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This issue JULY 2015

Portfolio

Exclusive to Emirates First Class and Business Class

Cover Story 22 Subaru’s Big Question Yasuyuki Yoshinaga, president of Fiji Heavy Industries, has been at the helm since 2011. During that time Subaru, one of its subsidiaries, has seen meteoric growth. But that raises questions for the car manufacturer: is it better to stay small or try to be another Toyota?

Features 28 Keeping North Sea Oil Relevant

46 Venezuela’s Vanishing Billions

Lower oil prices and declining yields paint a challenging

Due to the government’s complex currency system,

picture for the future of North Sea oil. However, oil

importers use numerous schemes to wildly inflate prices or

companies are not giving up without a fight.

import phantom goods.

32 SingPost’s Big Revamp

52 Rebooting China’s Rubber Plantations

Singapore Post has embraced the digital age by becoming

The fall in the price for natural rubber has given officials a rare

an all-in-one logistics partner.

chance to try a more environmentally-friendly approach.

38 Fake Jobs With Real Benefits

58 Jordan’s Tourism Decline

Long-term unemployed people are getting real job training at

Tourist numbers to Jordan have dropped by more than 50

fake businesses across Europe.

per cent since 2010, and many believe the government could do more to stem this decline.

42 Fighting Over the Harvest Leftovers In Spain it is tradition that after the main harvest is over the leftovers are picked by locals. But more pickers, many of them foreigners, have caused tensions with farmers.

46 52

Portfolio

Exclusive to Emirates First Class and Business Class

Essentials

63 Far From the Madding Crowd Majorca may be famous for its heady mass tourism, but it has so much more to offer. A look at the lesser-known wonders on this bewitching Balearic island.

68 Guardians of Italy’s Treasured Oil In Italy olive oil is a way of life, and Tuscany is particularly famed for the delicate oil it produces.

72 Hunt for the Star Eaters

Astronomers are trying to prove that there is a supermassive black hole at the centre of the Milky Way, which has swallowed the equivalent of four million suns.

76 Tea Culture Blossoms in New York Americans have discovered a passion for tea with retail sales soaring to nearly $11 billion last year.

82 China’s Intersection of Business and Power Wang Jianlin, Asia’s richest man, has built up an extensive international real estate and entertainment empire.

84 3,000-Year-Old Fishing Method Is Waning Traditional trap fishing for bluefin tuna in the Mediterranean is waning due to quotas and market demands.

88 Other Business Portfolio takes a light-hearted look at the latest business news.

Departments 7 Notebook World business in a nutshell.

13 Observer Spotting and analysing business trends.

20 Column: Karl Mathiesen China to Phase Out Ivory Industry

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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

M A D R I D / D I AG O N A L

DEPARTMENT STORES SPAIN & PORTUGAL

BA R C E LO N A

Notebook B U S I N E S S

N EW S

US Federal Reserve Moves Towards Rate Rise

I N

B R I E F

said it would raise rates when it had

placed on the timing of the first increase

“seen further improvement in the labour

– and that the entire trajectory should

market” and was “reasonably confident”

be considered. “It seems likely that some

that inflation would reach its target of

cyclical weakness in the labour market

two per cent in the “medium term”. A rate

remains,” she said, “although progress

increase will mean that the US economy

clearly has been achieved, room for

has improved – a mission accomplished

further improvement remains”.

for the most powerful financial institution in the world. The US Federal Reserve is moving

cent, close to where the policy makers said it needed to be to consider raising rates. When the Fed raises interest rates

towards an interest rate rise later this year,

rise to come in September, though the

which would be the first increase since

projections released by the Fed show less

the US dollar is expected to increase in

the rate was cut to near zero during the

certainty about how far rates will rise

value. It will also benefit global stocks as

2008 financial crisis. However, the bank

before the end of this year.

a stronger dollar will boost US demand

said conditions in the labour market and

Photos: Getty Images

Many economists expect the first rate

The US jobless rate is currently at 5.5 per

Policy makers are equally split between

for products from Asia and Europe,

inflation did not yet warrant an increase.

one, two or three rate increases this year,

helping lift corporate profits in those

The US central bank is trying to find

according to the bank’s “dot plot”, which

regions. Emerging-market economies –

a balance between giving clear guidance

shows where individual policy makers

such as Brazil, Turkey and South Africa

to the markets about what will prompt

think the economy is heading.

– will likely have a tough time as money

a rise, while not restricting its freedom to react to new economic data. The bank July 2015

Fed chair Janet Yellen said that “sometimes too much attention” was

will flow toward the US. It will also hit corporate borrowers.

Notebook

N u m b e r s

G a m e

The world in figures Julien’s Auctions. The Gibson guitar that Lennon played when he wrote the Beatles number “I Want to Hold your Hand” was bought in 1962 for $245.

$231

million offer for salsa maker Garden Fresh Gourmet will help expand Campbell Soup Co’s

organic packaged foods business. The acquisition by the world’s largest soup maker is the latest among food companies, which have been buying up smaller organic counterparts as US consumers move away from processed food.

$1.2

billion valuation of Manchester United has smashed the $1 billion brand barrier, beating Real Madrid

and Bayern Munich. The English club has become the world’s most

$2.35

million bid for a lunch with Warren Buffett was scooped by Chinese gaming company Da Lian Zeus Entertainment. Each year Buffett auctions off an invitation to lunch on eBay and the proceeds go to the GLIDE charity programme. The highest price ever paid for this power lunch was $3.5 million by an anonymous bidder in 2012.

valuable football club according to a Brand Finance report.

€2.8

billion deal for Galeria Kaufhof, a struggling German department store, is boosting Saks

Fifth Avenue’s bid to enter the European market. The real prize is the prime retail real estate the Canadian company will acquire as

for Z$35 quadrillion exchange rate will see Zimbabwe ditch its local currency in favour of the US dollar and South African rand. The demonetisation process that runs till September 30 will see the end to an era of people carrying cash around in large bags to do their everyday shopping.

Kaufhof owns 103 stores in Germany, including 59 in prime citycentre locations.

£32

million worth of Maggie noodles will be destroyed by Swiss multinational food and beverage company

Nestle, following a ban imposed by India’s food safety regulator after

$800,000

is the estimated price that John

finding higher-than-allowed levels of lead in some consignments.

Lennon’s guitar is expected to

Nestle hogs 80 per cent of India’s instant noodles market and the

sell for when it hits the auction block in November, according to

company is challenging the ban in Mumbai’s high court.

Asian Wealth Beats Europe Asia has overtaken Europe as the world’s second-richest region, according to an annual report by the Boston Consulting Group (BCG). The Asia Pacific, excluding Japan, held $47 trillion in private wealth last year as the number of new millionaires rose in China and India. North America is the world’s richest region with $51 trillion, but is expected to be surpassed by Asia in 2016. Asia is also projected to hold

34 per cent of global wealth in 2019. Overall, global private financial wealth grew by nearly 12 per cent last year to $164 trillion, lifted by strong gains in the stock and bond markets. “A strong ‘old world versus new world’ dynamic was observed, with the so-called new world growing at a far faster pace,” the report said. “As in both 2012 and 2013, Asia-Pacific (excluding Japan) remained the fastest-growing region in 2014.” Portfolio

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Notebook 3D Printing Takes Off

machining, casting and

There is no doubt that 3D printing is a

of time before a tipping

serious business. For example, the new

point is reached.

injection moulding. But the technology and scale of 3D printing will inevitably improve, so it’s only a matter

Airbus A350 XWB has around 1,000 3D

3D parts reduce weight

printed components, more than any other

on aircraft, and so improve

plane. Most of these are small routine

fuel efficiency. And making one 3D part often replaces

parts such as brackets, formed by fusing layer upon layer of resins in machines that

– not stored in a warehouse somewhere

the need to combine several smaller parts,

replicate computer-generated 3D models.

awaiting delivery to factories. While

reducing the need to carry inventory.

The size of the component being made

on-demand supply may be a little way

is currently limited by the size of the

off, John Schmidt, US-based managing

years, about 40-50 per cent of aircraft

printing machine.

director of aerospace and defence at

components will use printed materials. It’s

consultancy Accenture, says printing is

about four per cent now. It will also have

reducing lead times from months to weeks.

a significant impact on aircraft design, as

3D printing’s biggest supporters talk of a future world in which machines will be sited at key locations across the globe, churning out components when needed

He says it’s far too early to call the end of traditional manufacturing –

Analysts predict that within 10

3D offers the promise to produce more complex shapes.

Credit for Renewable Energy Effort in recent years. China is now the largest wind power market in the world. It has increased power generation from renewables from basically nothing 10 years ago to 25 per cent today. These are very important signals that China is moving into the right direction. China is still investing heavily in coalfired power plants, but these are highly efficient and have enabled old inefficient plants to be retired. Last year the nation reported that its emissions had fallen by one per cent as coal use slumped. The country is also building 50 new nuclear power stations and creating economies of scale in nuclear too, the Maria van der Hoeven, head of the

renewables generating capacity; higher

IEA says, at a time when the industry is

International Energy Agency, has said

than the EU ($46 bilion); Japan ($37

moribund in Europe.

China should be given more credit for its

billion) and the USA ($34 billion).

investment in clean electricity.

However, because of China’s vast size

China’s commitment to renewables has

and its growing wealth, the country’s

benefited the rest of the world by creating

emissions are expected by 2030 to be

energy think-tank – says in 2014 that

a mass market that prompted a 70 per

two and a half times higher than the next

China spent more than $80 billion in new

cent reduction in the cost of solar panels

bigger emitter, the US.

Her organisation – the rich countries’

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Observer BUSINESS NEWS IN BRIEF

A Coin Meets Its Waterloo The euro has been losing value against the dollar, which represents the wider problems in the Eurozone, reports Danny Hakim.

the coin’s design, which shows a lion perched over a map, “appears prejudicial, in a context where the governments of the Eurozone are trying to strengthen unity and cooperation throughout the monetary union.” With 19 members, the Eurozone was supposed to be the leading edge of Europe’s integration efforts. But Europe has a lot of trouble grappling with its largest problems

At the BelgiAn Royal Mint in

But at the mint, there were more

– whether to integrate more tightly or drift

Brussels, machines called giraffes spit out

immediate concerns during a recent visit.

apart, for example, or what to do with Greece.

as many as 850 euros a minute. At times

Like the Battle of Waterloo. Since members

Trying to run a currency union without a

during the summer of 2008, that many

of the Eurozone are allowed to produce a

fiscal union and with 19 financial policy

shiny coins would have been worth $1,360.

limited number of commemorative coins,

agendas has made for messy governing.

Now it is about $950, a symptom of

the Belgians recently minted a two-euro

Europe’s inability to navigate through crisis.

coin memorialising the 200th anniversary

for obsessing over details. They have

Even as the region’s outlook improves ever

of the battle, which ended Napoleon’s rule

regulated the curvature of cucumbers

so slightly, the currency just cannot shake

in France.

and the jugs used to serve olive oil in

the spectre of moribund growth and the troubles of Greece. July 2015

But then the French got wind of it. They protested to European officials, arguing that

European policymakers do have a knack

restaurants. Now, the pressing issue of Waterloo is being addressed.

Observer posture than the European Central Bank,

shifted in Europe’s favour. The European

since Waterloo. One of the main combatants,

essentially printing money to stem the

economy has shown some faint glimmers

Prussia, bowed out long ago. And the site of

financial crisis. And for much of the last

of growth, while recent data suggest the

the battle is in a country that did not exist at

year, the euro’s decline has accelerated.

US recovery may be softer than thought.

Much has changed in the two centuries

And Europe’s allure remains powerful

the time, modern-day Belgium. Last year, the Belgian mint produced

for the stream of immigrants who risk

euros, the side of Napoleon prevailed. The

more than 42 million European coins –

death crossing the Mediterranean to reach

Belgians were left with 180,000 new coins

from the one-cent piece to the two-euro

its shores.

that had to be destroyed.

coin - with a face value of 12.9 million euros.

In the skirmish over the commemorative

But the euro – a volatile reflection of the

That was worth about $15.6 million at the

market’s mood – is hardly on firm ground.

idea of European nations fighting anew over

end of last year. Back in April 2008 it would

Greece is quickly running out of money,

Waterloo, he was lightly admonished. “You

have been worth $20.6 million.

raising concerns that country may leave the

When a reporter started laughing at the

can laugh about it,” Andre Toujour, the royal mint’s assistant manager, said. “We don’t.”

“This is a signal that the euro-area economy is weaker than the US economy,”

currency zone. This year, Moody’s projected that the

said Zsolt Darvas, a senior fellow at

euro would not fall below the dollar in 2015,

as financial. This year, the euro has been

Bruegel, a research organisation in

while others, like Deutsche Bank, have seen

flirting with parity to the US dollar,

Brussels. The US economy grew 2.4 per

it more likely falling to parity by the end of

underscoring the divergent fortunes of the

cent last year, compared with 0.9 per cent

2015 and to 85 cents by 2017.

US and European economies. Since the euro

for the Eurozone.

The euro’s value is as much psychological

was introduced in 1999, it has been at parity with the dollar just twice.

One kind of euro is rising in value – the

As their economies diverge, so have their monetary policies. The United States is

now exceedingly rare Waterloo coin. At the royal mint, the giraffes, with their

exiting its aggressive practice of quantitative

spindly orange necks, sucked up unformed

dollar, then quickly plummeted. This was in

easing, in which it created money to buy

metal slugs from trays and deposit them

a strong period for the dollar reflecting the

vast amounts of bonds, and it is now poised

into boxy grey machines where they are

dot-com boom. That bubble finally burst,

to begin raising interest rates. Europe, in the

pounded into shape. This is the European

and by November 2002 they were at parity

meantime, is starting quantitative easing.

dream of togetherness in perhaps its most

At the debut, the euro started just above a

again as the euro surged against the dollar.

So one side has decided to stop increasing

tangible, if uncertain, form.

