Portfolio | May 2014 by Motivate Media Group

Portfolio

Issue 101 ■ May 2014

Exclusive to Emirates First Class and Business Class

EUROPEAN STEEL A Return to Profit? WRONG TRACK Italy’s Divisive Railway BLACK GOLD France’s Truffle War

Kevin Movie Mogul

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This issue MAY 2014

Portfolio

Exclusive to Emirates First Class and Business Class

Cover Story 28 Bullish on the Big Screen Kevin Tsujihara, who took over as Warner Bothers’ CEO after a tough three-way succession battle last March, was largely an unknown in the entertainment industry. However, since his appointment he has proven that he’s not short of ambition and has an ability to get things done.

Features 36 A Divisive Track

50 A Respite for Europe’s Steel Industry

Italy has become divided over the Treno Alta Velocita rail

After a prolonged slump, European steelmakers are both

project that is meant to link Italy and France and form part of

wary and optimistic that an upturn is ahead.

a trans-European railway route.

42 Au Revoir, Entrepreneurs

54 A Tight Grip On Iceland’s Banks Iceland allowed its banks to go under and from the ashes a more conservative banking sector has emerged.

Regulatory hurdles, the stigma of failure and high taxes are pushing France’s entrepreneurs to try their luck in other countries.

58 No More Siesta? A pro-efficiency movement is advocating a 9-to-5 working

48 Web Banks Draw China’s Savers

day for Spain, but it will be difficult to break a habit deeply ingrained in culture.

China’s internet companies are luring savers with higher interest rates than the state-run banks pay.

Portfolio

Exclusive to Emirates First Class and Business Class

Essentials 63 Water World Only surly travellers could complain about the infamous hide tides that occasionally swamp the beauty of Venice.

68 France Rallies Around Its Truffles Chinese imports and diminishing harvests of black truffles have turned attention to the lesser-known Burgundy truffle.

72 Tap Your Phone to Pay

Around the world different technologies are moving us closer to a cashless society.

78 End of the ‘Sea Women’? Haenyeo, or ‘sea woman’, have traditionally supported their families on the South Korean island of Jeju by free-diving in the perilous sea. But this tradition is now dying out.

82 Shakespeare Behind Barbed Wire

Syrian refugee children performing King Lear in Jordan’s Zaatari refugee camp brought a brief glimpse of hope in an otherwise bleak existence.

86 Poise and Character Audi’s high-performance limousine, the S8, is a luxurious executive rocket that will put a smile on your face.

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

Departments 13 Notebook World business in a nutshell.

19 Observer Spotting and analysing business trends.

26 Column: Will Hutton Has CEO Pay Gone too Far?

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Portfolio

Notebook

getty images

BUSINESS NEWS IN BRIEF

South Africa’s $18 Billion Rail Investment Shongololo, whoSe name

While South Africa is the world’s sixth-

plans with companies shipping less. Transnet’s upgrades have already shown

means millipede in Zulu, is a train

largest coal exporter, the country hosts the

that carries 200 coal wagons and can

biggest single-site terminal for the fuel.

results, delivering 6.9 million tons of coal

haul 16,800 metric tons of coal at 80

The Richards Bay Coal Terminal, located

to the terminal in August, the best month

kilometres per hour non-stop to the

on the northeastern coast of the country

in two years. The terminal shipped about

country’s main export port.

has yet to match its annual capacity of

70 million tons of coal last year, a record.

The Shongololo is part of a $18.48 billion rail overhaul and expansion plan aimed at boosting exports of coal,

91 million tons because it says the coal couldn’t get there. Commodities exports in Africa’s biggest

Transnet awarded a 2.6 billion rand contract to China’s CSR Zhuzhou for 95 locomotives, 85 of which will be built at

manganese and other commodities

economy rose 5.6 per cent to 384 billion

Transnet Engineering’s unit in Pretoria,

from Africa’s biggest economy. It’s being

rand in 2013, according to data from

the capital.

rolled out by Transnet SOC Ltd, the

the country’s Department of Mineral

state-owned ports and rail operator,

Resources, and the investment is a bet on

kilometres of track, a project that includes

tapping the expertise of GE, Bombardier,

further growth. South Africa shipped 75

replacing wooden ties with concrete

CSR Zhuzhou Electric Locomotives

per cent of its coal exports to Asia and 21

ones along the rail lines. This will let

and China CNR Corporation Ltd to

per cent to Europe in 2013, according to

the Shongololo, which carries eight AC/

manufacture the locomotives locally and

data from the terminal’s website. A drop

DC locomotives, to shave the journey to

increase freight capacity.

in coal demand could slow the expansion

Richard’s Bay to eight hours from 10. n

May 2014

Transnet is improving more than 20,000

Notebook EMIRATES OPENS €2.53M ROME LOUNGE

Numbers Game

billion offered by Facebook for Oculus

VR, maker of virtual-reality glasses for gaming, marks

Emirates, the global

the company’s foray into

connector of people and

the fast-growing wearable

places, celebrated the

devices arena. Facebook said

opening of its 35th dedicated

virtual-reality technology is

lounge at Leonardo da Vinci

the next big social media and

Airport in Rome on 8 April. The Emirates Lounge at

communications platform.

Leonardo Da Vinci Airport

£20

Faberge egg,

chanced upon by a US scrap metal dealer at a market stall in the Midwest, was bought for a mere £8,000. The rare relic belonging to Russia’s royal family was a gift from Tsar Alexander III to his wife in 1887.

7.45

represents a ¤2.53 million

million priced royal

million barrels of crude produced

-a-day salary places Mark Zuckerberg in the ranks of a handful of wealthy CEOs, including Apple’s late co-founder Steve Jobs, who took home a symbolically negligible base pay. Zuckerberg is worth around $27 billion and ranks as the 22nd richest person in the world according to the Bloomberg Billionaires index.

The World In Figures

by Bloomberg. The increased production has resulted in a decline of US oil imports from

provide a seamless, luxurious travel experience to its premium customers. These include First Class and Business Class customers, as well as Platinum and

Actos. Following the ruling

Gold members of Emirates

Takeda’s shares fell nine per

Skywards – the airline’s

cent – their biggest drop in

frequent flyer programme. Located at Terminal 3 in the airside transit area, the

per cent increase from 2009 according to data compiled

the airline, with the aim to

associated with diabetes drug

five years.

by the US per day marks a 39

investment on the part of

162

IQ score by 13-yearold Neha Ramu in a

-year-old Kristoffer Von

new Emirates Lounge offers

Hassle from San Diego

seating for 156 customers

Mensa IQ test for people under

has been praised by Microsoft

covering an indoor area

18 puts her in the league of the

after he found a flaw in the

of 920 square metres. It

UK’s brightest people. Scoring

Xbox security system. When

features a contemporary

the highest mark possible makes

the login screen appeared on

design and the same

Neha smarter than Stephen

his father’s Xbox Live account

attention to detail as all of

Hawking.

all Kristoffer had to do was

Emirates’ lounges.

press the space button several times, which let him in by a back door without needing to use the password. the Organisation of Petroleum Exporting Countries dominated by Saudi Arabia. US energy independence is expected to

billion fine has been imposed on Japan’s

rise with the forecast set to

Takeda Pharmaceutical company

reach 9.6 million barrels a day

and its US partner Eli Lilly for

in 2016.

hiding a possible cancer risk Portfolio

Chinese Growth for VolVo Volvo Car Group, the Swedish luxury

Gothenburg-based

carmaker owned by Zhejiang Geely

manufacturer plans

Holding Group, expects China to surpass

to almost double

the US as its largest market this year.

deliveries to 800,000 vehicles by 2020.

estimated 20 per cent growth in China’s

That compares to a

luxury car sales this year and deliver

goal by luxury-auto

at least 80,000 vehicles in the country,

industry leader BMW

according to a statement by the carmaker.

AG to sell two million

The company will also make the XC

cars this year.

Classic, a China variant of the XC90 that

The Swedish manufacturer delivered

getty images

Volvo Cars will probably outpace the

billion kronor ($292 million) from 66 million kronor in 2012 as sales in China

will cease production in Sweden this year,

427,840 vehicles worldwide in 2013. In

leaped 46 per cent and a reduction in

at its plant in Daqing.

addition to rapid growth in China, Chief

operating costs more than made up for

Executive Officer Hakan Samuelsson also

losses in the first half. Even so, revenue

around safety and reliability, is in the

has said he expects Volvo Cars’ US and

fell 1.8 per cent to 122.2 billion kronor,

midst of a four-year, $15 billion project

European sales to rise in line with those

while deliveries rose 1.4 per cent. The

to develop new models after Ford Motor

markets in 2014.

operating margin at 1.6 per cent of

The carmaker, which built a reputation

Company sold the company in 2010. The

Operating profit last year surged to 1.92

revenue was short of BMW’s 9.4 per cent.

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Notebook DUBAI EVENT: ARABIAN TRAVEL MARKET WEBSITE: ARABIANTRAVELMARKET.COM DATE: 5-8 MAY VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE Arabian Travel Market (ATM) is a leading international travel and tourism event within the Middle East. Exhibiting companies and visitors gain from the networking opportunities available at this trade show. Last year, visitors requested a record 15,000 meetings with different exhibitors, which is indicative of the event’s success in generating business and marketing opportunities. ATM also offers educational programmes delivered by industry experts. One point of discussion will be the impact of Expo 2020 on the UAE’S travel and tourism industry.

EVENT: RETAIL SHOW MIDDLE EAST WEBSITE: TERRAPINN.COM/EXHIBITION/RETAIL-SHOW-MIDDLE-EAST DATE: 13-14 MAY VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE This latest edition of the UAE’s fast growing retail solution show will focus on the major changes in the retail industry due to changing consumer behaviour and technological advances. More than 10,000 attendees – including senior buyers from regional banks, government officials and delegations from the GCC countries – will congregate over the two days. The event schedule incorporates fireside chats with innovators, networking lunches, and the smart cards and payment awards.

DUBAI

United Arab Emirates

EVENT: THE MOBILE SHOW MIDDLE EAST 2014 WEBSITE: TERRAPINN.COM/EXHIBITION/THE-MOBILE-SHOW DATE: 13-14 MAY VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE Get a first hand update on the latest in high-end smartphones, new devices and wearable technology from some of the biggest players in the mobile industry. More than 10,000 global attendees and 50 exhibitors will be attending the event. The year’s line-up of keynote speakers include Hatem Bamatraf, chief technology officer of the Etisalat Group, and Grant Allen, the principle architect of Google, to share their visions for the future of mobile technology.

EVENT: THE MIDDLE EAST WASTE & RECYCLING EXHIBITION WEBSITE: MIDDLEEASTWASTE.AE DATE: 19-21 MAY VENUE: DUBAI WORLD TRADE CENTRE This free to attend event addresses the needs and unique challenges of the waste and recycling industries in the Middle East. It is a platform to meet with the top regional suppliers of waste management and recycling products and equipment. There will be conference sessions where leading industry experts will present their perspective and case studies on strategy, government policies and latest developments affecting the industry.

EVENT: 2014 INDEX WEBSITE: INDEXEXHIBITION.COM DATE: 19-22 MAY VENUE: DUBAI WORLD TRADE CENTRE INDEX (The International Design Exhibition) is an opportunity for retailers, interior designers, architects and contractors to source the very latest interior products from new and up-and-coming design talent, as well as established brands. There will be more than 600 local and international trade suppliers showcasing high-end traditional and modern furniture, furnishing, flooring, lighting and plenty more. More than 20,000 visitors from 105 countries attended the exhibition last year. This year is set to draw even larger numbers through a series of free events and attractive new features including the INDEX Design Talks 2014, INDEX Trend Tour and the INDEX Product Design Awards. Portfolio

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Observer

BUSINESS NEWS IN BRIEF

Bringing 3-D Power to the People Shapeways, a 3-D printing service and online marketplace, is upending the traditional manufacturing process, reports Steven Kurutz.

The firsT Thing Duann scoTT

like South by Southwest Interactive, in

Victoria’s Secret. The designer modelled

does when he arrives at the Shapeways

Austin, Texas, where in March he and his

snowflake angel wings and other pieces

factory in Queens, New York is check the

co-workers took a 3-D scanner to parties.

based on sketches by the Victoria’s Secret

bins. They are yellow and stacked in an all-

(Willing guests were scanned and could

design team, which were then worn by

white room that resembles the interior of a

order a figurine of themselves printed by

the models in the Victoria’s Secret fashion

spaceship, and they contain the latest prints

Shapeways.)

show late last year, garnering attention for

to come out of the machines, which can really stack up. Shapeways, a 3-D printing service and

the designs uploaded to the Shapeways

online marketplace, has been described

website, for the 3-D-modelled

as the Amazon of 3-D printing for its

equivalent of a gold nugget. Impressed

on-demand model, if not its outsize volume:

by a designer’s work, he will call and

The machines spit out about 120,000

offer the use of company resources,

objects a month, a tidal flow of design that

or feature the designer on the

runs from the mundane to the astonishing.

Shapeways blog, or extend an

On a recent day, a quick search through

invitation to a party – or, as he did

the bins revealed a pair of pliable black-

with Bradley Rothenberg,

frame eyeglasses, a scale model of a biplane,

a Manhattan-based architect

an intricately detailed brass ring, enough

and designer, recommend

plastic train cars to form a miniature

the person in question to

railroad and a figurine of two tiny purple

brands with an interest in

women on tiny purple trapezes. To what

3-D printing.

use any of these things will be put, Scott

Scott also spends a good portion of his day searching not just the bins, but all

After seeing Rothenberg

usually has not a clue. But that doesn’t

give a talk about a year

diminish the Christmas-morning grin he

ago, Scott suggested him

gets while he is fishing through them.

to representatives from

Scott, a tall, bearded man of 39 who was born in Australia, holds the title of design evangelist at Shapeways. He judges 3-D design competitions, gives talks at schools and businesses, and attends events May 2014

Shapeways, which printed the nylon plastic pieces, and for Rothenberg.

Observer “I keep my eye on talent,” Scott said. “I’ve always got this group of amazing designers in the back of my mind if someone needs to connect with them.” Other 3-D printing services exist, including Sculpteo and Materialise, but most of them are based in Europe. Kraftwurx, a Houston company, provides on-demand printing and a venue for designers to sell their work, but it doesn’t yet have the robust public presence of Shapeways, which sponsors design contests, courts talented designers and partners with museums. In his role as a Pied Piper for on-demand 3-D printing, Scott has been instrumental in developing that relationship with

Shapeways prints around 120,000 objects per month.

the design community. Some designers,

demand, there were no discouraging

it seems, are one of the trials of modern

like Rothenberg, use the company’s

upfront manufacturing costs; Shapeways

life.) But after uploading a computer-aided

sophisticated, highly accurate printers

also handled time-consuming back-

design (CAD) model to Shapeways, he

to make prototypes or produce their

end processes like billing, shipping and

received an instant production quote and

work. Others, though, are treating the

customer service. Taing simply uploaded a

ordered a few to test. And once he refined

company as an everything-in-one platform:

printable design, set a price above the cost

his design, he sold them. Total Research &

manufacturer, e-retailer and venue for

Shapeways charged her to print and paid

Development: about $15.

propelling their careers.

the 3.5 per cent processing fee out of her

Susan Taing, who started a 3-D design studio called bhold, is one of those who has developed a close partnership with

“I think Shapeways charged $2.50 to

profit. And she was assured that supply

make that button, and I added $1.50,” Gant

would exactly meet demand.

said, for his own profit.

