Portfolio | September 2015

Portfolio Exclusive to Emirates First Class and Business Class

MUSIC ROYALTIES Artists Battle The Industry CAREER CHANGE Programming Is King SUPERCITY Beijing’s Growth Plan

Gwyneth Paltrow The Brand Behind Goop

Issue 117 n September 2015

Montblanc Heritage Spirit Moonphase and Hugh Jackman Crafted for New Heights The new Montblanc Heritage Spirit Moonphase features the moonphase complication in the spirit of traditional ďŹ ne watchmaking. Housed in a 39 mm 18 K red gold case, the self-winding Calibre MB 29.14 indicates the moonphase in a crescent-shaped aperture, making this reďŹ ned timepiece a true lifetime companion. Visit Montblanc.com

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This issue SEPTEMBER 2015

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15

Exclusive to Emirates First Class and Business Class

Cover Story 38 Gwyneth Paltrow Goes To Market

© Rob Latour/REX Shutterstock

Goop, Paltrow’s lifestyle platform, has been polarising since the day it was launched, and that might be its greatest asset as it tries to extend its reach.

Features 44 Music Artists Take On the Business

54 A Supercity Rises Around Beijing

Musicians are calling for change as paltry royalties from

Beijing is planning to incorporate surrounding towns and

streaming services eat into their incomes.

cities to create a new supercity of 130 million people.

48 Qatar an Energy Giant

44

58 Coding a Career Change

About a third of all liquefied natural gas is produced by

As the tech sector booms, workers are turning to the

Qatar, making it the world’s wealthiest nation per capita.

language of the digital world to reboot their careers.

48

54

58

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Exclusive to Emirates First Class and Business Class

Essentials

63

63 The French Side of Basque Country Most people associate Spain with the Basque Country, but out of its seven provinces, three are in France. And the French side is very different from its neighbour.

68 A Taste of London We head to London to sample a selection of culinary establishments with a traditional and historic flavour. From afternoon tea to fish and chips, old-fashioned pubs and

68

elegant dining rooms, there is something for everyone.

74 The Path Ahead for Korea’s Kimchee The Koreans are so passionate about their fermented cabbage that it has become a point of friction with neighbouring China.

78 Mogao Caves Under Threat A plan to build a theme park next to the Mogao Caves, a UNESCO World Heritage Site, has alarmed scholars and preservationists.

82 Czech Company’s Unexpected Hit GZ Media in the Czech Republic expects to produce 20 million albums this year, thanks to an explosion in global vinyl demand.

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

78

Departments 19 Notebook World business in a nutshell.

27 Observer Spotting and analysing business trends.

36 Column: Les Carpenter Who Wants to Be An Olympic Host City?

Published for Emirates by

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Editor-in-Chief Obaid Humaid Al Tayer Managing Partner & Group Editor Ian Fairservice Editorial Director Gina Johnson Group Editor Guido Duken Deputy Editor Vishwas Kulkarni Junior Writer Mary Sophia Picture Researcher Hilda D’Souza Editorial Assistant Londresa Flores Senior Art Director Tarak Parekh Senior Designer Charlie Banalo General Manager – Production S Sunil Kumar Production Manager Murali Krishnan Chief Commercial Officer Anthony Milne Email: anthony@motivate.ae Group Sales Director Craig Wagstaff Email: craig.wagstaff@motivate.ae International Sales Manager Martin Balmer Email: martin.balmer@motivate.ae Group Sales Manager Jaya Balakrishnan Email: jaya@motivate.ae Senior Sales Manager Michael Underdown Email: michael@motivate.ae INTERNATIONAL MEDIA REPRESENTATIVES AUSTRALIA/NEW ZEALAND Okeeffe Media; Tel + 61 412 080 600, licia@okm.com.au BENELUX M.P.S. Benelux; Tel +322 720 9799, francesco.sutton@mps-adv. com CHINA Publicitas Advertising; Tel +86 10 5879 5885 GERMANY IMV Internationale Medien Vermarktung GmbH; Tel +49 8151 550 8959, w.jaeger@imv-media. com HONG KONG/MALAYSIA/THAILAND Sonney Media Networks; Tel +852 2151 2351, hemant@sonneymedia.com INDIA Media Star; Tel +91 22 4220 2103, ravi@ mediastar.co.in ITALY & SPAIN IMM International; Tel +331 40 1300 30, n.devos@imm-international.com JAPAN Tandem Inc.; Tel + 81 3 3541 4166, all@tandem-inc. com NETHERLANDS GiO media; Tel +31 (0)6 22238420, Giovanni@giO-media.nl TURKEY Media Ltd.; Tel +90 212 275 51 52, mediamarketingtr@medialtd.com.tr UK Spafax Inflight Media; Tel +44 207 906 2001, nhopkins@spafax.com USA Totem Brand Stories; Tel +212 896 3846, faith.brillinger@totembrandstories.com

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F O R

S H O P P I N G

L O V E R S

CA S T E L L A N A

S TO R E

S TO R E

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

DEPARTMENT STORES SPAIN & PORTUGAL

BA R C E LO N A

19

Notebook B U S I N E S S

N EW S

The Food Waste Problem

B R I E F

global population. Reducing food wastage

food annually, whereas in sub-Saharan

would ease the burden on resources as the

Africa and south and south-east Asia the

world attempts to meet future demand.

equivalent waste was just 6-11 kilograms.

The problem is global but manifests

The environmental impact of food loss

itself in starkly different ways. In developing

and waste is high. The carbon footprint of

Each yEar 1.3 billion tonnes of food,

countries there are high levels of what is

food produced and not eaten is estimated at

about a third of all that is produced, is

known as “food loss”, which is unintentional

3.3 gigatonnes of CO2, meaning that if food

wasted, including about 45 per cent of all

wastage, often due to poor equipment,

waste were a country it would rank as the

fruit and vegetables, 35 per cent of fish and

transportation and infrastructure. In

third highest national emitter of greenhouse

seafood, 30 per cent of cereals, 20 per cent

wealthy countries, there are low levels of

gases after the US and China. About 1.4

of dairy products and 20 per cent of meat.

unintentional losses but high levels of

billion hectares, or close to 30 per cent of

Meanwhile, 795 million people suffer from

“food waste”, which involves food being

available agricultural land, is used to grow

severe hunger and malnutrition.

thrown away by consumers because they

or farm food that is subsequently wasted.

have purchased too much, or by retailers

And more surface and groundwater is used

loss of food – such as recent laws in France

who reject food because of exacting

to produce wasted food around the globe

that require supermarkets to distribute

aesthetic standards.

than is used for agriculture by any single

Well-publicised attempts to combat the

unsold food to charities – have highlighted Photos: Getty Images, Corbis

I N

In developed countries, consumers and

country, including India and China.

the issue of food waste, identified by the UN

retailers throw away between 30 and 40 per

The worst food waste offenders are the

as one of the great challenges to achieving

cent of all food purchased, whereas in poorer

US, Canada, Australia and New Zealand,

food security.

countries only five to 16 per cent of food is

where consumers waste 39 per cent of all

thrown away. According to a 2011 report,

food purchased, followed by Europe, where

production will need to have increased by

in Europe and North America each person

about 31 per cent of all food purchased by

60 per cent on 2005 levels to feed a growing

wasted 95-115 kilograms of otherwise edible

consumers is thrown away.

Estimates suggest that by 2050 food

September 2015

20

Notebook N u m b e r s

G a m e

The world in figures around the world when they bring it home.

share. The average price target rose from $480 a share to $560.

$725

150,000

million is the asking price for the W.T. Waggoner Estate Ranch in Texas, the largest US ranch within a single fence. At 2,072 square kilometres, the Waggoner sprawls over six counties and is bigger than Los Angeles and New York City combined. It comes complete with 1,000 oil wells and 6,800 cattle.

9.7 457

is the total number of companies that US presidential hopeful Donald Trump is the president of. Trump also presides over more companies in the capacity of director, chairman, trustee or member.

$200

billion is the amount of cash Apple has in its coffers, with almost 90 per cent of it being held overseas. This is

a headache for Apple, as US companies owe the full 35 per cent US corporate tax rate – the highest of any industrialised nation – on income they earn

billion people will be the earth’s population in 2050, according to the latest projection by the UN. This predicted increase of 2.4 billion from today’s 7.3 billion will complicate efforts to stamp out poverty, inequality and hunger and place further strain on health and education systems.