The euro rose as high as $1.60 in 2008.

its money supply while the other is starting

“It is a foundation,” said Bernard

But it began to fall against the dollar as the

to do so, which is pushing the currencies in

Gillard, who runs the royal mint. “A

economic performance of the United States

opposite directions.

foundation for European countries,”

and the Eurozone diverged. The US Federal Reserve took a much more aggressive

The euro, in recent weeks, has stabilised somewhat, as the economic winds have

echoed Toujour. A key in his hand, Gillard went to fetch a coin from a safe. He leaves a calling card on the millions of coins that are produced here – a tiny image of a cat, because Gillard has seven of them at home. He returned with a surviving Waterloo coin, which was encased in a protective covering, and placed it on a table in his office. “It is a beautiful design,” he said. Toujour said, “We were quite astonished, because we had a big part of the production

Left: One of the Waterloo commemorative coins that will never go into circulation.

ready, so now it’s just a waste of time and a waste of money and a waste of everything, because of the French government.” The French government declined to comment. Portfolio

Observer

O N E

w a t c h

Text: Hilda D’Souza

that the bank agreed to pay in settlement of allegations that it manipulated interest rates that underpinned trillions of dollar in mortgages, student loans and other debts. While the hefty payment helped resolve some of the allegations it still faces potential fines related to foreign exchange, mortgage and asset-backed securities, and precious metal dealing. It is also under investigation for alleged US sanctions violations. Shareholders have also expressed their concerns over weak returns and demand more changes including slashing costs. In April the bank outlined a Strategy 2020 that aims for a return on tangible equity of at

John Cryan

CEO, Deutsche Bank AG

least 10 per cent by 2020 compared to the previous target of 12 per cent for 2015. This involves downsizing parts of its investment bank, selling off its Postbank retail unit and

Deutsche Bank AG, Germany’s largest

cutting thousands of jobs. Cryan has been

lender, has appointed John Cryan as its

heavily involved in drafting this strategy.

chief executive officer, effective July 1. He is

assuring investors that the bank intends to

has been on the bank’s supervisory board

follow through on its strategic plan.

since 2013 and was a former chief financial

“The strategy will not be reformulated

officer of Swiss rival bank UBS. In 2008,

but there’s obviously room to shape the

among the darkest days of the financial

details of the strategy” a senior bank source

crisis, he took over as chief financial

told Reuters.

officer at UBS, which underwent a radical

Photos: Getty Images

By appointing Cryan as CEO, the board is

an expert in investment banking. Cryan 54,

Cryan, a British national,says there is

restructuring and went on to write off $50

work to be done. “Our future will be

billion. He left UBS in 2011, after rising to

defined by how well we deliver our strategy,

chief financial officer as well as chairman

impress clients and reduce complexity,”

and chief executive for UBS Europe, the

he said in a Deutsche Bank statement

Middle East and Africa. The next year, he

announcing his appointment.

became head of Europe at Temasek, the

“He is well regarded by the market

vast sovereign wealth fund of Singapore,

and his experience at UBS puts him in a

where he stayed for two years. Cryan takes

good position to steer the bank through

over from co-CEO Anshu Jain who resigned

necessary strategic change in our view,”

from the post and will become the sole

said analysts at Credit Suisse. Deutsche’s

CEO when Juergen Fitschen steps down

shares jumped as much as 8.2 per cent,

next year.

the biggest intraday advance since April

The appointment comes on the back of a recent record-breaking $2.5 billion penalty

2013, and traded up six per cent following the announcement.

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Observer Betting On Security Software

the hackers and the companies trying to stop being hacked. The median company in the ISE Cyber Security Index is expected to boost sales by 14 per cent in 2015, according to data compiled by Goldman Sachs

Online intrusions such as

and Bloomberg. That’s more than three

the breach of confidential

times the forecast revenue expansion

US government employee

for a broader group of US technology

records have fanned cyber

companies, the data show. A May survey

paranoia, boosting spending on

by Goldman Sachs showed cash will

network security and elevating

continue to flow to the group, with

companies with a hand in

almost 60 per cent of respondents

safeguarding digital data.

expecting a minimum five per cent boost in security spending.

A 24 per cent gain in 2015

As the data breaches mount, large

and a frenzy of investor inflows swelled the market value of the

Just over 3,000 data breach incidents

technology companies are looking at

PureFunds ISE Cyber Security ETF past

happened worldwide last year, exposing

smaller data security firms as potential

the $1 billion threshold last month. That’s

1.1 billion records, with 97 per cent

acquisition targets. Companies from

up from $107 million at the start of the

related to either hacking or fraud,

Cisco Systems to Google are interested in

year and $494 million at the end of the

Goldman Sachs Group wrote in a June 12

one of the fastest-growing information-

first quarter.

note. The result is an arms race between

technology markets.

The China Bubble A growing number of analysts believe that China’s stock-market rally is a bubble waiting to burst as valuations climb to levels that by some measures already exceed the peak of the country’s last equity mania in 2007. Fuelled by record margin debt and unprecedented numbers of novice investors, China’s market capitalisation has tripled in the past year to $9.8 trillion. At 84 times projected earnings, the average stock on mainland exchanges is now almost twice as expensive as it was when the benchmark Shanghai Composite Index peaked in October 2007. The combination of surging turnover and rapid price gains in China’s yuan-denominated A shares suggests a market peak is near. The 20-day average value of shares changing hands on mainland exchanges has jumped to about $314 billion,

Kong, wrote in a June report titled “Bubble trouble.” If shares

versus $244 billion on bourses in the US, which has a market

keep rising, the government will probably introduce a stamp

capitalisation more than twice the size, according to data

duty on stock purchases, Cheung wrote.

compiled by Bloomberg. Chinese policy makers view a 12-month forward price-

Macquarie Investment Management, whose Asian stock fund is outperforming 97 per cent of peers in 2015, has already

to-earnings ratio of 20 as a signal of over-valuation for the

eliminated exposure to mainland shares after turning bearish

broader market, Francis Cheung, a strategist at CLSA in Hong

for the first time in seven years.

July 2015

Observer T H E

W O R L D

toP Text: Hilda D’Souza

australia Faces tough times

COUNTRIES WITH THE HIGHEST GROSS DOMESTIC PRODUCT RankInG

countRy

uS$ bIllIonS 18.1

China

11.2

Japan

4.2

Germany

3.4

United Kingdom

2.8

France

2.4

India

2.3

Brazil

1.9

receded. The implications are profound: stagnant pay limits

Italy

1.8

household spending that accounts for about 55 per cent of the

Canada

1.6

economy; it impedes government efforts to repair the budget; and

Australian wages fell in the first quarter for the first time on record as Chinese money scooping up the nation’s commodities

Source: IMF World Economic Outlook, April 2015

will force the central bank to maintain low interest rates for an

COUNTRIES WITH THE HIGHEST GDP BASED ON PURCHASE POWER PARITY VALUATION

extended period or cut even further. The three main levers for the economy to adjust to the end of

RankInG

countRy

uS$ bIllIonS

China

18.9

18.1

India

7.9

Japan

4.8

yet with a two per cent cash rate competing against zero levels

Germany

3.8

in major developed economies also seeking lower currencies, its

Russia

3.4

success has been limited.

Brazil

3.2

Indonesia

2.8

United Kingdom

2.64

France

2.63

The Reserve Bank of Australia has focused on the local dollar,

Higher productivity requires investment to give workers better tools to boost their output, or regulatory changes that improve firms’ operations. However, Australian politicians are reluctant to means wage cuts are being used to adjust the economy.

COUNTRIES WITH THE HIGHEST REAL GDP GROWTH countRy

a surge in productivity or wage cuts.

make the structural reforms needed to boost productivity. That

Source: IMF World Economic Outlook, April 2015

RankInG

the commodities bonanza are a sharp depreciation of the currency,

PeRcentaGe chanGe 19.3

Smaller pay packets are a serious problem for many Australian households, as the 20-year commodity boom and rising wages

Papua New Guinea

Democratic Republic of the Congo 9.2

encouraged them to take on more debt. Household debt as a

Turkmenistan

9.0

Ethiopia

8.6

proportion of disposable income rose to a record 153.8 per cent in

Myanmar

8.3

Cote d’Ivoire

7.7

the final quarter of last year, having more than doubled over the past two decades. The Australian government needs wage growth to push

Chad

7.6

Bhutan

7.6

salaries into higher tax brackets to narrow a shortfall in revenue.

India

7.5

Australian firms, meanwhile, are in a quandary. They need weaker

Lao PDR

7.3

wages to increase export competitiveness, but also need the

Source: IMF World Economic Outlook, April 2015

domestic demand that bigger pay packets bring. Portfolio

Commentary

Karl Mathiesen part of a 10-point plan announced by Zhao. It also included stricter policing of the illegal wildlife trade both on and offline, renewed efforts to deflate demand through public campaigns and a commitment to international cooperation. The announcement comes less than two months before bilateral trade talks between the US and China – the world’s two largest markets for illegal ivory. There is an ongoing dialogue between China Photo: Getty Images

and the US on combatting the illegal ivory trade. Conservation groups are hopeful talks will eventually produce a coordinated international response to the crisis.

China to Phase Out Ivory Industry China has Committed to phasing out

delivered. China did not set a timescale for

Hong Kong has also committed to burning

the domestic manufacture and sale of ivory

the phase-out.

28 tonnes of its ivory stockpile in monthly

products for the first time. Conservation

Cutting consumer demand in China is

tonnes of elephant tusks. The government of

burns of one tonne each – the first tonne was destroyed a year ago.

groups said the announcement was “the

seen as essential to stopping the loss of

single greatest measure” in the fight to save

Africa’s last elephants to poaching, but

the last African elephants from poaching.

progress has been slow. Since a ban on

elephant sanctuary by Prince William,

At an event in Beijing where foreign

the international ivory trade in 1989, it is

China banned the import of carved ivory for

diplomats witnessed 662 kilograms of

estimated China has seized more than 40

12 months.

confiscated ivory being symbolically

tonnes of ivory.

In January, ahead of a visit to a Chinese

The symbolic destruction of ivory has

The stockpile is released to licensed

been practiced in many countries for more

State Forestry Administration, said: “We will

carving factories and then sold legally in

than 25 years. In recognition of the global

strictly control ivory processing and trade

markets across the country. But conservation

trade ban on ivory in 1989 Kenya burned

until the commercial processing and sale of

groups say this supports demand for black

a 12 tonne pile of seized tusks. In April,

ivory and its products are eventually halted.”

market tusks from freshly killed elephants.

the UAE crushed 10 tonnes of contraband.

destroyed, Zhao Shucong, head of China’s

This is the first time China has committed

Last month, it was announced that

Some critics believe the actions do more

to phasing out its legal, domestic ivory

Mozambique had lost half its population of

harm than good as they create an impression

industry. Lo Sze Ping, CEO of WWF’s

20,000 elephants in just five years. In Africa

of scarcity, driving the price higher.

China division applauded the Chinese

more than 22,000 elephants are killed for

government’s strengthening resolve to

their tusks each year.

The crush follows a larger one in January 2014, when the government destroyed 6.1

Zhou Fei, head of wildlife trade monitoring

Zhou said the destruction of ivory stockpiles was only useful if it was backed by concrete measures to combat the smuggling

group Traffic’s China branch, said: “The

networks and reduce demand among the

decision to phase out China’s ivory market as

Chinese public. “Ivory destructions should not be an end

impact on wild elephant conservation and

well as today’s destruction of the seized ivory

ivory trafficking,” he said.

are powerful indications of the government’s

in themselves – any such events should

commitment to support international action

be followed by actions to ensure countries

anti-trafficking group WildAid , said the

against elephant poaching and the illegal

continue to comply with their international

announcement was significant but he would

ivory trade.”

commitments under Cites to shut down the

Peter Knights, the executive director of

be waiting to see whether the pledge was

The phase-out of domestic ivory was

illegal ivory trade,” he said. Portfolio

CASHMERE, SILK & CROCODILE CONCEPT

Profile

Subaruâ&#x20AC;&#x2122;S BIg QueSTIon Yasuyuki Yoshinaga, president of Fiji Heavy Industries, has been at the helm since 2011. During that time Subaru, one of its subsidiaries, has seen meteoric growth. But that raises questions for the car manufacturer: is it better to stay small or try to be another Toyota, reports Guido Duken.

Portfolio

Photos: Getty Images, Reuters

July 2015

Profile

ubaru, a subsidiary of Fiji

The current and future scenario looks

up for this kind of sales surge. Toyota,

Heavy Industries (FHI), is

equally good. While FHI has a midterm

the world’s largest automaker, sold a car

in a quandary that many

sales target of 850,000 units by March

about every three seconds, while it took

companies would like to

2016 and estimates deliveries will reach

35 seconds for a Subaru. Almost every car

have. Simply put, Subaru can’t produce

one million by the end of the decade, it

company is bigger than Subaru. BMW

cars fast enough to meet demand.

may be racing well ahead of schedule.

is twice its size, while Kia is three times

Sales jumped 13 per cent to 724,000

bigger. Since 2011, Subaru’s global sales

2012, Subaru said in early 2013 that it

units in the year through March and may

have surged by 45 per cent. In the US,

wanted to hit 500,000 annual sales by

rise to 752,000 in the current fiscal year,

Tesla is the only competitor that increased

2015. After boosting sales to 424,683 in

according to the company’s latest forecasts.

sales quicker during this period.

Having sold 336,441 cars in the US in

2013, the company reached its half-million

However, the company is not geared

The dilemma for Subaru is that being

target a year early: on December 29, 2014 Subaru sold its 500,000th car, and the sales year didn’t end until January 2. The brand has never done that before in a calendar year, and on top of being an 18 per cent improvement year-on-year, 2014 was Subaru’s seventh consecutive year of growth. Above: Yasuyuki Yoshinaga, president and CEO of Fuji Heavy Industries, poses next to the company’s Subaru Cross Sport Design Concept vehicle. Right: Tom Doll (R) is the US CEO of Subaru. Portfolio

small is the very reason why it has been so successful. But with production at maximum capacity, the company is now at the crossroads of deciding what it should look like in the future. FHI President Yasuyuki Yoshinaga is well aware of this. “We’re standing at a major turning point for Subaru,” Yoshinaga said in 2013. “It shouldn’t just be about volume. We should be making cars only Subaru can make, which are a little more expensive and profitable than the competition. “The ‘smiling curve’ concept used in business analyses has shown that profits are significantly higher when focusing on a niche market. Conversely, expanding your product range to grow your business actually has the opposite effect and

volume. It was the Outback launch in 1995

the Sino-Japanese sovereignty clash over

reduces overall profitability. The one

that helped the company recover the lost

the Senkaku Islands fuelled a wave of anti-

exception to this is a company like Toyota

ground. But by 2005, Subaru’s competitors

Japan protests across China. The company

who has a broad range of products but has

had caught up and the company was once

was largely immune to the backlash that

positioned itself as a dominant force within

again losing ground. The turning point was

saw Toyota, Nissan and Honda report

the industry.

in 2005 when US CEO Tom Doll suggested

drops in their China sales in 2012.

“The automotive industry is already

the company stop focusing on horsepower

well established and matured. It’s near

and prices and instead talk about the love

against every other major currency –

impossible for any company to reach

customers have for their cars.

including 19 per cent versus the dollar.

the status that Toyota and GM (General

Doll was given the go ahead and the

Plus the yen helped, which has weakened

FHI produces 80 per cent of its vehicles

Motors) have. For us to increase our

ensuing “Love” campaign became a huge

in Japan, compared to Honda with 21 per

product range to try and attain the same

success and reached a totally new group of

cent, and sells 80 per cent of them overseas,

status as these long established giants is

consumers who were searching for safety,

mainly in the US market. As a result it

simply suicidal.

reliability and something different in their

benefits from a weaker currency more than

cars. “In a lot of ways, we were nation

all its domestic rivals except for Mazda.

“We’re not a carmaker that can grow as big as Toyota,” says Yoshinaga. ”And even if

building,” Doll said. “The whole hearts and

we could, reaching that sort of scale would

mind thing.”

mean we’d stop being Subaru.” Not that Subaru has always been in

FHI has also had some luck along the

“We make a small number of limited types of cars and we can’t simply be following the footsteps of other Japanese

way. Its failure to win Chinese approval

companies going global,” says Yoshinaga.

such a positive position. In the late 1980s,

to build cars in the world’s largest auto

“Our strategy is to have a high domestic

Subaru lost almost half of its US sales

market turned into a blessing in 2012 after

production rate regardless of the currency

Top: Subaru’s production line in Lafayette, Indiana, is running at full capacity. Left: (R-L) Yoshinaga believes Subaru should stay small; The Subaru Impreza dominated the World Rally Circuit. July 2015

Profile

they have a limited range, but each one is the best in its class and outsells the competition. With our Legacy, we market it as the ‘thoroughbred Outback’ as it really is the best of the best.” Yoshinaga also believes that Subaru could become more of a niche brand. “At the moment, there’s a clear divide with cars: either they’re premium or they’re not. But I think there should really be more than just those two. In fashion, there are a lot of different brands with a variety of products ranging from haute couture pieces to sportswear.” rate, and to have special care for quality.”

sides of the argument.

