:00:00. > :00:07.2014 could be the biggest year Talking Business with Linda Yueh.
:00:08. > :00:09.2014 could be the biggest year for mergers and acquisitions in a
:00:10. > :00:24.decade. What is behind this trend, and will
:00:25. > :00:46.it continue? Here in Singapore we are Talking Business.
:00:47. > :00:51.A warm welcome to the programme. It seems that every week we hear about
:00:52. > :00:56.another company expanding into a new overseas market. Whether it is a
:00:57. > :01:00.European brand opening new stores? Asia or a Chinese firm establishing
:01:01. > :01:04.its fist branchs in the US, there have been a flurry of global
:01:05. > :01:09.expansion plans, looking at merges and acquisitions the number of deals
:01:10. > :01:16.this year is set to rival the pre`2008 crisis peak in global M and
:01:17. > :01:20.A, one of those companies that is growing internationally is luxury
:01:21. > :01:25.jeweller bug Gary. It expanded its operation to Asia, the Italian firm
:01:26. > :01:31.has diversity fibbed from selling jewellery and watches into boutique
:01:32. > :01:34.hotel, to find out what is driving the company's expansion and
:01:35. > :01:40.diversefication strategy I caught one the Chief Executive. When you
:01:41. > :01:44.look at your global strategy, how you viewing the different regions?
:01:45. > :01:51.Are you elevating Asia in the next five, ten years? Are you paying less
:01:52. > :01:55.attention to Europe? What we are aiming at where is the money today
:01:56. > :02:00.and tomorrow, so where the money is today is still clearly in the United
:02:01. > :02:07.States, it remains by far the richest country on earth, overall,
:02:08. > :02:12.not percap but per capita means you have tens of millions of people who
:02:13. > :02:18.can afford some luxury. The second region remains Europe, despite the
:02:19. > :02:24.vie its `` crisis, issues in the south and then Asia is one which
:02:25. > :02:29.tomorrow might become the number one, but where it an ears the next
:02:30. > :02:36.ten year, I think global company must pay as much attention to Asia,
:02:37. > :02:42.a to the US as Europe, because for the next ten years it will prevail.
:02:43. > :02:49.Even though the gross rate of Asia is for sure quicker, than the gross
:02:50. > :02:54.rate of Europe, US being another challenge, as people have the money,
:02:55. > :03:00.but they don't spend as much money on luxury, as Asia, and Europe would
:03:01. > :03:08.do. Terms of your competitor, your size and your sales and turn over
:03:09. > :03:12.are not as large as say Tiffanys, or even LV. Is that intentional or are
:03:13. > :03:19.you intending to grow the business in terms of scale? It is never
:03:20. > :03:25.intentional to be the number two, in the sense that, well, let us put LV
:03:26. > :03:32.aside because we are different business, you mention Tiffany. That
:03:33. > :03:39.is an interesting case because the report said that they sell different
:03:40. > :03:43.products, in in other words, sizeable share of Tiffany business
:03:44. > :03:48.is silver product, can be silver jewellery, can be any object related
:03:49. > :03:52.to silver, frames, and whatever, which we do not consider as direct
:03:53. > :03:59.competition, so when we look at Tiffany for instance, we look at
:04:00. > :04:07.comparable, which is any jewellery above one,000 euro row, which it is
:04:08. > :04:13.a kind of commonly agreed definition n the luxury industry. I would say
:04:14. > :04:20.most competitors do agree. So if you look at Tiffany under this angle, so
:04:21. > :04:24.anything above 1,000 euro, I am not sure because bug Gary is nothing
:04:25. > :04:31.below, at the end there is an industry one competitor which is
:04:32. > :04:35.bigger than Bulgari, Cartier, because Cartier sells only precious
:04:36. > :04:40.material, and precious and semi precious stones so products over
:04:41. > :04:44.one,000 euro row. It is not our goal take market share out of them,
:04:45. > :04:49.because the utmost challenge in jewellery is to take share out of
:04:50. > :04:56.the global market. I explain myself, unlike watches which are 100%
:04:57. > :05:01.branded. Luxury watches are 99% Swiss and they are all branded, you
:05:02. > :05:06.don't have unbranded watch, selling over one,000 euro row. Conversely
:05:07. > :05:11.jewellery is a different business. Fine jewellery market is about the
