31/01/2018 BBC Business Live

This is Business Live

from BBC News, with Sally

Bundock and Ben Thompson.

Bundock and Ben Thompson.

And shakes and trade deals. --

handshakes.

The UK Prime Minister

begins her three-day visit to China.

Business is top of the agenda.

Live from London,

that's our top story

on Wednesday 31st January.

Theresa May has arrived in China

at a crucial period for the UK.

We'll be asking a leading expert

about the future relationship

between the two countries.

Also in the programme.

Just how "great" is

the American economy?

We weigh up the reaction

to President Trump's State

of the Union Address.

And January has

been the best month on record

for global financial markets.

Today, we look ahead to the Fed.

Is this the

end of consumerism?

New research confirms young people

are buying fewer things,

but choosing to live

new experiences instead.

So how is business

adapting to the change?

We meet the boss of one

entertainment company

with a bit of a difference.

So we want to know,

are you buying less stuff.

Are you spending less time

in the shops and more time

in restaurants and cinemas?

Let us know.

Just use the hashtag BBCBizLive.

Hello and welcome

to Business Live.

We hope you enjoyed this experience!

The UK Prime Minister Theresa

May has announced new education

links with China as she arrives

for a three-day visit to boost trade

and investment after Brexit.

She has claimed her visit

"will intensify the golden era

in UK-China relations".

But she also stressed

China must adhere to free

and fair trade practices.

Trade between the two

is already worth more

than $80 billion and the UK's

trade secretary Liam Fox

says that exports to China

increased by over 25%

in the last year alone.

But the talks are about

more than just trade.

The two sides will want

to ensure that investment

between the two countries is both

fair and transparent.

Chinese businesses

have been pursuing huge

international expansion plans,

with investment in the UK more

than doubling in 2017.

Matthew Rous the Chief

Executive of China-Britain

business council joins us.

Thank you for joining us. Theresa

May has already announced new

education links with China. All well

and good but should we be aiming

higher? Should there be a bigger

trade deal in place rather than just

a relatively small-scale education

link which is useful but it's not

going to help a lot of businesses?

We are aiming high, my company is

aiming high and the UK is aiming

high as well, this visit will help

build momentum towards a free trade

agreement in the medium-term. But in

the meantime, there are gains to be

made. This visit will usefully build

the momentum.

It is all about small

steps, I suppose. You have

highlighted it there and Theresa May

has made very clear it must be our

shared objective over the coming

years, suggesting this isn't about a

big announcement but about lots of

handshakes and meetings like this

and lots of gatherings to try to

improve relations on a day-to-day

basis.

Sometimes it is Big Bang but

generally speaking, China is a long

game for UK business. As an

organisation, we've been never 65

years, helping companies to make

success, to achieve success in a big

and challenging market in many ways.

But various such a thing as

Brailsford's law, fans of British

cycling will know you accrue the

incremental gains one by one and

that applies in business as well and

we want to see good things coming

out of this.

The British delegation

is about 50 or so people with

Theresa May, not the biggest but at

the same time important in terms of

who is there, we know Jaguar Land

Rover and firms like BP are there,

well and good for big firms but what

about small business?

It's actually

quite a diverse delegation. The

government has done a good job in

assembling a mix of companies large

and small from different sectors and

there are some new faces there and I

think that is welcome as it helps to

put new people in front of Chinese

audiences and to showcase everything

we do. As China gets older and

richer, the UK's offer in terms of

world beating financial services,

health care and consumer goods is

really strong.

But it's not without

controversy, though, particularly

when it comes to things like steel

exports from China, a lot of

manufacturers say it is done too

cheaply and locked them out of the

market and lots of concern about

Chinese technology involvement in

things like Hinkley Point. Will she

address those on this visit?

I think

we can be proud of the fact that

Britain is one of the world's most

open economies and we have been very

open to Chinese investment in key

sectors.

But can Theresa May have

tough talks with the Chinese without

jeopardising the investment?

It is

part of a mature conversation

between two long-standing partners.

So yes, is my answer, I would not

expect it to dominate but she will

be looking to get the point across.

We will watch and wait and see what

is announced. Thank you for joining

us.

Let's take a look

at some of the other

stories making the news.

Japan's

Fujifilm is to cut a fifth

of its global workforce -

that's around 10,000

jobs, blaming a decline

in the photocopying business.

Fujifilm owns 75% of the joint

venture, called Fuji Xerox,

which accounts for nearly half

of the Japanese company's

sales and profits.

It comes as Fuji film looks set to

take over Xerox.

Workers in Germany have

begun a series of 24-hour strikes

in a row over pay and working hours.

