:00:00. > :00:00.heading for phthalate when it stopped because of problems with a
:00:00. > :00:00.power cable. Time now for the latest business news live from Singapore
:00:07. > :00:22.with Rico `` for Calais. Lower sales. South Korea's consumer
:00:23. > :00:26.electronics giant Samsung reports a 25% drop in quarterly earnings. The
:00:27. > :00:35.Japanese Prime Minister Shinzo Abe arrives in Australia with hopes of
:00:36. > :00:40.signing a trade agreement. Welcome to Asia Business Report on BBC One
:00:41. > :00:46.news. Samsung says operating profits fell by nearly 25% in the three
:00:47. > :00:50.months to June to around $7 billion, that is compare two year ago
:00:51. > :00:55.levels. The drop in earnings would be mainly due to slowing growth in
:00:56. > :01:03.their once star performing division, smart phones. They are estimating a
:01:04. > :01:07.10% fall in sales. We report on the challenges facing the tech giant.
:01:08. > :01:12.This is the gadget that has helped Samsung become a household name
:01:13. > :01:16.worldwide. The success of its Galaxy range has seen them become the
:01:17. > :01:19.world's biggest mobile phone maker. Such as being the pace of growth
:01:20. > :01:26.that the mobile phone division accounts for two thirds of the
:01:27. > :01:31.overall profits. `` such has been. Until two months ago that was a good
:01:32. > :01:36.thing but now it is an area of concern. That is because the pace of
:01:37. > :01:40.growth of the smart phone market has been slowing. Prices are falling as
:01:41. > :01:43.well, eating into the profits of manufacturers. To make matters more
:01:44. > :01:46.complicated, competition in the sector is heating up with new
:01:47. > :01:50.players coming up with various strategies to keep their costs, and
:01:51. > :01:56.as a result the prices of their gadgets, low. One of the
:01:57. > :02:01.fastest`growing names in the region doesn't even sell in stores, instead
:02:02. > :02:06.selling directly to customers via the website. The strategy seems to
:02:07. > :02:11.be paying off. They sold 26 million phones in the first six months of
:02:12. > :02:16.the year. Even though that is sun and Apple, the fact that low`cost
:02:17. > :02:24.manufacturers are slowly and steadily eating into their market
:02:25. > :02:29.share. Many are concerned that its dominance may not translate into the
:02:30. > :02:38.healthy profits investors have been used to. Samsung will release its
:02:39. > :02:41.actual earnings at the end of the month if the results are in line
:02:42. > :02:47.with guidance it will be the company's bird straight quarter of
:02:48. > :02:52.declining operating profit. I found out if Samsung has passed its
:02:53. > :02:57.heyday. What has traditionally happened, they are increasingly
:02:58. > :03:01.focused on smart phones, smart phones were driving the operating
:03:02. > :03:07.profit for the past 12 quarters. Look at three years ago, 2011, if I
:03:08. > :03:11.compare the financial statements, the operating profit from the
:03:12. > :03:16.division was close to 40%, last quarter it was around 70%. The smart
:03:17. > :03:21.phone business has been focused on the high end segment, has that been
:03:22. > :03:28.saturated? In most of the mature economies, the high and smart phone
:03:29. > :03:33.market is already mature. Consumers are less inclined to pay a premium
:03:34. > :03:37.for new features of a smart phone. The incremental value that a
:03:38. > :03:41.consumer sees is declining and there are so many competitors now. Before
:03:42. > :03:46.it was a choice just between Apple and Samsung. Are they realising it
:03:47. > :03:57.has been saturated and they should focus on the low end market and
:03:58. > :04:02.diversify? You don't just have the traditional players. You have people
:04:03. > :04:09.from China. And also India, a phone for less than $50 is coming out.
:04:10. > :04:12.What Samsung is realising is that the traditional high end margin
:04:13. > :04:17.smart phone business will not be the way to move forward. They need to
:04:18. > :04:21.look at new forms of devices or even look at the portfolio, the whole
:04:22. > :04:28.consumer electronics business, can they revitalise it? Despite this,
:04:29. > :04:33.their stock price is up by about 1% at this hour in Seoul trade as it
:04:34. > :04:37.said it cautiously expects a more positive outlook in the July to
:04:38. > :04:40.September quarter. To Shinzo Abe and he is currently in Australia as part
:04:41. > :04:44.of a week`long trip to the Pacific that included a stop in New Zealand.
:04:45. > :04:51.He's the first Japanese prime minister to visit Australia in seven
:04:52. > :04:55.years. A key item on his agenda is a signing of a trade agreement.
:04:56. > :05:01.Earlier I spoke to our Sydney correspondent, Phil Mercer. Were
:05:02. > :05:04.expecting him to sign this free trade agreement with his Australian
:05:05. > :05:09.counterpart Tony Abbott `` we are. Details were thrashed out in April.
:05:10. > :05:14.The Australian government believes that free trade agreement will be an
:05:15. > :05:19.absolute economic bonanza for this country. It will also be not only
:05:20. > :05:25.trade on the agenda but also defence ties as well. Both leaders expected
:05:26. > :05:32.to sign an agreement to share military equipment. The resource
:05:33. > :05:40.industry, Phil, still a major backbone of the Australian economy.
