13/02/2014 World Business Report


13/02/2014

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say it is immoral. Those are the latest headlines.

:00:00.:00:07.

Now the latest financial news with Sally.

:00:08.:00:16.

Italy's Prime Minister fights for his political survival amid soaring

:00:17.:00:20.

youth unemployment and the longest recession since World War II.

:00:21.:00:25.

Plus, taking on the Dreamliner - Airbus shows off its hi-tech A350 at

:00:26.:00:26.

the Singapore Airshow. Welcome to World Business Report,

:00:27.:00:41.

I'm Sally Bundock. Also in the programme: Stellar results from

:00:42.:00:44.

Lenovo as the Chinese PC giant continues to branch out. We'll have

:00:45.:00:50.

the details. We start with Italy, and a standoff

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between these two men over how to pull the country out of its worst

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slump since the Second World War. On the left, Prime Minister Enrico

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Letta. On the right, the leader of his Democratic Party, Matteo Renzi,

:01:06.:01:07.

currently mayor of Florence but with major designs on the Prime

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Minister's job. Today, Letta's future could be decided at a party

:01:16.:01:18.

summit. On Wednesday, he defied pressure to resign, instead

:01:19.:01:20.

outlining plans to create jobs, improve the country's welfare system

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and reduce taxes. Italy is the third biggest economy that uses the Euro.

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Its health is of huge importance to the region. And, at the moment, it

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is not in good health at all. Years of recession have meant the economy

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has shrunk by 9% since 2007. And unemployment is at a record high -

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the jobless rate among the under 25s is now 41.6%. I'm joined by

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economics professor Giuseppe Fontana. Thanks for being on the

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programme. It all sounds pretty dire, and use of political

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instability is a very familiar tale in Italy. What you think is going to

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happen in the tussle between these two men? Good morning. It is not the

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first time that we have a political battle in Italy, and I don't think

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it will be the last time. The economic situation is difficult at

:02:20.:02:24.

the moment, and therefore in a sense it is normal, given the current

:02:25.:02:30.

political situation, that there are rumours and speculation that there

:02:31.:02:34.

may be a change in government. You think Matteo Renzi is the right man

:02:35.:02:42.

to run Italy? Well, I think I will stay back a bit and say the

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political elite is trying to respond to a difficult economic situation,

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and don't think we should be surprised that there are rumours of

:02:54.:03:00.

it at all between different people that try to solve the economic

:03:01.:03:05.

situation in Italy. I don't worry too much. The financial market

:03:06.:03:09.

doesn't seem to worry too much for the time being so I would suspect

:03:10.:03:13.

that the political instability you were describing due to the hung

:03:14.:03:21.

parliament and the last austerity measure is all bearing on the

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current economic situation and political instability. The new

:03:26.:03:28.

measures that Enrico Letta announced, we have mentioned some of

:03:29.:03:33.

them. Do you think that they will help? To what extent will do get

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Italy back on its financial beat? One of the problems with Italy is

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that it is part of the European Union so there is not much a single

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country can do. What we can hope is that in a sense Letta together with

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other partners in Europe can respond to economic problems that are very

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urgent in Italy as well as other countries. You mention high

:03:59.:04:02.

unemployment, it is a problem across Europe. The Italian government on

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its own can do little. The political instability is not helping but in a

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sense it is a difficult situation and it is normal to expect them

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political turmoil even the very high level of unemployment, the low level

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of demand. Therefore, I would say that the best hope is that, for

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instance, when Italy will take over on July the 1st the presidency of

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the consulate Europe we will propose a way forward to solve those

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economic problems. We appreciate your time. Professor of economics

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based in the UK. As the day progresses in Italy, we will keep

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you up to date. To Asia now, where Chinese PC giant

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Lenovo has reported a 29% jump in the third quarter profit, way ahead

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of expectations. The company's shares have been on a roller-coaster

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in recent weeks as it has been on a major acquisition spree as it tries

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to diversify away from shrinking PC market. Most recently, it bought the

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Motorola mobile phone division from Google, the biggest ever technology

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deal for a Chinese firm. Rico Hizon is in our Asia business hub in

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Singapore. Always good to see you. This must be a sigh of relief,

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today's news for Lenovo's shareholders?

