:00:08. > :00:18.This is business live from BBC News. BW veers further off course,
:00:19. > :00:22.the German car-maker admits another 800,000 Kashi inconsistencies, this
:00:23. > :00:26.time relating to carbon dioxide emissions with petrol engines. That
:00:27. > :00:46.is our top story on Wednesday the 4th of November. From diesel to
:00:47. > :00:50.petrol as the VW scandal spreads, so does the costs. A breach of carbon
:00:51. > :00:56.dioxide regulations could hit the car giant to the tune of $2 billion,
:00:57. > :01:01.we will have the very latest, also in the programme, another scandal,
:01:02. > :01:07.Takata will be paying $17 million over its failure to disclose in
:01:08. > :01:12.summation over exploding airbags and hundreds of injuries around the
:01:13. > :01:17.world. And in the markets, there is a mixed picture emerging, we will
:01:18. > :01:22.discuss the winners and losers. And how do you run a business amid
:01:23. > :01:30.riots, protests, economic collapse and volatile politics, we will speak
:01:31. > :01:35.to a man, whose job, is to keep businesses on track despite that.
:01:36. > :01:43.And as the VW crisis deepens, we want to know would you ever buy a
:01:44. > :01:53.false bargain again? Is the brand is damaged beyond repair. Vaults
:01:54. > :01:59.a very warm welcome to the programme, another day, another
:02:00. > :02:04.twist in the Volkswagen emissions gamble, the German car giant has
:02:05. > :02:08.discovered what it calls inconsistencies in 800,000 of its
:02:09. > :02:13.cars in Europe which are in breach of carbon dioxide regulations, this
:02:14. > :02:19.time it is both diesel and petrol cars that are involved, that the
:02:20. > :02:25.company has yet to give a breakdown. VW is saying that it is looking at a
:02:26. > :02:31.$2.2 billion bill to fix this problem at BMW, Audi, bolts bargain,
:02:32. > :02:37.and others. That is largely because it is more costly than doing a
:02:38. > :02:39.software update, which is the case with the so-called emissions
:02:40. > :02:43.cheating software. This has to do with the way that the fuel is
:02:44. > :02:48.consumed by the car, which means that the cars are not as
:02:49. > :02:52.fuel-efficient as they claim to be. Joining us now is our business
:02:53. > :02:58.editor, they call them irregularities but it gets worse and
:02:59. > :03:04.worse for VW? It does, Sally's point is correct, this is a bad fuel
:03:05. > :03:08.efficiency, the claims that the cars make to them and inns of customers
:03:09. > :03:14.about what Miles per gallon this car does, it also said last night, that
:03:15. > :03:20.this could affect a far wider range of car types. Not just the two litre
:03:21. > :03:28.diesel engines but the 1.4 litre engines, diesel and possibly also
:03:29. > :03:39.petrol. That opens up a whole new category of engine for VW. They have
:03:40. > :03:42.also spoken about the issue of how, petrol, and carbon dioxide emissions
:03:43. > :03:47.could affect the way that those cars operate and the fact that it will be
:03:48. > :03:53.a lot more costly to fix these cars. ?1.4 billion is set aside for this,
:03:54. > :03:58.it is far higher per car to fix this car. I think it does stretch the
:03:59. > :04:05.credibility of the notion that this was down to a Hugh Rogue engineers.
