27/02/2018 BBC Business Live


27/02/2018

A look at the global business stories.


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Transcript


LineFromTo

This is Business Live from BBC News

with Sally Bundock and Ben Thompson.

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Stopping the sales.

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The EU looks at how it can prevent

foreign takeovers it doesn't like.

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Live from London, that's our

top story on Tuesday

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the 27th of February.

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Protectionism or keeping

crucial assets in-house?

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Europe is deciding on its actions

in the face of growing

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investment from China.

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EU ministers are

meeting in Bulgaria.

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We'll tell

you all you need to know.

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Also in the programme.

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The Sky's the limit.

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US cable TV giant Comcast

makes a $30 billion bid

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for Rupert Murdoch's

European TV operation.

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And the trading day has

just begun in Europe.

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This is how the main

markets are faring.

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The new Fed Chair Jerome Powell

is speaking in Washington today.

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And how and why do

things go viral online?

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We meet one of the firms

that says it can do it

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all for you - for a price.

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We'll get the inside track

on the world of online marketing.

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Today, we want to know

do social media ads reel

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you in or switch you off?

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Let us know.

Just use the hashtag BBCBizLive.

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Hello and welcome to Business Live.

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Packed as usual so let's get

started.

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Does Europe need to do

more to protect itself

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from foreign takeovers?

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From German manufacuring to Greek

ports and UK data centres, there's

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growing concern about how to make

sure investment

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doesn't cost know-how.

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And EU trade ministers

are discussing this at their meeting

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in Bulgaria today.

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Foreign direct invesment into the EU

- that's when companies

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invest their money in foreign

countries - came in at $370

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billion last year.

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Not all of it is considered

uncontroversial.

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The President of the European

Commission Jean-Claude Juncker said

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in September, "Europe must always

defend its strategic

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interests" such as technology,

defence and infrastructure.

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One of the biggest deals to spark

concern was the 2016 purchase

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of Kuka, Germany's largest maker

of industrial robotics,

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by China's Midea for $5.5 billion.

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And there is particular concern

about companies linked

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to foreign governments.

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As China looks increasingly overseas

at technology and manufacturing

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interests, its investors spent

a record $43 billion

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on EU purchases in 2016.

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That's almost double

the previous year.

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Just yesterday, Germany's financial

regulator said it would look

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into the $9 billion investment

in the car-maker Daimler,

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which owns Mercedes,

by China's Geely, which hopes

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to access Damiler's technology.

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With me is Miriam Gonzalez,

an expert on European

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trade law at Dechert LLP.

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Thank you for joining us. Sally

running through the details on what

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strikes me about this is about

trying to decide which investments

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are welcomed and which are not and

that is the difficult thing, isn't

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it? Some industries will say, "We

need access to this intellectual

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property and technology", but then

the government might say, "Yes, but

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it's a crucial industry". How do you

decide what is important?

Maybe but

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there are no new things in this

proposal, the EU members, including

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the UK, by the way, carry on these

reviews significant foreign

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investment in certain sectors like

nuclear energy, cyber security,

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financial services. This is

something countries have been doing

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for a long time. It is done outside

the EU regularly, the US have a

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particular mechanism and in

Australia, likewise, and in Canada,

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they have investment reviews. These

things have been happening for a

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long time. All the EU is doing is

two things, one, to ensure there is

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more coordination and transparency

between the different EU member

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states and something which is truly

new is that the EU will have a say

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it's self whenever there is EU

programme at stake and I think that

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is particularly in the area of

energy where we will see the impact

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of that but there's nothing

revolutionary in this.

One of the

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particular concerns right now is the

role China plays around the world.

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We know it is expanding its reach in

all sorts of industries,

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particularly energy but also

security and that is where there are

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concerns about how closely linked to

the state many of the Chinese firms

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could be.

Yes, that is absolutely

right but it is only in certain

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areas that are clearly defined that

the EU member states are going to be

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doing this and what the EU

Commission and Jean-Claude Juncker,

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who presented the proposal in

September last year is telling them,

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what you are doing, we want to see

more coordination and crucially more

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transparency. So the more

transparent these processes are, the

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better for everybody. It is a system

in the general international trade

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system, it is allowed to do

something like this so there is no

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mystery in it.

The US is

particularly tough when it comes to

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vetting foreign investment, and

also, as you've touched on, places

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like Japan. Is Europe still seen as

a bit of a soft touch when it comes

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to foreign investment in that they

can buy up crucial assets?