One problem for a small car company is that research and development is

Since mid-November 2012, when the yen

“To meet the increased demand,

started to decline against the dollar, FHI

there’s always a natural tendency for

extremely costly, especially in light of the

shares have quintupled.

our manufacturing department to keep

move towards hybrid vehicles. Therefore,

the production line moving at all costs,”

Toyota’s 16.5 per cent stake in FHI has

investing overseas. It is spending $400

explains Yoshinaga. “However, we will

proven extremely useful.

million to expand production at its

always cease production and take any

Lafayette, Indiana factory in the US to

necessary steps at the first sight of a fall in

is extremely costly and far beyond our

expand output by 100,000 at the end of

quality. As with most companies, we never

reach,” explains Yoshinaga. “But thanks to

2016. That follows on from the $75 million

want to fall behind on our production

Toyota we were able to develop and launch

the company poured into the plant in 2012

and we’ll always do our utmost to stay on

our own hybrid vehicle, the XV Hybrid.

to boost capacity by 15 per cent.

track. But we pride ourselves on quality

At a time when environmental issues are

and compromising this on our production

under the spotlight more than ever, car

than it makes. But because supplies are so

line will mean compromising the entire

manufacturers need to explore hybrid

tight, there is very little discounting in the

company.” In other words, Subaru is using

technology in order to survive. Without

US. Subaru currently offers a discount of

the kaizen technique made famous by

help from Toyota, who know how long we

$481, compared with almost $2,000 on a

Toyota in the 1980s that aims for slow and

would have lasted. We currently have a

Mercedes and $3,000 on a Ford.

steady improvement.

new hybrid in in the works that we’re also

That is not to say that FHI is not

Still, Subaru could sell a lot more cars

“Trying to create a ‘world’s first’-anything

developing with the help of Toyota but this

Last year, Subaru made a profit of nine cents on every dollar of sales, some $2.4

There are a lot of options for Subaru

billion in net income. No other automaker

if it wanted to grow its market share. It

hit that threshold – not Toyota (eight per

doesn’t have a luxury brand like Honda’s

relationship with Toyota will stay as is. “If

cent), nor BMW (7.2 per cent) or Ford (2.2

Acura or Toyota’s Lexus nor does it make

we were completely absorbed by another

per cent).

a large SUV. Its sedans aren’t particularly

company, Subaru just wouldn’t be Subaru

popular and the company doesn’t make

anymore. In other words, our company has

our success in America is down to the

much effort to sell its cars in Europe, the

the following it does because we’re not a

supply (of Subaru cars) remaining below

Middle East or South America.

part of a larger company.

“I think that part of the reason behind

demand,” says Yoshinaga. “No matter how

Not that this bothers Yoshinaga. “In

time with a plug in charger.” However, Yoshinaga is adamant that the

“Our dedication to doing things

good the marketing, an over supply or

terms of our overall approach, I would

differently to stay ahead of the competition

surplus would result in our dealers having

say that it’s comparable to that taken by

shows in our cars. As a result, we’ve built

to offer discounts to sell the cars. Broadly

the late Steve Jobs with Apple’s products;

a significant following of customers who share our vision. Compromising on our

speaking, our discount rate in these scenarios is far below the industry average of $2000+. Whilst we can understand our dealers’ frustration regarding the lack of stock, we always have to think about both

Above: Toyota President Akio Toyoda (R) and Yoshinaga shake hands during a lineoff ceremony for the Toyota ‘86’ (R) and Subaru ‘BRZ’ sports car.

core principles would mean losing not only our customers but also the very foundation on which our partnership with Toyota is built upon.” Portfolio

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Energy

Keeping North Sea Oil Relevant Lower oil prices and declining yields paint a challenging picture for the future of North Sea oil. However, oil companies are not giving up without a fight, reports Stanley Reed.

“We recognised we weren’t structured

prices. Instead, OPEC – which does not

time Chevron executive, moved

the right way,” said May, who now leads the

include Britain or any other North Sea

to the North Sea port city of

company’s exploration and production in

producer – hopes that a spell of low prices

northern Europe. “Cost always matters.”

will discourage new investment in high-

And that was when oil was selling for

cost regions like the North Sea, reducing

ven before Craig May, a long-

Aberdeen two summers ago, he knew that the oil wealth in Britain’s waters was on the steepening slope of a decades-long

more than $100 a barrel. Now, with oil’s

decline.

price per barrel down about 40 per cent

Even before the price of oil began collapsing

from a year ago, and with some operators

last summer, May was taking steps to trim

make Aberdeen their North Sea hub,

shutting down ageing platforms, May and

Chevron’s North Sea costs and planning

Chevron had let its ageing offshore

Chevron are in a race against irrelevancy for

new technologies – including a $3 million

operations become inefficient. There was

their North Sea operations.

integrated operations centre in Aberdeen –

their output.

still plenty of oil and gas out there. But

The Organisation of the Petroleum

to wrest renewed efficiencies from 20- and 30-year-old offshore oil and gas rigs.

the rising expenses, May said, no longer

Exporting Countries (OPEC) is unlikely to

justified the diminishing revenue from the

provide any sort of relief to the North Sea

There is much more at stake than one

undersea wells.

industry by cutting production to prop up

company’s profitability. The efforts are a test Portfolio

job cuts in the North Sea region have so far been in the low thousands, the management consulting firm Ernst & Young forecasts that as many as 35,000 of the 375,000 jobs related to the oil industry in Britain could be lost over the next four years. “The issue in the North Sea is existential around the cash cost of operation at the current level of oil prices,” Simon Henry, Royal Dutch Shell’s chief financial officer, said recently while discussing the company’s quarterly results. And in the North Sea, no company is an island. The region is a vast web of interconnected fields and pipelines and other infrastructure, with different owners, that transport the oil and gas. If one company closes a node in this network,

Left: Golfers walk the links as offshore oil drilling supply ships sit idle in the bay outside the port of Aberdeen, Scotland. Below: Technip’s Wellservicer, an offshore oil industry support vessel, returns to port in Aberdeen. Far below: Nautical chain piled up in the port of Aberdeen.

of the continued viability of an energy region

Despite the global push toward

that, if nurtured, could continue to give

renewable energy and onshore drilling of

Europe a hedge against its reliance on oil and

oil and gas from shale in the United States

gas from Russia and the OPEC nations.

and elsewhere, the world is likely to require

Just as crucially, the techniques that

a long-term, adequate supply of undersea

Chevron is experimenting with in the North

oil – if it can be extracted economically.

Sea could lead the way for other oil companies

Chevron, for one, has postponed a

around the world to coax continued life

big Scottish deepwater project called

from ageing offshore energy operations –

Rosebank, where the North Sea gives way

wherever they are – and learn from some

to the North Atlantic just northwest of the

industry mistakes. In a sense, British waters

Shetland Islands, judging it not feasible

are a microcosm of the global industry.

under current industry economics.

Costs, especially for offshore operations, have

As other large oil companies in the region

risen across the globe, eating into profits and

have, Chevron has turned to layoffs and other

reducing incentives for new exploration.

cost-cutting moves. While total industry

July 2015

Energy

Above: Chevron’s new $3 million integrated operations centre in Aberdeen. Below and bottom: Offshore oil industry support vessels in Aberdeen.

others might be forced to shut down

model. In 2003, Apache acquired a portion

portions of their own operations.

of the Forties field, a vast North Sea plot

Chevron, for example, lost production for

225 kilometres northeast of Aberdeen that

several months from a field called Erskine

was discovered in 1970 and once produced

because its oil flowed through a field

about a half-million barrels a day. By the

operated by the BG Group. That field had

time Apache bought its portion from BP,

been closed since October for an upgrade

output had dwindled to 41,000 barrels a

but recently came back online.

day. But Apache has raised production by

“It takes only one field that has

20 per cent, to about 50,000 barrels a day,

exposure to a piece of infrastructure to put

by investing in new wells and installing more

the whole system in jeopardy,” said Derek

electrical generators to reduce downtime,

Leith, an energy consultant at Ernst &

according to James L. House, the company’s

Young in Aberdeen.

North Sea manager until recently.

Once fields start to shut down, the

“We all have access to the same level

companies cannot simply abandon them.

of technology and hire people with similar

International laws require the companies to

educational backgrounds,” he said. “It is

safely and cleanly dismantle the platforms

how decisions are made and how they

and underwater equipment, a process with

are executed.”

considerable costs. The industry is projected

At Chevron, May says he is encouraged

to spend about £15 billion pounds ($23

by his company’s efforts to reclaim the

billion) in the next decade on North Sea

North Sea. Chevron is continuing with the

decommissioning – spending the industry

development of a new field called Alder.

can hope to partly defer the longer it can

And the giant Rosebank project could yet go

squeeze life from existing operations.

ahead, May said.

Apache, a midsized oil company based in Houston, is considered something of a

“We have been here for 50 years,” he said. “We want to stay.” Portfolio

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Commerce

SingPostâ&#x20AC;&#x2122;s Big Revamp

ÂŠ 2015 New York Times News Service

Singapore Post has embraced the digital age by becoming an all-in-one logistics partner, reports Alexandra Stevenson.

Portfolio

hen a German lingerie brand wanted to sell undergarments online in Malaysia, it turned to

Singapore’s nearly 200-year-old national postal service. Singapore Post built a website, developed a marketing strategy, and now delivers packages for the company, Triumph International. The customer service team even answers questions about sizing. As postage stamps give way to keyboard clicks, SingPost is redefining the role of the letter carrier, by creating a hub for retailers’ e-commerce needs in Asia. In South Korea, SingPost is helping to sell Levi’s jeans. In Singapore, it is stocking Toshiba laptops. In Malaysia, it is delivering Adidas sneakers. With traditional mail services in decline, post offices around the world are scrambling to reinvent themselves for the digital age. “Sitting on that burning platform, we looked around and said, ‘Where could we develop?’” said Wolfgang Baier, chief executive of SingPost. Japan Post is buying the largest private package and freight delivery company in Australia, Toll Holdings, in a bid to create a rival to UPS and FedEx. The US Postal Service, which lost $5.5 billion last year, is providing Sunday deliveries for Amazon. Australia Post is working with the Chinese internet giant Alibaba to help local businesses connect with consumers in China. “There are at least two business trends unfolding before us. One is the death of mail,” said Frank Lavin, chief executive of the e-commerce consultancy Export Now. “The second is this boom in e-commerce.” SingPost’s makeover is among the most ambitious. Besides its regular postal duties, it offers a variety of services for companies,

Right: Mark Ha of Singapore Post uses a digital goods picker that cuts the time needed to find a customer’s order at one of the company’s warehouses in Singapore.

“Using Singapore as a base, you can reach 680 million people in the region. That is practically half of China,” said Teo Doy, managing director of Triumph in Singapore.

July 2015

Photo: Reuters

Commerce

The company also created a customer-

Above: Alibaba founder Jack Ma gives a thumbs-up as he arrives to speak to investors at an initial public offering roadshow in Singapore. Above right: Stacks of consumer goods in a Singapore Post warehouse.

Alibaba paid $250 million for a 10 per cent

including website development, online

laboratory in the early 2000s. It dabbled

As part of the e-commerce expansion,

marketing, customer service and, of

in various parts of the supply chain, first

SingPost upgraded its core delivery services.

course, package delivery. Following the

delivering goods from American shops

It has bolstered its network of warehouses

Amazon model, it is building a network

to Singaporean homes. It then tried

and fulfilment centres, most of which are

of 24 warehouses in 12 countries to

selling products on its own homegrown

in Asia. The centres handle freight and

stockpile goods for companies. The

platform. It even dipped into the luxury

customs clearance so goods can move faster

e-commerce team is staffed with former

goods market, starting a website called

through the region, where regulations differ

Silicon Valley executives.

Clout Shoppe.

from country to country.

stake in SingPost. Alibaba and SingPost

care department. At its Singapore offices,

are now in discussions to form a joint

30 or so employees handle the phones,

venture focused on e-commerce logistics in

answering questions or addressing

Southeast Asia.

complaints. An additional 200 customer-

SingPost began using the internet as a

Singapore’s central location, Baier said,

Then, two years ago, SingPost made its

service agents work elsewhere.

In Singapore, SingPost has invested $182

makes it a natural hub for e-commerce in

biggest digital push, creating SP eCommerce

million in building a high-tech warehouse

Asia. He recited numbers to demonstrate

to tap into the internet retail boom in Asia.

that will merge logistics and sorting into

the scale of the opportunity: more than

Today, it counts nearly 1,000 companies as

one assembly line. Workers punch or scan

600 million consumers live in the region

clients, including Philips, Uniqlo, Deckers

an order on a screen, and robotic trays

around Singapore, and 2.2 billion people are

and Muji.

deliver products from shelves for them to

within a five-hour flight. “We want to be the gateway to the East,” he said.

SP eCommerce’s offices feel more startup than mailroom. There is a

pack and ship. SingPost is pitching itself as a conduit

foosball table in one corner. Employees

to the Asian consumer, particularly in

service, once a state-owned company

can play ping-pong. The group’s chief

countries like Indonesia, Vietnam and

that went public in 2003. Four years ago,

executive, Marcelo Wesseler, created his

Malaysia. With its swelling population of

e-commerce barely figured into its bottom

first e-commerce website in 1997 and

young and mobile consumers with newly

line. Today, it accounts for more than a

worked in Silicon Valley before moving to

disposable incomes, the region offers a rich

quarter of the group’s revenues, which have

Singapore. Other employees have come

seam of new opportunities.

grown 60 per cent during that same period.

from technology stalwarts like Amazon

The shift has been stark for the postal

Others are taking notice. Last year,

and Hewlett-Packard.

Looking beyond its borders for growth, the Chinese smartphone maker Xiaomi Portfolio

Commerce

Above: Staff at work in Singapore Post offices.

“E-commerce is growing quickly across the region,” said Steve Vickers, Xiaomi’s general manager for Southeast Asia. “We are participating in that shift from retail stores to online stores.”

