26/08/2014 Asia Business Report

Researched by ICM for The Guardian newspaper showed 71 # % of people

thought Alex Salmond was the better performer. Now, on BBC News, all of

the latest business live from Singapore with Riko Heezon.

Online video games streaming ` could it be the next big thing after

Amazon buys Twitch? And bad debt ` how will China's rising loan

problems impact the banks? Hello and welcome to Asia Business Report on

BBC World News. I am Riko Heezon. The biggest online retailer Amazon

has bought video games service Twitch for nearly $1 billion. The

deal is it biggest acquisition since 2009 when it bought the online shoe

retailer. Twitch allows users to watch other people play video games.

It is not the first time Twitch was an acquisition target. Earlier in

the year, Google's YouTube was reported to be in talks to bow the

firm as well. Well, Twitch has over 55 mill you unique monthly viewers

as of July of this year. So is video gaming the next big thing?

Apparently the move makes sense for Amazon? If you are a retailer, what

do you do? You need to go where the people are. If there are 59,000

users on tich Fitch you need to go there. How do you get there? You own

the 55 million eyeballs. They want to compete basically on all fronts.

They are competing against the likes of net politics and Google Microsoft

and Wal`Mart. This is not really their score business here. Well, it

is not, but the point is if your customers are on your side, then

they are nowhere else. They can't be in two places at the same time. What

Amazon wants is to. Engage these people onto its website so they are

not shopping somewhere else. And if these gamers, which are in the

millions will buy their products online. Well, that is the first

thing. I mean, the second thing, of course, is when people are playing

video games, compulsive video gamers, like myself, for instance,

want to know how other people have done certain things, so you want to

watch to see what they have done and when you have seen how they have

done it, then you want to improve yourself and, as you rightly said,

you will buy some of the games at the same time. David, I am your

opposite. I don't play any of the video games. Oh, you should, Riko.

You should. Amazon is trying to gain a foot hold here in Asia. Will it

allow them to allure the Asian glamer. Does the Asian gamer money

to spend? They are no different to any gamers nowhere else in the

world. They are compulsive gamers and they want to im#3r506 their

skills, therefore they want to learn how others do things. The first

thing is to engage the user, get the user familiar with your site. If you

get them onto your site, the next thing is to start cross selling

your. Product. Do you think the online gaming streaming is the next

big thing because Google and YouTube passed it up. It is for now. If you

have a look at, say, for instance, my son who also is a compulsive

gamer, he will have all of his Frenches together and that is what

they want to do. When they play a particular game, there might be

something they are very proud of. They are particularly proud of a

particular move that they make. They upload it and want to share it with

other people to say, guess what, I am actually quite good at this. You

are right, it is the next big thing. Thank you. For the first time mobile

phones can be used on planes, but only if you are flying Qantas and

Virgin Australia. Passengers on those flights will be able to move

mobile phones on board starting today. Carriers had always

considered phones and other mobile devices a safety risk. Other

airlines are expected to follow suit, but devices are still expected

to be put on flight mode when the plane takes off. India's new Foreign

Minister Sushma Swaraj met with her Vietnamese counterpart to try to

best bilateral relations. Regional issues including matters in the

South China Sea were on the agenda. Just before the visit Vietnam

reknewed India's lease of two oil blocks in the South China Sea for

another year. India's Supreme Court has ruled that all coal mining

licences awarded between 1993 and 2010 are illegal. The court said

previous governments gave rights to mine coal to state and private

companies in a way which was not fair and transparent.

It will examine whether O'200 licences should be cancelled. The

Treasurer said the country lost more than $200 billion because coalfield

rights were sold off cheaply. Cruising bad loans in China have put

the spotlight squarely on the earnings of the biggest banks. The

latest report, Agricultural Bank of China releases its half`year numbers

today. An increase in non`performing loans has been a cause for concern

for both China's policy makers, as well as foreign investors. Bad loans

at mainland banks totalled $80 billion by the end of 2012. By the

end of last year that climbed to $100 billion. One of the reasons,

the slowdown in the Chinese economy has made it harder for businesses to

repay their debts. Now we speak act if rise in China's bad loans. To put

it in perspective, $100 billion, Riko, is just about a little less

than 2% of the total loan book of all of the Chinese banks combined.

It is not a very large number. The point is it has been growing quit

rapidly and that of course is of concern, but, on the other hand,

when you think about it, the Chinese banking system is highly regulated.

So how the banks make profits is they have a big spread between

deposit rates that they pay their depositors and the rate at which

they get on their lending. So that spread allows them to make

sufficient profits to write down these bad loans and that I think is

the way forward. Now, look at the other side ` who are the big

borrowers whose loans are going bad? Mainly the municipalities, the big

cities that built a lot of infrastructure and real estate,

which is not giving them returns. Those municipalitieses are starting

to issue bonds, as of this month, August. We have seen the NPC giving

$400 billion worth of room for these issuers to go ahead and raise bonds.

That will fund some of these potential bad debts. But if you do

critique the prospects of the cities that have been over the past decades

been the lynchpin, the catalyst for growth in the Chinese economy, this

could further slow down the economic growth of the Chinese economy, which

has been between 7`7. 5% over the past year and we have seen a Jekyll

and hide character of the Chinese economy which has been mixed data.

Absolutely. Basically, the Chinese economy used to grow 10% and that

has come down to 7. 5%. That drop is a reflection of overreliance on

infrastructure and real estate that perhaps whats been excessive. Now

the Chinese are trying to rebalance the economy into consumption. They I

are trying to get the Chinese to consume more and that is how the

they expect the economy to grow into the future to be more

consumer`reliant and less on investment. Thank you. While there

may be concern about bad loans in China, plenty of global businesses

are still betting on the willingness of the Chinese to spend moneyment as

a result, mainland consumers are being told they can look forward to

thousands of new shopping malls in years to come. According to new

research the number of malls in China could rise by as much as 70%

over the next five years, but that brings its own challenges. I spoke

to a consultant in Hong Kong. If you actually look at the penetration

rate of malls in China, compared to other

France, the actual penetration of malls is one`third to one`fifth. So

in terms of actual total number of malls being developed, based on the

penetration rate, you would argue it is not that extreme. There is a lot

of opportunity, but at the same time there is risk and that is where the

problem becomes because there are another 1,000 malls that will be

built in the next 3`5 juniors or so. But the retail market in China is

still not developed as that of the United States or in Europe and we

already are seeing retail sales numbers, Mr Chan, slowing down in

China in the first few months of this year. That's correct. I think

that in itself presents the problem. There is a retail slowdown, however

the market is still growing, so therefore there is a lot of

opportunity based on this particular growth.

offer lip rely on a load of different factors and one particular

factor is making sure you are in the right location. So location is

important but creating the mall that has some kind of unique proposition,

either unique tenants or unique food and Bev rage offering, something

unique to draw people to the mall. That will be a key success factor to

the thousands of malls being developed in China. What happened to

the malls that don't succeed in they become white elephants and owe banks

debt. This could add to the mounting debt problem of China? Well, this is

the funny and interesting thing about China because many of these

malls are mixed used developments, so often there is an office building

and residential building there and a mall there, so often the

and the income that comes from the actual office building or the

residential building, in fact, caters for the mall itself, so

therefore whilst the mall may not have many people inside because the

whole development is not caught up in terms of progress yet, the actual

financing of the mall is such that the other components can actually

fund the mall itself. Therefore, it will take some Tim before it is ``

there is a big shakeout in the market place I believe. Thank you

for investing your time with us on Asia Business Report. I am Riko

Heezon. Bye for now.