:04:06. > :04:12.This has moved on from the issue of nitrogen, monoxide, pollution
:04:13. > :04:16.levels, into the whole way that carbon dioxide and fuel efficiency
:04:17. > :04:23.issues, happened. Then that means that it could be more systemic
:04:24. > :04:26.within VW. As you said, VW putting a figure on what they think it will
:04:27. > :04:33.cost, we have seen in previous scandals, that cost just grows and
:04:34. > :04:39.grows, this is very much an initial estimate? If you remember back to BP
:04:40. > :04:44.when the crisis happened, that he initially was put at a few billions
:04:45. > :04:49.of dollars, in terms of the cost of that crisis, it ended up being $50
:04:50. > :04:54.billion. Nobody knows where this problem will go for VW, but this
:04:55. > :04:59.notion that it is starting at $5 billion and will stay at that number
:05:00. > :05:04.is difficult to believe, some people have put the estimate as high as $60
:05:05. > :05:11.billion. Whether it will be that high, nobody yet knows. 400,000 cars
:05:12. > :05:15.it started with in America, it then became the 11 million cars worldwide
:05:16. > :05:20.and now a further 800,000 cars, each announcement says that the problem
:05:21. > :05:24.is not getting better, it is getting worse. White briefly, the thing that
:05:25. > :05:29.we cannot put a value on, is the cost to the damage of the reputation
:05:30. > :05:35.of the brand, and to the company, it is difficult to see how they can
:05:36. > :05:40.rebuild trust? It is, the new chief executive has said that he wants
:05:41. > :05:45.absolute honesty and transparency now, but the more honesty and
:05:46. > :05:49.transparency they have, the bigger the damage to their brand. VW so
:05:50. > :05:55.far, there does not seem to have been an effect on the sales, it is a
:05:56. > :05:59.very strong brand, it is going from a high base but every bit of bad
:06:00. > :06:04.news undermines trust. There has also been a broader issue, how many
:06:05. > :06:11.other manufacturers have been looking at CO2 emissions issues, and
:06:12. > :06:18.trying to make sure that their cars look a lot better in the laboratory
:06:19. > :06:23.than on the road. Thank you. Let us look at another car company that is
:06:24. > :06:28.in dire straits, it is actually a car parts provider, Japanese
:06:29. > :06:35.company, it is displaying $70 million over its failure to talk
:06:36. > :06:41.about exploding airbags. It could face another fine of a if more data
:06:42. > :06:45.is found, 20 million of the airbags have been recalled since 2008 and
:06:46. > :06:50.have been linked with AIDS deaths and hundreds of injuries throughout
:06:51. > :06:58.the world. And the electric car maker Tesla, have jumped 75%, after
:06:59. > :07:01.reporting better than figures. 11,600 cars in the second quarter as
:07:02. > :07:15.it rolled out the model X SUV, the loss was $230 million. The biggest
:07:16. > :07:18.loss in ten quarters. And the battle by some San Francisco residents
:07:19. > :07:24.fighting the move to reduce the number of days that they can rent
:07:25. > :07:27.out their homes using Head B Votes are in, they have defeated the
:07:28. > :07:32.controversial bill but it was very close, 55% voted against the rules,
:07:33. > :07:40.campaigners expected the figure to be much higher. Let us take you to
:07:41. > :07:48.the business live page. The story we have just mentioned, an update on
:07:49. > :07:57.that air B victory, proposal to ban the site, being defeated --
:07:58. > :08:03.AirB Check out the business live page, you will notice that it is
:08:04. > :08:06.dominated by news from Marks Spencer, one of the biggest
:08:07. > :08:11.retailers in the UK, expansion around the world, but it is a
:08:12. > :08:16.familiar story, sales of food rising slightly blocked clothing sales down
:08:17. > :08:19.once again. It is expanding its food offering, but womenswear remains
:08:20. > :08:26.particularly one of the biggest issues for the firm. Now onto a big
:08:27. > :08:29.success at least a day for the Japanese government because shares
:08:30. > :08:35.of Japan Post jumped nearly 26% on the trading debut, after the company
:08:36. > :08:40.and the banking insurance unit, raised 1.4 yen trillion in dollars,
:08:41. > :08:47.about $12 billion in the world's largest initial public offering this
:08:48. > :08:53.year. We have got the details. A success story as Sally was saying?