At its campus in Singapore, SingPost built a warehouse specially for Xiaomi, where orders from the first click to the final delivery

to consumers in new markets like Malaysia, Indonesia and India. Most countries in Southeast Asia are

are handled. Inside the space, a smartphone

experiencing rapid change, said Herbert Chan,

battery is stuffed into a cardboard box, sent

a regional manager at ZTE. “These countries

flying down a green conveyor belt and zipped

have got huge populations and they’ve got the

off to the customer a few kilometres away. A

right customer base,” he added.

video camera is perched above, controlled by someone who watches from Beijing. “E-commerce is growing quickly across

Triumph International had been eyeing Southeast Asia for years, waiting for online consumers to reach a critical mass. Then, last

the region,” said Steve Vickers, Xiaomi’s

year, Triumph approached SingPost to get

last year opened a regional headquarters

general manager for Southeast Asia. “We are

started. “Using Singapore as a base, you can

in Singapore, using it as a launching pad

participating in that shift from retail stores

reach 680 million people in the region. That

to move into Malaysia, the Philippines and

to online stores.”

is practically half of China,” said Teo Doy,

Indonesia. Next, it is targeting Vietnam and

SingPost is helping the Chinese telecom

managing director of Triumph in Singapore. Next, Triumph is planning to expand

Thailand. It teamed up with SingPost for

company ZTE to offer its products

support on logistics for e-commerce, which

regionally through a website that will go live

into Indonesia, once again with the help of

accounts for 80 per cent of Xiaomi’s sales in

in Malaysia in a few weeks. ZTE is trying to

SingPost. “They have completely evolved,” Teo

Southeast Asia.

sell its own brand of smartphones directly

said. “I mean, who sends letters anymore?” Portfolio

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Employment

Fake Jobs With Real Benefits

t 9:30 am on a sunny weekday,

business is fake. So are Candelia’s

the phones at Candelia, a

customers and suppliers, from the

purveyor of sleek office furniture

companies ordering the furniture to the

in Lille, France, rang steadily with orders

trucking operators that make deliveries.

from customers across the country

Even the bank where Candelia gets its

and from Switzerland and Germany. A

loans is not real.

photocopier clacked rhythmically while

Long-term unemployed people are getting real job training at fake businesses across Europe, reports Liz Alderman.

More than 100 Potemkin companies

more than a dozen workers processed

like Candelia are operating today in

sales, dealt with suppliers and arranged

France, and there are thousands more

for desks and chairs to be shipped.

across Europe. In Seine-St.-Denis,

Sabine de Buyzer, working in the

outside Paris, a pet business called

accounting department, leaned into her

Animal Kingdom sells products like dog

computer and scanned a row of numbers.

food and frogs. ArtLim, a company in

Candelia was doing well. Its revenue

Limoges, peddles fine porcelain. Prestige

that week was outpacing expenses, even

Cosmetique in Orleans deals in perfumes.

counting taxes and salaries. “We have to

All these companies’ wares are imaginary.

be profitable,” de Buyzer said. “Everyone’s working all out to make sure we succeed.” This was a sentiment any boss would like to hear, but in this case the entire

These companies are all part of an elaborate training network that effectively operates as a parallel economic universe. For years, the aim was to Portfolio

train students and unemployed workers looking to make a transition to different industries. Now they are being used to combat the alarming rise in long-term unemployment, one of the most pressing problems to emerge from Europe’s long economic crisis. De Buyzer did not care that Candelia was a phantom operation. She lost her job as a secretary two years ago and has

highest in two decades.

“Their skills can become obsolete. They get stigmatised. They risk being disconnected from the workplace and society, with negative implications for them, their families and the economy.”

been unable to find steady work. Since

growth should help. But the European economy is not recovering quickly enough to pull large numbers of people back into the workforce. When people do find work, it is often through temporary, low-paid contracts, which have sharply increased as employers have looked to cut costs. “It’s worrisome because we’re talking

January, though, she had woken up early every weekday, put on makeup and

If long-term unemployment is cyclical, or tied to economic trends, stronger

about many people who have been out of “If you have a significant part of the

work for a very long time,” said Stefano

gotten ready to go the office. By 9 am she

population that’s not integrated, they

Scarpetta, the director of employment,

arrives at the small office in a low-income

won’t increase their spending, which

labour and social affairs at the

neighbourhood of Lille, where joblessness

dampens a possible recovery,” said Paul

Organisation for Economic Cooperation

is among the highest in the country. While

de Grauwe, a professor of European

and Development. “Their skills can

she doesn’t earn a pay cheque, de Buyzer,

political economy at the London School

become obsolete. They get stigmatised.

41, welcomes the regular routine. She

of Economics. When a large number of

They risk being disconnected from the

hopes Candelia will lead to a real job, after

people go jobless for long stretches, “you

workplace and society, with negative

countless searches and interviews that

also subdue optimism, which will weigh

implications for them, their families and

have gone nowhere.

on an economic turnaround.”

the economy.”

Five years after Europe descended into

The problem is worst along Europe’s

The concept of virtual companies, also

crisis, there are signs that a recovery may

southern rim. In Greece, which has

known as practice firms, traces its roots to

finally be taking hold. The economy of

plunged back into a recession, 73 per

Germany after World War II, when large

the 19-nation Eurozone has been growing

cent of job seekers have not landed work

numbers of people needed to reorient

slowly but steadily since last year, led

in more than a year; in Italy, it is 61 per

their skills. Intended to supplement

by Germany and a turnaround in once-

cent. But the trend is rising even in more

vocational training, the centres emerged

troubled countries like Spain and Ireland.

prosperous nations like France, where the

in earnest across Europe in the 1950s and

As oil prices have dropped, consumer

rate recently approached 43 per cent, the

spread rapidly in the last two decades.

spending and manufacturing have started to pick up. Unemployment is even starting to fall. Yet long-term unemployment – the kind that de Buyzer and nearly 10 million others in the Eurozone are experiencing – has become a defining reality. Last year, a staggering 52.6 per cent of unemployed people in the Eurozone were without work for a year or more, the highest on record, according to Eurostat, and many of those have been jobless more than two years.

Opposite page: Helene Dereuddre gets administrative training at Candelia to help her job prospects in Lille, France. Right: Saad Khrifi, the director of the Candelia operation, talks to a trainee. July 2015

Employment

Today about 5,000 practice firms

For 15 years, Moreno worked for two

operate on the Continent, supported by

doctors in Paris, caring for their four

government funds, with at least 2,500

children and maintaining their home

elsewhere in the world, including the

10 hours a day while also ferrying her

United States.

own three children to and from school.

Within France, 12 new centres have

Below: (L-R) Julia Moreno trains at a pet business called Animal Kingdom, where unemployed workers are trained; Documents at a business where unemployed workers are trained in SeineSaint-Denis, outside Paris.

Moreno’s husband, a construction

sprung up since 2013, said Pierre

worker, pulled in a little more. With

Troton, the director of Euro Ent’Ent,

their earnings, they were able to buy a

which oversees the nation’s network of

modest home and send their daughter to

stopped leaving the house. “You don’t have

110 virtual companies. “We have more

private school.

the money to buy anything, so you don’t

At one point, Moreno almost entirely

go out,” she said. “You feel isolated. There

long-term unemployed people than ever

Then in 2011, Moreno injured her

before,” he said. Most are under 25 and

cervical spine on the job. In France, a

are moments when you think maybe

have either not found work or are getting

so-called workplace doctor is required to

you’re worth nothing.”

only precarious, temporary jobs. But there

assess whether employees can return to

is also a surge in unemployed people over

work after an accident. In Moreno’s case,

operation at Animal Kingdom. She wants

50. “Today,” Troton said, “more and more

the doctor said she could no longer be a

to get an office job when her programme

people who lose their jobs stay jobless.”

nanny. After that, Moreno ended up in the

ends in September. “I don’t want welfare;

In April, Moreno heard about the

unemployment office. Without a college

I want to work,” Moreno said. “I’ll do

works in the marketing and sales

degree or any other experience, there were

anything to get a job.”

departments at Animal Kingdom,

few jobs she was suited for.

Julia Moreno, 45, a former nanny,

who go through France’s practice firms

and billing. She learned how to make PowerPoint presentations and to use data spreadsheets. On a recent day, she was leafing through invoices and consulting a spreadsheet about sales. “We believe in it,” she said. “We organise ourselves as if we’re working in the real world. And you’re working so much and dealing with other colleagues, that you don’t even see the time pass.”

The success rate of the training centres is high. About 60 to 70 per cent of those

overseeing activities like deliveries

The success rate of the training centres is high. About 60 to 70 per cent of those who go through France’s practice firms find jobs, often administrative positions.

find jobs, often administrative positions, Troton said. But in a reflection of the shifting nature of the European workplace, most are low-paying and last for short stints, sometimes just three to six months. Today, more than half of all new jobs in the European Union are temporary contracts, according to Eurostat.

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Culture

Fighting Over the Harvest Leftovers

In Spain it is a tradition that after the main harvest is over the leftovers are picked by locals. But more pickers, many of them foreigners, have caused tensions with farmers, reports Suzanne Daley.

hough the official harvest had

Picking up the leftovers after the

their trucks onto the fields and maybe

ended weeks before, there

harvests – whether grapes, olives or garlic

even affect the quality and the price of

were still olives under the trees

– has been a way of making extra income

regional goods, like wine and olive oil,

outside the small town of Villafranca de

in these parts for as long as anyone can

because older and cheaper products make

los Barros southwest of Madrid recently,

remember. Cardenas said he did it with

their way into the pipeline.

and Luis Cardenas Travado, 52, was hard

his grandfather when he was nine. But

at work raking them up in the hope of

this century-old practice has come under

of Spain’s villages, where hundreds of

making some extra money. Maybe just

fire recently from angry farmers who

families depend on income from picking

$22 to $32. But with all four of his adult

believe that hard times have led far too

up leftovers. Last year, the regional

children unemployed and living at home,

many pickers, and not just local villagers,

government considered legislation to

even that would help.

to the fields.

regulate the practice, raising fears among

“We can buy some fuel,” said Cardenas,

They say that swarms of out-of-towners,

The subject has caused tension in many

pickers that the secondary harvests would

who once worked in construction. “Not

often Romanians, are at it, too, making a

be so tightly restricted that they would no

for heating. We can’t afford heating. But

profession of gathering the leftovers. And

longer be profitable. In the end, regional

for cooking.”

as they work, they break branches, drive

government officials backed down, Portfolio

Culture

concluding that the issue was complex and

some local officials believed it was

permission for leftover picking, but they

that they lacked the authority to legislate.

simply meant to curtail the market

are not always asked.

They said in response to written questions

for leftovers, which in 2013 accounted

that they were still pursuing the creation

for 10 million kilograms of grapes.

Ventura Arroyo, the president of the agriculture collective in Villafranca de los Barros, said his group did not want

of a board to regulate leftover sales. OTHER REGIONS IN Spain have

the practice of picking leftovers to be

inspectors, backed by members of

grappled with this issue. Around the

forbidden. But he said his members did

the national police, to block the sale

southern city of Jaén, for instance,

want more oversight. “Traditionally, those

of hundreds of kilograms of grapes

the government postponed the usual

who did this were from the village and

collected after the official harvests

collection of leftovers until everyone in the

they used good practices – they knew

this autumn, saying that, as they were

region had finished their official harvest,

what they were doing,” he said. “But a lot

collected from various properties

a move intended to ensure that no one

of the people out there today are from

and combined, they would violate

was collecting in fields before the farmers

different countries. It’s not the same.”

European Union rules on traceability.

themselves had finished, another frequent

Officials said this was necessary, though

complaint. Farmers sometimes give

In the meantime, they sent health

July 2015

Many here sell the leftovers they collect to Juan Luis Diaz, whose run-down

Culture

warehouse is not far from the centre of town. He opened it in 2012, believing leftover pickings could be a niche business. “Ten years ago, leftover pickers collected a third of what they collect today,” he said. Diaz said that in many cases, foreign pickers brought to Spain to work on the official harvests could not make ends meet without the leftovers. “It’s certainly better than having people go on welfare,” he said. Benito Durán, a member of the Villafranca de los Barros town council who is in charge of agricultural issues, said the regional engaged in this work were careful and Clockwise: Leftovers from an olive harvest at the warehouse of Juan Luis Diaz; Viorel Constantin, right, with his family who work as rebuscadores, at their home in Villafranca de los Barros; Juan Luis Diaz buys olives from Romanian men at his warehouse; Luis Cardenas Travado looks for leftovers from the harvest at an olive farm.

desperately in need of the money.

government’s efforts to stop the picking of

potatoes one month and grapes the

leftovers had created a lot of bad blood in this

next. When possible, they live in a small

town, where the unemployment rate is 31 per

apartment in a neighbouring village. But

cent. “This is a village of 15,500,” he said. “We

when the work is too far away and they

know each other.”

can’t make it home for months at a time,

“There would only be one reason to

ONE OF THE pickers selling leftovers to Diaz recently was Viorel Constantin, 52, who came from Romania nine years ago to work in the fields. He and his family move around following work, harvesting

the landlord lets them cut the rent by half,

block people from doing this,” Durán

an accommodation, Constantin said, he

added. “You are a bad-hearted person.”

was grateful for.

While some local newspapers have cited

But it would be difficult to pay even

unnamed farmers claiming to have seen

half the rent without the money picking

pickers using metal bars on the olive trees

leftovers. “There are good farmers here and

and driving heavy vans into the fields,

bad ones,” Constantin said. “Some of them

Duran said that 95 per cent of the people

say leave it all on the ground. It is mine.”

Portfolio

Finance

Portfolio

Venezuela’s Vanishing Billions

“It’s like the robbery that our people were

Due to the government’s complex currency system, importers use numerous schemes to wildly inflate prices or import phantom goods, report William Neuman and Patricia Torres..

that disappeared through corruption

subject to in the time of the conquest and the colonies, when the gold and silver were carted off by the tonne.” During the boom years of high oil prices, little was done to stop the billions and fraud. But today, with the country in a deep economic crisis marked by recession, crippling inflation, and shortages of goods like milk and shampoo, the missing billions are particularly

With the huge drop in the price of oil,

and people wait in line for hours to buy

Each. Then there was the $1.8

Venezuela’s only major export, the nation’s

basics, a crisis made much worse by the

million machinery to kill and gut

central bank recently reported that the

years of haemorrhaging dollars through

chickens. When the police checked it, they

country’s foreign currency reserves –

import fraud.

found a worthless jumble of rusted scrap

essential for international trade and debt

metal. And there were the businessmen

payments – were at their lowest level in

behaviour of oil prices, these are

who collected $74 million to ship

almost 12 years.

resources that we could use right now,”

he weed whackers were $12,300.

chemicals and other products from abroad – but sent almost nothing in return. For years, Venezuela has had a hole in its pocket, a very big hole. The government’s complex currency

That has Venezuelans on the left and

“Taking into consideration the

said Ricardo Sanguino, a governing

the right in rare agreement, clamouring

party legislator appointed by President

for someone to be held accountable for the

Nicolás Maduro to lead a commission to

vanished billions.

investigate the fraud.

“It’s scandalous,” said Víctor Álvarez, a

Estimates of the import fraud vary, but

system has led to exorbitant schemes by

leftist economist and government minister

a former president of Venezuela’s central

importers, who wildly inflate the value

under Hugo Chávez, who died in 2013.

bank, Edmée Betancourt, has said that up

of goods brought into the country to grab US dollars at rock-bottom exchange rates. Sometimes, they fake the shipments altogether and import nothing at all. Then they just pocket the dollars that the government provides, or sell some © 2015 New York Times News Service

conspicuous. Many store shelves lie bare,

of the money for a gargantuan profit on the soaring black market here for American currency. Tens of billions of dollars needed for vital imports have been drained this way from Venezuela’s treasury, officials say, but the loss is especially painful now.