“You don’t have to manage inventory for

With Shapeways handling the

Shapeways. Taing, 33, first experimented

something that may or may not be needed,”

manufacturing and back end, “what you’re

with 3-D printing and modelling as a

she said. “It’s much less wasteful.”

left with is conceptualising the design,” he said. “And documenting it to get your story

hobby, designing simple things like an

Evan Gant, an industrial designer in

earbud cord winder. Last year, she used

Massachusetts, said if not for Shapeways,

Shapeways to print the device, which she

many of the ideas he comes up with in

called the bsnug wrap, and began selling

his spare time would never make it out of

designers and tries to “surface,” from the

the tool through the Shapeways website.

his notebook.

tens of thousands of items for sale on its

“Every few days I got more ideas as to

“To develop a product takes a

out there.” Although Shapeways promotes

site, what it thinks are the best goods,

what I could do with 3-D printing,” said

tremendous amount of time,” he said.

marketing is largely left to the designers,

Taing, whose offerings now include the

“There’s not only initial conception

as are patent issues. Scott’s favourite

bholdable espresso tumbler ($69) and the

and design, but beyond that there’s a

designers to work with, he said, are the

bheard sound pod ($39.50), an acoustic

massive amount of funding, you have to

ones who grasp form and 3-D printing

amplifier for smartphones. “I’d been

find the right manufacturer, you have to

technology, but can also produce a good

thinking about starting a company, and

understand retail.”

video or photography.

It’s unlikely that Gant or any outside

“Once we see someone can do that

It was the Shapeways “lower risk,

investors would have devoted significant

well, we’ll promote them and help them

lower barrier” model, Taing said, that

resources to manufacturing Button 2.0, a

to improve as much as we can,” he said.

made it possible for her to start her own

shirt button with a clip that he designed to

“Because the more successful they are, the

business. Because Shapeways prints on

secure an earbud cord. (Stray earbud cords,

more successful we are.” n

once the concept came, it felt right.”

Portfolio

Observer O N E 2 W AT C H

Dubai Real Estate Andrew Gregory Thorburn Buyers TExT: HildA d’sOuzA

National Australia Bank (NAB), Australia’s fourth-largest lender by market value, promoted insider Andrew Gregory Thorburn to chief executive officer effective 1 August. Since 2008, Thorburn has been the chief executive officer of Bank of New Zealand (BNZ), a subsidiary of NAB. Thorburn replaces Cameron Clyne who is retiring. Thorburn is a “career banker” who has spent 17 years in the industry in both Australia and New Zealand. Fittingly enough, he took over the reigns from Clyne as CEO of the bank’s New Zealand unit. Under his leadership the unit’s cash earnings and deposits increased by more than 40 per cent. NAB chairman Michael Chaney supported the appointment saying, “As CEO of BNZ, Andrew has gained extensive experience in all of the component parts of running a full service commercial bank. BNZ has delivered consistently strong results, reflecting a focused and disciplined approach to implementation of the strategy.” Investors have also welcomed the appointment but stressed that New Zealand-born Thorburn would have to expedite selling the bank’s ailing UK operations that reported losses of as much as $767 million on credit-market investment. Investors feel that any potential upside would be dimmed by the uncertainty around the UK assets. Plus the 48-year-old would have to brace for increased competition in a home loan market growing at its fastest pace since September 2011. Addressing these concern Chaney said, “I’m sure Andrew will be as diligent as Cameron in looking for opportunities to dispose of the UK business.” Chaney described Thorburn as an outstanding banking executive who has been part of the NAB Group executive team responsible for developing the bank’s successful strategy. Other than resolving the UK issues, Thorburn’s priorities will include settling a recent organisational restructure, setting up management accounting systems and pushing ahead with the next generation projects. Discussing these concerns Thorburn, an economics graduate from Auckland University with a masters from the University of Durham, UK said he would start by focusing on NAB’s struggling UK banking operations and further efforts to increase earnings from Australia and New Zealand. In the three months through December, NAB’s profit rose by 11 per cent partly because of an improvement at its UK business and a marked climb in its loans across its operations. Prior to joining BNZ, Thorburn was head of retail banking at NAB.

getty images

Indians continued to remain the top expatriate property buyers in Dubai with their investment reaching nearly Dh6 billion in the first quarter 2014, according data released by Dubai Land Department. British citizens and Pakistanis came in second and third on the expat investor list with investments worth Dh3.145 billion and Dh2.410 billion, respectively. “Indians were at the top spot for international investment, both in terms of the number of investors (2,414) and the amount of expenditure Dh5.895 billion,” DLD said. Total investment in real estate reached Dh35 billion in the first quarter, registering an increase of 57 per cent over the same period last year. The number of individuals (133 nationalities) buying properties rose 81 per cent to 13,279 from 7,339. Emiratis topped the list of all investors. A total of 1,228 Emiratis purchased properties worth Dh7 billion. Gulf Co-operation Council (GCC) states contributed Dh3 billion in the first quarter, with 583 Saudis spending Dh1.8 billion, Qataris Dh1.25 billion, Omanis Dh344 million, Kuwaitis Dh312 million and Bahrainis Dh160 million. Arab nationals outside the GCC invested over Dh3 billion, which included 1,599 nationals from 16 Arab countries. “The diverse array of nationalities putting their money into Dubai’s property sector and the high value of the investments being made confirms the city’s attraction for real estate investment, especially when compared to other property markets in the region,” said Sultan Butti Bin Mejren, Director General, DLD. Portfolio

Remittance Fees Hurt Africans? Communities in sub-Saharan Africa are

target for 2014 set by the G20 would cut fees

being “hurt” by high fees charged by money

by $1.8 billion, the ODI said.

has said. Restricted competition has helped push

Western Union and Moneygram account for about two-thirds of remittance payout locations in Africa. “Global markets are

up charges, according to research by the

dominated by an oligopoly of money transfer

Overseas Development Institute (ODI).

operators (MTOs) and regional markets by a

The research found that average fees of 12

duopoly,” the report said.

per cent to send $200 (£119) were twice

Carl Scheible, Moneygram’s executive vice

the global average. Fees charged to Africans

president of UK and Africa operations, said

wishing to send money back amount to a

that the ODI figures were not representative.

“super-tax” that could be better spent on

Moneygram charges depend on how much

education or health, ODI said.

money is being sent. Scheible said that most

“Africans living abroad make huge sacrifices to support their families, yet face charges which are indefensible in an age of

people send money to Africa in amounts of about £200, which have a lower fee. When taken as a whole, the average

mobile banking and internet transfers,” said

percentage that Moneygram takes for money

Kevin Watkins, the report’s co-author and

transfers to Africa from the UK is 5.1 per

ODI Director.

cent, compared with a global average take of

Reducing charges to a five per cent global

4.9 per cent, he said. workers by 2016, according to Industrial Info Resources in Texas. Regional estimates call for even more new hires once those projects are built. The processing and refining industries need so many workers to build new facilities in Texas and Louisiana because of the unprecedented rise over the last three years in US oil and gas production, much of it due to shale. Labour shortages, causing delays in construction, threaten to slow the boom and push back the date when the country can meet its own energy needs, estimated by BP to be in 2035. Worker scarcities are already evident in the unemployment

getty imAges

rates of Texas (5.7 per cent) and Louisiana (4.5 per cent), both below the national average of 6.7 per cent, according to the Bureau of Labor Statistics.

Gulf Coast Labour Shortage The boom in the shale oil industry has created a labour shortage

Companies will spend $35 billion, more than ever, on expansion projects along the Houston Ship Channel by next year, creating a total of 265,800 jobs, a 2012 Greater Houston Port Bureau survey shows. Louisiana, where $60 billion in building projects are planned through 2016, will need 86,300 workers over that time, according to the state’s Workforce Commission. Labour scarcity can erode profit. Cost run-ups and labour

in the US’s Gulf states. Just for construction, Gulf Coast oil, gas

shortages have hindered recent energy-boom projects in Canada

and chemical companies will have to find 36,000 new qualified

and Australia.

May 2014

getty imAges

transfer operators, charity Comic Relief

Observer The World

CompIled by Hilda d’souza

Top 10

Brazil’s Climate Peril

Top-paying Companies rank

Best Company rank

Company

average annuaL Base pa ($)

WellStar Health System

253,500

bingham mcCutchen llp

222,231

100

Cooley llp

215,861

perkins Coie

175,787

Hilcorp energy Company

162,980

discovery Communications

160,000

Arnold & porter

160,000

devon energy

158,664

eoG resources

144,166

10.

boston Consulting Group

141,017

GeTTy ImAGeS

SourCe: ForTuNe mAGAZINe

Top-reCruiTing Companies rank

Best Company rank

Company

Current openings

Brazil may see a mass migration of crops and farm workers from huge swaths of currently tillable lands to more temperate zones

ernst & young

16,500

as global warming takes hold, according to leading climate

deloitte

12,000

experts in the country.

Intel

7,000

KpmG

6,200

A study looking at projected warming trends shows Brazil’s soybean production may drop by as much as 24 per cent and

uSAA

5,000

marriott International

4,706

pricewaterhouseCoopers

4,449

Google

4,000

As Brazil is increasingly helping to feed the world, this is

Nordstrom

3,450

an international problem. The nation sold 41.9 million tons of

10.

Capital one

3,329

soybeans to Asia, Europe and the Middle East last year – and

SourCe: ForTuNe mAGAZINe

Company

Twitter

reduces areas where the crops can grow.

has led the world in sugar and coffee production for more than

BloomBerg’s BesT plaCes To Work for 2014 rank

wheat output as much as 41 per cent by 2020 as climate change

rating (on scale of 1 to 5) 4.56

4.55

Facebook

4.53

enagas

4.53

Guidewire Software

4.50

Interactive Intelligence

4.29

Google

4.28

orbitz Worldwide

4.27

a century. It also exports more beef and orange juice than any other nation on earth. Agriculture accounts for 25 per cent of Brazil’s gross domestic product and more than one third of its annual exports. While the connection of warming to droughts and extreme weather is still being studied, there’s no doubt that warmer temperatures are affecting global crop output. Worldwide wheat yields are declining by about two per cent a decade and those

deere

4.20

for maize by one per cent, the United Nations said in a March

10.

Chevron

4.16

31 report.

SourCe: bloomberG.Com

Portfolio

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Commentary

Will Hutton

Has CEO Pay Gone too Far? Last month, the new York times

economist Thorstein Veblen captured this

CEO pay has been sky high in the US for

published its annual league table of chief

a decade and has doubled in Britain over

social dynamic well. There is a logic to the

executive pay at the US’s top 100 publicly

the same period, but has economic and

very wealthy needing more wealth: they

quoted companies. The average has now

corporate performance been that stellar in

show it off to demonstrate where they are in

climbed to $13.9 million.

either country?

the pecking order. Veblen writes that, while

That is nearly twice the average of £4.4

the livery worn by servants, the nature of

Some economists argue that it is

million for CEOs within Britain’s top 100.

the direct cause of the collapse of

pets and the grandness of parties may seem

But since America’s top 100 companies

business investment in both countries.

to be economically irrational if not futile,

are, on average, around three times larger

Even the most eloquent apologists are

to the very rich, these are subtle, socially

in terms of turnover than Britain’s, one

increasingly mute.

honed indicators of standing. We now live in an era of “conspicuous

could argue that executives are even better

executive pay” – only understandable

paid here.

as a social phenomenon because

A growing number of US commentators are asking, as are some of the braver

its extravagance has ceased to have

remuneration consultants, just why

economic logic. What can be done? Cornell University

executives in America need to be paid so much. The LA Times headlined one opinion

professor Lynn Stout proposes that all tax

piece “Obscenely high salaries are stark

relief should be withdrawn on any CEO pay

reminders of US wealth gap”. The NYT

that is 100 times the minimum wage. The

talked about the dark side of executive pay

Brookings Institution’s Leonard Burman

driving US inequality.

suggests that income tax brackets should be adjusted for inflation and for target

What do these men – and 91 of the 100

levels of income inequality. Financial Times

are men – actually do with so much money?

money editor, Merryn Somerset Webb,

The rationale is that such pay is needed getty images

to drive “performance”. Oracle’s Larry Ellison, already the world’s fifth richest man, collected $78.4 million in 2013. But does he need so much cash to push Oracle’s performance, and if so, why does Larry Page at Google need only $1 million?

The answer is that these “super-

as inheritances should be taxed as unearned income. You could add a twist and adjust the gift tax rate to achieve target levels of wealth inequality. There are remedies: what is needed is

salaries” have almost nothing to do with

the political coalition to deliver them. The

performance has hardly anything to do with

performance and everything to do with

dilemma is that society needs successful

the rise in executive pay. Why should British

CEOs keeping up with each other in a

business, and politicians do not want to be

CEOs in charge of smaller, generally less

status race. One of the best determinants of

painted as anti-business. Yet something

complex companies be paid proportionally

any CEO’s pay in the US was the size of his

must be done. The reaction last month to

more than their counterparts in the US?

or her social network. The more examples

the NYT figures suggests a long overdue

Does it make sense that 60 per cent of pay

of highly paid members in one’s network,

change in the US debate, which sets

comes in options to buy shares, so that

the more generous a remuneration

the tone worldwide. From this year, for

executive focus is wholly on doing those

committee felt it had to be.

example, US companies are compelled to

It is beginning to be obvious that

Larry Ellison, the CEO of Oracle, was paid $78.4 million in 2013.

argues that all gifts of capital during life or

things – cutting investment, avoiding risky

In Conspicuous Consumption, a book

innovation, using cash to buy company

published in 1899 when inequalities in

shares – that keep up the share price?

wealth and income matched those of today,

publish the ratio of top pay to the median Maybe, just maybe, the times are a-changin’. They need to. n Portfolio

Profile

Warner CEO Kevin Tsujihara in a California recording studio with a scene from The Lego Movie in the background. Portfolio

Bullish on the Big Screen Kevin Tsujihara, who took over as Warner Bothersâ&#x20AC;&#x2122; CEO after a tough three-way succession battle last March, was largely an unknown in the entertainment industry. However, since his appointment he has proven that heâ&#x20AC;&#x2122;s not short of ambition and has an ability to get things done, reports Brooks Barnes.

