12/04/2017 Asia Business Report

baby are devastated after a High Court decided doctors can withdraw

their son's life-support. I'll be back later but first, here's

Sharanjit Leyl with Asia Business Report.

Toshiba's troubles. The Japanese firm risks a de-listing after

risking earnings without a sign of from auditors. And we find out what

China's latest inflation figures tell us about the country's economy.

Hello and welcome to Asia Business Report, I'm Sharanjit Leyl.

Toshiba's shares are down more than 2% at the start of trade in Tokyo

this morning, the conglomerate from Japan could face delisting from the

stock exchange after it listed results without the endorsement of

an auditor. It's unprecedented for a major Japanese firm, they are going

to sell their crown jewels, the chip business, to offset huge losses from

its nuclear division in the US Westinghouse. Earlier I spoke to

Rupert Wingfield-Hayes and asked him about the likelihood of a

de-listing. Every stock exchange around the world has rules over what

companies have to do to qualify too keep their stocks listed, and one of

those is normally that you have to file timely results, timely reports,

financial reports, and they have to be audited by an auditing company

and signed off by that company. Clearly what we said yesterday that

saw yesterday is PwC, Toshiba's auditors, have refused to sign off

on those results and the Tokyo stock exchange will have to make a

decision, does that mean Toshiba is not in compliance with its own

regulations and if so it will be forced to delist the company. I

suspect it will be reluctant to do so but then there's the credibility

of the Tokyo stock market, it is potentially at stake here as well.

Rupert, what happens next to this giant conglomerate? We know it's a

century-old company, founded in 1875, will Toshiba be allowed to

fail and how might this failure be a lesson to other Japanese stalwarts?

I don't think the Japanese government wants Toshiba to fail but

at the moment there's no rescue package, so it looks likely some

sort of deal will be done to sell off chunks of the company but the

problem again for the Japanese government and Toshiba, at the

moment only foreign companies are coming forward. Word we understand a

Taiwanese company is prepared to offer well over the market rate for

Toshiba's memory chip business but there are political issues around

selling such a crown jewels, as you called it, of Toshiba to a foreign

company. There are political considerations and the Japanese

government would clearly like to keep that company or all of

Toshiba's assets in Japanese hands if they can. What happens next to

the company? As you say, it will be broken up into bits, the prized

assets being sold off, but beyond that, can it continue to survive in

what we know today, Toshiba, the big giant conglomerate? It can certainly

survive, it can survive de-listing, other companies have done so. It

would be a major blow, a sort of moral blow to the company, everybody

would frown upon a de-listing, certainly in the financial markets

and the financial industry, it could delist and then go through a deal to

sell off various bits of the company and raise enough cash to cover its

huge debts, especially in its North American division. It will have to

go through the bankruptcy and of Westinghouse in North America and it

could re-emerge a smaller but leaner company and go back to basically

it's all business of construction, that is the core business that

Toshiba used to do. Rupert Wingfield-Hayes. Another

high-level staff departure at Uber. The company's head of communications

has left and no reason was given for her exit but she's the fourth

high-level executive to leave the company recently. Last month Uber's

president left citing the culture of the company... Uber's reputation

took a hit after video emerged of the chief executive swearing at a

driver as well as allegations of sexual harassment. More on that

story and other corporate news on our website.

Not so long ago customers who were unhappy with the company's service

would call up and complain or even write a grumpy letter, but in the

digital age of you have questions or need help with an order so companies

are finding new ways to help you reach out to them. We caught up with

the Chief Executive of a software company that supplies services like

live online chat systems, Zendesk. We see some new trends here that we

don't see anywhere else in the world, we can see how these trends

are coming through the rest of the world, how consumers are embracing

mobile and new messaging paradigms and moving more of their brand

interactions to these new channels and devices. We're curious about

them and interested in how that can help our products and help customers

elsewhere in the world. The voice of the customer has never

been louder than it is today and because of all the social media, any

consumer can reach the entire world through social media and the

Internet, the customer has so much power both in terms of exposing

companies and hurting their brands if they want to. So for businesses

it's really about embracing those channels and figuring out the pot

proper way of engaging in those channels and having meaningful

conversations with their customers. Technologies like artificial

intelligence, machine learning, deep learning, these kinds of things,

helps us build better tools that help customers serve themselves

better. So we see it as a very natural revolution of service but

also that we have quality customer service that can help when the

automated experience doesn't work. Now, speaking of the importance of

good customer service, shares of United Continental, the parent

company of United Airlines, fell by as much as 4% in US trading before

recovering to close lower than 1%, the selloff wiped off $255 million

from the market value of the company and investors dumped on the stock

after this video emerged showing airport officials dragging of a

passenger on one of United's US flights. The video has gone viral

and has been watched hundreds of millions of times around the world

and United's chief executive had to issue another apology saying he was

sorry and the airline would fix it. He had initially said the staff were

following established procedures. In other news, China's inflation

figures are out later this hour and the CPI grew fast last month. They

are targeting 3% this year but is that a realistic target? Here's the

view of a man who tracks the Chinese economy and he spoke to me earlier.

In China they have already set a target, this year. To why isn't

good, too low isn't good, but of course it is a bit on the low side

-- to why. 2% is probably around best for China. At the moment I

would say it's not easy to achieve 2% because of food prices, food

prices always account for a big chunk of China's's CPI. At the

moment so far food prices have been fairly low, that's why it isn't easy

for China to reach 2% this year. Looking away from that, let's look

at some of the policies the Chinese government took this year, capital

controls, limiting capital flowing out of the country, what impact has

that had? I know about that and the impact it has had. In terms of the

impact on the real economy, we have heard from companies who have had

some trouble expanding overseas. Right now there's a lot of scrutiny

in terms of investigation and motivation behind that. The money

has been a distraction. But that's the negative side. On the positive

side we are seeing a more balanced flow for China because in the past

few years we have been worried about this but after the tightening

measures we are seeing more balanced flow is, that is good for everyone.

In terms of balance, the output, authorities are projecting 6.5%

growth this year. What impact will that slower growth in China have on

many of its trading partners in Asia who count on it as a major trading

partner? I would say 6.5% isn't a bad number for China given China is

such a huge economy, after 30 years of record growth, the size of the

Chinese economy is huge so 6.5% is based on a high base already. So in

terms of the impact on the region, I don't see significant impact as long

as China can keep their growth around 6.5%.

Let's have a look at the markets before we go because as you can see,

the Nikkei is down 1% already at the get go. Those Toshiba shares have

been going in and out of positive territory right now, they are up

around 0.5% at the moment, a lot of conflicting talk about where the

company is headed. That's it for this edition of Asia Business

Report. I'm Sharanjit Leyl. Thanks for joining us.

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