15/09/2014 Asia Business Report

Going global. From start to worldwide giant, Alibaba get set to

list in the US stock market. But can it take on its American rivals? And

China's is oil company gets set to sell off $17.5 billion worth of its

retail business. `` China's biggest oil company. Thank you for joining

us for this edition of Asia Business Report on BBC World News, I am Rico

Hizon. Alibaba's public offering is making waves, not just on Wall

Street, but on the West Coast of America as well. A chunk of its $500

billion investment over the year has been in Silicon Valley, but as our

North American technology correspondent reports, not everyone

there is welcoming the CEO with open arms. Ridesharing San Francisco

style. His moustachioed mauve eels, the hallmark of this smartphone app

`` mobiles. The start`up has been on quite a journey, a key investor in

the $200 million funding round earlier this year. That was just the

latest in a spending spree. Its venture in mobile spreading way

behind transport into areas as diverse as communications, gaming,

and app search. So what is driving these investments? This Silicon

Valley venture capitalist himself invested in Alibaba a decade ago.

Jack is very astute, a operator and investor. I think they are trying to

learn as much as they came, understanding that they are Chinese,

they are trying to learn as much as they can about the US market. The

tech market type economy in general. And obviously many of them have a

strategic aspect, which they are trying to bring back into China and

using here is a beachhead to expand here in the US. In those potentially

expansionist intentions are getting some in Silicon Valley concerned.

Right now Alibaba's e`commerce presence is subtle or stop its

retail outlet doesn't so much as carry any Alibaba ranting. Some of

observers say it e`commerce ambitions could eventually pose a

real threat to established companies like eBay. Alibaba does they can't

just go into the US and drop. Some of their services they want on the

US and expected to work. They will take a long`term approach and try to

introduce other services slowly but surely into the US. But they have a

ton money and experience and you can never discount Alibaba. But for

start`ups needing investment in their quest to become the next big

thing, Alibaba's investment is positively welcome. Chinese funding

these days is seen as a badge of credibility. It is clear that

Alibaba's presence here in Silicon Valley is not a 1`way street. Many

established US firms may fear what they see as the encroachment by the

Chinese Internet giant on But for many others it is a gateway

into China itself. Not just in new market, but the world's guest.

Alibaba might be a household name in China, but this is not necessarily

the case beyond its borders. In part of the ambition is to raise

awareness of the company among consumers in North America and

Europe. I spoke to a representative from advertising giant McCann, who

shared his insights into what Alibaba needs to do to attract

consumers in these markets. It is known for the best transaction. That

is what it does. One site has it all. The reality is it will have to

make some changes if it wants to build within those two geographic

locations. Do you think that Alibaba has what it takes to be able to

break into the American market and give American consumers that sense

of experience? I would never underestimate the CEO. He has proved

to be an incredible businessman and an incredible showband. He knows

what it takes to find the consumer `` show man. The question is whether

he wants to do that. He seems to believe that the best marketplace is

one looking at the results in China,

ears right. The question is whether he will have to adapt for the United

States. I think in the long`term if you want a significant part of the

market you will have to make changes. If he makes that adoption?

What if he adapt to what the US consumers want? Can he beat the

Amazon and the eBay is? He is not just looking to see whether he can

eat those companies, he is in a race against Walmart, against a lot of

individually oriented Rands who have good consumer presence right now on

the web and to a way for consumers to find their

goods. Many consumers still prefer shopping with those companies. He is

a marketplace, they are brand specific areas. I think this is a

race with which still has a lot to be run. Can Alibaba educate American

consumers with a transaction oriented philosophy? Without a doubt

he can bring some things which right now are not necessarily the same as

in the United States. I'm not sure he can educate them, but he can make

some of the things that Alibaba is doing more appealing for an American

audience. There is no doubt that he can do that. What he still has to

then figure out is whether it is a sensory, wholesome experience. Do I

get the experiential satisfaction I get in these other places? Can Asian

e`commerce sites succeed in the with their existing business models?

No, I think they still need to do more about the security of data,

they still have to engender more confident about privacy, they still

need to be more knowledgeable about American consumer experience. Those

elements which the Asian business sites will have to adapt to. And

other business is making headlines, China has

showing its weakest growth in industrial output in more than five

years. The industrial debt measures output at nine factories and

workshops. The numbers released over the weekend also revealed

growth in retail sales and weaker than expected investment in

infrastructure. Analysts say the new numbers are raising concern over

China's current economic strength. The UK`based retailer hones4u is set

to fall into administration, putting hundreds of jobs at risk. The chain

says 550 stores would all be closed on Monday `` Phones4u. Phones4u

blamed its position on the decision not to renew its contract, which

came after Vodafone made a similar move. South Korean conglomerates

Samsung and LG are in the midst of a strange dispute. Samsung accuses

some LG employees of deliberately destroying washing machines in

stores in Germany. Samsung says the vandalism took place earlier this

month ahead of a major trade fair in Berlin. LG alleges that two machines

were damaged, but said it was done accidentally. The case is now being

investigated. China's state owned oil giant China Trolley and chemical

Corporation is set to sell a whopping $17.5 billion stake in its

retail businesses `` China Petroleum. Its retail side includes

tens of thousands of fuel stations and convenience stores. The sale

comes as china's government looks to restructure and boost productivity

in its major state owned companies. For the latest let's cross to Hong

Kong. This sale, at $17.5 billion, will be the biggest privatisation

since the President came into power. That's right. The biggest since the

end of 2012. Now the administration has made it very clear that they

want to bring in private capital and private know`how into some of the

country's biggest state owned companies, and you don't get much

bigger than this. They have more than 30,000 petrol stations around

the country, and around 20,000 convenience stores as well, as other

assets. They are expanding overseas. If you think about what these

private companies are being brought in to do, it does make sense.

Interestingly, unlike most other companies, they actually bring in

99% of their business. That is just gas and oil. In other parts of the

world, things like car washing, going to the convenience store, next

to a petrol station, buying food, drinks, perhaps alcohol, it could

account for up to 50% of revenue. And that is something that Sinopec

is looking at. And I can certainly tell you, when you do those long

drives throughout China, you certainly wish these petrol stations

would have other services. And which foreign investors would be

interested in buying a stake in Sinopec? A whole list of them. This

was a huge deal. So it was more than just a few investors. Let me just

share with you some of the big names. Really some of the biggest

funding management names in China. Harvest Fund, China Life Insurance.

10 cents is another Internet giant in China, and they have signed up

with Sinopec to work on its digital commerce. And before we go, a quick

look at the markets. Asia are currently stumbling to start the new

trading week. Most are in negative territory.

trading week. Most are in negative Thank you for investing your time

with us. I am Rico Hizon. Goodbye for now. The top stories this hour:

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