Portfolio
Issue 111 n March 2015
Exclusive to Emirates First Class and Business Class
Risky Business Climate and Finance Energy Diversion Russia’s New Pipeline Luxury Goods Focus On America
Robin Li Baidu’s Search King
This issue MARCH 2015
Portfolio
Exclusive to Emirates First Class and Business Class
Cover Story 32 Growth Engine When Robin Li started Baidu in 2000, China was still a relatively closed country and the internet still in its infancy. Today, Baidu is the country’s most popular search engine with a market share of more than 80 per cent. But there are challenges on the horizon.
Features 38 Risky Business
52 Oil Impacts Venezuela’s Economy
The Risky Business Project, an unlikely alliance of high-
The tumbling oil price has affected Venezuela’s flow of hard
level US leaders, is drawing attention to climate change by
currency, which has hurt the import of food, medicines and
focusing on the financial bottom line.
other basics.
42 The Pipeline Challenge
56 Internet in Orbit
Russia has scrapped its proposed South Stream gas
Companies such as Google and Facebook are looking
pipeline in favour of one going to Turkey, but there are a lot
towards space in their quest to deliver internet to
of challenges in the way.
underserved areas around the world.
46 Luxury Goods Change Focus
60 Aiming at Glass Ceilings
The US is attracting high-end luxury goods purveyors as the
Helena Morrissey, the CEO of Newton Investment
local economy booms, while Europe and Asia is faltering.
Management, is successfully pushing for more female representation on boards.
38
46
60
9
Portfolio
10
Exclusive to Emirates First Class and Business Class
Essentials 63 Path to Enlightenment When you’ve had enough of urban, boom-time China, head to Shanxi Province for ancient history, mountain landscapes and a slower pace.
68 A Spicy Contender Balti, a favourite curry in Birmingham, is now vying to become one of Britain’s traditional specialties.
63
72 Fuelled by Danish Ingenuity The tiny island of Samso off the Danish coast is a case study in renewable energy.
76 The Mosquito Net Issue Mosquito nets are meant to combat malaria, but in many waterside communities they are used for fishing with devastating environmental effects.
72
80 Time Flies: 25 Years and Counting The Salon International de la Haute Horlogerie (SIHH) is one the world’s most prestigious trade fairs and a refined celebration of high watchmaking.
84 Keeping Irish Romance Alive Willie Daly has been looking after the Irish matchmaking tradition for the last 50 years.
88 Other Business
80
Portfolio takes a light-hearted look at the latest business news.
Departments
84
13 Notebook World business in a nutshell.
21 Observer Spotting and analysing business trends.
30 Column: Frederika Whitehead Taming An Exploding Lake
Published for Emirates by
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Editor-in-Chief Obaid Humaid Al Tayer Managing Partner & Group Editor Ian Fairservice Editorial Director Gina Johnson Group Editor Guido Duken Deputy Editor Vishwas Kulkarni Junior Writer Mary Sophia Picture Researcher Hilda D’Souza Editorial Assistant Londresa Flores Senior Art Director Tarak Parekh Senior Designer Charlie Banalo Head of Production S Sunil Kumar Assistant Production Manager Murali Krishnan Group Sales Manager Jaya Balakrishnan Email: jaya@motivate.ae General Manager – Group Sales Anthony Milne Email: anthony@motivate.ae International Sales Manager Martin Balmer Email: martin.balmer@motivate.ae Senior Sales Manager Michael Underdown Email: michael@motivate.ae INTERNATIONAL MEDIA REPRESENTATIVES AUSTRALIA/NEW ZEALAND Okeeffe Media; Tel + 61 412 080 600, licia@okm.com.au BENELUX M.P.S. Benelux; Tel +322 720 9799, francesco.sutton@mps-adv. com CHINA Publicitas Advertising; Tel +86 10 5879 5885 GERMANY IMV Internationale Medien Vermarktung GmbH; Tel +49 8151 550 8959, w.jaeger@imv-media. com HONG KONG/MALAYSIA/THAILAND Sonney Media Networks; Tel +852 2151 2351, hemant@sonneymedia.com INDIA Media Star; Tel +91 22 4220 2103, ravi@ mediastar.co.in ITALY & SPAIN IMM International; Tel +331 40 1300 30, n.devos@imm-international.com JAPAN Tandem Inc.; Tel + 81 3 3541 4166, all@tandem-inc. com NETHERLANDS GIO Media; Tel +31 6 29031149, giovanni@gio-media.nl TURKEY Media Ltd.; Tel +90 212 275 51 52, mediamarketingtr@medialtd.com.tr UK Spafax Inflight Media; Tel +44 207 906 2001, nhopkins@spafax.com USA Totem Brand Stories; Tel +212 896 3846, faith.brillinger@totembrandstories.com
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Portfolio
F O R
S H O P P I N G
L O V E R S
CA S T E L L A N A
S TO R E
S TO R E
M A D R I D / D I AG O N A L
DEPARTMENT STORES SPAIN & PORTUGAL
BA R C E LO N A
13
Notebook B U S I N E S S
N EW S
Miners Trim Spending by $20 Billion
B R I E F
sheets stretched. Macquarie estimates total
London Mining Plc was planning a
spending this year of $79 billion is 39 per
$400 million expansion of its Marampa
cent down on the industry’s peak outlay of
operation in Sierra Leone in July, but by
$130 billion in 2012.
October it had called in administrators.
As a result, the world’s biggest mining
African Minerals Ltd., which also
companies are moving away from Africa.
produces the steelmaking ingredient in
BHP Billiton, the world’s biggest mining
the country, shut its mine in December.
COMMODITY PRICES have fallen to
company, is moving to spin off its Africa-
In Zambia, First Quantum Minerals
the lowest in 12 years, spurring deeper
focused assets into a new company called
Ltd. and Glencore are among companies
spending cuts by the world’s biggest
South32, while Rio Tinto Group, the second-
that have suspended projects valued at
mining companies.
largest, exited its Mozambican coal business
more than $1.5 billion in Zambia because
last year after writing it down by $3 billion.
of a tax dispute, while Barrick Gold Corp.,
According to Macquarie Group miners
the biggest producer of the metal, has
will scale back spending by $20 billion
Glencore Plc’s South African coal unit will
this year. With projects planned during
cut annual output by half amid a “continued
started the process to put its Lumwana
the decade-long commodities boom now
deterioration in the export coal price,” it said
mine under care and maintenance.
being shelved, Africa is likely to bear the
last month. Anglo American Plc is looking
brunt of the cuts, investors say.
to sell platinum mines in South Africa
in capital spending in Africa was in line
and its iron-ore unit is planning to reduce
with the rest of the world, the cuts will
capital expenditure by 20 per cent.
have more impact in the continent due
Prices of minerals and metals dropped to the lowest since August 2002 in January, Images: Getty Images
I N
according to the Bloomberg Commodity
West Africa-based producers of iron ore,
Index. Companies are contending with
which has declined 54 per cent to $61.64
the slump in the wake of an era of debt-
a metric ton since the beginning of 2014,
fueled expansion that’s left some balance
have been particularly hard hit.
March 2015
While the 19 per cent decline in 2014
to its reliance on resources, according to PricewaterhouseCoopers. Of the 20 countries most reliant on mineral exports, 10 are in Africa.
14
Notebook N U M B E R S
G A M E
THE WORLD IN FIGURES
£100
a week sickness
benefits availed by alcoholics, drug addicts and obese people could be taken away if they refused treatment that would help them get a job, says the UK government. Ministers estimate there are almost 100,000 people claiming sickness benefits on the grounds of treatable conditions.
£1
billion has been invested by China
Minsheng Investment Co Ltd, China’s largest private investment
1,215
rhinos were killed in South Africa last year marking a new record for poaching and an alarming 827 of these were said to occur in the country’s famous Kruger National Park. Traffic has cited judicial delays in prosecutions, and lack of strong political will from the government for the inability to crack down on poachers.
fund, in a Chinese-led project to develop a new financial district in London.
1,800
high-end
£41
million windfall earned by Candy
$1
billion loss for BP, recorded in the final
£197
million is the record price
air purifiers
have been purchased by the US
Crush Saga, the smartphone
quarter of the year owing to low
fetched for an artwork of two
Embassy in recent years for its
game sensation, will see
oil prices and more write-downs.
Tahitian girls by the French artist
staff members’ home in India’s
Midlands entrepreneur Mel
The company plans to cut its
Paul Gauguin. The painting titled
capital New Delhi in light of the
Morris and Italian games
exploration activity in half and
Nafea Faa Ipoipo, or When Will You
rising air pollution in the capital.
developer Riccardo Zacconi
reduce overall spending for 2015
Marry? was painted in 1892 and
Many other major embassies are
pocket a large slice of the
to $20 billion, down from a target
was owned by a Swiss collector.
following suit, as well as Indian
£195 million dividend to be
of over $24 billion in 2014.
Unconfirmed reports suggest it
companies that have also begun
was sold to a museum in Qatar.
ordering filtration systems for their
paid by the gaming owner King Digital in March.
office buildings.
Dubai Overtakes Heathrow Dubai ended London Heathrow airport’s decades of dominance as the world’s top international air hub last year. Dubai International Airport boosted passenger numbers by 6.1 per cent to 70.5 million in 2014, almost all of them travelling to or from locations outside the United Arab Emirates. That took it past Heathrow, which attracted 68.09 million international travellers in 2014. Dubai has used its location as a geographical crossroads between Europe, Asia, Africa and the Middle East to establish itself as a base for intercontinental transfer flights, with Emirates already the world’s No. 1 carrier by international traffic. The emirate is building a new hub at Al Maktoum airport, which could one day handle 240 million passengers. Portfolio
16
Notebook Windows Phone targets Africa Microsoft plans to start selling mobile
a combined 280 million customers
phones and tablet computers in Africa
in Africa and the Middle East, have
that run on the US company’s operating
developed smartphone devices priced
systems to tap surging demand for
at less than $100 to boost data revenue.
smart handsets on the continent. The
They offer a growing middle class access
smartphones will cost between $75
to online retailing, social media, and
and $100.
services such as music-streaming. Microsoft set up its 4Afrika Initiative
Microsoft joins smartphone makers including Beijing-based Lenovo Group
to sell phones that would be affordable on
and Shenzhen-based Huawei Technologies
the continent while investing in education
in trying to take advantage of a market
and local technology companies. The
with rising internet connectivity. About
company is also investing in startups
one in five Africans was expected to be
to build relevant applications and has
online by the end of last year – many
report by Ernst & Young. MTN Group
partnered with Ghanaian internet
using mobile devices – compared with
and Vodacom Group, South Africa’s
providers to tap unused slices of the
10 per cent in 2010, according to a 2014
largest mobile phone companies with
television spectrum.
world’s top crude exporters, were also featured in the list of countries selling petrol at the cheapest rates. Saudi Arabia sold petrol at the fourth cheapest rate globally while Kuwait had the sixth cheapest price in the world. Bahrain and Qatar were also among the top 10 countries offering cheap petrol, while Oman and the UAE were placed further down the list. Petrol is sold at $0.47 per litre in the UAE, the highest rate in the GCC, the website showed.
COUNTRY
Countries with the cheapest petrol Venezuela has the cheapest rate for petrol globally at $0.02 per litre, according
the government, the website said. The average price of petrol around the
to fuel price comparison website
world was found to be $1.04 per liter but
GlobalPetrolPrices.com
various levels of taxation and subsidisation
Such low petrol prices in Venezuela were due to heavy subsidies provided by
led to different pricing levels.
Venezuela Syria Libya Saudi Arabia Turkmenistan Kuwait Iran Bahrain Qatar Algeria
price/litre $0.02 $0.05 $0.12 $0.15 $0.21 $0.22 $0.24 $0.25 $0.25 $0.25
Gulf countries, which are among the Portfolio
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+++ ++ + ++++++ +++ + +++Ras + alAjman ++++++ Khaimah Sharjah +++ ++++ +++++++ +++++++++++++++++ Dubai ++++++ ++++ ++++++++++++++++++++ ++++++++ Jebel Ali ++++ ++ +++++++++++++++++++++++ ++ +++++ +++ ++ + ++++++++++++++++++++ ++++++++Fujairah + +++ ++ + + + + + + + + + + + + + + + + + + + ++++++++ +++++ +++ ++ +++++ + ++++ ++++++++ ++++++++++++ + +++++++++++++++++++++ ++ +++++++++++++++++++++++++ + + + + + + + + + + + + + + + ++++++++ ++++++++ +++++++++++++++++ +++++++ +++++++ Dhabi ++++++++ +++++Abu ++++++++++++++++++++++++++ +++++++++ + + + + + + + +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Al Ain ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++ +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++++++++++++++ ++ +++++ + + +++++++++++++++++++++++++++++++++ +++++++ +++++++ ++++++++ + + + + ++++++++++++++ ++ +++++ ++++++++ + + + +++++++ + + + +++++ ++ ++++++++ ++++++++++++ + +++++++ ++++++++ ++ ++ +++++ ++++++++ +++ ++ ++++ +++++++ 18-19 +++++++ + D U B A I D I A R Y + + + ++++ +++ +++++ +++++++ SME WORLD ++++ +++++++++++++ ++ SUMMIT 2015 ++++ Jumeirah Beach Hotel
Notebook
UNITED ARAB EMIRATES
March 2015 08-10
DUPHAT Dubai International Convention & Exhibition Centre duphat.ae Held for the past two decades, this annual pharmaceutical event will once again host pharmacists, physicians, scientists, marketing professionals and researchers, to name but a few. Exhibitors enjoy ample benefits including generating sales leads, building brand image and giving live product demonstrations to test market responses. Visitors gain first-hand insight of the pharmaceutical market including new trends and technologies in manufacturing pharmaceuticals, as well as the latest regulatory and corporate developments.
16-18
AGRAME Dubai International Convention & Exhibition Centre agramiddleeast.com The Middle East’s largest exhibition dedicated to the agribusiness will host more than 250 agriculture, poultry and horticulture businesses from over
30 countries. The three-day event will also feature a number of educational platforms covering all aspects of GCC food security, sustainable farming and food preservation. This year the agenda focuses on topics pertaining to healthy poultry production and food security. There will be in-depth analysis on the roles of farmers and governments in reaching selfsufficiency and the diagnosis and control of poultry diseases.
17-18
smeworld.ae The two-day summit will host over 100 top small and medium-sized (SME) manufacturers from across the region. The leading enterprises will present their products and services, plus share their success stories and growth plans with investors, businesses, and governments. It will also highlight the region’s commitment to encouraging entrepreneurship by providing a strong ecosystem for small and medium enterprises. There will be panel discussions and Q &A sessions with experts and industry leaders on issues related to SME growth and development.
MIDDLE EAST RAIL
23-26
Dubai International Convention & Exhibition Centre terrapinn.com/exhibition/middle-east-rail/ The MENA region’s largest rail expo will attract 6,000 attendees, 220 exhibitors and 600 delegates. The show serves as a platform for Middle East governments to design, plan and build their future rail networks. Attendees benefit by being the first to witness multi-billion dollar deals and government development programmes and projects being rolled out. There will be plenty of networking opportunities through one-on-one partnering sessions, drink receptions and a gala dinner.
Dubai International Convention & Exhibition Centre arablab.com This show is regarded as the largest technology event serving the Middle East and Africa. It covers a wide range including research and development, forensics and security, agriculture and food. It is a onestop-shop for buyers from markets such as the Middle East and Africa, the Indian Subcontinent, China, and East Asia. Last year the event drew almost 11,000 visitors from 101 countries to see 912 exhibitors and their products.
ARABLAB 2015
Portfolio
Observer BUSINESS NEWS IN BRIEF
Hotels and resorts have long catered to travellers who cannot disengage from their jobs. But increasingly there is a new option for those who need to work but who also want the benefits of a vacation. These new centres are an offshoot of co-working spaces, which offer the benefits of an office environment on a temporary basis. But they also provide a place to sleep, have fun and mingle with colleagues – not in humdrum office parks but in exotic locations around the world, in the European countryside close to urban centres or in warm-weather destinations like Bali. Call it the busman’s holiday for the digital age. Matej Hrescak, a product designer at Facebook, spent several weeks at the Surf Office on Gran Canaria in the Canary Islands, near one of the island’s noted surfing beaches. “I really appreciate long uninterrupted periods of work time in order to dive deep into a particular problem, and having a destination where you’re far away from usual distractions made this possible,” he said.
Co-Working Facilities in Exotic Locales High-speed internet access and a round-the-clock work mentality have given rise to working vacations where business and pleasure mingle, reports Tanya Mohn.