The powerful Ee Gay Metall union has

called on its members to down tools

for the rest of the week.

The union is demanding an 8% pay

rise and shorter working hours

for 3.9 million workers.

Samsung has reported

a record 73% jump

in its fourth quarter profit,

to $11.4 billion.

That was mainly driven

by demand for its memory

chips and display panels.

The South Korean giant's shares

surged more than 8%,

after suggesting the outlook

for the memory sector

is forecast to remain strong.

Donald Trump has given his first

State of the Union speech,

where he outlined his achievements

during his first year in office.

One hour and 20 minutes, that is how

long it was. I listened to the whole

thing!

The US President also

reiterated his stance

on international trade -

here's what he had to say.

The era of economic surrender is

totally over. From now on, we expect

trading relationships to be fair and

very importantly, reciprocal.

We will work to fix bad trade deals

and negotiate new ones and they will

be good ones but they will be fair.

We will protect American workers and

American intellectual property

through strong enforcement of our

trade rules.

Our Asia Business

Correspondent Karishma Vaswani

is in Singapore for us.

It interesting, talking about trade

but not a lot of detail.

I think it

would be fair to say there was not a

lot of detail in many aspects of the

President's speech today but the

State of the Union is all about

laying out an agenda for the next 12

months or so and President Trump

certainly did that and when it came

to trade, as you said, in the clip

you have just run for the audiences,

he's repeated some of the things we

have heard before so many times, he

wants free trade, fair trade,

reciprocal trade, some of his

favourite words when it comes to

talking about trade policies. What

we did not hear however is that he

was not as hard on China as many had

expected him to be. Ahead of the

State of the Union, there were lots

of comments, lots of expectations,

certainly from people out in the

Asian business community that

perhaps we would see some hard

policy moves on China with regard to

intellectual property, the

investigation of the US has launched

an China, or something even on steel

and aluminium tariffs, especially

after he slapped tariffs on solar

panels and washing machines last

week, which we have talked about

before. But beyond saying that he

wants trade to be fair and

reciprocal, that he will get out of

bad trade deals, no specifics so far

on what he is actually going to do

with China. Many of the Asian

businesses I have been speaking to

our breathing a sigh of relief

because for now, at least, but not

for long, but because as one member

of the Asian trade business

Association in Singapore told me

does not mean there is not a trade

war on the horizon because it was

not mentioned in the State of union.

We should that warning. So the

Twitter or teleprompter president

delivered his State of the Union

address and we will talk more about

that in a minute but let's look at

the market. Japan down by 0.8% at

the close. Some of the key losers,

like Fuji film, one of the big

stories, Hong Kong bouncing back

after slides across the board on

Wall Street the night before. We are

in the midst of the Federal Reserve

meeting. The last one presided over

by Janet Yellen as chair. We will

talk about that in a moment. January

in Europe has proved to be the

strongest month on record -- January

on record for global financial

markets but some profit-taking going

on around the world, the Footsie

down just a touch having opened, but

gains in Europe and Stirling

bouncing back today against some

guarantees. Let's look ahead to the

day on Wall Street.

Yogita Limaye has the details.

It's a big day for

corporate results here.

Technology giant Microsoft

is expected to report a strong

performance as is Facebook.

Investors will be waiting to hear

how the new tax bill will impact

earnings in the months ahead

for the two companies.

Meanwhile, profits are

expected to have risen at

American plane-maker

Boeing because more people

are choosing to travel by air.

Wall Street will be watching

for comments on the trade battle

with Canada's Bombardier,

which Boeing recently lost,

and they will also be looking

for more details of

the company's proposed tie-up

with Brazilian firm Embraer.

Telecoms company AT&T

and chip-maker Qualcomm,

will also be releasing earnings.

And we will be hearing

from the Federal

Reserve as well which will conclude

its monetary policy meeting today.

Rates are not expected to be changed

but it will be interesting to see

what the committee makes

of the slightly lower than expected

growth rate in the last

quarter of 2017.

We were just chatting about Janet

Yellen!

Joining us is Mike Amey,

Managing Director and Portfolio

Manager at PIMCO.

Good morning. Let's stay in the US

because we saw pictures of Janet

Yellen, her last Federal Reserve

meeting in charge but she's had a

pretty good run, held a steady ship.

A very good run, yeah, she's

achieved a number of things, one is

the US economy continuing to do very

well and she should take some credit

for that. She has also managed to

get interest rates away from

effectively zero and that, a couple

of years ago, was a very big deal.

It was uncertain whether they would

be able to raise rates and there

would not be problems somewhere in

the system and she has achieved that

well. She's done a good job.

