18/09/2014 Asia Business Report


18/09/2014

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now, the US Central Bank has insisted it will not raise interest

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rates until the end of its stimulus programme. With that due to expire

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next month, attention has shifted to when those rates might rise. Janet

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Yellen has insisted that the idea of considerable time should be linked

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to a specific `` should not be linked to a specific date. There is

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no mechanical interpretation of what the term considerable time means.

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And as I have said repeatedly, the decisions the committee makes about

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what is the appropriate time to begin to raise its target for the

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federal funds rate will be data dependent. What is the point of

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forward guidance is not linked to a specific date? The central bank says

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it needs the ability to adapt to a changing economy. Unemployment is

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falling but it needs the flexibility to adapt to changing economic

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conditions. And raising rates to quickly could choke off the economic

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recovery. Keep them too low for too long and the economy could spiral

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out of control. America has been awash with cheap cash through low

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interest rates and economic stimulus but those emergency measures cannot

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last indefinitely. Shares in Sony have fallen by as much as 12% in

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Tokyo today after it said it stood to lose more than $2 billion this

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financial year, more than four times its earlier forecast a few months

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ago. Sony is blaming a downturn in its mobile phone business. It has

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long promised a turnaround but will it ever deliver? Earlier, I ask if

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these troubles were really all link to smartphones. They have a balance

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sheet adjustment while they move out of this period in their business.

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Having said that, their forecasts have been lowered. Their positioning

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is very muddled. They are not at the top end. They are not at the low end

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either. They are not the first choice of the top end customer or

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the first choice of the mass`market customer. This market is only going

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to get tougher, isn't it? Yes. Apple will have new products, Samsung will

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react and then there will be lots of Chinese brands on the market. I

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don't see that changing. I don't see anything which is going to make them

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a product category leader. I don't see anything that will distinguish

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it from other products. And they don't even have a global strategy

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when you look at what they have done so far. They will continue to model

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and that begs the question if they should be in this isn't at all.

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Japanese exports fell by 1.3% compared to last year. Shipments to

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the US declined in August, adding to concerns that the Japanese economy

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might not be able to rely on a pickup in trade to help it recover

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from an April tax hikes. News Corporation has demanded the

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European Commission take a tougher approach to Google. It says the

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search engine has become a platform for piracy and its powers are

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increasing every day. Google says it tackles piracy rigourously. And eBay

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has been compromised. Users who clicked on some links have been

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diverted to a website designed to steal their credentials. It looks

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like the eBay welcome page. Authorities only removed the suspect

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listing after a follow`up phone call from the BBC more than 12 hours

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after the initial alert. Xi Jinping is on his first visit to India, the

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first visit by a Chinese leader to India since 2006. There are high

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hopes this trip will lead to improved business ties. Earlier, I

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spoke with an Indian national who has a long history of doing business

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in China. The growth rate of India and China have been the fastest

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globally. China has run a large trade surplus over the last four

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years. India can provide chemicals and iron ore. China exports

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Manufacturing goods and electronic components. It is an unbalanced

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trade from that perspective. What we expect to see is that the trade

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deficit will continue but Chinese investment in India will rebalance

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and that is where we see the big change coming. Will that allow India

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to move up the value chain in terms of what it makes and therefore what

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it sells back to China? The Chinese are very good at infrastructure and

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India desperately needs infrastructure. China has an export

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manufacturing sector. The supply chain extends across Asia. India

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needs to join that supply chain. The Chinese export manufacturing and the

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Indians support `` export manufacturing and those two will

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come together. Relations seem warm at the moment but we know that there

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are ongoing border disputes between these two countries. The politics

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does sometimes interfere with the business. China is a large country

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and it has challenges with many of its neighbours on a political

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front. That will not stop it with growing commercial relationships

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with all of its neighbours. And India has to learn that and see this

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relationship on the commercial side differently to the relationship on

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the political side. The political side always takes longer to change

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than the commercial side but we can clearly see the benefit of the over

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100 Chinese companies in India and the over 100 Indian companies in

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China. One of the world 's biggest stock offerings is about to take in

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New York. Alibaba is expected to complete its sale of shares to big

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investors on Thursday before trading opens to the general public on

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Friday. What reception can the company expect from investors? The

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big apple, America's financial centre. New Yorkers have a

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reputation as a tough crowd to please, especially when it comes to

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investments. That is what the massive Chinese company Alibaba will

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soon discover when its shares begin trading at the New York stock

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exchange. This will be one of the biggest events I have witnessed.

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Inside this emblem of capitalism, Alibaba is about to have what could

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be the biggest stock offering on the planet. Bigger than Facebook and

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bigger than the Agricultural Bank of China. Such is the anticipation...

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I'm very active on Chinese social media. I have had people chatting

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with me and asking me if I can connect them with the IPO team

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because they want to buy up to 2 million shares. Why all the hype?

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Internet analyst Max Wolff explained. This company is literally

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poised to take advantage of the largest emerging middle class in the

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world, China, and the largest consumer class emergence in the

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history of the world, China. Alibaba's success as an online

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marketplace has already made it a force on the Chinese internet and it

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has helped turn its founder from a teacher into one of China's urges

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men. Investors are being asked to put their trust in him, but should

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they? After all, this Chinese company comes with unusual risks

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including a unique ownership structure, which gives the owner

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most of the control. And an OPEC political system that for now has

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supported Alibaba's success. `` opaque. There is no shortage of

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investors clamouring to bet on Alibaba. And all eyes will be on

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that float on Friday. Before we go, we can see that Asian markets are

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higher. That is it for this edition of Asia

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Business Report. Thank you for watching.

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The top stories this hour: With hours to go before polls open, both

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sides in the Scottish referendum campaign have held rallies as they

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made their final efforts to win over undecided voters.

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President Obama says American forces won't have a combat

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