23/01/2017 World Business Report


23/01/2017

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Nothing wrong with the phones, it was all in the battery - Samsung

:00:00.:00:26.

explains the reason why the Galaxy Note mobile phones caught fire and

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were recalled. The UK government to outline the industrial strategy.

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But with Brexit looming large, where will any government money go?

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Also in the programme: iPhone maker Foxconn signals $7 billion

:00:40.:00:45.

Korean electronics giant Samsung has released the results

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of its investigation into its flagship Galaxy Note 7 smartphones.

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In October last year the phones were recalled because some had

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The company today confirmed problems with the design saying

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the manufacturing of batteries was to blame, not the actual phones.

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The Note 7 was supposed to rival Apple's iPhone 7 but instead,

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the device caused massive damage to the company's profits,

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Last year, over 100 of the phones spontaneously burst into flames.

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This forced Samsung to halt production and recall millions

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globally months before the all important Christmas sales period.

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The debacle almost entirely wiped out the company's mobile business

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profit in the third quarter of last year,

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And this dragged total profits at the company down by 30%,

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Samsung itself predicted another three billion dollars could be wiped

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off profits over the next two quarters.

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The total cost of the recall has been estimated at around

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$5.3 billion, but the damage to the company's

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This is how one of the independent external experts that has helped

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Samsung find the cause of the fires summed it up.

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We need additional analysis to understand the root cause of the

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damage to the edge or corner of the battery which results in internal

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issues at that location. In summary design and manufacturing issues with

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the batteries led to failures of the devices.

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With me is Daniel Gleeson, Consumer Technology Analyst at Ovum.

:02:53.:02:55.

Good morning. Good to see you. So that was the big press conference

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that happened today. Give us more on where they went wrong. While it is

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good news for Samsung that it wasn't their own design that was the

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problem it was a problem on their behalf that they didn't do enough

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testing of the Note 7 and after they caught the problem and switched

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battery suppliers they asked the new supplier to go too fast too quickly

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and a whole new set of problems occurred with this new supplier. So

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there are a lot of lessons to be learned for other manufacturers as

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well as we try to shrink phones and pressure the batteries about how to

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design and test those issues. It was almost like the race was on to get

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this phone out there at the same time as the apple iPhone 7 and also

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Google launching its phone as well, there is so much competition right

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now that perhaps there I was off some of the detail. Exactly, and

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especially the last two or three months of the year are so important

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for any consumer device sales obviously with black Monday in the

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US leading into Christmas and most of the western world leading into

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the Chinese New Year at this time of year. So, what now, they have set as

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well today that they are not going to be launching their next news

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Samsung smartphone in February at the big mobile phone conference in

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Spain, which was expected. So, what now? Yes, the Galaxy S8, which we

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expected at the end of February we won't see until April, which gives a

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big window of opportunity for Sony, HTC, Huawei, launching flagship

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phones in the next month or two to make an impact on the market. For

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Samsung it was them in a difficult position because they are in a

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non-traditional launch window but I guarantee they will come to the

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market with the S8 and not only will it be very well-prepared and tested

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but they will come with millions of marketing to try to overcome the

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brand damage. How damaging has it been, how put off are we when it

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comes to buying a Samsung, are we keeping Samsung for the time being,

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our people staying loyal? I think with most controversies with mobile

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phones, it stuck in people's mind, it was a protracted recalled, that

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really pushed it into the public consciousness, the butt of

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late-night jokes on American TV networks, it was all over social

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media, so I think because of that it is a kind of issue that will stick

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with consumers for several months and will impact on a lot of

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decision-making. Ultimately I think Samsung can recover if they invest

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heavily enough into their market. And if nothing goes wrong again in

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future, you would imagine. Thank you for your time this morning. And

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there is much more detail on the story on the website, as with this

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story too, which we will discuss next.

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Foxconn, one Apple's biggest suppliers based in Taiwan,

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has confirmed it's considering setting up a display-making plant

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Sharanjit Leyl is in our Asia Business hub in Singapore.

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Interesting announcement from Foxconn? Indeed it is, and it was

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from none other than the chief executive Terry Go, part of Taiwan's

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technology giant Foxconn, basically confirming they are to set up a

:06:28.:06:33.

plant in the US, with Mr Go saying it might exceed $7 billion. It is a

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major supplier of apple and a likely generate thousands of jobs for the

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US, if it does indeed go ahead and the plans come after US President

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Donald Trump confirmed his America first agenda which is meant to

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overturn international trade treaties, which he said during his

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inaugural speech on Friday and during his campaign. Since his

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election he repeatedly threatened high import tariffs in order to try

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to encourage US as well as foreign companies to improve production in

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the United States and he singled out China as a significant cause of loss

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of manufacturing jobs in the United States. As we know, Foxconn doesn't

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just manufacture for Apple but for other global giants as well. It is

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formally known as Honhai Position and has most of its factories in

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China, where it assembles its iPhone. Very interesting. Thank you.

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See you soon. The UK Prime Minister Theresa May

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will today launch the government's vision for an industrial

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strategy for Britain. Our Industry correspondent

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John Moylan talks us through what the government

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is likely to announce. How can the government ensure the

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economy is fit for the future? For the Business Secretary Greg Clark

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places like this are part of the answer, it is a new automotive

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innovation centre in Warwick backed by government industry money and

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designed to keep carmakers firing on all cylinders. One of the things

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with industrial strategy is to build on the great success and also to

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help make sure that we drive growth in all parts of the country. The

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industrial strategy will be committed to driving very hard to

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spread the opportunities right across the country and to drive not

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just jobs but really good well-paid jobs in all parts of the country. It

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is going to be a big part of the strategy. Today the strategy will be

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outlined in a new green paper aimed at kickstarting wide-ranging

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consultation on the government's new vision, including plans for sector

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deals where businesses and stakeholders in specific sectors can

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make the case for government support. That is just one of ten

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so-called strategic pillars which are all designed to increase

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productivity and drive growth. In the past, governments used

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industrial strategies as an excuse to back key firms or industries. It

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didn't always work. As we prepare for the challenges of leaving the EU

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the big test of this plan will be that it doesn't just deliver for

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successful firms like this but that it reaches out to all parts of the

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UK to deliver the government's aim of an economy that works for

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everyone. United Airlines says in a statement

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it grounded all domestic flights You might have noticed if you try to

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fly on Sunday. It did not give any more details,

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and it was not immediately clear how The Chicago-based Airline

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and United Express operate more than 4,500 flights a day to 339

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airports across five continents. So, let's hope they have fixed that

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problem. Looking at market very quickly and we have a stronger yen,

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the dollar falling in value, affecting Japan, and that is merely

:10:06.:10:08.

because the news out of the new president so far hasn't really been

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about how to boost growth but more political issues and issues that

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could cause a must as opposed to host growth and help the world's

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biggest economy, so disappointment for financial markets so far on the

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Trump effect for the global economy - that is down for the dollar and up

:10:25.:10:29.

for the yen, which is not helping exporters in Japan. I will see you

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soon.

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