Posts in category Business


ApprovedBusinessBusiness and finance

Online matchmaking businesses in India have many ways to woo

Arranged by algorithm

“IT WAS 2012…I was number 37,” says Ashwini, referring to the badge that was pinned on her shirt pocket. Her task was to go onto the stage and introduce herself to around 70 eligible bachelors and their parents. Families then conferred and, provided caste and religious background proved no obstacle, would approach the event’s moderator asking to meet number 37. At midday girls would wait for prospects to swing by, again with parents on either side. A brief exchange might establish the potential bride’s cooking skills or her intention to work after marriage. If the two sides hit it off, they would exchange copies of their horoscopes. Nearly 50 men lined up to meet Ashwini that day, speed-dating style. No one made the cut. She later married a colleague.

Such gatherings form an important part of the wedding industry, worth around $50bn a year, in a country where arranged marriages continue to be the norm. India has 440m…Continue reading

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Streaming has pushed Latin music into the mainstream

“MI GENTE” lures listeners with a mesmerising hook, a thumping beat and lyrics about breaking down barriers. A collaboration between J Balvin, a Colombian reggaeton star (pictured), and Willy William, a French producer, the latest product of this summer’s Latin craze is crooned almost entirely in Spanish. (The title means “My People”; reggaeton borrows from hip hop, reggae and rap.) The song topped the charts on Spotify, a streaming service, for weeks. “To be a crossover artist, you used to have to sing in English,” said John Reilly, Mr Balvin’s publicist. Now six of YouTube’s top ten music videos are predominantly in Spanish. In August the Billboard Hot 100, which tracks streams, sales and radio plays, sported seven Latin hits. Just five graced the chart in all of 2016.

Latin music is helping the music industry to arrest years of decline. Its growth is far outpacing that of other genres. Last year Latin America yielded just $598m out of total global recorded-music…Continue reading

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Behind the veil of Saudi Aramco

IF SAUDI ARAMCO is a state within a state in Saudi Arabia, then the blandly named Oil Supply Planning and Scheduling (OSPAS) is its deep state. To enter it, you pass tight security at Aramco’s suburban-style headquarters in Dhahran, in the east of the kingdom. The transition is eye-opening. Suddenly, English is the common tongue even among Saudi “Aramcons”, as its workers are known. Female employees, their faces uncovered, lead meetings of male colleagues. The crisp banter is common to engineers everywhere. A toilet break is called a “pressure-relief” exercise.

Deep within, OSPAS is even further removed from the kingdom outside. The few executives with clearance to enter call it the “nerve centre” of the world’s largest oil company. Using 100,000 sensors and data points on wells, pipelines, plants and terminals, it directs every drop of oil and cubic foot of gas that comes out of the kingdom (10% of the world’s oil supply), monitors it on giant screens as it heads to…Continue reading

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Ryanair cancels more than 2,000 flights over the next six weeks

Not his biggest cock-up said O’Leary

RYANAIR, an Irish airline, is known for three things: low fares, the brash way in which Michael O’Leary, its chief executive, advertises them, and its record for sticking to its flight schedules. The last of these is key to its appeal: many businessmen chose Ryanair more for its punctuality than its cheapness. And so the announcement on September 15th that it is cancelling over 2,000 flights between now and the end of October—around 2% of its capacity over the period—is more serious than it may at first seem. Ryanair’s share price fell by more than 5% in the aftermath.

The problems began in early September when Ryanair’s on-time record plunged, owing to a pilot shortage. To restore punctuality, it cancelled many flights at short notice; passengers were marooned around Europe. Up to 400,000 people booked on the 2,000 scrapped flights risk missing business trips and holidays.

Mr O’Leary says the…Continue reading

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What if large tech firms were regulated like sewage companies?

THREE-QUARTERS of Americans admit that they search the web, send e-mails and check their social-media accounts in the bathroom. That is not the only connection between tech and plumbing. The water and sewage industry offers clues to the vexed question of how to regulate the Silicon Valley “platform” firms, such as Alphabet, Amazon and Facebook. The implications are mildly terrifying for the companies, so any tech tycoons reading this column might want to secure a spare pair of trousers.

In America and in Europe a consensus is emerging that big tech firms must be tamed. Their dominance of services such as search and social media gives them huge economic and political clout. The $3trn total market value of America’s five biggest tech firms (Apple and Microsoft are the other two) suggests that investors believe they are among the most powerful firms in history, up there with the East India Company and Standard Oil.