19

cents a share was the surprise second-quarter profit Amazon announced, confounding analysts who had predicted a loss of 14 cents a

defects, including 85,000 serious ones have delayed the opening of Berlin Brandenburg International Willy Brandt Airport. The airport, which was slated to open in 2012, has seen its costs tripled to €5.4 bn.

$105

million is the record fine Fiat Chrysler has to pay. The National Highway Traffic Safety Administration issued the fine for recall lapses covering millions of vehicles, adding to mounting scrutiny of the auto maker’s safety practices.

$37.2

billion is the value of Warren Buffet’s biggest deal ever. His Berkshire Hathaway investment conglomerate will pay $235 a share for Precision Carparts, a maker of aircraft parts and energy production equipment.

UK’s Chinese Windfall Spending by Chinese visitors in the UK jumped in July, as the country’s shops and restaurants benefited from simplified rules on tourists applying for visas.

Chinese visiting the UK spent $78 million on their credit cards in July, up 45 per cent from a year earlier, according to Visa Europe. About 185,000 Chinese tourists came to Britain in 2014, and visitors from the country are now the second-highest spending tourists.

The surge in spending comes after efforts by the UK government to make it easier for the Chinese to visit. On July 1, Britain introduced a pilot programme allowing Chinese citizens to obtain a tourist visa for the UK and the 26 European countries in the Schengen area simultaneously.

The extra money spent by the Chinese went on eating out, trips to the supermarket and shopping, Visa Europe said.

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22

Notebook Big Deal Fever Returns

its peak, with this year’s deals, at $233

Warren Buffett’s largest ever deal – a

at $1.51 trillion, already close to last year’s

$37 billion buyout of aerospace supplier

full-year figure of $1.55 trillion, and will

Precision Castparts – is just the latest

surely beat the previous record total of

example of a resurgence in the merger

$1.56 trillion in 2000. The global figure,

market that, by the end of the year,

swollen by an upsurge in Asian deals,

might break records set before the

broke through $3 trillion last month,

financial crisis.

not far short of last year’s annual total of

billion to date, well below the $485 billion for the year achieved in 2000.

US deal values so far this year stand,

$3.6 trillion.

Buffett’s move took place against the

Bankers are predicting that global

backdrop of an increasingly buoyant global mergers and acquisitions (M&A)

surpassed last year’s annual figure,

takeover-deal announcements this year

market. US deals are already well on their

according to data firm Dealogic, and a

could reach the record-breaking $4.6

way to beating their previous high of

London-based deal, Shell's $81.5 billion

trillion achieved in 2007 if the current

2007; the UK is quieter, but nevertheless

proposed takeover of oil and gas explorer

pace of activity continues. This is due in

keeping investment bankers busy.

BG, tops the list of global transactions so

part to emerging economies becoming

far. But Britain is still some way short of

even more powerful since the crash.

UK deal values this year have already

Uber Boosts Indian Car Sales Ola, the biggest Indian ride-booking

Uber Technologies has posed a threat to

Industrywide passenger-vehicle sales

auto sales by enticing car owners to ditch

expanded 7.5 percent in the same period.

app, is seeing rising demand for new

The surge in demand for these cheaper

vehicles coming especially from new

their keys. In India, its popularity has sparked a vehicle boom instead.

models is helping to drive a recovery in

drivers who sign up for its service.

Maruti Suzuki India Ltd. has seen a

vehicle sales in India. Automakers like

The company, which counts billionaire

surge in demand for its DZire Tour sedan

Maruti Suzuki get about a third of their

Masayoshi Son’s SoftBank Group as an

because of the rising popularity of car-

sales volume from rural areas, where

investor, is working with automakers to

booking apps, said R.S. Kalsi, executive

incomes are correlated to rainfall during

offer discounts and easier access to car

director at India’s largest carmaker.

the monsoon season and a good harvest.

loans for its drivers.

Toyota is offering special deals to woo drivers and fleet operators that are boosting orders for its Etios sedan, which starts at $9,400.

Uber and other booking apps have announced plans to expand to smaller cities in India, where public transportation is often inadequate. The services have created a boom in demand from for-hire car companies expanding their fleets and from individual operators buying new cars to drive for the apps.

In the four months through July, Maruti Suzuki’s DZire Tour, sold only as a taxi, surged 152 percent while Toyota’s Etios compact sedan gained 28 percent.

Portfolio

24

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Notebook

UNITED ARAB EMIRATES

September 2015 7-9

GIFTS & PREMIUMS Dubai World Trade Centre giftsandpremium-dubai.com The UAE’s only gift fair brings together buyers and distributors from across the MENA region and showcases the latest in gifting trends. The event offers a fresh approach this year with several new initiatives designed to offer additional opportunity for exhibitors to reach key decision makers. New and improved contents this year include a series of industry-led conferences and seminars complementing the exhibitions, pre-event promotional campaign and early bird benefits that secure exhibitors premium placement with enhanced brand exposure opportunities.

8-10

CITYSCAPE GLOBAL Dubai World Trade Centre cityscapeglobal.com The region’s biggest real estate event brings together key real estate investors, developers and government officials all under one roof. This 14th edition will host more than 300 exhibitors in an expanded arena with two additional exhibition halls.

Juggernauts of the industry including Emaar, Dubai Properties and Nakheel will unveil their upcoming projects alongside first-time exhibitors such as Kleindienst Group and Al Barari. The Cityscape Awards this year will incorporate a cocktail party after the official ceremony.

14-15

seeking to showcase their products and services and to engage with wholesalers, distributors and agents. The event programme includes a three-day vision conference that will host over 70 experts from across the industry to address trends seen in the global hospitality industry, measures to drive leisure demand, and ways to deal with sustainability issues. The programme will also explore emerging markets, destination marketing and tourism infrastructure.

TELECOMS WORLD MIDDLE EAST

28-30

The Ritz-Carlton DIFC terrapinn.com/conference/telecomsworld-middle-east/ This event is platform with a comprehensive agenda that brings together four events.

This allows participants to choose the sessions which are most applicable to their business. Attendees can select from TWME Networks that offers sessions on deployment and optimisation of next generation connectivity. TWME Carriers offer talks on content and collaboration for global wholesale teams, TWME Digital Services provides steps to planning and monetising new digital, mobile and home services, and TWME Customer Experience showcases strategies on providing quality service and customer engagement.

Dubai World Trade Centre theleisureshow.com The UAE’s leading leisure industry exhibition represents all sectors of the industry from pool and spas to fitness and outdoor design, furniture and lighting. This dedicated trade show attracts a diverse cross section of the leading industry figures and key decision makers. Split into distinct zones to cater for all operators, visitors can enjoy varied and engaging activities including the chance to explore the custom built spa areas, attend the vision conference offering insights into industry trends, and source products and meet with suppliers that cover all recreational facilities including theme parks and fun-fairs.

THE LEISURE SHOW

Portfolio

Observer BUSINESS NEWS IN BRIEF

Netflix Streamlines Old Business Although Netflix is focused on its streaming service, its DVD-by-mail operation is still making a tidy profit, reports Emily Steel.

into a global streaming service.

Netflix now counts more than 65 million streaming members in more than 50 countries and plans to expand across the world in the next 18 months. But that breakneck growth comes at a cost: the company expects its streaming business to just break even globally through 2016 as it pours billions of dollars into content and

and reinsert it into the original sleeve. That

early-spring morning at Netflix’s DVD

disc was then returned to the storage carts

operations in Fremont, California, where

or shipped out to another customer who

company’s dwindling, often ignored DVD-

metallic arms whirred in a giant glass box

had requested the title.

by-mail operation, known for envelopes

and rolling carts holding millions of DVDs © 2015 New York Times News Service

an aggressive expansion.