:05:12. > :05:19.size of the luxury watches, we talk about 40`50 euro retail value in
:05:20. > :05:23.both cases, but if the 50 billion euro watches are branded, in the 50
:05:24. > :05:30.billion euro jewellery, only eight or nine o brand and the rest are
:05:31. > :05:37.local actors who can be very strong in some market, I have in mind the
:05:38. > :05:41.players in China, they are huge, but they sell only in China and they can
:05:42. > :05:47.be really very local, typically I mean the family jeweller, round the
:05:48. > :05:53.corner, who for three or four generations has forged your wedding
:05:54. > :05:59.band and ring and combining the two channel, that means the local and
:06:00. > :06:04.independent jeweller, you have 80% of the market, which do not belong
:06:05. > :06:08.to the global brands. Our main challenge for growing is obviously
:06:09. > :06:15.to take more and more share out of this market. Why is that? Because,
:06:16. > :06:23.you know, it very much to see the total change into society. After the
:06:24. > :06:29.war, most people were born in a place where there would be get
:06:30. > :06:36.married, get a job, spend their life and die. In most countries it is
:06:37. > :06:41.different. We are moving to a nomadic world. I am myself. I was
:06:42. > :06:47.born in France, then I moved to Italy, then my first job, I have
:06:48. > :06:53.been in five or six different country, I have no idea whatsoever
:06:54. > :06:59.who as a jeweller of my parent, if nicks and therefore, the trust which
:07:00. > :07:04.was explained, the strengths of the family jeweller, because basically
:07:05. > :07:10.when you buy a jewel you need trust. It is about precious material,
:07:11. > :07:17.precious gems, and even they are stiff Kate, they can be forged, so
:07:18. > :07:23.eventually, trust is foremost, also because of price you pay is very
:07:24. > :07:28.expensive. So the trust is today transitioning from the local family
:07:29. > :07:35.jeweller, to the big brands, because the big brands are global. You can
:07:36. > :07:41.find the trust everywhere. I am born in Paris today, I can find Bulgari,
:07:42. > :07:46.if I move to Hong Kong to work still I can find Bulgari. If in five years
:07:47. > :07:50.I move to New York I will file Bulgari, so the trust relationship
:07:51. > :07:54.is shifting from your family jeweller, to the global brand, why?
:07:55. > :08:01.Because the world is becoming nomadic. You diversified into hotels
:08:02. > :08:06.and you have aarrangement, you don't have the full owner of the hotel.
:08:07. > :08:10.Why diversify in that way and what is your product going ahead? Is it
:08:11. > :08:14.hotel, a small nearby, are you predominantly going to be jewellery,
:08:15. > :08:20.with watches, and what is the kind of diversification you have in mind?
:08:21. > :08:25.Is that it? The hotel is the pinnacle of service in a boutique
:08:26. > :08:33.already, you can offer a unique experience, we all training our
:08:34. > :08:39.staff, as good as we can, not only, mine, in terms of products, in terms
:08:40. > :08:45.of the way the product is connected to legends, when it comes to the
:08:46. > :08:50.most beautiful Bulgari Sapphires or emerald, but our competitors are
:08:51. > :08:56.capable do that, they have their own needs, their own stories, so I don't
:08:57. > :09:00.see we are on an equal footing but the most professional competitors
:09:01. > :09:03.can be pretty close in providing a good store experience. We do it in
:09:04. > :09:09.our style, which is very Italian as you can see round, and some are
:09:10. > :09:14.doing it in a more classical style which is Parisian. It is fantastic.
:09:15. > :09:18.If you want to go to next step and create an experience that is
:09:19. > :09:23.enchanting, the hotel is the pinnacle, because the hotel is not
:09:24. > :09:30.only one room or couple of rooms or three room, the hotel is a lobby,
:09:31. > :09:36.plus a couple of bars, a restaurant, a spa, a couple of restaurants,
:09:37. > :09:43.different suite of different sizes so in an hotel you can express much
:09:44. > :09:47.more of a brand than in a boutique. That was the Chief Executive of
:09:48. > :09:51.Bulgari. Even as west companies are fast growing markets, led by China
:09:52. > :09:55.in many areas, Asian companies are going global into overseas markets.