I don't

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know whether a soft touch. I think

the fact we have the EU market as a

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whole and yet some of these reviews

are being done at the national level

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opens up some possibilities that you

may not find, for example, in the US

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between the federal, state and the

estate themselves. There is a bit

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more of a gap but I don't think it

says much as to how tough or not you

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may be. It is normal that there may

be some skin purity with -- some

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security concerns, for example, on

anything related to cyber security.

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Provided you do the review in a

transparent and accountable manner,

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I think that should be OK.

The

debate will run and run, I'm sure

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but for now, thank you.

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There could be a battle for control

of the European pay-TV giant Sky.

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In the last hour or so,

US cable giant Comcast has launched

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a $31 billion bid for company.

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That's despite Rupert Murdoch's 21st

Century Fox already having agreed

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a deal worth more than $25 billion

for the 61% of Sky it

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doesn't already own.

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Our correspondent Theo Leggett

is in the Business Newsroom.

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This is interesting. I notice Sky

shares up 18% this morning.

And the

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reason for that may well be that now

21st-century fox might have to

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improve its own offer in order to

pull off the deal it really wants.

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This announcement has really

throwing the cat among the pigeons.

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Basically, pitting three of the

world's biggest media giants against

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each other. On the one hand, you

have 21st to three fox which wants

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to buy their share of Sky it does

not already own. That would be part

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of a package sold onto the Walt

Disney company which wants to buy

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21st-century fox's film and TV

assets and on the other hand,

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Comcast, which has come in with a

surprise, all-cash offer, which it

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says is superior to what Sky is

offering and Comcast says it wants

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to take control of Sky because it

wants to expand internationally. It

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says it would be happy to share

ownership with the Walt Disney

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company but only if it has more than

50%, in other words, only if it has

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full control and maybe Walt Disney

would not be particularly happy with

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that. What we are going to see now

is a whole lot more toing and froing

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and potentially higher bids as well.

Interesting as well because from

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Rupert Murdoch's perspective, this

is another spanner in the works.

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He's been desperate to acquire the

remainder of Sky for some time.

Yes

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and he's been stymied for a long

time by regulators in Britain who

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are concerned he was acquiring too

much influence in the British media.

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Yeah, it's going to be interesting

to see what happens.

Thank you for

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joining us. We will keep you right

across that story as we get more on

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it this morning.

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Let's take a look at some of

the other stories making the news.

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The UK's minister for

International Trade is set to argue

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that any form of customs union

with the EU after Brexit would be

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a complete sell-out.

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Liam Fox is expected to say having

EU limits on doing other deals

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would make the UK less attractive.

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On Monday, the leader of the Labour

opposition argued that staying in a

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customs union would be best for

Britain.

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Pre-tax profits at

Standard Chartered have

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jumped to $2.4 billion

over the past year,

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after a period of

painful restructuring.

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Despite surviving the financial

crisis relatively unscathed,

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the bank struggled when commodity

prices later crashed.

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The firm makes the bulk

of its revenue in Asia.

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South Africa's former finance

minister Nhlanhla Nene has been

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re-appointed to the post

by the country's new

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President Cyril Ramaphosa.

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Mr Nene was controversially

sacked two years ago.

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In a wide-ranging reshuffle,

the new president has ousted several

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former allies of Jacob Zuma.

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He's called it a new

dawn for the country.

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China's top economic advisor

will visit the US today

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to talk about trade,

a tricky subject between

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the two countries.

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US trade officials recently

threatened to impose

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a tariff on steel imports,

leading to threats of

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retaliation from China.

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Sarah Toms is in Singapore to tell

us how significant this is.

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We have heard from both sides come

if you impose tariffs, we will do

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the same but it's just ratcheting up

the pressure, isn't it?

Absolutely

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but this is actually pretty

significant. China's top economic

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adviser shows that China is taking

the mounting trade tensions with the

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US very seriously. Mr Lu is seen as

a close ally to Xi Jinping and it is

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likely the trusted deputy on a

mission to lobby the US and restart

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trade talks. As you said, there are

a couple of problems between the US

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and China at the moment. The first

is, there's an investigation into

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whether Chinese companies have

infringed intellectual property

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rights. Mr Trump must make a

decision in the next few weeks.

