18/11/2015 Asia Business Report

Leaders from around the Pacific touchdown in Manila. Trade and

growth are on the agenda, but Paris and the South China Sea dominate

Apec. And it wouldn't be Apec without matching outfits for every

litre. We give you a sneak peek of what they will wear for this year's

family photo -- leader. Good morning, Asia, hello world. Bet you

could join us for this special edition of Asia Business Report. I

am Rico Hizon, live from my home city here in Manila, which is

hosting the Asia-Pacific economic Corporation summit. Moments ago, the

Alibaba founder wrapped up his session and he told delegates he

wants to support all small and medium-sized enterprises, for them

to grow bigger. And he said that companies should compete, but they

should not copy. Also, America's President Barack Obama, Chinese

President Xi Jinping and Shinzo Abe are among the 18 leaders who will

discuss the big issues facing Asia and the Pacific. Apec has 21 members

working towards free trade throughout the region. It is

terrorism, the South China Sea, territorial disputes and climate

change which are expected to be talked about today but it is trade,

business and economic issues which dominate the official agenda.

Earlier I spoke to the executive director of the Apec Secretariat,

and I asked him what other priorities in this meeting. So far

we have had trade ministers and foreign ministers meeting and going

through the whole list of things that Apec has been doing for the

year. Some of that is about trying to improve growth generally, some of

it is inclusive growth, small-business, services, women in

the economy, a lot initiatives. A lot of initiatives indeed, inclusive

growth, building economies. But is the political let to support the

small and medium-size enterprises which make of about 90% of Apec?

They can be 97% of Apec but they're not 97% of trade and that is what we

are trying to do. We are trying to up and get the advantages of this

very strong dynamic around the region. And what he really needs, Dr

Bollard, is a live level playing field, financing. We're looking at

financing, trade agreements, trade facilitation, red tape at borders,

making sure they can tap into global supply chains. Electronic

technologies are making that much easier and we want to make sure that

works for them. Apart from Apec, of course, everyone is looking forward

to the meeting of the transpacific partnership members on the sideline

at this it. Do you think it will eventually be ratified, and when

will it be? We don't know that, that is not an Apec event! We observe

that, we also see progress on other trade agreements around the region

and we are interested how they might come together as a free-trade area

for Asia and the Pacific. At the moment, apart of course from the

Apec summit, everyone is talking about the Paris attacks. How much is

the security situation overshadowing this summit? I don't think it is. We

do economics. I expect leaders... Ministers did a minute's silence,

but I suspect they will talk about it and want to pass on their message

but say what is this really all about? If we can get strong economic

growth, that help stabilise the situation is a lot, and that is what

we are all about, economic growth. That was Dr Bollard, executive

director of the Apec directorate. China's growing economy is a hot

topic here. Some suggest the outlook is still bright and one of them is

America's largest retail chain, Walmart. Their earnings were

released yesterday and while earnings were stronger than

expected, sales and international segment fell 11%, hit the stronger

dollar. For China, the retailer once had an aggressive plan to move into

the country, with more than 1000 stores. I asked Scott Price, the

chief executive of aggro to Asia, how China's slowdown was affecting

the business. The challenge that China has is not insurmountable, but

it is big as they change their economy from an export driven one to

services and consumption. Obviously with 400 plus stores in 165 cities

in China, we are a pretty good barometer for how that process is

moving. We are optimistic. We are long on China. I think when you go

from the fast lane down to just 70 miles an hour, it may feel slower

but it is still pretty fast. Mr Price, you are indeed expanding in

mainland China, but much less than the original plan. Why is that? When

you want to open a new store you have to hire 200 -300 new people,

you have to keep them trained. There is quite a bit to ensuring healthy

growth so when we talk about growth we want to make sure that is growing

in the right way. So for us that is growing at the right level but as

well focusing on things like the safety, training, complaints are

cetera. So we think it is reasonable and skilled growth. Walmart is a

bricks and mortar operation. How competing with the online e-commerce

market? We continue to invest, we have about the Mac announced 115 new

hypermarkets. We completed a new acquisition of a large e-commerce

player out of Shanghai. We continue to offer our customers

online/off-line opportunities. On Tuesday we discovered that Alibaba

made $40 billion. How did Walmart fear? We don't release powers on a

specific date, 11/11. That is a big day for our online world. We are

quite comfortable with the performance. We had a lot of great

deals, we think, online, and we think we performed pretty well. What

lessons did Walmart learn from 11/11? Singles Day? If you look at

the Chinese customer, they are interested in authenticity. Second

is the quality. There is an increasing demand for quality in all

product, and the third is the best possible price. What we found on

Singles Day is that you don't have to go out with a whole raft of

loss-making discounts, that if you focus on delivering those three

things, you can build a very healthy business. And for us that is what we

are looking for, again growth the right way. That were Scott Price,

the CEO of Walmart Asia. Yesterday we reported on how the slow pace of

infrastructure and development here in the Philippines hampers growth

for companies both big and small. And the international logistics

giant FedEx relocated its Asia hub from Manila two China six years ago

because of poor infrastructure. I spoke to David Cunningham, Chief

Executive Officer of FedEx, to talk about what needs to happen to lure

the company back, and how it has benefited from the move to the

mainland. We moved our hub because of the capabilities, airspace space,

runways, runways, the workforce capabilities, that we had in China.

And so we have done very well in that. For FedEx to come back in a

big way in the Philippines, what needs to happen in terms of

infrastructure? Until the Philippines has a significant

investment in capability and runways, then those are really not

options for us. But I hope that Manila and the Philippines will

continue to progress, as it has over the last five years with the

President, by making targeted infrastructure investments. But

also, and probably most importantly, by using the TPP, are coming a TPP

member, using the TPP, improving the transparency, using the digital

economy to increase capacity. Because one of the things we think

about is we think about infrastructure, and we think about

it in concrete and steel and roads and buildings. But with the digital

economy it is not all about that any more. You can scale Customs

capabilities, you can scale infrastructure capabilities by one,

ten, 1000, by the use of those techniques. And so I think that is

where maybe the Philippines can lead that next revolution. Because you

have incredibly technically capable people. Those just need to be

integrated with government policy. And that was David Cunningham from

FedEx. And now, before we go, no Apec summit would be complete

without a family photo of the leaders wearing traditional shirts

of the host country. And this year, being in the Philippines, all the

leaders will be wearing vests. It is made partly from pineapple fibre.

And being a Filipino, I can tell you that I have worn one many times

before. And take a look at this. Here is my favourite. I wear at all

the time during special occasions, like weddings and formal parties. I

hope I could wear one during Asia Business Report. We will have to

wait until tomorrow, Thursday, to see the leaders in their respect of

garments. Before we go, here is a quick look right now at the markets.

Currently they are mixed in mid-morning Asian trade. Japan's

Nikkei 225 is up on plans from their government. Australia is down and

the Hang Seng is up slightly. Thank you so much for investing your time

with us on Asia Business Report. I am Rico Hizon in Manila, goodbye for

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