23/10/2017 BBC Business Live


23/10/2017

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This is Business Live from BBC News with Jamie Robertson and Ben Bland.

:00:00.:00:09.

Full speed ahead for Shinzo Abe and Abenomics.

:00:10.:00:14.

His election win means the Japanese Prime Minister

:00:15.:00:16.

can continue his economic reform programme.

:00:17.:00:17.

Live from London, that's our top story

:00:18.:00:19.

Another $18 billion worth of stimulus has been promised

:00:20.:00:40.

to help boost Japan's flagging inflation and lift productivity.

:00:41.:00:46.

Also in the programme - Tesla could be the first foreign

:00:47.:00:49.

car company to have a manufacturing operation wholly "made in China".

:00:50.:00:52.

We'll find out more about the obstacles

:00:53.:00:53.

Not a huge amount of movement in the markets at the moment. We were

:00:54.:01:04.

following them throughout the day. Sending a message

:01:05.:01:08.

from the past to the future - the postcard is getting a digital

:01:09.:01:11.

revamp from tech company TouchNote. We'll find out why it's

:01:12.:01:13.

growing in popularity. Today we want to know -

:01:14.:01:15.

do you still send postcards? Wish you were here, that sort of

:01:16.:01:18.

thing. Who was the last person

:01:19.:01:20.

you sent one to and why? Let us know Just use

:01:21.:01:23.

the hashtag #BBCBizLive. The outlook for the world's third

:01:24.:01:31.

biggest economy will be shaped He's won another term

:01:32.:01:37.

in Sunday's elections. His second stint as Prime

:01:38.:01:43.

Minister began in 2012. And if the main stock index

:01:44.:01:49.

the Nikkei is anything to go by he's had a good influence

:01:50.:01:58.

for the economy. Much has been made of his Abenomics

:01:59.:02:00.

platform for reform. But one of the big problems

:02:01.:02:02.

is that whilst inflation has been going up, and he wants

:02:03.:02:10.

it to, it's only 0.7%. To try and boost that flagging

:02:11.:02:13.

number, Mr Abe has overseen The latest bundle is worth almost

:02:14.:02:17.

$18bn and will be spent on childcare

:02:18.:02:23.

and increasing productivity. It's being paid for by a 2%

:02:24.:02:26.

increase in sales tax. The plan to make it 10% from October

:02:27.:02:35.

2019 was a big election issue. For more we're joined

:02:36.:02:42.

by Karishma Vaswani, Shinzo Abe has been trying to boost

:02:43.:02:53.

the economy, to kick-start it for some time. How much more patience to

:02:54.:02:59.

think the bubble have and how much stronger position do you think he is

:03:00.:03:03.

now in after this election? Let me answer the second part of that

:03:04.:03:08.

question first. As a result of the figures that we are seeing out of

:03:09.:03:11.

Japan with regard to the election, he certainly seems to be winning a

:03:12.:03:16.

decisive victory. He will be in a much stronger position than he was

:03:17.:03:20.

perhaps right before he called the election with regards to the

:03:21.:03:24.

economy. This election was never about the Japanese economy but about

:03:25.:03:28.

North Korea, about constitutional reform and certainly Abenomics, his

:03:29.:03:36.

self named pillars of economic policy, the three pillars that he

:03:37.:03:38.

tried to jump-start the Japanese economy with, it has been a sort of

:03:39.:03:45.

unfinished business aspect to those policies. To some extent, the

:03:46.:03:49.

Japanese economy has done relatively well. It would be fair to say, over

:03:50.:03:54.

the past few years that he has been in office. But the structural

:03:55.:03:57.

reforms side of that Abenomics policy has yet to fully come through

:03:58.:04:01.

and have the impact that I think he wanted it to have. In that first

:04:02.:04:07.

press conference he gave a couple of hours ago, he was specific about

:04:08.:04:14.

certain measures, things like about streamlining the workforce, the

:04:15.:04:17.

ageing population and falling birth rate and those are problems that are

:04:18.:04:23.

easy to identify but hard to solve. This is the kind of stuff we have

:04:24.:04:27.

consistently heard from Shinzo Abe. It is nothing new. Japan has had an

:04:28.:04:33.

ageing problem for the last Nite in 15 years, a shrinking workforce were

:04:34.:04:39.

