01/08/2017 Asia Business Report


01/08/2017

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Now on BBC News, all the latest business news live from Singapore.

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Downgraded. Toshiba moves off the main stock board of Tokyo because of

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financial problems. And a snap deal going at a loan after calling off a

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sale to a rival, Flipcart. Good morning, Asia. Hello, world. Welcome

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to another edition of Asia Business Report. It's a Tuesday. I'm

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Sharanjit Leyl. We will start with the ongoing problems around the tech

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giant Toshiba. The markets opened for trade and its shares got demoted

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to the second section of the Tokyo stock exchange. We have that story.

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Tell us about this demotion. They opened higher this morning. Up about

:01:09.:01:15.

2.5% this hour. Yesterday as well Toshiba shares rose. If you are like

:01:16.:01:22.

me, wondering why they are actually rising despite the demotion, I have

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been reading reports from security companies and it is partly because

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shares have fallen sharply since financial trouble was reported but

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also because by being demoted from the first section to the second

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section, you remove all the big institutional investors but you also

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get retail investors and day traders who want to make quick money by

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selling and buying quickly. We have been seeing a lot of volume with

:01:48.:01:52.

trading in Toshiba shares. They will continue to see volatility. The

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interesting thing about Toshiba, we all grew up with it, it is one of

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the best-known conglomerates in Japan. How did you get here? It is a

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dramatic fall from grace. Last year it was all fine until December. That

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is when the company warned investors it may have to face a one-time right

:02:14.:02:18.

down in its US nuclear division. We did not know how much that loss was

:02:19.:02:24.

going to be. Then we heard figures like $6 billion. For the last

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financial year that ended in March, the company still has not reported

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its earnings. The figure we are expecting is a loss of $9 billion.

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It is trying hard to sell its chip business, the only profitable

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business. It is facing legal challenges from the US partner it

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has. How does it recover? Could it be delisted altogether? It is quite

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possible if it cannot solve this by March. It could be delisted. 15

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companies got delisted in the last decade. Sharp, for example. That one

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turned around and Taiwan's Foxcon. But it is unusual. -- under. Thank

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you for that. In other business news, prices in South Korea rose to

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a multi-year high in July according to the latest government data. The

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consumer price index group to 20% compared to 1.9% in June. Qatar has

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launched a formal complaint with the WTO with regards to a trade embargo.

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Four Arab countries cut diplomatic and trade ties with them in June

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after allegations of supporting terrorism. Qatar called it an

:03:57.:04:02.

illegal siege. It looks like investors are not sharing the $12

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billion deal in TV deals. They were hoping a merger would build up

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viewership figures. Shares for Discovery fell 8%. The $900 million

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sale of India's deal to Flipcart was heralded as one of the most exciting

:04:30.:04:35.

e-commerce deals. But they pulled the plug, saying they will pursue an

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independent path. What is next for the struggling firmhave more. It was

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supposed to be an incredible deal. But instead of two arrivals coming

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together to create a mega firm, talks collapsed during the final

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stages of a talk between Flipcart and Snapdeal. When the talks began,

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there were constant issues between Softbank and minority shareholders.

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The founders of the company were not keen on selling to their main rival

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as well. Snapdeal had been struggling financially for years,

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which is why it was open to sail. But last week it sold its mobile

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payment business to a bank raising $60 million. That has given it some

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financial ammunition to keep going. In a statement, they said they would

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trim operations and restructure the business to stay afloat. Many

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analysts say it might not be enough to survive in the highly competitive

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e-commerce market of India. India is one of the fastest growing markets

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for on line shopping largely to do with the huge number of smartphone

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users in the country. And in an effort to attract customers, on line

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retailers have been offering massive discounts. But this has made it

:06:00.:06:03.

difficult for them to make profit. Amazon has been pursuing an

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aggressive strategy in India as well. They cut down operations,

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branding them as Snapdeal 2.0. It might be a new avatar for the

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company, but it is facing the same old competition in the market. BBC

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News. In other news, warmer summer weather in Europe has led to

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bubbling profits for Heineken. They get half of their turnover from the

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continent. Profits rose nearly 6%. $2.1 billion. It beat market

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expectations. They had good growth in Vietnam as well. China's appetite

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for fast food shows no signs of slowing down. The world's second

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biggest economy has a more vibrant restaurant economy than ever.

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Chinese consumers it out almost three times a week. Thanks to a

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growing middle-class making up 68% of all households, some of the top

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brands are doing extremely well. Others include KFC and McDonald's.

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Other retail industries are struggling to get by. Why is casual

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eating restaurants becoming such a rising industry? For international

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brands, it has been a game of adapting the menu to local taste.

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Kace has an entirely new occasion with breakfast in China. -- KFC. The

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breakfast menu is 100% Chinese exclusive. They have a few different

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types and tastes and spices. The other thing is trying to bring in

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healthy food. Chinese mothers, just like in the West, they would like to

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take their family to McDonald's, KFC, but they want something healthy

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for their children and something lighter and healthy for themselves.

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So these chains have been adding salads, vegetables, proposing corn

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as a substitute to french fries, and also improving ingredients

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themselves, putting less salt in the food, better meat, sources of

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potatoes and so on. Tell us about the beverage industry as well. It is

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not just fast food. Star bucks spent over $1 billion last week to take

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full ownership of China outlets. Is that a good move? A very good one.

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This means they are taking control of the entire supply chain, the

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quality of the delivery in the stores. They have big plans to

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increase their network which is today probably between 1500, around

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1500. They are trying to open 1000 new stores. They have been adapting

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to local tastes as well. For example, in the menu in China, they

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have several types of tea with different flavours that cater to

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Chinese tastes. I think it is a good move We will see star bucks

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extending very much the number of locations they have in China. We

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will turn to the market, starting with the virtual currency, Bitcoin.

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A split in the community is set to create a new version of the

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cryptocurrency on Tuesday. A group of insiders, unhappy with existing

:09:45.:09:48.

plans to speed up transaction times, have created a rival called Bitcoin

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Cash. That could put pressure on the value of the original Bitcoins. One

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person has said it could cause chaos. The price of a single Bitcoin

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rose 5% in US trade overnight. We will look at trade in Asia. Most

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Asian markets that are open have opened higher, taking cues pretty

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much from Wall Street where we saw the Dow Jones yet another record

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high. Essentially in Australia we are seeing games. Many investors are

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watching the Reserve Bank of Australia who will announce

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interest-rate decisions later. -- ??MACRO1 and that is it for this

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edition of Asia Business

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