:05:41. > :05:45.Mr Abe will be travelling to Pilbara in Western Australia, a centre of
:05:46. > :05:51.the mining sector. Yes. It gives you an indication, Rico, as to what is
:05:52. > :05:56.playing on Japan's mines in terms of coming to Australia. This is one of
:05:57. > :06:00.the resource hubs of the Asia`Pacific region, the Pilbara
:06:01. > :06:06.region in Western Australia is at the heart of the iron or trade.
:06:07. > :06:10.Remember, it's not just China that has had a voracious appetite for
:06:11. > :06:16.Australian minerals. Back in the day, Japan's interest was helping to
:06:17. > :06:20.spark the industry long before the present boom. A very big time for
:06:21. > :06:26.Australia as it seeks to further its trade with Japan. Ministers here,
:06:27. > :06:30.Rico, trying to brush aside concerns that close economic ties with Japan
:06:31. > :06:35.could upset Australia's biggest trading partner, China. Australia
:06:36. > :06:41.says it can be friends with both and it isn't taking sides. Film is in
:06:42. > :06:45.Sydney. Britain's Foreign Secretary William Hague and George Osborne
:06:46. > :06:49.continue their three`day visit to India today in Delhi, where they
:06:50. > :06:54.will meet with the Prime Minister Mahendra Modi. It follows a trip to
:06:55. > :07:02.Mumbai to boost trade and business relations. The two British ministers
:07:03. > :07:05.have made no bones about why they are here and that is to build a
:07:06. > :07:10.relationship with a new government because of the landslide victory it
:07:11. > :07:14.saw in elections a months ago. Speaking to business leaders not far
:07:15. > :07:17.from here, they said they could feel sentiment about India had already
:07:18. > :07:21.changed and within a day they could feel a buzz of excitement in the
:07:22. > :07:24.country. Among the major announcements, perhaps the biggest
:07:25. > :07:29.deal was the signing of a defence contract between the UK and India
:07:30. > :07:35.for British made missiles to be used by the Indian air force. There were
:07:36. > :07:40.two other investments, by Indian companies in the UK, won by an auto
:07:41. > :07:43.major, investing in research and development for electric cars,
:07:44. > :07:47.another by a big pharmaceutical company, which will put money into
:07:48. > :07:53.cancer drug research. This visit comes in a big week for India. In a
:07:54. > :07:57.couple of days the new government will be delivering its first budget
:07:58. > :08:01.and Mr Osborne says it will be watched closely not just by people
:08:02. > :08:05.in India and the UK, but by everyone worldwide, because it's the first
:08:06. > :08:10.time we will see what concrete plan the new government has two
:08:11. > :08:15.turnaround the government, economy, a promise made in elections. While
:08:16. > :08:19.the UK is looking to do more business with India, one French
:08:20. > :08:23.retail giant is planning its exit. They say they will shut down their
:08:24. > :08:27.five stores in the country by the September. They have five wholesale
:08:28. > :08:32.cash`and`carry outlets in operation since 2010. For the first time over
:08:33. > :08:36.half of the world's population now lived in cities, and that number is
:08:37. > :08:42.set to grow. However urban centres have also become the biggest source
:08:43. > :08:50.of pollution. For example and safe air quality levels are the worst in
:08:51. > :08:52.Asia with India and Pakistan's major cities topping the list. But
:08:53. > :08:56.pollution in cities is not just a health problem. According to a
:08:57. > :09:04.Washington, DC think tank, it is a growing economic one as well.
:09:05. > :09:09.Certainly every city and every country should have the right to
:09:10. > :09:14.develop the way it wants and if it wants to lose 5% of its GDP due to
:09:15. > :09:19.air`pollution and another 5% of its GDP due to traffic congestion, if it
:09:20. > :09:24.once and inefficient economy by using too much energy per unit of
:09:25. > :09:28.output, if it wants its people spending two hours going to work
:09:29. > :09:34.every day, fine. That's not the way a smart economy would work. We have
:09:35. > :09:41.learnt a lot from the mistakes that cities have made. Let's do it
:09:42. > :09:46.right. To address climate change governments will need to change the
:09:47. > :09:49.way cities are built. But isn't this a very expensive proposition? Some
:09:50. > :09:54.people think so, some people think they would love to address climate
:09:55. > :10:01.change but it is too expensive. It turns out it is the other way round.
:10:02. > :10:05.We live in an economy that is very inefficient. We use too much energy
:10:06. > :10:10.and too much resources per unit of output. It turns out if you act
:10:11. > :10:13.smartly on climate change, by reducing greenhouse gas emissions
:10:14. > :10:18.you make your economy more efficient and that is especially true in
:10:19. > :10:23.cities. A quick look at the markets, and Asian stocks are mostly lower in
:10:24. > :10:27.midday Tuesday trade after US stocks slipped overnight before the start
:10:28. > :10:33.of the earnings season. Investors are waiting for the release later in
:10:34. > :10:39.the week of Chinese economic data. I'm Rico Hizon, goodbye for now.
:10:40. > :10:40.The