about just as long. There are easy, simple solutions to this, bringing

:04:40.:04:41.

more foreign talent into the country, that was part of the

:04:42.:04:46.

structural reform, adding no women into the workforce, again, another

:04:47.:04:49.

thing that Shinzo Abe has consistently talked about whilst in

:04:50.:04:53.

office, but as I was saying earlier, he has been able to push ahead with

:04:54.:04:57.

monetary policy, fiscal stimulus, he's not been able to address the

:04:58.:05:02.

key structural reforms in the Japanese economy and there are so

:05:03.:05:06.

many estimate is coming out about the Japanese economic GDP in the

:05:07.:05:09.

future that if the structural reforms are not get fixed we are

:05:10.:05:13.

likely to see growth rates dipping again to around 0% in the next

:05:14.:05:18.

couple of years. Why has he been unable to reform the economy in that

:05:19.:05:24.

way? To reform the way that people work in Japan. There are a lot of

:05:25.:05:31.

reasons for that. To put it simply, there are items of cultural baggage

:05:32.:05:34.

in Japan that make this difficult to achieve. I do not want to take away

:05:35.:05:38.

from some of the successes that Shinzo Abe has had. But looking at

:05:39.:05:42.

the examples we have been seen from corporate Japan in recent weeks,

:05:43.:05:46.

that we have been talking about on this channel for the last couple of

:05:47.:05:50.

days, issues with accounting problems, fabrication of data,

:05:51.:05:58.

looking at companies like Kobe Steel, the top-down hierarchy in

:05:59.:06:02.

companies in Japan needs to be addressed and this is a long-term

:06:03.:06:05.

problem and it will not be solved overnight. The fact that Shinzo Abe

:06:06.:06:10.

has made structural reform such a primary part of Abenomics is a

:06:11.:06:13.

credit in itself but he has got a lot of work left to do now that he

:06:14.:06:18.

has got such a strong mandate. Thank you very much indeed.

:06:19.:06:20.

Let's take a look at some of the other stories making the news.

:06:21.:06:24.

Two of Italy's richest northern regions

:06:25.:06:25.

The regional leaders claim more than 90% of voters

:06:26.:06:32.

In Lombardy, home to Italy's financial capital Milan,

:06:33.:06:37.

and the Veneto region around Venice. The referendum is non-binding.

:06:38.:06:40.

The regions together account for about 30%

:06:41.:06:42.

Britain's five biggest business lobby groups issued a joint letter

:06:43.:06:49.

to Brexit Secretary David Davis calling for an urgent Brexit

:06:50.:06:52.

transition deal to prevent job losses and

:06:53.:06:54.

The UK Government maintains the talks are "making real,

:06:55.:06:58.

China lifts a ban on imports of mould-ripened cheeses -

:06:59.:07:06.

including Camembert, Brie and Roquefort -

:07:07.:07:08.

following a meeting between European Commission

:07:09.:07:10.

An EU-China delegation said over the weekend that trade would be

:07:11.:07:16.

Let's have a look at the markets. The Australian market, the Hang Seng

:07:17.:07:33.

and the Dow are up, the other ones are down. The Japanese market up 1%

:07:34.:07:40.

but we are seeing the yen falling, which helps lots of the Japanese

:07:41.:07:45.

companies. Generally a feeling of excitement and enthusiasm behind the

:07:46.:07:50.

fact that Shinzo Abe has returned as Prime Minister of Japan. Looking at

:07:51.:07:53.

the European markets, this is how they started. Not much movement.

:07:54.:08:03.

Michelle Fleury has the details about what's ahead

:08:04.:08:05.

The recent hurricanes have had an impact on earnings for the third

:08:06.:08:15.

quarter. As the American stock market rally has its good legs?

:08:16.:08:19.

There are profit outlooks today just over the next few days. So far with

:08:20.:08:24.

the exception of the disappointing results from General Electric, the

:08:25.:08:27.

news from corporate America has been good. Looking ahead to this Monday,

:08:28.:08:31.

Halliburton is expected to report an increase in third-quarter profits.

:08:32.:08:38.

The oilfield sector has benefited from increased drilling activity in

:08:39.:08:40.