Trustbusters in need of instant gratification want to break…Continue reading

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Boeing takes off on a flight of hypocrisy against Bombardier

“WE WON’T do business with a company that is busy trying to sue us.” So said an uncharacteristically stern Justin Trudeau, Canada’s prime minister, alongside his British counterpart, Theresa May, in Ottawa on September 18th. The two had teamed up to take on Boeing. The giant American aeroplane-maker is pressing Donald Trump’s administration to impose duties on commercial jets made by Canada’s Bombardier. Boeing says its smaller rival is using Canadian government subsidies to sell aircraft to Delta, an American carrier, at below cost price.

Few in either country question that Bombardier has had vital financial support from the Canadian and British governments since 2005 for its small jetliner, the C-Series. As the plane’s development costs soared, to $5.4bn, Bombardier struggled to find buyers for it; financial trouble followed. An estimated C$4bn ($3.4bn) in state support, including C$2.8bn in 2015, stopped a nosedive. It was not until 2016 that the aircraft’s future seemed…Continue reading

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Big technology firms are newly in the hot seat at home

Jane Doe and friend

ANTITRUST, privacy, hate speech—whenever the European Union tries to rein in tech giants, Americans accuse it of protectionism. That argument has always been simplistic, but now it is harder to make; scarcely a week passes in Washington when companies like Apple and Google are not in politicians’ crosshairs.

The latest target is Facebook. Earlier this month the firm revealed that 470 accounts that appeared to be controlled from Russia had bought advertisements worth a total of $100,000 on the social network between June 2015 and May 2017. Alex Stamos, Facebook’s chief security officer, said they aimed at “amplifying divisive social and political messages”.

This was the first time Facebook had acknowledged that Russia may have used the social network, leading the team of Robert Mueller, the special counsel investigating possible links between Donald Trump’s presidential campaign and the Russian government, to issue a…Continue reading

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Toys “R” Us files for bankruptcy

ASK young American parents about Toys “R” Us and they are likely to be able to sing a jingle from their childhood: “I don’t wanna grow up, ’cause maybe if I did, I couldn’t be a Toys ‘R’ Us kid”. For children of the 1980s, Toys “R” Us was a mecca at the strip mall, an awe-inspiring array of dolls, trucks, board games, bikes, art supplies and much more. Many of them noticed when on September 18th, the chain filed for bankruptcy.

Dave Brandon, the company’s chief executive, emphasised that shops would carry on operating as usual and claimed that the best era of Toys “R” Us was still to come. “These are the right steps to ensure that the iconic Toys “R” Us and Babies “R” Us brands live on for many generations,” he declared. A Chapter 11 bankruptcy, many analysts agree, is a sensible way to deal with the chain’s $5bn of long-term debt. So Toys “R” Us is not dead. But its future is hardly certain.

The company in many ways…Continue reading

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Global LNG giants turn to poor countries for new markets

Bringing rivers of the liquefied stuff

WHEN it comes to liquefied natural gas (LNG), the supermajors have supersized appetites. The likes of Royal Dutch Shell, ExxonMobil and BP make discoveries described as “elephants”; their cost overruns alone can run into the tens of billions of dollars; and projects take the best part of a decade to complete. For years, the industry has demanded fixed, long-term contracts from their customers to justify the size of these megaprojects.

The producers also have pretty big problems. They are in the midst of a vast expansion in Australia and elsewhere just as the shale revolution and the start of American LNG exports has brought an unexpected burst of gas onto markets, clobbering prices for the foreseeable future and forcing producers into concessions. Demand in rich countries such as Japan and much of western Europe appears to be in long-term decline.

At least one big customer, China, is making life easier….Continue reading

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New rail routes between China and Europe will change trade patterns

ASTANA in Kazakhstan is one of the world’s most remote capitals, surrounded by thousands of kilometres of empty steppe. This summer Astana attempted to launch itself onto the global stage by hosting the World Expo, which closed on September 10th and underwhelmed many attendees. But there are other ways to have an impact. On the city’s north side, away from the Expo’s exhibits, a series of diesel trains, each pulling dozens of containers, roll through the old railway station. Most are heading from China to Europe. Last year over 500,000 tonnes of freight went by train between the two, up from next to nothing before 2013. Airlines and shipping firms are watching things closely.