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Secondly, it has got a problem with

the Chinese steel imported into the

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US, as you mentioned. That comes

after tariffs were slapped on solar

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panels. It is not clear who Mr Lu

will meet in Washington and we don't

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know if the talks will be successful

until the US makes a decision on Day

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trade issues.

Thanks, Sarah. We will

keep an eye on how he gets on in the

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US. Let's take a quick look at the

Asian markets.

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Japan closing up over 1% higher

again, and Hong Kong, spoiling the

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party a little bit. That is the

night before in the US. Moving on to

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Europe, in the US on Wall Street, we

saw shares moving up to a four week

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high, and in Europe right now,

markets across the board doing well,

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Sky shares as we have mentioned up

some 18%, Liam Fox speaking today,

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we have mentioned that as well so

keep an eye on the pound and the

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euro for reaction to what he says.

In terms of Wall Street, let's go to

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New York and find out what is on the

agenda there.

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Ever since Jerome Powell took over

as chair of the Federal Reserve

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earlier this month, markets have

been extremely volatile. He is not

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to blame. It is because of

speculation about the pace of

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interest rate rises in the US thanks

to strong economic data but

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certainly, that timing -- bad timing

for Mr Powell. On Tuesday he will

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present his first-ever semiannual

report to the House financial

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services committee and is sure to be

grilled by lawmakers. Wall Street

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will be watching with bated breath.

Department store chain Macy's will

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report fourth-quarter results. Last

month the company announced it was

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cutting thousands of jobs as it

struggles to compete with e-commerce

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firms. And in a case which could

have wider implications, the US

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Supreme Court will decide whether

Microsoft needs to turnover data

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stored overseas to prosecutors in

America in a drug trafficking

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investigation.

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Joining us is Maike Currie,

Investment Director,

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Fidelity International.

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Good morning. Let's pick up on the

US theme because if you look at the

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numbers now come you would be

forgiven for thinking one of the

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volatility over the last couple of

weeks was never there, we're back up

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to the levels of before.

We are, the

US markets as recouped a lot of

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losses. All eyes on Jerome Powell.

This is his chance to draw a line in

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the sand between him and his

predecessor, Janet Yellen. But of

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course, she did a very good job on

reassuring markets, navigating the

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path towards monetary normalisation.

The big question investors will be

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looking for and scrutinising is

whether the US will have four

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interest-rate rises this year. We

know three are on the cards but if

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there could be another one.

Quickly,

I want to get your take on the

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changes in South Africa. You are

from there, Cyril Roma Poser

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announcing late last night a

brand-new cabinet with a new finance

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minister, your thoughts?

I'm very

positive, I think Mr Nene is right

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for the job. Cyril Ramaphosa is a

businessman, we need him to bring

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about the change, economic growth

was nonexistent under Jacob Zuma and

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unimportant at record highs so very

positive for the country and of

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course a lot of companies are dual

listed on the Johannesburg stock

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exchange and the FTSE 100 and those

companies like old mutual and

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Anglo-American has benefited from

the regime change.

We will keep a

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close eye on it. For now, thank you.

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Still to come...

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Is that must-watch video

really going viral -

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or just some clever marketing

from big business?

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We'll meet one of the firms

that promises views,

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likes and clicks - for a price.

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You're with Business

Live from BBC News.

0:14:550:15:02

First, let's talk about the Great

Northern Exhibition, which promises

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to exhibit great art and innovation

from the North.

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Steph is in Gateshead to find out

what is planned.

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Hello, today they are launching the

great exhibition. In the summer for

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80 days across the region there will

be various events celebrating the

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art, culture and history of the

whole of the North region. It is

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about inspiring the next generation

of people to come up with future

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innovations, but it is also about

celebrating the past as well. One of

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the things that is part of it is a

water sculpture. That will run along

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the time in Gateshead, it separates

Newcastle from Gateshead. There is a

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lot more to it as well. You are the

executive director, tell us a bit

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more.

We have got a great example of

things we are showcasing in Lego and

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some things from the Beatles to

grapheme, we are also creating a

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virtual reality rocket. We have an

amazing, new 21st-century transport

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port that will get you from Scotland

to Manchester in ten minutes. The

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great North run. We are also

encouraging young people to be

0:16:350:16:39

inspired and create their own

inventions.

And we have got this

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driverless car. Hello. It is a car

you can sleep in. Something for the

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future. There is a competition

running as well which will see a lot

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of little inventors. Some of them

are here. They have come up with

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some great ideas about life in 2030.