May 2014

Profile

hen a quiet and courteous DVD executive named Kevin Tsujihara ascended to the Warner Brothers throne last year, Hollywood did not know quite what to make of him. Lacking the usual show-business personality traits – screaming, scheming, showboating – and entering from the musty world of home entertainment, Tsujihara seemed awfully corporate for a business built around creativity. He had almost no experience managing movie or television show production. And yet this low-profile son of egg distributors was given the job of steering the motion picture industry’s biggest and most storied studio. “In the beginning,” said Robert Daly, geTTY iMages

a former Warner chairman, “there were a lot of people who asked themselves, ‘Kevin who?’” Nobody is asking that now. Since last March, when he won a bitter

Tsujihara and actor Clint Eastwood attend a Warner Brothers presentation at this years CinemaCon.

succession battle to become CEO,

release of Veronica Mars in theatres and

Tsujihara, 49, has surprised Hollywood

through on-demand services. And he has

and directors may have thought,

with bold moves that belie his nice-

duked it out – twice – with no less a force

Tsujihara’s reign will be anything

guy demeanour. He persuaded J.K.

than Harvey Weinstein, who started a

but dull.

Rowling to expand the Harry Potter

naming-rights battle with Warner over

movie universe. By hiring the flashy

The Butler and is suing the studio over its

breakfast with another new Hollywood

Fox executive responsible for American

“Hobbit” series.

kingpin, Jeff Shell, chairman of

Despite what many agents, producers

On one recent morning, just after

Idol and paying $273 million for part of Eyeworks, a Dutch entertainment company, Tsujihara moved to fix one

of Warner’s most glaring weaknesses: overseas reality-TV production. He parted ways with one film financier and instantly teamed with another, securing $450 million to make 75 movies. In March, he risked a fight with theatre owners by experimenting with the simultaneous

Lacking the usual show-business personality traits – screaming, scheming, showboating – and entering from the musty world of home entertainment, Tsujihara seemed awfully corporate for a business built around creativity. Portfolio

Universal Filmed Entertainment, Tsujihara sat in a stylish armchair inside his sparsely decorated executive suite in Burbank, California. “This was Jack Warner’s office,” he said with a grin, referring to the mogul who founded Warner in 1923. “I’m building a desk that is a replica of his desk. It’s

This summer, Warner will release eight movies, compared with five in the same period last year – the most of any studio. It’s an aggressive gamble that has some analysts worried; only one of the films, Godzilla, is a lower-risk remake or sequel.

really cool.” During a 1 ½-hour interview, Tsujihara came across as a relaxed father

studios are starting to train consumers

receipts for 2013 totalled $5.04 billion,

(of two young children) with a passion

to buy movies digitally (big profit) rather

the most of any studio. With 63

for sports. He loves the San Francisco

than renting them (small profit) or

programmes in production, Warner is

Giants, owns a racehorse and likes to

watching pirated copies (no profit).

the No. 1 supplier of television shows.

play basketball during lunchtime at the

Warner also sees movies as an

“This is not a turnaround,” he said.

Warner gym. He seemed to be enjoying

international play – the Chinese box office

“But I do want to run the company

his new rank – he recently attended

grew 30 per cent last year, to $3.6 billion.

differently as a way to improve and grow.”

a Los Angeles Lakers game with Will

Looking out a window toward Warner’s

Ferrell – while also finding it a bit

35 sound stages, Tsujihara spoke solemnly

LittLe more than a year ago,

confining; he now reads so many scripts

about the pressure he feels to keep

Tsujihara was still caught up in a

that he has less time for books. “That’s a

the studio’s engines firing. Home to

two-year, three-way race to succeed

bummer,” he said.

enterprises as diverse as Batman, Bugs

Barry Meyer, who retired as Warner’s

This summer, Warner will release

Bunny, The Big Bang Theory and TMZ.

chief executive last March. Bruce

eight movies, compared with five in the

com, Warner had operating income of

Rosenblum, the studio’s highly-polished

same period last year – the most of any

$1.33 billion last year, up 7.3 per cent

television president, was seen as the

studio. It’s an aggressive gamble that has

from a year earlier. Global box-office

likely winner. Warner’s movie chief, Jeff

some analysts worried; only one of the films, Godzilla, is a lower-risk remake or sequel. “If we were in charge of Warner’s studio, we would highly consider moving one or two of these films to later in the year or early 2015,” Doug Creutz, an analyst at Cowen & Co, wrote in a research note. While acknowledging the risk, Tsujihara sees an opportunity to start new franchises and to send a message to Hollywood’s top writers and directors: Bring your projects to Warner, because we are not pulling back. A steadily pumping pipeline of movies also suggests an optimism about the future of home entertainment. He sees evidence that May 2014

The Lego Movie has been a surprise blockbuster with more sequels in the pipeline.

Profile

Robinov, was a dark-horse candidate. Tsujihara was selected over his rivals (both of whom have since left the company) in part because he had experience with the disruptive technologies that are unravelling the business models. As president of home entertainment, Tsujihara laboured to

reuters

entertainment industry’s traditional

Director Peter Jackson at the premiere of The Hobbit: The Desolation of Smaug.

prop up slumping DVD and Blu-ray sales while also prodding consumers to begin buying movies digitally. He also ran the studio’s video game division and led its anti-piracy efforts.

As president of home entertainment, Tsujihara laboured to prop up slumping DVD and Blu-ray sales while also prodding consumers to begin buying movies digitally.

But his diplomatic skills were also – “behaving like a human being” is how

flew to New Zealand to lead a tense

he put it – reflected his unpretentious

negotiation that allowed Warner, Metro-

upbringing in Petaluma, California,

Goldwyn-Mayer and Peter Jackson

reuters

crucial. In 2010, it was Tsujihara who

north of San Francisco. His parents, Harvey Weinstein is suing Warner’s for a greater share of the “Hobbit’’ profits.

second-generation Japanese immigrants

Zealand’s prime minister to agree to a

going. (A lawsuit brought by Weinstein

internment camps during World War

deal where the government contributed

seeking a greater share of the “Hobbit”

II, owned the modest Empire Egg

financing and agreed to introduce new

profits, however, continues.)

Company there. The youngest of five

to proceed with the “Hobbit” trilogy. Tsujihara and his team convinced New

labour legislation to keep production

Tsujihara said his ambassadorial style

who were forced into California

children, Tsujihara grew up making egg deliveries. Summer jobs included sorting eggs on a conveyor belt and mucking chicken coops. Wherever he learned the skill, his deft touch became clear to Hollywood’s creative community in September. That is when Warner announced that Rowling had agreed to adapt for the big screen her Fantastic Beasts and Where to Find Them, a 2001 book billed as one of Harry Potter’s Hogwarts textbooks. Three megamovies are planned. Convincing the famously independent Rowling to dive back into film was a coup. “When I say he made Fantastic Beasts happen, it isn’t PR-speak but the literal truth,” Rowling said in response to emailed questions.

The Hobbitt: The Desolation of Smaug took in $950 million worldwide.

Tsujihara faces the same daunting Portfolio

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Profile

challenges as any Hollywood studio

Comics characters like Wonder Woman

its comic book characters appears to

chief: scraping for material to make

and the Flash.

have accelerated considerably since Tsujihara took over.

into hit television shows and movies,

Tsujihara noted recent progress on

pushing into restrictive but booming

both of those fronts. Dan Lin, a Warner-

international markets and finding

based producer, is working on multiple

even-handed approach have earned

ways to meaningfully cut marketing

sequels to The Lego Movie, which became

him far more devotees than detractors.

expenses, something he called “our

a surprise blockbuster in February.

next big opportunity.”

(Tsujihara was directly responsible, having

Chuck Lorre, the Warner-based creator

bought a company that makes Lego-

of Two and a Half Men and The Big Bang

Efforts to resuscitate its Looney Tunes

themed video games in 2007. That led to

Theory. “I trust Kevin not to make short-

animation franchise have repeatedly

the film, which has taken in more than

sighted decisions based on ego. He’s a

failed to gain traction. And the

$410 million worldwide.)

very mature, sophisticated executive.”

But Warner also has unique puzzles.

studio has been painfully slow to

collaboration to make better use of

“I don’t need to blow smoke,” said

The no-nonsense Lorre had one more compliment: “And he’s a nice fella.” n

GETTY IMAGES

establish a slate of films based on DC

As for DC Entertainment, cross-studio

So far, Tsujihara’s decisiveness and

Tsujihara speaks onstage during Warner Brothers’ ‘The Big Picture’, an Exclusive Presentation Highlighting the Summer of 2014 and Beyond during CinemaCon. Portfolio

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Transport

A Divisive TrAck Italy has become divided over the Treno Alta Velocita rail project that is meant to link Italy and France and form part of a trans-European railway route, reports Elisabetta Povoledo.

Portfolio

37 Construction begins on the Treno Alta Velocita railway, which will connect Turin, Italy, and Lyon, France.

May 2014

Transport

Over the years, the saga of the train line has been punctuated by episodes of popular resistance and colourful, thousandsstrong demonstrations but also by violent clashes, night-time acts of sabotage and even accusations of terrorism. Opponents of the Treno Alta Velocita rail project meet in the Susa Valley of Chiomonte, Italy.

prison for a 2010 protest staged against the broader cultural and political debate

exploratory tunnel being bored

over balancing the country’s identity with

Grillo’s party is overtly opposed to the

into Italy’s northwestern Alps,

European integration, and more generally,

project, and several members of his party

visitors first must pass through

preservation with progress.

were elected to parliament here and in

For Europe, the long deadlock has

nearby districts in national elections last

Tall fences topped with barbed wire

become a prime example of the strange

year. Many are looking to local, regional

roll along the mountainside. Armoured

jujitsu of European Union politics, in which

and European elections in May to gauge

vehicles cross paths with jeeps on winding

sometimes the smallest local issues threaten

the popularity of the line, which is a hot-

roads lined by vineyards.

to tie up a continent’s grandest ambitions.

button issue.

a police checkpoint, then a military one.

In an area known for picturesque

“This is not about a train,” said Lisa

For the national government, as

villages, winter skiing and summer Alpine

Ariemma, a resident who has opposed the

Transport and Infrastructure Minister

excursions, the fortified construction yard

Treno Alta Velocita rail project, or TAV, as it

Maurizio Lupi put it in March after visiting

is a jarring juxtaposition, betraying the

is known.

this site, “the tunnel is evidence that the

bitterness of a two-decade battle over plans

The construction here is the first step

state exists and that it believes in a project it

to build a high-speed train link between

in a planned 56-kilometre tunnel on a

sees as fundamental to the development of

Italy and France.

high-speed train line that would connect

the country and of Europe.”

Over the years, the saga of the train line

Turin, Italy, and Lyon, France. It is one

has been punctuated by episodes of popular

section of the Mediterranean Corridor

resistance and colourful, thousands-strong

– a trans-European railway route from

demonstrations but also by violent clashes,

Algeciras, Spain, to Budapest, Hungary

night-time acts of sabotage and even

– that the European Commission has

accusations of terrorism.

named as a priority.

Local people have long resisted the rail

rail link in Chiomonte.

o get to the site of an

But for some residents here, the

link, fearing damage to aquifers as well

barricades, both physical and metaphorical,

as the possible release of asbestos and

have come to reflect their differing view

radioactive materials during the excavation.

of development, and even democracy, and

They also questioned the economic sense of

their distance from decision-makers in

a project that required an initial outlay of

Rome and Brussels. The issue has given

nearly $12 billion.

momentum to the Five Star Movement,

But the strategic location of the Susa

the anti-establishment and anti-European

Valley has also given the 90,000 people

Union party of Beppe Grillo, who was

who live here an outsize platform in Italy’s

sentenced in March to four months in Portfolio

Construction of the site began in 2011

a certain environmental damage vis-à-vis an

amid protracted protests that climaxed

uncertain financial gain,” he said. “That’s not

in violent clashes. Large swaths of the

much of a business model.”

mountain have since been fortified to keep

Even as they acknowledge that the valley

life into the region’s stagnant economy. “Right now the valley is a dry branch. To have an international station – an architectural gem – will bring development,

demonstrators at bay, delaying the boring of

will bear some inconveniences, proponents

and a reinforcement of the territory’s

the mountain until late last year.

of the plan say that rail infrastructure has

economy, in particular, tourism.”

changed significantly since the old line was

Mario Virano, an expert called by the

The long effort at resistance has

built, and the current track is inefficient

government in 2006 to help moderate

not deterred the Italian government’s

because it is built on a steep slope and

between the various factions, noted that the

commitment to the plan, despite political

the tunnel is not large enough to handle

issue was much larger than the Susa Valley.

changes over the past 20 years, and

modern freight traffic.

regardless of which party was in power. But

Gemma Amprino Giorio, the mayor of

“We can’t lose the possibility of European funding or let France lose theirs because of

the long delay has put Italy’s own reputation

the nearby town of Susa, where a station

us,” he said. “If we don’t go ahead now, when

as a dependable European partner on the

the rest of Europe is working towards more

line. Fear of losing European financing,

Kuma is to be built once the track is

homogeneous infrastructure, the scandal

which Italian officials say is expected to

complete, sees the train as breathing new

will be that we didn’t do it.” n

cover 40 per cent of the costs of the line, finally spurred the government to more concerted action. Opponents have waged a multi-front resistance, through court challenges and “No TAV” publications and websites. They have even bought up one-metresquare patches of land along the planned rail route to bog down the expropriation process. Hundreds of protesters have been investigated – and some tried. Four young protesters are in jail on charges of terrorism. “The No TAV movement has become radical, drawing on anarchic disaffected young people,” said Stefano Esposito, a prowho has received death threats and now travels with bodyguards.

AFP

TAV senator with the Democratic Party, There have been numerous demonstrations against the Treno Alta Velocita railway.

Alberto Perino, a long-time leader of the opposition to the rail link who was convicted alongside Grillo, believes the feeling against the project is far broader. “We’re angry because they’re carrying out a project with our money, against us,” he said. Many locals feel their political representatives, “no longer represent the interests of citizens,” but rather those of banks and constructions groups, he said. Luca Giunti, a park ranger and “No TAV” activist, argues that passenger and cargo traffic between Italy and France on the old rail line – built in 1871 – has been on a steady decline for years and sees no need for a new one. “You’re looking at a certain expense, and

AFP

Transport

The construction site has been fortified and is protected by police to prevent acts of sabotage. Portfolio

Entrepreneurs

Au RevoiR, entRepReneuRs Regulatory hurdles, the stigma of failure and high taxes are pushing France’s entrepreneurs to try their luck in other countries, reports Liz Alderman.

Just not in his own country.