It was just past sunrise on an

About 3,400 discs zip through the rental

Helping fuel that expansion is the

that wind up under sofa cushions and

lined the walls. The company’s iconic red

return machine each hour, five times as

viewed by many as an anachronism in an

envelopes buzzed through an assembly line

many as when teams of Netflix employees

era of lightning-fast streaming. Netflix has

at the other end of the warehouse.

used to process the discs by hand. Called

5.3 million DVD subscribers, a significant

the Amazing Arm by engineers here, the

falloff from its peak of about 20 million in

mailer into the system then proceeded to

machine symbolises the way Netflix has

2010; still, the division continues to make

slice open the envelope, identify and clean

managed to maintain a profitable physical

hundreds of millions of dollars in profit

the disc inside, check that the DVD worked

DVD operation even as it transforms itself

each year. And engineers are trying to

The machine sucked a returned Netflix

September 2015

27

28

Observer improve customer service and streamline the labour-intensive process of returning, sorting and shipping millions of DVDs each week.

Netflix has not put a life expectancy on its DVD division. Even as its subscriber count shrinks, the group has kept a core base of customers, particularly in rural zones with lacklustre internet service and among people who want access to the breadth of its selection, and executives expect it to stay around. To hold on to those customers – and the profits they bring – Netflix continues to deploy innovative technologies that help trim costs as well as improve customer service.

“If you cut back on service, you are going to lose your subscriber base,” said Hank Breeggemann, general manager of Netflix’s DVD division, who has worked

was that the company would not make

and producing original series like the

for the company for 13 years. “Expect us

the leap from DVDs to streaming. At the

political drama House of Cards, while

to continue to ship DVDs for the

time, Netflix was suffering a humiliating

the DVD division focused on managing

foreseeable future.”

blow after its disastrous attempt to raise

the subscriber decline of the mail service

prices and split into two companies – one

by making it more efficient. The two

to employ about 100 people to handle

for its DVD mailing group and another

groups have separate management teams,

the returning, sorting and shipping of the

for streaming. About a million customers

headquarters that are about 40 kilometres

DVDs. Today, about 25 employees work

cancelled their subscriptions.

apart and different employee incentives.

Here at the Fremont hub, Netflix used

through the night, largely assisting the

“Most companies that are great at

“What’s interesting is that although the

machines. “Embrace change – that’s what

something – like AOL dialup or Borders

business is in a slow decline, there is still

I’ve learned here at Netflix,” Breeggemann

bookstores – do not become great at

a huge demand there,” Breeggemann said

said. “If you don’t like change, this is the

new things people want (streaming

of the DVD side, noting that Netflix had

wrong place. Something is going to change

for us) because they are afraid to hurt

about 93,000 titles on DVD and next-

every single day.”

their initial business,” Hastings said in a

day delivery service for 92 per cent of its

September 2011 blog post, in the midst

subscribers. Recently–released films tend

perpetual change. Software executives

of the tumultuous period. “Eventually

to be available only on DVD and not on the

Reed Hastings and Marc Randolph

these companies realise their error of

streaming service because of rights issues.

founded Netflix in 1997 to offer online

not focusing enough on the new thing,

movie rentals by mail. Netflix introduced

and then the company fights desperately

distribution centres across the country.

streaming in 2007 and plans to be fully

and hopelessly to recover,” he continued.

Now that number is down to 33. The

global by 2017. Netflix’s transformation

“Companies rarely die from moving too

introduction of automation technologies

has been rocky at times, but its evolution

fast, and they frequently die from moving

has allowed the company to process more

has become an example of how companies

too slowly.”

DVDs and expand service areas.

If anything, the Netflix story is one of

At its peak, Netflix operated about 50

“Yes, we still do DVDs,” Breeggemann

can adapt, tapping their legacy businesses

Within months, Netflix had publicly

to fuel growth in new areas as the ground

abandoned the separation. But behind

said with a laugh, responding to a

underneath them shifts.

the scenes, it quietly divided the company

comment that many people were not aware

in two. The streaming side focused on

that Netflix still provided discs. “It is a

luring subscribers around the globe

completely different company.”

Four years ago, Hastings, Netflix’s chief executive, said one of his greatest fears

Portfolio

Observer

30

O N E

2

w a t c h

Text: Hilda D’Souza

Ade Ayeyemi

Photos: Corbis

Group Chief Executive

Pan-African bank Ecobank Transnational Inc. has named Ade Ayeyemi as its new group chief executive with effect from September 1.

Ayeyemi, 52, will replace Albert Essien who retired in June after nearly 25 years of service with the group and functioned as its chief executive since March 2014. The Ecobank board has made an interim arrangement for managing the group until August 31 when Ayeyemi assumes office.

Ecobank Transnational was set up by mostly private West African shareholders in 1985 with the mission to develop and integrate African economies. It expanded through organic growth and acquisitions to become a leading pan-African banking group with a presence in more African countries than any other bank. It’s recognised as one of the leading providers of wholesale, retail, commercial, investment and transaction banking services and products and has assets worth more than $22 billion according to the bank’s 2013 report.

However, in 2013 the bank’s leadership faced a crisis that shook the confidence of its shareholders. The large outstanding debts of $7.5 million – owed by businesses associated with its chairman, Kolapo Lawson – led to the sacking of chief executive Thierry Tanoh and the election of a new board. The bank’s trouble became even more complex in January 2014 when an investigation by

Nigeria’s security and exchange commission revealed a series of alleged breaches including inadequate transparency in the recruitment procedures, a lack of effective mechanisms in achieving ethical behaviour in the organisation, and the absence of a clear vision and strategy.

The appointment of Essien, in March 2014, helped restore stakeholders’ confidence and also drew fresh investments from financial institutions with Qatar National Bank and South Africa’s Nedbank becoming strategic shareholders. Although Essien was able to end the boardroom crises that threatened to cripple the bank, he struggled to rebuild the bank’s damaged image as it continued to reel under allegations of poor corporate governance. According to Fitch Ratings the group’s operating environment is considered to be volatile and challenging.

Analysts believe that Ecobank will benefit from the substantial synergies accompanying the investment deals. Nedbank and Qatar National Bank are strong in terms of crossborder banking as well as sharing technical skills, strong governance practices and risk management expertise.

The general consensus amongst stakeholders and the industry is that Ayeyemi is the right man to lead the bank through the next phase of its development as he is an experienced banker with a successful track record at Citigroup, where as CEO he led the group’s sub-Saharan African division based in Johannesburg.

“Ade is a truly outstanding individual with deep knowledge of banking across Africa.

After a thorough and extensive search throughout the African continent we are delighted to have secured Ade as the person to lead Ecobank through the next phase of its development and beyond as a worldclass pan-African bank,” the bank’s chairman Emmauel Ikazoboh said in his welcome note.

Ayeyemi is Nigerian and an accounting graduate from the Obafemi Awolowo University in Nigeria. He also studied at the University of London and is an alumnus of Havard Business School.

++++++++++++++++++ ++++++++++++++++++ “Made in India” ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ Growth ++++++++++++++++++ ++++++++++++++++++ Two major tech firms that now make ++++++++++++++++++ most of their products in China have ++++++++++++++++++ pledged to dramatically expand their ++++++++++++++++++ ++++++++++++++++++ operations in India. ++++++++++++++++++ Chinese smartphone maker Xiaomi ++++++++++++++++++ ++++++++++++++++++ debuted the Redmi 2 Prime last month. ++++++++++++++++++ The device, which will cost about $100, ++++++++++++++++++ ++++++++++++++++++ will be the company’s first product ++++++++++++++++++ assembled in India. ++++++++++++++++++ ++++++++++++++++++ In a separate announcement, ++++++++++++++++++ Foxconn, one of the largest suppliers ++++++++++++++++++ for Apple, Xiaomi and other big tech ++++++++++++++++++ ++++++++++++++++++ companies, committed to investing $5 ++++++++++++++++++ billion over five years to build factories ++++++++++++++++++ ++++++++++++++++++ in India’s Maharashtra state. ++++++++++++++++++ The developments are a sign that ++++++++++++++++++ ++++++++++++++++++ Prime Minister Narendra Modi’s “Make ++++++++++++++++++ in India” campaign, which is designed ++++++++++++++++++ ++++++++++++++++++ to boost the country’s manufacturing ++++++++++++++++++ sector, is starting to pay off. The effort ++++++++++++++++++ includes outreach to foreign firms and ++++++++++++++++++ reforms that will make it easier for them ++++++++++++++++++ to operate in India. ++++++++++++++++++ ++++++++++++++++++ In China, rising labour costs and labour ++++++++++++++++++ disputes have made manufacturing less ++++++++++++++++++ ++++++++++++++++++ appealing for many large firms like Xiaomi ++++++++++++++++++ and Taiwan-headquartered Foxconn. ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ ++++++++++++++++++ Portfolio

LONDON | GOLD COAST | SYDNEY CALLEIJA.COM

Observer Hong Kong Visitors Down

of July compared with the same period a year earlier, according to Michael Wu, head of the city’s Travel Industry Council. With

A series of anti-

fewer mainland Chinese staying overnight,

China and pro-

average daily rates at Hong Kong’s hotels fell

democracy protests

for a ninth straight month through June.