:09:56. > :09:59.Leading the charge, are Chinese firms.
:10:00. > :10:05.Due to the Chinese Government controlling the amount of outward
:10:06. > :10:12.investment it was only a decade ago the first deal was done.
:10:13. > :10:17.Since then, expansion by Chinese companies has been rapid from 3
:10:18. > :10:23.billion dollars, Chinese companies spoefrnt 52 billion in 2008. That
:10:24. > :10:28.figure has nearly doubled to a record 100 billion invested out of
:10:29. > :10:31.China last year. The Chinese company has bought the pizza express chain
:10:32. > :10:36.in Britain. They are not the only ones. Globally M and A deals are at
:10:37. > :10:41.the highest level since before the global recession, in the first half
:10:42. > :10:47.of the year, 1.75 trillion $s of deals were done, which is 75% higher
:10:48. > :10:52.than a year ago and the most since 2007. In that year $2.8 trillion
:10:53. > :11:01.worth of deals were concluded. This year it is led by cross`border M and
:11:02. > :11:05.A deals. These have surged by over 130% a year earlier. The busiest
:11:06. > :11:11.sector is healthcare, which accounts for nearly one in five deal, at $317
:11:12. > :11:16.billion. Followed by media and entertainment with deals valued at
:11:17. > :11:20.220 billion $, so what is driving firms to go global. Why are aShaun
:11:21. > :11:27.companies investing overseas when western firms are trying to get into
:11:28. > :11:32.the region? I have with me a panel of Chief Executive. The Chief
:11:33. > :11:47.Executive of Banyan tree hotel resorts. John Nelson. And Anthony
:11:48. > :11:57.Tann the CEO of GrabTaxi. Welcome to all of you. Let me start with you.
:11:58. > :12:04.Why expand outside the region? We have a very strong footprint in Asia
:12:05. > :12:07.People have come to enjoy what we have got to offer. We are bringing
:12:08. > :12:11.that experience to other parts of the world where we are missing
:12:12. > :12:15.today. Also, the demand for brands that are common and prevalent in
:12:16. > :12:19.Asia is growing in western parts of the world, hence the reason we want
:12:20. > :12:23.to capitalise on that demand in growing middle class. Is that a
:12:24. > :12:28.similar reason for you, John, because there's a lot of business to
:12:29. > :12:32.be done, especially assembly`conductor? Taiwan,
:12:33. > :12:37.Singapore tend to be the high`technology hubs in Asia. There
:12:38. > :12:43.is expansion into Thailand, Vietnam more recently. For us, the advance
:12:44. > :12:50.technologies continue to come to Singapore and Taiwan. We are
:12:51. > :12:56.investing more in Indonesia, in Thailand and the markets that we
:12:57. > :13:00.serve are very diverse. In some cases, our customers basically, for
:13:01. > :13:06.their own supply chain reasons, asked us to support their operation
:13:07. > :13:12.from certain locations, be it Thailand, be it Singapore or Taiwan.
:13:13. > :13:16.Anthony, what about you? You've dominated south`east Asia in a sense
:13:17. > :13:21.and do you have any plans to go further afield? South`east Asia has
:13:22. > :13:26.been kind to us, so there was a clear problem today in south`east
:13:27. > :13:30.Asia, the broken public transport system, very inefficient, Friday
:13:31. > :13:37.5pm, raining outside, can't get a taxi. A lot of women fearful of
:13:38. > :13:43.taking a taxi in south`east Asia, there was a clear need. So that
:13:44. > :13:47.basically will allow us to scale first within south`east Asia and of
:13:48. > :13:51.course, other countries, other cities that we see has a real
:13:52. > :13:56.problem of a similar nature and of course that we have the competitive
:13:57. > :14:00.advantage to solve. Isn't there a bigger hurdle for brands like yours.
