10/05/2016 World Business Report


10/05/2016

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Losses mounting at Japan's biggest conglomerates

:00:00.:00:21.

Mitsui and Mitsubishi who are the latest victims of the fall

:00:22.:00:24.

Fancy shopping till you drop, you'd better head to asia.

:00:25.:00:31.

Fancy shopping till you drop, you'd better head to Asia.

:00:32.:00:34.

The region that has more luxury shopping than anywhere else

:00:35.:00:36.

Also in the programme:

:00:37.:00:44.

What tech is going to shake up the way we do things next?

:00:45.:00:47.

Michelle Fleury has been finding out.

:00:48.:00:49.

Things have been going haywire for some of the titans of corporate

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Two of the oldest and biggest company's in

:00:52.:00:55.

the country, Mitsui and Mitsubishi, are expected to post their first

:00:56.:01:03.

The two companies trade in a wide range of products and materials,

:01:04.:01:07.

including energy, machinery, chemicals, food and logistics.

:01:08.:01:09.

They blame China's economic slowdown and the subsequent fall

:01:10.:01:11.

in demand for raw materials for the losses.

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The price of copper has dropped 20% since mid-2014.

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It's a commodity both Mitsui and Mitsubishi have invested heavily

:01:18.:01:20.

in, especially in copper mining operations in Chile.

:01:21.:01:28.

Similarly, the sharp fall in the oil price has also hit both

:01:29.:01:31.

They have invested billions in shale oil exploration in

:01:32.:01:37.

Saijiro Takeshi is professor of management and information

:01:38.:01:45.

Nice to see you, Saijiro. We have yet to get the numbers from these

:01:46.:01:59.

two companies but they won't be good news, will they? Unfortunately not.

:02:00.:02:05.

It's also a transitionary state for these trading firms, this is like

:02:06.:02:11.

the Japanese companies that used to trade in conglomerate groupings, but

:02:12.:02:14.

these manufacturers can now trade on their own. For that reason these

:02:15.:02:19.

trading houses had to find a new role within their group. Obviously

:02:20.:02:23.

they looked at energy and the fact is they overdid it, or I should say

:02:24.:02:28.

the diversification with other businesses has not boomed as much as

:02:29.:02:33.

they hoped yet. Where do these companies go from here? Are they of

:02:34.:02:36.

such scale that they can ride these storms? They have gone through a lot

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and they are extremely strong. They have a strong network and they have

:02:44.:02:49.

a good value chain, there are lots of opportunities. Mitsubishi have to

:02:50.:02:54.

focus on their science side and Mitsui in their infrastructure

:02:55.:02:58.

side, add 1.80% of profit from Mitsui came from energy and 70% from

:02:59.:03:04.

Mitsubishi. They are definitely tipping the scale on the energy

:03:05.:03:14.

side. We are expecting they will come back strongly. What impact will

:03:15.:03:23.

the news today have on sentiment in Japan, where it is barely bruised

:03:24.:03:30.

right now? /Fairly. It means times are changing. -- fairly. Even these

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giant conglomerates having such a loss tells you the external factors

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could sway their profitability or their plans. They need to be a lot

:03:41.:03:48.

more flexible and more diverse with their business structure, that's

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what it is telling us. Times are changing very quickly and that's

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what these two losses mean too many of us here. Saijiro, good to see you

:03:58.:04:02.

and thank you for your analysis. When we get the numbers for both of

:04:03.:04:04.

those companies we will update you. The Greek Government says it's

:04:05.:04:06.

hopeful it will receive the next instalment

:04:07.:04:09.

of its bailout loan from eurozone However, the Eurogroup still wants

:04:10.:04:11.