Guillaume Santacruz,

“A lot of people are like, ‘Why would

an aspiring French entrepreneur, brushed the

you ever leave France?’” Santacruz said.

rain from his black sweater

“I’ll tell you. France has a lot of problems.

and skinny jeans and

There’s a feeling of gloom that seems to be growing deeper. The economy is

headed down to a cavernous A year earlier, Santacruz, who has two

not going well, and if you want to get

seven-storey hive run by Google in the

degrees in finance, was living in Paris near

ahead or run your own business, the

city’s East End.

the Place de la Madeleine, working in a

environment is not good.”

basement inside Campus London, a

It was late on a September morning,

boutique finance firm. He had taken that

In the Campus London basement,

and the space was crowded with people

job after his attempt to start a business

Santacruz, 29, squeezed into one of the

hunched over laptops at wooden café

in Marseille foundered under a pile of

few remaining seats. Within hours, he

tables or sprawled on low blue couches,

government regulations and a seemingly

was to meet with an entrepreneur he

working on plans to create the next

endless parade of taxes. The episode left

identified only as Knut, to discuss an

Facebook or LinkedIn. The hiss of a milk

him wary of starting any new projects

investment in the company Santacruz was

steamer broke through the low buzz of

in France. Yet he still hungered to be his

trying to build. He called it Zipcube, and

conversation as a man in a red flannel

own boss.

he was pitching it as a sort of Airbnb for

shirt brewed cappuccino at a food bar.

He decided that he would try again.

renting office space online. Portfolio

From 80 to 90 per cent of all startups

when France can ill afford it. The nation

Some wealthy businesspeople have

fail, “but that’s OK,” said Eze Vidra, head

has had low-to-stagnant economic growth

also been packing their bags. While

of Google for Entrepreneurs Europe and

for the past five years and a generally

entrepreneurs fret about the difficulties

of Campus London, a free workspace in

climbing unemployment rate – now about

of getting a business off the ground, those

the city’s booming technology hub. In

11 per cent – and analysts warn that it

who have succeeded in doing so say that

Britain and the United States, “it’s not

risks sliding into economic sclerosis.

society stigmatises financial success. The

considered bad if you have failed,” Vidra said. “You learn from failure in order to maximise success.” That is the kind of thinking that drew Santacruz to London. “Things are different in France,” he said. “There is a fear of failure. If you fail, it’s like the ultimate shame. In London, there’s this can-do attitude and a sense that anything’s possible. If you make an error, you can get up again.” France has been losing talented citizens to other countries for decades, but the current exodus of entrepreneurs and young people is happening at a moment

election of President François Hollande,

France has been losing talented citizens to other countries for decades, but the current exodus of entrepreneurs and young people is happening at a moment when France can ill afford it.

a member of the Socialist Party who once declared, “I don’t like the rich,” did little to contradict that impression. After denying that there was a problem, Hollande is suddenly shifting gears. Since the beginning of the year, he has taken to the podium under the gilded eaves of the Élysée Palace several times with significant proposals to make France more alluring for entrepreneurs and business, while seeking to preserve the nation’s model of social protection. His deputy finance minister for business innovation, Fleur Pellerin, a dynamic

Axelle Lemaire, a French lawmaker, says France should enhance competitiveness but not compromise its social model.

May 2014

Entrepreneurs

40-year-old credited with schooling

about the same population as Nice, France’s

Hollande on the importance of the

fifth-largest city. So many French citizens

digital economy, has been busy pushing

are in London that locals have taken to

initiatives to turn Paris into a “tech

calling it “Paris on the Thames.”

capital” to rival the world’s most active startup hubs. Those initiatives, however, have not yet

Santacruz grew up in his parents’ small, tidy home in a suburb of Aix-en-

closed the spigot on the flow of French

Provence in the south of France. During

citizens to other countries. Today, around

one of his summer breaks from college

1.6 million of France’s 63 million citizens

in Bordeaux, he visited a cousin who had

live outside the country. That is not a

become rich working in finance and lived in

huge share, but it is up 60 per cent from

a sprawling residence in the Luberon Valley.

2000, according to the Foreign Affairs

When Santacruz drove up to the entrance,

Ministry. Thousands are heading to Hong

electronic gates opened to a vast garden.

Kong, Mexico City, New York, Shanghai

The government has since simplified procedures and reduced the social costs for startups. But those changes came too late for Santacruz, whose venture folded before it could get off the ground.

“It was crazy,” he said. “I drove five

and other cities. About 50,000 French

minutes just to reach the house. That’s when

nationals live in Silicon Valley alone.

I thought, ‘I want to make it like him.’”

But for the most part, they have fled

“Making it” is almost never easy, but

in England, he returned to France to work

across the English Channel, just a two-hour

Santacruz found the French bureaucracy

with a friend’s father to open dental clinics

Eurostar ride from Paris. Around 350,000

to be an unbridgeable moat around his

in Marseille. “But the French administration

French nationals are now rooted in Britain,

ambitions. Having received his master’s in

turned it into a herculean effort,” he said.

AFP

finance at the University of Nottingham

French President Francois Hollande is now trying to rebrand his government as business-friendly. Portfolio

enjoy responsibly

DOM PÉRIGNON VINTAGE 2004 EACH VINTAGE IS A NEW CREATION DOMPERIGNON.COM

Entrepreneurs

A one-month wait for a license turned into three months, then six. They tried simplifying the corporate structure but were stymied by regulatory hurdles. Hiring was delayed, partly because of social taxes that companies pay on salaries. In France, the share of nonwage costs for employers to fund unemployment benefits, education, health care and pensions is more than 33 per cent. In Britain, it is around 20 per cent. “Every week, more tax letters would come,” Santacruz recalled. The government has since simplified procedures and reduced the social costs for startups. But those changes came too late for Santacruz, whose venture folded before it could get off the ground. His parents were relieved when he took a job in Paris at the boutique firm NFinance. But he knew it was a way station. He quickly turned to drawing up blueprints for a new venture.

Guillaume Santacruz, an aspiring French entrepreneur, at Campus London that is designed to help startups.

“I asked myself, ‘Where will I have the bigger opportunity in Europe?’” he said. “London was the obvious choice. It’s more dynamic and international, business funding is easier to get, and it’s a better base if you want to expand.” Diane Segalen, an executive recruiter for many of France’s biggest companies who recently moved most of her practice, Segalen & Associés, to London from Paris, says the competitiveness gap is easy to see just by reading the newspapers. “In Britain, you read about all the deals going on here,” Segalen said. “In the French papers, you read about taxes, more taxes, economic problems and the state’s

Defeat is seen as so ignominious that France’s central bank alerts lenders to entrepreneurs who have filed for bankruptcy, effectively preventing them from obtaining money for new projects – a practice that Pellerin would halt.

involvement in everything.”

expatriates I interviewed said their country was marked by a deeper antipathy toward the wealthy than could be addressed with a few new policies. “Generally, if you are a self-made man and earn money, you are looked at with suspicion,” said Erick Rinner, a French executive at Milestone Capital Partners, a British-based investment bank, who has lived in London for 20 years. “It is a French cultural characteristic that goes back to almost the revolution and Robespierre, where there’s a deeprooted feeling that you don’t show that

Hollande’s government is now trying

you make money,” Segalen, the recruiter,

to re-brand itself as business-friendly,

said. “There is this sense that ‘liberté,

especially for startups. Pellerin recently cut the ribbon on a large-scale technology

These changes were welcomed by business, but the more than 20 French

égalité, fraternité’ means that what’s yours Defeat is seen as so ignominious that

should be mine. It’s more like, if someone

incubator in Paris. She unveiled initiatives

France’s central bank alerts lenders

has something I can’t have, I’d rather

to free up venture capital and encourage

to entrepreneurs who have filed for

deprive this person from having it than

digital entrepreneurship, including a “second

bankruptcy, effectively preventing them

trying to work hard to get it myself. That’s

chance” programme intended to remove the

from obtaining money for new projects –

a very French state of mind. But it’s a race

cultural stigma attached to failure.

a practice that Pellerin would halt.

to the bottom.” n Portfolio

Finance

For years, Chinese policymakers have

Web banks DraW China’s savers China’s internet companies are luring savers with higher interest rates than the state-run banks pay, reports David Barboza.

promised to liberalise interest rates as part of a bold reform effort aimed at letting market forces play a larger role in the economy so that it grows in a more sustainable and healthy way. Perhaps because of strong opposition from banks and other state institutions, the interest rate controls have not yet been lifted. Analysts say the government’s decision to permit internet companies to offer a wide range of investment and financial services is an effort to create alternatives to state banks and, in effect, loosen interest rate controls. While the money involved is relatively small – about $50 billion in a $9 trillion economy – the phenomenal growth of internet finance is intensifying competition for deposits and putting

In June, an affIlIate of the

regulations are suffocating smaller investors

pressure on China’s dominant state-run

Chinese e-commerce giant Alibaba made

and average consumers. He has vowed to

banks, which are struggling to cope with a

an offer to its hundreds of millions of users:

shake up the country’s banking and financial

severe cash squeeze. Internet finance is also

Give us your cash and we will pay more

services sector. “The financial industry

emerging at a time when the government

than Chinese banks will.

needs spoilers to make a revolution,” he said

is trying to contain the growth of shadow

during a speech in June.

banking, which could be masking huge risks

Savers swamped the company seeking interest rates that were significantly higher

The big winners are Chinese savers, who

than the low rates fixed by the government.

earn up to seven per cent annually on cash

By early February, 81 million people had

deposits. Traditional banks have rarely been

signed up for the company’s money market

so generous. They now pay 3.3 per cent.

and liabilities that exist outside the purview of regulators. Not everyone is pleased. In recent weeks, critics have referred to the online products

product called Yu’e Bao, which translates as “leftover treasure.” The fund, which was established by Alipay, a unit of Alibaba, now has $40 billion in assets under management, making

Jack Ma, Alibaba’s chairman, wants to disrupt China’s traditional financial industry.

it the country’s biggest money market fund. Other big Chinese internet companies have followed suit, promising even higher returns than Yu’e Bao. The result is an assault on one of the crucial instruments the Chinese government uses to manage the economy: interest rates. “This is the beginning of interest rate teaches at Shanghai Jiao Tong University’s Advanced Institute of Finance. “People want to get a higher yield on their savings deposits, and so this is one way to get around the regulation.” Jack Ma, Alibaba’s flamboyant and sharp-

reuTers

liberalisation,” said Chang Chun, who

tongued chairman, insists China’s financial Portfolio

as “vampires sucking blood out of banks,” and warned that investors may not be aware of the risks. Chinese regulators said in late February that they are considering new rules to govern the sector. For their part, the leaders in internet finance, such as Alibaba, Baidu and Tencent, play down the risks of their new investment products. They say they are operating within the law and putting the cash to work in There are, of course, serious challenges ahead for internet finance in China, analysts say. For instance, although the online deposits are promoted as if they

Alipay, part of the Alibaba Group, now has $40 billion in assets under management.

getty images

investments that carry low risk.

were savings accounts, they are investment

internet companies are now disrupting

16 cents, into Yu’e Bao and withdraw the

products that carry risk. The principle is

those controls by offering enticing yields

money at any time, without being penalised.

not guaranteed, and if consumers begin to

aimed at ordinary savers with spare cash,

They can also get daily earnings updates on

suffer losses, analysts say, there could be a

people like Gao Yue, a 25-year-old health

their mobile phones.

flood of redemptions.

care consultant in Beijing. Since October,

For the last decade, the government has aided state-run banks by placing a ceiling on the savings deposit rate and a floor on bank

“What makes Yu’e Bao attractive is the

she has put about $15,000 into her new Yu’e

small size. You don’t need to invest much,”

Bao account.

says Joe Zhang, a Hong Kong banker.

“As long as I get a higher return than the

“Small is the killer app.”

lending rates. The wide spread between the

regular bank deposit, I’m happy to put my

Yu’e Bao gets such high rates because,

two, known as the net interest spread, has

money in there,” she said in an interview.

company executives say, they invest mostly

helped banks pocket fat profits.

“It’s better than being beaten by inflation.”

in the interbank market, where banks and

Savers, on the other hand, have seen the

Alibaba is the prime mover in the

other financial institutions extend loans

value of their cash deposits deteriorate, since

new business. The company has dominated

to one another, usually for short periods.

the rate of inflation has usually been higher

online shopping for years

Interbank rates have soared in China during

than the government controlled deposit rate.

with its popular websites Taobao and Tmall

the last year because banks, particularly

Economists say the policy has acted like a tax

and even established an arm that lends to

smaller banks, are desperate for cash.

on savers. It has also forced some wealthy

small businesses.

Chinese investors to channel their money

In 2013, the company’s online payment

Analysts say soaring interbank rates are a sign of stress in the banking system, which

service, Alipay (a kind of Chinese version

means banks or financial institutions could

of PayPal) moved into banking and

default, leading to losses; or if conditions

also sought higher yields by buying wealth

finance by partnering with Tianhong Asset

improve, interbank rates could slide,

management products through financial

Management, a small, state-backed firm. (In

meaning lower interest rates and lower

leasing companies, trust companies and

October, Alipay agreed to pay $200 million

returns for consumers.

even local banks. The products, though, can

to acquire a controlling stake in Tianhong.)

into hard assets: art, gold and property. In recent years, many investors have

be risky because the money is often used to

Alipay’s 800 million registered users were

For now, though, internet finance looks lucrative. With $40 billion in assets under

finance high-interest loans to developers and

then encouraged to transfer any money

management, Alibaba and its partners are

local government infrastructure companies.

left over in their online shopping account

expected to reap $250 million in revenue

to Yu’e Bao, the new online fund set up by

annually just from management and service

Now, iNvestors are turning to online

Alipay and Tianhong. The rates promoted

fees. Baidu and Tencent have formed

investment products.

by Tianhong were higher than those offered

partnerships to offer new funds with other

by banks.

fund companies, including the state-run

The high rates offered by products like Yu’e Bao are exposing weaknesses in China’s

Soon after, Yu’e Bao took flight. Analysts

China Asset Management Co.

financial system, where investors have

say Yu’e Bao’s appeal is its simplicity and

“Internet finance is here to stay,” says

fewer options than in the West, especially

convenience. Alipay account holders can

Johnson Chng, a banking expert at A.T.

with fixed interest rates. Major Chinese

transfer as little as one renminbi, or about

Kearney, the global advisory firm. n

May 2014

A Respite foR euRopeâ&#x20AC;&#x2122;s steel industRy After a prolonged slump, European steelmakers are both wary and optimistic that an upturn is ahead, report Stanley Reed and Palko Karasz.

Portfolio

Industry

teel mills like ArcelorMittal’s 485.6-hectare complex on the French coast near Dunkirk are forbidding

places, full of incandescent metal and groaning machinery. But long-time industry executives like Henri-Pierre Orsoni, who runs the company’s operations in northern France, relish being around these dusty behemoths. “It is a passion,” he said recently, walking past rivulets of molten slag streaming from a blast furnace. But Orsoni, who has spent his 33-year career at ArcelorMittal and its predecessors, acknowledged that the last few years, when Europe’s demand for steel all but evaporated, had been painful. Now, though, he and others in the industry are beginning to see signs of a revival in the hard-hit sector, which remains a good proxy for the broader European economy. After sporadic shutdowns during the recession to cope with a lack of orders, all three blast furnaces at Dunkirk are running at full capacity. Orsoni expects the Dunkirk plant this year to produce about 6.6 million metric tons of raw steel slabs, about five per cent more than last year. His customers, particularly those in the auto industry, which buys about half of his steel, are increasing their orders as the pace picks up at their factories. The tough times have made him wary, though. “We are feeling only that it is starting to be better,” he said. “But everybody is cautious.”