:14:01. > :14:06.Whir very well`known in Asia, less so say in Latin America or Europe?
:14:07. > :14:12.Even though our presence today is in Asia, we have a very, very good
:14:13. > :14:16.presence throughout Asia. A lot of our customers over the years have
:14:17. > :14:21.been through typical Western Europe, through the US, so the brand recall
:14:22. > :14:27.in those markets is quite good. We bring in the brand to that market,
:14:28. > :14:31.so at times we'll have to travel long haul to enjoy the brand. That's
:14:32. > :14:37.actually helped us. Yes, we've been missing in some of the markets, so
:14:38. > :14:43.making our presence known and delivering those experiences could
:14:44. > :14:48.be a challenge. Finding the right talent group. Because if we are in a
:14:49. > :14:54.very high`touch industry. Unfortunately, it's low`tech, but
:14:55. > :14:57.high`touch industry and we rely on talent pool to be able to deliver
:14:58. > :15:02.the services. That is a big challenge for us.
:15:03. > :15:07.John, is there more competition now in Asia than before? You have
:15:08. > :15:11.western companies, looking to get into this fast`growing middle`class.
:15:12. > :15:16.Are you feeling more competition in your business? I think the
:15:17. > :15:20.competition we see is primarily coming from China. The
:15:21. > :15:25.semi`conductor business in heroin is one of the ones that the
:15:26. > :15:31.government's placing a special emphasis on be it special funding,
:15:32. > :15:38.incentives. So the China companies have become very strong. 15`20 years
:15:39. > :15:42.ago, they were low`end technology, not so sophisticated servicing,
:15:43. > :15:47.low`end products. Over the last ten years, they have become pretty
:15:48. > :15:52.advanced. They are not quite at the Taiwanese level in terms of
:15:53. > :15:56.technology, but with one of the constraints I think that the
:15:57. > :16:02.semi`conductor industry is facing a little bit is China customers would
:16:03. > :16:07.like to have a strong preference to have their products manufacturered
:16:08. > :16:11.in China. So that in a way is forcing companies such as ours to
:16:12. > :16:15.ensure we have a presence there. Anthony, do you have a built`in
:16:16. > :16:18.advantage because you're dominant in the market, you know the network and
:16:19. > :16:22.the market. So even if western markets try to come in and get a
:16:23. > :16:26.piece of this market or Chinese companies even trying to come to get
:16:27. > :16:30.a piece of the mash, you are going to provide fierce competition,
:16:31. > :16:36.aren't you? We already do, every day there's a war and we love it,
:16:37. > :16:42.because it helps us remember again why we started the business. We are
:16:43. > :16:48.solving south`east Asian problems. Being hyper`local that way. For
:16:49. > :16:53.example, the customer call centre is supporting someone not only in the
:16:54. > :17:04.Philippines, but could also support other areas, right. So our Thais can
:17:05. > :17:08.also speak Thai and other language languages a well as English.
:17:09. > :17:13.Appreciating that and having the nuances are critical. It's customer
:17:14. > :17:21.service focussed. This is an industry whereby if you jumped in a
:17:22. > :17:29.taxi or car in hoe chill mean, you can speak via the app. `` Ho Chi
:17:30. > :17:32.Min. It will get you safely from A`to`B. What about the hotel
:17:33. > :17:37.business? More competition as western hotel chains are trying to
:17:38. > :17:43.again get a piece of the Asian middle class? Sort of economic
:17:44. > :17:47.migration, if you would. If you are not there, you are going to get in
:17:48. > :17:51.and try to take a bit of it. The first advantage is always there.
:17:52. > :17:57.We've been very fortunate and have gone into emerging economies where a
:17:58. > :18:00.typical hotel organisation we shy away from actually, some of the
:18:01. > :18:11.deaths nations that we went into, it would scare a lot of people. Like?
:18:12. > :18:16.`` destinations. We opened a certain hotel seven years ago, a luxury
:18:17. > :18:25.presence there was unheard of. People thought it would never work.