In addition, China slashed tariffs on

last year prompted stores to close

products such as face creams and imported

and mainland

sneakers from June 1, reducing Hong Kong’s

tour groups to

draw as a cheaper shopping destination.

The effect on Hong Kong’s retailers has

cancel bookings.

Meanwhile, a

been immediate and painful. Retail sales fell

slowing Chinese

in four of the five months through May, with

economy and

jewellery, watches and other high-end gifts

President Xi

the worst hit.

The Hong Kong tourism board forecasts

Jinping’s anticorruption and

and South Korea, as well as mainland

overall visitor arrival growth to slow to

austerity campaigns have also made the

alternatives including Shenzhen and

6.4 per cent in 2015 from 12 per cent

Chinese more wary of buying pricey cognac

Shanghai. Mainland Chinese travellers

last year, with mainland Chinese tourist

and Gucci bags in the city.

to Hong Kong last year grew by the

arrivals expected to drop by half to right

slowest pace since 2009, according to

per cent. Hong Kong’s economy expanded

Bloomberg Intelligence.

2.1 per cent in the first quarter from a year

While still the biggest outbound destination for Chinese tour groups last year, Hong Kong is in danger of losing its lead to regional rivals such as Thailand

Chinese tour group visitors to Hong Kong plunged 40 per cent in the first two weeks

earlier, weaker than a revised 2.4 per cent expansion in October through December.

Africa’s Rich Get Richer Africa is now home to more than 160,000 people with personal fortunes worth in excess of $1 million, a twofold increase in the number of wealthy individuals since the turn of the century that highlights the problem of deepening inequality as some of the world’s poorest nations register strong economic growth.

The combined wealth holdings of high-net-worth individuals – those with net assets of $1 million or more – in Africa totalled $660 billion at the end of 2014, according to a report by New World Wealth, a South African market research firm.

Meanwhile, the number of poor people in Africa – defined as those living on less than $1.25 a day – increased from 411.3 million in 2010 to 415.8 million in 2011, World Bank data shows.

By 2024, the number of African millionaires is expected to

worldwide worth more than $1 million had reached 13 million with a combined worth of $66 trillion, although the number of

rise 45 per cent, to approximately 234,000, according to the

millionaires can vary depending on what assets are included and

report. During the past 14 years, the number of high-net-worth

different methods have produced different figures.

individuals in Africa has grown by 145 per cent. The rate for the

The World Bank has forecast an average of 5.5 per cent

Middle East over the same period was 136 per cent, while in Latin

economic growth for sub-Saharan Africa over the next year,

America it was 278 per cent. The global average was 73 per cent.

though it warned that, “extreme poverty remains high across

The report said that by the end of 2014, the number of people September 2015

the region”.

33

Observer T H E

W O R L D

top Text: Hilda D’Souza

1o

oil producers feel the pain

TOP SELLING ART IN THE FIRST HALF 2015 Rank

WoRk

aRtist

1

Les femmes d’Alger

Pablo Picasso

auction pRice ($M)) 179.37

2

L’homme au doigt

Alberto Giacometti

141.29

3

No.10

Mark Rothko

81.93

4

Buste de femme

Pablo Picasso

67.37

5

L’Allée des Alyscamps Vincent van Gogh

6

Benefits Supervisor

RestingLucian Freud

56.17

7

Colored Mona Lisa

Andy Warhol

56.17

includes Algeria, Iraq, Libya, Nigeria and Venezuela, a group dubbed

8

Nymphéas

Claude Monet

54.01

the ‘Fragile Five’ by RBC Capital Markets Ltd.

9

Composition No.III

Piet Mondrian

50.57

10

Portrait of Henrietta

MoraesFrancis Bacon

47.77

66.33

Source: Bloomberg

aRtists

by out-producing rivals are mounting.

As oil prices slump to six-year lows, the risks of worsening political turmoil are rising in the organisation’s most vulnerable nations. This

With even Saudi Arabia facing its biggest budget deficit in almost three decades, consultant Petromatrix GmbH says the plan to produce at full throttle was a “strategic mistake.”

Oil prices slumped to near $40 a barrel in New York on August

WORLD’S HIGHEST PAID ARTISTS Rank

The costs of OPEC’s plan to protect members’ share of the oil market

sales fRoM 2004-2014 ($M) 1,286

14 as a global surplus endures almost nine months after the

1

Gerhard Richter

2

Jeff Koons

581

3

Damien Hirst

549

4

Zeng Fanzhi

364

5

Richard Prince

296

Venezuela “appears poised for a near-term crisis” amid protests

Organisation of Petroleum Exporting Countries unveiled its plan to squeeze rivals led by US shale drillers. American production has stubbornly refused to buckle.

6

Zhang Xiaogang

272

and shortages of basic goods as the country heads for parliamentary

7

Christopher Wool

227

elections in December, according to RBC. The cost of insuring the

8

Fan Zeng

225

9

Peter Doig

193

government’s five-year bonds has rebounded to near a 12-year high.

10

Ed Ruscha

183

Source: Bloomberg

While promises of reform from newly elected President Muhammadu Buhari have bought Nigeria time, the grace period won’t last indefinitely, RBC says. The naira has weakened 7.8 per

TOP ADVISER BANKS TO US M&A DEALS Rank

adviseR

total value of deals ($B)

1.

Gigayacht

1

Goldman Sachs

554.3

168

cent against the dollar this year, pushing inflation outside the central bank’s upper target of nine per cent.

Libya’s risks of further political chaos are among the highest in the

2

Bank of America Merrill Lynch

444.4

organisation, matched only by Iraq, according to RBC. Threats have

3

Citigroup

392.4

4

JP Morgan Chase

391.9

also intensified in Algeria as it faces “a looming leadership transition.”

5

Barclays

378.4

6

Morgan Stanley

323.2

7

Lazard

201.7

As chief architect of OPEC’s new policy, Saudi Arabia has the

8

Credit Suisse

181.8

financial resources to absorb the short-term pain involved. These

The economies of both North African nations tipped into current account deficits last year after more than a decade of surpluses.

9

Centerview Partners

171.5

include a budget deficit for 2015 that the International Monetary

10

Deutsche Bank

124.3

Fund estimates at 20 per cent of gross domestic product, and the

Source: Bloomberg

September 2015

whittling away of $80 billion in foreign currency reserves.

35

Commentary

36

Les Carpenter against the bid proposals in Oslo, Krakow and Stockholm for the 2022 Winter Games. The costs of hosting the Olympics seemed too extreme, the rewards too small.

“The idea of a bidding process is a joke,” Ruffolo said. “Everybody’s laughing about it except for the people in Lausanne (Switzerland, home of the IOC). They don’t realise they are riding a dead horse. There was a time when the Olympics was a good thing – Los Angeles in 1984, Barcelona in 1992, even Beijing needed 2008 to prove to Photo: Corbis

the world it could do this – now since 2008 it’s a poison pill. The Olympics are dead.

It’s a dying concept no one wants to touch.”

Who Wants to be an Olympics Host City?

The reason BosTon’s residents

amount of building needed to placate the

may quickly dwindle until the only bidders

didn’t want to be Athens is the same

International Olympic Committee. While

will be places like Beijing or breakaway

reason the residents of Oslo or Krakow or

Rome and Paris will fight for the right to

Soviet republics. These are places that

Stockholm don’t want to be Athens. Hosting

put itself in financial peril a bigger truth

won’t need to worry about local opposition

an Olympics is a corporate sinkhole costing

should be clear: Why should anyone want

when writing cheques in the name of

billions of dollars and often leaving a city

to host an Olympics anymore?

national pride. The concept of getting

with a mountain of debt.