:08:54. > :08:58.Indeed, in fact, shares in the banking unit were hired by as much
:08:59. > :09:02.as 40% at one point today, so it has definitely been a very successful
:09:03. > :09:06.trading debut, we will monitor if this kind of hype is sustainable but
:09:07. > :09:11.not only was it the world's biggest share sale, it was also the biggest
:09:12. > :09:17.asset sale by the Japanese government in three decades. It has
:09:18. > :09:22.taken more than ten years since the former Prime Minister decided to
:09:23. > :09:26.privatise Japan Post. It was a very controversial move, partly because
:09:27. > :09:30.it is a very wealthy institution that has been used by a lot of
:09:31. > :09:35.politicians as a piggy bank to fund their projects which resulted in
:09:36. > :09:40.Japan's huge debt, it is controversial but it is finally
:09:41. > :09:49.going ahead. Thank you so much. Let us look at the numbers now, what has
:09:50. > :09:55.been going on overnight. Japan up by 1.3%, the big winner is Japan Post.
:09:56. > :10:03.Takata shares were hit very hard, also Hong Kong up, 2.5%. And there
:10:04. > :10:08.has been a bit of confusion about what the People's Bank of China had
:10:09. > :10:12.to say on some of its comedic Asians about future stimulus for the
:10:13. > :10:15.Chinese economy, actually it was a very old announcements, but it was
:10:16. > :10:21.felt through the market because it was thought to be a new announcement
:10:22. > :10:26.but it wasn't. Your tix pectic to trade much higher. As you can see,
:10:27. > :10:32.it is quite a mixed day -- Europe expected to trade much higher. VW
:10:33. > :10:37.shares will be trading today in a very volatile manner, because of the
:10:38. > :10:43.latest about VW. We are now in the US, looking ahead to the day on Wall
:10:44. > :10:47.Street. Usually when federal chairman Janet Yellen, speaks,
:10:48. > :10:50.people are looking out, but on Wednesday she is likely to grab
:10:51. > :10:57.attention for another reason. While testifying at the house financial
:10:58. > :11:01.affairs committee, almost sensibly to come up, is that financial
:11:02. > :11:07.information was leaked from the Fed ahead sensitive moments. Janet
:11:08. > :11:14.Yellen has handed over documents to the panel of lawmakers. And despite
:11:15. > :11:19.increased spending on its Mobot haps, and data is expected to show
:11:20. > :11:25.that the trade deficit is expected to narrow sharply. That was New
:11:26. > :11:30.York. We have now got somebody who is an investment direct at Aberdeen
:11:31. > :11:34.asset management. Staying with that American theme, we have got a lot of
:11:35. > :11:39.jobs data on Friday, manufacturing and the services update. The Fed did
:11:40. > :11:43.say that all of their decisions would be data
:11:44. > :11:50.Dependent. We are never short of data in the United States, Janet
:11:51. > :11:55.Yellen in her last Conference said that they would watch carefully the
:11:56. > :11:58.data coming up in the next few weeks. Thinking about their
:11:59. > :12:02.deliberations on the rise in US interest rates, the price of money
:12:03. > :12:07.in the world's largest economy is extremely important, when that price
:12:08. > :12:12.rises it is also important. Expectations have been for the
:12:13. > :12:15.interest rates to increase next year but recent utterances from Janet
:12:16. > :12:19.year and his suggests that it might be into December rather than next
:12:20. > :12:26.year. Just briefly, European markets, what is on the minds of
:12:27. > :12:30.investors? Probably like the US, running through the Q3 results,
:12:31. > :12:33.investors are microscopically focused on how companies are doing,
:12:34. > :12:37.they are trying to learn on what is going on throughout the world and
:12:38. > :12:41.whether companies are making any money on the possible use like the
:12:42. > :12:47.difficult market conditions, over the last quarter 's. I know you'll
:12:48. > :12:52.be back to talk us through some of the business pages later. Still to
:12:53. > :12:55.come, how to manage a business in turbulent times, economic