:18:26. > :18:31.It was an absolute roaring success. So we go into new destinations. We
:18:32. > :18:35.almost create the destinations. It helps the local economy because
:18:36. > :18:40.there are hundreds of jobs that are created. The in`bound travel creates
:18:41. > :18:45.the destination. Now, seven years later, there are lots of other
:18:46. > :18:49.brands that are present in that area, we were the only ones at one
:18:50. > :18:55.particular point. Finally, which companies are you most anxious about
:18:56. > :18:59.entering your home market? Is it the American companies, the European
:19:00. > :19:06.companies or the Chinese companies? Anthony? The Chinese are battling it
:19:07. > :19:11.out there. There are huge subsidies behind each other. So they have the
:19:12. > :19:19.subsidies coming into your space? Yes. It's tough work. If you look at
:19:20. > :19:22.the apps actually, they are very different in characteristics,
:19:23. > :19:26.recording, non`recording, ours is four square based, the map systems
:19:27. > :19:31.are different, so it's all possible and it's something that obviously
:19:32. > :19:36.it's always on the radar, but for us, just go back to the story about
:19:37. > :19:42.if you are looking, chasing a girl, focus on a girl, don't think about
:19:43. > :19:48.the guys, the other guys chasing her. OK. That is a great analogy,
:19:49. > :19:53.I'll have to remember that! Are you most concerned about American,
:19:54. > :19:59.European or Chinese hotels coming into your space? Rierks all of the
:20:00. > :20:03.above but none of the above `` yes, it's all of the above but none of
:20:04. > :20:08.the above. Competition keeps us honest. The innovation is driven by
:20:09. > :20:12.competition. We are all about innovation, we have to do it better
:20:13. > :20:16.than it's been done before, better than somebody else would. So
:20:17. > :20:22.competition is not necessarily a bad thing. It is the dominant players.
:20:23. > :20:27.We have the advantage in this area. I think we will continue to
:20:28. > :20:33.capitalise on it. We are launching new brands to stay relevant with the
:20:34. > :20:38.demographics are chaining. That will help us. We have to do it better
:20:39. > :20:44.than anybody else can. John? What about you? For us I think, Taiwan,
:20:45. > :20:49.Korea have a very strong presence already. They are not a threat, they
:20:50. > :20:58.are a reality. We go to war every day. I would say the next wave of
:20:59. > :21:02.attack will be Chinese companies, subsidies probably give them some
:21:03. > :21:08.financial benefit, but the reality is in our semi`conductor world, it's
:21:09. > :21:12.stability of the workforce, the education and the depth of
:21:13. > :21:17.knowledge. This is not an area that someone can walk into and within a
:21:18. > :21:21.year or two or three years become a dominant player. You need ten #15rks
:21:22. > :21:28.years experience of the management team, the engineering groups,
:21:29. > :21:34.customer service also, we have to work with the same role as other
:21:35. > :21:41.companies in terms of supporting other companies. So yes, they'll
:21:42. > :21:47.come, but there's adequate silos and walls up there that we can defend
:21:48. > :21:54.ourselves quite well. Silos walls, keeping you honest ander, chasing
:21:55. > :21:59.girls. Thank you very much indeed. Anthony Tan, Abid Butt and John
:22:00. > :22:03.Nelson. If the trend on the stock market
:22:04. > :22:06.continues, we could see a new slew of multinational corporations emerge
:22:07. > :22:10.from around the world. There is rapid expansion of European and
:22:11. > :22:14.American companies Ian to sell to the world's fasters markets. They
:22:15. > :22:17.may not be profitable at first but there are advantages to being in an
:22:18. > :22:22.emerging market as it's about to take off. But for all these
:22:23. > :22:25.companies, they'll be aware many markets will have their own dominant
:22:26. > :22:29.local companies which could offer fierce competition at home, and
:22:30. > :22:34.increasingly globally. That's all we have time for. Check out our
:22:35. > :22:38.website. Join us next time for more Talking Business with me, Linda
:22:39. > :22:49.Yueh. We have been tracking a certain
:22:50. > :22:53.weather system for well over a week now and at last it's arrived on our
:22:54. > :22:59.shores, determined to spend the day with us here tomorrow rather than in
:23:00. > :23:00.France. It's going to bring wet and windy weather