:00:00. > :00:00.Those are the latest headlines from BBC World News. Now for the latest
:00:00. > :00:17.financial news in World Business Report.
:00:18. > :00:20.A 10% jump in profits is expected at Europe's biggest bank, HSBC, as it
:00:21. > :00:26.cuts costs and avoids damaging fines.
:00:27. > :00:29.Rare earth row ` China and the WTO on a collision course over the
:00:30. > :00:43.export of minerals that are crucial to our favourite tech devices
:00:44. > :00:47.Welcome to World Business Report. I'm Sally Bundock. Also in the
:00:48. > :00:53.programme: What's behind IKEA's sudden success in China? We find
:00:54. > :00:56.out. But first, banking giant HSBC is
:00:57. > :01:02.expected to report a 10% rise in quarterly profit in a few hours.
:01:03. > :01:06.Europe's biggest bank has benefitted from cost cuts and the absence of a
:01:07. > :01:16.big provision to cover a fine last year. HSBC is expected to report a
:01:17. > :01:19.pre`tax profit of $5.5 billion for the three months to the end of
:01:20. > :01:23.September, according to the average of 13 analysts polled by the bank.
:01:24. > :01:36.That compares to $5 billion a year ago, excluding losses from changes
:01:37. > :01:41.in the value of the bank's own debt. How has HSBC managed to move on from
:01:42. > :01:45.the grim headlines and costly bills? Saranjit Leyl is in our Asia
:01:46. > :01:52.Business hub in Singapore. We hope the profits come through. Tell us
:01:53. > :02:00.more. That is right. It is expected to see a rise in earnings, mainly
:02:01. > :02:07.because of cost cuts. The chief executive has, in the past three
:02:08. > :02:11.years, sold or exited 54 businesses. He has cut $4.1 billion in annual
:02:12. > :02:18.cost. HSBC makes a big chunk of its money in Asia. There is still a lot
:02:19. > :02:23.of trade going on. We know it is facing a lot of challenges. There
:02:24. > :02:28.are tougher regulations, squeezing profits. Investment banking has seen
:02:29. > :02:32.its income drop. There is a return on fixed income investments. There
:02:33. > :02:36.might be more litigation over things bank has done in the past. The
:02:37. > :02:41.results are expected to compare will specifically with last year, when
:02:42. > :02:48.bank was fined a record $1.9 billion for compliance failings over in
:02:49. > :02:52.Mexico. HSBC set aside $100 million in the third quarter last year to
:02:53. > :02:57.cover the fine. There have been huge attempts made sense to try to
:02:58. > :03:01.improve compliance within the bank. The industry remains under lots of
:03:02. > :03:10.close scrutiny from regulators. The Fed has put the HSBC's aching arm
:03:11. > :03:18.under tough stress test. `` banking arms. JPMorgan says there are core
:03:19. > :03:21.operating `` operator with authorities in the alleged
:03:22. > :03:27.manipulating of currency markets by major banks. HSBC already had to pay
:03:28. > :03:31.over $1 billion to settle with a US regulator over allegations it is
:03:32. > :03:39.sold mortgage bank bonds during the housing bubble. `` Mr sold.
:03:40. > :03:48.`` mis`sold. After floundering for years in
:03:49. > :03:51.China, IKEA is starting to pull in some real profits and it's also
:03:52. > :03:54.expanding at a rapid pace, opening three stores a year. The Swedish
:03:55. > :03:56.home furnishing chain IKEA is often associated with flat`pack furniture
:03:57. > :04:01.that customers put together themselves. But, in China, millions
:04:02. > :04:08.of people use IKEA in their own way ` and that's causing the store to
:04:09. > :04:10.adjust to their way of shopping. 45 million visitors passed through
:04:11. > :04:27.IKEA's China locations last year. From Beijing, Celia Hatton explains.
