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Now on BBC News, all the latest
business news live from Singapore. | 0:00:00 | 0:00:04 | |
US stocks retreat on reports that
China could be losing its appetite | 0:00:17 | 0:00:22 | |
for purchasing American debt as
tensions between the two countries | 0:00:22 | 0:00:25 | |
continue to escalate.
Destination Cambodia, find out what | 0:00:25 | 0:00:31 | |
storing international companies to
this manufacturing hub in Southeast | 0:00:31 | 0:00:35 | |
Asia.
Good morning, Asia. Hello, world. | 0:00:35 | 0:00:45 | |
Glad you could join us for this
Thursday edition of Asia Business | 0:00:45 | 0:00:49 | |
Report, I'm Rico Hizon. We start
with Wall Street and the major stock | 0:00:49 | 0:00:54 | |
indices ending lower overnight after
a choppy trading session and one of | 0:00:54 | 0:00:58 | |
the reasons involve is Asia's
biggest economy, Bloomberg is | 0:00:58 | 0:01:03 | |
reporting Chinese officials are
thinking of slowing or possibly even | 0:01:03 | 0:01:08 | |
halting purchases of US Treasury
bonds. China is the biggest foreign | 0:01:08 | 0:01:13 | |
holder of US government debt, with
$1.2 trillion in Treasuries as of | 0:01:13 | 0:01:19 | |
October, 2017. But Chinese officials
were cited as saying they would slow | 0:01:19 | 0:01:23 | |
down the purchase because of trade
tensions between the two big | 0:01:23 | 0:01:29 | |
economies and there is further
evidence of a delicate business | 0:01:29 | 0:01:32 | |
relationship between the Americans
and the Chinese, and these stories | 0:01:32 | 0:01:36 | |
both concerns Mark phones. Apple
says a Chinese government owned | 0:01:36 | 0:01:40 | |
company will take control of its
iCloud services in the country. | 0:01:40 | 0:01:44 | |
Vincent from the BBC News service
says Apple's boss Tim Cook had no | 0:01:44 | 0:01:50 | |
choice but to do this if he wanted
to keep this company in the | 0:01:50 | 0:01:53 | |
mainland.
I think this is a dilemma for | 0:01:53 | 0:01:57 | |
companies like Apple. The Chinese
market is really attractive to all | 0:01:57 | 0:02:01 | |
sorts of businesses across the
world, but if you want to enter | 0:02:01 | 0:02:04 | |
China there are local rules and
regulations that you have to comply | 0:02:04 | 0:02:07 | |
with and I would say Tim Cook was
facing a really tough choice. From | 0:02:07 | 0:02:14 | |
the Chinese government and business
perspective, it only makes Apple and | 0:02:14 | 0:02:19 | |
equal player in China because all
businesses operating in China have | 0:02:19 | 0:02:22 | |
to comply with Chinese government
role and they would argue why Apple | 0:02:22 | 0:02:28 | |
is exceptional. The government were
saying I'm glad you're complying | 0:02:28 | 0:02:32 | |
with our laws, welcome to our
market, but Apple, for them, they | 0:02:32 | 0:02:37 | |
won the market in China, but they
lose the moral argument outside | 0:02:37 | 0:02:41 | |
China. Vincent Ni from the BBC China
news service. | 0:02:41 | 0:02:46 | |
Leading Chinese and smart phone
manufacturer wow why has chosen, | 0:02:46 | 0:02:51 | |
axing its US business presence Paul
Frew at the last minute because of | 0:02:51 | 0:02:57 | |
security concerns. It wanted to sell
phones through AT&T in America but | 0:02:57 | 0:03:02 | |
there was strong competition. The US
move has an air of protectionism. | 0:03:02 | 0:03:07 | |
We've seen this in the
infrastructure market and now it | 0:03:07 | 0:03:10 | |
seems to be coming to the smart
phone market. The key difference | 0:03:10 | 0:03:13 | |
here is that Huawei's chipset is its
own chipset and I think that's why | 0:03:13 | 0:03:21 | |
we've seen particular emphasis on
Huawei and this model in the US and | 0:03:21 | 0:03:27 | |
this AT&T deal. Certainly 18
lawmakers have signed a document to | 0:03:27 | 0:03:31 | |
the FCC highlighting their concerns
over this. Concerns over Chinese | 0:03:31 | 0:03:37 | |
manufacturers' equipment has been
long-running in the US, and of | 0:03:37 | 0:03:40 | |
course we get into this tit for tat,
it might be the US being | 0:03:40 | 0:03:45 | |
protectionist over backdoors but who
started that? The US. | 0:03:45 | 0:03:48 | |
The next guest says the trend is
still upwards for big deals in the | 0:03:48 | 0:03:52 | |
region. In 2017 the various deals in
the Asia-Pacific added up to over | 0:03:52 | 0:03:59 | |
673 billion US dollars, that's 4.8%
higher than 2016. | 0:03:59 | 0:04:03 | |
The story is a bit different when
you look at muggy coming from China. | 0:04:03 | 0:04:08 | |
Government restrictions reduced
mainland outbound M& by: | 0:04:08 | 0:04:17 | |
If you count megadeals, Asia saw
four major deals in 2017, one more | 0:04:19 | 0:04:25 | |
than 2016.