North America. But Wall Street beware. The company is likely to

:08:41.:08:45.

warn that the good times in the region are not sustainable. Hasbro

:08:46.:08:50.

has turned in third-quarter results. The toy maker said the Belkov 's

:08:51.:08:54.

profits are likely to come later in the year to coincide with the

:08:55.:08:57.

release of the latest film from the Star Wars franchise.

:08:58.:09:02.

Lawrence Gosling, editor in chief of Investment Week joins me now.

:09:03.:09:07.

Let's kick off with events in Tokyo. As Jamie mentioned, that has been a

:09:08.:09:17.

lukewarm response to this election result from the Nikkei. It is

:09:18.:09:20.

stability, and everyone knows what they're going to get from Shinzo

:09:21.:09:24.

Abe, and he has been re-elected and with a good majority so that is the

:09:25.:09:29.

sort of news people want. It allows them to build... You could say a

:09:30.:09:34.

third bite at the cherry, to get reforms and the stimulus going and

:09:35.:09:39.

inflation up. He's had two goes at it. Now it is his third. Will he

:09:40.:09:44.

make it? Will he be able to sort of breakthrough? Robert Lui not

:09:45.:09:48.

universally, because we are talking about decades of kind of Japanese --

:09:49.:09:54.

probably not universally. The session, in a sense. He's going in

:09:55.:09:59.

the right way, very steadily. Japan has an ageing population and they do

:10:00.:10:04.

not raise enough tax, hence the increase in VAT to help pay for the

:10:05.:10:12.

ageing population. What about in Europe, is Spain having an affect on

:10:13.:10:16.

the ECB? A couple of weeks ago it looked like Spain has settled down.

:10:17.:10:19.

Now it seems to be flaring up. One of the issues, talking about that

:10:20.:10:26.

whether we are in a bubble or not, professional investors are looking

:10:27.:10:30.

at the big risk that will crack the good general economic news that

:10:31.:10:34.

seems to be going on in the world. It is a very gloomy sort of boom,

:10:35.:10:39.

isn't it? We are thinking that it is all going to go horribly wrong at

:10:40.:10:45.

some point. But just had the anniversary of the 1987 crash in the

:10:46.:10:50.

UK. Younger investors, the Lever Brothers moment are still in the

:10:51.:10:54.

back of their minds. It is nine years ago. People remember how bad

:10:55.:11:03.

that was -- Lehman Brothers. It is one of the things that people point

:11:04.:11:09.

out, that a lot of of movement, the push upwards is coming from

:11:10.:11:14.

technology stocks. The Nasdaq is doing incredibly well. People are

:11:15.:11:21.

drawing parallels with the dotcom boom, with overvalued stocks.

:11:22.:11:27.

Microsoft is a 40-year-old company. It is almost like a utility company

:11:28.:11:31.

now. It was different this time. It is a dangerous expression to use,

:11:32.:11:35.

but I don't think we are moving into a bubble area around technology

:11:36.:11:42.

stocks. State gloomy, stay gloomy. Is that your phrase for life,

:11:43.:11:44.

Jamie?! Under the mattress! Giving a technological twist

:11:45.:11:54.

to an old favourite - sending postcards in

:11:55.:11:57.

the digital age. We'll find out more about an app

:11:58.:11:59.

that let's you do just that. You're with Business

:12:00.:12:02.

Live from BBC News. Consumer confidence has rallied

:12:03.:12:12.

in the third quarter of 2017 from professional

:12:13.:12:15.

services firm Deloitte. It's the first quarterly rise

:12:16.:12:20.

in consumer confidence Ben Perkins is head of consumer

:12:21.:12:22.

research at Deloitte. In some ways it is slightly

:12:23.:12:37.

surprising given that we are seeing prices increasing faster than wages

:12:38.:12:40.

within some cases people having to borrow to pay for the basics and yet

:12:41.:12:44.

consumer confidence reportedly doing better. Yes, it is. In terms of the

:12:45.:12:54.

drivers behind that it is confidence around two things. One is the

:12:55.:12:58.

security of employment. We know that we have record low unemployment at

:12:59.:13:04.

the moment so consumers are not feeling much concern around that

:13:05.:13:08.

and, as you mentioned, consumers continue to have access to plentiful

:13:09.:13:16.

and relatively cheap credit. It is a year now and which consumer

:13:17.:13:20.