The high-speed internet, fully stocked office, access to a kitchen and camaraderie “Normally when you arrive to a new
consulting firm in California, said the
and other planned group activities, he
location, you have to find a place to live
trend to blend co-working with living
added, all contributed to his productivity.
and a place to work,” he said, adding, “For
started about five years ago. He cited
“You’ll get your work done, you’ll surf
digital nomads and entrepreneurs like me,
as factors advances in technology that
and you’ll meet like-minded people,” said
it is definitely the best existing option.”
allow people to work from anywhere
© 2015 New York Times News Service
of other guests at barbecues, biking trips
there is fast internet, the round-the-clock
Hrescak, who is originally from Slovakia
Liz Elam, founder of Link Coworking
and now lives in Palo Alto, California. “I
in Austin, Texas, and executive producer
work mentality and the move toward
don’t think I’d be able to have such an
of the Global Coworking Unconference
more people travelling and rejecting the
experience while staying at a resort.”
Conference, a network of co-working
traditional work schedule.
Raphaël Harmel, a co-founder of
conferences, emphasised the focus on
But people are social, King said, so
Speecheo, a web app meant to improve
social interaction. “At hotels, travellers
they seek out spaces where they can
speeches, left his native France 10 months
shut the door and order room service,”
work with others. “I would be surprised
ago to travel the world and is now in
Elam said. “At co-working-co-living
if there were more than 20 to 30
Uruguay. He says he prefers to stay at
spaces, they are part of a community of
co-working-co-living spaces around the
co-working spaces whenever possible
shared ideas.”
world,” he said. “But I think there’s going
because they are all-inclusive and “are trying to reinvent the way people work.” March 2015
Steve King, a partner at Emergent Research, an independent research and
to be very rapid growth.” Elam attributes the growth to more
21
22
Observer Right: Johannes Haupt of Hannover, Germany, prepares to surf on a break from work during his retreat at the Surf Office on Gran Canaria in the Canary Islands. Below: (L-R) A team member of Automattic, a web development corporation from San Francisco, takes a break from the Surf Office; The Automattic team at work on a new project.
Julianne Becker helped found Coconat, a “workation retreat” set to open in July about an hour from the centre of Berlin. The cluster of bungalows and gardens is built around a castle-like water tower from the late 1800s, and its name is a portmanteau of “community and concentration in nature.” There, Becker said, “people can work for a few hours, take a long walk, then be super refreshed and ready to go again.”
independence and flexibility in reaction
A growing number of co-working spaces
to a lack of job security and the tendency among many Americans to work too
are temporary, like Coworking Camp, a
hard and take too little vacation. “More
pop-up venture established at a beachside
young people want work-life balance,”
hotel for six weeks in November and
she said. “Maybe vacations completely
December in Kemer, Turkey. Matthias Zeitler, founder of a software
unconnected are not feasible anymore;
company, says he got the idea for it as
maybe people won’t take traditional
a member of a small co-working space
vacations. But they can go to work in not outside the city with some fresh
in Salzburg who yearned for a larger
air to breathe, good food to eat and
community. “Co-working is really best if
intimate communal areas, amenities and
nice people to talk with around the
you have a lot of different people, with
activities of co-working and co-living
fireplace?” said Eric van den Broek, who
diverse skills; it drives the creative spirit,”
spaces. Nine remote-working employees
opened Mutinerie Village last summer,
he said.
of Automattic, a web development
an hour and a half southwest of Paris in
corporation, gathered for a work meetup
an old restored farmhouse that belonged
group of some 30 entrepreneurs, startup
in January at the Surf Office in Gran
to his grandfather.
founders, coders, designers, marketers,
paradise for two months.” Companies, too, are drawn to the
Canaria, taking over the 10-room property for six days “to build relationships, have real-time interaction and also work on
Since then, it has hosted many corporate retreats and team-building events. “Without being stressed and tempted
At Coworking Camp, there was a core
developers and other creative types from 18 countries. “It was a very open atmosphere,” he
projects that are best done in person,” the
in big cities,” said William van den Broek,
said. “We shared what we really felt.
company said.
Eric’s brother and a co-founder, it is easier
Then everyone gave feedback. It was very
The idyllic locations are no accident.
to disconnect and “focus on creative or
powerful. We really focused on work,
“If you can work from anywhere, why
introspective work.”
networking – and vacation.”
Portfolio
24
Observer O N E
2
W A T C H
Text: Hilda D’Souza
controlled Banco do Brasil and one of his first tasks will be to issue audited accounts for Petrobras and provide a write-off for the losses to the tune of $22 billion as outlined in the unaudited results reported in January. The defaults are said to have resulted from price-fixing, political kickback scandals involving top former executives, construction firms and political parties including President Rousseff’s Workers’ Party. In his first public statement as the chief executive, Bendine addressed pressing issues including the write-downs, saying there will be write-offs but the write-downs assessed by the audit were too high and does not
Aldemir Bendine, CEO, Petrobras
reflect the reality of the company. “What we are discussing now is the methodology, the way to calculate this,” he stated on the Globo Television network’s nightly news programme. “The results will reflect the actual situation in 2014, which could have been affected by corruption but also other variables such as
Petrobras, Brazil’s state-owned energy corporation headquartered in Rio de
prices,” he added. Despite the company’s financial failures,
Janeiro, appointed Aldemir Bendine as
Bendine appears positive when he said that
the Chief Executive Officer on February 6,
the debt was not as high as it looked, given
a move that saw its share prices tumble
the oil company’s ability to generate revenue.
more than eight per cent. Bendine’s
Bendine, 51, joined Banco do Brasil as
predecessor, Maria das Graças Foster,
a teenager on work experience and then
resigned abruptly along with most of the
worked his way up in what is now the
company’s senior management team
country’s largest bank by assets. He took
amidst a huge corruption scandal.
up positions such as vice president of retail
Petrobras has failed to publish its third
and distribution, and vice chairman of the
quarter results since November last year
bank, and chairman of the board at Banco
when a corruption probe led to the arrest of
Votorantim SA. Bendine holds a degree in
executives, and auditors refused to certify
business administration.
the results. Industry experts say that if the
In the coming days and weeks Bendine
company fails to file its audited result by
will need to demonstrate his banking
June this year, investors can declare the
expertise by cleaning up the company
company in a state of default. This could
books and acknowledging how many
force Petrobras to repay or renegotiate as
billions of dollars the company has lost to
much as $54 billion in bonds.
corruption as he carefully negotiates some
Bendine is a 35-year veteran of the state-
tricky political and economic mine fields.
++++++++++++++++++ ++++++++++++++++++ Cars Drive ++++++++++++++++++ Mexican Economy ++++++++++++++++++ ++++++++++++++++++ A $2 billion facility, opened in November ++++++++++++++++++ ++++++++++++++++++ 2013 by Nissan Motor Company in ++++++++++++++++++ Aguascalientes, Mexico, produces 600 new ++++++++++++++++++ cars a day and employs 3,000 workers. ++++++++++++++++++ ++++++++++++++++++ The 192,000-square-metre plant is ++++++++++++++++++ one of half a dozen that have sprung up ++++++++++++++++++ ++++++++++++++++++ or been announced for central Mexico’s ++++++++++++++++++ industrial belt in the past five years, ++++++++++++++++++ ++++++++++++++++++ contributing to a nationwide $20 billion ++++++++++++++++++ investment by global automakers eager to ++++++++++++++++++ ++++++++++++++++++ establish ready access to the US market. ++++++++++++++++++ Mexican vehicle exports are expected to ++++++++++++++++++ rise to a record 2.9 million in 2015, with ++++++++++++++++++ ++++++++++++++++++ more than 70 per cent of the cars and ++++++++++++++++++ light trucks headed to the US, according ++++++++++++++++++ ++++++++++++++++++ to the Mexican Automobile Industry ++++++++++++++++++ Association, or AMIA. December exports ++++++++++++++++++ ++++++++++++++++++ alone were up 21 per cent over the ++++++++++++++++++ previous year, to 195,091. ++++++++++++++++++ ++++++++++++++++++ Mexico is also the world’s sixth-biggest ++++++++++++++++++ manufacturer of auto parts, with an ++++++++++++++++++ estimated $81.5 billion in sales in 2014, ++++++++++++++++++ according to trade group INA. ++++++++++++++++++ On the Aguascalientes Nissan site, ++++++++++++++++++ ++++++++++++++++++ construction is about to start on another ++++++++++++++++++ plant, a joint venture between Nissan ++++++++++++++++++ ++++++++++++++++++ and Germany’s Daimler AG that will ++++++++++++++++++ make both Infiniti and Mercedes-Benz ++++++++++++++++++ ++++++++++++++++++ luxury vehicles. Another maker of luxury ++++++++++++++++++ cars, Audi AG, also has plans to produce ++++++++++++++++++ in Mexico starting in 2016, joining its ++++++++++++++++++ ++++++++++++++++++ parent company, Volkswagen AG, which ++++++++++++++++++ makes more than 475,000 cars, including ++++++++++++++++++ ++++++++++++++++++ Beetles, Golfs and Jettas, in the country ++++++++++++++++++ every year. ++++++++++++++++++ ++++++++++++++++++ In December, General Motors Co., ++++++++++++++++++ which made 678,388 automobiles last ++++++++++++++++++ year in Mexico, announced it would ++++++++++++++++++ ++++++++++++++++++ spend $3.6 billion through 2018 to ++++++++++++++++++ modernise its four Mexican plants. ++++++++++++++++++ ++++++++++++++++++ Auto production, which increased 10 ++++++++++++++++++ per cent last year over 2013, according ++++++++++++++++++ ++++++++++++++++++ to the AMIA, is projected to reach five ++++++++++++++++++ million vehicles by 2020. ++++++++++++++++++ Portfolio
Observer UAE Can Handle Low Oil Prices The UAE is focusing on diversifying its economy and can ride out the recent drop in oil prices, Abu Dhabi’s Crown Prince, HH Sheikh Mohamed bin Zayed Al Nahyan asserted at a government summit in Dubai. Sheikh Mohamed, who is also deputy supreme commander of the UAE Armed Forces, admitted that the dramatic drop in oil prices was causing panic and fear in the market. “But people forget that in 2008 oil prices were even higher than last year’s high, and then they dropped even lower [after the financial crisis] than the current low. Despite that, the UAE kept moving forward and we have seen several achievements,” he said. Sheikh Mohamed emphasised that the UAE’s economy was buoyed by its focus on sectors such as education, health,
Reuters
26
economic diversity, and security. “In the next 50 years or so, we may not
UAE’s nuclear programme, which aims to
The country was already seeing progress in industrial sectors through companies
supply up to 25 per cent of the country’s
have any oil or gas. And this is something
like Strata, which manufactures parts for
power needs when completed. The first
that the government is thinking about.
aircraft makers Airbus and Boeing.
plant is scheduled to go live in 2017.
Maybe in the next 50 years, after we ship
According to the UAE government, the
Dubai’s airport is also growing, becoming
off our last barrel of oil, will we be sad?
the busiest in the world after welcoming
contribution of oil revenues to the UAE’s
If we invest today in the right sectors, we
over 70 million passengers last year.
GDP is set to drop from around 30 per cent
will celebrate at that moment,” he said.
at present to only five per cent by 2021.
Sheikh Mohamed also highlighted the
China’s Football Shopping Spree Brazilian players are a major force in China’s Super League.
players in China’s 16 top division clubs are Brazilian. Transfer fees
Half of last season’s top 10 scorers are from Brazil with just one
are also rising. China bought 20 players from Brazil in 2012 for $9
Chinese player, Shanghai SIPG midfielder Wu Lei, on the list.
million in fees, FIFA said. Last year, the fees for the same number of
Chinese clubs have been involved in three of the five biggest trades during the current Brazilian transfer window, a period that allows the Latin American teams to buy and sell players from January 23 through April 16. Cruzeiro attacker Ricardo Goulart’s $18.3 million move to Guangzhou Evergrande is the most expensive football player sale from Brazil to China. China’s clubs spent $101 million importing players in 2014, triple the $28 million spent a year earlier, according to football’s global governing body FIFA. A third of the 74 foreign
players climbed to $40 million. China’s current football boom is the latest effort to make the world’s most populous country a force in the sport. The national team failed to qualify for a World Cup since its first appearance in 2002. While China finished at the bottom of its group in its only World Cup appearance, Brazil is a record five-time champion. And though the squad lost 7-1 at home in last year’s World Cup semifinal, the appetite for Brazilian players in emerging nations like China remains undiminished. Portfolio
28
Observer T H E
W O R L D
TOP Text: Hilda D’Souza
1O
TOP 10 RICHEST FOOTBALL CLUBS RANK
CLUBS
1
Real Madrid
REVENUE ($)
2
Man Utd.
587
3.
Bayern Munich
552
4.
Barcelona
549
5.
Paris Saint-Germain
537
6.
Manchester City
470
7.
Chelsea
440
8.
Arsenal
407
9.
Liverpool
347
10
Juventus
317
623
Source: deloitte.com
Emirates Brand Climbs in Ranking Emirates flew into the world’s top 200 brands for the first time in
TOP 10 BEST-SELLING VINYL ALBUMS IN THE US I 2014 SALES (UNITS SOLD)
the 2015 Brand Finance Global 500. The UAE carrier also ranked
RANK ARTISTS
TITLE
1.
Jack White
Lazaretto
86,700
2.
Arctic Monkeys
AM
58,700
etisalat and Saudi Arabia’s STC, the only other brands from the
3.
Lana Del Rey
Born to Die
42,100
Middle East to make the list.
4.
Beatles
Abbey Road
38,200
5.
Bob Marley &
The WailersLegend
37,800
6.
Black Keys
Turn Blue
34,200
7.
Beatles
Sgt. Pepper’s Lonely
33,600
Hearts Club Band 8.
Lana Del Rey
Ultraviolence
31,800
9.
Miles Davis
Kind of Blue
31,700
10
Amy Winehouse
Back to Black
27,800
Source: Nielsen Soundscan
as the world’s most valuable airline brand and finished ahead of
This marks the fourth consecutive year that Emirates has steadily climbed the table of the Top 500 most valuable brands in the world. It now sits at #196, an increase of 38 spots in just 12 months. Emirates’ estimated brand value has grown more than 21 per cent from $5.48 billion to 6.6 billion. Lego came out on top as the world’s most powerful brand, scoring highly on a wide variety of measures on Brand Finance’s Brand Strength Index such as familiarity, loyalty, promotion, staff satisfaction and corporate reputation. Lego unseated last year’s
TOP 10 OF YOUTUBE’S BIGGEST EARNERS ARTISTS
1.
PewDiePie
2.
BluCollection
6.38
Apple, which is currently worth $128 billion, claimed first
3.
Disney CollectorsBR
5.06
4.
Smosh
4.50
spot as the world’s most valuable brand, followed by Samsung
5.
SkyDoesMinecraft
2.92
6.
Vegetta777
2.59
7.
TheFineBros
2.41
Twitter claimed the top spot as the world’s fastest growing
8.
TheWillyRex
2.31
brand; it has almost tripled its brand value in a year, increasing
9.
BFvsGF/PrankvsPrank
2.26
from $1.5 billion in early 2014 to $4.4 billion now. Fellow tech
10.
TobyGames/TobyTurner
2.18
giants Baidu and Facebook have also grown strongly, by 161 per
Source: businessinsider.com
EARNINGS ($M)
winner Ferrari that tumbled to eighth. PWC and Red Bull came
RANK
8.47
2.18
second and third.
and Google. Apple saw its brand value increase by 23 per cent, dwarfing Samsung’s four per cent and Google’s 12 per cent.
cent and 146 per cent respectively. Portfolio
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Commentary
30
Frederika Whitehead neighbouring volcano (which pumps its gassy eruptions into the lake). To get funding for a methane-powered electricity plant in a region that’s politically tumultuous, with a volcano looming over the intended site, is not an easy task. Fund managers from the Emerging Africa Infrastructure Fund (EAIF) and the Netherlands Development Finance Company (FMO) shared out the risks Photo: Getty Images
between a group of donor government funds, and provided a “political risk insurance policy” for the energy company carrying out the project.
