23/10/2017 BBC Business Live


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


Full speed ahead for Shinzo Abe and Abenomics.


His election win means the Japanese Prime Minister


can continue his economic reform programme.


Live from London, that's our top story


Another $18 billion worth of stimulus has been promised


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


Also in the programme - Tesla could be the first foreign


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


We'll find out more about the obstacles


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


following them throughout the day. Sending a message


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


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


growing in popularity. Today we want to know -


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


thing. Who was the last person


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


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


biggest economy will be shaped He's won another term


in Sunday's elections. His second stint as Prime


Minister began in 2012. And if the main stock index


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


for the economy. Much has been made of his Abenomics


platform for reform. But one of the big problems


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


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


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


$18bn and will be spent on childcare


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


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


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


by Karishma Vaswani, Shinzo Abe has been trying to boost


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


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


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


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


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


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


perhaps right before he called the election with regards to the


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


North Korea, about constitutional reform and certainly Abenomics, his


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


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


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


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


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


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


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


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


certain measures, things like about streamlining the workforce, the


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


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


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


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


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


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


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


thing that Shinzo Abe has consistently talked about whilst in


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


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


key structural reforms in the Japanese economy and there are so


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


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


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


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


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


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


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


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


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


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


days, issues with accounting problems, fabrication of data,


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


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


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


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


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


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


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


Two of Italy's richest northern regions


The regional leaders claim more than 90% of voters


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


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


The regions together account for about 30%


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


to Brexit Secretary David Davis calling for an urgent Brexit


transition deal to prevent job losses and


The UK Government maintains the talks are "making real,


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


including Camembert, Brie and Roquefort -


following a meeting between European Commission


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


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


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


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


companies. Generally a feeling of excitement and enthusiasm behind the


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


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


Michelle Fleury has the details about what's ahead


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


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


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


the exception of the disappointing results from General Electric, the


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


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


The oilfield sector has benefited from increased drilling activity in


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


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


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


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


release of the latest film from the Star Wars franchise.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


drawing parallels with the dotcom boom, with overvalued stocks.


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


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


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


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


Jamie?! Under the mattress! Giving a technological twist


to an old favourite - sending postcards in


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


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


Live from BBC News. Consumer confidence has rallied


in the third quarter of 2017 from professional


services firm Deloitte. It's the first quarterly rise


in consumer confidence Ben Perkins is head of consumer


research at Deloitte. In some ways it is slightly


surprising given that we are seeing prices increasing faster than wages


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


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


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


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


the moment so consumers are not feeling much concern around that


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


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


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


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


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


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


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


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


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


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


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


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


unsecured borrowing, it has risen dramatically over the past two


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


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


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


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


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


Live page. Japan's Prime Minister Shinzo Abe


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


of confidence for his A quick look at how


markets are faring. Pathy and getting everybody behind


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


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


make much better decisions than ever you can.


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


down now. Not a huge amount. Nothing to panic


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


That is the latest doom and gloom update from Jamie.


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


In the last 20 years, the number of people sending


The postcard boom began around 1900 after printing methods


improved and postal charges became more affordable.


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


to friends and family from nearly everywhere around the world.


But an app that is bridging the gap is TouchNote -


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


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


Oded Ran is the chief executive of TouchNote.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


doubling the marketing, this year we launched a successful marketing


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


He found there was one big difference between the running


a business in theory in running one in practice.


People matter more than he'd ever thought.


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


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


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


feelings, having basic human empathy and getting everybody


behind your course of action is very important.


If you get the support, you will have a group


of very motivated people, who will always make much better


Lawrence is back to look through the papers.


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


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


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


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


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


Business Minister who chairs Santander, saying, capitalism has


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


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


increase profits and look after shareholders. One of the things


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


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


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


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


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


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


is significant some of the big businesses and some are


representative of the high street banks who have not covered


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


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


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


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


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


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


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


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


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


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


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


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


owned manufacturing operation in China. It will test that


relationship between foreign companies and Chinese companies.


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


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


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


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


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


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


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


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


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


Interesting contradiction. Those who have complained Gordon Brown did


nothing when he was Chancellor can thank him for this.


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


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


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


good day. Bye.


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