28/07/2014 Asia Business Report


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regular sessions in Parliament. The idea would need the approval of the


Speaker of the house to go ahead. `` House. Now, Asia Business Report. Is


Latin America and the new battleground for Japan's Japan's


rivalry with China? Starbucks opens shop in Hanoi. Welcome to the


programme. Japan's Prime Minister has kicked off a 5`nation tour of


Latin America by signing a series of oil and gas deals with Mexico. Japan


has been focused on energy since the Fukushima disaster, which shut down


the country's nuclear reactors. It comes hot on the heels of a trip to


the region by China's premier Xi Jinping. Both China and Japan are


keen to tap into Latin America's natural resources. One of the most


important issues around Asia, including in Japan and China, is


energy and resources. This is where Shinzo Abe is following China on


many accounts. Already into Africa and now into South America. Very


important deals have to be signed on oil and gas, which is so important


in Japan after nuclear power was switched off. Is it a competition


between the two? Is Japan looking for resources as well as other


things? There might be some competition in Asia and even in


Africa but not so much in South America. Everyone is after resources


but for Japan, this is a very important market. When there is a


deal on infrastructure or energy, Japan is much more about selling its


technology, while China is just trying to connect its market to


major projects. We have seen this deal with Mexico. Japan has a


free`trade agreement with Mexico. Now they have signed deals in oil


and gas. Is this the first of many contracts to be signed over the


course of this visit by Shinzo Abe to Latin America? Yes. Mexico is


very important because it is the market that connects Japan to the


US. It is the energy market. In Brazil, it will be security


relations but also energy. The plan was to sell its technology and major


infrastructure projects. And Chile is very important because already


half of Japan's copper comes out of Chile, and you so important for the


electronics industry. Thank you. China's industrial profits continue


to expand at a faster pace than expected, due to strong growth in


June, when profits rose 18% compared to one year before. The US company


that owns the meat supplier at the centre of China's latest food scare


is withdrawing all products made by its subsidiary, Husi Foods. It is


sending its own representative to Shanghai to investigate claims that


Husi Foods sold out of date meet. India's consumption of soft drinks


is well below that of China, the US and Europe, but it is growing


rapidly. In the budget is a plan to add a 5% tax to show brief history


drinks `` to sugary fizzy drinks. Adding some fees to the budget. The


debate over soft drinks and their potential harm in large quantities


has been bubbling over around the world. India's government has now


weighed in, unexpectedly raising taxes on them. I also propose to


levy an additional duty of excise of 5% on aerated waters containing


added sugar. The extra money will not do much to balance the books but


it is certainly an attempt to balance the scales. In the past few


years, more and more Indians have been getting health`conscious and


consulting experts for guidance on what they should eat and drink.


Steering clear of too many fizzy drinks is one piece of basic advice.


But there is scepticism about whether this so`called healthy tax


will discourage the large majority. They want something to make any


impact and to dissuade the public from using fizzy drinks. So, why


don't they prohibit advertising such products? Similarly how we have a


ban on tobacco and smoking and cigarettes and alcohol? India is not


the first country to bring in extra taxation on these products. In


fact, it is a list that has been growing and which includes nations


like France, Germany and Mexico. Compared to other countries around


the world, India is a relatively small consumer of fizzy drinks.


These so`called healthy taxes have been effective in other parts of the


region. It has been shown by sudden researchers that a 10% rise in price


creates a 4% drop in consumption. Monetary changes, increasing


monetary prices, tend to be more effective than the other ways of


trying to prevent somebody will discourage somebody on drinking or


consuming something that would cause future health problems. Those


figures, are they specifically for alcohol or more broadly? We have


seen taxation on fizzy drinks in other jurisdictions. From what I


have seen for alcohol... There is some for tobacco as well. It does


show that in general, price changes tend to be more effective than


things like education, advertisements and so on. What does


this mean for the business bottom line? If it does cut consumption,


does it move that consumption to other products? Businesses will find


a fall in consumption affecting their business, so they will start


producing more healthy things like fruit juices. With alcohol


consumption, the interesting thing is that with heavy drinkers, the


monetary change does not change consumer behaviour. The same with


heavy users of tobacco. Do you see these tax changes is becoming more


common in Asia as governments become more aware of their health budgets?


What we have just seen, this monetary change does affect


consumption. If that reduction in health issues in the future offsets


the dropping consumption, that is something that they want to do but


unfortunately, how much savings will you actually get in the future? Is


too far the future to see and it is too cause. So far, it is an excuse


for them to raise taxes more than really to reduce health issues for


the future. Now, coffee. How does a global chain target a marker that


already has a top products? Coffee is huge in Vietnam. The south`east


Asian nation is the world's second largest exporter of coffee. There


are more coffee shops crammed into Hanoi than probably anywhere on


earth, so opening a cafe in Vietnam's capital could be a bit of


a gamble. But this month, Starbucks is making an aggressive push,


opening three branches in this bustling city, possibly one of its


most challenging markets yet. It is unique and special in that there is


a long and deep coffee history and heritage in Hanoi and many things in


Hanoi happen over coffee. The US copy chain already has 11 outlets in


two other Vietnamese cities but France's coffee legacy is most


visible in the capital. Most city streets overflow with coffee shops


that sell one cup for as little as 50 cents. Black coffee in Starbucks


costs about $2, about half the average daily wage. TRANSLATION: I'm


not concerned about the competition because we have a number of regular


customers. Some have been drinking coffee here for the last 61 years.


Hanoi's first Starbucks drew the crowd on opening day but the


question is if it can keep up the momentum, as many Vietnamese people


feel financially squeezed. The country is mired in debt, hit by


bankruptcies and last year suffered its slowest growth in four years.


Not everybody has the money to spare. TRANSLATION: I think all


types of coffee... It certainly makes things seem more interesting.


But for me, I prefer Vietnamese traditional coffee. The streetside


coffee is more down`to`earth and it suits my wallet. Starbucks hopes to


brew up profits in Hanoi but the coffee giant might just find that it


is not everybody's cup of tea. Now, a quick check of the markets.


Australia has opened slightly weaker but Japan, after opening weaker, has


turned around. That is it for this edition of Asia


Business Report. We are on Twitter, don't forget to follow us there.


Thank you for watching. This is BBC News. The headlines:


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