confidence in this survey has been suppressed. Why is it unable to get

:13:21.:13:26.

going because, for instance, we have got full employment. You highlighted

:13:27.:13:29.

some of the major points at the start. One, the squeeze on

:13:30.:13:37.

disposable income so in the short-term, consumer confidence is

:13:38.:13:42.

quarter on quarter, but we look at disposable income and, year-on-year,

:13:43.:13:45.

disposable income is down nine points. So there is a considerable

:13:46.:13:52.

squeeze on consumers' incomes and we expect that to continue. Consumer

:13:53.:13:59.

spending has not been terribly strong but it hasn't collapsed.

:14:00.:14:05.

Given the lack of confidence, it suggests it might do. It feels like

:14:06.:14:08.

we're waiting for the trigger point. If you look at the graph of

:14:09.:14:14.

unsecured borrowing, it has risen dramatically over the past two

:14:15.:14:19.

years. Consumers have been dipping into their savings as we can see

:14:20.:14:22.

from the decline in the savings ratio. We're waiting for that

:14:23.:14:29.

trigger point which sort of force this gradual slowdown in demand,

:14:30.:14:35.

into something a bit sharper. Ben Perkins from Deloitte, thank you

:14:36.:14:41.

very much. More throughout the day on the website, the BBC Business

:14:42.:14:44.

Live page. Japan's Prime Minister Shinzo Abe

:14:45.:14:57.

wins another term in office - which is being seen as a vote

:14:58.:15:01.

of confidence for his A quick look at how

:15:02.:15:04.

markets are faring. Pathy and getting everybody behind

:15:05.:15:09.

your course of action is very important, if you get the support,

:15:10.:15:12.

you will have a group of very motivated people, who will always

:15:13.:15:14.

make much better decisions than ever you can.

:15:15.:15:15.

The European markets have just opened. They have decided to head

:15:16.:15:17.

down now. Not a huge amount. Nothing to panic

:15:18.:15:20.

about. I am sure we have time do that later.

:15:21.:15:22.

That is the latest doom and gloom update from Jamie.

:15:23.:15:25.

Now, let's get a new twist on an old - but increasingly

:15:26.:15:28.

In the last 20 years, the number of people sending

:15:29.:15:32.

The postcard boom began around 1900 after printing methods

:15:33.:15:36.

improved and postal charges became more affordable.

:15:37.:15:37.

And the rise of technology has meant sending photos quickly and easily

:15:38.:15:40.

to friends and family from nearly everywhere around the world.

:15:41.:15:44.

But an app that is bridging the gap is TouchNote -

:15:45.:15:46.

which sends digital postcards using the sender's own photos.

:15:47.:15:48.

So far, ten million have been sent since the app went live in 2008.

:15:49.:15:58.

Oded Ran is the chief executive of TouchNote.

:15:59.:16:04.

How much does it cost? I can get a postcard in a shop for 50 experience

:16:05.:16:13.

send it for another pound, so that is about $50 experience send it for

:16:14.:16:16.

another pound, so that is about a dollar, is.30. If you send a single

:16:17.:16:19.

karkt it will cost you 2.99. If you send lots it will go down to 1.50,

:16:20.:16:24.

the nice thing about it is you don't need to go and select a card, buy

:16:25.:16:29.

stamp, wait in the Post Office, you can do it all from the comfort of

:16:30.:16:33.

your home. You take your own picture, right? Correct. Put it in

:16:34.:16:38.

the app and what? This is a card someone sends on holiday, and you

:16:39.:16:42.

literally, you upload a photo. We do the rest. Part of the reason people

:16:43.:16:48.

haven't been sending cards for the last few year, is really because it

:16:49.:16:52.

has been much more complicated than to do it on line. We make it easy to

:16:53.:16:59.

send something meaningful, tangible as it is to send it digitally. It is

:17:00.:17:05.

all typewritten. I don't think I want to send one. You can send hand

:17:06.:17:11.

writing. My own? You can. No-one could read it then, Jamie. You are

:17:12.:17:16.

right there. One of the things people love to customise if you see

:17:17.:17:20.

here, we put a stamp with our logo on it. People can customise the

:17:21.:17:24.

stamp itself, so if you dreamed about having your face replaced, the

:17:25.:17:28.