On July 31 the IOC chose Beijing as

2024 Games – the list of Olympic hopefuls

one big city to compete against another,

host of the 2022 Winter Games. The

with each promising more extravagance is

of empty, broken, useless stadiums built

vote was between Beijing and Almaty,

probably an old one. Fewer municipalities

in the euphoria of a coming Olympics

Kazakhstan. And this may well represent

will have the money to waste.

and then abandoned soon after. Is there a

the future of Olympic bidding – cities

better sign of Greece’s collapse than a pile

in countries that will spend any amount

years in China, working for a government

of useless sports facilities crumbling since

to run a Games hoping to make an

that would spend whatever it takes to

the torch went out in the summer of 2004?

international political statement.

prove to the world that its system is the

The internet is clogged with slide shows

What use did Athens have for a baseball

“The thing I’ve learned is that you have

Ruffolo has spent much of the last 10

best. China had little trouble building its

stadium anyway? It’s crumbling among the

to have local support,” said Jeff Ruffolo,

grounds for the Beijing Games and seems

weeds just like the field hockey venue, the

an American who was heavily involved in

to care little that the facilities from those

canoeing centre and the training pool is

operating Beijing’s 2008 Olympics, and who

Olympics remain unused. The point was

green with algae.

helped China prepare its 2022 bid and has

never an eternal, reusable city.

Those who were going to force the Olympics on Boston vowed their Games © 2015 Guardian News Service

After Rome, Paris, Hamburg and maybe Toronto or Doha – all fighting to host the

worked on other bids in the US including a failed attempt in Honolulu for 2024.

For the Winter Olympics, Beijing’s organisers will pull water from a nearby

would be frugal, insisting they would

Boston did not have local support for

lake to manufacture the piles of snow

build upon existing facilities and erect

the 2024 Summer Games. A small group

needed for mountain sports and will

temporary stadiums, cutting costs. But

of businesspeople, signing up for six-

construct a giant, high-speed rail line to

even the $4.5 billion required to organise

figure salaries, forced the bid through the

whisk athletes and spectators from the

the Games and the $6 billion needed for

US Olympic Committee despite strong

city to the remote outdoor locations. Who

new roads and parks seemed perilously

opposition in the city’s neighbourhoods.

can compete against this? Who would

low when considering the massive

A similar grassroots opposition worked

want to?

Portfolio

Profile

38

Goop, paltrow’s lifestyle platform, has been polarisinG since the day it was launched, and that miGht be its Greatest asset as it tries to extend its reach, reports anjali mullany

G w y n e t h

P a l t r o w

Portfolio

39

G o e s

September 2015

t o

M a r k e t

Profile

40

Gwyneth Paltrow is the founder – and the living embodiment – of the lifestyle brand Goop. She’s in Chicago to oversee the launch of a pop-up store in the Waldorf Astoria hotel. She walks across the showroom, past racks of $2,000 Stella McCartney dresses and $400 Phillip Lim gym shorts, to sit beside Goop’s CEO, Lisa Gersh.

Paltrow is often criticised for seeming, at best, removed from the cares of ordinary life. The public has always felt this way about her – simultaneously drawn to, and repelled by, her seemingly unattainable perfection. In 2013, for example, she was named People magazine’s Most Beautiful Woman and also Star magazine’s Most Hated Celebrity.

Paltrow knows that she has this effect on people. And she believes it has been

recommendations about living the good life.

Now the question is whether Paltrow

Living Omnimedia, from which Gersh stepped down as CEO in 2013). Gersh

good for her personal business, Goop, a

can turn the public’s powerful feelings

and Paltrow hope to sell Goop fashion

website and newsletter that offers style,

about her and her brand into a profitable

and home collections and make the brand

food, and wellness recommendations

business of scale.

synonymous with chic, minimalist, high-

from Paltrow and her circle of elite chefs,

In the past year, Goop has been gearing

quality living. Pop-up stores like the one

spiritual thinkers, and alternative health

up for a major expansion, hiring Gersh as

in Chicago may act as testing grounds for

professionals. This enterprise, which also

CEO, moving its headquarters from the

more Goop-branded brick-and-mortars in

sells fashion and home products, now has

UK to Los Angeles, amassing a 25-person

the future.

nearly one million newsletter subscribers,

team, pitching investors, building an

The pop-ups seem to serve another

according to the company; analytics firm

advertising unit, and planning its first

purpose: exposing the brand to people

Alexa.com estimates Goop receives more

private-label product: an organic skin-

who have a strong opinion about Paltrow

than 3.75 million page views per month.

care line due out in 2016. Gersh has

but have never visited her website. “I do

Even people who’ve never heard of Goop

restructured the company so that it’s in a

think a lot of the misperception comes

(a play on Paltrow’s initials) may have

position to realise a vision she and Paltrow

from people who haven’t actually gone

heard of “conscious uncoupling”. They may

share: to turn Goop into a “contextual

on the site, because a lot of the things

have also heard that Paltrow’s product

commerce” brand, in which editorial and

you see or hear, we’re like, ‘We never said

recommendations sometimes venture

sales work hand-in-hand to sell product

that, never wrote that, that’s not the price

into rather exclusive price ranges: $300

in a more seamless way than other

point, or this was totally out of context,’”

pyjamas, a $4,700 juicer. But while she

lifestyle brands (such as Martha Stewart

Paltrow says. “It seems that when people

is often criticised for being out of touch, it’s precisely her privileged lifestyle – she Photos: Corbis, Getty Images

is the Oscar-winning daughter of the late television producer Bruce Paltrow and the actress Blythe Danner, and was married to Coldplay frontman Chris Martin until last year – and her highly specific sense of style that gives her the authority to make

Top: Gwyneth Paltrow attends the Goop pop-up store launch party in Dallas for Monique Lhuillier products.

Paltrow is often criticised for seeming, at best, removed from the cares of ordinary life. the Public has always felt this way about her – simultaneously drawn to, and rePelled by, her seemingly unattainable Perfection.

Portfolio

41

Right: Paltrow at a signing for her cooking book It’s All Good. She personally tries out all the recipes featured on Goop.

really engage, they understand who we are and what we’re doing.”

Of all the activities on Paltrow’s professional pie chart these days – acting, investing, writing cookbooks, expanding her chain of high-end gyms with Tracy Anderson – Goop “is the biggest slice,” she tells me over the phone a month later. She started the company in 2008 at her kitchen table in her house in London, having reduced her acting schedule to about one film per year in order to spend more time with her children. For years she had been compiling notes on how to live an elevated life. At the same time, she found herself asking questions about food, fashion, health, and spirituality, and not finding a place on the web that answered them.

So she decided to start one, sharing tips makeup artists gave her before magazine shoots, restaurants she loved, unique spa treatments in far-flung locations, even advice from her therapists. “Like many other things in my life,” Paltrow says, “I sort of found myself in the middle of doing them before I really understood how I got there. It was the same with my movie career, or my cookbooks.”

As Paltrow was launching Goop, other fashion and lifestyle websites were popping up that would gradually expand into e-commerce. Refinery29, for example, had begun as an editorial site in 2005 (also at its founders’ kitchen table; it would open its shopping feature in 2012).

Goop was also the first in a recent wave of celebrity-driven lifestyle brands. The

suggestion. “I feel there’s something slightly

highly curated and, so far, available only

actress Rachel Bilson launched her fashion

misogynistic about it,” she told Time

in limited quantities. Shopping on Goop is

collection, Edie Rose, the same autumn

magazine in June. And the comparisons

not unlike shopping in Paltrow’s closet.

that Paltrow started her newsletter. Jessica

are not entirely apt. Honest pulled in $150

Alba cofounded the Honest Company in

million in revenue in 2014. Goop, with

project. Paltrow focused on sending

2011, and Reese Witherspoon launched

meagre earnings in comparison, has always

subscribers a weekly newsletter that

her Southern-inspired fashion-and-home

been a different kind of business, one that’s

contained a little bit of content – recipes

brand, Draper James, last year.

editorially driven and guided stringently by

for a post-holiday cleanse, photos of herself

Paltrow’s voice and personal aesthetic. The

modelling winter wardrobe suggestions,

product offerings on Goop are therefore

or advice from one of her many gurus.