Taming An Exploding Lake In 1984, 37 people died on the road
to buy all of the available electricity. The
Their tests revealed that the gas in Kivu’s
a power purchase agreement with the Rwandan government, which requires them
leading past Lake Monoun in western
waters was methane, so it would be suitable
Rwandan government is confident that any
Cameroon. Survivors reported seeing a
for energy production. It was essential to
surplus energy can be sold to neighbouring
foul-smelling cloud of white gas, which
de-gas the lake before another catastrophic
countries – should they find they have more
crept low along the floor. Was someone
explosion, but at the same time, there was
than they can use.
testing chemical weapons?
huge potential for energy generation from
The UK, Dutch, Swedish and Swiss
such an enormous untapped supply of gas.
governments lent a total of $91.5m to the
of Rhode Island ruled out biological warfare
This was the beginning of the Kivuwatt
$142m needed to build phase one of the
in favour of suffocation. Following interviews
biogas project.
project. Contour Global is hoping they will
Haraldur Sigurdsson from the University
with survivors, he reached the conclusion
In May this year phase one of the project,
agree to fund phase two. “We want to make sure that there is no
that the deadly gas cloud had emanated from
a 25MW biogas plant, will open on the
the lake. Tests on the water showed that it
banks of Lake Kivu, bringing electricity to
harm to the lake, so we will take things
was almost saturated with gas: Sigurdsson
millions of people who currently have none.
slowly for a few months,” says Jarmo
and his colleagues concluded that the deaths
Phase two of the Kivuwatt biogas project
Gummerus, Contour Global’s Kivuwatt
were a result of a limnic eruption, also known
will ‘copy and paste’ the technology from
country manager. He adds that he hopes to
as lake overturn or lake explosion.
phase one (presuming that it works), adding
start work on phase two in early 2016: “We
a further 75MW, increasing Rwanda’s
will see exactly how it works, and if we can
“exploding lakes” could be a blessing,
current installed energy capacity – around
improve the design at all, but it will be more
rather than a blight, on local communities.
183MW – by more than 50 per cent.
or less a matter of copying and pasting this
But it was another lake that revealed
Lake Kivu is 2,300km east of Lake Nyos, © 2015 Guardian News & Media
Energy firm Contour Global purchased a 25-year concession on the site and signed
As well as being life-changing for millions
one into three more spots around the lake.” The final nuts and bolts are currently
straddling the border of the Democratic
of Rwandans – 78 per cent of whom
Republic of Congo (DRC) and Rwanda. It
currently live without electricity – Kivuwatt
being tightened on phase one of the Lake
is 2,000 times bigger than Nyos and two
will have a colossal impact on the Rwandan
Kivu energy project. “We are energising
million people live along its shores. The
economy. So how did they manage to get the
units, checking wiring – seeing that
Rwandan government immediately began
project off the ground?
everything is functioning,” says Gummerus.
seeking a solution to prevent a catastrophic explosion at Kivu.
There were three main hurdles to overcome: technology, funding and the
“We are almost at the summit. It was long way to come.” Portfolio
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Profile
32
Portfolio
33
GROWTH
ENGINE
Photos: Getty Images, Reuters
When Robin Li started Baidu in 2000, China was still a relatively closed country and the internet still in its infancy. Today, Baidu is the country’s most popular search engine with a market share of more than 80 per cent. But there are challenges on the horizon, reports Guido Duken.
March 2015
Profile
34
T
alk about a tough day at the office. On February
10, Robin Li’s fortune dropped by $1.8 billion. Not that he’ll feel much of a squeeze, as Forbes estimates his Baidu shares are still worth $14 billion, including stock held by his wife. That makes him the second richest person in China after
fellow internet entrepreneur Jack Ma, the founder and CEO of the Alibaba Group. Third is Ma Huateng, who turned his company Tencent Holdings into a giant on the back of profits generated from online games. The reason for Li’s hefty hit was that Baidu Inc, owner of China’s dominant search engine, reported a lower-thanexpected 47.5 per cent rise in quarterly revenue. Most shareholders would be overjoyed if a company reported revenue of 14.05 billion yuan ($2.26 billion) for a quarter. But then Baidu isn’t an ordinary company – not many take on Google and come out on top. Today, Baidu has around 82 per cent of China’s search engine market, followed by Google at around 10
far from an overnight success, but when
would make a lot of money. But I sleep
per cent and Sougou at four per cent.
the firm went through its initial public
so little not because I want to make a lot
offering on the Nasdaq in 2005, its name
of money but because I really enjoy the
Li had studied information management
and Li’s were soon known around the
work. I just work from the heart. It is not
at Peking University before leaving China
world and he was propelled into the ranks
true that I can’t stop working.”
for the United States, where he earned
of the super-rich. Not that money was Li’s
a Master of Science degree from the
driving force. “I must clarify, the goal of
WHEN BAIDU WAS first set up, China
University of Buffalo. His first job was
my career is not to make money,” he told
was still relatively cut off from much
at IDD Information Services, where he
2,000 delegates at the Asian Financial
of the world. The rise of the internet
worked with search engines. He then
Forum. “When I decided to set up the
opened up doors for Chinese people and
moved on to further his knowledge of the
business, I knew if I was successful I
Baidu’s role was to provide the nation
Li and Eric Xu founded Baidu in 2000.
field at Infoseek between 1997 and 1999.
with information it previously did not
These jobs gave Li enough confidence to set up his own company. He wasn’t merely applying what he had learnt but was also innovating. The core at the heart of all market search engines is Hyperlink Analysis, which was written and patented by Li prior to (Google co-founder) Larry Page’s patent for Page Rank. It took many years to build Baidu up from the bottom and the company was
have access to. As Li said in 2005: “People
China is the world’s largest online nation. It is also one of only four countries in the world – along with the United States, Russia and South Korea – to have its own core search engine technology.
can get information – on entertainment, politics, finance – much easier than before. That will change the way people do business, the way people live.” Li was right about that. Today, China is the world’s largest online nation. It is also one of only four countries in the world – along with the United States, Russia and South Korea – to have its own core search Portfolio
35
Left: A woman walks past the Baidu Inc. logo in the reception area of the company’s headquarters in Beijing, China. Above: Baidu, China’s most-used searchengine, is available around the world but more than 99 per cent of its revenue comes from China.
invest in apps and content to keep users engaged. Moreover, foreign companies are very competitive in the smartphone field. But Li says he holds no fears about increased competition, especially from foreign companies. “If foreign companies have the competence, that is good,” he says. “It is good to have competition because the market grows very rapidly. If there is competition, everyone will become more competitive. We will
engine technology. In a country with a
be of a higher standard. This is
population of 1.4 billion, the number of
good.”
people with internet access is 568 million. This gives an internet penetration of 42.3
Baidu’s figures for
per cent, which is substantially lower than
2014 prove that Li is
the 81 per cent of the United States. In
serious about taking
other words, there is still plenty of room
on the competition and
for growth.
completing the transition to a mobile internet
Yet at the same time, internet usage patterns are changing and that poses a challenge for Baidu. More users are switching from PC’s to mobile devices, which have less space for more lucrative forms of advertising. In the last quarter of 2014, mobile revenue represented 42 per cent of total revenue, up from 36 per cent in the third quarter. That, in turn, explains the lower-than-expected rise in quarterly profits and why investors are worried. Baidu is also facing increased competition on smartphones as companies such as Alibaba and Tencent March 2015
China’s search engine market
Baidu
82%
10%
Sougou
04%
Others
04%
Profile
36
The company’s most notable move was its Baidu Japan service, although this has been generally regarded as a flop as it has less than one per cent of the search engine market share in Japan. Baidu is currently targeting South America, the Middle East and South-East Asia for expansion. It opened an office in Brazil at the end of 2013, and has already launched four products in order to understand internet usage in the country. Although the Brazilian expansion is still in its initial stages, Baidu plans to move into other Latin American countries, starting with Argentina, Chile and Mexico, as they are the strongest economies in the region. By avoiding Google’s key markets, developed economies, Baidu has a strong chance to succeed. LI IS CLEAR on the fact that Chinese internet companies will continue to move beyond their homeland and play a big role in transforming regional economies. “Companies need to know how to connect to the ground,” Li says. “If you don’t understand the local market environment, it will be very difficult to succeed.” However, he rules out attacking the US market. “Surely we will reach out, and we have done so already. But our path is not that we are going to attack the US market. In the business-based company. Baidu’s total business turnover in 2014 was reported at $7.8 billion, with its research and development investment at around $1.1 billion, up 70 per cent from the previous
Left: Uber CEO Travis Kalanick (L) and Baidu Chairman and CEO Robin Li shake hands after signing a strategic investment and cooperation agreement. Above: Li runs Baidu on the maxim of “underpromise and overdeliver”.
US market there are very strong internet companies. But there are other countries without a very strong market – Thailand, Brazil, Indonesia have our presence,” he says. “In the years to come we will surely go out and operate in other countries.”
year. Baidu’s investment in tech research
Li runs Baidu on a maxim he learnt
and development was more than that of its major competitors Google and
currently have over 500 million monthly
from an early investor who told him to
Facebook. “2015 will be an important
active users, while Baidu Map has over 240
“Underpromise and overdeliver”. “I took
year for Baidu as we execute our plan
million monthly active users, which means
it to heart then and still rely on it today,”
and invest in the next phase of mobile
the integration of Uber’s “request a ride”
says Li. “I believe the loyalty from Baidu’s
growth,” Li said.
buttons will benefit both companies.
customers, users, employees and investors
Last year, Baidu bought 91 Wireless –
Baidu is predominantly based in China,
today is due in large to that approach.
one of China’s largest app stores - for $1.9
and has no English service as it is designed
People trust that when we set out to do
billion. Baidu claims it is currently China’s
for mainland Chinese users. However,
something, we do it well.”
largest mobile app distribution platform,
Baidu has made its first moves towards
with an average of 160 million apps per day.
expanding outside of China by moving
changing market and ambitious expansion
Baidu also became an investor in Uber last
into other East Asian countries where
plans, 2015 is the year that Li’s maxim will
year. The company’s mobile search products
user behaviour is similar to that in China.
be tested to the fullest.
Face with increased competition, a
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Climate
38
Risky Business The Risky Business Project, an unlikely alliance of high-level US leaders, is drawing attention to climate change by focusing on the financial bottom line, reports Burt Helm.
Portfolio
39
Opposite page: New York and the Northeast are increasingly being hit by heavy winter storms. Left: Former New York City Mayor Michael Bloomberg, a member of the Risky Business Project, in a boat on the Bosphorus in Istanbul.
a wool sport coat layered over a zip-up
crop yields in many states will most likely
sweater. “I’m 63 years old, and I’ve grown
fall, the costs of cooling chicken farms
up in the upper latitudes. I’ve seen too
will rise, and floods will more frequently
much change to presume we might not
swamp the railroads that transport
get more.”
food in the United States. He wants US
Page is not a typical environmental activist. He says he doesn’t know – or
agribusiness to be ready. Page is a member of the Risky Business
particularly care – whether human activity
Project, an unusual collection of business
causes climate change. He doesn’t give
and policy leaders determined to prepare
much serious thought to apocalyptic
US companies for climate change. It’s
predictions of unbearably hot summers
a prestigious club, counting a former
and endless storms. But over the past nine
senator, five former White House Cabinet
months, he has lobbied members of the
members, two former mayors and two
US Congress and urged farmers to take
billionaires in the group. The 10 men
climate change seriously. He says that
and women who serve on the governing
over the next 50 years, if nothing is done,
committee don’t agree on much. Some are Democrats, some Republicans.
I
t was -13 degrees Celsius in Minneapolis, and out on Interstate
© 2015 New York Times News Service
394, snow whipped against the
windshields of drivers on their morning commutes. But inside the offices of Cargill, the food conglomerate, Greg Page, the company’s executive chairman, felt compelled to talk about global warming. “It would be irresponsible not to contemplate it,” Page said, bundled up in March 2015
Even when it comes to dealing with
The committee started last June as a way to promote a study that it commissioned, “Risky Business: The Economic Risks of Climate Change in the United States”.
climate change, they have very different perspectives. Some advocate a national carbon tax; some want to mandate companies to disclose their climate risks. Page suggests that the world may be able to get by without any mandatory rules at all. Some members want to push investors to divest from fossil fuel companies. Several favour construction of the Keystone XL pipeline while one
Climate
40
“The rationalist, evidencedriven, faith-in-thepolitical-process approach to solving environmental problems has been really effective in many realms,” said hal harvey, who advised the risky Business group and is chief executive of energy innovation, a green policy firm.
former chief executive of Goldman
all of which would be served by making
Sachs and the Treasury secretary under
the climate threat feel real, immediate
President George W. Bush; and Michael
and potentially devastating to the
Bloomberg, New York City’s former mayor
business world.
and the billionaire founder of financial
To understand how the Risky Business
information company Bloomberg LP.
Project came to be, it’s helpful to look
Each spent $500,000 to commission the
at how the climate change battle has
Risky Business research and each has his
been waged over the years. In the early
own particular goals for the initiative,
days, discussion was focused on fixing the problem and staving off disaster. This has been the strategy environmentalists have used to respond to all sorts of risks for years: scientists identify the harm, publicise it, debate with the responsible industry and expect legislators to take action. But climate change defied that
member has spent more than $1 million
playbook. There was no immediate crisis
lobbying to stop it. But they all do agree
to point to. There was no one industry to
on one issue: shifts in weather over the
target or overwhelming constituency to
next few decades will most likely cost US
push legislators. “The rationalist, evidence-driven,
companies hundreds of billions of dollars,
faith-in-the-political-process approach to
and they have no choice but to adapt.
solving environmental problems has been The commiTTee sTarTed last
really effective in many realms,” said Hal
June as a way to promote a study that
Harvey, who advised the Risky Business
it commissioned, “Risky Business: The
group and is chief executive of Energy
Economic Risks of Climate Change in the United States”. But it has since evolved into a loose network of missionaries who publicise the report’s ominous data far and wide, in talks at the Clinton Global
Innovation, a green policy firm. “But it has Above: Henry Paulson, a member of the Risky Business Project. Below: Global warming, which is implicated in more severe storms and droughts, will affect company profits.
done bupkis for climate change.” Indecision and indifference have prevailed instead. A majority of Americans in 2014 surveys by Pew
Initiative conference, briefings with the American Farm Bureau Federation and breakfast meetings with local chambers of commerce. On January 23, the group released the second chapter of the Risky Business project, focused on the effects on the Midwest: “Heat in the Heartland.” A report on California is next. With $1.7 million in grants from the MacArthur Foundation and others, the group is hiring a full-time staff. The group is led by three men: Tom Photos: Getty Images
Steyer, the hedge fund billionaire whose Super PAC spent $73 million last year attacking Republicans who denied climate change and promoting awareness of the issue; Henry M. Paulson Jr., the Portfolio
41
Gordon pitched Steyer on an american version – what would become the Risky Business report. It would be a way to discuss in a practical, dollarsand-cents way how businesses would have to adapt to climate change, while also making a clear case for taking action to mitigate the coming environmental crises.
clear case for taking action to mitigate the coming environmental crises. Steyer liked Research and Gallup acknowledged
regarded thinkers to help him brainstorm.
climate change was happening, and 83
Attendees included environmentalists
per cent of Americans say that without
Bill McKibben and Harvey, and political
research firm, the Rhodium Group. They
emissions reductions, global warming will
strategists John Podesta and Chris Lehane.
also reached out to Paulson, a Republican,
be a problem in the future, according to
The participants tossed ideas around the
and Bloomberg, an independent, to see if
a January survey conducted by The New
kitchen table. McKibben discussed his
they would co-sponsor the study and help
York Times, Stanford University and the
fossil fuel divestment campaign.
form a bipartisan committee. Both agreed.
environmental group Resources for the
While Steyer was devising his
what he heard. The team contracted an economic
Through a contact of Gordon’s, they
Future. But in survey after survey, those
political strategy, staff members at Next
signed up Henry Cisneros, the former
same Americans rank climate change at
Generation, his non-profit group, were
housing and urban development secretary
or near the bottom of pressing issues, far
at work trying to solve another critical
under former president Bill Clinton.
behind jobs, the economy and health care.
question: how do you make climate change
Steyer called Robert E. Rubin, the former
feel real and immediate for people?
secretary of the Treasury under Clinton.
In the meantIme, powerful lobbies
Kate Gordon, senior vice president
In May 2014, the committee members
stand in the way of regulation. Climate
of Next Generation, found inspiration
gathered at the Bloomberg Philanthropies
change has become a partisan issue.
in a British report called the Stern
offices in New York to hear two of the
Review, published in 2006. It was an
authors commissioned by the Rhodium
2012, Steyer convened a meeting at
economic analysis, sponsored by the
Group present their findings. Among their
his Pescadero ranch in California. The
British government, which examined all
conclusions if the status quo persisted:
month before, he had stepped down from
the costs of climate change, eventually
climate change would increase energy
running his hedge fund, Farallon Capital
concluding that the price of curbing
demand in Texas by between 3.4 and 9.2
Management, to devote himself to the
global warming paled compared with the
per cent by mid-century. Crop yields in
environment. He wanted to devise a way
costs of doing nothing.
Missouri and Illinois would face a 15 per
It was in this context that in November
to fight climate change more effectively, and he had assembled some highly
Above: Padraig Palisi wades through flooding in the streets in New York. March 2015
Gordon pitched Steyer on an American
cent decline over the next 25 years. And
version – what would become the Risky
in the Northeast, annual property damage
Business report. It would be a way to
from severe storms – from hurricanes to
discuss in a practical, dollars-and-cents
blizzards – would likely increase $11.1
way how businesses would have to adapt
billion, to a total of $15.8 billion by the
to climate change while also making a
end of the century.