Greece to create a privatisation It also says it will offer Greece

:04:12.:04:17.

a form of debt relief from 2018 Tata Steel says seven potential

:04:18.:04:21.

buyers are interested The firm,

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which put the assets up for sale in March, potentially jeopardising

:04:32.:04:36.

jobs, says it's clarifying outstanding

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points with the interested parties. Tata and others within the European

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industry blames cheap Chinese imports for a collapse

:04:43.:04:45.

in steel prices. China's Google,

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Baidu, has been told to reduce the number of paid-for adverts it

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includes in its search results. The warning

:04:52.:04:56.

from Chinese regulators came after a student died from an experimental

:04:57.:04:58.

cancer therapy that came top of How many Krispy Kreme doughnuts do

:04:59.:05:01.

you think you could get The owner the Kenco coffee and

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Jimmy Choo shoes has agreed to buy the sugary snack maker

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for exactly that amount. The chairman

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of Krispy Kreme said the deal would allow them to continue to spread

:05:23.:05:25.

that joy to a growing number Where should you set up shop

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if you want to sell luxury goods? According to a new report,

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Asia is your perfect destination. According to a new

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study It's home to seven According to a new

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study it's home to seven of the top 10 cities with

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the highest luxury retail presence. Hong Kong is second only to

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London in its global popularity and despite China's slowing economy

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still gets many of its high spending Also in the top ten,

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Shanghai, Singapore and Beijing, all of which have benefited

:05:57.:06:02.

from growing middle classes Our very own Rico is in Singapore,

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have you had a chance to do I don't aspire to buy any luxury

:06:05.:06:33.

goods. I'm not a high end retailer type of customer, I'm a budget

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consumer. Taking a look at the research, Hong Kong remains Asia's

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leading luxury shopping destination with many retailers using it as a

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springboard for expansion into China. You mentioned Shanghai,

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Beijing and Singapore, but one city that has seen a revival is Tokyo,

:06:55.:06:59.

taking fourth placed globally. Luxury retailers are looking for

:07:00.:07:04.

high-quality real estate in the country as a result of improving

:07:05.:07:07.

economic conditions and the rising tourism numbers. Diem, which has

:07:08.:07:14.

devalued by 30% since 2012, has made Japan a magnet for high-end retail

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in the region -- the yen. It is also meaning Japanese citizens can make

:07:23.:07:32.

the most of their purchasing power. Hong Kong is still number one,

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though. Good to see you, frugal living, that's the BBC life. Nice to

:07:38.:07:40.

see you, Rico. TechCrunch's Disrupt New York event

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is happening right now in the For those of you not in the know,

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it's a huge show highlighting the technology that aims to shake up

:07:47.:07:49.

the way we live. We gave Michelle the day

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off to check this out for us. She found a lot of the excitement is

:07:53.:07:55.

about the next generation I'm at the cruiseship terminal

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in Brooklyn and instead of tourists, as you can see, the room here today

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is filled with technologists. A lot of the buzz has centred around

:08:04.:08:06.

the creators of Siri, Apple's digital assistant, they did a demo

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a short while ago showing off their newest creation, it's called Viv,

:08:15.:08:18.

and it's what they say is the next generation of artificial

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intelligence assistant. We think there will be a new icon

:08:23.:08:28.

that will be very recognisable, as Will it be warmer than 70 degrees

:08:29.:08:31.

near the golden gate bridge Will it be warmer than 70 degrees

:08:32.:08:42.

near the Golden Gate Bridge Send Adam $20

:08:43.:08:45.

for the drinks last night. It knows who Adam is,

:08:46.:08:58.

it knows what it's about, we are One of the questions that came up is

:08:59.:09:02.

whether or not Viv could potentially replace search,

:09:03.:09:09.

Siri routinely directs queries to search engines when it can't answer

:09:10.:09:14.

the questions it self. search engines when it can't answer

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the questions itself. This obviously wouldn't be

:09:19.:09:21.

the case with Viv but he still thought there was a role

:09:22.:09:24.

in the future for search engines. And when asked about whether

:09:25.:09:27.

artificial intelligence posed any Michelle Fleury, who is at the event

:09:28.:09:43.

in New York. A lot more about that online and more business news as

:09:44.:09:46.

well, have a look when you have time but for now, goodbye.

:09:47.:09:54.

The legal case for the use of drone strikes against so-called

:09:55.:09:58.

Islamic State terrorists needs urgent clarification, according to

:09:59.:10:04.

A report from the Joint Committee on Human Rights says

:10:05.:10:10.

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