If the steel business in Europe does perk

May May2014 2014

up, profits may soar for ArcelorMittal, based in Luxembourg. It is the world’s largest steel maker and produces about 25 per cent of European steel. Its main rivals, which include ThyssenKrupp of Germany and Voestalpine of Austria, would also benefit. The big question is whether demand

Industry

Demand from manufacturers who make things like appliances and cars is on the rise. But construction, which accounts for about 35 per cent of European steel consumption, remains slow.

will be sufficient to keep all of Europe’s steel mills busy. Businesses have been buying about 30 per cent less steel than during the peak in 2007, and steel industry employment has shrunk by about 16 per cent since the downturn began, to around 350,000 jobs. Like Orsoni, others in the industry predict that as the European economy stabilises, demand for steel,

A worker tests a pit of molten steel in ArcelorMittal’s 1,200-acre steelworks in Dunkirk, on the northern coast of France.

which is widely used in building and manufacturing, will gradually increase. But they are not forecasting a boom.

firm Meps in Sheffield, England. Countries like Spain and Italy, whose

Europe’s third-largest steel maker, recently estimated that the European steel industry

earlier economic booms depended on

had permanently shuttered 10 million

any skyrocketing figures,” Wolfgang

construction, “are still in trouble,” Fish said.

metric tons of crude steel capacity since

Eder, Voestalpine’s chief executive, told

Governments focused on reducing debt are

the financial crisis but needed to remove

reporters recently.

not spending much on large projects.

an additional 25 million tons of capacity to

“Quite definitely, there will not be

The crisis in Ukraine, where

Jean-Christophe Vigouroux, chairman of

prevent downward price pressure. “We should do this as quickly as possible,”

ArcelorMittal has a large plant, is a

Bacacier, a French maker and distributor

worrisome distraction. But because Ukraine

of steel buildings and supplies that will buy

said Eder, who is also president of the

and Russia are only small markets for

70,000 tons of steel from ArcelorMittal this

industry trade group Eurofer.

Western European steel plants, unless the

year, says he thinks the French market for

situation turns significantly worse, the

his products will be flat this year but “much

But closing plants in Europe is far

bigger uncertainties for the industry are

more interesting in 2015.”

from easy, as ArcelorMittal well knows. Part

whether Western European companies

Steel makers have been trying to

of the reason Dunkirk is going flat out is

will step up investments, whether

negotiate modest price increases of about

that the company has already shut down

consumers will increase their buying of cars,

four per cent, to about ¤470 ($650) a

other operations, including blast furnaces

refrigerators and washing machines, and

metric ton, but are having trouble making

elsewhere in France and in Belgium. The

whether construction will rebound.

them stick, according to Jeff Largey, an

partial closing of operations in Florange in

analyst at Macquarie Securities in London.

northeastern France, with the loss of about

things like appliances and cars is on the

“Confidence in the market is still shaky,”

600 jobs, drew a threat of nationalisation

rise. But construction, which accounts

Largey said.

in 2012 from the government of President

Demand from manufacturers who make

for about 35 per cent of European steel

Some of ArcelorMittal’s rivals say that still

François Hollande.

consumption, remains slow, said Peter

more cuts in steel production are required

Determined to stanch persistent losses

Fish, chairman of the industry consulting

in current conditions. Eder of Voestalpine,

in Europe, the company has consolidated Portfolio

getty images

Workers in the control room at the ArcelorMittal steelworks in Dunkirk.

Wolfgang Eder, Voestalpine’s CEO, believes European steel makers need to cut capacity by 25,000 tons to stablise prices.

its production of raw steel, the heart of the business, to a handful of locations. Those include Ghent in Belgium, Fos-sur-Mer in southern France and near the beaches and harbour of Dunkirk, where about 300,000 getty images

Allied troops were evacuated in 1940 ahead of advancing German forces. Like the other favoured sites, Dunkirk has certain basic qualifications. The blast furnaces, tower-like structures in which

Finished rolls of galvanised steel await distribution at the ThyssenKrupp steelworks in Duisburg, Germany.

iron ore is converted to molten iron, are big

2,000 people, then press the slabs into

and efficient. Large ships bearing the vast

long, flat sheets and coat or otherwise finish

quantities of iron ore and coal required for

them for use as car parts, washing machine

investments in Dunkirk are reassuring,

steel making can dock at the Dunkirk site,

bodies, roofing or steel cans.

they are unhappy that the company is

lowering costs. That means smaller inland

ArcelorMittal has signalled its intent

metal without getting too close. Union representatives say that while the

whittling away staff and employing young

blast furnaces, like those at Florange and

to continue investing in Dunkirk. The

and temporary workers as the plant’s older

Liège in Belgium, are doomed.

company says it will reline one of the

workers retire.

Dunkirk is the ArcelorMittal site left in

blast furnaces next year, a necessary but

Serge Vanderlynden, a 39-year employee

this part of Europe where iron from blast

expensive ¤90-million project. Already the

and representative of the Force Ouvrière

furnaces is blended with a leavening of

plant, which was built in the 1960s but has

union, recalls that in the 1970s there

molten scrap and alloys and then poured

been periodically updated, stands out from

were about 10,000 employees at the site,

into long, glowing slabs of steel. Other

many other steel facilities. It has bright, airy

compared with about 3,100 now.

plants in the region, including the one at

control rooms with video screens that allow

Florange, which still employs more than

technicians to monitor the caldrons of hot

May 2014

“We can feel the gloominess,” he said. “People are worried.” n

Banking

A TighT grip on

Iceland’s Banks

Iceland allowed its banks to go under and from the ashes a more conservative banking sector has emerged, reports Nathaniel Popper.

An AngulAr glAss building on

the biggest bank crashes any country has

where the one that took the least risk

the waterfront in Reykjavic used to be

ever had. The risk in Iceland’s financial

became the employee of the month,”

the headquarters of a banking giant with

system has dissipated, but the basic

said Bjarni Benediktsson, the Icelandic

operations in Europe, North America and

businesses of banking have shrunk as well.

finance minister. “I think we need to find

the Middle East. Now, it houses a shadow

Lending to consumers and businesses has

a balance in between.”

of that behemoth – a small bank doing

slowed to a fraction of what it was before

business only in Iceland and lacking both

the crisis.

the trading culture and ambitions of its failed predecessor. The metamorphosis is a result of one of

“We moved from a situation where the

Iceland is a living experiment in what can happen when a country forces its financial firms to go under, rather than

one that took the biggest risk was the

bailing them out, as much of the rest of the

employee of the month, to a situation

world did during the global financial crisis. Portfolio

In December, four former Kaupthing

have a different mindset from the brash

major banks collapsed. None failed more

executives were sentenced to multiple-

tenacity that prevails elsewhere in the

spectacularly than Kaupthing, the bank

year prison terms.

financial industry.

In October 2008, all three of Iceland’s

whose glass headquarters were on the

Emerging from the crisis are three

“The mandate was to build a new bank

waterfront. At one point, it had a balance

new ventures, including Arion Bank, the

on the foundations of the old collapsed

sheet four times as large as the annual

successor to Kaupthing, that hold only

bank,” said Hoskuldur Olafsson, the

economic output of the entire country.

the local assets of the old firms. They also

chief executive of Arion Bank, sitting in

May 2014

Banking

Iceland is a living experiment in what can happen when a country forces its financial firms to go under, rather than bailing them out, as much of the rest of the world did during the global financial crisis.

“We are a new bank with new business ethics and a new way of doing things,” said Steinthor Palsson, the chief executive who was brought in to run Landsbankinn, the largest of Iceland’s new banks. Revenue from trading operations at Landsbankinn is down to 10 per cent of what it was in 2006. But a transformation of the financial system can accomplish only so much in a country that faces such a long road to recovery. Many coMpanies and households in Iceland are still deeply indebted. Birgir Gudjonsson, a 37-year-old policeman in Reykjavik, said that the banks had

Bjarni Benediktsson, Iceland’s minister of finance, at his office.

a direction for where we would go with

been too interested in rebuilding their

this bank.”

businesses and their balance sheets, and

Iceland’s unusual path has been held up

not helpful enough to homeowners like

as a successful model of what can happen

him who bought their first homes just

when a country opts to let its financial

before the crisis. Because many Icelandic

his sparsely decorated office overlooking

firms go under. The result is that the

loans are linked to inflation, Gudjonsson

the water. “It didn’t look good. It had no

new banks in Iceland are missing the big

owes more than he initially borrowed.

direction whatsoever. What we needed to

bonuses and risky trading desks that have

do in the beginning was find some sort of

fed populist anger elsewhere.

Birgir Gudjonsson in the home he bought just before the Icelandic banking world collapsed in 2008.

Customers exit a branch of Landsbankinn, where revenue from trading operations is down to 10 per cent of what it was in 2006.

“We’ve been hearing, almost weekly, ‘Oh look at this, everything is great,’” he

Portfolio

and stuffed them into a so-called bad bank with no government backing. The government also made it illegal to move money out of the country, halting a run on the local currency, the krona. Even with these steps, the economy shrank 16 per cent over the next year, and the unemployment rate rose to nearly 10 per cent, from around two per cent. The banks were also working to restructure the loans of companies and households that could no longer pay them. The government passed a law mandating that loans had to be reduced to no more than 110 per cent of the underlying property – helping homeowners who had ended up underwater, though it did not eliminate the inflation-linked loans that people like Gudjonsson have. Landsbankinn went further and began a campaign to reduce the debt of any Hoskuldur Olafsson is the chief executive of Arion Bank.

said in the two-bedroom house where

Instead, the government took the

company or household that was unable to pay off its loans. This pressured the other banks to make similar efforts.

he lives with his wife and two daughters.

banks and separated off all the loans

“We just have to look in our wallet to see

and financial products that were outside

to pay bonuses more than 25 per cent

the reality.”

Iceland – the majority of the assets –

of base salaries, and until recently none of the banks paid bonuses at all. But

Companies and homeowners that want to borrow more are also having difficulty given the conservatism of the banks and a lack of access to foreign investors. In the first nine months of last year, for instance, Landsbankinn’s net new lending to corporations and individuals was 0.8 per cent of what it was in all of 2006. “There is no easy way out of a deep crisis,” said Benediktsson, the Icelandic finance minister, who recently came into office after an election that hinged on economic discontent. Iceland’s leaders did not see bailouts as an alternative when they took control of the banks in October 2008. The three major banks were 10 times as large as the country’s gross domestic product, in contrast to the United States, where bank assets were about the same size as the annual GDP. Even if it wanted to, Iceland did not have the resources to save its banks. May 2014

Another law made it illegal for banks

this has been one of the areas where the banks have realised the limits of reform. After some employees were poached by banks elsewhere in Scandinavia, where there were no bonus limits, Arion Bank and Islandsbank recently began offering bonuses for select executives. The restructuring of the financial sector – and the government steps to protect the currency – have allowed unemployment to fall to 5.6 per cent, and economic growth to begin. Many economists, though, say that the banks are too focused on the past, and not doing enough to make new loans and build a business for the future. The banks have also been conservative about continuing to shrink their workforce. “They are sort of in a standstill,” said Fridrik Mar Baldursson, a specialist in finance at Reykjavik University. “There is so much inertia in the system.” n

Productivity

NO MORE

SIESTA?

A pro-efficiency movement is advocating a 9-to-5 working day for Spain, but it will be difficult to break a habit deeply ingrained in local culture, reports Jim Yardley.

IPPING INTO A

Spanish evening is usually beginning at

to recover from a devastating economic

bucket filled with

10, with dinner often being served and

crisis – in the absence of easy solutions – a

drinks, Jorge Rodríguez

prime-time television shows starting (and

pro-efficiency movement contends that

and his friends

not ending until after 1 am). Surveys show

the country can become more productive,

hunkered down on a

that nearly a quarter of Spain’s population

more in sync with the rest of Europe, if it

recent Wednesday night to watch football

is watching television between midnight

adopts a more regular schedule.

at Mesón Viña, a local Madrid bar. At

and 1 am.

Yet what might sound logical to

“It is the Spanish identity, to eat in

many non-Spaniards would represent a

oblivious to others, as a waitress brought

another time, to sleep in another time,”

fundamental change to Spanish life. For

out potato omelettes and other dinner

said Rodríguez, 36, who had to get up the

decades, many Spaniards have taken a

orders. Then the game began. At 10 pm.

next morning for his bank job.

long midday break for lunch and a nap.

a nearby table a couple were cuddling,

This is not unusual. Even as people in some countries are preparing for bed, the

Spain still operates on its own clock and rhythms. But now that it is trying

Under a new schedule, that would be truncated to an hour or less. Television Portfolio

programmes would be scheduled an hour

regular eight-hour workday. As yet, the

the pressure. “Spanish society is still

earlier. And the elastic Spanish working

government has not taken action.

old-fashioned. The ones who rule are old-

day would be replaced by something closer to a 9-to-5 timetable. Underpinning the proposed changes

A workday abbreviated by siestas is a

fashioned, and here, they like it like it is.”

Spanish cliché, yet it is not necessarily rooted in reality. Instead, many urban

THE NATIONAL schedule can be traced

is a recommendation to change time

Spaniards complain of a never-ending

to World War II, when Spanish dictator

itself by turning back the clocks an hour,

workday that begins in the morning but is

Francisco Franco moved the clocks forward

which would move Spain out of the time

interrupted by a traditional late-morning

to align with Nazi Germany, as also

zone that includes France, Germany and

break and then interrupted again by the

happened in neighbouring Portugal. After

Italy. Instead, Spain would join its natural

midday lunch. If workers return to their

the defeat of Hitler, Portugal returned to

geographical slot with Portugal and Britain

desks at 4 pm (lunch starts at 2), many

Greenwich Mean Time, but Spain did not.

in Coordinated Universal Time, the modern

people say, they end up working well into

successor to Greenwich Mean Time.

the evening, especially if the boss takes a

agrarian nation, and many farmers set

long break and then works late.

their schedules by the sun, not by clocks.

“We want to see a more efficient culture,” said Ignacio Buqueras, the most

At the time, Spain was a largely

“These working hours are not good

Farmers ate lunch and dinner as before,

outspoken advocate of changing the

for families,” said Paula Del Pino, 37, a

even if the clocks declared it was an hour

Spanish schedule. “Spain has to break the

lawyer and the mother of two children,

later. But as Spain industrialised and

bad habits it has accumulated over the

who said an 8-to-5 workday would ease

urbanised, the schedule gradually pushed

past 40 or 50 years.” For the moment, Spain’s government is treating the campaign seriously. In September, a parliamentary commission recommended that the government turn back the clocks an hour and introduce a

Many urban Spaniards complain of a neverending workday that begins in the morning but is interrupted by a traditional late-morning break and then interrupted again by the midday lunch.