Opposite page: Overseas exporters insist in being paid in euros or dollars, and do not accept bolivares. Right: People queue at a money exchange in Caracas. July 2015

Finance

to $20 billion of the $59 billion that went to product imports in 2012 disappeared through fraudulent transactions. One economic consulting firm, Ecoanalítica, estimated that about $69.5 billion was stolen through import fraud from 2003 to 2012. It said that 20 per cent of the importing done by private companies had been bogus, while 40 per cent of the imports carried out by government agencies and government-run companies had been fraudulent. The schemes have been so rampant that exporters in a free-trade zone in

on the condition of anonymity. He said that

Panama invoiced $1.4 billion in shipments

he regularly shipped in only about 10 per

to Venezuela. Yet Panamanian officials

cent of what he claimed to be importing.

said that $937 million of that was a sham,

Venezuela is heavily dependent on

with companies billing for goods that

imports for food and other basic goods,

never existed.

as well as for raw materials needed to

At the heart of the import ploys are

manufacture many items. But exporters

the country’s currency controls, which

abroad do not want to trade in bolívares,

were begun in 2003 by Chávez. They are

Venezuela’s currency. They want dollars or

based partly on the populist notion that

other foreign currency, like euros.

“it’s like the robbery that our people were subject to in the time of the conquest and the colonies, when the gold and silver were carted off by the tonne.” a total invoice of more than $1 million,

providing cheap, essentially government-

So in Venezuela, importers obtain

subsidised dollars to importers translates

government permission to import a

according to government documents. The

to cheap imported goods for the masses.

product and then apply to the nation’s

companies claimed that each machine cost

currency control agency to buy the

up to $12,300, even though investigators

But economists say the controls

dollars needed to pay for the shipment

found that similar items cost as little as a

create vast incentives for fraud.

from abroad. The system is rife with

few hundred dollars each.

“There are lots of Venezuelan multimillionaires thanks to this system,” said one importer of clothing, food, medicine and other products, who spoke

opportunities for abuse, the main one being wildly inflated invoices. In the weed whacker case, two companies imported 88 machines for

In another case, the documents assert, a company importing agricultural equipment declared the value of a machine to remove kernels from ears of corn at $477,750, when the real price was about $2,900. Such manoeuvres mean automatic profits, which only multiply once the money goes through the black market. An importer can buy US currency from the government for as little as 6.3 bolívares to the dollar, then turn around and get as many as 280 bolívares to the dollar on the black market. Venezuelans call the churning of bolívares and dollars “the bicycle” because the process can

Above: Shipping containers at the port in La Guaira, outside of Caracas. Left: Venezuela’s subsidised consumer goods are sold in Colombia for a profit. Portfolio

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Finance

The scheme contributed to the collapse

go around and around indefinitely, generating exorbitant profits in both currencies along the way. As the economic crisis has deepened in recent months, the government has cut back sharply on the dollars available to importers, worsening shortages but still not eliminating opportunities for fraud. “In Venezuela, your real business isn’t your ‘business,’” the importer said. “Your real business is what’s behind your ‘business.’” He explained that hefty bribes, which can add up to hundreds of thousands of dollars per deal, needed to be paid at numerous steps to receive permission to import a product, to get speedy approval

One economic consulting firm, Ecoanalítica, estimated that about $69.5 billion was stolen through import fraud from 2003 to 2012. It said that 20 per cent of the importing done by private companies had been bogus, while 40 per cent of the imports carried out by government agencies and government-run companies had been fraudulent.

could wind up with about 60 per cent Photos: Getty Images

of the dollars originally bought from the

Ecuadorean prosecutors have alleged other ploys involving other companies, totalling about $150 million in fraudulent exports to Venezuela. Large amounts of the money siphoned out of Venezuela pass through the United States. The US authorities identified the shipper of the bogus chicken processing equipment as a Florida company. Ecuadorean prosecutors have tracked millions of dollars transferred to the United States by companies involved in the Venezuelan frauds. And a US Treasury in March uncovered a money-laundering

to certify fraudulent imports and to have paying bribes and other costs, an importer

losses of tens of millions of dollars.

Department investigation made public

for applications to buy foreign currency, the dollars released. He said that after

of an Ecuadorean bank that reported

or government officials. The scale is mind-boggling, creating distortions in the regional economy. In Ecuador, prosecutors charged three

government. The actual merchandise

Venezuelan businessmen with using a

brought into the country is often beside

bevy of shell companies to receive about

the point, the importer said, and many

$74 million for inflated or phantom

times he gives his away to military officers

shipments to Venezuela in 2012 and 2013.

ring that had moved $4.2 billion out of Venezuela though import-related schemes and other means. The investigators determined that at least $50 million had passed through the US financial system. Above: Venezuelan oil workers demonstrating against low wages Venezuela. Portfolio

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Agriculture

Rebooting Chinaâ&#x20AC;&#x2122;s Rubber Plantations The fall in the price for natural rubber has given officials a rare chance to try a more environmentally friendly approach, reports Becky Davis.

Portfolio

Villagers cutting down and collecting the timber of mature rubber trees.

July 2015

Agriculture

n the farming village of Tuanjie,

in 1983 became the first in the village to

major city, have been testing a plantation

in the hills above Jinghong, in

plant rubber trees. “Our lives then just got

model that they hope will become the

southwest Yunnan province, nearly

better and better,” she said.

blueprint for a more sustainable and

every family lives in a two- or three-storey

By 2011, the Wangs were earning nearly

economically stable rubber industry. On approximately 67 hectares, workers

concrete house, testament to a prosperity

$13,000 a year from their 1.6-hectare

built during the boom years for natural

farm, while neighbours with larger plots

have interspersed the rubber trees with

rubber production.

earned close to six-figure incomes. Family

cacao, coffee and macadamia trees, as

Sitting in a gleaming new kitchen

members built their two-storey home,

well as high-value timber species. The

larger than the thatched hut that once

bought a car and a flat-screen TV and

mix, touted as “environmentally friendly

stood on the same spot, Wang Guiying,

went on group tours to distant Beijing and

rubber,” is intended to decrease soil

51, recalled hunting wild animals to

nearby Vietnam.

erosion, improve water quality and increase

survive and growing cotton to make her own clothes in the days before her family

Clockwise: Workers stack processed rubber at the Weisheng Rubber Ltd. processing factory in Jinghong, China; A villager harvests rubber on her plantation at dawn in the village of Tuanjie; Wang Guiying, whose family became the first in her village to plant rubber trees, preparing a meal in the yard of her home.

This year, thanks to the drop in oil prices, which set the price for natural

biodiversity, among other benefits. Rubber plantations first appeared in

as well as synthetic rubber, they predict

this tropical region in the mid-1950s as

they will make only about $1,600. “We

state farms run by the centrally planned

don’t know why the price went down, but

economy. The uniform rows of rubber

we have nothing else to depend on,” said

trees fan out across the valleys where

Wang’s son-in-law, Jie Er, 32.

Asian elephants and white-cheeked

Recognising that, environmental officials just outside Jinghong, the region’s

gibbon once roamed. From afar, they meld into an unnaturally even carpet of singleshade green, a stark contrast to patches of remaining natural forest. The transition to a free-market economy combined with rising rubber prices led to the rapid expansion of plantations beginning in the late 1990s. These days, over a fifth of all land in the Xishuangbanna prefecture of Yunnan province is devoted to rubber production, an area of cultivation that tripled in size between 2002 and 2010. Natural forest coverage, in turn, has fallen to less than 50 per cent in 2003 from nearly 70 per cent in the late 1970s, snuffing out wildlife in a corner of China renowned as one of its most biologically diverse. Li Qingyou, director of the BioIndustrial Crops Office, the governmental body that is seeking to convert nearly a fourth of the region’s rubber-growing areas to this new more eco-friendly model by 2020, stood next to his Jeep facing a view of new high-rises and the Mekong River beyond, feet planted on the slope separating a row of coffee trees from rubber trees. “We used to be so focused on developing the economy that we planted rubber and ignored the environmental impact,” he said, “but now we realise that Portfolio

Agriculture

this isn’t good for us, and it isn’t good for the economy either.”

“When rubber prices were very high, it simply wasn’t easy to get anything done,”

proportionately lower. Though rubber farmers typically

said Pan Yuwen, 48, a technical adviser

engage in intercropping while the

Last year, the prefecture-level

in a government department specially

trees are still young and have not yet

government spent $1.6 million to convert

created to assist farmers with following

developed full canopies, it is uncommon

about 8,700 hectares of existing rubber

the new practices.

for farmers to integrate other species into mature plantations. Yet, tea, cacao, coffee

plantations into environmentally balanced

There is no official consensus as to

ones. According to officials, another 6,475

what exactly “environmentally friendly

and a number of Chinese medicinal

or so hectares are in the pipeline for this

rubber” ought to be; researchers are

plants can grow even in the midst of

year. With rubber prices at a 10-year

divided as to what intercropping species

a rubber forest, as can valuable, slow-

low and farmers panicked over sinking

and planting practices would best

growing trees like teak.

incomes, officials say they have a rare

balance economic needs against purely

opportunity to promote their ideas, which

environmental concerns.

include introducing new products that

The current programme includes

Jie said he was intrigued by the seedling distribution programme, though he would never cut down his rubber

make farmers less dependent on a single

measures like the distribution of free

trees, which take seven years to mature.

revenue stream.

seedlings – some 500,000 in 2014 –

“We’re wondering if we should also start

and the discouragement of planting

planting macadamia nuts or Aquilaria

rubber trees on steep slopes or in areas

trees,” tall evergreens that produce

over 792.5 meters in elevation, where

resinous agarwood, which is used in

soil erosion and other environmental

perfumes and is one of the world’s most

damage is much higher and yields

expensive raw materials.

A government funded model site, used to research and promote intercropping of rubber trees with macadamia nuts, coco, coffee and tea;

Portfolio

Tourism

Photos: Getty Images

Jordan’s Tourism Decline Tourist numbers have dropped by more than 50 per cent since 2010, and many believe the government could do more to stem this decline, reports Ranaf Sweis.

a few steps from the main gate, drinking

as Jerash, are among the best preserved of

thick black coffee and smoking. There

any provincial city of the Roman Empire. The

were 42 of them, ready to show a visitor around a

monuments and temples, baths and amphitheatres,

world-renowned archaeological site in any of nine

plazas and colonnaded streets transport visitors

languages. But even though it was a sunny spring

back to the first few centuries AD, when the city

day, there was no work for 38 of them.

prospered under emperors like Trajan, Hadrian and

he tour guides sat in a dusty white trailer

“Four years ago, I would do two to four tours a day for visitors,” said Ahmed al-Qaim, 43, who has been a tour guide for the past 19 years. “Now, we

The ruins of ancient Gerasa, known now

Antoninus. The marks of chariot wheels can still be seen in the ancient paving stones. The 65-hectare site has been one of Jordan’s

mostly just sit around discussing things like, ‘How

main tourist attractions, and a sustainable long-

do you like your coffee?’”

term source of revenue. But it is just 32 kilometres Portfolio

from the border with Syria, where a civil war has been raging for four years – and the region’s conflicts are anything but a magnet for foreign visitors. Sites all over Jordan are suffering. In 2010, the year before the Arab Spring erupted across the region, some 8.2 million people visited the country, according to the World Bank, but by 2013 the figure was down to 5.4 million, and it is still falling. And many of the foreigners who do come now are not tourists, but people drawn here by the very turmoil that keeps the tourists away: aid workers, diplomats, journalists, refugees. The Ministry of Tourism and Antiquities says visits to Jerash are off by 35 per cent this year from a year ago. At some other sites, like Mount Nebo, Wadi Rum and Karak, the fall has been even sharper, almost half.

Left: Camels wait for tourists outside the UNESCO World Heritage Site of Petra. Below left: Tourists in the ruins of ancient Gerasa, known now as Jerash. Below middle: A vendor waits for tourists in the ruins of Gerasa. Below: Petra is Jordan’s most-visited tourist site.

July 2015

Tourism

Above: A child runs through grass in the ruins of Gerasa. Below right: Chinese tourists explore Gerasa. Far top right: Men assemble a tent ahead of a festival in Gerasa. Far middle right: Visitors explore some of the 65 hectares that make up Gerasa. It is one of the best preserved Roman provincial cities.

“When I look around the region, I see

Atoom stood outside, greeting the trickle

there’s nothing to be optimistic about,” said

of tourists who passed by and pointing to

Ahmad Shami, the antiquities ministry

photographs of the barbecued meat and

official in charge of Jerash. “We have a

appetisers he offers. The large seating

responsibility to promote and preserve

area inside remained desolate and dim.

Jerash, because this place belongs to the

Surrounded by his waiters and a few tour

world and to humanity.”

guides, he said ruefully, “Inside this ancient

Some Jordanians say that what the ministry calls a problem is really an opportunity. “Nobody is going to Yemen,

site, we are reviving the dead, but we’re killing the livelihoods of the people living outside.” The government and the tourism industry

Syria or Iraq,” said Thiab Atoom, who

here have tried a few modest initiatives:

recently opened a restaurant on the way

discount airline tickets, visa fee waivers, a

to the main gate at Jerash. “This is not

social media campaign. But even the minister

something that should only work against us –

of tourism, Nael al Fayez, has said publicly

it should also be an opportunity to say ‘Jordan

that much more needs to be done.

is a haven, come here!’ But we aren’t doing enough to lure in visitors.”

The intrepid tourists who do come to Jordan’s archaeological sites often have other Portfolio

amphitheatres. But Palmyra recently fell under the control of the Islamic State extremist group, which has been known to loot or smash many cultural artefacts. That same week in Jerash, about 40 girls in blue school uniforms smiled and greeted a small group of Chinese tourists, who posed for group photos holding umbrellas to shade them from the sun. The schoolgirls formed a circle in the centre of the southern amphitheatre, where Roman acoustic design ensured that anyone in the 3,000 seats would be able to hear them clearly. With their teacher in the middle, they sang and recited multiplication tables. Visitors to Jerash are guided past the longstanding colonnades of the city to the temple of Artemis, the goddess of the hunt revered by the Greek portion of the ancient population. The temple is surrounded by “whispering” columns, and tour guides are eager to demonstrate how, with slight pressure, a column can actually move. Recent excavations show that Jerash has been inhabited since the Bronze Age, leaving behind layers of antiquities from the Greek, Roman, Byzantine and Umayyad parts of the region on their itinerary as well,

civilisations. The modern city has about

including the West Bank and Egypt.

200,000 inhabitants, and the main market

Jack Spears, an American from Phoenix,

rows of clothing and accessory shops and

making his way to Jerash, 48 kilometres

vegetable stands, surrounded by mosques,

north of Amman, the Jordanian capital. As he

masonry houses and run-down apartments.

completed his tour of the ruins, he stopped to

July 2015

is just outside the archaeological site, with

Arizona, flew to Jerusalem first before

Experts say that no more than one-quarter

look at the monumental Arch of Hadrian at the

of the ancient city has yet been excavated,

entrance, erected to honour the emperor’s visit

and that important Roman ruins probably lie

to the city in AD 129. “When you start off, it

under today’s markets and houses.

looks small, and like there’s not much to see,” he

The slump in tourism threatens many jobs

said of the sprawling site. “But the more you

in Jerash, and some antique shops have already

go in, the bigger and better it becomes.”

shut down. Local residents and business

In calmer times a few years ago, it was

owners cast blame in many directions – at the

easy for visitors to book a tour with stops

warring sides in the region for scaring visitors

at three spectacular ancient sites – starting

away, at the government and the tourism

at Petra, the famous city carved from rose-

industry for doing too little to woo them back,

coloured stone cliffs in southern Jordan,

at the international community for not solving

then Jerash, and on to Palmyra in Syria.

the crisis and ending the brutal violence.