I spoke to Stephanie Hanna in Hong | 0:04:25 | 0:04:28 | |
Kong and I asked her about the
future for deals already on the | 0:04:28 | 0:04:32 | |
table.
I think it casts a shadow for other | 0:04:32 | 0:04:35 | |
deals that are still waiting for
approval that involves Chinese | 0:04:35 | 0:04:40 | |
buyers. Were talking about deals
like Jen Worth being sold to China | 0:04:40 | 0:04:46 | |
Ocean wide, a life insurance
company, other deals being sold in | 0:04:46 | 0:04:51 | |
the semiconductor space. It doesn't
bode well for those deals that are | 0:04:51 | 0:04:56 | |
still hanging in the balance and I
think it goes to show that Cifius is | 0:04:56 | 0:05:05 | |
considering access to consumer day
as part of that umbrella of national | 0:05:05 | 0:05:09 | |
security risks. Later today a UK
court will rule on evidence | 0:05:09 | 0:05:13 | |
pertaining to the extradition case
of the Jane Malcolm Turnbull, the | 0:05:13 | 0:05:18 | |
fugitive tycoon has co- ownership of
Formula 1 Force India race team and | 0:05:18 | 0:05:21 | |
he also owns Kingfisher Airlines,
which has been grounded since 2012. | 0:05:21 | 0:05:28 | |
Let's go to Mumbai. What is this
case all about? Well, Rico, Vijay | 0:05:28 | 0:05:39 | |
Mallya is a wanted man in India and
ever since he left India for the UK | 0:05:39 | 0:05:45 | |
in 2016, the Indian government has
really ramped up its efforts to get | 0:05:45 | 0:05:49 | |
him extradited back to India to face
trial for financial crimes. Vijay | 0:05:49 | 0:05:54 | |
Mallya's known for being a very
flamboyant businessman, this | 0:05:54 | 0:05:59 | |
business interests ranged from
airlines to alcohol and he co- owned | 0:05:59 | 0:06:04 | |
the Formula 1 team. He was once
dubbed the Richard Branson of India | 0:06:04 | 0:06:08 | |
but this companies owe a lot of
muggy to Indian banks. The Indian | 0:06:08 | 0:06:11 | |
government is trying to get back
around 1.4 $1.4 billion from his | 0:06:11 | 0:06:17 | |
companies. He said he is subject to
a witch-hunt and the extradition | 0:06:17 | 0:06:21 | |
trial is politically motivated and
he denies all the allegations. It | 0:06:21 | 0:06:27 | |
seems like the Indian government is
singling out Vijay Mallya, is this | 0:06:27 | 0:06:32 | |
true? Vijay Mallya owes a lot of
money to Indian banks, $1.4 billion | 0:06:32 | 0:06:40 | |
is no laughing matter, but he's
become really the face of a wider | 0:06:40 | 0:06:45 | |
problem in India. Public-sector
banks, which give out around 70% of | 0:06:45 | 0:06:49 | |
loans, more than that, in India, are
struggling with non-performing | 0:06:49 | 0:06:54 | |
assets and that's really causing
problems here, it's limiting the | 0:06:54 | 0:06:59 | |
banks' ability to give credit to
small businesses and it's affecting | 0:06:59 | 0:07:03 | |
the banks' balance sheets and it's
affecting foreign investment coming | 0:07:03 | 0:07:06 | |
into the country and that's what the
Indian government really needs in | 0:07:06 | 0:07:10 | |
order to boost growth. The Indian
economy slowed down a little bit | 0:07:10 | 0:07:14 | |
last year and the Indian government
really wants to improve that. So | 0:07:14 | 0:07:18 | |
Vijay Mallya has become the very
public face to a really serious | 0:07:18 | 0:07:21 | |
problem here.