Energy
42
The Pipeline Challenge Russia has scrapped its proposed South Stream gas pipeline in favour of one going to Turkey, but there are a lot of challenges in the way, report Stanley Reed and Sebnem Arsu.
P
resident Vladimir Putin surprised
Netherlands government to let it keep
pipeline,” Gazprom’s chief executive,
the world in December when
working with Gazprom, despite European
Alexey Miller, told reporters in Moscow
he aborted long-laid plans for a
sanctions against Russia over the invasion
in January. “There are no other variants
of Ukraine.
possible. Our European partners have been
natural gas pipeline under the Black Sea to Europe, saying Russia would run pipes to Turkey instead. Many in the West thought it might be
notified of this, and their task now is to
actively negotiating with government
establish the necessary gas-transporting
officials – who are said to be driving a hard
merely a bluff, to make the European
bargain – while trying to buy into a leading
Union reconsider its opposition to the
Turkish gas distribution company.
pipeline project, known as South Stream.
© 2015 New York Times News Service
On the Turkish front, Gazprom is
And all the while, Gazprom is continuing
But in recent months, the Russian state-
to pay to keep two big pipe-laying ships
owned company Gazprom has shown signs
and their combined crews of 200 people on
that it is serious about proceeding with
standby in the Black Sea.
what it calls Turkish Stream.
As if to dispel any lingering doubts about
Gazprom quickly bought out its
its intentions, Gazprom’s chief executive
European partners in South Stream
recently made it clear that Turkey is its
Transport, the Amsterdam company
new focus – and that if Europe wants more
that was to build the Black Sea leg of
Russian gas then it will need to find its
the pipeline. And the chief of that
own way to tap into it.
Dutch company has petitioned the
“There are no other variants possible. Our European partners have been notified of this, and their task now is to establish the necessary gastransporting infrastructure from the borders of Turkey and Greece.”
“Turkish Stream is now the only Portfolio
43
weaken Kiev in its struggle with Moscow.
hit by falling oil prices. So a new pipeline
EU officials had insisted that South
estimated to cost as much as $40 billion
Stream could not bring gas into Europe
to deliver gas mainly to small European
be simply accepting the current
unless it conformed to European energy
countries like Hungary and Serbia made
geopolitical realities.
competition rules, which would include
little sense. Industry analysts estimate that
allowing other suppliers to put gas into
the cost of Turkish Stream would be about
Stream’s planned route – including
the pipeline. They also successfully put
$10 billion for Gazprom, which so far has
Bulgaria, Hungary and Serbia – had
pressure on Bulgaria – where South Stream
spent an estimated $4.7 billion on the
initially welcomed the proposed project as
would first enter the EU after crossing the
Black Sea project.
a source of transit fees and an alternative
Black Sea – to block it.
infrastructure from the borders of Turkey and Greece.” Rather than bluffing, Gazprom may
Some European countries along South
With European negotiations at an
had long been wary of the idea, and its
impasse, and expensive work on South
The company and the German chemical
opposition stiffened last year after Russia’s
Stream contractually scheduled to
giant BASF in December scrapped their
intervention in Ukraine.
commence, Putin turned to Turkey.
agreement for Gazprom to take full
Brussels feared that South Stream Photos: Getty Images
The South Stream cancellation fits
source of gas. But the European Union
Energy economics played a role, too. The
would increase Russia’s dominance of the
price of natural gas has not plummeted the
European gas market and that Gazprom’s
way that the cost of crude oil has fallen.
plan to shift the large volumes of Russian
But slow industrial demand is expected to
gas that now flow to Europe through
mean sluggish growth for the European gas
Ukraine to the new pipeline would further
market. And Russia’s finances have been
March 2015
with other recent moves by Gazprom.
Opposite page: The North Stream pipeline was inaugurated in 2012. Above: The South Stream pipeline to Europe was launched with great fanfare in 2012 but was cancelled last December.
Energy
44
control of their trading and distribution joint venture. And earlier last year Gazprom signalled a shift toward Asian markets by signing two big pipeline deals with China, with one of them worth an estimated $400 billion. While some analysts doubt the feasibility of Turkish Stream, others say a route to Turkey makes strategic and economic sense. Russia would solidify its position in that country, a fast-growing gas market that is already Gazprom’s secondlargest gas customer in the European region after Germany. “This makes far more sense than South Stream,” said Jonathan Stern, chairman of the gas programme at the Oxford Institute Above: Russia’s President Vladimir Putin and Gazprom CEO Alexei Miller (L) look at a scale model of the proposed South Stream gas pipeline in 2012. Left: Two sections of the North Stream pipeline are joined in Belarus.
for Energy Studies. “What Russia needs to do is nail this market down; everything else is not growing.” The pipeline to Turkey would also partly cut Gazprom’s dependence on Ukraine as a transit route. About half of the gas Turkey imports from Russia now comes through Ukraine and would be replaced by Turkish Stream.
Gazprom said it was buying out its
As it proceeds, Gazprom is revamping its
Western partners: Italy’s oil giant, Eni; the
Amsterdam venture. The Dutch company
French utility Électricité de France; and
had already assembled an armada of
BASF’s Wintershall oil and gas subsidiary.
skilled personnel and billions of dollars
The companies said they would be
of equipment to build the 930-kilometre
compensated for their cash outlays so far,
Black Sea portion of South Stream.
an estimated $750 million.
To avoid wasting years of preparation and lengthy contract negotiations,
IN ADDITION, GAZPROM is paying
Gazprom has quickly secured control of
Saipem, the big Italian oil field engineering
the Dutch company. In late December
company, to keep two huge pipe-laying vessels and at least 200 people ready to
Gazprom said in December it would UKRAINE cancel the South Stream gas pipeline and replace the Black Sea portion of it with a pipeline to Turkey. CRIMEA ROMANIA
Black Sea
Varna BULGARIA
GREECE
100 MILES
were poised to start when Putin’s surprise announcement called off the South
Anapa
RUSSIA
Stream project. Saipem has ¤2.5 billion ($2.9 billion) in contracts with South Stream Transport.
) anceled tream (c South S
The Dutch company is also seeking support from its home government for the
Alternate paths
Istanbul
begin work in the Black Sea. The ships
GEORGIA
imposed by the EU on Russia to punish Moscow’s actions in Ukraine, companies
Samsun
now require permission to export oil and
TURKEY
Source: The Oxford Institute for Energy Studies
change of mission. Because of the sanctions
gas equipment to Russia. THE NEW YORK TIMES
On December 19, Oleg Aksyutin, who is Portfolio
45
South Stream Transport’s chief executive and a Russian, wrote to Lilianne Ploumen, the Dutch minister for foreign trade and international development. The letter discussed a license the company had previously obtained to provide ¤1.5 billion in pipelines and technical assistance for South Stream. In the letter, which a person involved in the discussions shared with The New York Times, Aksyutin notified the Dutch official of the possible change of route from Bulgaria to Turkey. He wrote that, in the company’s view, the switch “does not impact the continued validity of the license,” though it was willing to discuss the matter. South Stream Transport declined to comment on the letter. A Dutch Foreign Ministry spokeswoman said that the government was “still studying the matter.” Another potential sticking point is Turkey itself. For one thing, the country
Above: President Putin applauds after Gazprom CEO Miller (C) and China’s CNPC Chairman Zhou Jiping signed a multi-decade gas supply contract. Right: A section of pipeline is delivered to a pipe-laying ship in the Black Sea. Below: Istanbul might be the end point for the new South Stream pipeline.
obtains about 60 per cent of its gas from Russia, a dependence the government is not necessarily eager to increase. Talks
use Gazprom’s need for a face-saving
between Russian and Turkish officials on
alternative to South Stream as leverage
matters like the precise route and financial
to negotiate lower prices for Russian gas,
terms of a deal are said to be proceeding
according to a Turkish official, who spoke
slowly. That is partly because the Turkish
on the condition of anonymity because of
government appears to be trying to
the sensitivity of the negotiations.
Turkish officials also presumably have leverage because they know that if Gazprom cannot proceed quickly with the Turkish route and continues to pay idle contractors, a lot of the potential cost savings may be lost. Putin already publicly offered a six per cent reduction to Turkey. But Ankara, which pays substantially more for Russian gas than Germany does, is pressing for a better deal. “Nothing is being discussed while we have not achieved a desirable discount on gas prices,” the Turkish official said. March 2015
Retail
46
Luxury Goods Change Focus The US is attracting high-end luxury goods purveyors as the local economy booms, while Europe and Asia is faltering, reports Hiroko Tabuchi.
Portfolio
47
I
n Houston, Texas, Chanel’s new
the biggest increase in the world and
the Italian luxury shoemaker. “There are
galleria is styled after Coco Chanel’s
dwarfing the 90,000 Chinese who crossed
opportunities on the West Coast, with the
Baroque-inspired apartment, with
the million-dollar mark since then, Credit
tech industry there and Asian tourism,”
Suisse estimates.
Norsa said. “There are opportunities in
bronze screens, an antique fireplace and a
In 2014, Americans with net wealth of
Miami, which is becoming important
more than $50 million outnumbered their
as a window to Latin America. We see
Rodeo Drive, in Beverly Hills, is the label’s
Chinese counterparts eight to one. And
opportunities not just this year, but in the
biggest and features white marble and
the United States is set to remain by far
long term.”
polished brass with a discreet back-alley
the wealthiest country, Credit Suisse says,
entrance for celebrities.
with aggregate wealth of over $114 trillion
The sTrong luxury spending is
in 2019.
welcome news for an industry grappling
chandeliered shoe salon. Yves Saint Laurent’s flagship store on
And in downtown Manhattan, Hermès, Salvatore Ferragamo and Paul Smith are set to open locations at a $300
Luxury retailers now see America’s
with slowing growth in Europe and in
ultrarich, over Hong Kong magnates or
emerging markets that once seemed to
million luxurious redevelopment of the
offer the most potential for growth, but
World Financial Center on the Hudson
are now hit by weaker asset prices,
waterfront, with a glass pavilion and European-themed gourmet market. Purveyors of high-end luxury goods are chasing millionaires in the United States, as upper-income spending falters in Europe and in the emerging markets once considered luxury’s promised land. And the wealth, they say, is not just confined to the
yves saint laurent’s flagship store on rodeo Drive, in Beverly hills, is the label’s biggest and features white marble and polished brass with a discreet back-alley entrance for celebrities.
American coasts. Fast-growing industries, like technology
Luxury sales in China, especially, have slowed in the face of a crackdown on bribery, and probably led to the first decline in luxury sales there in more than a decade, according to Bain consultancy. A weak ruble and low consumer confidence have of big luxury spenders: moneyed Russians.
Russian moguls, as their biggest drivers
Houston, Dallas and San Jose, California,
of growth. “If you look in the past year, the
In the United States, spending on personal luxury goods rose a steady five per cent last year to about $73 billion,
of wealth in the world. Since 2012, the
United States has been at the top of our
Bain estimates, compared with negative
number of high-net-worth individuals
investment plans,” said Michele Norsa,
growth in previous juggernauts like China
has jumped as much as 20 per cent
chief executive of Salvatore Ferragamo,
and Russia.
in Dallas and 18 per cent in Houston, according to a Capgemini and RBC © 2015 New York Times News Service
political turmoil.
taken a toll on spending by another group
and energy, are transforming cities like into some of the densest aggregations
currency pressures and economic and
Wealth Management tally. Propelled by market gains and a skewed economic recovery, the United States’ share of the world’s super-rich is rebounding. Since mid-2013, the number of millionaires in the United States has grown by 1.6 million, by far
Opposite page: (Clockwise) Hermés is set to open a new store in downtown Manhattan; Cartier’s flagship store in New York; Rodeo Drive in Beverley Hills caters for the super-rich. Right: Yves Saint Laurent's flagship store in Beverley Hills is the labels biggest and features a discreet back-alley entrance for celebrities. March 2015
Retail
48
Left: Some of Elizabeth Taylor’s jewellery on display at Christie’s Auction house. Below: Salvatore Ferragamo is opening a new location in downtown Manhattan at a $300 million redevelopment of the World Financial Centre.
And last month’s report by LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury-goods maker, underscored the market shifts. The company said that annual sales in Asia dropped six per cent in 2014 from the previous year because of the ailing Chinese luxury market. Sales in
on luxury spending at Bain.
Europe grew a tepid three per cent. But its
International tourism to the United
bright spot was the United States, where annual revenue jumped eight per cent
States, which has grown steadily to an
from the previous year.
estimated 74 million visitors last year, has also bolstered luxury spending, experts say.
“There’s a whole new generation of
Labels like Yves Saint Laurent are
30- and 40-year-olds making millions of dollars a year in hedge funds and
seeing how the American turn is paying
technology and real estate,” said David
off. The company’s Paris-based parent,
Friedman, president of the wealth
Kering, reported in October that luxury
consultancy Wealth-X.
sales rose 3.5 per cent for the third quarter, disproportionate share, are driving high-
compared with a year earlier, to $1.91
a textile company in New York, said
end consumption. The world’s brain drain
billion, led by a 12 per cent jump in North
business was looking up and that he felt
– and America’s brain gain – is transferring
American sales.
flush enough to upgrade his wardrobe this
more wealth and more luxury spending to
year. “I wanted the larger buckle,” Troche
America, experts said.
Milton Troche, 29, whose father runs
HerMèS, THe FreNCH luxury brand, is increasing the size of its stores in Dallas,
said, stepping out with his $450 belt from
“The US is helped by wealthy
Ferragamo’s flagship store on Fifth Avenue.
immigrant flows, giving additional
Houston, Miami, Boston and Seattle,
“You can wear a T-shirt with it, but you still
impetus to the luxury market in New
and plans a new boutique in Palo Alto,
get the girls.”
York, Miami, even university cities like
California. Hermès is also set to open a
Boston,” said Claudia D’Arpizio, an expert
location at Brookfield Place, its third in
Much of the growing wealth in America comes from equity markets that have performed well, adding to the wealth of upper-income Americans who are most
Photos: Getty Images, Reuters
likely invested in stocks. In the United States, the rich also have relatively more of their money left over to spend, because of lower top marginal income tax rates. And across America, highly skilled, high-income immigrants, of which the United States continues to attract a
“The US is helped by wealthy immigrant flows, giving additional impetus to the luxury market in New York, Miami, even university cities like Boston,” said Claudia D’Arpizio, an expert on luxury spending at Bain.
Portfolio
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Retail
50
Manhattan, which will be a perfumery that sells Hermès fragrances, said Robert Chavez, president of Hermès US. “Before, growth was really focused on the BRICS,” he said, referring to the five major
Place in the spring. Not all luxury retailers are doing well,
spending, some analysts say. (But in a sign of the strength of the US luxury consumer,
however. The jewellery chain Tiffany cut its
European luxury brands have not been
annual forecast in January, citing sluggish
slashing prices.)
November and December sales.
Still, Brookfield’s clientele is not
And economists at Morgan Stanley
easily affected by exchange rates, said
India, China and South Africa. “But the
wrote in a recent report that rapid year-
the developer’s chief executive, Dennis
world changes constantly, and the US is
over-year growth in luxury spending might
Friedrich. Brookfield invested $300 million
now a strong foundation.”
simply be unsustainable. “How many
to revamp the former World Financial
personal aircraft can one buy?” they wrote.
Center. “The change in exchange rates
emerging economies of Brazil, Russia,
No place seems to say new luxury in America more than Manhattan. New York City spent more than $25.5 billion on
The weakened euro and yen also threaten to crimp tourist traffic and
won’t dissuade them,” Friedrich said. “We serve a very wealthy demographic.”
personal luxury goods last year, more than the whole of Japan, the second-biggest market, Bain estimates. And luxury’s focus is shifting to downtown Manhattan, once the domain of harried commuters and office workers. The Westfield Group is set to open a second luxury mall in the neighbourhood later this year. “It’s a market unto itself, and it’s got tremendous growth,” said Gerald Storch, chief executive of Hudson’s Bay, the parent company of Saks Fifth Avenue, which is set to open a store at Brookfield
Above: Construction is underway in Miami’s Design District. Twelve square blocks of warehouses have been torn down to make way for luxury brand stores. Right: A shopper looks at the jewellery display of Cartier in New York. Portfolio
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Economy
52
M
ary Noriega heard there
lines snaking for blocks. Some states have
would be chicken. She hated
barred people from waiting outside stores
being herded “like cattle,”
overnight, and government officials are
she said, standing for hours in a line of
posted near entrances, ready to arrest
more than 1,500 people hoping to buy
shoppers who cheat the rationing system.
food, as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week. But Noriega, a laboratory assistant with three children, said she had no choice, ticking off the inventory in her depleted refrigerator: coffee and corn flour. Things had gotten so bad, she said, that she had begun bartering with neighbours to put © 2015 New York Times News Service
food on the table. “We always knew that this year would start badly, but I think this is super bad,” Noriega said. Venezuelans have put up with shortages and long lines for years. But as the price of oil, the country’s main export, has plunged, the situation has grown so dire that the government has sent troops to patrol huge
Oil Slump Impacts Venezuela’s Economy The tumbling oil price has affected Venezuela’s flow of hard currency, which has hurt the import of food, medicines and other basics, reports William Neumann.