According to Eurostat, Spain is more productive than some of its European competitors. May 2014

Manuel De Soto takes a nap during his afternoon siesta in Seville.

the country away from the European norm. “People got stuck in that time,” said Javier Díaz-Giménez, an economist. “Eventually, the clocks took over.” In the early decades of his rule, Franco ordered radio stations to broadcast reports of news and propaganda twice a day to coincide with mealtimes at about 2:30 pm and 10 pm. Television arrived in the 1950s and followed the same mandate, with daily programming on the lone government channel ending at midnight with the national anthem and a portrait of Franco. “Then everyone would go to bed and procreate,” said Ricardo Vaca, chief executive of Barlovento Communications, a media consultancy in Madrid. By the 1990s, with Spain’s post-Franco transition to democracy underway,

Ignacio Buqueras, head of a pro-efficiency movement, wants Spain to adopt normal working hours.

television also began evolving. Vaca said

new private networks, eager for profits on

Madrid, Buqueras burst into a conference

popular shows, made programmes longer

room and immediately checked his watch.

Buqueras argues that changing the Spanish schedule would be a boon to working mothers, allow families more free time together and help Spain’s economic recovery.

and pushed prime time into the early morning hours. Now, he added, surveys show that 12 million people are still watching television at 1 am in Spain.

“Thank you for being on time!” he declared. Buqueras argues that changing the Spanish schedule would be a boon to working mothers, allow families more free

CHANGING THE prime-time schedule

time together and help Spain’s economic

is one of the recommendations bundled

recovery. “If Spain had a rational

together by Buqueras, president of the

timetable, the country would be more

Association for the Rationalisation of

productive,” he said.

Spanish Working Hours. At his office in

Whether an earlier, more regimented Portfolio

Productivity

schedule would translate into higher productivity is a matter of dispute. Buqueras’ group says Spanish workers are on the job longer than German workers but complete only 59 per cent of their daily tasks. Measuring productivity is an imprecise science, and while many experts say Spanish productivity is too low, Spain actually outperforms many European countries in some calculations, according to Eurostat, the European Union’s statistical agency. “These three-hour siestas don’t exist,” said Carlos Angulo Martín, who oversees social analysis at the National Statistics Institute in Madrid. Nor are habits uniform across the country, he said, noting that in the Catalonia region, mealtimes and work

Due to the long breaks during the day, the average Spanish worker gets home late in the evening.

schedules are aligned more with those of other European countries.

the Netherlands, where his co-workers

eat. It is another thing to nourish oneself.

arrived at 8 and left at 5, with a half-hour

Our culture and customs are our way of

his friends contemplated the Spanish

to munch on a sandwich for lunch, a

living.” But, he admitted, a shorter nap

clock. One friend, Miguel Carbayo, 26,

regimen he found shocking.

might be acceptable.

At the Mesón Viña bar, Rodríguez and

was appalled at the notion of a nap-free lunch. He had worked as an intern in

“Reduce lunchtime?” he said. “No, I’m completely against that. It is one thing to

The owners of a grocery store eat lunch outside their store. May 2014

“They say 20 minutes is enough to boost productivity,” he said. n

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Essentials

The besT of leisure and lifesTyle

View of the Grand Canal from the rialto bridge.

Water World Only surly travellers could complain about the infamous hide tides that occasionally swamp the beauty of Venice, reports Brian Johnston.

Before we even arrive in

though I’m bootless and umbrella free, I’m

predictable, recurring event that locals

Venice, the naysayers are moaning. A

secretly pleased that our arrival coincides

take in their stride.

combination of full moon, high tides and

with the city’s most infamous event.

rain-sodden winds are threatening another

There’s nowhere else where you can see a

workers are setting up elevated passerelle,

acqua alta, those tourist-annoying high

city submerged, secure in the knowledge

or elevated wooden walkways on metal

tides that regularly submerge Venice. Yet

that it isn’t a natural disaster but a

legs that extend along main thoroughfares

May 2014

Next morning, as I exit my hotel, city

Essentials

Travel

The basilica and facades of St Mark’s Square reflected in floodwaters.

during flooding. Shop owners are slotting

with a central cistern and pink Gothic

to find an alternative alley to the Rialto

metal barriers across the thresholds of

architecture. The morning is gloomy

markets. Canal water sloshes onto slippery

their doors. At 9:50 am an alarm sounds:

and dank, the buildings tearful. Anna

flagstones. “We locals enjoy seeing tourists

a dull beep like a reversing truck that

shrugs. “The typical Venetian weather

falling into the water,” laughs Anna before

barely penetrates over clanging church

is wet weather,” she pronounces

sending me on my way. “Just watch your

bells and the rumble of taxi boats. The

mournfully. “Little light, humidity,

step, and explore,” she urges. “I frequently

more frequent the tone, the higher the

floods, narrow alleys, lots of steps: this

get lost myself in this labyrinth. I look

tide expected: to me the beeping sounds

is why old people leave.”

around to make sure nobody knows me,

urgent. Water is slopping over the landing

Fifteen minutes later, water is sopping

then I ask for directions.”

steps of the Grand Canal and bubbling

between café chairs by the Rialto Bridge.

With over 100 islands and some 400

up through grates in the flagstones of St

Stall owners set out lurid yellow or purple

bridges, there are plenty of ways to get lost

Mark’s Square.

plastic boot-coverings, outrageously priced

in Venice, but few reasons to complain. I

at eighteen euros. Water is slick over the

go from squares packed like battery-hen

Sotoportego del Camerale, and we have

farms with tourists into empty back alleys

My tour guide Anna leads me to Campo San Beneto, a very Venetian little square

where water slaps against apartment

The more frequent the tone, the higher the tide expected: to me the beeping sounds urgent. Water is slopping over the landing steps of the Grand Canal and bubbling up through grates in the flagstones of St Mark’s Square.

blocks and children’s voices sound from open windows. Water rises around churches and palaces, yet hardly seems to matter. Cracks appear in the clouds and the sun throws pale light onto gargoyles and gateways. By 10:45 am I’m down on the waterfront, where pigeons hobble on Portfolio

AFP

Tourists get into the watery spirit of Venice.

Walkway across St Mark’s Square against the façade of the basilica.

Water rises around churches and palaces, yet hardly seems to matter. Cracks appear in the clouds and the sun throws pale light onto gargoyles and gateways.

the northern side of St Mark’s Square.

with a warm sirocco from North Africa,

The cafés opposite are as yet unaffected;

usually between September and April.

in one a pianist determinedly plays,

Low pressure systems and heavy rain

like a musician aboard the Titanic. The

combine to worsen the effect. Media

bubbling water I spotted here earlier is

reports of particularly bad acqua alta –

now pooling, then spreads a slow stain.

such as those that hit at the end of 2012

I finish my coffee as seawater laps at my

– show pictures of miserable tourists

toes, but am still able to hop across dry

trudging through floods with their

patches and onto a passarella that brings

suitcases. Yet so far, I’ve kept my socks

me to the basilica. Water has covered

dry. Tides can rise 85 centimetres and not

mosaic floors under the gold-leaf porticos,

be too bothersome, flooding only the area

providing the feel of wanton Roman

around St Mark’s Square, the city’s lowest

baths, a curious contrast to the aquarium-

point. A 110-centimetre tide leaves a tenth

dim Byzantine interior of the basilica.

of Venice submerged. Very occasionally

pink legs over grey flagstones. Water is lapping the doge’s palace and is now

Venice’s acqua alta is caused when high tides in the northern Adriatic coincide

tides exceed 120 centimetres and flood the entire city; the record was set in 1966 with

ankle-deep along the shopfronts that line

Stormy view from Bacino di San Marco towards the entrance to the Grand Canal, with the Church of St Mary Salute on the left. May 2014

Essentials

Travel

Acqua alta is more an inconvenience to tourists than locals. The pleasure is that fussy tourists beat a retreat, but ordinary life goes on, allowing a momentary glimpse into a more normal Venice. a 194-centimetre tidal rise. Apart from the unforseen plunges between pavement and canal that Anna warned me about, there are few dangers in this flooding. Because they’ve happened for centuries, they do little damage to foundations; Venetians worry more about cruise-ship wash and vibrations. Acqua alta conditions are predictable and the city well prepared. High tides are announced on a website, in newspapers and on noticeboards around town, such as in Piazza San Marco and Piazzale Roma. As a tourist, you’ll be well warned by the clang of arriving passarelle. There are maps of walkway routes at waterbus stations if you’re determined not to get

your feet wet.

A gondola on the Grand Canal.

AcquA AltA is more an inconvenience to tourists than locals. The pleasure is that fussy tourists beat a retreat, but ordinary life goes on, allowing a momentary glimpse into a more normal Venice. After all, Venetians are used to water. Everything here is floated in and hauled onto wharfs, and life is lived to the rhythm of boat timetables. Even when Venetians die they head to San Michele’s island cemetery by boat. The ebb of tides is the blood pressure of the city, its background noise the slap of water on walls, rain on shutters, shrieking seagulls. I’m happy enough. The dense crowds of a previous, sunnier visit are absent. I have Portfolio

AFP

Flooded shopping arcade on the north side of St Mark’s Square.

Tourists walk on footbridges near the Rialto bridge.

Storm clouds over Riva degli Schiavoni, still damp from retreating floodwaters.

The doge’s palace and basilica reflected in the floodwaters of St Mark’s Square.

warm clothes and my Henry James novels.

campaniles and cupolas like a scene

The streets may be damp, but I can lose

from a Canaletto painting? By the time

myself in a labyrinth of sad beauty. There

I return to St Mark’s Square, blue sky

are pulling off their plastic shoe-covers. A

are things to dislike about the Disneyland

has emerged. Turrets and towers are

Sound of Music medley from Café Florian

tourist Venice, but its wondrous theatrical

reflected in the floodwaters in a shimmer

signals a return to normalcy.

allure touches your soul. Besides, it might

of gorgeous architecture.

The walkways are already stacked up on

The tides are on a six-hour cycle, but

the route to my hotel. Venice’s mad crowds

have made people slightly giddy, like

water usually falls after four hours unless

are emerging once more. Shopfronts clang

little kids let loose in the mud. Adults in

winds are particularly strong. By 2 am it’s

open, and North Africans spread leather

galoshes splash, and the smiles are sunny.

already trickling down drains in St Mark’s,

handbags across still-damp pavements.

I take a ride on the harbour. You can

be a lagoon-damp winter, but the floods

but only a ridge in the centre of the square

The Venice that everyone wants is back

complain about the bad weather, or

is water free. Still, waiters in gumboots

but, in the frantic pace of this battered

you can admire it. How is it bad when

are putting out chairs, and in the Bar

peep-show of a town, the floods have

it produces raw sky-scapes of bloated

Americano staff sweeps the last water

slowed things for a moment, and created

purple clouds that drift over sun-touched

out with brooms. An hour later, tourists

moments of magic. n

May 2014

Essentials

Cuisine

FRANCE RALLIES AROUND ITS

TRUFFLES

Chinese imports and diminishing harvests of black truffles have turned attention to the lesser-known Burgundy truffle, reports Elaine Sciolino. Portfolio

S THE WORLD OF

higher class and more valued all around

French truffles falls into

the world,” Chabert said. “But we need

disarray, let’s hear it for

diversity and flexibility. France needs

the poor man’s truffle of

the Bourgogne.”

Bourgogne.

Inexpensive truffles from China,

“Let’s hear it for the best of France!” chimed in Hervé Kerlann, president of

odourless and tasteless, are flooding

the Maison Kerlann winery, who

France. Synthetically flavoured truffle oil

supplied the wines.

is turning up in more restaurant creations.

In truth, “Périgord” is a misnomer for

And the supply of the royal black Périgord

the black truffle. Yes, this species (tuber

truffle, the black diamond of French

melanosporum) is found in the Périgord

cuisine, is shrinking.

region, in southwestern France, but more

Enter Didier Chabert, the retired

often in the southeast and in many other

chief executive of his family’s nougat-

countries, including Spain, Croatia and

making empire, who has created a truffle

Australia. The Burgundy variety (tuber

command centre at Domaine de Cordis,

uncinatum) is largely confined to the

his country estate and guesthouse near

Burgundy region.

Avignon, in the south of France. Chabert has called in the chef Jean-

The Burgundy truffle mimics its luxury cousin in looks. Both subterranean fungi

Luc Barnabet to test recipes with the

can have the same black pebbly skin,

Bourgogne, or Burgundy, truffle, which

golf-ball-to-baseball size and irregular

is routinely snubbed in favour of its

shape. Inside, the Burgundy’s pale colour

aristocratic cousin. He has created a

turns darker the longer it matures in the

scientific association to study it and

ground, so that it sometimes resembles

has begun a national public relations

the dark flesh of the black truffle.

campaign to promote it. In February, he

But then there’s the aroma, a major

invited a dozen of the nation’s leading

reason the Burgundy has been dismissed

truffle experts to dine, serving them

as the Périgord’s pale copy. The classic

cream-cheese-filled choux pastries, puréed

black truffle smells of soil, mould, garlic,

potatoes, dessert macarons and a sabayon

sweat, ripe mushrooms, hazelnuts and

parfait – all made with Burgundy truffles.

sweet onions. The smell is made up of

They marvelled at them.

chemicals that evoke the reproductive

“The Périgord truffle will always be

pheromones of mammals. That explains

A sack of truffles at the table of L’Escapade bistro in Richerenches, France.

Truffles grow in the roots of deciduous trees at a depth of five centimetres. May 2014

why sniffing a perfect luxury truffle, deeply, from a brown burlap sack can make you feel dizzy enough to want to follow its handler just about anywhere. (Play it safe and stick to the kitchen.) The Burgundy variety has a lighter, sweeter, less pungent smell, and it loses its taste in cooking. Even at Chabert’s dinner, the scallops had to be prepared with Périgord truffles. But when the Burgundy is freshly harvested and fully mature, it works just fine raw. THERE IS another advantage: The Burgundy costs one-fourth to one-half the price of the Périgord. This is good news at a time when France is producing

Visitors sniff truffles at the Saturday retail and wholesale truffle market in Richerenches.

only about 40 tons of black truffles a year, compared with about 1,000 tons in the 1930s; some scientists blame climate change. (The fungi are sniffed out by trained dogs and then carefully dug by hand from the tangle of tree roots in which they grow.) The crisis is so dire that in February the French government banded together with its trufficulteurs (truffle “growers”) to declare war on Chinese imports, which some chefs are doctoring with industrial oils and aromas to make them smell and taste like the real thing. To raise awareness of the problem, the French Truffle Growers’ Federation signed a protocol with the French government that will provide a grant of about $280,000 annually for seven years to

Jeanot Pailhes, the patriarch of the local family-run L’Escapade bistro, prepares a truffle.