Though the media presents these women as competitors, Paltrow bristles at the September 2015

At first, Goop was mostly a writing

Profile

42

The website was simply an archive of past

of traction in terms of moving tons of

Goop’s business model. She assembled

newsletters. “When I think back on it, I’m

product for other people, like hundreds

an advertising team to drum up a second

afraid to press send,” she says. “But at the

and hundreds of thousands of dollars of

stream of revenue (brands like Chanel

time, I had this belief in what I was going

product, and millions of dollars of product

are already running sizable ads on the

to do.”

for other brands, that I started to think,

Goop website); she worked with head

You know, there might be more of a

buyer Patrick Devlin and head of brand

Goop evolved slowly. Using

business here,” Paltrow says. In 2012, the

collaborations Brittany Weinstein to

her own money, Paltrow hired a COO, a

company made approximately $1.5 million

increase Goop’s product offerings on the

website editor, and a CEO, Seb Bishop,

in revenue, though it ended the year about

site; and she beefed up the content teams.

in 2010. Bishop had been an investor in

$40,000 away from actually turning a

According to the company, revenue in the

Summly, which Yahoo acquired in 2013,

profit and also carried about $1.2 million

first half of 2015 was up 62 per cent over

and was no stranger to celebrity-fronted

in debt, according to financial documents

the same period the previous year.

projects; for three-and-a-half years, he

filed with Companies House in the UK

had been the international CEO of Red,

(By the end of 2013, the company carried

says. “She has taken a thousandth-floor

U2 singer Bono’s licensing brand for

$1.7 million in debt.)

view of what we could be.”

“Lisa brings all the scaffolding,” Paltrow

Paltrow is surprisingly hands-on as a

raising funds to fight HIV. But the pace remained unhurried. When Paltrow’s

boss, overseeing Goop’s editorial team

company launched its travel app, Goop

much like the head of a traditional

City Guides, in 2011, it featured just

magazine would. She leads brainstorming

New York; it added one new city every

sessions with the LA-based edit staff –

year or so, in part because Paltrow

sometimes in the Goop office, but often

wanted every recommendation in the

while lying on the floor of her Brentwood

app to come personally from her or

living room or sitting around the kitchen

someone she trusted.

table. (Weinstein often joins, to ensure

Paltrow and Bishop explored options

that the product and edit teams are in

for monetising the site and newsletters

alignment.) Paltrow approves all story

in a similarly patient way. “We used to

ideas, as well as screen grabs of articles and

have a lot of discussions about how we

visual spreads. Paltrow is equally involved

were going to do it,” Paltrow says. “There

on the commerce side of the business.

was ShoeDazzle, and there were all these

“Gwyneth sees every single piece that we

subscription things – were we going to do

sell on the site,” says Weinstein.

“I’m at Goop every day,” Paltrow tells me

that? Were we going to be only media?

in Chicago. “It’s my main job. I’ve made

Were we going to sell physical product?” In 2012, Goop tested the commercial waters,

But the pace of change was about to

commitments to people and I’ve taken their

offering one limited-edition product

pick up. The next year, she moved her

money, so I’m going do everything in my

for sale per week, each an exclusive

family back from the UK to her native

power to make sure that the brand scales.”

collaboration between Paltrow and an

California. Then she announced, via that

existing brand. Over time, Goop evolved

now-infamous Goop post – which drove

screen has left some wondering if her

beyond the weekly single-product format,

a wave of new attention – that she and

passion for film is waning. But Paltrow

featuring products from hundreds of

Martin were separating. In the midst of all

refutes the idea that she can only have

brands and collaborating with designers

this change, she officially relocated Goop’s

one career. “I’m a big believer in the

including Monique Lhuillier and Diane

headquarters to LA; Bishop, who chose to

ampersand,” she says. “I don’t see it as I’m

von Furstenberg.

stay with his family in London, remained

leaving something behind, I see it as this

on until Gersh, the new CEO, was in place.

year I probably won’t make a movie or I

One reason Goop grew so slowly,

Paltrow’s relative absence from the big

probably won’t do a TV show or a play,

Paltrow admits, was simple nerves. “It

Gersh has helped Paltrow raise a

wasn’t until Goop started getting a lot

seed round of funding for Goop, as

and I’ll focus on the business. It’s our

well as an approximately $10 million

tendency to want to put women in one little

Series A led by Tony Florence at New

category,” she continues, making a pinching

Enterprise Associates. With expanding

gesture with her hand. “That’s where we

resources, Gersh set about diversifying

like them.”

Top: Paltrow appeared on Saturday Night Live and numerous other shows to promote her website.

Portfolio

Music

44

M

Music Artists Take On the Business

usicians are known for

artists, from big stars who take a principled

speaking out on issues like

stand to middle-class musicians who need

human rights, politics and

to worry about paying the bills.

the environment. They are less known for

David Byrne, formerly of Talking Heads,

itself should operate.

who has been vocal on the economics

© 2015 New York Times News Service

That may be changing. When Taylor

Musicians are calling for change as paltry royalties from streaming services eat into their incomes, reports Ben Sisaro.

“We’re at a turning point,” said singer

speaking out about how the music business

behind digital music. “Musicians, their

Swift publicly rebuked Apple in June over

managers and many others are frustrated.

royalty payments, the company reversed its

The black box of hidden transactions in the

position and Swift’s move was celebrated

music business, while maybe not illegal, is

throughout the music world as a victory.

a recipe for chicanery.”

But it was only the most prominent

The activism has taken different shapes.

example of a growing trend of industry-

Jay Z, for example, paid $56 million for

focused activism undertaken by a range of

the subscription streaming service Tidal, Portfolio

45

though his efforts to market it as an artist-

attitudes toward the online economy over

friendly alternative have been criticised

the past 15 years or so – a period that

as clumsy. Prince, Neil Young and Swift

stretches from the rise of Napster and

have withdrawn their music from some

iTunes to online streaming outlets like

streaming outlets, and various musicians

YouTube, Pandora and Spotify, and has

have called for greater transparency in how

been accompanied by enormous changes in

labels and musicians’ groups and that

the music industry operates.

how money flows through the industry.

helped organise the social media campaign.

Over the past few weeks, dozens of acts,

Photo: Corbis

Opposite page: After Taylor Swift publicly rebuked Apple in June over royalty payments, the company reversed its position and Swift’s move was celebrated throughout the music as a victory.

Above: David Lowery, best known for his band Cracker and Camper Van Beethoven, has also been very outspoken about artists’ rights.

“The support that we’re seeing, in

The economics behind downloads is

including R.E.M., Common and Chuck D

terms of the range and number of artists,

relatively simple: Typically about 70 per

of Public Enemy, took to social media to

whether it’s from somebody who’s a

cent of a song’s retail price goes to a record

support a US bill that would require radio

working-class musician to somebody who’s

company, which then pays its musicians

stations to pay royalties to performers.

very successful, it’s unprecedented,” said

according to its contracts. But with

Ted Kalo, executive director of MusicFirst,

streaming, the system is complex and often

a lobbying coalition that includes record

opaque, as became apparent in May, when

The debate has been enabled by social media and reflects changes in many artists’ September 2015

Music

46

an outdated licensing contract between Sony and Spotify was leaked online, showing the elaborate formulas used in computing streaming rates.

Public relations missteps in the early 2000s kept many musicians from speaking out about economic issues, artists and executives said. Those include the music industry’s lawsuits against thousands of fans for online filesharing, and the pillorying that the band Metallica received after it sued Napster for copyright infringement. But the shift toward streaming in recent years has prompted many musicians to investigate the changes in the business and comment online. Among them are independents like David Lowery of the band Cracker; Zoe Keating, a cellist who has documented her online royalties; and Blake Morgan, a singer-songwriter who owns a small record company and started an online campaign, #IRespectMusic, to draw

Above: Singer-songwriter Blake Morgan started an online campaign, #IRespectMusic, to draw attention to artists’ rights, at his home in New York.

Right: Zoe Keating, a cellist who makes her living by recording her music, which is distributed over the internet, in Camp Meeker.