And

also the massive quantitative easing

experiment, she has kind of got the

US economy off the intravenous drip

and she has done it without any

tapered tantrums that we saw

previously.

They learned from

previous experience and the

so-called template -- taper tantrum

way you got volatility was all about

market is being surprised but now

they have been making it very clear

they will be slow about it and the

rate rises, for example, it has

taken in two years to get up to 1.5%

from 0.25%, it's been steadily done

which has been the right thing as it

has turned out, so good job.

A quick

word on the state of union, we heard

Donald Trump talking about trade

earlier but he was also very keen to

point out the tax cut that he says

has handed business a big boost and

lots of infrastructure spending and

US business will like that. It looks

like the theme going forward is

infrastructure spending.

The tax cut

gave the stock market a boost at the

year's end and they are looking to

the midterms at the end of this year

so we will hear more about

infrastructure but as we know,

getting infrastructure spend done is

difficult and takes time and he's

trying to do what other countries

have done which is in gauge the

government and the private sector

and that can be a very difficult

combination, as we know. -- is

engaged the government.

We will

learn the lessons from Carillion.

Still to come...

Tapping in to the $1 trillion

experience industry.

We meet the entrepreneur

putting on virtual reality

entertainment shows.

That is what these pictures relate

to.

You're with Business

Live from BBC News.

The number of cars made

in the UK fell last year

for the first time since 2009.

Lower demand is partly to blame,

according to the Society

of Motor Manufacturers and Traders.

It's just released

the latest figures.

Chief executive Mike

Hawes joins us now.

So tell us a bit more about how

things have gone.

Over the past

year, production output from UK car

manufacturing plants fell about 3%,

primarily due to a drop in demand in

local markets, so basically cars

built in the UK for UK customers.

What we have seen is slowing growth,

declining business and consumer

confidence which has affected demand

last year, as has a lot of the

confusion in the UK around potential

diesel changes that the government

is looking to make. But both of

those factors together and it's

depressed new car registrations last

year which has a knock-on effect on

production as well.

But coming from

a pretty high level, every time we

speak to you it has done a story of

sales and new registrations going up

but at the same time, a lot of

concern about financing deals,

people able to get cars cheaply but

you end up with a flood of

second-hand cars in the market would

ultimately affects new-car sales.

Potentially but what has been very

encouraging is the residual value of

the second-hand car market has been

very strong and second-hand values

have held up which is good for the

finance packages that are available.

There has been a degree of

examination of the finance

arrangements but essentially, they

are delivering what the consumer

wants and that is enabling the

consumer to purchase a car or at

least effectively lease one third or

four years and at the conclusion of

the lease, they can flip into a new

one, had the car back or pay a bit

more to own it outright and that is

very attractive, it is just the

changing nature of the new-car

consumer.

Thank you for joining us.

OK, Andrew

OK, Mike, thanks.

boss of the company, Ellipsis

Entertainment. And polenta is in

trouble over possible insider

trading, so there will be updates

you the Business Live page. You can

find out more on the website.

You're watching Business

Live - our top story:

UK Prime Minister Theresa May has

announced new education links with

China as she begins her three-day

tour of the country. Of course she

is looking to boost trade and

investment after Brexit. She has

claimed her visit will intensify the

golden era in UK and China

relations, but she has also stressed

China must agree to free and fair

trade practices. Claims of steel

exports being dumped earlier.

We are in the grip of

a spending revolution,

with the rise of the so-called

"experience economy."

That's where people are spending

more cash on doing things -

like going to concerts -

than buying objects like

clothes or gadgets.

It's being fuelled by the changing

tastes of millennials.

Research in the US suggests

78% of young people

would rather buy access to an event

or experience, rather

than buying objects.

The same study says that more

than half of millennials

are spending more on events and live

experiences than ever before.

And that's good for business,

and our next guest.

His company - Ellipsis Entertainment

- is planning to stage innovative

theatre events using virtual reality

and augmented reality.

He's already managed to raise around

$4.5 million in investment to stage

the first event in London in March.

Andrew McGuiness is the boss

of Ellipsis Entertainment

and joins me now.

This event in March was your big

idea. Can you just explain how it

will work?

We are bringing together

technology, virtual reality,

augmented reality, with theatre, so

we have large-scale sets with

actors, 20,000 square feet, so very

large spaces, together with the

physical aspect, and it is bringing

together of those things, the kind

of layering if you like of those

different experiences that makes

ours unique.

Who is the customer for

this? Are we talking about those

millennial is we just mentioned

there?