“Ninety-nine per cent of the consumers

A pot of mashed potatoes with truffle butter is prepared at La Table des Delices.

French families who can afford black

develop the nation’s truffle industry.

have no idea when they are being served

truffles traditionally use them in their

French truffle growers also want

Chinese truffles spiked with chemicals,”

Christmas cooking. But last year was

Asian imports to be labelled an “exotic

Jean-Charles Savignac, president of the

very dry, and in December, those truffles

invasive species.” They are asking that

French Federation of Truffle Growers, said

weren’t mature. Chabert contends that

the black truffle receive Appellation

at the dinner. “They’re being swindled. And

people should have tried the Burgundy.

d’Origine Contrôlée status, a coveted

those chemicals, they burn in your stomach

certification that authenticates the

for 48 hours. You can feel the sulphur.”

Still, he speaks grandly of promoting all sorts of truffles. “My ultimate goal is to

content, production method and origin

Chabert’s goal is to extend the

have people come here to buy truffles year-

of a French agricultural item. A team of

French truffle season by persuading

round,” he said. “We can make this place a

experts from the National Institute of

his countrymen to hunt and use the

global centre, so that every time of the year

Agronomic Research at Avignon is trying

Burgundy truffle. Its high season is from

there will be a truffle from somewhere.”

to identify the specific aromas of the

mid-September through December; the

European truffle, as a potential tool for

Périgord truffle is normally hunted from

estate is also an inn and could benefit if

detecting fakes.

December to mid-March.

turned into a truffle centre. But he is also

Chabert has some self-interest here: His

Portfolio

Essentials Cuisine The Burgundy costs one-fourth to one-half the price of the Périgord. This is good news at a time when France is producing only about 40 tons of black truffles a year, compared with about 1,000 tons in the 1930s. At the Saturday retail and wholesale truffle market in Richerenches, nearly 21 kilometres away, reactions to the initiative were cautious. “Whether you say something good or bad about something, Chef Eric Rolland slices truffles in the kitchen of his restaurant, La Table des Delices, while Didier Chabert, the retired chief executive of his family’s nougat-making empire, looks on.

what’s important is that you talk about it,” said Jeanot Pailhès, the patriarch of the local family that run L’Escapade bistro. “So anything you say about any truffle is good.” Pailhès poured me a glass of very cold local white wine. He pulled a black truffle from a dirty canvas sack, cut off a thick slice, sprinkled it with fleur de sel and popped it into my mouth. Frank Sinatra was singing “Fly Me to the Moon” on an old boombox. Could it get any better than this? At the guesthouse La Bastide La Combe in nearby Vaison-la-Romaine, Marie Ballis, who runs the house with her husband, Yves Nanquette, has turned herself into somewhat of a truffle expert. She knows all the reputable truffle merchants at the Richerenches market, and is called upon by friends in Paris to

A sabayon parfait with Burgundy truffles and coffee sauce.

buy their truffles. She is best known for her brouillade

genuinely eager, even obsessive, about

aristocrat and letter writer Madame de

with truffles, a dish made from eggs that

preserving the glory of France and its

Sévigné. A standing-room-only crowd

have been soaked the night before with

fungi. At the dinner, he offered a tongue-

crammed into a dimly lighted reception

a large quantity of black truffles over a

in-cheek prayer: “God, we have worked so

room learned that there are six different

double boiler and stirred until creamy.

hard. Help us to fulfil your creation.”

edible species of truffles in the world,

“I could never, ever do this with

that every year the French Federation of

Bourgogne truffles,” she said. “Their taste

THE NEXT day, he was one of the stars at

Truffle Growers is committed to planting

and aroma would simply evaporate. Even

an all-day scholarly conference on truffles

at least 300,000 trees that they hope will

with black truffles it’s not easy. If I put

at the Renaissance Château de Grignan, a

yield truffles, and that they should give the

the mixture straight onto the stove, the

fortress made famous by the 17th-century

Burgundy truffle a chance.

truffles would turn into black rubber.” n

May 2014

Essentials

Technology

Tap Your phone To paY Portfolio

cience fiction writers

Boston and Washington, for example,

have long envisioned a cashless

have adopted proprietary payment cards

society. But some places have

that need only a tap, not a swipe. Some

taken bigger steps in that

transit systems allow customers to buy

direction than others. The London transit agency, for instance, is trying out a new payment system that will allow passengers to tap a debit card on an electronic reader at

geTTY images

Elsewhere around the world, the advances are more commonplace. Shashi Verma, the director of customer experience for London’s transit agency,

Underground. In Sweden, consumers

Transport for London, said the agency

are increasingly using their phones

is part of a dry run in which so-called

for purchases at retailers or to buy a

contactless payment cards – debit or

hamburger at McDonald’s or Burger King.

credit cards equipped with a computer

And in Kenya, consumers are bypassing

chip – are being tested to eventually

the traditional banking system and using

replace the system’s Oyster smart card

a cellphone-based money transfer and

as the main way to enter and exit

microfinancing service instead.

London’s transit. Bank cards have been used successfully

economy than the others, has been much

for pay-as-you-go rides on London

slower in adopting interconnected,

buses for the past 15 months and will

speedy and secure solutions for making

be accepted across the entire subway

electronic payments.

system this year. The agency expects

In fact, it is the size of the US market

May 2014

their smartphones.

a subway station and board the London

Yet the United States, a far bigger

Around the world different technologies are moving us closer to a cashless society, report Chad Bray and Reuben Kyama.

their tickets online and download them to

bank cards to replace the Oyster card as

that is a major reason for the delay.

the primary method for monthly passes

The costs of outfitting retailers with

for the subway within two years, Verma

new equipment are much higher. And

said. In the future, riders may be able to

there have been disagreements among

board the system just by tapping a mobile

technology providers over what standard

phone, he said.

to use for mobile payments. That is not to say that all US cities are

It is the type of system the Metropolitan Transit Agency in New York

behind their foreign counterparts. But

City has envisioned as a way to replace its

the advances seem to be in pockets of

aging, magnetic-strip Metrocards – and

the economy. Transit systems in Chicago,

tested in pilot projects – but has never

The London transit agency, for instance, is trying out a new payment system that will allow passengers to tap a debit card on an electronic reader at a subway station and board the London Underground.

Essentials

reuters

getty imAges

Technology

Staff from South Africa’s Standard Bank show a newly signed client how to use mobile phone banking .

been able to adopt broadly. “What we are doing today fits in London’s tradition of innovation,” Verma said, noting that the London Underground was the first system to use a magnetic strip for ticketing in 1961. As in the United States, everything from local taxes to water bills can be automatically debited from bank accounts, without the need to write a cheque or

In parts of Hong Kong, the Octopus card, a contactless payment system for the transit system, is quickly becoming a catchall means of payment.

worry about missing a bill in the mail. Richard Koch, the head of policy at

Zapp allows UK customers of major banking institutions to see their balance and pay for goods in real-time.

the UK Cards Association, a trade group, said that contactless cards had started off slowly after their introduction in Britain in 2006 and were initially seen by card issuers as a way to differentiate their products. But their acceptance –by consumers and businesses – has increased rapidly in the past 18 months as more retailers accept the cards, he said. “The proposition works best for consumers when it saves them time,” Koch said. “I find that contactless is really helpful when going in to buy a sandwich and drink at lunch time. It considerably cuts down my time in store and at the till.” Koch said the average amount spent per transaction with contactless cards was about £6.50. In parts of Hong Kong, the Octopus card, a contactless payment system for the transit system, is quickly becoming a catchall means of payment. Depending on the type of card issued, the Octopus can also be used to pay for parking, to buy lunch at a fast-food restaurant and to go

AFP

to the cinema. Some cards also have the Hong Kong commuters top up their Octopus stored-value cards at a mass transit railway (MTR) station.

ability to keep two electronic wallets – one in Hong Kong dollars and another in Portfolio

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Essentials

Technology

In Africa, consumers are bypassing the traditional banking system altogether, instead focusing on technology to make payments. M-Pesa, the cellphone-based money transfer and microfinancing service, has become the go-to service for millions of Kenyans.

money transfer and microfinancing

withdraw cash and make payments or

service, has become the go-to service

send money using their cellphones.

for millions of Kenyans. Anne Githinji, 27, a sales assistant at a fashion and clothing boutique in Nairobi,

partnership with Vodafone, a British

says she uses M-Pesa regularly. “I usually

telecommunications company, introduced

use it to purchase my phone airtime and

the system in Kenya in March 2007,

to pay my electricity bills,” she said.

and it has expanded rapidly. Registered

Githinji, who has been using the service

In Sweden, consumers are taking a

customers have a menu on their cellphone

since its inception in 2007, said she

giving them the ability to move money to

preferred M-Pesa to cash or other bank

other phone-based accounts.

transactions owing to its convenience. According to a study released

To withdraw actual currency, customers use a network of M-Pesa agents – 75,000

in January by the Kenya Bankers

of them, scattered across the country,

Association, as many as 60 per cent of

compared with about 1,300 banks in

Kenyans use cellphones to carry out

Kenya as of 2013. Once an M-Pesa agent

financial transactions, for example,

has verified a customer’s identity via the

paying utility bills and school fees. Only

cellphone number, the cash is dispensed.

three of every 10 Kenyans go to bank

renminbi for travel in mainland China.

Safaricom, the country’s largest cellphone service provider, in

Gillian Ndeti, a senior business

offices, while only eight per cent use

development officer for M-Pesa at

ATMs, the report said.

Safaricom, said more than 98 per cent of

The majority of M-Pesa customers have no bank accounts, but they

all mobile money transactions in Kenya were made through M-Pesa. n

different approach. Contactless payment cards are not in wide circulation. Instead, consumers are increasingly making electronic payments with their cellphones as banks, mobile phone providers and startups are offering competing applications to serve as the public’s primary digital wallet. WyWallet, which was started by the nation’s four largest mobile companies, has almost 1.2 million users, or about 20 per cent of the six million mobile phones in use in Sweden, said Jakob Soderbaum, the WyWallet chief executive. That’s impressive considering Sweden as a whole has about 9.6 million residents. “You use your phone everywhere,” Soderbaum said. “That’s the way to really change the habit and the way you’re making payments.” The culture and size of Sweden are driving factors in why consumers are rapidly moving to mobile payments, he said. In Africa, consumers are bypassing the traditional banking system altogether, instead focusing on technology to make payments. M-Pesa, the cellphone-based

Naomi Wanjiku, right, works with a customer at an M-Pesa booth, a Kenyan cellphonebased money transfer service that is changing the face of banking in East Africa. Portfolio

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Essentials

Culture

End of thE

‘Sea Women’? Haenyeo, or ‘sea woman’, have traditionally supported their families on the South Korean island of Jeju by free-diving in the perilous sea. But this tradition is now dying out, reports Choe Sang-hun.

Portfolio

the treacherous waters of the Korea Strait,

has for 60 years, Kim Eun-

even during the frigid winters. Using

dwindled to about 4,500, from 26,000

sil carried her diving gear to

only flippers and goggles – no breathing

in the 1960s, with 84 per cent of them

a rocky beach on the eastern

equipment – they scour the sea bottom for

60 or older.

side of Jeju to spend the day free-diving in water more than six metres deep to harvest

abalone, conch and octopus. They are, by tradition, women,

“Most of the haenyeo will be gone in 20 years unless we have new recruits,” said Yang Hi-bum, a Jeju government official.

seafood by hand. Kim, 80, figures she can

nicknamed the Amazons of Asia in a

work a few more years at a job women here

custom that has as much to do with the

have done for centuries but which now is

island’s sad history as its geography. The

sea women have been as emblematic

fast disappearing.

reversal of traditional gender roles, with

of Jeju as snow-capped Mount Halla

women being the chief breadwinners,

at its centre. They duck underwater

said, warming her arthritic body at a fire

made the island an outlier in Korea’s

more than 100 times a day, grabbing

she built with fruit boxes on a pier while

patriarchal society.

sea creatures barehanded or sometimes

“I can still manage under the sea,” she

The number of sea women has

n a recent morning, as she

But the work is hard and dangerous.

For as long as Koreans can remember,

with a spear. Resurfacing a minute

had it easy, hardly lifting a finger. Until he

Since 2009, 40 divers have died, including

later, making a plaintive whistle as they

died four years ago, he had no complaints

three this year. Younger women on

exhale, they deposit their catch into a

against me.”

Jeju, now South Korea’s biggest tourist

net sack tied to a float.

Kim, like her mother before her, is a

destination, would rather work in resort

“Haenyeo were Korea’s first working

haenyeo, or ‘sea woman’. For centuries,

hotels and car rental offices than plunge

moms,” said Koh Mi, an editor at the Jeju

the sea women of Jeju, an island off the

into the cold sea, as some of their mothers

newspaper Jemin Ilbo and a participant

southern coast of South Korea, have braved

and grandmothers still do.

in a nine-year research project on the

May 2014

Essentials

Culture

sea women. “They were a symbol of female Koh Yoon-ja, one of the younger haenyuo, returns to shore with her catch on Jeju Island, South Korea.

independence and strength in Korea.” There is much hand-wringing over how to preserve their culture in the face of changes that have turned Jeju from the “island of sea women” into an island of honeymooners in a matter of decades. In March, South Korea applied to UNESCO to add the sea women to its Intangible Cultural Heritage list. Islanders believe the designation would infuse pride in the tradition and encourage popular support for preserving it. Today, the 1,849-square-kilometre island is as famous for its citrus orchards as for its pearly beaches, golf courses and esplanades overlooking black cliffs where lava met the sea ages ago. But until farm machinery enabled families to cultivate Jeju’s notoriously rocky soil and tourism gave the island more job opportunities in recent decades, Jeju was among the toughest places to live in South Korea, an outpost where trees were stunted from sea winds and where kings exiled their enemies. By the 17th century, as men went to sea to fish or row warships and never returned, diving become exclusively women’s work, said Kang Kwon-yong, curator of the government-run Haenyeo Museum. An 18th-century document recorded that officials flogged the women, and even their parents or husbands, when they failed to pay steep taxes in dried abalone, a prized delicacy among Korea’s elite, forcing women to dive in cold water even when pregnant. The work has always been perilous. Old haenyeo ballads speak of “diving with a coffin on the head” or “toiling in the netherworld so our family can live in this one.” The divers pray to sea goddesses for protection, regularly offering them rice, fruit and imitation paper money. As late as the early 1960s, 21 per cent of the island’s women were professional divers, their bounty accounting for 60 per cent of Jeju’s fisheries revenue. While brides in other parts of South Korea were expected to provide a dowry, on Jeju the

Sea women prepare for work using only flippers, goggles and no breathing equipment.

men paid a bride price. Portfolio

The divers adhere to a strict hierarchy. Young divers stay clear of the shallow waters where the older and weaker women dive. When the village school needs repairs, they donate a portion of the proceeds of their catch.