Below: Melvin Gibbs, a jazz bassist, is the president of the Content Creators Coalition in New York.

Apple prepared in July to release its new streaming service, Apple Music, independent labels around the world said the company’s refusal to pay royalties for trial streams was unfair. But Apple did not

attention to the issue.

budge until Swift scolded the company in At the sAme time, musicians and

rapidly growing source of income for the

a blog post – whereupon Apple changed

songwriters of all stripes have begun to

industry as sales of CDs and downloads

course in a matter of hours.

complain, often bitterly, of low royalty

plunge. Pandora says it has paid nearly $1.5

Lobbying has become another

payments from streaming music. In

billion in royalties since it started a decade

battleground. In April, the Fair Play

2014, for example, Bette Midler spoke

ago, and Spotify, which went online in

Fair Pay Act was introduced to the US

out against Pandora and Spotify, and

2008, says it has paid $3 billion. Yet how

Congress, which would require AM and

Aloe Blacc said he earned just $4,000 in

much of that money makes its way into

FM radio stations to pay royalties to

songwriting royalties from 168 million

musicians’ pockets remains hotly debated.

performers, in addition to songwriters.

streams on Pandora of Avicii’s hit “Wake

Melvin Gibbs, a jazz bassist in New York

The bill has been hailed by musicians and

and president of the Content Creators

opposed by broadcasters, who have long

In response, many streaming outlets

Coalition, said that declining royalties –

argued that by playing a song on air they

point out that their actions are a legal and

he recalled once getting a check for three

give it valuable promotion.

Me Up,” which Blacc helped write.

cents – were a factor that led him to study

The political chances are unclear for

the business models of internet companies

the Fair Play bill, whose other provisions

that offer abundant music free or at low

include paying royalties to artists for

subscription prices.

recordings made before 1972, which are

“None of these companies that are supposedly in the music business are actually in the music business,” Gibbs said.

“They are in the data-aggregation business.

They’re in the ad-selling business. The value of music means nothing to them.”

not covered by federal copyright. Similar efforts have failed in the past.

Still, Byrne and other musicians pushing for the bill say they are undeterred.

“This one can be won, then we can move on to the harder ones,” Byrne said. “Why

Despite growing complaints from

this time? Can’t point to anything specific.

middle-class musicians, it is still the

It feels right, and as musicians that’s what

stars who have the most impact. As

often drives us.”

Portfolio

A T

T H E

H E A R T

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Energy

48

Qatar an Energy Giant About a third of all liquefied natural gas is produced by Qatar, making it the world’s wealthiest nation per capita, reports Stanley Reed.

T

he temperature hovered around 100 degrees on the jetty in Ras Laffan, where a set of pipes were

connected to a giant red-hulled ship.

But the moisture in the air froze on the pipes and flaked off, creating snow-like flurries in the early summer evening. The incongruous sight is common on the Qatari ship, the Al Rekayyat, which carries a frigid fuel known as liquefied natural gas.

Natural gas, when chilled to minus 260 degrees, turns into a liquid with a fraction of its former volume. The process has reshaped the natural gas business, allowing the fuel to be pumped onto ships and dispatched around the world. After investing tens of billions of dollars, Qatar is at the forefront. Part of the emirate’s fleet, the Al Rekayyat, run by Royal Dutch Shell, goes to Fujian in China and Yokkaichi in Japan, as well as Dubai and Milford Haven in Wales.

When loading was finished recently, four tugboats pulled the ship from its berth with a deep roar. “I expect to be in the north channel around midnight,” said the captain, Veerasekhar Rao Muttineni, over the marine radio, as the ship eased © 2015 New York Times News Service

into the waters of the Arabian Gulf. Four days later, it docked in Hazira on the west coast of India.

Once a poor nation whose economy

called the North field, in Qatari waters. But

Looking to the example of Malaysia and

depended on fishing and pearl diving,

there was no market for the fuel. Potential

Indonesia, Qatar and Hamad bin Khalifa

Qatar is a relatively new giant in the global

customers in Europe were too far to reach

al-Thani, who was then its emir, started

energy trade. In the 1970s, Shell discovered

via pipeline, the usual method. Shell

promoting LNG in the mid-1990s. Exxon

the world’s largest trove of natural gas,

walked away.

Mobil was the important early investor; Portfolio

49

Left: An LNG train, a liquefied natural gas plant, at Qatar’s Ras Laffan Industrial City.

Below: Natural gas flares burn at the port of Ras Laffan, Qatar.

has recently been flat, worldwide volumes have roughly quadrupled in the last two decades, accounting for about one-third of overall gas exports. Annual sales are estimated at $180 billion.

“With the full development of Qatar, LNG came of age,” said Michael Stoppard, chief gas strategist at IHS, a market research firm. “Qatar made LNG a bigger business – bigger projects, bigger ships, bigger volumes and a much bigger global footprint.”

Ras Laffan, a desert headland about an hour’s drive from Qatar’s capital, Doha, bristles with storage tanks, pipelines and other gas processing facilities. Gas comes

Photo: Corbis

in from offshore wells and then passes

Shell, Total and ConocoPhillips soon

natural gas, although Australia and the

followed. Qatar and its energy partners took

United States have big export ambitions.

the business to a new level, developing far

It is a lucrative business that has made

bigger and more efficient plants. In 2014,

Qatar the world’s wealthiest country by

Qatar produced about a third of all liquefied

output per capita. While industry growth

September 2015

Once a poor nation whose economy depended on fishing and pearl diving, Qatar is a relatively new giant in the global energy trade. In the 1970s, Shell discovered the world’s largest trove of natural gas, called the North field, in Qatari waters.

Energy

50

Right: The main control room for liquefied natural gas operations.

through a series of refrigeration units that clean the fuel and chill it to liquid form.

Qatargas and RasGas, the emirate’s two exporting companies, have 14 of these facilities, known as trains.

“We pushed the R&D to go another step, to increase the size,” said Ibrahim Bawazir, a Qatargas executive, as he led a group of visitors dressed in orange fire-resistant suits around Qatargas 4, one of the largest and most modern installations. “It is almost impossible to build LNG on this scale,” Bawazir said.

With the ability to produce and process such huge quantities of gas, Qatar can keep its costs low. IHS estimates that it costs

more nimble and make money even in the

Instead, three-quarters of Qatari gas in 2014

about $2 per million British thermal units,

current weak environment, when prices

flowed to Asian countries like China, India

a standard natural gas measure, to produce

are low.

and South Korea. Japan was Qatar’s largest

and liquefy gas in Qatar. That compares

The Qataris originally planned to deliver

customer as its electric utilities substituted

with $8 to $12 for planned projects in the

much of their LNG to the United States

natural gas generation for nuclear after the

United States, East Africa and Australia.

and Europe, but those plans were frustrated

2011 Fukushima disaster.

The low cost structure allows Qatar to be

by the shale gas boom in North America.

Qatar’s shift toward Asia mirrors

Portfolio

Energy

52

Above: Veerasekhar Rao Muttineni, captain of the Al Rekayyat, a liquefied natural gas tanker.

Right: Workers at the liquefied natural gas terminal.

Bottom: Natural gas cools into liquid form in one of the “trains” which can stretch up to three-fifths of a mile, at Ras Laffan.

Hazira, says that the pipelines buried in the

customers, until the state’s gas distribution

broader trading patterns in the oil industry.

ground outside the terminal are monitored

system was expanded and Hazira

In recent years, gulf producers like Saudi

by an optical fibre system that would “give

connected. Now, the Indian economy is

Arabia, Iraq and Iran have increasingly

a signal in case of unauthorised work.” A

growing at a decent clip and the country

focused on Asia, where demand for energy

patrol also goes out at least four times a

faces an energy shortage. Customers, says

imports is growing. Qatar is well placed

day, he says, to check in person.

Shell, are lining up, viewing LNG as a

to serve Asian markets, particularly India,

Shell, which has made a bigger bet on

clean, reliable source of energy.