The trains rumbling through Astana result from a Chinese initiative, in tandem with countries like Kazakhstan, to build a “New Silk Road” through Central Asia. The earlier overland routes were once the conduits for most trade between Europe and China and India; they faded into irrelevance…Continue reading

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A legal vulnerability at the heart of China’s big internet firms

COMPANIES’ legal structures are usually mind-numbing fare. But occasionally it is worth pinching yourself and paying attention. Take “variable interest entities” (VIEs), a kind of corporate architecture used mainly by China’s tech firms, including two superstars, Alibaba and Tencent. They go largely unremarked, but VIEs have become incredibly important. Investors outside China have about $1trn invested in firms that use them.

Few legal experts think that VIEs are about to collapse, but few expect them to endure, either. One sizeable investor admits loving Chinese tech firms’ businesses while feeling queasy about their legal structures. Like scientists appalled by their monstrous creations, even the lawyers who designed VIEs worry. They are “China’s version of too-big-to-fail”, says one. As well as being spooky, VIEs are another instance of how China’s weak property rights hurt its citizens.

What are VIEs? Over 100 companies use them. Since the 1990s private firms have sought to break free of China’s isolated legal and financial systems. Many have done so by forming holding companies in tax havens and listing their shares in New York or Hong Kong. The problem is that they are then usually categorised as “foreign firms” under Chinese rules. That in turn prohibits them from owning assets in some politically sensitive sectors, most…Continue reading

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The business of sperm banks

Fruit of a global supply chain

BROWSING websites that list sperm donors is weirdly similar to online dating. “Sanford is the total package,” begins one online ad, describing his strong jawline and piercing blue eyes. With a degree in finance and a “charming demeanour”, he is more than a pretty face. You can listen to a voice recording from Sanford himself. If all that wins you over, you can have his baby without ever having to go on a date. For $635, Seattle Sperm Bank (SSB) will post you a vial of his frozen swimmers.

The fact that the main customers for many sperm banks are now single women explains the marketing technique. “They tend to be highly educated, impatient and picky,” says Ole Schou, founder of Cryos International, the world’s largest sperm bank, based in Denmark’s second-biggest city, Aarhus. Its website is designed to resemble Match.com, a dating site, because “finding a donor should be as close to finding a natural partner as…Continue reading

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Is Margrethe Vestager championing consumers or her political career?

EVEN her enemies admire the bloody-mindedness of Margrethe Vestager, the European commissioner in charge of competition policy. Last autumn, not long after she had ordered Apple to pay €13bn ($14.5bn) in back-taxes to Ireland, to the fury of many in America, she flew across the Atlantic on a charm offensive. The Americans were not charmed; Ms Vestager was unmoved. Buckling up for the flight home, she tweeted that she had never felt so European.

Since she assumed her current role in November 2014, Ms Vestager has had several high-profile clashes with American tech firms. In May she fined Facebook €110m for misleading EU trustbusters about its takeover of WhatsApp, a messaging service. In June a long-running investigation resulted in a €2.4bn fine on Google for using its search engine to promote its own comparison-shopping service. EU trustbusters have also charged Google with using its Android operating system to promote its mobile-phone apps and services over those of rivals. That…Continue reading

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Why do European companies bother to hire ex-politicians?

THIS month Gerhard Schröder starts a new job. Shareholders in Rosneft, a Russian energy giant with a market value of nearly $60bn, are set to appoint Germany’s ex-chancellor as a board director on September 29th. Russia’s government, Rosneft’s majority-owner, nominated Mr Schröder, who is pals with Vladimir Putin. Despite Western sanctions imposed on the firm after Russia’s invasion of Ukraine in 2014, Mr Schröder’s move is no surprise. He has worked for years with Gazprom, another energy arm of the Russian state, to promote a gas pipeline to western Europe.

His ties to Russia win him few friends at home. His successor as Germany’s leader, Angela Merkel, calls his behaviour “not OK”. She also vows to reject offers of “any posts in industry once I am no longer chancellor”. Other politicians are happier to follow Mr Schröder’s example. It emerged last month that a former German president, Christian Wulff (pictured), is also employed by a foreign company. He advises…Continue reading

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China moves towards banning the internal combustion engine

“A DEFINING moment for the auto industry.” That is how usually restrained analysts at Sanford C. Bernstein, a research firm, described the news that China’s government wants to move towards a ban on gas guzzlers. On September 9th, Xin Guobin, vice minister of industry and information technology, told an automotive conference in Tianjin, a grimy industrial city near Beijing, that the government is developing a long-term plan to phase out vehicles powered by fossil fuels.