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Absolutely, record numbers, soaring demand for its laptops and mobile

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devices in emerging markets. The Novo said it shipped a record 32.6

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million devices in the third quarter and it is nearly five devices every

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second. However, the company executives are warning that its

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future finances will be impacted by its recent purchase of IBM's another

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end server business and motor roller. It paid more than $5 billion

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to buy both businesses in January. Investors have basically questioned

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these acquisitions, even that both businesses are currently

:06:07.:06:08.

loss-making. Lenovo said in its conference call that it would take

:06:09.:06:14.

up to five quarters, more than a year, to turn around the motor

:06:15.:06:17.

roller business, which it bought from Google for about 2.9 billion US

:06:18.:06:23.

dollars. The Chinese firm stressed that acquisitions are part of a

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longer term strategy to move away from resilience on PC sales --

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reliance on PC sales. Thanks very much. Many of the team

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are at the Singapore airshow at the moment, where Airbus has been

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showing off its rival to Boeing's Dreamliner - the A350 XWB. It's a

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long-range wide-bodied plane made from advanced materials, due to be

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delivered by the end of this year. Airbus hopes the hi-tech plane will

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tap into Asia's aviation boom, where a growing middle class are demanding

:06:56.:06:58.

more comfortable - but still affordable - long haul flights. It

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always looks good on these videos, doesn't it? Do don't see the

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toddlers running around and the mayhem that we experience when we go

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on flights. The BBC's Ashleigh Nghiem spoke to Kiran Rao, executive

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vice president of strategy and marketing at Airbus. He told her

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Asia was becoming the most important market for them.

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It is a very exciting region. The Asia-Pacific is growing at around 7%

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a year. We have demand, we believe, for around 11,000 aircraft over the

:07:32.:07:33.

next 20 years, which represents about dirty 7% of the world aircraft

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demand for the next 20 years -- about 37%. It is a huge market, the

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most important for us going forward. The A350 has created a buzz but how

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will it go up against the Dreamliner? It is the newest

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technology airliner in the sky today. With the composite wings, we

:07:56.:08:01.

have an aircraft that delivers excellent comfort and passenger

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appeal but also delivers the lowest fuel burn and the best economics for

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the airlines to operate. Explore burn is 25% less than current

:08:11.:08:13.

generation air paint and up against the Dreamliner because it is a newer

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generation aircraft, it has significant advantages. What lessons

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have you learned from the problems that has faced this macro we learn

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from our own mistakes on the A350, which was delayed, as you know.

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Those mistakes were corrected and we have an aircraft that is on time,

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which will be delivered this year to the first customer. And, yes, we saw

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some of the issues that occurred on the Dreamliner and we were able to

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anticipate some of those things and able to correct them in time for the

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aircraft to go into service. Many say that the duopoly between parent

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bus and the link is over. What is your strategy? -- between Airbus and

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Boeing. All of the aircraft starting with small aeroplanes, 100 seaters

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and above, but the A320 is the world 's most successful aircraft so

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anybody who wants to challenge the A320 family has to produce a very

:09:17.:09:21.

strong epic against us. So far what we see is that the A320 will

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continue for many years and be very successful into the 20 13ths --

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2030s. Time Warner is being brought in a

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$45 billion deal according to some reports in the press. They said the

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takeover will be announced today and would combine the two biggest cable

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operators in the United States would be subject to regulatory approval. A

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smaller cable company had been pursuing Time Warner. We will look

:09:56.:09:58.

out for that an announcement later today.

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Market in Asia, as you can see not a good at all. Australia is in focus,

:10:04.:10:11.

it is flat. It has got a headline number at today, unemployment

:10:12.:10:15.

figures out, a ten year high in January, up to 6% now. Not good news

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for Australia, the Australian dollar down on that news. I will see you

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very soon. Many thanks to Sally for that.

:10:24.:10:41.

The number of people signed up for new workplace pensions is

:10:42.:10:42.

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