13/08/2014 Asia Business Report


13/08/2014

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suspected sex offender was poorly handled. Now on BBC News all the

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latest business news live from Singapore. Japan's economy contracts

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in the second quarter. We will take a closer look at the results and

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what they mean. And Tencent, Asia's biggest company gets set to show

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shareholders how the bottomline is looking, later today. Thank you for

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joining us. I'm Rico Hizon. Japan's economy is in dire straits. The

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economy contracted by 1.7% in the April`June period, compared to an

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earlier quarter. It is not good news for the world's third`largest

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economy. And even more dramatic, the economy has shrunk by 6.8%. But

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today's numbers follow big gains in the previous quarter, so is this

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just an economy readjusting, or is it an indication of the health of

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the economy, being linked to sale statistics? `` sales tax. I spoke to

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a Japanese macro economist. It is pretty bad. When you look at the

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details, it is private consumption which really pulls down the economic

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growth. Private consumption in April June quarter fell as much as 5%, so

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that pretty much explains how Japan's economy is performing right

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now. So as a consumer, you also lost your appetite to spend after the

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sales tax was raised from 5% to 8%? Not at all. After the consumption

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tax rate hike, everything looks more expensive, trains, taxis, even just

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a $1 bottle of water looks expensive. So it is no wonder

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consumers don't really feel like spending more than they need. All

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right, so now you have a contraction during the April`June period. In

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this particular quarter, are you expecting another contraction? With

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two consecutive quarters, this could mean a technical recession for the

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Japanese economy. I actually don't think so. We are halfway into the

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July`September quarter, but we do see some improvements in consumer

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and business confidence. So I do think it is more likely that we will

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see moderately positive growth, perhaps a 3% growth in the September

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quarter. But this consumer confidence could be dealt another

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blow, because by next year the consumption tax will be raised again

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from 8% to 10%. So could the government reassess its situation?

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Yes, I think that would be prudent. The government should consider if

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Abenomics is still alive. I think with this bad second`quarter

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number, the Japanese government may need to revise down their outlook,

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and they should seriously consider cancelling the last hike. So what

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can we expect, then? More economic reforms, wage hikes? When will this

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be implemented? I think wage hikes will come through gradually, but the

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sad fact is that it is only happening very slowly. In the latest

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data, it is only rising at 0.6%, far lower than inflation, which is at

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3.6%. So in terms of Abenomics, it has been great so far, but from here

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on, it doesn't seem to be going in the right direction. In other

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business news, Japanese electronics giant Sony says its PlayStation TV

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consoles will go on sale in the US from the 14th of October, and in the

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UK one month later. The micro`console, which has been

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available in Japan since last year, is part of the company's attempt to

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compete with other streaming television consoles like Apple TV.

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It will cost $99 in the US, and will include three games. Hand `` and

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with thanks to a traditional Japanese dress, the high street

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fashion label New Look is profiting from its kimono`style garments. The

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company said its underlying operating profit was up by 30%. They

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have sold 40,000 of these tops every week, which equates to one every

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five seconds. A popular kimono! What a statistic there. Asia's biggest

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electronics company updates its shareholders on results today.

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Investors are expecting net profits to have surged by 4%. The Chinese

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company started out with an instant messaging service called QQ, before

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hitting the market with games. Now it is during its effort behind

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mobile offerings, as our correspondent reports. The cyber

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games arena. Players have come to sharpen their skills in an online

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game, where teams battle to defeat opponents. League of Legends, or LL,

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as it is known, is owned by Tencent, one of the biggest companies in

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China. This is one of the most popular computer games on the

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planet, and it costs absolutely nothing to play. Instead, the makes

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company money through online transactions. So players can spend

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their cash on purchasing new characters, or outfits for those

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characters. The man who started it, with two partners, explains this

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appeal. TRANSLATION: While you don't need a very powerful computer to

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play, there is high awareness of the game. Because of frequent

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competitions. Also, it is regularly updated with new characters and

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situations. Computer games still have a massive fan base, but even

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the most hard`core players are beginning to spend more time on

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their smartphones. Tencent launched their games through a messaging

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application last year. Titles like Thunder Raid, and Dash. If you look

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at their chat, they have had to implement things like mobile

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payments, online banking, games, even blogging platforms, to appeal

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to the Chinese consumer. And because of that, they have had many more

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channels that they can offer to monetise and develop those channels.

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Tencent may be ahead, but it has tough competition. Online shopping

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giant Alibaba has introduced its own messaging app. Search firm Baidu has

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purchased new business, like App Store is. Back at the Arena, people

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are gearing up for the World Championships in South Korea.

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Tencent has profited hugely from this game, but future wealth lies in

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offering games through smartphones and other applications. They are

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cheap, have enormous music catalogues, and allow fans to share

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new music with their friends, and are easy to use. Streaming services

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are becoming increasingly popular among music lovers, and the major

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players are trying to get a slice of the Asian market. But what does it

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mean for musicians? For more on that, I spoke earlier to Jean Cook

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from the Music Coalition in New York. I think musicians are

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optimistic that new doors are opening for a legitimate

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music`sharing system. A digital marketplace in Asia. Indeed, but are

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deals already been signed between artists and labels that have been

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successful and fair for everyone? I think that is a struggle. Over the

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last ten years, since the founding of Napster several years ago, there

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was quite a bit of playing catch`up within the industry, to make sure

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all the agreements are in place. Copyright law is quite complex. And

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making sure the musicians get paid is something that musicians have

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been very patient in waiting for. And eventually, as these markets

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mature, it is starting to happen. Indeed, you have the struggle from

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the musicians, and they are also struggling with piracy, particularly

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in the Asian market. And Spotify, who we interviewed weeks ago, says

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piracy has dropped in markets where streaming music has become popular.

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Do you think this could be a trend, going forward? I think certainly

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that one of the reasons piracy exists is because of lack of

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availability of things that people want. The technology exists, but the

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market place hasn't yet inbuilt. That is one of the reasons we are

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very optimistic. I understand that 2014 is seen as a year that will be

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a big year for streaming music in Asia, and as these legitimate

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marketplace is get up and going, I think consumers will find that if

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they want to support the artist, it is much easier to do so, and they

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will. That was Jean Cook from the Future of Music Coalition in New

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York. And before we go, here is a quick look at the markets. Asian

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stocks are currently mixed. US stocks ended slightly lower

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overnight, pressured by a slide in energy share prices, and worries

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over developments in Russia and Ukraine. You have the Nikkei flat,

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the Hang Seng also going the same trend. Gaining about 23 points, at

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the ASX All Ordinaries is lower by 16 points. This is on the back of

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the Dow Jones industrial average slipping overnight. The NASDAQ,

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faced with technology issues, in positive territory. Thank you for

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investing your time with us, I'm Rico Hizon. I am Mike Embley. The

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top stories this hour: One of Hollywood's great leading ladies,

:10:52.:10:53.

Lauren Bacall, has died the age of 89. The legendary American actress

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starred alongside Humphrey Bogart in To Have and Have Not and Key Largo.

:10:57.:11:00.

The UN warns of a a tragedy of huge proportions in Northern Iraq. As

:11:01.:11:03.

thousands flee Islamic militants, 130 more American military

:11:04.:11:04.

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