Because Venezuela is so dependent on oil sales to buy imports of food, medicines and many other basics, the drop in oil prices means that there is even less hard currency to buy what the country needs. Even before oil prices tumbled, Venezuela was in the throes of a deep recession, with one of the world’s highest inflation rates and chronic shortages of basic items. One of the nation’s most prestigious public hospitals shut down its heart surgery unit for weeks because of shortages of medical supplies. Some drugs have been out of stock for months, and at least one clinic performed heart operations only by smuggling in a vital drug from the United States. Diapers are Portfolio
53
“If things are so bad now, I really cannot imagine how they will be in March when some of the lowest oil prices materialise in terms of cash flow,” said Francisco Monaldi, a professor of energy policy at the Harvard Kennedy School of Government in Massachusetts.
so coveted that some shoppers carry the birth certificates of their children in case stores demand them. Now economists predict that shortages
charismatic leftist Hugo Chávez. “I’ve always been a Chavista,” said
more than 95 per cent of its hard currency income. Chávez used the oil riches to fund
will get even more acute and inflation,
Noriega, using a term for a loyal Chávez
social spending, like increased pensions
already 64 per cent, will climb further.
supporter. “But the other day, I found a
and subsidised grocery stores. Now that
The price of Venezuelan oil dropped in
Chávez T-shirt I’d kept, and I threw it on
income has been slashed.
January to $38 a barrel, down from $96
the ground. I was so angry. I don’t know if
“If things are so bad now, I really
in September. “Things are going to be
this is his fault or not, but he died and left
cannot imagine how they will be in
even worse because oil keeps Venezuela
us here, and things have been going from
March, when some of the lowest oil prices
going,” said Luis Castro, 42, a nurse,
bad to worse.”
materialise in terms of cash flow,” said
standing in line with hundreds of others at a grocery store. He had arrived with his wife and sixyear-old son at 6 am, but by 11:30 am, they had still not entered. “We’re getting used to standing in line,” he said, “and when you get used to something, they give you only crumbs.” The shortages and inflation present another round of political challenges for President Nicolás Maduro, who has vowed to continue the socialist-inspired revolution begun by his predecessor, the
Above: Thousands line up to buy difficultto-find items – like sugar, cooking oil, milk, rice, toilet paper and baby diapers – at subsidised prices during a government organised event. Right: People line up for soup at a government-sponsored event that included free food and a nutrition class in the settlement of Los Teques, Venezuela. March 2015
Venezuela has the world’s largest
Francisco Monaldi, a professor of energy
estimated petroleum reserves, and when
policy at the Harvard Kennedy School of
oil prices were high, oil exports made up
Government in Massachusetts.
Economy
54
Left: Doctors protest the lack of medical supplies, holding signs about patients in need of care that they cannot properly treat, in front of the state-run University City Hospital in Caracas. Below: (L-R) Allanys Ruiz, three, receives treatment for an asthma condition in the pediatric ward at a state hospital; Vendors illegally sell black market butter, soap and cooking oil outside of the Quinto Crespo government market for more than five times the prices set by government price controls.
finally come to do so. And he reiterated
January travelling the globe in an effort
his position that the country’s economic
to court investment and persuade other
ills are the fault of an economic war being
oil-producing nations to cut production
waged against his government by right-
and push the price back up. “We have
wing enemies.
serious economic difficulties regarding
Many economists argue that
the country’s revenue,” Maduro said to
government policies are a big part of the
the legislature during his annual address,
problem, including a highly overvalued
which had to be pushed back because of
currency, price controls that dissuade
the trip. “But we will get, and we have
manufacturers and farmers, and
gotten, the resources to maintain the
government restrictions on access to
country’s rhythm.”
dollars that have led to a steep drop in
After months of toying with the
imports. Some investors fear Venezuela
politically taboo idea of raising the price
will default on billions of dollars in bonds,
of petrol sold at pumps here, the cheapest
but Maduro has said the country will pay
in the world, he said that the time had
its debts. Typically, in an election year like this one, when voters will choose a new legislature, the government showers supporters with goods, like refrigerators and washing machines, or other benefits, like free housing. But now there may not be enough foreign currency to import appliances and construction materials. In interviews, shoppers did not say they were going hungry. Rather, many said the economic crisis meant eating canned sardines instead of chicken, or boiled Portfolio
Illustration: Charlie Banalo
Many economists argue that government policies are a big part of the problem, including a highly overvalued currency, price controls that dissuade manufacturers and farmers, and government restrictions on access to dollars that have led to a steep drop in imports.
Maduro spenT 14 straight days in
55
Left: National Guard soldiers stand by to ensure order as people buy difficult-to-find items. Below: Henrique Capriles, an opposition party politician and past presidential candidate, greets people at an “empty pans” march, a protest over food shortages.
day off so that it will last longer.” On a recent morning, hundreds of people stood in line outside a big-box store, similar to Costco. Inside, many shelves were stripped clean. The large appliance and electronics section was empty. One aisle displayed hundreds of boxes of a single brand of toothpaste. There was no fresh meat; a cooler was filled with frozen chicken feet. Most people came to buy only three items sold at government-mandated prices: laundry detergent, vegetable oil and corn flour. Every purchase was entered into a database, ensuring that
food instead of fried because vegetable oil
But social media in Venezuela is full
is so hard to get. Many said they ate meat
of urgent pleas from patients trying to
shoppers did not try to buy the same
less frequently because it is out of stock
find prescription medicine. Ana Guanipa,
regulated staples at the chain for at least
or too expensive.
75, a retired government office worker,
seven days.
Fresh fish can be harder to find, in
said that she had searched numerous
Soldiers patrolled the line outside,
part, fishermen said, because they find it
pharmacies for her hypertension
police officers were stationed inside
more profitable to use their boats to sell
medicine. “I’ve been looking all month,
and government officials checked
subsidised Venezuelan diesel on the black
and I can’t find it,” she said, adding that a
identification cards, looking for fake ones
market in a high-seas rendezvous instead
neighbour who takes the same drug gave
that could be used to cheat the rationing
of hauling in a catch.
her some. “I take it one day on and one
system – or for immigrants with expired visas. An official from the immigration and identification service said that offenders would be arrested. “This is pathetic,” said Yenerly Niño, 18, adding that she had waited more than five hours to buy the three subsidised products because she could not afford to buy them at the higher prices charged by street vendors. “You do what you have to,” she said. “If you don’t do it, you don’t eat.”
Many said they ate meat less frequently because it is out of stock or too expensive.
March 2015
56
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Illustration: Tarak Parekh. Photos: Getty Images
1
Portfolio
Technology
57
Internet in Orbit
Companies such as Google and Facebook are looking towards space in their quest to deliver internet to underserved areas around the world, reports Conor Dougherty.
G
oogle has never shied from novelty or spending big to find ways to connect more people to the internet. Over the last two years, its ideas have included fleets of little
satellites, solar-powered drones that would fly around the world and balloons that float high into the stratosphere, beaming the internet to those below. Building on that, Google and the mutual fund giant Fidelity announced a $1 billion investment in January into Space Exploration Technologies, a growing private rocket company that is still trying to prove itself on the world stage. The company, also known as SpaceX, could give Google a way to put its devices into outer space. With that growing collection of devices in the sky, Google believes it can spread the internet to underserved areas around the world. The investments also reflect a bit of enlightened selfinterest, since the more people who are connected directly to Google, the more ads it can show them. And that is how Google makes its money. “Anything they provide, if it’s going through their own pipe, they have more control over the experience and more potential for revenue,” said J.P. Gownder, an analyst at Forrester Research. That means those consumers are more likely to stick with Google services like search, Gmail or YouTube rather than going somewhere else. Google’s interest in satellites is anything but original. In January, the Virgin Group and Qualcomm, a maker of communications semiconductors, announced they had invested in OneWeb, a network of internet connectivity satellites, while Planet Labs, a maker of shoebox-size satellites that offer Earth imagery, announced it had received $95 million in financing.
altitude, unmanned planes to deliver internet service to parts of the world that have little connectivity now. The company is also experimenting with satellites and lasers to deliver internet services. These companies have different technologies and different ideas for making money, but the bind among them is a common
March 2015
© 2014 New York Times News Service
Last year, Facebook bought a British drone maker and hired a bevy of top aerospace scientists, with the goal of deploying high-
58
assumption that there is no economic way
Jurvetson, a founder and partner at Draper
Station, was a sort of stratospheric blimp
to physically wire the world’s underserved
Fisher Jurvetson, a Menlo Park, California,
that would hover over areas that needed
consumers. So the only way to do it is with
venture capital firm. He is on the boards of
broadband internet service. It was not
satellites and other wireless technologies.
both SpaceX and Planet Labs.
successful, mostly because there was not much demand for the high-speed access it
There is another benefit for Google: The company is always looking for ways to
THIS IDEA OF sky-high internet
could provide, said Martine Rothblatt, the
get around internet service providers. As
connections seems to be a fixture of
inventor of the satellite service SiriusXM
Google executives have shown with new
technology booms. In the mid-1990s,
who was a partner in Sky Station and
offerings, from insurance shopping to the
there were similar efforts. One, called Sky
is now the chief executive of United
growing Google Fiber broadband service, if there is one thing they believe, it is that
Therapeutics, a biotechnology company. “Twenty years ago, when people were
their company’s interests are best served
like really happy to get a phone call on a
by going directly to the consumer.
mobile phone, it was inconceivable that
And as first reported on the tech
most people’s television platform would
website The Information, Google has been
be their mobile” device, Rothblatt said.
in talks with cellular network companies
Today, Rothblatt added, the demand for
with a goal of providing its own wireless
bandwidth is “essentially insatiable.”
service, according to two people familiar
The interest in satellites also extends to
with Google’s efforts. “If you’re a big internet company, you don’t want to have to deal with every cable company, every telco, that are potentially or actually trying to interfere with your freedom to do business,” said Steve
Left: Elon Musk, the founder of Space X, recently received a $1 billion investment from Google and Fidelity. Below: Viasat satellites allow airlines to offer inflight broadband wi-fi.
Portfolio
Technology
59
Left: A SpaceX rocket, carrying supplies to the International Space Station, lifts off. Above: New technologies mean that communication satellites are becoming smaller and cheaper.
services. Last year, Google spent about
the boundaries of miniaturised electronics,”
and that cover the world to put the three
$500 million to buy Skybox Imaging, a
said Will Marshall, co-founder and chief
billion people who do not have internet
maker of small high-resolution imaging
executive of Planet Labs.
access online.
satellites that could do things like
There is nothing new about connecting
Low-earth-orbit satellites are already
monitor crops or map the terrain below
to the internet via satellite. People do it on
revolutionising imaging technologies by
a forest canopy.
airplanes, at sea and in remote corners of
allowing companies to receive continuously
But be it imaging or connections, the
the world. ViaSat, a Carlsbad, California,
updated pictures of earth, which lets them
recent interest in satellites stems from
satellite company, beams satellite internet
do things like measure a mall’s hourly
a reduction in satellite cost. Unlike the
to 700,000 homes and apartments in
parking lot traffic. But whether these
first space race, when governments had
the United States. But this is done with
satellites can be used to connect people
to make almost everything themselves,
bigger, higher-orbiting satellites that sit
to the internet more cheaply has yet to be
there are now all kinds of off-the-shelf
in a geosynchronous orbit, meaning they
proved, Dankberg said.
chips, batteries and other components
move at the same speed as the earth and
that can be mixed and matched. And
so stay above a fixed point.
just as the camera on your mobile phone
One advantage is that low-earth satellites could have less lag between typing a search into Google and receiving
becomes better with each upgrade,
MARK DANKBERG, VIASAT chief
the results. But since most of the world is
the advancement in space imaging
executive, estimated that dozens of
water and barren land, Dankberg said, a
technology has been rapid.
companies around the world are working
fleet of internet-connected satellites would
“Aerospace is following business
on satellite-based internet services that
have many of its components hovering
because the dominant research and
are regional in scope and use these
over unpopulated areas.
development dollars are no longer in the
higher-orbit technologies.
Air Force or NASA, but they are in Google and Apple and all these places pushing March 2015
But the satellites internet companies have become enamoured of using orbits
“It has yet to be proven that lots of little satellites can provide internet more cheaply than a handful of big ones,” he said.
Profile
60
The approach has produced some remarkable results. Since 2010, the percentage of women on Britain’s top boards has nearly doubled, to 23 per cent, while in the United States, the figure has crept up a few percentage points to 17 per cent. “There is a spotlight and visibility there that is not present here,” says Brande Stellings, vice president for corporate board services at Catalyst, a non-profit focused on increasing opportunities for women in the United States. That Morrissey is credited with spearheading those results while raising nine children – ages five through 23 – could have made her the target of ire in a country that does not always celebrate success. Or it might have fuelled the debate about whether a woman can or cannot have it all. It has done neither. “She’s an anomaly, not a template,” said her husband, Richard, 51, who is a Buddhist and former journalist who cares for the children at home.
S
uggest to Helena Morrissey that she is Britain’s version of Sheryl Sandberg, and she smiles politely.
“I think I am meant to be flattered,”
Morrissey, a 48-year-old money manager, said recently in her office in the City, London’s historic financial district. “But I am doing my own thing.” Like Sandberg, the Facebook executive, Morrissey has become the face of women’s advancement in business in her country. Four years ago, she founded the 30% Club, an organisation that seeks to increase the representation of women on boards to that number. But Morrissey has taken a rather
Aiming at Glass Ceilings Helena Morrissey, the CEO of Newton Investment Management, is successfully pushing for more female representation on boards, reports Jenny Anderson.
in positions of power. But progress in the United States has been glacial, making the 30% Club’s methods, and results, all the more compelling. “If we could in any way, shape or form replicate the success she has had in such a short period of time, we would be doing a good job for the business community here,” said Peter Grauer, chairman of the news and information company Bloomberg and the founding chairman of the American chapter of the 30% Club, which was started last year. The 30% Club’s approach is distinctive, and heavily influenced by Morrissey, whose English-rose approach masks a
different approach than Sandberg and © 2015 New York Times News Service
Groups like Catalyst in the United States have worked to get more women
relentless determination. “My style is not
others have. Sandberg has implored women to assert themselves and find
steely focus on Britain’s most powerful
to tell people what to do but to show a
sponsors who can help advance their
men. Working behind the scenes, she
path that is appealing,” she said. And she
careers. And countries like Norway and
has persuaded 120 of the country’s top
does not go negative. For example, she
France have mandated legal quotas for the
chairmen that they want what she wants:
will not name those who would not join
percentage of women serving on boards.
more diverse boards that will produce
the 30% Club in its early days. Equally,
better company returns.
she is supportive of anyone trying to effect
Instead, Morrissey has directed her
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name the group for the target she means
change rather than complain about the lack of it. “I see so much confrontation and negativity and I don’t see that it achieves very much,” she said. Morrissey is a Sandberg fan and compliments her for starting an important dialogue. “Women do need to lean in but I don’t think it’s fix the women or fix the system. It’s not binary,” she said. Morrissey is adamant that the group is
Morrissey is a Sandberg fan and compliments her for starting an important dialogue. “Women do need to lean in but I don’t think it’s fix the women or fix the system. It’s not binary,” she said.
of women by 2015. She said she believes the group will get to 27 per cent by the end of the year, and more if it focuses on the 10 per cent of nonexecutive directors who have held seats for more than nine years. The movement has not been without detractors. One chairman told her she was going to destroy business; others wonder why she is not doing more for broader
not promoting a women’s initiative or a
categories of diversity, like race. Also,
diversity initiative, but a business issue. She cites research from McKinsey, Catalyst and
chairman of the companies in the FTSE
women’s numbers in senior executive roles
Credit Suisse as evidence that more diverse
350 stock index, alphabetically.
in Britain remain paltry. Still, the 30%
boards provide better shareholder returns,
When she reached the H’s some
Club has expanded, with groups in Hong
because homogeneous boards often provide
unfriendly mail from the A’s started
Kong, South Africa and Ireland as well as
little fresh thinking about customers,
pouring in. She quickly learned there was
the United States, and plans for Canada
risks or outcomes. Not coincidentally,
a better way. “It’s best to get chairmen to
and Australia.