Kang Yi-sook, right, and other haenyuo share a meal of potatoes before work.

“Diving was the lifeline for the entire family,” said Ku Young-bae, 63, one of

“Jeju children did not like to admit that

270 sea women from Hado-ri, a cluster of villages on Jeju’s eastern shore, before

their mother was a haenyeo,” said Lee

swimming into the waves recently. “Men

Sun-hwa, a member of the Jeju Provincial

are lazy,” she said. “They can’t dive. They

Council, whose mother and grandmother

are weak under the sea, where it’s really

were sea women. “The women always

life or death.”

elected their men as chiefs of their villages.” The sea women have partly been victims

Until recently, sea women from

of their own hard work. The introduction

Jeju also worked along the coasts of

of wet suits encouraged them to dive

mainland South Korea.

deeper and for longer hours, resulting in overharvesting and declining incomes and

“We children waited for our mothers to return home from their mainland trips,” said Lim Baek-yeon, 53, head of the Hadori sea women’s cooperative. “It meant new clothes and new shoes.”

Kang Yi-sook sorts the conch in her catch.

Kim Eun-sil, who has been diving for 60 years and is one of the oldest sea women in Hado-ri, with a photograph of her mother, centre, who was also a sea woman on Jeju Island.

health. The seaside shelters where they

The divers adhere to a strict hierarchy.

Jeju government pays for their wet suits

with empty bottles of painkillers and antiseasickness drugs. To help keep the tradition alive, the

Young divers stay clear of the shallow

and subsidises their medical and accident

waters where the older and weaker

insurance. Their government-financed

women dive. When the village school

shelters are now equipped with heated

needs repairs, they donate a portion of the

floors and hot-water showers.

proceeds of their catch. The divers’ economic independence

The sea women have also regulated themselves – imposing voluntary

contributed to Jeju’s divorce rates, the

no-harvest seasons, no-diving zones and

highest in South Korea. But despite their

monthly limits on the number of diving

essential role, the divers were held in

days – to sustain the profession.

low esteem by a society that frowned on

But Kim, who raised five children and

women travelling outside their villages and

paid her husband’s college tuition by

revealing bare skin. Until full-body wet

diving, says she will be the last haenyeo in

suits became available in the 1970s, they

her family.

wore homemade cotton suits that showed the thigh and often shoulders. May 2014

gather before entering the water are strewn

“My only daughter doesn’t even know how to swim,” she said. n

Essentials

Art

N A ROCKY PATCH of earth in the sprawling city of tents and prefab trailers that make up the Zaatari

refugee camp in Jordan the king, dressed in dirty jeans and a homemade cape, raised his wooden sceptre and announced his intention to divide his kingdom. His elder daughters, wearing paper crowns and plastic jewellery, showered him with false praise, while the youngest spoke truthfully and lost her inheritance. So began a recent adaptation here of King Lear. For the 100 children in the cast, it was their first brush with Shakespeare, although they were already deeply acquainted with tragedy. All were refugees who had fled the civil war in Syria. Some had seen their homes destroyed. Others had lost relatives to violence. Many still had trouble sleeping or jumped at loud noises. And now home was here, in this isolated, treeless camp, a place of poverty, uncertainty and boredom. Reflecting the demographics of Syria’s wider refugee crisis, more than half of the 587,000 refugees registered in Jordan are younger than 18, according to the United Nations. About 60,000 of those young people live in the Zaatari camp, where fewer than a quarter regularly attend school. Parents and aid workers fear that Syria’s war threatens to create a lost generation of children who are scarred by violence and miss vital years of education, and that those experiences and disadvantages will follow them into adulthood. The King Lear performance, the conclusion of a project than spanned months, was one attempt to fight that threat. “The show is to bring back laughter, joy

and humanity,” said its director, Nawar Bulbul, a 40-year-old Syrian actor known at home for his role in Bab al-Hara, an enormously popular historical drama that

SHAKESPEARE BEHIND BARBED WIRE Syrian refugee children performing King Lear in Jordan’s Zaatari refugee camp brought a brief glimpse of hope in an otherwise bleak existence, reports Ben Hubbard.

was broadcast throughout the Arab world. Last year, he and his French wife moved to Jordan, where friends invited him to help distribute aid in Zaatari. The visit Portfolio

Essentials Art

The tragedy briefly took their minds off life in the camp, where fewer than a quarter of its 60,000 young residents regularly attend school. May 2014

Nawar Bubal, a Syrian actor, watches his adaptation of Shakespeare’s King Lear.

exposed him to what he called “the big lie”

In later scenes, the king was heckled

of plastic tubing. A few scenes from

of international politics that had failed to

by the Fool, who wore a rainbow-

Hamlet were spliced in, making the

stop the war.

coloured wig, and eight boys performed a

story hard to follow. And at one point,

choreographed sword fight with lengths

a tanker truck carrying water roared by,

“There are people who want to go home, and they are the victims while the great powers fight above them,” he said. Children he met in the camp made him promise to return, and he did – with a plan to show the world that the least fortunate Syrian refugees could produce the loftiest theatre.

The visit exposed him to what he called “the big lie” of international politics that had failed to stop the war.

drowning out the actors and coating the audience in a cloud of dust. But the mere fact that the play was performed was enough for the few hundred spectators. Families living in nearby tents brought their children, hoisting them on their shoulders so they could see.

THE SUN blazed on the day of the performance, staged on a rocky rectangle of land surrounded by a chain-link fence topped with barbed wire. The 12 main actors stood in the middle, while the rest of the cast stood behind them, a chorus that provided commentary and dramatic sound effects. The audience sat on the ground. When each of Lear’s first two daughters tricked him with false flattery in elegant, formal Arabic, the chorus members yelled “Liar! Hypocrite!” until the sisters told them to shut up. And when the third sister refused to follow suit, the chorus members yelled “Truthful! Just!” until the king told them to shut up.

Thirteen-year-old Bushra al-Homeyid (centre) enjoyed her first taste of acting. Portfolio

Essentials Art government forces set his carpentry shop on fire. “We were a rebellious neighbourhood, so they burned every shop on the street,” Azzam said. He arrived in Zaatari a year ago with five other family members, but one of his brothers got sick and died soon afterward, and his elderly mother never adjusted to the desert climate and died, too, he said. He hesitated to send his children to school, fearing that they would get sick in the crowded classrooms, and he kept them from roaming the camp because he did not want them to start smoking or pick up other bad habits. But the theatre project was close to home, and his daughter was so excited about it that he let her go. The Fool, who travels with the outcast King Lear, wore a brightly-coloured wig.

The crowd burst into applause, and a number of the leading girls broke into tears. Bulbul said they were overwhelmed because it was the first time anyone had clapped for them. “People get opportunities in life, and you have to take advantage of them,” Azzam said. “She got a chance to act when she was young, so that could make it easier for her in the future.” The mother of Bushra al-Homeyid, 13, who played another of Lear’s daughters, The King Lear cast was overcome with emotion after the audience’s applause.

After Lear’s descent into madness and

“I am the mother of King Lear,”

said the family fled Syria after government shelling killed her niece and nephew. “The camp is an incomplete life, a temporary

death, the cast surrounded the audience,

declared Intisar al-Baradan when asked

life,” she said. “We hope that our time here

triumphantly chanting “To be or not to

if she had seen the play. She had brought

will be limited.”

be!” in English and Arabic. The crowd

about 20 relatives to the performance,

burst into applause, and a number of the

she said, adding that her son was also a

that her eldest daughter, who was in

leading girls broke into tears. Bulbul said

great singer.

high school, would not be ready to go to

they were overwhelmed because it was the first time anyone had clapped for them. AFTER THE show, as journalists

Other parents described the project

college. Her younger daughter Bushra,

as a rare point of light in a bleak camp

grinning widely and still wearing her

existence.

yellow paper crown, said she had never

Hatem Azzam, whose daughter

interviewed the cast, the parents boasted

Rowan, 12, played one of Lear’s daughters,

of their children’s talent.

said the family fled Damascus after

May 2014

But after a year here, she worried

acted before but wanted to continue. “I like that I can change my personality and be someone else,” she said. n

POISE AND CHARACTER Audi’s high-performance limousine, the S8, is a luxurious executive rocket that will put a smile on your face, reports Guido Duken.

LTHOUGH AUDI ALMOST

design and development chiefs. But if you

are also well catered for, with enough

tripled its sales in the last

want an Audi now that stands apart from

head and legroom for three adults in the

decade, the rapid growth

the crowd the S8 might be the answer.

back. Up front, there’s a huge range of

at VW’s biggest earnings contributor

The S8 differentiates itself from the

adjustment for both driver and passenger

is slowing. One reason, critics say, is

standard A8 by adding enormous 20-inch

and despite its dimensions, visibility is

that Audi models currently so closely

alloy wheels, a more aggressive single-

good so the S8 is fairly easy to park.

mirror one another that it’s hard to tell

frame chrome grille and a subtle body kit.

them apart. But the look has become

At the back, a set of quad-exhaust pipes

the S8 represents the fastest and most

increasingly important to consumers.

and special ‘S’ badging give clues to its

exclusive version available. The S8 is

Design for the first time replaced fuel

performance potential. On the inside, the

economy as the most important selling

already high-class interior has been given

two IHI turbochargers, which yields

point after reliability, according to a

a range of sporty upgrades, including

520bhp and 650 Nm of torque. If you’re

survey of German buyers by researcher

grey-back dials, carbon-fibre trim and

late for a meeting the 0-100 km/h time of

Deutsche Automobil Treuhand.

quilted leather and Alcantara on the

4.2 seconds and a governed top speed of

seats and dashboard.

250 km/h might come in handy.

Fortunately, Audi is well aware of this. VW Chairman Ferdinand Piech

The S8 offers the same generous level of

Like all other Audi S and RS models,

But that’s not where the technical

and Chief Executive Officer Martin

space as the standard A8, which includes

wizardry ends. The S8 has recuperation

Winterkorn, both of whom previously

a 510-litre boot. It also comes with an

and start-stop systems, as well as a

ran Audi, are shaking up the Ingolstadt-

electric tailgate and an opening that’s

newly developed “cylinder on demand”

based automaker with an overhaul of

wide and flat, making it easy to load even

technology. Under part load, it deactivates

top management, including naming new

the bulkiest of items. Rear seat passengers

four of the eight cylinders for an efficiency

Portfolio

Essentials Test Drive

The 4-litre V-8 has a newly developed “cylinder on demand” technology.

gain that, according to Audi, reduces fuel consumption to 10.1 litres per 100 kilometres. That’s 23 per cent less than its predecessor, despite gaining 70bhp. Mind you, the way I was driving it was closer to 20 litres per 100 kilometres. On the freeway, despite it performance credentials, the S8 is still a quiet and

The S8’s interior has a range of sporty upgrades such as carbon-fibre trim.

comfortable limousine. A very clever active noise cancellation system makes it virtually silent at cruising speed. One of the S8’s features is a specially tuned adaptive air suspension with variable damping, which can vary the ride height of the body between three levels to ensure a wide-ranging driving experience. Dynamic steering, also standard, adapts its steering ratio and boost to the vehicle’s speed. It uses slight, nearly imperceptible steering corrections to stabilise handling at the cornering limit. The Audi drive select dynamics system encompasses these two systems as well

A set of quad-exhaust pipes and 20-inch alloy wheels allude to the S8’s high-performance credentials.

as engine management, the eight-speed

four cylinders is imperceptible. The only

tiptronic and the sport differential. The

indication I had that it was happening at

of standard equipment, but when you

driver can determine the function of these

all was thanks to the instrument panel.

add options the price climbs fairly rapidly

components by choosing between the five

In the corners the S8 really surprises.

from its $129,000 starting point. The

modes comfort, auto, dynamic, individual

Despite it’s almost two-ton weight it really

driver assistance systems, such as the

and efficiency.

sticks and is far more nimble than its 5.14-

adaptive cruise control system with stop

There are luxury limousines that are

metre body would suggest. The vectoring

and go function, Audi side assist, Audi

quieter than the S8, and some that feel

sport diff at the rear pushes the torque to

lane assist, the speed limit display and the

sportier. But as a package the S8 works

the outside wheel for sprightlier turn-ins,

night vision assistant with highlighting of

well. The power is always there, turbo

while the quattro system, with its 40/60-

detected pedestrians, are not included.

lag doesn’t exist and the straight-line

per cent front-to-rear torque split, supplies

As a fast, capable executive rocket,

acceleration is almost frightening. On

the grip you need. There is some body roll,

the S8 is absolutely satisfying. But more

the open road the switch from eight to

but the S8 still feels very controlled.

importantly, it has poise and character. n

May 2014

The S8 comes with a generous helping

Essentials

Other Business

Banning Paris’ ‘Love Locks’ For some they are a symbol of

become unbreakable. However, with

everlasting love. For others they are

an estimated 700,000 padlocks

a rusting eyesore. But now the ‘love

now attached to locations across the

locks’ – padlocks engraved with the

French capital, the weight could be

names of lovers – that line the rails

putting the structural integrity of

of Paris’ bridges may have met their

the city’s architecture at risk.

have them banned. The No Love Locks campaign

The city council, evidently aware of the locks’ popularity with tourists, has so far resisted taking

was launched in February. The idea

action, although concerns about

is that by attaching the locks to a

the damage they cause to the

public place and throwing away

architecture have been raised in

the key, the love it represents will

the past.

REUTERs

match, as a campaign takes off to

Vegan Crocs for High Fashion Crocodiles are feared predators in Africa, but at Nyanyana crocodile farm in Zimbabwe, they are fed a diet of vegetarian pellets. Besides being cheaper than meat, the diet of protein concentrate, minerals, vitamins, maize meal and water is said to enhance crocodile skin destined to become handbags or shoes on the catwalks of New York, Paris, London or Milan. The company has 164,000 crocodiles REUTERs

in all and started feeding pellets in 2006 at the height of an economic crisis in

Bad Hair Day?

Zimbabwe that made meat scarce and

North Korea failed to see the joke when a

Asian state had been ordered to have the

42,000 skins to tanneries in Europe,

London hair salon used a picture of its

same hairdo.

especially France, where the average skin

Last year, Harare-listed Padenga sold

The promotional poster read: “Bad Hair

customers and has written to Britain’s

Day? 15 percent off all gent cuts through

Foreign Office asking it to stop what it calls

the month of April.”

a “provocation”. The hair salon in west London put up a

fetches $550.

Officials at the country’s embassy, which is just a short walk away from the

giant poster of the North Korean leader

salon, visited to complain and wrote to

in its window after reading unconfirmed

the Foreign Office asking it to take

media reports that men in the reclusive

“necessary action”.

REUTERs

leader Kim Jong Un to try to attract more

very expensive.

Portfolio

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