Palmyra has much in common with

If things do not get better soon, “it will

Jerash – both were crossroads of cultures

be a tragedy,” said Shami at the antiquities

in the ancient world and both feature well-

ministry. “What will the result be when all

preserved colonnades and majestic Roman

these people lose their livelihoods?”

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Essentials

THE BEST OF LEISURE AND LIFESTYLE

Far From the Madding Crowd Majorca may be famous for its heady mass tourism, but it has so much more to offer. Nick Rice reveals the lesser-known wonders on this bewitching Balearic Island.

July 2015

Essentials

Travel

Left: The Medieval city walls surrounding the main Roman settlement town of Alcúdia. Below: Hotel Son Gener set in a house dating back to the 18th century.

draws an active crowd to its network of lavender and citrus-scented trekking and cycling routes. Majorca is also popular with artists, poets and writers – the vivid colours and golden light providing plenty of inspiration. The island has long piqued the interest of outsiders. Its rich history encompasses the Roman, Byzantine and Moorish unburn and sangria, the

resort-style hotels that detracted from the

cultures, each of which discovered that its

beach and the bar, large

wild beauty of Majorca’s stunning coastline.

wealth of olive and citrus groves provided

white hotels bulging

The good news is that the island has

lucrative export goods. The amalgam

very much lived and learned. Whilst

of Majorca’s Mediterranean and Arabic

Brits and Germans.

parts of Majorca still cater for family and

heritage becomes immediately apparent in

Hasn’t Majorca been like

package holidaymakers, its offerings have

Palma, its capital city. Palma’s magnificent

this since the early days of mass-tourism?

broadened considerably. Since the turn of

Cathedral that bestrides the port was once

Well, yes and no.

the millennium Majorca has shucked off

the Medina Meyurka, capital of Muslim

the stereotypical image, quietly evolving

Majorca for over three centuries. Also

Balearic Islands, and with a different

into a high-end, luxe-focused destination.

in the centre of Palma’s ‘old city’ sits the

character to neighbours Ibiza and

Now studded with chic hideaways, tranquil

Banys Arabs – the former public bath or

Menorca, Majorca was well placed to

rural retreats, gourmet dining options

hammam, representing another aspect of

capitalise on the first influx of northern

and world-class properties, it draws an

Majorca’s rich heritage.

Europeans keen to make the most of its

international clientele that is as discerning

sun-drenched beaches and spectacular

as it is discreet.

with hard-holidaying

As the largest of Spain’s stunning

bays. But its gifts were to prove something of a double-edged sword as the rush to

Summer sees its harbours filled with fine yachts, while the breathtaking interior

Over the decades a long list of luminaries has taken Majorca to its hearts, with the likes of Winston Churchill, Agatha Christie, Grace Kelly, Joan Miró, John

establish a new tourism-based economy in the 1960s and ‘70s led to some poor planning decisions, and an abundance of

Summer sees its harbours filled with fine yachts, while the breath-taking interior draws an active crowd to its network of lavender and citrus-scented trekking and cycling routes. Majorca is also popular with artists, poets and writers – the vivid colours and golden light providing plenty of inspiration.

Portfolio

Wayne, Chopin and his lover Amantine-

with Spanish partners to restore the

Tramuntana mountain range, it’s popular

Lucile-Aurore Dupin (the French novelist

building to its immaculate new state. The

with walkers and cyclists.

better known by her pseudonym George

refurbishment has meticulously preserved

Sand), and the acclaimed British poet

the Gothic architecture and re-established

ocean vistas, and the Cap de Formentor,

Robert Graves all taking up residence at

the central courtyard, which is 20 metres

the northernmost point on the island,

one time or another. Graves even wrote an

below street level. Three hundred years’

is the final attraction along an

essay entitled, Why I live in Majorca.

worth of rubble was removed in order to

18-kilometre stretch of coastline that is

create what is now the spa area and plunge

dotted with viewpoints.

The antidote to the infamous mass

Coastal walks offer breathtaking

tourism in Majorca is the wide range of

pool. The long years of hard work have

impeccably conceived luxury escapes.

paid off and Hotel Can Mostatxins sees the

of Pollença is another 15th century

building brought back to life.

property that has been transformed into a

Portfolio was in the northern port town of Alcúdia for the hotly anticipated

Just two kilometres outside the centre

hotel of the highest standards. The 5-star

opening of Majorca’s latest boutique

Majorca is sMall enough to visit

Son Brull hotel was formerly a monastery

property, Hotel Can Mostatxins. Situated

many places in a relatively short time, and

and is surrounded by the silence of the

in the heart of Alcúdia’s lively old town

with a hire car visitors can easily explore

countryside. A member of the luxury

and a stone’s throw from the medieval

many towns, each with its own particular

hotel and restaurant association Relais

walls, the building dates back to the 15th

charm. A short drive from Alcúdia is the

& Châteaux since 2005, the property

century. A local historian explained that

far northern town of Pollença. Beautifully

retains an implicit calm and couldn’t be

the original tower, now a two-storey luxury

preserved with a strong café culture and

more conducive to rest and relaxation.

suite, was a watchtower in 1467, and also

a bustling market, Pollença is full of

Commenting on what makes the hotel so

part of the town jail.

character and a great place to spend a few

A British family has saved the building from dereliction, working for six years July 2015

days tuning into the Mallorquín lifestyle. Located at the base of the stunning

Above: A children’s cooking class proves to be a success at La Residencia.

Essentials

Travel

well known in Majorca, the owner Mar Suau says it’s “the casual atmosphere and the service. The fact of being a family run hotel and the only independent privately owned 5-star on the island makes our attention to detail and service more personalised.” Another famous property and exemplar of Majorca’s sophisticated side is La Residencia, a Belmond group hotel located in Deià on the West coast at the foothills of the Sierra de Tramuntana, a spectacular mountain range and a UNESCO World Heritage Site. Deià, a postcard–pretty village overlooking the Mediterranean and La Residencia, previously owned by Sir Richard Branson, has been attracting discerning guests for decades. Countless celebrities have stayed at the hotel, which comprises 67 rooms and suites that blend inconspicuously into the surrounding environment. A focal point of the town, La Residencia has carefully curated the best of leisure activities for guests, offering boat trips, guided donkey walks, professional tennis lessons, cooking classes and art courses, as well as an outstanding spa. The acclaimed British painter Alan Hydes and Spanish sculptor Juan Waelder are both in residence at the hotel, providing visitors with a chance to explore their creative side. For dining, Café Miró has the best tapas you can find in the region and the awardwinning El Olivo, which produces its own delectable olive oil, is considered among the best restaurants on the island. La Residencia has long represented the alternative to the mass tourism that

Clockwise: Dining on the terrace of Cases de Son Barbassa, where most ingredients are locally sourced and seasonal; The lobby in the 18th century farmhouse at Hotel Son Gener near Arta; The tower in Hotel Can Mostatxins is the highest point in Alcúdia and dates back to 1467; The dining room, framed by the huge trees that form the ancient olive press. Opposite page: Belmond’s La Residencia Hotel, discreetly tucked beneath the mountains in Deia. Portfolio

Majorca is widely known for. Head of

a distinct culinary focus. Cases de Son

much all that you’ll hear in its sensitively

PR, Louise Davis, explains, “The image of

Barbassa and Son Gener are two of the

landscaped gardens. Inside the mood

Brits behaving badly abroad is something

finest examples to be found on the island.

continues as the interior unfurls into a

perpetuated out of all context. Mass

Located near the historical town of

sequence of elegantly minimal spaces.

tourism exists but in a tiny pocket... in

Capdepera on the northeast coast, Cases

The ambience is one of a fine Mallorquín

the meantime, there is an island with

de Son Barbassa is a picturesque country

home that you’ve had the pleasure of being

great professionals developing a tourism

estate surrounded by the Llevant National

invited to by a host whose only desire is

industry that should be the envy of

Park. Although only minutes away from

that you relax and luxuriate.

the world.” Commenting on the many

beautiful coves and beaches such as Cala

different types of vacation available, Davis

Agulla and Cala Torta, the grounds feel

apparent when you taste its homegrown

adds, “Everyone finds something. Majorca

wonderfully isolated, with 3,000 year-old

cuisine. The world’s greatest chefs

is being recognised as a place that offers

remains of the Talayotic culture and

know that ultimately it’s the quality of

diversity in beautiful surroundings.

views of the medieval Castle of

ingredients that do the talking in any dish,

The quality tourism market clients are

Capdepera. Most impressive of all is

and this is the trump card at Son Gener.

totally oblivious of any ‘mass tourism’

the restaurant, with an open terrace

Its organic ethos shines through in every

market that may exist – they never see or

giving 360° views of the countryside and

mouthful of its plump olives, sun ripened

experience it.”

delicious Mediterranean cuisine.

tomatoes and deeply flavoured asparagus.

Son Gener’s magic becomes even more

Particularly special in Majorca is the

Hotel Son Gener is found out the

high level of agrotourism – an extension

outskirts of the laid-back inland town

or the active side of life with cycling,

of ecotourism that encourages visits to

of Artà. The first thing that hits you on

trekking and an array of water sports,

agricultural-based properties. Secluded

approaching Son Gener is its sense of

Majorca has a wealth of attractions for

farms known as fincas are lovingly

utter tranquillity. Birdsong and the rustle

those willing to look beyond the out-dated

reinvented as luxurious rural escapes with

of palm trees in the breeze are pretty

impressions of the island.

July 2015

Whether it’s the calm of the countryside

Essentials

Cuisine

he bottles were presenting a

Guardians of Italy’s Treasured Oil In Italy olive oil is a way of life, and Tuscany is particularly famed for the delicate oil it produces, reports Danielle Pergament.

problem. The stainless steel one was best at keeping out the light,

but it conducted heat and it wasn’t cheap. The painted glass bottle was promising, but only if it was made with the right

paint. Dark glass was still an option, though not ideal. “The wrong container can ruin all of our work,” said Nico Sartori, our host, his hands shaking with feeling. It had been an emotional morning – and we hadn’t even gotten to the subject of corking. Portfolio

populated with soothingly straight grids of

I had been invited to Fattoria Altomena, an olive oil farm just outside of Florence, to meet six of the region’s most respected olive oil producers. Outside our roughhewed tasting room, flaxen hillsides were teeming with plump rolls of hay, and the ribbons of road that cut through them were dotted with cars rolling patiently behind huge green tractors. Late summer was painting itself on the landscape of northern Tuscany. And the land between the geometric fields and canopies of grape vines was given to olive trees – hillsides July 2015

Every few months, these gentleman farmers – all of whom favour crisp, buttondown shirts and elegantly trimmed facial hair – meet at one of their farms to discuss machinery, bottling, whatever is going on in their business.

trees, spindly branches giving way to tufts of pale green. We sat around a massive wooden table in Sartori’s tasting room, the famously golden Tuscan sunlight spilling over our shoulders, three bottles resting on a tray in the middle, waiting for judgment. Every few months, these gentleman farmers – all of whom favour crisp, button-down shirts and elegantly trimmed facial hair – meet at one of their farms to discuss machinery, bottling, whatever is going on in their business.

Essentials

Cuisine

“There is no competition; we all love olive oil,” said Francesco Biagiotti of Compagnia degli Oliandoli. “If the whole

crumpled a piece of paper and threw it in his face. Olive oil is as old as time. Egyptians,

world used as much olive oil as we do, we

Phoenicians, Greeks and Romans all

would be very rich.”

cultivated it. And here, in this sacred

Olive oil, they explained, is more than

conclave of olive oil producers in a small

something to drizzle over a dish when you

farmhouse on a hillside - and throughout

want to impress company. It is a lifestyle.

Tuscany and more rugged regions to the

It is a necessary ingredient at every meal.

south - it was almost a religion.

So none of them, I asked, have so much

“A good wine lasts one dinner; a good

as a stick of butter in their refrigerators?

oil lasts many meals,” said Michele Porcu

They laughed. They guffawed. Butter!

of I Greppi di Silli. “Once you taste a high

But then, slowly, quietly, Sartori raised

quality oil, you can’t go back to the other

his hand. “It’s true,” he squeaked. “I

kind. It will taste rancid, like chemicals.”

use butter. I’m not from Tuscany - I’m from the mountains!” Someone actually

I was in Italy to get exactly this sort of education. I love olive oil. Always have. I pour it on everything and it magically makes me feel as if I live closer to the Mediterranean. My trifecta of culinary joy could be summed up as: wine, cheese and olive oil. But while I have passing knowledge of the first two, my

olive oil, they explained, is more than something to drizzle over a dish when you want to impress company. It is a lifestyle. It is a necessary ingredient at every meal.

erudition of olive oil is limited to articles about its health benefits and which labels I like the best. More than any time in recent memory, olive oil is an increasingly precious commodity. Last year’s harvest was severely damaged by extreme heat, torrential rains and hailstorms, as well as a devastating fruit fly infestation. But even worse, a few regions to the south, in Puglia, olive trees have suffered a catastrophic bacterial infection that has wiped out at least one million trees. It’s been a disastrous year. Some experts predict many olive farms will go out of business; others foresee drastically increasing prices. One thing is clear: we can’t take olive oil for granted. With all this in mind, I had come to the old country, joined by my husband and two children, on a month-long quest to to develop my American taste buds (and

Above: Angelo Silibello, owner of Cibus, a restaurant in Ceglie Messapica, Italy. Left: New oil spills out from a mechanical mill at Chiarentana farm in Tuscany. Portfolio

“Olive trees are a generous plant. here in tuscany, one tree can produce one litre. in Puglia, one tree can produce 30 litres. if you go to Puglia, you will see trees so big you need three people to hug them. You won’t believe your eyes.”

had told me. Voigtmann, who owns the boutique hotels La Bandita and

a quest to have a month-long vacation).

La Bandita Townhouse in Pienza, had

People go on wine tours of Italy, why not

explained the difference between Italian

an olive oil tour?

olive oil provenances. “We’re at 500

Our itinerary was simple: start in

metres above sea level here. Olive oil from

Tuscany, sampling delicate, precious

this part of Tuscany is delicate, like a pinot

olive oils from the world’s most famous

noir. When you get to Puglia, the olive oil

producing region. Once my palate was

is like a big cabernet, it’s much heartier.”

(somewhat) educated, we’d head due south toward the Mediterranean, not

Back in the tasting room, someone

stopping until we reached Puglia, the

passed me a small bottle of cloudy green

rugged, salty heel of Italy’s boot. Less

oil, a tiny container of fatty Tuscan

famous, but far more prolific, Puglia is

sunlight. I poured a teaspoon’s worth into

the olive oil capital of the country. I was

a glass and drank. It tasted like olive oil.

here to smell, to taste, to learn. If I could

My schooling had a way to go.

do it without sounding like an idiot, all the better.

