UK and India, for British made missiles to be used
:07:19. > :07:25.by the Indian Air Force. There were two other investors by Indian
:07:26. > :07:28.companies in the UK, one by an automaker which will be
:07:29. > :07:33.investigating development of electric cars, and a pharmaceutical
:07:34. > :07:37.company which will be putting money into cancer drug research. His visit
:07:38. > :07:40.comes in a big week for India. In a couple of days' time the new
:07:41. > :07:45.government will be developing its first Budget. And it will be watched
:07:46. > :07:48.closely not just white people in India and the UK but by everyone
:07:49. > :07:52.around the world. Because it is the first time we will see what concrete
:07:53. > :07:56.plant the new government has to turn around the economy, which is a
:07:57. > :08:00.promise they made during elections here. While the UK is looking to do
:08:01. > :08:05.more business with India, one French retail giant is planning its exit.
:08:06. > :08:09.Carrefour said it will shut down its five stores in India by September.
:08:10. > :08:18.The company has five wholesale cash and carry out in operation since
:08:19. > :08:28.D10. American travel firm Expedia has agreed to buy out Australian
:08:29. > :08:34.website wotif. The deal will give Expedia a wider presence in Asia.
:08:35. > :08:39.Its online brand includes hotels .com. For the first time in history,
:08:40. > :08:43.half of the world's population now lives in cities. That number is set
:08:44. > :08:47.to grow. Urban centres have become the biggest source of pollution. For
:08:48. > :08:52.example, unsafe air quality levels are the worst in Asia, with India
:08:53. > :08:56.and Pakistan's major cities topping the list. But pollution in cities is
:08:57. > :08:59.not just a health problem. According to a Washington, DC `based
:09:00. > :09:03.think`tank, it is a growing economic one as well. We spoke to the head of
:09:04. > :09:10.the world resources Institute to find out why. Certainly, every city
:09:11. > :09:15.and every country should have the right to live however they want. And
:09:16. > :09:19.if it wants to lose 5% of its GDP due to air pollution, and another 5%
:09:20. > :09:24.of its GDP due to traffic congestion, and if it wants to have
:09:25. > :09:29.an inefficient economy by using too much energy per unit of output, and
:09:30. > :09:34.if it wanted people to spend two hours going work every day, fine.
:09:35. > :09:39.But that's not the way that a smart economy would work. We have learned
:09:40. > :09:47.a lot from the mistakes that cities have made. And so... And economies
:09:48. > :09:49.have made, and so let's do it right. To address climate change,
:09:50. > :09:53.governments will need to change the way cities are built. But that isn't
:09:54. > :09:57.this a very expensive proposition? While some people think so. Some
:09:58. > :10:01.people think they would love to address climate change but it is too
:10:02. > :10:05.extensive. Well turned out, actually, it is the other way
:10:06. > :10:09.around. We live in an economy in the world which is very inefficient. We
:10:10. > :10:14.used to much energy, too many resources per unit of output. And it
:10:15. > :10:17.turns out if you act smartly on climate change, by reducing
:10:18. > :10:20.greenhouse gas emissions you actually make your economy more
:10:21. > :10:25.efficient. That is especially true in cities. Before we go, a quick
:10:26. > :10:31.look at the markets. Stocks are mostly lower in early Tuesday
:10:32. > :10:37.trading. Samsung shares are higher despite the lower earnings. Thank
:10:38. > :10:43.you for interesting your time with us. `` investing.