30 per cent representation is the level at
recruit each other than to use me,” she said.
which organisational psychologists agree a minority voice can be heard. To that end, she has encouraged men Photo: Getty Images
to reach: 30 per cent of boards made up
to lead the charge, and once they are on board employed them to recruit others.
Perhaps the 30% Club’s greatest asset
The open tent, no-pressure strategy
is its ability to try new approaches.
seems to be effective in Britain, where
Recognising that boards turned to
complex rules around confrontation seem
executive search firms for lists, it lobbied
to permeate every level of society.
and won the support of some search
“Where I think Helena has been
firms. Hearing that midcareer women
When she was trying to build support for
uniquely successful is in quiet advocacy, in
wanted mentorship, but not always within
the group, she set out to send notes to each
getting people who have the power to make
their own organisations, it created a
a change, believing that they want to make
cross-mentoring group where a female
a change,” said Robert Gillespie, a member
lawyer might be mentored by a male asset
of the Royal Bank of Scotland board and a
manager, because she might not want to
former banker at Evercore and UBS.
talk to her boss about balancing children
Morrissey is vehemently against
and work, or taking time off to care for an
Opposite page: Helena Morissey believes that more diverse boards provide better shareholder returns. Below: Morrisey, the CEO of Newton Investment, at a company function in London. She is also the founding chairperson of the 30% Club.
government-imposed quotas, bucking the trend from much of Europe, but she did
elderly parent. Morrissey has begun the new year by taking the group’s message to schools. Teaming up with another charity, Speakers for Schools, the 30% Club is blanketing a handful of British schools, with the chairmen explaining to students how diversity benefits business. On January 26, Douglas Flint, the chairman of HSBC, offered 400 students in a high school audience in east London some advice. When he goes to promote a man, he said, the reaction is often: “What took you so long? I’ve been ready for ages.” Women, he said, often question if they have the necessary skills. “Don’t be too self-effacing,” he told the crowd, channelling Sandberg.
March 2015
63
Essentials
THE BEST OF LEISURE AND LIFESTYLE
Path to Enlightenment
Images: Getty Images/Brian Johnston
When you’ve had enough of urban, boom-time China, head to Shanxi Province for ancient history, mountain landscapes and a slower pace, reports Brian Johnston.
March 2015
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Essentials
Travel
I
like feeling insignificant. Instead of being intimidated, I find something soothing about vast dimensions
of time or space that make my life seem trivial. And that’s just the way I’m feeling now, standing in a cave dwarfed by a soaring 17-metre Buddha sculpted 1,500 years ago. The cave glows with a honeyed light, and two serene Bodhisattvas stand on either side of the Buddha, softly smiling. They’ve been smiling as 50 generations have come and gone: a thought to make my own troubles unimportant. These statues ought to be more famous. In Yungang in northern China, they’re just a few among 50,000 sculptures of Buddhas, dragons, strumming musicians and flying angels that stretch along a one-kilometre hillside. The sculptural range dazzles. Artists from across Asia worked in these caves for a century from
congregation of emperors and disciples.
453 CE, and they display Greek, Persian
The earliest sculptures are bold and
and Hindu motifs among a Chinese
simple, but their size impresses. Later sculptures are more detailed; some still
Clockwise from right: Buddha carvings in Cave 9 at Yungang; Taihuai temple complex on Wutai Mountain; A finely carved room inside Yungang; Sculpture student at Shuanglin temple.
have their plaster casings and multicoloured paintwork. These Buddhist grottoes are easily among the most fabulous cultural sights anywhere. Buddhists say renouncing earthly desires will let you glimpse nirvana. I’m far too fond of my creature comforts for such lofty ambitions, but there’s something both soothing and uplifting about following China’s Buddhist trail. Having ‘done’ the classic sights such as Shanghai and Beijing, it offers me another whole glimpse of this varied country. I’m in Shanxi Province which, though scarcely 400 kilometres west of Beijing, is a crumbling land in brown and ochre, framed by barren hillsides, just south of the dusty Gobi Desert. Corn and apricots ripen in valleys where sluggish brown rivers wander, and giant Buddhas smile enigmatically from caves, serenaded by whispering winds. Thanks to its location on the Yellow River, the vast and fertile plateau region that is now Shanxi saw the emergence of Chinese civilisation in ancient times. Portfolio
65
The first Chinese state was founded here in 2200 BCE. Within five centuries, its people had created walled cities, bronze vessels and weapons, silk and wheeled vehicles, and were well on their way to being the world’s greatest civilisation. SHANXI PROVINCE IS now something of an outdoor museum of sculpture, imperial mausoleums, red-roofed temples and ancient buildings excellently preserved both by the dry climate and relative isolation. Like much else in China, this history makes me feel small. It makes me feel there’s much beyond just my own culture to understand. Shanxi is an alien place, full of mysterious history and unpronounceable names and alien religions. What better place to be? I’ve started in Datong, once an ancient capital under two Chinese dynasties, now one of China’s powerhouses, supplying a quarter of its vital coal needs. The local tourist office runs mining tours that are followed by lunch in the miners’ cafeteria, providing an interesting glimpse into China’s contemporary industrial boom – and a change from all things ancient. Datong also has some good shopping, and an enticing row of souvenir and antiques March 2015
Clockwise from top left: Yungang Caves; An elderly monk catches the afternoon sun at Xiantong temple on Wutai Mountain; Tourists on a guided tour of Jin temple outside Taiyuan; The Yungang Caves (Wuzhoushan Grottoes in ancient time) are near the city of Datong in the province of Shanxi; A street in the old town of Pingyao.
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Essentials
Travel
shops along its recently-opened replica
me with worries about the dizzying drops
‘ancient’ Huayuan Street.
and groaning wood – I’m a lot heavier than
The Yungang Caves are the reason most people come to Datong, but southwest
Above: Hanging Temple in northern Shanxi Province.
a skinny monk. Nirvana is all very well, but I don’t want it to arrive too soon.
of the city in the Heng Mountains you
century, Wutai is one of China’s most
can challenge yourself (as did several
DEEPER INTO SHANXI Province,
revered mountains. By the fourth century,
emperors past) by ascending its highest
the mountains get higher. In the Wutai
the remote region was a thriving centre
peak, the 2,000-metre Xuanwu, passing
range, five peaks soar over 3,000 metres
of Buddhism and boasted hundreds of
many a venerable temple along the
into fresh blue skies above with hillsides
temples and monasteries. These days,
way. The most extraordinary sight is the
blanketed in flowers. In ancient times,
some 40 remain, and Wutai is still an
Hanging Temple, more easily reached on a
pilgrims used to take two years to ascend
important site of pilgrimage, particularly
tour coach than by hiking. Like something
each in turn. These days, minibuses haul
for Tibetans and Mongolians. It’s
from a kung-fu movie, the temple is hewn
tourists at least part of the way up several
dominated by the soaring 50-metre White
from rock halfway up a cliff and extended
of the peaks, though many visitors seem
Stupa, which sticks out like a giant thumb
outwards in a series of wooden walkways.
satisfied just with glimpsing the temples
from the rocky brown hills and tinkles
The monastery houses small shrines to all
at the summit through telescopes set up at
prettily with breeze-blown bells that can
three of China’s main religions (Taoism,
souvenir stalls in the valley far below.
be heard across the valley.
Buddhism and Confucianism), but distracts
With a history dating back to the first
The most spectacular group of buildings Portfolio
67
Clockwise from top left: Traditional architectures in Jin Memorial Hall; Climbing the staircase to Pusading temple on Wutai Mountain; Shanxi Province’s final must-see is the eighteenth-century Qing Dynasty town of Pingyao, one of the most delightful places in China.
is at Taihaui, where temples cover an entire hillside with yellow roofs, a giant white stupa and even an elaborate Bronze Palace covered in animals, flowers and Buddhas. A steep set of 108 steps connecting two of the temples is said to represent the 108 earthly worries that are cast off as pilgrims, monks and tourists alike ascend upwards. True, by the time I’m at the top, I only really have one worry, and that’s getting enough breath in the thin mountain air. It’s well worth the climb, though, for the meditative view of
highlight is one of the earliest wooden halls
an early banking centre has graced it with
temple roofs and snowy peaks.
in China, where life-size figurines in pastel-
impressive mansions, civic buildings and
painted court dress, carrying jugs and
six-kilometre city walls from which I peer
FROM HERE, A bumpy 200-kilometre
brooms, attend to an empress. Wonderful
down onto dragon-draped temple roofs
drive takes me through a rugged landscape
dragons writhe around pillars on the
and into courtyards where ears of corn are
towards Taiyuan, the provincial capital
exterior of the hall like a set from Game of
strung out to dry.
and another mining and industrial centre.
Thrones. Life-size guardian warriors made
Just before town, a superbly kitschy Song
of iron dot the grounds, provide a useful
isn’t the China we hear about in often
Dynasty complex known as Jin Temple,
prop for holiday photography.
negative news coverage. It’s the China
It’s a happy ending to Shanxi, which
dotted through a sprawling park and
Shanxi Province’s final must-see is the
I love, a place of wonders and marvels,
forested hillside, is also guaranteed to
eighteenth-century Qing Dynasty town of
oozing culture and history, where red-
reduce earthly worries. The first temples
Pingyao, one of the most delightful places
cheeked ladies in red aprons giggle as you
were knocked up in the fifth century and
in China. Although it’s a mere newcomer
walk past their fruit stands, local apricots
added to over hundreds of years. The
by Chinese standards, its importance as
laid out like treasures before them.
March 2015
Essentials
68
Cuisine
A Spicy Contender
© 2015 New York Times News Service
Balti, a favourite curry in Birmingham, is now vying to become one of Britain’s traditional specialties, reports Stephen Castle.
T
he year after opening a small
prawns, combined with vegetables and
and religious and ethnic differences
restaurant in Birmingham in
a spicy sauce, and cooked over a high heat.
seem to be growing ever sharper, this
1977, Mohammed Arif spent two
Arif ’s recently refurbished restaurant,
adaptation of Pakistani cooking to
weeks in his native Pakistan, where he saw
Adil’s, is thought to be the place where
British tastes is a symbol of culinary
spicy, aromatic curries being cooked and
the first Balti curry was served in 1978,
cross-fertilisation in one of Britain’s most
served, sizzling, in the same dish.
and lies in a colourful immigrant area of
multicultural cities. Most customers at
Birmingham where bustling shops sell
Balti restaurants are non-Asian – a tasty
South Asian food, spices and clothing.
retort to the much-mocked reports that
“It just came into my mind that I could take this idea back,” said Arif, whose thought gave life to a new dish – the Balti, a curry usually made of meat, chicken or
More than 35 years later, at a time when tensions over immigration, assimilation
areas of Birmingham, and of a number of other European cities, had become “no-go Portfolio
69
“Let’s hope the popular Birmingham Balti recipe follows in the footsteps of our other iconic foods like the Cornish pasty in achieving protected status,” said Liz Truss, Britain’s secretary of state for environment, food and rural affairs, referring to a traditional savoury pie that has won a related European status.
zones” for anyone but strict Muslims. The area around Adil’s is now known as Birmingham’s Balti Triangle. Restaurants in other cities have their own recipes and precooked Balti meals occupy supermarket shelves. But does that make Birmingham’s Balti one of Britain’s traditional specialties? ThaT quEsTion is being pondered by European Union officials. They are now debating whether Birmingham Balti should be recognised and registered alongside famous European foods like Italy’s Neapolitan pizza and its mozzarella cheese, and Spain’s Jamón serrano. The British government wants European recognition. “Let’s hope the popular Birmingham Balti recipe follows absorbs and adapts external influences.”
in the footsteps of our other iconic foods
savoury pie that has won a related
like the Cornish pasty in achieving
European status. Curry is “a great part
protected status,” said Liz Truss, Britain’s
of the UK’s food heritage, along with fish
Britain, India’s former colonial overlord,
secretary of state for environment, food
and chips and pies,” Truss said.
has had a long love affair with food
and rural affairs, referring to a traditional
Opposite page: A traditional Balti cooking pot at Shabab in the “Balti triangle” area of Birmingham, England. Above right: A king prawn curry served in a Balti pot. March 2015
She is not the first British politician to
Both politicians have a point because
inspired by the subcontinent, but adapted
make such claims. In 2001, Robin Cook,
to palates unaccustomed to hot spice.
who was then foreign secretary, described
Even small British towns generally
chicken tikka masala as “a true British
have an Indian restaurant and takeout,
national dish.” With its spicy, but creamy,
and Indian-influenced food features in
orange-coloured sauce it was, Cook said,
everyday staples like sandwiches.
a perfect illustration “of the way Britain
Balti emerged at a time when curry
Essentials
70
Cuisine
Left: Chicken Balti at Shabab. Below: Adil’s, which is thought to be the place where the first Balti curry was served in 1978, in Birmingham, England.
Eating Balti in Birmingham was, and
glass table tops, and, in line with Muslim
Indian restaurant, Veeraswamy, opened
remains, a different experience. Usually it
beliefs, did not serve liquor (though most
in London in 1926). By the 1980s, such
is consumed not with a knife and fork, but
allowed customers to bring their own, and
food was found all over the country, but
with large naan breads, dipped into hot
still do).
was often eaten by late-night diners, their
wok-style cooking pots made from thin-
taste buds dulled by an evening’s drinking.
pressed steel.
Photo: Getty Images
was well established here. (Britain’s oldest
Many restaurants, according to Arif, “just put it on a plate and microwaved it.”
During the 1980s, Birmingham’s Balti restaurants were basic places, usually with
Cooked in less than 10 minutes over a high heat and in vegetable oil, Birmingham Balti usually contains less cholesterol than curry recipes using
Cooked in less than 10 minutes over a high heat and in vegetable oil, Birmingham Balti usually contains less cholesterol than curry recipes using ghee, a sort of clarified butter. This is hardly health food, however. It tastes simple but full of flavour, spicy but not fiery, oily but not too heavy.
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71
ghee, a sort of clarified butter. This is hardly health food, however. It tastes simple but full of flavour, spicy but not fiery, oily but not too heavy. Arif ascribes its success to the fact that it is “fresh cooking and people like the fact that it is served sizzling.” In the kItchen at Shabab restaurant, on Birmingham’s Ladypool Road, the owner, Zafar Hussain, demonstrates the cooking technique over a fierce flame. One of his helpers rolls out a large naan bread and then, with an unexpected flourish, pulls out a pillow that is the perfect size to shape the bread, and then places it carefully into a hot, circular tandoori oven. “We get visitors from all over the world,” Hussain said. “Balti has a distinctive taste because it is cooked in a unique way.” authenticity and a quality guarantee,
executive body of the 28-nation bloc,
ingredients include turmeric, fenugreek,
providing they cook according to a set
says its deliberations are continuing,
cumin, garam masala and coriander.
of rules. These would apply only to
and Arif, 62, who came to Britain in the
Each restaurant has its own sauce but
Birmingham Balti, Munro said. Balti
late 1960s, said he welcomed the bid for
name Balti, one theory being that it
meals prepared elsewhere, or those not
European recognition. He said he had
was derived from a South Asian term
identifying themselves with the city, would
some personal regrets that he did not
for “bucket” because at large gatherings
not be affected, providing they did not
exploit Balti more commercially. “This
on the Indian subcontinent, food was
describe themselves as “Birmingham Balti.”
was my brand,” he said, “but I never really
There is debate over the origin of the
sometimes served from buckets. Another is that it refers to a mountainous area of northern Pakistan, known as Baltistan. Arif said the name was invented because it was easier to pronounce than the Pakistani cooking pot known as a karahi. Andy Munro, adviser to the Birmingham Balti Association, has led the campaign to gain the European quality mark known as TSG, which stands for traditional specialty guaranteed, and is one of three programmes intended to protect European agricultural products and foodstuffs. If successful, restaurants will be able to use the designation as a proof of
Above right: Patrons and employees at Adil’s, which was recently refurbished. Right: Balti curries are cooked over high heat in vegetable oil. March 2015
The European Commission, the
bothered about it.”
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Essentials
Technology
Fuelled by Danish Ingenuity The tiny island of Samso off the Danish coast is a case study in renewable energy, reports Diane Caldwell.
Portfolio
73
Opposite page: Arne Kremmer Jensen, director of the district heating plant places hay bales used for heating on an assembly line on Samso. Top: Hans Jorgen Buur, an investor in the offshore wind farm, times his solar energy use to when power is cheapest.
long-term transformation. It won a
about 60 swells to include hundreds of
government-sponsored contest to create
residents and thousands of tourists in the
a model community for renewable energy
summer. They – along with generations
and, through a combination of wind and
of artists like Edward Hopper, Rockwell
solar (for electricity) and geothermal and
Kent and Jamie Wyeth – have been drawn
plant-based energy (for heating), the
by the island’s lost-in-time charm and
island reached green energy independence
picturesque setting in the Gulf of Maine.
in 2005. That means Samso generates
Monhegan faces challenges as stark as
more power from renewable sources than
its beauty. Foremost among them – and
it consumes overall. Attached by a power
the spur for the journey to Denmark – is
cable to the mainland 18 kilometres away,
dependence on expensive, dirty fuels
the island sells its excess electricity to the
B
for heating and electricity. Even with
national utility, bringing income to the
efore dawn one morning in
the recent fall in oil prices, Monhegan
hundreds of residents who own shares in
October, a handful of Americans
residents pay among the highest power
the island’s wind farms, both on land and
gathered at a lonely pier on
rates in the US – almost six times the
at sea.