:12:56. > :13:01.stability, feigning economies, wild weather and volatile politics, how
:13:02. > :13:04.do firms plan? We will speak to a man who is charged doing just that,
:13:05. > :13:14.in a few minutes on business live with BBC News. First let us get some
:13:15. > :13:21.more details on Marks Spencer, sales down in the six months to
:13:22. > :13:25.September, like-for-like sales fell by 0.4%, general merchandise
:13:26. > :13:31.includes coving, they were down 1.2% but food sales rose by 0.2%. The
:13:32. > :13:40.underlying profit figure is up by 6%, 280 formerly in pounds. Let us
:13:41. > :13:45.now speak to our business unit. Just reading between the lines, how good
:13:46. > :13:48.or bad is this? As ever with Marks and Spencer it is something of a
:13:49. > :13:54.mixed picture, yes underlying profits are up, profit margins are
:13:55. > :14:01.up, but those key women where sales are down. Mark Bolland, the Chief
:14:02. > :14:06.Executive, I spoke to him this morning, you said this is good news
:14:07. > :14:11.for Marks Spencer. Yes, they might be selling fewer things but every
:14:12. > :14:14.item they sold they sell at a greater profit and it must be said
:14:15. > :14:19.that investors like what they have seen. You can see from the share
:14:20. > :14:25.price, up 19p this morning, that is something like 3.5%. It has been
:14:26. > :14:31.going up today after these results, they have had quite a positive share
:14:32. > :14:35.price run over the whole year, that is because Marks Spencer have made
:14:36. > :14:41.a virtue out of necessity. Whatever they do, they cannot get those women
:14:42. > :14:44.where sales up, but what they can do is make sure that the profit margin
:14:45. > :14:49.is higher which increases the profit margins for the company and the cash
:14:50. > :14:52.flow, and that means that Mark Bolland can say to investors that we
:14:53. > :14:58.are doing a very good job in a tough market. Final thought, food sales
:14:59. > :15:03.are up in a tough market, investors are saying so far that they like
:15:04. > :15:12.what M are saying this morning. Thank you. Staying with that theme,
:15:13. > :15:16.just one story to bring to you, Burberry, the fashion retailer is to
:15:17. > :15:23.open a further factory in Yorkshire, the factory will be opened near
:15:24. > :15:28.Leeds, completed, by 2020. The company already has two factories in
:15:29. > :15:33.York, and it employs about 800 staff currently, Burberry is one of the
:15:34. > :15:39.big UK success stories around the world. A real turnaround for the
:15:40. > :15:51.company of late. Yorkshire, a vote of confidence. For the county. This
:15:52. > :15:55.is business live, our top stories, the Volkswagen emission scandal has
:15:56. > :16:00.taken another dramatic turn, they have admitted irregularities in a
:16:01. > :16:04.number of carbon dioxide used by 800,000 cars in Europe. Yes that was
:16:05. > :16:12.found while the previous problems were involved with diesel, the
:16:13. > :16:18.problem seemed to get worse. Is the brand VW damaged beyond repair? Lots
:16:19. > :16:21.of comments for you? Looking at the news you would be forgiven for
:16:22. > :16:26.thinking that the world is a much more date was placed than it was say
:16:27. > :16:30.ten years ago. Chances are that you are poultry right, according to the
:16:31. > :16:36.World Economic Forum, geopolitical tensions still dominate the risks of
:16:37. > :16:42.tensions in 2015. They list the four other most likely global risks as
:16:43. > :16:46.extreme weather events, failure of national governance, state
:16:47. > :16:52.collapse, and then, unemployment, or underemployment. So what do you do
:16:53. > :16:56.if you are a multinational company or a business thinking about
:16:57. > :17:00.expanding global footprint? How do you manage those risks? The man who
:17:01. > :17:05.can answer that, is the chief executive of the risk advisory
:17:06. > :17:08.group, nice to see you. We outline some of the issues that businesses
:17:09. > :17:13.face when they look to expand throughout the world, it is a bit