A lot going on to celebrate and even

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in the background we have got a

wonderful choir and band. Hello! I

0:17:080:17:12

will leave them to play us out. You

get it all on this programme.

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It is all happening out there today.

Our business life page has the

0:17:240:17:30

latest on one of my favourite

subjects, pasties, pies and food.

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Profits up at Greggs, but they were

down at the end of last year.

0:17:360:17:43

You're watching Business Live.

0:17:430:17:44

Our top story:

0:17:440:17:46

EU trade ministers are meeting

in Bulgaria to work out

0:17:460:17:48

what they can do to stop foreign

takeovers they don't like.

0:17:480:17:52

There's growing concern

about companies with government

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links buying companies just

to access their technology.

0:17:560:18:03

Some particular criticism has been

levelled at many Chinese firms and

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they deny that.

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they deny that.

0:18:070:18:08

A quick look at how

markets are faring..

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Sky and shares are up 18% with the

news that Comcast is making a play

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for Sky, which sparks a whole new

story in that. That is all on our

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website.

The chances are we will be talking

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about that for the rest of the week.

In other news:

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In

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Companies are forever trying to come

up with ways to drum up sales

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or increase clicks and views online.

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And the best way to get

a brand or product to viral

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is via social media.

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But according to our next guest,

things don't just go viral by luck.

0:18:430:18:46

There's a whole industry behind it,

which two young British

0:18:460:18:48

entrepreneurs have built

a business around.

0:18:480:18:51

Social Chain is a social

marketing agency and social

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media publishing house.

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It owns and runs hundreds

of popular social media

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accounts covering sport,

video games, fitness and food -

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which have millions

of young followers.

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Established by two then-students

in 2014, the company has grown

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from just five staff two years

ago, to over 200 today.

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And has an annual turnover of over

$12.5 million dollars.

0:19:120:19:20

that is £9 million.

0:19:200:19:21

that is £9 million.

0:19:210:19:24

Joining us is Steve Bartlett,

Co-founder and Chief Executive

0:19:240:19:26

of social media marketing agency,

Social Chain.

0:19:260:19:28

Welcome. We have done a little bit,

but explain in more detail how your

0:19:280:19:38

company works.

There I2 companies

within the group and that is the

0:19:380:19:42

media business which is called Media

Chain, and then the marketing agency

0:19:420:19:49

which takes all the things we have

learnt from running these big global

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channels and works with the world's

biggest brands to help them reach

0:19:550:19:58

young people.

Explain how this

began. This is about you spotting

0:19:580:20:04

what people are genuinely interested

in. Then finding out why people are

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watching and relating back to

brands. How do you find those

0:20:090:20:13

interesting things in the first

place?

I was an 18-year-old

0:20:130:20:18

university dropout building a

website and in doing so I became a

0:20:180:20:23

marketeer as well. I had to find out

how people came to my website. I had

0:20:230:20:27

a couple of thousand pounds, but I

needed a 1 million people for it to

0:20:270:20:31

prove the concept. I tried taking

ads out in newspapers and the

0:20:310:20:36

conventional things and they did not

work. It was not until I bought a

0:20:360:20:40

small Facebook page and posted my

website there that people came. I

0:20:400:20:45

doubled down on that and I found

myself going around the world

0:20:450:20:48

meeting every person I could who had

built a big social media channels in

0:20:480:20:53

their bedrooms. They all happen to

be super young. I met a 17-year-old

0:20:530:20:59

kid who had 15 million followers who

was running a fitness channel. We

0:20:590:21:05

all came together and acquired all

those assets and a few years ago we

0:21:050:21:11

started Social Chain.

For companies

who want to sell things, that is a

0:21:110:21:14

gift for them and you are giving

them access.

We never meant to start

0:21:140:21:20

marketing business or a media

company, that was never our design.

0:21:200:21:24

We were trying to figure out how to

get people to come to our product.

0:21:240:21:28

Then I got a call from a big brand

and I realised the website I was

0:21:280:21:32

building was less effective than the

social media site. Six or seven

0:21:320:21:37

years ago nobody would have

considered posting a brand on a

0:21:370:21:41

social media page.

How do you make

money from all of this?