Samso, a small Danish island about four
national average – and the electric
hours from Copenhagen. Bundled in
company, locally owned and operated,
for its accomplishments. Soren
layers of fleece and wool, the Americans,
struggles to keep the lights on.
Hermansen, 55, and his wife, Malene
mostly from islands off the Maine coast, © 2015 New York Times News Service
Monhegan, Maine, whose population of
Twenty years ago, Samso faced similar
Samso has attracted global attention
Lunden, 49, worked for years to develop
had come to get a closer look at a wind
problems. Its farming and fishing
the programme on the island and have
farm – 10 mighty turbines spinning in the
industries were in decline, and its
created an institute, the Samso Energy
Kattegat strait – that has helped make
electricity and heating costs, mostly from
Academy, to spread their story and
Samso a symbol for a greener future, one
diesel and coal, were rising. Its young
methods to international visitors.
powered entirely by renewable energy.
people were leaving the island to attend
Among them was Marian Chioffi, the bookkeeper at the electric company in March 2015
high school and choosing not to return. But in 1997, the island began a
The Maine islanders, along with students from the College of the Atlantic in Bar Harbor, had travelled to Samso to
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Essentials
Technology
and plans were finally moving ahead for a long-term, public-private demonstration project that would place two turbines there. There are not yet any full-scale offshore wind farms in the United States, so the Mainers were eager for a rare chance to see one up close. It was still dark as the group boarded the Ocean Cat, a former whale-watching boat. Willy Mortensen, the captain, started making coffee and chatting with the visitors. He and his mate are on call to ferry repairmen to the wind farm, which starts about 3.5 kilometres from Samso’s coast. That’s what they were doing on that damp morning, with the Mainers tagging along. The repair crew often works for 12 hours on a visit. Mortensen said: “There’s attend the academy and hear the Danes’
a lot of trouble with the turbines. You’re
advice. If all went well, each islander
repairing and repairing and repairing. By
would go home with a team of students
the time you get one fixed, the next one
dedicated to solving an energy problem
doesn’t work.”
using ideas borrowed from Samso. Beyond that, the planners hoped, new
Indeed, when Mortensen nudged the bow of the boat through the heaving
Maine island projects could become
waters to settle near turbine No. 6,
templates for broader adoption of
another stood idle, victim of a cracked
renewable energy. Because of their particular geography, islands often lack the resources and infrastructures to meet their own needs. Fuel, like other necessities, is often imported – sometimes with great difficulty – and electric grids, when they even exist, are often underdeveloped or out of date, all
Top: Soren Hermansen, who created the Samso Energy Academy, on a wind turbine on the Danish island Samso. Below: The main harbour of the small island town of Vinalhaven, home to the Fox Islands Electric wind site.
of which leads to higher prices and less reliable service. With residents open to cheaper and better alternatives, islands are becoming seedbeds of innovation – living labs in which to test and refine technologies and approaches that are too new or expensive to establish on a mainland. And their small size makes the systems easier to manage and analyse. For Chioffi, seeing how the people of Samso had come to accept new technologies had particular significance. In 2009, Maine designated a patch of ocean off Monhegan’s coast that is part of the state’s lobstering grounds as a test site to study renewable energy development, Portfolio
75
about 20 per cent from government subsidies, to turn the island into a renewable-energy community, Hermansen estimates. But in the end, the island’s accomplishments seem to stem not so much from government policies and subsidies as from Hermansen’s ability to show people how the changes could benefit them. On tiny Monhegan, the year-round residents are focused on Maine Aqua Ventus, a wind project with public and private financing that may arrive near their shores whether they want it or not. Conceived as a demonstration of the potential for offshore wind, it would put two enormous turbines – 100metre towers atop 10-metre platforms, bearing that would require a special
hay to heat water, which then circulates
as opposed to the roughly 70-metre
crane boat to fix. As the workmen put on
through underground pipes to radiators
machines near Samso – in a pristine
harnesses and climbed off the bucking
and heat exchangers for warmth and hot
section of the Atlantic Ocean. Some
deck to a small platform encircling the
water. But the plant near the academy is
residents say they like the idea of potential
steel tower, Chioffi craned her neck to
experimenting with elephant grass as a
benefits of the farm, including better
look at the machine looming overhead.
new source of biomass, Hermansen told
“Does seeing these give you more
the group, because it grows faster and
of a sense of the reality?” asked Sam
has a higher energy content than hay.
Saltonstall, a retired Maine schoolteacher
“We are still looking for the elephants,”
who now lives on Peaks Island, near
Hermansen joked of the dense field.
Portland. “Yeah,” she said softly, stunned by
Part of the appeal of using the biomass is that even with low oil prices it is
how big they were. “But the ones they’re
cheap – about one-eighth the cost of
talking about putting up are twice as high
oil, which is heavily taxed in Denmark,
as that.”
he said. But as with some of the other
“I’m not on a mission of saving the polar bears in the Arctic or changing the climate – I am on a mission of saying it is not good for us to be depending on imported fossil fuels.”
renewable technologies in use on Samso, One sunny afternoon during their
the system is not so easily replicated
weekslong stay on Samso, the five Maine
elsewhere. The island has open, fertile
broadband service and access to central
islanders and about 15 students rode on
land and ground soft enough to bury the
Maine’s grid, which would relieve them of
bikes with Hermansen to an open field.
hot-water pipes. Maine’s flinty landscapes
the burden of running and maintaining
Huge, plastic-encased bales of hay sat
are not so accommodating. Hermansen
their own system. But they also worry that
alongside a large plot of a dense, tufted
and Lunden acknowledge as much but
it could harm tourism and lobstering, as
plant called elephant grass.
argue that specific natural resources and
well as birds and marine life.
On the island, many private houses
technologies are irrelevant to developing
and public buildings connect to central
a green community without an appeal to
Monhegan work through those questions
heating plants established as part of the
people’s direct and practical self-interest.
by borrowing engagement strategies
energy project. The heating plants burn
Top: Island Energy Conference attendees tour the Fox Islands Electric wind site on Vinalhaven island in Maine. March 2015
“I’m not on a mission of saving the polar
Chioffi’s project is intended to help
from Hermansen and Lunden. So far, the
bears in the Arctic or changing the climate
approach is having some effect. When
– I am on a mission of saying it is not
the Danish couple visited Monhegan in
good for us to be depending on imported
October, most island residents showed up
fossil fuels,” Hermansen said.
for a discussion and were still talking about
It has taken $80 million in investment,
it along the dirt roads the next day.
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Environment
O
ut here on the endless swamps of the Bangweulu Wetlands in Zambia, a harsh truth has
been passed down from generation to generation: there is no fear but the fear of hunger. With that always weighing on his mind, Mwewa Ndefi gets up at dawn, just as the first orange rays of sun are beginning to spear through the
The Mosquito Net Issue Mosquito nets are meant to combat malaria, but in many waterside communities they are used for fishing with devastating environmental effects, reports Jeffrey Gettleman.
papyrus reeds, and starts to unclump a mosquito net. Nets like his are widely considered a magic bullet against malaria – one of
bugs and the occasional green frog. “I
mosquito-net fishing is a growing
the cheapest and most effective ways
know it’s not right,” Ndefi said, “but
problem, an unintended consequence of
to stop a disease that kills at least half
without these nets, we wouldn’t eat.”
one of the biggest and most celebrated
a million Africans each year. But Ndefi and countless others are not using their
Across Africa, from the mud flats of Nigeria to the coral reefs off Mozambique,
public health campaigns in recent years. The nets have helped save millions of
mosquito nets as global health experts have intended. Nobody in his hut, including his seven © 2015 New York Times News Service
children, sleeps under a net at night. Instead, Ndefi has taken his family’s supply of anti-malaria nets and sewn them together into a gigantic sieve that he uses to drag the bottom of the swamp ponds, sweeping up all sorts of life: baby catfish, banded tilapia, tiny mouthbrooders, orange fish eggs, water Portfolio
Essentials Environment anyone fishing with a mosquito net. “We need a regulation to deal with these
“If you’re using freshly treated nets in a smallish stream or a bay in the lake, it’s quite likely you’re going to kill fish you don’t intend to kill,” said Dan strickman, a senior programme officer for the Bill and Melinda Gates foundation, which has invested heavily in malaria research and development.
people,” Museveni said. Many of these insecticide-treated nets are dragged through the same lakes and rivers people drink from, raising concerns about toxins. One of the most common insecticides used by the mosquito net industry is permethrin, which the US Environmental Protection Agency says is “likely to be carcinogenic to humans” when consumed orally. The EPA also says permethrin is “highly toxic” to fish. Most scientists say the risks to people are minimal, because the dosages are
lives, but scientists worry about the
relatively low and humans metabolise
collateral damage: Africa’s fish. Part of the concern is the scale.
smaller than mosquitoes, traps much
Mosquito nets are now a billion-dollar
more life than traditional fishing nets do.
industry, with hundreds of millions of
Scientists say that could imperil stressed
insecticide-treated nets passed out in
fish populations, a critical food source for
recent years, and many more on their
millions of the world’s poorest people.
way. They arrive by the truckload in poor,
Scientists are hardly the only ones
waterside communities where people have
alarmed. Fistfights are breaking out
been trying to scrape by with substandard
on the beaches of Madagascar between
fishing gear for as long as anyone can
fishermen who fear that the nets will
remember. All of a sudden, there are light,
ruin their livelihoods, and those who say
soft, surprisingly strong nets – for free.
they will starve without them. Congolese
Many people said it would be foolish not
officials have snatched and burned the
to use them for fishing.
nets, and in August, Uganda’s president,
“The nets go straight out of the bag into the sea,” said Isabel Marques da Silva, a marine biologist at Universidade Lúrio in Mozambique. “That’s why the incidence for malaria here is so high. The people don’t use the mosquito nets for mosquitoes. They use them to fish.” But the unsparing mesh, with holes
March 2015
Yoweri Museveni, threatened to jail
Opposite page: (Top) Fishermen, their canoes loaded with mosquito nets, at Bangweulu Swamp, Zambia. Opposite page below: (L-R) A boy stands by a makeshift football net made from a mosquito net in Lagosa, Tanzania; Fishermen drag mosquito nets across shallows. Clockwise: A child sits on mosquito nets that a family is sewing together to use for fishing; Women fish traders ready and waiting to buy fish from men returning from a night of fishing on Lake Victoria, in Kenya; Jane Adhiambo, a mother of two, using a mosquito net for fishing.
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78
Essentials
Environment
BASF, a major net maker, said, “We want to avoid any form of contamination.” He acknowledged that “if it’s a small pond, say maybe 10 metres, it could be a problem.” Though experts say that the vast majority of mosquito nets are used exactly the way they were intended – hung over beds – the full extent of mosquito-net fishing is unknown. “No one is going to come forward in a survey and say, ‘That thing you’re giving me, we’re not using it properly,’” said Seth Faison, a spokesman for the Global Fund to Fight AIDS, Tuberculosis and Malaria, which has financed the purchase of 450 million nets. Yet Faison and several other public health officials maintained that mosquito-net fishing was “anecdotal”.
permethrin quickly. But with coldblooded
and Melinda Gates Foundation, which
animals, it’s a different story. “If you’re
has invested heavily in malaria research
using freshly treated nets in a smallish
and development. “That’s definitely an
said, “it’s an infinitesimal problem, maybe
stream or a bay in the lake, it’s quite
environmental hazard.”
one per cent.” But that would still amount
likely you’re going to kill fish you don’t
The leading mosquito net
“In regards to what we face,” Faison
to millions of nets. One of the few detailed studies on
intend to kill,” said Dan Strickman, a
manufacturers insist that their products
senior programme officer for the Bill
are not dangerous. Still, many nets are
the issue showed that in several villages
labelled: “Do not wash in a lake or a river.”
along Lake Tanganyika, an essential body
Some labels go even further, warning Above: Fish for sale at a market in Katumbi, Tanzania. Below: A woman sits under mosquito netting with her young children who are being treated for malaria, at a medical center in the the village of Kirando.
of water shared by four East African
people to pour any water used in washing
nations, 87.2 per cent of households used
a net into a hole in the ground, “away
mosquito nets to fish. When that study
from home, animals and wells.”
was presented at a malaria conference last
When asked about this, Egon Weinmueller, a public health executive for
year, the reception, according to some of those in attendance, was decidedly cool. “People are very defensive about this topic,” said Amy Lehman, an American
When the nets land on the beach, it’s like peering into the stomach of the sea: a squishy mass of sand, seaweed, dead blowfish, dead baby eels and thousands of baby shrimp, their bodies translucent, their tiny eyes black dots no larger than specks of sand.
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79
from 7,849 metric tons in 2002.
physician and the founder of the Lake
beautiful northern coast, fishing crews
Tanganyika Floating Health Clinic,
drag seines made from mosquito nets
which conducted the study. “The
through the putty-coloured sea. When the
a crucial shrimping area, Madagascar
narrative has always been, ‘Spend $10
nets land on the beach, it’s like peering
recently banned the use of ramikaoko
on a net and save a life,’ and that’s a very
into the stomach of the sea: a squishy
nets there. But the government has been
compelling narrative.”
mass of sand, seaweed, dead blowfish,
in such disarray since a military coup a
dead baby eels and thousands of baby
few years ago that enforcement of the
“But what if that net is distributed
shrimp, their bodies translucent, their
decree is up to a group of threadbare
in a waterside, food-insecure area where
tiny eyes black dots no larger than specks
vigilante fishermen.
maybe you won’t be affecting the malaria
of sand.
rate at all and you might actually be
The Malagasy word for these nets is
Because Antongil Bay is considered
Clearly, there are no easy answers. In all these places, the people fishing with
hurting the environment?” she said. “It’s a
“ramikaoko,” or the thing that takes all
mosquito nets tend to be those without
lose-lose. And that’s not a very neat story
things together. The extent of the damage
boats or even tackle, often women and
to tell.”
is unclear, but recent surveys show that
children, the most dispossessed. They
Madagascar’s industrial shrimp catch
work from shore, tugging the nets through
plummeted to 2,851 metric tons in 2010
shallow waters, precisely where many
Every morning at sunrise in Antongil Bay, along Madagascar’s ruggedly
species spawn, creating another potential problem: the slow, steady destruction of sensitive aquatic breeding grounds. Lehman, the American physician on Lake Tanganyika, wonders if there might be better malaria solutions for waterside communities. Specially treated wall coverings? Custom-fit window screens? “Why is this question not being asked?” she said, a bit exasperated. “Is it that we don’t really want to know the answer?”
Top: (L-R) Children separate fish that were caught with mosquito nets; Mosquito nets stored by the Red Cross, awaiting distribution. Left: A maternity clinic nurse gives a free mosquito net to a pregnant woman. March 2015
Essentials
80
Luxury
Time Flies: 25 Years and Counting The Salon International de la Haute Horlogerie (SIHH) is one the world’s most prestigious trade fairs and a refined celebration of high watchmaking reports Nick Rice.
of music, movies and sport appear at the booths and add glamour to the procession of parties. Kevin Spacey performing a play at an ostentatious IWC event, Gerard Butler hanging out at the Roger Dubuis booth, the likes of Zinedine Zidane, Cate Blanchett and Hugh Jackman browsing the stands – all par for the course. SIHH is distinctly A-list. An environment pitched somewhere between a first class
T
Cartier, Montblanc and Ralph Lauren
five-star VIP suite. It’s well curated with
International de la Haute
showcase their latest creations and fill up
meticulous finishing and impeccable taste.
Horlogerie (SIHH) in January
the order books.
In comparison, BaselWorld is a sensational
is an eagerly awaited event for all those
What in 1991 occupied 5,500 square
souk – a vibrant, bustling multitude of
connected to the luxury watch industry,
metres with just five exhibiting brands –
people visiting hundreds of exhibitors.
as the creative and commercial direction
Baume & Mercier, Cartier, Piaget, Gérald
Back in 1990, the luxury goods
for the exhibiting brands is gauged here.