The news reverberated around car firms, for which China is the largest market. William Russo of China’s Gao Feng Advisory, a consultancy, who was previously a senior executive at Chrysler, says China is simply far too big to lose out on. “If China says no more fossil-fuel powered cars, global carmakers must follow.”

No timeline for a ban was suggested. China already has ambitious medium-term goals for automotive efficiency and climate change, including a cap on carbon emissions by 2030. Experts…Continue reading

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Rivalry between Apple and Samsung in smartphones will grow fiercer

NEVER shy about hype, on September 12th Apple’s boss, Tim Cook, presented the firm’s latest iPhones to a packed auditorium in its glitzy new headquarters in Cupertino. He made a grand prediction: its new, premium phone, the iPhone X (pronounced “ten”), will “set the path of technology for the next decade”. Set to be released this November, ten years after the first iPhone launched, the iPhone X has new features such as an edge-to-edge OLED screen (a thinner screen that does not use a backlight), wireless charging, facial-recognition technology and a dual-lens camera.

On the same day, Samsung, a rival smartphone-maker, held a lower-key event in Seoul. Koh Dong-jin, president of Samsung Electronics’ mobile business, announced that next year Samsung could reimagine the smartphone entirely and launch a new design with a foldable screen, which can close like a small book. On September 15th its latest premium smartphone, the Galaxy Note 8, will go on sale, boasting many of the features offered by the iPhone X.

Both are trying to convince consumers to spend around $1,000 for their new gadgets. Samsung’s new phone will cost $960; Apple’s high-end iPhone X will cost $999, 45% more than the average selling price of an iPhone in 2016. (The iPhone 8, simpler than the X and available for sale in September, will start at $699.)

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A craft-beer boom with Chinese characteristics

EVIDENCE unearthed at Mijiaya in Shaanxi province proved that the Chinese have an ancient tradition of making beer. Brewers were operating 5,000 years ago, using grains such as millet and Job’s tears (a kind of pearl barley). This year a couple of small-scale brewers lovingly recreated that Neolithic ale. The cloudy, hop-free beverage would challenge even the bravest microbrew devotee. Ladislao Raphael of Moonzen Brewery in Hong Kong describes it as “sour and funky”.

Yet Mr Raphael and his fellow craft-beer evangelists are winning converts. The Chinese market, which is the world’s largest, is dominated by mass-produced lager. But craft breweries are sprouting up around the country—by 2016 there were around 150, up threefold from 2015. Consumption of their brews has surged by two-thirds over the past five years, figures from GlobalData show, even as overall beer-swilling declines. This mirrors a global pattern: consumers often crave better beers as they get richer. Trend-setters…Continue reading

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An infrastructure for charging electric vehicles takes shape

A NEW phrase, “range anxiety”—the fear that an electric vehicle (EV) will run out of power before it reaches a charging-point—entered the Oxford English Dictionary in 2013. At the time a Nissan LEAF, the world’s best-selling EV, could travel only 120km between charges. A car with a full tank of fuel will travel 650-800km between refills. A motorist relying on batteries has to find a public charger, a rare sight in 2013, or plug in at home to cover the same distance. Range anxiety has not gone away as EVs have advanced. But the problem now feels much more soluble.

Many governments are pushing hard to replace the internal combustion engine (ICE) with cleaner EVs—this summer both Britain and France said that by 2040 new cars completely reliant on petrol or diesel will be illegal. By 2050, half the cars on the road globally, a billion in total, will be battery-powered, reckons Morgan Stanley, a bank. Falling battery costs mean that the total cost of EV ownership will soon hit…Continue reading

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America’s utilities prepare for a nuclear threat to the grid

When the lights go out

WHEN North Korea said on September 3rd that it had developed a hydrogen bomb, adding that it could be used for a “super-powerful” high-altitude electromagnetic pulse (HEMP) attack, America’s electricity industry was already on alert. Sceptics tend to dismiss as far-fetched the idea that the rogue regime would knock out the electricity grid by detonating a nuclear bomb high in the atmosphere. Regulators have not mandated safety measures. But the utilities are taking it seriously enough.