Thank you so much for that update. | 0:07:21 | 0:07:28 | |
Many foreign companies are knocking
on the doors of Southeast Asia and | 0:07:28 | 0:07:31 | |
companies to do business since they
are less expensive than its economic | 0:07:31 | 0:07:35 | |
powerhouse to the North. A survey
from the US chain of commerce in | 0:07:35 | 0:07:39 | |
China found nearly a quarter of its
members are considering moving or | 0:07:39 | 0:07:42 | |
have already done so. Of those about
half are looking at other countries | 0:07:42 | 0:07:47 | |
in Asia where labour costs are
lower. But do labour costs always | 0:07:47 | 0:07:52 | |
mean more profits? Tim McDonnell has
more from Phnom Penh. | 0:07:52 | 0:07:56 | |
It's exam day at this school and by
Cambodia's largest textile industry | 0:07:56 | 0:08:00 | |
group. Many manufacturers come here
in search of cheap labour, | 0:08:00 | 0:08:07 | |
especially as wages rise in China.
But there's plenty of competition | 0:08:07 | 0:08:11 | |
from other low-cost countries, like
Vietnam and Bangladesh. So these | 0:08:11 | 0:08:16 | |
classes are aimed at making sure
productivity keeps pace with wages, | 0:08:16 | 0:08:20 | |
which have been rising here.
There's way to offset more than 100% | 0:08:20 | 0:08:25 | |
increase over three years through
productivity gains. If wages rise to | 0:08:25 | 0:08:30 | |
a level whereby we are competitive
then there is no development. There | 0:08:30 | 0:08:34 | |
can only be growth and gain when
there's economic development. If you | 0:08:34 | 0:08:42 | |
are uncompetitive it means there's
no investors or fewer investors | 0:08:42 | 0:08:45 | |
coming to invest in Cambodia, so
where do you get development? Wages | 0:08:45 | 0:08:49 | |
will need to clear that speed bump
and start rising if ordinary | 0:08:49 | 0:08:53 | |
Cambodians are to improve their
fortunes but economists say they | 0:08:53 | 0:08:56 | |
will need better skills to do it.
Our productivity now has improved | 0:08:56 | 0:09:00 | |
from day to day, but we need more
skill to improve. If our government | 0:09:00 | 0:09:06 | |
improves we can gain manufacturing
from China. | 0:09:06 | 0:09:11 | |
But a more diverse manufacturing
sector might be part of the answer | 0:09:11 | 0:09:14 | |
to two.
The overwhelming majority of | 0:09:14 | 0:09:17 | |
manufacturing in Cambodia is in the
garment industry, but a new | 0:09:17 | 0:09:21 | |
generation of companies are moving
in hoping to take advantage of the | 0:09:21 | 0:09:25 | |
country's low wages. This Japanese
company makes equipment for car | 0:09:25 | 0:09:31 | |
factories. TRANSLATION: Bearings,
gears shifts, we line up the parts | 0:09:31 | 0:09:35 | |
and heat it up at a high temperature
to make it more durable. The jobs | 0:09:35 | 0:09:39 | |
are a little more skilled and the
pay is a bit better. This man says | 0:09:39 | 0:09:44 | |
there are many challenges but
Cambodia is cheap enough for | 0:09:44 | 0:09:47 | |
investing here to make sense.
TRANSLATION: Wages are increasing in | 0:09:47 | 0:09:57 | |
China, by manufacturing in China and
in porting to Japan it doesn't make | 0:09:57 | 0:10:00 | |
much of a difference. Because of
that we've moved our factory to | 0:10:00 | 0:10:05 | |
Cambodia and Southeast Asia --
importing. | 0:10:05 | 0:10:09 | |
The World Bank says the number of
non- textile factories here is | 0:10:09 | 0:10:12 | |
growing and they could be vital to
lifting the country's living | 0:10:12 | 0:10:16 | |
standards. Some of those jobs might
come to Cambodia because China's | 0:10:16 | 0:10:20 | |
getting more expensive and workers
there are making more money. That's | 0:10:20 | 0:10:25 | |
a luxury many Cambodians would like
too. Timothy Wood Donnell, BBC News, | 0:10:25 | 0:10:31 | |
Phnom Penh.
With that we end this addition of | 0:10:31 | 0:10:34 | |
Asia Business Report. -- Timothy
McDonnell. Don't forget to follow us | 0:10:34 | 0:10:40 | |
on Twitter. | 0:10:40 | 0:10:42 |