Technically, extra-virgin olive oil can

Clockwise: The Museum of Rural Life of Masseria Brancati in Ostuni, Italy; A building on land owned by Angelo Silibello, a restaurateur in Ceglie Messapica; The villa at Chiarentana in Tuscany; Workers collect olives in the field of Chiarentana farm.

include no chemicals and must have an acidity level of less than 0.8 per cent.

artichoke,” said Filippo Alampi of Fattoria

of Florence; this is pretty much the end

Less technically, “when you taste the oil,

Ramerino. “That’s a good Tuscan oil.”

of the line,” my friend John Voigtmann

you must smell leaves of tomato and wild

“There’s no olive oil more or less north

A few days later, I found myself at Il Palagio, a sprawling estate in Figline Valdarno that makes wine, honey and olive oil but is most famous for its owners: Sting and his wife, Trudie Styler, bought Il Palagio in 1997 and have been making organic olive oil there since 1999. “In Italy, we say, the bread of one day, the oil of one month, the wine of one year,” said Paolo Rossi, the property manager, establishing parameters for freshness and essentially articulating my entire Italian summer diet. “Olive trees are a generous plant. Here in Tuscany, one tree can produce one litre. In Puglia, one tree can produce 30 litres. If you go to Puglia, you will see trees so big you need three people to hug them. You won’t believe your eyes.”

July 2015

Essentials

Technology

Hunt for the Star Eaters

Astronomers are trying to prove that there is a supermassive black hole at the centre of the Milky Way, which has swallowed the equivalent of four million suns, reports Dennis Overbye.

r Sheperd Doeleman’s project to take the first-ever picture of a black hole wasn’t going well.

For one thing, his telescope kept filling with snow. For two weeks at the end of March, Volcan Sierra Negra, an extinct 4,570-metre volcano also known as Tliltepetl in southern Mexico, was the nerve centre for the largest telescope ever conceived, a network of antennas that reaches from Spain to Hawaii universe. In short, that black holes – objects

Stephen Hawking, are still arguing about

so dense that not even light can escape their

just what happens inside a black hole and

its job was to see what has been until now

maws – are real. That space and time as we

the ultimate fate of whatever falls in.

unseeable: an exquisitely small, dark circle

know them can come to an end right under

of nothing, a tiny shadow in the glow of

our noses.

to Chile. Known as the Event Horizon Telescope,

radiation at the centre of the Milky Way

Conversely, they could produce evidence

Nearly every galaxy seems to harbour one of these dark monsters, millions or even billions of times as massive as the sun,

galaxy. There, astronomers think, lurks a

that Einstein’s theory of gravity, general

squatting at its centre. Black holes lie with

supermassive black hole, a trap door into

relativity, the rule of rules for the universe,

their mouths open, and when something – a

which the equivalent of four million suns

needs fixing for the first time since it was

wayward star or gas cloud – falls toward

has evidently disappeared.

introduced a hundred years ago.

it, it is heated to billions of degrees as it swirls in a doughnut called an accretion

If Doeleman and his colleagues succeed,

Astronomers today agree that space is

the images they capture will be in textbooks

sprinkled with massive objects that emit no

disk around the cosmic drain. Black holes

forever, as definitive evidence of Einstein’s

light at all. Many of them are supposed to

are sloppy eaters, and when they feed, jets

weirdest prediction: that space-time could

be the remnants of massive stars that have

of X-rays and radio energy can be squeezed

curl up like a magician’s cloak around

burned out, collapsed and imploded.

from the accretion disks. Astronomers

massive objects and vanish them from the

Generations of theorists, including

believe this is what produces the energies Portfolio

no visible or infrared light. If this is not a black hole, no one knows what it could be. “That is the strongest evidence so far for an event horizon,” said Doeleman, using the name for the boundary of a black hole that is the point of no return. The Sagittarius black hole, if it is there, would appear as a ghostly dark circle amid a haze of radio waves, theorists say. Its exact shape would depend on details like how fast the hole is spinning. The black hole’s own gravity will distort and magnify its image, resulting in a shadow about 80 million kilometres across, appearing about as big from here as an orange would on the moon. The proof would be if astronomers could determine that the shadow, the graveyard of four million suns, really was that small. In 2005, a group led by Shen Zhiqiang of the Shanghai Astronomical Observatory narrowed the diameter of Sagittarius A* to a cloud of energy less than 145 million kilometres across, about twice the size of the long-sought shadow. But there was a problem getting measurements any finer. The ionised electrons and protons in interstellar space scattered the radio waves into a blur that obscured details of the source. Enter the Event Horizon Telescope, which involves 20 universities, observatories, research institutions and of quasars, brilliant beacons in the cores of galaxies that far outshine the starry regions in which they dwell. “Paradoxically, that makes black holes some of the brightest things in the sky,” said Doeleman, a 48-year-old researcher from the Massachusetts Institute of Technology’s Haystack Observatory and the HarvardSmithsonian Centre for Astrophysics. The centre of the Milky Way, 26,000 light-years from here, coincides with a faint source of radio noise called Sagittarius A*. Astronomers tracking the orbits of stars circling the centre have been able to calculate that whatever is at the centre has the mass of four million suns. But it emits July 2015

Above: The Large Millimetre Telescope at Pico De Orizaba National Park. Below: Scientists inside the Large Millimetre Telescope check for ice on its dish, which prevents the instrument from connecting up with other telescopes.

Essentials

Technology

government agencies, and more than a

across the sky from the various observatories,

hundred scientists.

the astronomers could reconstruct a map of

The observing run in March was the first time the group would have enough telescopes – seven radio telescopes, on six

what was happening out there, thousands of millions of light-years away. Nobody would know if the whole

mountains – to begin to hope they could

telescope had worked until the data

glimpse the black hole. They would have five

recorded from each instrument had been

chances over a period of two weeks. On each

correlated in a supercomputer back at

night, they hoped to have two black holes

M.I.T., a process that would take months.

in their sights: Sagittarius A*, and one in a

The first setback occurred when the

giant galaxy known as M87.

receiver of the radio telescope in Chile died. It had to be sent back to Europe for

In late March, Doeleman’s

repairs. This put more of an onus on the

collaborators were camped out on

Mexican telescope.

similarly uncomfortable mountains in

Sierra Negra was a natural choice as the

Chile, Hawaii, California, Arizona and

fulcrum of the Event Horizon Telescope. But

Spain, waiting for his signal, based on

snow kept collecting on its dish. Then there

weather forecasts and the state of their

was the matter of a mysterious electrical

equipment to begin observing. All the

buzz afflicting the telescope’s new receiver.

telescopes would point in unison at M87,

As a result, the Mexican telescope had to sit

and then at the galactic centre.

out the first official observing run.

If everything went right they would see

The telescope’s chances of helping to

that any given wavefront would arrive bearing

produce a black hole image were hanging

the marks of interference, a complicated

in the balance. The black-hole party now

pattern of crests and troughs – “fringes,” in the

became a race against time. One night,

astronomical vernacular. With enough fringes

the Mexican telescope was shut out by the

from baselines going in different directions

weather completely. Portfolio

with duct tape. The scientists were now down to their last official chance to join the Event Horizon Telescope party. The weather remained unpromising, but they went up Sierra Negra anyway. Then they clicked with the Event Horizon Telescope for good, first for Virgo and then for Sagittarius, collecting data until dawn. That night marked the end of the Event Horizon Telescope’s official observing run, but as it happened, there was an encore. California, Arizona and Mexico were available for an extra night. That was the best night of all. As a result, some 200 terabytes of data are now at M.I.T. They showed striking signs of an interference pattern. The fringes were there. If the scientists are lucky, sometime later this summer or autumn, they might see emerging from the computers at M.I.T. the first rough image of a black hole. “We can see a black hole eat in real time,” Doeleman The expert on the receiver, Gopal

said. “If something is dancing around the

Narayanan of the University of Massachusetts,

edge of the black hole, it doesn’t get any

took it apart and traced the troublesome noise

more fundamental than that. Hopefully

to mechanical vibrations, which he treated

we’ll find something amazing.”

Above and below: The Large Millimetre Telescope, surrounded by clouds, on the peak of the Sierra Negra volcano near Ciudad Serdan, Mexico.

Above left: Astronomer Sheperd Doeleman, with the Massachusetts Institute of Technology, makes notes while monitoring data in the control room. Above: Doeleman works inside the heart of the Large Millimetre Telescope to verify the alignment of a radio wave receiver. Left: Gopal Narayanan and Doeleman work on adjustments to the receiver.

July 2015

Essentials

Culture

Tea Culture Blossoms in New York Americans have discovered a passion for tea with retail sales soaring to nearly $11 billion last year, reports Susan Chira.

or decades, to be a tea lover in the

flavours; the calming, often meditative,

United States was to wander in

nature of tea drinking; and the subtleties

a wasteland. Even as Americans

Beckwith set out an oolong, a partly

of tea growing, processing and aging.

oxidised tea prized by enthusiasts for

discovered fine coffee, with specialty coffee

Many can remember the moment they

its complexity of flavours. Picking up

shops springing up across the country and

realised drinking tea could go beyond

the steeped leaves, he pointed to bite

debates over the merits of pour-over and

black tea bags.

marks. They are made, he explained, by

Weil was 17 when he visited Japan in

a small green insect called a leafhopper.

1959 and discovered sencha and matcha.

The bites expose that part of the leaf to

For Christopher Day, who runs the tea

air, changing its chemistry and giving the

by old people and sick people,” said Dr

programme at Eleven Madison Park,

resulting tea a distinctive sweetness that

Andrew Weil, 72, director of the Arizona

the epiphany was a sip of rose tea in a

has traces of honey.

Centre for Integrative Medicine. “It was

Chinese apothecary on a back street in

Lipton and it was terrible.”

Philadelphia. And for Sebastian Beckwith,

the same gong fu style of tea serving to the

a tea importer, it came while shepherding

more formal and less leisurely demands of a

tea salons offer a dazzling range of loose

tourists around the tea plantations of

restaurant. Its offers change with the season,

leaf teas from around the world, sponsor

Bhutan and Sikkim when he served as an

with 32 types of tea served by the pot and

tea preparation classes and sell artisan

adventure travel guide.

five teas available for tableside tastings for

cold brew, tea remained a largely pedestrian choice among mass-produced brands. “When I was growing up, tea was drunk

No longer. Online tea purveyors and

teaware. Chain-store tea salons are

and encyclopaedic tea maven, presides over

Starbucks bought Teavana, which has 301

tea tastings in a spare, serene apartment

stores in the United States.

and office in the Flatiron district. On one wall is an oak pharmacy chest with dozens

that retail sales of tea have soared from

of small drawers containing tea samples.

just under $2 billion in 1990 to nearly

On the other, a glass container of water

$11 billion last year, and a broad array

supplies his bubbling teapot.

of brands and styles can be found on supermarket shelves. In New York, high-end restaurants such

One recent morning, he set out the elements of a Chinese style of tea service known as gong fu cha: a slatted wooden

as Eleven Madison Park, Atera, Blanca

tea tray to catch excess water and tea, a

and Betony have extensive tea lists, often

lidded dish called a gaiwan for steeping,

with tasting notes to match. Matcha in

a pitcher to hold the steeped tea, and

particular is in vogue; the frothy powdered

a few small porcelain teacups. As he

Japanese green tea is featured at shops like

deftly poured, steeped, discarded and

MatchaBar in Williamsburg, Brooklyn.

resteeped, he provided a guided tour of

Tea’s partisans cherish its complexity of

At Eleven Madison, Day has adapted

Beckwith, an engaging, unpretentious

appearing across the country, too: In 2012,

The Tea Association of the USA reported

processed and tasted.

For decades, to be a tea lover in the United States was to wander in a wasteland. Even as Americans discovered fine coffee, with specialty coffee shops springing up across the country and debates over the merits of pour-over and cold brew, tea remained a largely pedestrian choice among mass-produced brands.

tea, describing how it is grown, picked, Portfolio

July 2015

Clockwise: Todd Chatterton, an assistant server at Eleven Madison Park, prepares the second steeping of High Mountain Oolong during tableside tea service; Sebastian Beckwith, founder of In Pursuit of Tea, at his home in New York; A large iced matcha tea at the MatchaBar; Chris Day, dining room manager at Eleven Madison Park, leads the tableside tea service team at the restaurant.

Moonen, and started the tea service nearly

height of the teamaker’s art,” in Day’s

five years ago at Eleven Madison, where

estimation, because of the way varying

he is the dining room manager. “Why is it

oxidation and roasting compress and

that we as restaurant professionals spend

layer the flavours), a black tea and a 2003

so much time making sure every aspect of

aged pu-erh.

a meal is perfect and then at the end serve tea bags in a wooden box?” he said. He has created the opposite experience

But there are as many settings to enjoy great tea in New York as there are tea varieties. Far from the soaring ceilings of

with his tableside tastings, where a

Eleven Madison Park, a modest storefront

waiter wheels out a cart with the same

on Flushing’s Main Street houses Fang

basic equipment as Beckwith’s to present

Gourmet Tea, long a gathering spot for

tea programmes in New York City in 2002,

and prepare the teas. This spring, the

Chinese tea aficionados. Fang, run by a

while working at RM, with chef Rick

restaurant offers three oolongs (“The

Taiwanese family whose expertise spans

two people priced from $26 to $65. Day began one of the earliest restaurant

Portfolio

B O O D L E S . C O M / B L O S S O M WAT C H

Essentials

Culture

Left: Tea is picked at a farm in the Sri Lankan highlands.

infusion time. Western tea service tends to use less tea and steep longer, while the Chinese use more tea and steep very quickly, as little as 15 to 30 seconds. The biggest mistake made in serving tea is water temperature, said Christopher Day, who runs the tea programme at Eleven Madison Park. Water that is too hot can burn the leaves and spoil the flavour. Avoid

generations, offers tastes of more than

there are as many settings to enjoy great tea in New York as there are tea varieties. Far from the soaring ceilings of eleven Madison park, a modest storefront on Flushing’s Main street houses Fang Gourmet tea, long a gathering spot for Chinese tea aficionados.

putting tea in balls or infusers, since they

drinkers of Weil’s childhood. “There is a

vessel and pouring into small cups. Matcha

to stop oxidation. These teas require the

tea culture developing in America,” he said,

is typically served in bowls. For regular

lowest brewing temperatures, about 76°C

“that was never here before.”

green tea leaves, the Japanese often use a

to 85°C degrees.