They will be a big part of

it, you know. They are very keen to

have new and experiences. They want

to have both those expenses with

their friends but also to share them

with the wider community to show

they have had them. But the truth is

this data is focused on millennials

but many of us... I want to buy less

stuff, I want to do things I

remember, and really what we're

trying to do is create really

memorable experiences for people. It

might just explain how this works.

As you were saying to me earlier in

the green room -- so can you just

explain how this works?

During a

mass of warehouse with real actors

and you go on a bit of a journey, a

bit of story -- you are in a massive

warehouse. Some of it is physical?

Is that right?

Yes, you go in groups

of six, how you travel through it,

and it is a big physical experience

and some of it is fairly invasive,

like virtual reality, incredible in

terms of what it can deliver, but

then we are combining that with

actors and sets to make it much

richer, but we are also using other

technologies, so other things people

may not have experienced at all.

It

is £50 for a ticket?

Yes, for 90

minutes, to two hours, the whole

experience. The equivalent of going

to a West End theatre but for a new

generation of people looking for a

different experience.

Talking about

the cost, we constantly hear young

people have less money in their

pocket because it is harder to get

on the housing ladder and everything

is costing more, European student

loans, although what sort of thing.

Does that worry you? As a business

that target young people, that they

have less money? -- you are paying

student loans.

Of course we would

love people to have more money in

their pocket but what we have on

from research is they prioritise

these experiences. They are willing

to spend it, partly because they

can't have other things in their

lives, so they may not have a home,

a car, some of the things I may have

aspired to have in my 20s but it is

a choice they are having they want

to spend the money on experiences

rather than that staff.

Presumably

being located in London where you

are launching this, I know you have

global ambitions, New York,

Singapore etc, but you are also

banking on the tourism market,

Irish? It is a catchall in a city

like London? -- you are banking on

the tourism market, I assume?

Yes,

the website gives you an idea of

what the experience is like.

Did you

just throw that one in?

LAUGHTER

It is my job. We will get tourists,

but this is for the people of

London, and we want to do something

that particularly the young people

of London love and deliver them some

fantastic memories.

Andrew, thank

you. Good luck with it and let us

know how it goes. Andrew McGuiness,

director of Ellipsis Entertainment.

Lots of you getting in touch with us

about this. We spoke about this at

the start of the programme, spending

less money on stuff and moronic

abuses. Here is one. The only stuff

I need is a stack of photos from the

awesome places I have been.

Experiences overstuffed any day --

spending less money on stuff and

more on experiences. Lots of you are

getting in touch. Here's another

reason why.

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Business Live, on TV and online -

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when you need to know.

Mike is back, as promised. And they

said not a day goes by when we don't

talk about crypto currencies, and we

don't want to break that rule so we

are talking about it again. Facebook

is banning ads for Bitcoin and other

crypto currencies.

Interesting, yes,

Facebook trying to respond to some

of the alleged misinformation going

through Facebook and of course the

volatility and uncertainty over

crypto currencies so I think they

catch two with one decision.

And

also because of the anonymous

nature, crypto currencies can be

used for money-laundering and that

kind of activity?

Yes, that's right.

The challenge with crypto currencies

if you are in authority is to know

where they are going, and that is

one thing they are aware of.

I guess

it is no big deal for Facebook

because the amount of advertising on

their platform, Facebook and Google

between them get over half of global

ads on their platform.

I think that

is right and a lot of crypto

currencies have questions in other

ways because of the volatility of

the prices, so probably a relatively

cheap one for them. It lets talk

about this story in the Telegraph.

Cards.

This in terms of the diesel

emissions issue. German

manufacturers with blood on their

hands...

Yes, one of the chief

scientific advisers who was in the

job when diesel cars and engines

were perceived as being the best for

the environment, and of course now

we know, we have the emissions

scandal, and get more information

coming out now with Volkswagen and

one or two match of the other German

manufacturers allegedly using

unfortunately monkeys to create

potentially miss information on the

amount of diesel emission, so sadly

this story just keeps coming and

unfortunately doesn't get any

better.

You say that, but it was not

that long ago Volkswagen released

its sales and profits numbers,

really strong, and everybody

thought, it has drawn a line, but

clearly not. The headlines keep

coming.

Obviously it is costing them

financially in fines, but the things

they are really worried about, VW,

is getting the car sales back up

again so I would say they would be

saying this is not welcome news, but

the fact they have car sales are up

for them is clearly helpful,

amazing, actually.

Yes or no map,

buying more staff, are less stuff

and bought experiences?

Less stuff,

more experiences.

Virtual reality

sets in a big warehouse, with iPod,

what do you think?

I'm more into

music.

Live concerts? -- with a pod.