They are more than a year into a three-year programme, funded by about 60 electricity firms, to understand the potential impact of a HEMP attack on the generation and transmission of electricity, and to find ways to shield the network. Such concerns are not new. In 1962, when America exploded nuclear devices high above the Pacific, electrical damage was found in Hawaii. The industry has also studied analogous space-weather effects on power systems,…Continue reading

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Panipat, the global centre for recycling textiles, is fading

Tools of the shoddy trade

WHEN the doors open to the warehouse at Ambey Spinning Mills in Panipat, a city 90km from Delhi, it seems as if its contents might tumble out like those of an overstuffed cupboard. Heaps of clothes are piled to the ceiling. Ten women meticulously extract zips, chains and buttons from T-shirts, winter jackets and denims using long blades usually used to chop vegetables. Outside, a teenage boy wields a knife to bash synthetic fibre against a tree stump. In another workshop clothes are shredded, spun into yarn and woven by power looms into blankets. Bullock carts take them for further processing; they are then sent off for sale in India and beyond.

Known as the “cast-off capital”, Panipat is home to 150-200 such mills, which take in discarded clothes from Western countries and turn them into recycled cloth. The industry employs around 20,000 people and brings in annual revenues of $62m, according to Pawan Garg of All India Woollen and…Continue reading

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Mobile technology is revamping loyalty schemes

THOSE of a cynical bent might think Tom Stuker a glutton for punishment. Over the years, Mr Stuker has flown more than 18m miles (29m kilometres) on United Airlines, a carrier not always renowned for treating its passengers tenderly. Mr Stuker may possess the world’s most impressive frequent-flyer account. Over the past half-decade he has averaged over 1m miles a year with United.

Mr Stuker is extreme in his devotion. But engendering customer loyalty is something that nearly all firms strive for. Most fail. The average American household belongs to 28 loyalty schemes. The country is home to 3.8bn scheme memberships in total, according to Colloquy, a research firm, up from 2.6bn in 2012. More than half of these accounts go unused.

Frequent-flyer programmes, introduced in the 1970s, were the first examples of modern loyalty schemes. They proved to be a clever bit of marketing. Flyers value plane seats highly, so a free one feels like a substantial reward. But…Continue reading

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United Technology merges with Rockwell Collins

WHEN passengers board an aircraft, only a few care whether it was built by Airbus or Boeing, two giants that make all the world’s big airliners. Fewer still would recognise the names of the thousands of suppliers that produce the 2m or so parts that go into a modern jet. Surprisingly little of the work is done by Boeing and Airbus. Boeing has outsourced 70% of the parts for its 787 aircraft. The job of assembling Airbus’s A380 superjumbo in its Toulouse factory accounts for only 4% of the work required to make it. The balance of power between aerospace firms and their suppliers is causing ructions.

Near hostilities have broken out due to a run of big mergers among parts-makers. On September 4th, United Technologies (UTC), an American conglomerate that makes Pratt & Whitney engines and other aerospace parts, announced that it had agreed to buy Rockwell Collins, an avionics firm, for $30bn. Although it is one of the biggest-ever mergers in the aerospace business, the deal…Continue reading

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Ever better and cheaper, face-recognition technology is spreading

TOURING the headquarters of Megvii in Beijing is like visiting Big Brother’s engine room. A video camera in the firm’s lobby recognises visitors in the blink of an eye. Other such devices are deployed around the office. Some of the images they capture are shown on a wall of video called “Skynet”, after the artificial-intelligence (AI) system in the “Terminator” films. One feed shows a group of employees waiting in front of an elevator with a white frame around every face and the name of each person next to it. Quizzed on the Orwellian overtones of the set-up, Yin Qi, the startup’s chief executive, simply remarks that “this helps catch bad guys.”

Even if Mr Yin wanted to ponder the implications of the technology, he would not have the time. Megvii is busy building what he describes as a “brain” for visual computing. The firm has come a long way since its founding in 2011 (its name stands for “mega vision”). More than 300,000 companies and individuals around the…Continue reading

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The lessons of fidget spinners

YOU can spin it on your nose, chin, finger or tongue. Some include LED lights, others resemble a ship’s wheel, or even a skull and crossbones. The fidget spinner has three paddle-shaped blades attached to a central, weighted disc containing ball bearings. Flick a blade and it spins, for anything up to 12 minutes in an advanced version from Japan. It was originally designed to help calm children with attention-deficit hyperactivity disorder or autism, but swept the world earlier this year as a toy that everyone can play with.

Retail sales have undoubtedly slowed recently, says Mark Austin of ToyWorld, a trade publication—good news for the schools that have banned it as too distracting for pupils. But the spinner has created a new “fidget” category of toys. And the global toy industry, which was surprised by its success, has learned lessons.

The fad started in America in February. By May, all 20 of the top-selling toys on Amazon, an online retailer,…Continue reading

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