:17:14. > :17:21.mind-boggling, you start looking at the global market, where do you even
:17:22. > :17:24.start? Clearly opening a factory Yorkshire is very different to
:17:25. > :17:28.buying in Kazakhstan, but most business decisions need to be based
:17:29. > :17:35.on the most credible evidence that you can take. Depending on the type
:17:36. > :17:40.of business, the type of facility, on whether you are an extractive
:17:41. > :17:44.industry or a telecoms industry, the amount of resorts, you are going to
:17:45. > :17:48.have two transfer it can be very different. You have two match the
:17:49. > :17:52.environment against the resource requirement, look at the funding
:17:53. > :17:57.around those issues and make some pretty clear determination. We were
:17:58. > :18:01.just looking at some of the key elements in terms of risk, when I
:18:02. > :18:05.was talking to you earlier, about what is most on the minds of those
:18:06. > :18:08.who are running businesses when they are thinking about business, they
:18:09. > :18:14.were saying that regulation is one of the big issues, and your
:18:15. > :18:19.background as a barrister and then working for various government
:18:20. > :18:24.agencies, gives you that insight into how that all operate? Clearly
:18:25. > :18:28.there is a tension because all businesses now seeking to look for
:18:29. > :18:32.new market opportunities, they have got to go to difficult and dangerous
:18:33. > :18:37.environments to Strat all new markets to sell, Indonesia with a
:18:38. > :18:43.population of 250 million. You want to be there. But at the same time
:18:44. > :18:48.the government has imposed more and more regulations, more policy and
:18:49. > :18:52.procedure around bribery and corruption and money-laundering, it
:18:53. > :18:55.has transferred the responsibility to corporate is to insure that those
:18:56. > :19:02.policy decisions are complied with so there is an internal conflict, so
:19:03. > :19:06.that you can drive new business growth, complying with the
:19:07. > :19:09.regulatory risks around that. We talk about planning for risk or
:19:10. > :19:14.planning strategies for expansion overseas as if it is something that
:19:15. > :19:20.we can quantify, I would imagine that there are a lot of events that
:19:21. > :19:23.nobody can see. Even things like Ukraine and Russia, nobody
:19:24. > :19:30.necessarily saw that coming, how do you prepare? It is difficult because
:19:31. > :19:35.the terminology is Black Swan, how do you prepare for it? It could be
:19:36. > :19:40.the Russia-the Ukraine situation, how do you actually plan for that?
:19:41. > :19:43.If you look at those circumstances, essentially companies get it wrong.
:19:44. > :19:52.I would advocate, that Volkswagen have got it wrong by
:19:53. > :19:56.going very quickly to the newspapers as saying that it is a small issue.
:19:57. > :20:01.There is a lack of thought and planning process as to how you
:20:02. > :20:04.respond to that, probably because a lot of CEOs are not interested
:20:05. > :20:10.improper is, they are interested in how they grow their business. In MBA
:20:11. > :20:14.courses they spend a lot of time about -- they don't spend a lot of
:20:15. > :20:19.time about what happens if there is a very bad happened. On other things
:20:20. > :20:23.on the mind of global business leaders is Iran opening up to future
:20:24. > :20:28.business, it is something that many of your clients are talking to you?
:20:29. > :20:33.Iran presents a fascinating opportunity, they have got 140
:20:34. > :20:38.billion in cash that will become free, they have got a very educated
:20:39. > :20:45.population, they have got a young population that is consumer
:20:46. > :20:48.oriented, they have got a very old infrastructure, they have got huge
:20:49. > :20:53.natural resources, companies are queueing up literally, there is
:20:54. > :20:55.clearly a difference between European businesses and US
:20:56. > :21:03.businesses in terms of different sanctions which is creating tension.
:21:04. > :21:08.So what are the risks, if I was to try and launch my business in Iran?