face of the Queen in the stamp you can send a postcard with TouchNote

:17:29.:17:32.

and it will be sent with your face or the face of your child on the

:17:33.:17:36.

postcard when it is sent in the post. Other companies do this as

:17:37.:17:40.

well, what is it that yours does, that makes you stand out from what

:17:41.:17:43.

is a very competitive market? The market is very large, we are talking

:17:44.:17:49.

about 20 billion dollar market or ?15 billion, the vast majority are

:17:50.:17:53.

generated in the high street, in retail shops. Only a small

:17:54.:17:57.

proportion 10% is online. Out of which mobile is very small. So this

:17:58.:18:01.

is a very large market. To give you a history, TouchNote was the first

:18:02.:18:05.

app of its kind, in 2008, to do what we do. We have grown substantially.

:18:06.:18:11.

Last year our revenued grossed 57 million. We sent our 10 millionth

:18:12.:18:16.

card last wreak. What people love about it is how easy it is do and

:18:17.:18:21.

you don't need to even on the computer spend hours creating the

:18:22.:18:24.

card or another product to send. Are you making a profit yet? We have

:18:25.:18:27.

been profitable last year. When did you start? We started in 2008. 2016

:18:28.:18:35.

was a year where we were profitable, which is hard for any tech company,

:18:36.:18:43.

we are happy to be in, this year we are doubling down on our expansion.

:18:44.:18:47.

How do you expand, now you are making money, what you going to do,

:18:48.:18:52.

have long holidays and send post cards? Good one. There are two

:18:53.:18:56.

billion people in the world right now, with smartphones and we all

:18:57.:19:00.

carry these amazing phone, they have cameras and we take thousands of

:19:01.:19:05.

photos every month. These photos, we help people turn them into the best

:19:06.:19:09.

products out there. We are the beginning of the journey. Behind my

:19:10.:19:14.

comment, how are you going to expand, what are you spending your

:19:15.:19:18.

Monday on to expand? You have done the hard work of designing the app,

:19:19.:19:22.

what do you do now? It is never ending so we have increasing the

:19:23.:19:26.

team in the UK, we doubled the size of the team last year, in the UK,

:19:27.:19:31.

and we spent a lot of time recruiting the best people. We are

:19:32.:19:36.

doubling the marketing, this year we launched a successful marketing

:19:37.:19:42.

campaign in the just as we enter the US market. I am interested, what are

:19:43.:19:47.

your margins? We have been profitable a year, a, we launch

:19:48.:19:51.

additional products. Your margin, what kind of margins do you have?

:19:52.:19:57.

The profit margin last year we broke profit, just above the operating

:19:58.:20:00.

cost, we are focussing this year on doing whatever it takes to grow the

:20:01.:20:04.

market, to be more relevant. I mean, just further for the benefit of the

:20:05.:20:09.

viewers beaming up at us from the table, an example of some of the

:20:10.:20:14.

other stuff they do. It is canvas, they have very kindly printed off

:20:15.:20:18.

the presenter, unfortunately Sally and Ben aren't here. If we pop that

:20:19.:20:22.

there, you know, it is like they are with us, almost. They are on

:20:23.:20:27.

holiday. I here that Ben is in Dubai, I am sure he is watching us,

:20:28.:20:32.

I am sure he is sending a holiday postcard. We are asking today,

:20:33.:20:38.

whether you still send post cards, we had lots of tweets. Ian says no,

:20:39.:20:44.

I put photos on Facebook, Ryan says I haven't gone anywhere worthy to

:20:45.:20:48.

send one but sure I would. David said the last one I sent were in

:20:49.:20:53.

Tokyo ten years ago. Another one says I use the postal service, I

:20:54.:21:00.

sent the last one to my mother. And another says I send post cards, I

:21:01.:21:05.

don't need a phone to do it for me. They are still round. You still see

:21:06.:21:10.

them sold everywhere. Indeed. We will make sure this gets to Ben and

:21:11.:21:14.

Sally and thank you for talking to us. See you soon. Thank you.

:21:15.:21:24.

He found there was one big difference between the running

:21:25.:21:26.

a business in theory in running one in practice.

:21:27.:21:29.

People matter more than he'd ever thought.