Genta and Daniel Roth – is now 16
impresario and former Head of Cartier,
Alongside the BaselWorld fair, from which
heavyweight brands spread across 30,000
Alain Dominique Perrin, decided that
SIHH derived, this is a focal point on the
square metres. The event has also grown
the organised chaos of BaselWorld was
industry’s calendar.
in guest numbers and now welcomes
not a befitting stage for brands occupying
more than 14,000 people, including brand
the upper echelons of the luxury goods
Geneva, the fair occupies a huge indoor
representatives, retailers, distributors,
market. He proposed a more eminent
exhibition space with kilometres of thick-
collectors, experts, VIPs and journalists.
space – less sausage and fried onions
Within the rarefied purlieus of the
(a typical meal at the Basel fair then)
Located within the Palexpo centre in Photos: © SIHH 2015
lounge, an opulent art gallery and a
he annual arrival of The Salon
carpeted promenades leading to lavish brand enclosures. Luxury titans such as
Palexpo’s great halls, stars from the worlds
– and more champagne and caviar Portfolio
81
1
Back in 1990, the luxury goods impresario and former Head of Cartier, Alain Dominique Perrin, decided that the organised chaos of BaselWorld was not a befitting stage for brands occupying the upper echelons of the luxury goods market.
2
the brand” into corporate parlance. So (or beef carpaccio, a popular dish at
Perrin elected Geneva as the location for
SIHH). However, the watch business is
a new event and established the Salon
famously traditional and conservative and
International de la Haute Horlogerie
accordingly the Basel organisers didn’t
in 1991 – his coining of the term ‘haute
agree with Perrin. The Basel fair had been
horlogerie’ bestowed an immediate sense
the same since the early 20th Century and
of sophistication and éclat upon the new
change was not forthcoming.
rival fair.
Perrin was undeterred though. He was
The SIHH tripled in size in a few
a marketing mastermind – this is the
short years and some of the participating
man who, for better or worse, is credited
‘maisons’ changed, but it wasn’t until 1999
with bringing such phrases as “DNA of
that the longevity of the fair was sealed –
March 2015
Opposite page: The opening party started the 25th anniversary celebrations in style. Above: (1) Huge carpeted corridors link all the exhibiting brands at SIHH. (2) Fabienne Lupo applauds 25 years of the SIHH.
the number of exhibiting brands grew to 17 and it has hovered around this figure ever since. Fabienne Lupo, Chairwoman and Managing Director of the Fondation
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Essentials
Luxury
de la Haute Horlogerie – the group
and a half decades. From 1990 to 2013,
Swiss watches – a restriction on giving
tasked with organising the SIHH, says,
Swiss watch exports increased from
watches as corporate gifts in China, and
“That an event which originated from a
approximately $5.4 billion to $24 billion.
an unsteady rouble. Yet these issues
creative vision should reach its quarter
However, there is a sense of caution on the
were pale in comparison to the Swiss
century is exceptional in itself. Even
opening day of this year’s event – markets
National Bank’s sudden announcement
more exceptional is the magic that
always fluctuate but there is genuine
before the fair that the Swiss Franc
happens year after year, thanks to the
concern afoot as growth is down to
would cease to be pegged to the Euro at
exhibiting maisons – 16 of them this year
around two per cent – a marked decrease
the 1.2 exchange rate, causing the Swiss
– that make each SIHH as exciting and
from the average expansion of 17 per cent
Franc to soar against the Euro. While
innovative as the very first one.”
in the three years leading up to 2012.
the SIHH was celebrating 25 years, the
Several factors have caused the slowed
Swiss stock market suffered its highest
The SIhh haS grown in tandem
growth, including the negative impact
one-day fall in 25 years, losing nine per
with the watch market itself, which has
brought about by civil unrest in Hong
cent of its total value. The majority of the
seen revenues balloon over the last two
Kong – the world’s biggest market for
exhibiting brands at the SIHH are owned
SIhh TIMeLINe OF CRUCIaL DaTeS SIHH – 25 years in 10 Key Dates
The Salon International de la Haute Horlogerie is established in Geneva with five exhibitors who leave BaselWorld and commit to the new event. Baume & Mercier, Cartier, Piaget, Gérald Genta and Daniel Roth pioneer a new home for Fine Watchmaking.
The SIHH expands to 11,000 square metres.
Further expansion to 18,000 square metres and the entrance of eight new brands, including independents Audemars Piguet, Bovet, Breguet, JeanRichard, GirardPerregaux and Perrelet.
1991
1995
The first edition lasts five days and covers 4,500 square metres at the Palexpo.
As large watch groups consolidate and acquire new brands the group of exhibitors changes again. Breguet joins the Swatch Group and Daniel Roth and Gérald Genta are acquired by Bulgari, leaving the SIHH.
For its 15th edition the SIHH adopts a new décor entitled ‘La Cité du Temps’. Designed by architect, designer and creative force at Richemont, Giampiero Bodino.
1999
2002
2005
Changes in the six exhibitors – Franck Muller departs, Gérald Genta and Daniel Roth return to join Baume & Mercier, Cartier, Piaget and Alfred Dunhill.
The SIHH opens its doors to a new total of 17 exhibiting Maisons. In the same year the euro became the single currency of 11 European countries.
A. Lange & Söhne, IWC, Jaeger-LeCoultre and Van Cleef & Arpels join the Richemont group. A new total of 18 exhibiting maisons.
The SIHH now covers 24,000 square metres and attendance has grown to reach almost 10,000 guests.
The 20th edition – the SIHH hosts two major exhibitions: the first given over to masterpieces from the Sandoz Collection, and the second a series of conceptual photographs of watches.
Following another buoyant year for watchmaking, the SIHH continues its expansion. Exhibition space grew again to 30,000 square metres.
Record attendance on the back of a period of spectacular growth in the watch sector. Visitor numbers reach almost 15,000, of which 10 per cent are journalists.
2009
2010
2011
2014
Despite a challenging economic climate, the number of media representatives tops 1,500 and the Ralph Lauren Watch & Jewelery Co makes its debut at the SIHH, now with 17 exhibitors.
Greubel Forsey and Richard Mille join and bring the total number of exhibitors to nineteen in a year when Swiss watch exports reported a significant upturn, ending the year on a record 22 per cent increase.
The SIHH makes the significant move of changing the event’s date from March to January.
The number of exhibitors remains unchanged at nineteen.
The same 16 maisons celebrate the 25th anniversary of the SIHH, widely regarded as the foremost event for Fine Watchmaking in the world.
2015
The number of exhibitors totals 16, following the departure of Girard-Perregaux and JeanRichard.
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83
Right: An employee of German manufacturer of writing instruments and watches Montblanc, owned by Richemont, the world’s second-largest luxury goods firm, shows a new watch model on the opening day of the Salon International de la Haute Horlogerie. Below: An Excalibur model wristwatch by Swiss watchmaker Roger Dubuis, part of the luxury goods group Richemont.
by the luxury holding group Compagnie Financière Richemont, and following the announcement the company shares were down 14 per cent. What the announcement means for watchmakers is essentially that their products, indeed all Swiss products, become much more expensive on the world market. In the case of wristwatches, the estimate is around 20 per cent more
on coming… from the Richard Mille
inventory… whilst rolling with whatever
expensive. Considering that 95 per cent
RM 19-02 Tourbillon Fleur ladies watch
punches the global market throws.
of the watches produced in Switzerland
launched in a series of 30 and priced
are exported – equating to 28.1 million
at $800,000, through to the $620,000
exclusive trade fair is a tribute to the
timepieces in 2013, it’s understandable
Rotonde de Cartier Grande Complication
skills and expertise that have established
that the news caused a whirlwind of talk
Skeleton – the most complicated watch
Geneva as the foremost centre for fine
and speculation.
Cartier has ever produced. Horophiles
watchmaking in the world. The SIHH is
need not fear, the watchmaking business
the pulse of the watchmaking profession,
CEOs remained calm. No doubt with
is here to stay. The core challenges for
and as always when emotion is at its
good reason. Richemont employs 20,000
luxury watch brands in 2015 will be to
height, this pulse beats stronger than ever.
people in more than 30 countries and
adjust growth forecasts, consolidate
Fine watchmaking is in its prime, and the
turns over approximately $10 billion per
growth and efficiently manage existing
SIHH is where its heart lies!”
Photos: Getty Images
And yet, the experts and the brand
year, and this seems to be a storm they will confidently weather. And so the exceptional pieces will keep
Several factors have caused the slowed growth, including the negative impact brought about by civil unrest in Hong Kong – the world’s biggest market for Swiss watches – a restriction on giving watches as corporate gifts in China, and an unsteady rouble.
March 2015
As Fabienne Lupo concludes, “This
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84
Culture
Keeping Irish Romance Alive Willie Daly has been looking after the Irish matchmaking tradition for the last 50 years, reports Sally McGrane.
A
fter 50-odd years in the business
Ireland’s rural west coast. “To be cherished,
of romance, Willie Daly has a lot
to feel special.”
of stories to tell.
© 2015 New York Times News Service
Like the one about the man who fell to
Daly – who thinks he is in his early seventies but does not know precisely
his knees in front of a woman, followed
because, he says, the priest who kept such
her to the altar and only later admitted
records drank a lot – has been thinking
that he had not meant to propose – it had
about love most of his life. A horse
been a long night, and he had tripped.
farmer by trade, he is one of Ireland’s last
Or the one about a woman whose
traditional matchmakers, best known for
potential suitors kept hanging up after
presiding over the annual matchmaking
inherited from his matchmaker father
asking her age, until Daly advised her to
festival in nearby Lisdoonvarna – a weeks-
and possessed, he says, of supernatural
say she was young at heart. After that, the
long autumnal event famed for its all-day
romantic powers (if you touch it with one
83-year-old widow enjoyed two months of
dancing and spontaneous, often late-
hand, you will fall in love in six months;
delightful conversation before dying.
night, marriage proposals.
both hands, you will be married in six
“We are all looking for the simple
While the festival is on, Daly conducts
months; and if you are already married,
thing of love,” Daly said, as one of his
business in a pub. For a small fee (usually
you will fall in love all over again). Then,
six daughters – he also has two sons –
$10 to $15), he takes down the details of
sometimes with no more than a twinkle
stoked the peat stove in his kitchen
those seeking partners. He keeps these
and a nod, he might introduce two people,
on a raw winter morning recently
details in a large, overflowing book held
buying a woman a drink or nudging a
outside Ennistymon, a village on
together with tape and a shoestring,
farmer toward the dance floor. Portfolio
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“We are all looking for the simple thing of love,” Daly said, as one of his six daughters – he also has two sons – stoked the peat stove in his kitchen on a raw winter morning recently outside Ennistymon, a village on Ireland’s rural west coast. “To be cherished, to feel special.”
“There’s a good deal of magic in it,” he said. “I’m not a big believer in too many words.” ThE rEsT of the year, Daly makes matches by mail and by telephone, although visitors from as far away as New York have turned up on the doorstep of his County Clare farmhouse. “I know a lot of people are going on the internet now,” said Daly, who has just recently decided to learn how email works. “But it’s cold – it’s a machine.”
Above: Couples at a matchmaking event in Lisdoonvarna, some successful at getting together, others, not. Right: Afternoon dancing at the Rathbaun Hotel and Restaurant.
March 2015
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Culture
Right: The town of Lisdoonvarna is famed for its annual matchmaking festival which attracted 60,000 people last year. Below: Willie Daly takes down the details of those seeking partners. He has facilitated around 3,000 marriages.
Daly was privy to his father’s negotiations from a young age. Back then, marriage was more of a practical matter. “I remember a big, tall, good-looking fellow, with a big red face, who came to wait for my father in the parlour,” Daly said. “My sister asked him, ‘What kind of a girl would you like?’ and his mother answered, ‘Michael wants a girl who will help with the sheep.’” Bound to the land, bachelor farmers had little free time and were often shy. And because of land inheritance rules,
Sunday Mass, and that she had blushed, too, he decided to help them meet. “One day I was looking in the local
men were often decades older than their
paper, and her father had a fat sheep for
brides; love was expected to come later,
sale,” Daly said. “I says to John, ‘Why don’t
with children. Still, Daly said, even these
we pretend we want to buy the sheep?’”
business-like arrangements had a gaiety he found infectious. Photos: Getty Images, Corbis
when he walked past a young woman at
By the time he was 12, Daly had
It worked. After challenging the sheep’s fatness and receiving a tart reply, the farmhand looked the farmer’s daughter
dropped out of school and was working
in the eye and asked if they might eat it
full time on his father’s potato farm.
together. Shortly afterward, they married.
At 15, Daly made his first match. Seeing that a farmhand named John had blushed
“These good, decent men who didn’t marry, now they’re 60, 70 years old, and there’s no one to take over the farm,” he said. “When they die, it will be sold, and that’s a soft, sweet personality, a way of life, that’s gone.”
Despite early success, Daly was in his mid-20s before he thought seriously of continuing the matchmaking tradition. He was running the family farm and, following a lifelong passion, had bought his first horses. For fun, he played music and told fortunes at local festivals. He says he suspected that matchmaking was on its way out until a neighbour asked him to find him a wife. He did, and Daly estimates that he has facilitated around 3,000 marriages since, although there is no official record. In this part of Ireland, though, much remains to be done. “These good, decent men who didn’t marry, now they’re 60, 70 years old, and there’s no one to take over the farm,” he said. “When they die, it will be sold, and that’s a soft, sweet personality, a way of life, that’s gone.” Portfolio
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Left: Potential suitors discuss their prospects at the Lisdoonvarna Matchmaking Festival. Below: Daly, one of Ireland’s last traditional matchmakers, pets some of his horses in a field close to his farmhouse in Ennistymon.
A look through Daly’s matchmaking book shows how things have changed. While details now include “personal preferences,” like a love of travel, an entry from his father’s time reads, simply: “12 cows.” Women’s desires have shifted the most, he said. “In the past, women needed a roof over their heads, a little house of their own. Now, they want to like the man.” Marriage is no longer a primary concern. Daly, who is himself in the process of divorce, also caters to those just looking to date. “What men need hasn’t changed,” he said. “Someone to share their life with, someone to share their love with. Not to grow old alone.” More recently, an influx of out-oftowners has added new dimensions to his work. While American women and Irish men often click instantly, “like a cow in a cock of hay,” other combinations are more challenging, he said. In his experience, Italians simply do not drink enough to count as real romantics. “Proposals are more likely when you’ve been drinking,” he said. Germans, on the other hand, drink plenty but are generally unromantic. Dubliners are picky, and American men sometimes have strange demands. “One fellow wrote and said his future bride had to be ‘untouched by scalpel,’” said Daly, whose daughter had to explain what the man meant. “Around here, cosmetic surgery, it means getting false teeth.” The Lisdoonvarna matchmaking festival attracted 60,000 people last autumn, something that pleases Daly. “Everyone should be in love, all their lives,” he said. March 2015
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88
Other Business
BMW Fixes Security Flaw German luxury carmaker BMW
users of mobile devices. BMW drivers can use the
has fixed a security flaw that could have allowed hackers to unlock the
software and SIM cards to activate
doors of up to 2.2 million Rolls-
door locking mechanisms, as well as
Royce, Mini and BMW vehicles.
a range of other services including
BMW said officials at German motorist association ADAC had
real-time traffic information, online entertainment and air conditioning. The security risk occurred when
identified the problem, which affected cars equipped with the
data was transmitted, BMW said,
company’s ConnectedDrive software
adding it did not impede the car’s
using on-board SIM cards – the
critical functions of driving, steering
chips used to identify authorised
or braking.
Gauguin Breaks Record
World’s Biggest Wind Farm The world’s biggest offshore wind farm has
possible location for offshore wind farms as
Yorkshire coast.
the shallow seabed, only about 30 metres
The Dogger Bank Creyke Beck project will
deep, should make it easier to lay
cover 430 square miles and is expected to
foundations and construct large turbines
generate enough electricity to power nearly
there, but no company has yet ventured into
two million homes and support 900 jobs.
the area.
The project, more than twice the size of
A painting of two Tahitian girls by the
Dogger has long been mooted as a
been approved by the UK government for the
If built, the Creyke Beck turbines would be
the UK’s current biggest offshore wind farm,
the furthest offshore that have ever been
is expected to cost £6 billion to £8 billion
attempted. They would be the first stage of a
and could fulfil 2.5 per cent of the UK’s
project that could eventually be three times the
electricity needs.
size, if further tranches are also constructed.
French artist Paul Gauguin has been sold for $300 million (£197 million), making it the most expensive work of art ever sold. Nafea Faa Ipoipo, or When Will You Marry?, was painted in 1892 and had been owned by a Swiss collector. Unconfirmed reports suggest it was sold to a museum in Qatar. The oil-rich state paid the previous highest price for a painting, a work by Paul Cezanne, which sold for a reported £158 million. The world’s third most expensive Photos: Getty Images
painting is Three Studies of Lucian Freud by Francis Bacon, which sold for £89 million after six minutes of fierce bidding in November 2013, according to auction house Christie’s. Portfolio
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