:21:09. > :21:12.One of the problems in Irani is that it has been essentially a police
:21:13. > :21:15.state for a number of years, so the access to information to make
:21:16. > :21:20.informed business decisions is just not there. Working through the
:21:21. > :21:24.intersection between politics, religion, business environment,
:21:25. > :21:29.working through who controls assets, how you manage those transactions,
:21:30. > :21:35.against a background of a lack of critical data, is quite a difficult
:21:36. > :21:42.question. But it is a market and people will take risk. We will watch
:21:43. > :21:44.closely, thank you, really interesting stuff. That was the
:21:45. > :21:49.Chief Executive of the risk advisory group. In a moment, we will beat
:21:50. > :21:53.taking a look through the business pages but this is a quick reminder
:21:54. > :21:58.of how you can stay in touch and keep across business stories. The
:21:59. > :22:02.business live pages how you can stay ahead with the breaking business
:22:03. > :22:07.news, we will keep you up-to-date with all of the latest business news
:22:08. > :22:10.with insight and analysis from the BBC News editor is right around the
:22:11. > :22:21.world and we want to hear from you too. Get involved on the BBC
:22:22. > :22:28.business live web page. You can find us on Twitter and Facebook. Business
:22:29. > :22:34.live, on TV and online whenever you need to know. Richard is back. There
:22:35. > :22:38.you are, to talk about some of the stories in the papers but before we
:22:39. > :22:46.do that let us mention some of your tweets. So this is James Newman who
:22:47. > :22:51.has been in touch" growing up, VW whenever a strong brand for me, this
:22:52. > :22:57.reaffirms that, why have VW when you can have a Merc or an Audi?". "Yes I
:22:58. > :23:01.would still buy VW, there are various things that can have an
:23:02. > :23:06.effect but this is just one problem for a business and they will get
:23:07. > :23:11.over it". Another one "clearly they need to dig down and find out who is
:23:12. > :23:15.responsible, or can they really just blame rogue engineers? People at the
:23:16. > :23:29.company clearly knew what was going on". Would you still buy VW? As the
:23:30. > :23:39.Chinese economy slows, consumers pick up some of the slack. Which is
:23:40. > :23:44.exactly what the government wants? Yes they have been trying to move to
:23:45. > :23:50.a consumer led economy, people have been concerned, it is to growing
:23:51. > :23:53.strongly, without a move to a consumer led economy, there are
:23:54. > :23:59.still a lot of people happy to spend the money. Particularly the
:24:00. > :24:04.youngsters and that will lead to a solid growth figure. Yes, I will try
:24:05. > :24:09.and make it bigger, we are talking about the power of the purse
:24:10. > :24:15.strings. Clearly, demand for flights is increasing, movies, Samaras. Even
:24:16. > :24:18.though the overall economy is falling slightly and it is that
:24:19. > :24:25.growth in that middle class which is so important for China. Huge
:24:26. > :24:28.burgeoning middle class? If you are focused in the Chinese economy on
:24:29. > :24:32.exports and things are properly a bit tough at the moment.
:24:33. > :24:36.Particularly if you are young and you have fewer liabilities then you
:24:37. > :24:40.have got money in your pocket. Some of these growth figures in cinema
:24:41. > :24:44.attendances and flights, would suggest that there is a desire and
:24:45. > :24:49.willingness to spend that money. This is one for you, it is about a
:24:50. > :24:56.Scottish craft beer company, brew dog, in the Financial Times. He is
:24:57. > :25:00.talking about his guide to being a business upstart? From personal
:25:01. > :25:06.experience a very good product which is always a good start for any
:25:07. > :25:10.company. Inoperative marketing, one of their efforts was to park a tank
:25:11. > :25:14.Bank of England. Which other companies would be quite interested
:25:15. > :25:20.in doing. They have been quite lucky in the sense that the craft beer has
:25:21. > :25:23.been a sweet spot, as the bigger companies have been merging and also
:25:24. > :25:32.pretty noted in the way that he is raising money for his company. --
:25:33. > :25:37.pretty and that it. His top tips, he said no networking, do not network.
:25:38. > :25:42.A lot of more staid companies might applaud that attitude. But
:25:43. > :25:47.nevertheless, he is trying, to access capital and money. In order
:25:48. > :25:55.to grow what is a very successful business. We did not mention his
:25:56. > :25:57.name, James Watt. We are up to date with the business headlines. Have a
:25:58. > :26:02.good day, goodbye.