:21:30.:21:35.

It's all about trusting and delegating the team underneath you.

:21:36.:21:55.

The big difference between advising and doing is that you are crucially

:21:56.:22:03.

reliant on the team of people around you, understanding people's

:22:04.:22:07.

feelings, having basic human empathy and getting everybody

:22:08.:22:09.

behind your course of action is very important.

:22:10.:22:11.

If you get the support, you will have a group

:22:12.:22:13.

of very motivated people, who will always make much better

:22:14.:22:16.

Lawrence is back to look through the papers.

:22:17.:22:34.

Big question but this question about whether capitalism has had its day.

:22:35.:22:39.

Significant because it is coming from some of the UK's top business

:22:40.:22:43.

leaders. I think people will remember the Prime Minister stood up

:22:44.:22:47.

at the Tory party conference and defended free market capitalism. We

:22:48.:22:51.

have people like Caroline fair burn who runs the CBI, and a former

:22:52.:23:02.

Business Minister who chairs Santander, saying, capitalism has

:23:03.:23:08.

been going one way for too long, and perhaps, you know, employees,

:23:09.:23:12.

everybody else has been missed out the equation over the drive to

:23:13.:23:14.

increase profits and look after shareholders. One of the things

:23:15.:23:18.

about capitalism and free markets is if you take it to extreme or let it

:23:19.:23:24.

go unbridled the obvious thing do is you end up cheating, don't you,

:23:25.:23:29.

because, if the ultimate competitive market is when you do everything you

:23:30.:23:33.

can to get ahead and so you have to cheat. Isn't that what happens? For

:23:34.:23:38.

some, I would argue it is like the party where there be somebody who

:23:39.:23:41.

drinks a bit too much if the alcohol is free. Not even does that and it

:23:42.:23:46.

is significant some of the big businesses and some are

:23:47.:23:48.

representative of the high street banks who have not covered

:23:49.:23:51.

themselves in Gloucestershire ray in the last decade, not necessarily the

:23:52.:23:55.

case with Santander, I might add. It's a question of where is the

:23:56.:23:59.

balance, capitalism can be good if everybody is included in the

:24:00.:24:03.

equation. These people are all saying actually there is big parts

:24:04.:24:05.

of society who have been missed out. There is a need for a sort of, they

:24:06.:24:10.

call it a reboot, so look at what... Regulation. It is partly regulation

:24:11.:24:16.

it is about ethics, people running companies, what are they trying to

:24:17.:24:19.

do? Are they trying to get themselves rich or are they trying

:24:20.:24:22.

to make a reasonable amount of money and look after their colleague, the

:24:23.:24:25.

shareholders, and the wired society. I think that is what the debate is

:24:26.:24:31.

about. Move on to the this story in which paper? The New York Times.

:24:32.:24:38.

Tesla potentially becoming the first foreign car company to have a wholly

:24:39.:24:42.

owned manufacturing operation in China. It will test that

:24:43.:24:47.

relationship between foreign companies and Chinese companies.

:24:48.:24:50.

There Trump goes to China next month so this is a test. China is the

:24:51.:24:55.

largest conup soar and producers of electric cars, so you can see who

:24:56.:24:58.

why Tesla wants to get in there. There is a massive tariff of 25% to

:24:59.:25:05.

export cars into China. China. New York Times says it is close to

:25:06.:25:10.

setting up a base in shack hire, and becoming the sort of -- Shanghai and

:25:11.:25:14.

becoming the first foreign car company to have its own subsidiary.

:25:15.:25:18.

That would be hugely important to Tesla and the broader growth of the

:25:19.:25:22.

Chinese market. Quickly on craft beer, boom pushes a number of Brewer

:25:23.:25:27.

over 2,000, what is interesting is that 27 pubs close every week. Yes.

:25:28.:25:34.

Interesting contradiction. Those who have complained Gordon Brown did

:25:35.:25:38.

nothing when he was Chancellor can thank him for this.

:25:39.:25:45.

Beer is good but they are not drinking it in pubs any more. We are

:25:46.:25:49.

hearing the music which is the bell for last orders or the equivalent.

:25:50.:25:53.

Good to see you, good to see you too, we will be back soon. Have a

:25:54.:25:55.

good day. Bye.

:25:56.:25:56.

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