:04:28. > :04:34.The doors have just opened in this IKEA store in Beijing. Even in the
:04:35. > :04:38.morning, this place has packed. Many in China treats IKEA as a furniture
:04:39. > :04:42.theme park, a place to spend hours picking every item in the store for
:04:43. > :04:47.a spin. Chinese has been the `` consumers are used to hearing the
:04:48. > :04:52.word, no. You can take a photograph. No, you cannot lounge on any server
:04:53. > :04:57.or bed in the store. In the store, they have learned to say yes. They
:04:58. > :05:02.have relaxed policies on almost everything. They are keeping the
:05:03. > :05:07.store is busy from morning to night. TRANSLATION: It is a store of the
:05:08. > :05:11.people. They have everything ordinary people use. Every time I
:05:12. > :05:16.come here, I stay for the whole day. Thousands come to IKEA to browse in
:05:17. > :05:29.the morning. It accused `` cafeteria at lunch and then put their feet up
:05:30. > :05:35.for a while. IKEA's first stores in China could not accommodate all the
:05:36. > :05:39.shoppers. The new outlets have wider aisles and extra room displays. If
:05:40. > :05:45.they build it, IKEA has realised that the crowds will come. This
:05:46. > :05:55.store, about 15,000 visitors from a weekday every day. On the weekends,
:05:56. > :06:00.25,000 to 30,000 visitors. Products have been redesigned with Chinese
:06:01. > :06:04.customers in mind. Little things like deep bowls so they can hold
:06:05. > :06:08.rice. Crucially, prices were slashed by an average of 50% across the
:06:09. > :06:14.store is. Often by productions within China. When we entered the
:06:15. > :06:20.market, we realised our prices were too expensive. It took years for us
:06:21. > :06:27.to really continuously reduce the toll prices. To really let the
:06:28. > :06:35.people afford them. `` retail prices. Finally, IKEA's adaptations
:06:36. > :06:40.to China are improving. Sales are up 17% this year, making China one of
:06:41. > :06:43.the retailer 's fastest growing markets. Chinese people like to hang
:06:44. > :06:53.out at IKEA. Now the luck to spend money there as well. `` they like to
:06:54. > :07:00.spend money. Do you use dysprosium or lanthanum?
:07:01. > :07:03.What about Scandium? Well, if you use a smartphone, energy efficient
:07:04. > :07:10.light bulbs, or a hybrid car, then chances are you rely on these
:07:11. > :07:12.substances to make your device work. Problem is, the world's major
:07:13. > :07:18.supplier of these so`called rare earth metals is China. And,
:07:19. > :07:21.according to complaints lodged with the World Trade Organisation, China
:07:22. > :07:24.has not been too forthcoming in letting the rest of the world get to
:07:25. > :07:27.them. Gareth Hatch is founding principal of Technology Metals
:07:28. > :07:44.Research and he joins me now from Carpentersville, Illinois via
:07:45. > :07:46.webcam. Tell us more about this. This discussion has been ongoing for
:07:47. > :07:56.a long time, about China's dominance. These elements are used
:07:57. > :08:00.for a wider range of users. There have dramatic effects in terms of
:08:01. > :08:07.performance and other technical aspects. The geology of rare earth
:08:08. > :08:14.metals is such that in the last 20 years, 30 years, we have relied on
:08:15. > :08:19.China to provide these materials. Over 95% of these come from China.
:08:20. > :08:26.We are dependent on those exports coming from China to allow the
:08:27. > :08:35.industries outside to work. What is the report going to tell us? China
:08:36. > :08:40.has responded to reports. But the official ruling stopping made yet.
:08:41. > :08:46.Tell us about that. It appears to have been leaked one of the
:08:47. > :08:55.complaining party 's, Europe, Japan and the West. They failed this
:08:56. > :08:59.complaint in March last year, against restrictions, unfair
:09:00. > :09:03.practices, minimum export prices. China has responded. They said, we
:09:04. > :09:13.need to restrict the export of these materials to reduce pollution, to
:09:14. > :09:18.safeguard natural resources. From the news report that have come out,
:09:19. > :09:25.it seems the case has been lost by China. If that is the case, they
:09:26. > :09:32.will have the opportunity to see how this will play out and to see how
:09:33. > :09:40.the exports, the prices, the availability will be affected. Thank
:09:41. > :09:46.you. It is a huge debate. There is a lot to discuss.
:09:47. > :10:01.Japan has closed for the public today. Elsewhere, the markets are
:10:02. > :10:04.falling. `` public holiday. The CBI's annual conference begins
:10:05. > :10:06.in London this morning and Britain's membership of the European Union
:10:07. > :10:10.will likely be on the agenda. Business leaders believe that being
:10:11. > :10:12.part of the EU is overwhelmingly in Britain's interest. The CBI has
:10:13. > :10:16.examined the advantages and disadvantages of EU membership. It
:10:17. > :10:20.concluded that Britain should stay in but says urgent reforms are
:10:21. > :10:25.needed. The economy is recovering. The
:10:26. > :10:32.service sector is up, so too is can destruction and manufacturing. ``
:10:33. > :10:37.construction. CBI believes the economy will grow by 1.4% this year,
:10:38. > :10:49.up from the previous forecast of 1.2%. Next year, it thinks GDP will
:10:50. > :10:50.be 2.4%. By 2015, it thinks Britain will grow by 2.6%. CBI is not