70 teas at $5 to $10 for several steepings, and stocks dozens more. Pierra Cheung, gentle and authoritative, pours tea from a gaiwan in a room decorated with Chinese paintings and glass cases of prized teaware that can run hundreds of dollars (or, in some cases, thousands). Back in Manhattan, Ippodo, a branch of a renowned Kyoto tea exporter, offers a serene alternative. Here a Japanesespeaking server whisks the matcha in pottery bowls with a chasen, or bamboo whisk, much as the Japanese have done for centuries for the formal tea ceremony.

kyusu, a one-handled teapot with a built-in

Photos: Getty Images

Tea can be prepared in several styles,

expand and release their full flavor. For iced tea, Beckwith recommends cold infusion. Take one tablespoon of loose tea of any kind, put it in a pitcher of cold water, then leave it in the refrigerator overnight. White tea is picked and air-dried, with minimal processing and the lowest level of caffeine. It is often grown in the Chinese provinces Yunnan and Fujian. The water used to brew the tea should be around 82°C degrees. Green tea is picked, then quickly heated

It’s a long way from the elderly tea

How tHe experts Brew tea

are too small to allow the tea leaves to

strainer. Tea importer Sebastian Beckwith said

Matcha is powdered green tea whipped in hot water. Because the tea is swallowed directly, it has higher levels of caffeine than

ranging from the formal Japanese

tea steeping varies according to water

other green tea. Oolong is partly oxidised

tea ceremony to the

temperature, the amount of leaves and

and often deliberately bruised to release

Chinese method of

oils and flavour, then heated to set the

steeping in a gaiwan

taste. Brew them at 82 to 98°C. Black tea leaves, the style best known to the West, are completely oxidized. Harvested leaves are spread out and allowed to wilt, then rolled, which exposes oils to the air. Then they are fired. Brew them near boiling, 98°C. Pu-erh is grown in China’s Yunnan province from a large leaf variety. Pu-erh is typically produced in two styles, raw (sheng) and cooked (shu), and is often aged to mellow its flavour. Pu-erh should be brewed at a rolling boil, 100 degrees. Portfolio

Essentials

Profile

e controls thousands of movie

Hollywood’s biggest stars fly to China when

screens around the world,

he summons them.

serving more filmgoers than

China’s Intersection of Business and Power Wang Jianlin, Asia’s richest man, has built up an extensive international real estate and entertainment empire, reports Michael Forsythe.

How the son of a foot soldier in Mao

any other cinema chain. He has invested

Zedong’s Communist Revolution catapulted

billions of dollars in real estate projects

into the top tier of the global elite is an

across four continents. He is building

archetypal story of China’s transition to

skyscrapers that will redraw the skylines of

capitalism and the outsize opportunities it

London and Chicago. He is shopping for a

presents those with talent or connections –

Hollywood studio.

or, in Wang’s case, both. His story, though,

There are as many as 430 billionaires in

is also singular: He built one of the world’s

China, more than in any country besides the

most valuable real estate portfolios in a nation

United States. But Wang Jianlin stands out,

where the state retains ownership of all land.

and not just because he is the richest person

Entrepreneurs have powered rapid growth

in Asia, with a fortune estimated at more

in China for more than three decades. But

than $35 billion.

even the most successful businessmen

As his real estate and entertainment

here must still reach some accommodation

empire expands overseas, Wang, 60,

with the party, which only a generation ago

has emerged as the rare private-sector

operated a socialist planned economy.

tycoon in a position to advance Beijing’s

Wang says he has prospered by delivering

interests abroad, with clout in industries

what ambitious party officials crave:

and communities around the world. Prime

showcase real estate developments that

ministers send him thank-you notes, and

propel economic growth and bolster their Portfolio

careers. In return, he says, the officials

In 2012, Wang purchased AMC

sell him the rights to develop choice

Entertainment Holdings, the second-largest

parcels of land at prices far below what his

theatre chain in the United States. By year’s

competitors pay.

end, his empire in China would include

to put a lot of effort into developing the

66 Wanda Plazas, 38 five-star hotels, 980

cultural industry,” said Zhang Lihua, a

known in China for its signature Wanda

cinema screens and 57 department stores,

scholar at the Tsinghua-Carnegie Centre for

Plazas, massive shopping complexes

not to mention 63 karaoke saloons. Within a

Global Policy in Beijing.

with cinemas, office towers, hotels and

year, he would break ground on an $8 billion

apartments. Since building the first one

movie studio and theme park in the coastal

industry, Wanda has opened a series of

in the north-eastern city of Changchun

city of Qingdao.

amusement parks that promote Chinese

His conglomerate, Wanda Group, is best

in 2002, he has opened more than 100 of

Wang has emerged as an outspoken

soft power and global cultural influence.” “After this document, Wanda started

In addition to investing in the movie

culture, including one that features a

them in at least 70 other Chinese cities,

advocate for his homeland. In interviews and

building in the shape of a Chinese teapot

generating the revenue that now finances

speeches, he tends to present himself as the

and that Wang says will compete with a

his ambitions abroad.

pragmatic face of big business.

Disneyland under construction in Shanghai.

But there is an aspect of his relationship

“Wang Jianlin is a perfect instrument

“No matter how good Disney is, it is

with the authorities that Wang never raises

for that from the party’s point of view,” said

still American culture,” he said after the

in interviews and that has gone unreported

Joseph Nye, the Harvard professor who

groundbreaking ceremony last year. “We

in the many accounts of his success

coined the term “soft power”.

hope to use Chinese culture.”

of some of the nation’s most powerful

Wang is effective in part because

the American management team and

politicians and their business associates own

he is no longer simply a Chinese real

emphasised that his company would not

significant stakes in his company.

published in China and abroad: Relatives

When Wang bought AMC, he retained

estate developer. As Beijing sought to

dictate what films were shown in American

There is no indication that any of the

cool its property sector in recent years, he

theatres. But with China forecast to surpass

politicians whose relatives and business

diversified by shifting investments abroad

North America in box office revenue by

associates owned shares in Wanda

and into the culture and entertainment

2018, Hollywood is already focused on

intervened on the company’s behalf in any

sector, including his network of movie

serving Chinese filmgoers and satisfying the

of its dealings with the government. Nor is

theatres, which became the world’s largest

censors who determine what foreign films

there evidence that any of the politicians

in 2012 with the purchase of AMC’s 4,000-

can be shown in Chinese theatres.

personally benefited from the windfall that

plus screens in the United States.

these investors reaped.

The strategy coincided with a policy push

Wang often notes that the Chinese market will be twice the size of the North American

Wang declined an interview request

by the Chinese leadership to expand the

market by 2023. Foreigners need to heed this

and did not respond to written questions

nation’s cultural influence both overseas

new reality, he warned when he hosted the

submitted to Wanda. But in public remarks,

and at home, where younger generations

2013 groundbreaking of his Qingdao studio.

he often uses the same phrase to describe

have increasingly turned to Western music,

how he manages his relationship with the

television and films.

authorities: “Stay close to the government and distant from politics.” “It’s a fact that China’s economy is government-led, and the real estate industry depends on approvals, so if you say you can ignore the government in this business, Photo: Getty Images

“urgency for China to strengthen its cultural

I’d say that’s impossible,” Wang told state television in a February interview. “I’d say it’s hypocritical and fake to say that. But at the same time, for example, we don’t pay bribes.” Opposite page: Wang Jianlin, chairman of the Wanda Group, in his office in Beijing. Right: Wanda Group is best known for its Wanda Plazas, which are massive shopping complexes. July 2015

A communiqué issued by the party’s Central Committee in October 2011 cited an

“Those in the world film industry who realise this first and are among the first to cooperate with China,” he said, “will be the first to reap the benefits.”

Essentials

Heritage

3,000-Year-Old Fishing Method Is Waning

ÂŠ 2015 New York Times News Service

Traditional trap fishing for bluefin tuna in the Mediterranean is waning due to quotas and market demands, reports Raphael Minder.

Portfolio

July 2015

Essentials

Heritage

Above: A fisherman loads tuna onto a ship while fishing with a technique known as almadraba. Left: Bluefin tuna were surrounded by fishing nets in a technique known as almadraba, as the fishing season opened off the coast of Zahara de los Atunes, Cadiz province, Spain. Below: Atlantic bluefin tuna are lifted by a crane during the recent opening of tuna-fishing season off the coast of Barbate, Cadiz province, Spain.

he fishing boats, swaying

the oldest form of industrial fishing

in the narrow strait that

in the world, dating 3,000 years to

connects the Atlantic to

the Phoenicians. Even if the tuna’s

the Mediterranean, manoeuvre one

final struggle and killing with a knife

recent morning around an intricate

can appear violent, the almadraba

architecture of nets they had laid as

has been praised as a sustainable way

a trap. Then the fishermen lifted just

of fishing. While the boats and nets

one section from the water, heavy

have been modernised, the method

with their prize.

itself has remained largely the same

Dozens of bluefin tuna rose to the choppy surface, thrashing wildly until,

over millenia. But change is slowly underway. In

exhausted and asphyxiated, the fish

response to fishing quotas and the

gave up the fight, and the fishermen

demands of consumers in Japan,

hoisted them onboard by the tail.

the world’s largest tuna market, the

This trap-fishing method, known as almadraba in Spanish, is considered

companies that run the almadraba are shifting to “ranch fishing” to help Portfolio

fatten the tuna, rather than lifting and

by the Committee on Fisheries of the

waters of the Mediterranean to spawn after

killing their catch.

European Parliament.

building up blubber during their winter in the colder Atlantic.

The shift to ranching is “putting at

Rafael Márquez, the second officer of

risk a very traditional fishing method,

the Cabo Plata almadraba, said he was the

because trying to fatten fish is really

fourth generation in his family to be part of

Pedro Muñoz, A PArtner At

different to the original goal,” said Carlos

an almadraba crew. “We’ve co-existed for

Petaca Chico, the almadraba company that

Montero, fisheries manager for Spain

3,000 years with this species – and certainly

now ranches four-fifths of its tuna, said

and Portugal at the Marine Stewardship

as long as we can remember in my family,”

fishing quotas had pushed companies to

Council, an NGO.

Márquez said.

switch to ranching to remain profitable. For

AlreAdy, one of the four

seasonal contract – and then find other work

catch some 1,000 kilograms of tuna, about

almadraba companies operating along

for the rest of the year or, more likely, claim

half of what they hoisted a decade ago.

Spain’s southern coast has all but stopped

unemployment compensation. The southern

the levantá, or hoisting of the trap, the

Spanish region of Andalusia has a jobless

just be relying on our old fishing ways,”

most dramatic and spectacular part of

rate of 34 per cent.

Muñoz said. “My dream is to reverse the

The almadraba fishermen work on a

the almadraba. The company still uses

“The only real change is that it used to

2015, Spain’s almadrabas were allowed to

“If they weren’t such quotas, we would

trend and go back only to wild tuna, but

a labyrinth of nets to trap the fish, but it

be pretty easy to find another job around

dreaming is for free, while running a

channels the tuna to an adjacent open-

the port during the offseason, but it’s now

business requires money.” In fact, some executives argue that quotas

water pool, where they are ranched for four

have become unnecessary as tuna have

months before being killed, frozen and shipped to Japan. Other almadraba companies are following suit. “Farmed tuna has more fat than wild tuna – and the Japanese like that,” said Tetsuya Inagaki, a manager at Maruha Nichiro, one of Japan’s largest fish distributors. So valued is the bluefin that by the

“farmed tuna has more fat than wild tuna – and the Japanese like that,” said tetsuya Inagaki, a manager at Maruha nichiro, one of Japan’s largest fish distributors.

returned en masse to the Mediterranean. Last November, the international commission that monitors tuna fishing agreed to raise the catch by 20 per cent – with strong backing from European fishermen. The European Commissioner for fisheries, Karmenu Vella, said in May that “bluefin tuna, an emblematic stock nearing collapse, is back to life.”

1990s stocks were depleted by overfishing,

Still, Montero of the Marine Stewardship

including by tuna boats that drag purse seines, or large walls of netting that can

almost impossible,” said Fernando Mendoza,

Council, which runs a sustainable fishing

sweep up an entire school. In 2006, tuna-

who retired last year after 40 years of

certification programme, argued that it

fishing nations responded by agreeing

almadraba fishing.

would be “very wrong” to declare victory in

to strict fishing quotas under a 15-year

The almadraba season starts in

efforts to protect the bluefin tuna. “We’re

recovery plan. That has helped stocks

February and runs six months, mostly

on the right path but not there yet,” he said.

recover somewhat, but the extraordinarily

spent on assembling and then dismantling

He also noted that, before tough controls

high value of the bluefin means illegal and

its complex structure of nets and anchors.

came into force, almadraba companies had

The nets form chambers through which

underreported their catch, like others in the

unreported fishing continues. But the almadraba fishermen say their

the tuna swim until they are trapped in the

fishing industry. For now, however, tuna ranching is on the

method has been unfairly punished for

chamber that is hoisted up. The fishermen

the past fishing excesses of others, not

even drop white canvas sheets into the

rise, according to fishing experts, however

least because in their method, only adult

water to mimic the underbelly of an orca,

attached almadraba fishermen are to their

tuna – weighing on average around 200

the tuna’s predator, and help drive the fish

ancient hoisting and killing methods.

kilograms each – are trapped and lifted in

to the last chamber.

their large mesh nets.

“Setting up an almadraba is like an

“Traditions are very important, but pricing drives the market,” said Alfonso Vidal, a

architectural project, using all sorts of

Spanish fishing inspector. “A migratory fish

mankind has proven itself to be as sound,

material, from steel to rubber,” Márquez

doesn’t build up fat in the same way if stuck

efficient, selective and yet so sustainable

said. The fishing itself only takes place

in a pool, but I’d also be lying if I said that

and environmental-friendly,” said a study

around May, when the tuna swim through

I could easily taste the difference between

on the almadraba published in April

the Strait of Gibraltar into the warmer

wild and ranched tuna.”

“No other fishing gear in the history of

July 2015

Essentials

Other Business

Car Propelled by Evaporation Researchers at Columbia University in New York have built a miniature car that draws on the process of evaporation to propel itself along, as well as an evaporationdriven generator that powers a flashing LED lamp. The inventions pave the way for a new generation of renewable devices that extract energy from natural evaporation and transform it into something useful. Ozgur Sahin, who led the research, said the machines were cheap and could draw energy from water as it evaporates continuously from the surfaces of lakes and oceans. The machines build on Sahin’s discovery last year that spores of common soil bacteria swell when they absorb water in humid environments and shrink when they release the water in drier air. The change in spore size can be used to push and pull objects.

Photo: Getty Images

Protecting Sri Lanka’s Mangroves Sri Lanka is to become the first nation in

any more being cut down in Sri Lanka

the world to protect all its mangroves.

and to boost some of the poorest

Mangroves are an important

communities in the world, women will

protection against climate change as

be offered small loans and training

they sequester up to five times more

to start businesses. In return for the

carbon than other forests, area for area.

microloans, 15,000 women – including

They protect coastlines against flooding,

thousands of widows from the civil war

including tsunamis, and provide vital

– will be expected to stop using the trees

habitat for marine animals.

for firewood and to guard the forests

In an initiative designed to prevent

Lego People Are Unique

against the trademark protection of

Lego has won a trademark battle after a

its figures as a three-dimensional

court ruled that its mini-figures should

trademark in 2000 after protection

continue to be classed as protected

under a technical patent registered in

shapes, thereby maintaining their

the 1970s came to an end. Best-Lock,

position in toytown.

which has sold figures similar to the Lego

near their homes.

Lego’s figures. The court has backed Lego’s argument that its mini-figures are sufficiently distinctive in character to be more than just building bricks. The Danish company registered

The European court of justice (ECJ)

toys around the world since 1998, first

rejected an attempt by Best-Lock, a

attempted to get the trademark revoked

Lancashire-based toymaker, to appeal

in 2012. Portfolio