From the

0:21:410:21:46

media side brands will come to us,

we have 370 million followers across

0:21:460:21:51

different niche is, sports, food,

parenting, and they will come to ask

0:21:510:21:56

if they want to appear on these

slots. On the marketing side they

0:21:560:22:00

will come to ask if they want

challengers to solve. They might be

0:22:000:22:05

working out how to use social media

to get them to check them out.

What

0:22:050:22:10

I don't get is if there is a good

bit of content, a funny video, a

0:22:100:22:14

cute video of a cat, I can see how

that might go viral. But if I am a

0:22:140:22:20

brand and I come to you with a

corporate video and I wanted to go

0:22:200:22:24

viral, how do you make people watch

content that they don't want to

0:22:240:22:29

watch?

We might say no. We say no

much more than we say yes. When it

0:22:290:22:34

comes to our own video service we

note in the audience is we gave them

0:22:340:22:46

content and made them feel that the

content they cared about was what

0:22:460:22:49

they wanted. If it was tough to talk

about, our job is to try and find

0:22:490:22:57

the story in the brand that will

resonate with our audience. It is

0:22:570:23:01

like making movies. We are trying to

make content that will entertain and

0:23:010:23:05

make people feel something and if

they do, they will earn a share of

0:23:050:23:09

the brand's life.

Briefly, we are

out of time. Do you feel a

0:23:090:23:14

responsibility when it comes to your

audience?

100%. We will never speak

0:23:140:23:20

to our audience that will make them

feel inadequate orally to

0:23:200:23:23

addictions. We have a strong ethical

code and with power comes

0:23:230:23:28

responsibility.

Thank you for coming

in. Absolutely fascinating.

0:23:280:23:31

Absolutely fascinating.

0:23:310:23:33

China's Huawei is the world's third

biggest smartphone maker but it's

0:23:330:23:36

having big problems trying

to sell its handsets in the world's

0:23:360:23:39

biggest economy, the United States.

0:23:390:23:42

The company's mobile boss has

told our correspondent

0:23:420:23:46

Rory Cellan-Jones it's

because of commercial reasons and US

0:23:460:23:49

security concerns are misplaced.

0:23:490:23:52

Every year we have strong

growth, every year.

0:23:520:23:56

We have the chance to be the number

one, maybe not far away.

0:23:560:24:00

Do you really think one day

you could be number one?

0:24:000:24:02

Yes.

0:24:020:24:03

Global smartphones?

0:24:030:24:04

For sure.

0:24:040:24:05

We have a chance.

0:24:050:24:09

Now, one of the problems

for you in achieving

0:24:090:24:11

that is trying to get

into the US market.

0:24:110:24:13

You are nowhere in the US market

because American politicians

0:24:130:24:16

don't trust you.

0:24:160:24:17

Why do you think that is?

0:24:170:24:19

Because, you know, some guy,

some political things trying to

0:24:190:24:26

keep us out because we are too

competitive but we have leading

0:24:260:24:29

technology, leading innovations.

0:24:290:24:32

They worry about that.

0:24:320:24:34

We're too strong.

0:24:340:24:36

Is that why American politicians

want to keep you out

0:24:360:24:39

because you're too competitive or

because they worry you are too close

0:24:390:24:42

to the Chinese government?

0:24:420:24:44

They are trying to say

that but actually we

0:24:440:24:48

are an independent company.

0:24:480:24:49

They are trying to use

kind of political

0:24:490:24:51

things to keep us out.

0:24:510:24:59

An interesting conversation. You

have rejoined us to talk about some

0:24:590:25:05

of the stories in the papers. We are

asking people related to our

0:25:050:25:10

previous guest about social media

ads and whether they are turned on

0:25:100:25:14

or turn off. Have you ever bought

anything from an advert on social

0:25:140:25:17

media?

No. I think the whole point

of social media was to connect with

0:25:170:25:23

people you have not seen in a long

time or people who share common

0:25:230:25:27

interests with you and adverts are a

distraction and they are an invasion

0:25:270:25:31

of privacy because they look at what

you are browsing. I have never

0:25:310:25:34

bought anything.

Luke says the same,

I am not interested in the

0:25:340:25:40

slightest. Ian says, if they are

about things I am interested in I

0:25:400:25:44

don't mind.

Good content is far more

powerful than advertising.

The world

0:25:440:25:53

has changed. Time is tight, but

really nice to see you this morning.

0:25:530:25:59

Thank you for your company, we will

see you tomorrow.

0:25:590:26:04

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