Maarten Wetselaar, the head of Shell’s

which is only a few days’ sail across the

gas than any of its rivals, opened the Hazira

Arabian Sea.

terminal in 2005 with the French giant

global gas business, said Hazira’s gas

Total as a junior partner. The terminal, the

receiving and processing facilities were

A vitAl pArt of Qatar’s effort has been

company figured, would supply the power

“completely sold out.”

a new fleet of carriers, substantially larger

plants and factories in the fast-growing

and more efficient than previous models.

industrial areas nearby.

At over 305 metres, the Al Rekayyat,

In the early days, Shell struggled to find

“Even if you begged us on your knees for a slot,” he said, “I don’t think in the next 12 months we could accept another cargo.”

which was built in South Korea in 2009, is only slightly shorter than the largest aircraft carrier. The ship carries up to 217,000 cubic metres of gas, worth around $30 million to $40 million at today’s market prices.

The Al Rekayyat is surprisingly fast for such a large ship. It cruises at about 18 knots, a speed that the crew figures makes it too fast to be easily boarded by pirates.

Still, the crewmen are cautious. On the first morning of the voyage, crewmen wearing heavy leather gloves, padding and hard hats rigged up barbed wire and water cannons to ward off pirates. “This is recommended good practice,” Rao said.

“We look on with suspicious eyes.”

Nilay Vyas, the general manager of Portfolio

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Computer generated image is indicative only

Development

54

A Supercity Rises Around Beijing Beijing is planning to incorporate surrounding towns and cities to create a new supercity of 130 million people, reports Ian Johnson.

take up to three hours.

“There’s not much I can contribute to the family anymore,” Liu, 62, said as his son waved goodbye from a bus window.

“He is exhausted every day, so if I can help him get a bit more rest, I’ll do it.”

The Liu family’s commuting habit is a small but telling part of a megacity in the making. For decades, China’s government

© 2015 New York Times News Service

E

has tried to limit the size of Beijing, the very morning at 5:30, Liu

Around 6:30, their adult children

capital, through draconian residency

Desheng joins a dozen retirees

arrive. The line, now snaking down the

permits. Now, the government has

waiting for the express bus

street, has become an hour-long wait.

embarked on an ambitious plan to make

to central Beijing from Yanjiao, a

People cut in, and a shoving match

Beijing the centre of a new supercity of

small city in Hebei province. They

breaks out. But the retirees have saved

130 million people.

stand at the front of the line but never

their children this ordeal. When the

board, instead waiting as bus after bus

next bus pulls up, the young adults take

metropolitan area that would be about

pulls up, each picking up 50 people

their parents’ places at the head of the

six times larger than New York’s, is

from the ever-lengthening line behind

line and board first, settling into coveted

meant to revamp northern China’s

the retirees.

seats for a 40-kilometre ride that can

economy and become a laboratory for

The planned megalopolis, a

Portfolio

55

Opposite page: At the end of a workday, commuters squeeze into a bus headed for Yanjiao in Beijing’s central business district.

Above: Lines snake down the street for buses to Beijing, creating an hour-long wait for a commute that can take three hours.

modern urban growth.

“The supercity is the vanguard of economic reform,” said Liu Gang, a professor at Nankai University in

province, forcing areas that have never cooperated to work together.

Last month, the Beijing city

kilometres and hold a population

the plan, vowing to move much of its

larger than a third of the United

bureaucracy, as well as factories and

States. And unlike metro areas that

hospitals, to the hinterlands in an effort

have grown up organically, Jing-Jin-Ji

to offset the city’s strict residency limits,

would be a very deliberate creation.

easing congestion, and to spread goodpaying jobs into less-developed areas.

Jing-Jin-Ji, as the region is called (“Jing” for Beijing, “Jin” for Tianjin,

on regional development. “It reflects

and “Ji,” the traditional name for Hebei

the senior leadership’s views on the

province), is meant to help the area

need for integration, innovation and

catch up to China’s more prosperous

environmental protection.”

economic belts: the Yangtze River Delta around Shanghai and Nanjing in

facilities and creative culture of Beijing

central China, and the Pearl River Delta

with the economic muscle of the port city

around Guangzhou and Shenzhen in

of Tianjin and the hinterlands of Hebei

southern China.

September 2015

would be spread over 212,000 square

government announced its part of

Tianjin who advises local governments

The new region will link the research

But the new supercity is intended to be different in scope and conception. It

The planned megalopolis, a metropolitan area that would be about six times larger than New York’s, is meant to revamp northern China’s economy and become a laboratory for modern urban growth.

Development

56

Right: Outside an elementary school, children, their parents, bicycles, cars and a cement mixer fight for space.

Below from left: At the start of a trip to Beijing, residents walk on a dirt track across the Chaobai River, which has mostly dried up; As day breaks, one of the main streets is already lined with commuters waiting for a bus to Beijing.

Its centrepiece: a huge expansion of high-speed rail to bring the major cities within an hour’s commute of each other.

But some of the new roads and rails are years from completion. For many people, the creation of the supercity so far has meant ever-longer commutes on gridlocked highways to the capital.

Encouraged by Hebei province’s relatively open residency policies and inexpensive housing, people are flocking to suburbs like this one.

Yanjiao has grown tenfold, to as many as 700,000 inhabitants, in a

over the Chaobai River to Beijing is

decade. But it remains a bedroom

under construction.

community for Beijing – a swath of

More worrying for many Yanjiao

and more people coming here.”

On a bright summer morning, it is easy to see Yanjiao’s better side. Even though

apartment towers and restaurants

residents is the dearth of hospitals

the cookie-cutter, 25-storey housing

with few services.

and schools.

blocks stretch dully into the horizon,

Many believe that the

“The services are bad,” said Zheng

shopping is plentiful, some streets are

transportation woes will sort

Linyun, who works in a sales company in

tree-lined, and the air is much cleaner

themselves out, given enough time

Beijing and commutes about five hours

than in Beijing. But the city has no bus

and money. A subway and better

a day. His six-year-old son just started

terminals, no cinemas and only two very

light rail are planned to open in

elementary school and has more than 65

small parks.

three to five years, and a new bridge

children in his class. “All we see are more

“The streets flood in the rain because

Portfolio

57

of thumb they learned from the West:

there is no good drainage,” said Xia

All parts of an urban area should be

Zhiyan, a 42-year-old employee of a printing company. “They just built more and more apartments without the most basic facilities.”

But several factors are making Jing-Jin-Ji a reality. The most immediate is President Xi Jinping, who laid out an ambitious plan for economic reform in 2013 and has endorsed the region’s integration. The plan calls for

“the streets flood in the rain because there is no good drainage,” said Xia Zhiyan, a 42-year-old employee of a printing company. “they just built more and more apartments without the most basic facilities.”

within 95 kilometres of each other, or the average amount of highway that can be covered in an hour of driving.

Beyond that, people cannot effectively commute. High-speed rail, Zhang said, has changed that equation. A new line between Beijing and Tianjin cut travel times from three hours to 37 minutes.

That train has become so crowded that a second track is being laid.

Now, high-speed rail is moving

eliminating the “beheaded highways” by

toward smaller cities. One line is

2020 and constructing a new subway

opening this year between Beijing

line. In addition, the plan assigns specific economic roles to the cities: Beijing

recently released a catalogue of minor

and Tangshan. Another is linking

is to focus on culture and technology.

industries, such as wholesale textile

Beijing with Zhangjiakou, turning

Tianjin will become a research base for

markets, to be transferred from Beijing

the mountain city into a recreational

manufacturing. Hebei’s role is largely

to smaller cities.

centre for the new urban area, as

undefined, although the government

Improving the infrastructure, especially high-speed rail, will be critical.

According to Zhang Gui, a professor

Above: Residents in a park in Yanjiao, a suburb of Beijing.

September 2015

well as hosting the 2022 Winter Olympic Games.

“Speed replaces distance,” Zhang said.

at the Hebei University of Technology,

“It has radically expanded the scope of

Chinese planners used to follow a rule

what an economic area can be.”

Career

58

almost every industry, either by necessity or to follow the pack, are pursuing some sort of digital game plan – creating lucrative opportunities for computingminded newcomers who, like Minton, want to reboot their lives.

“These are skilled and ambitious people who are seeking an on-ramp to the tech industry,” said Jim Deters, chief executive of Galvanize, the school Minton attended.

Whether the on-ramp proves to be a lasting pathway to high pay and stimulating work remains to be seen.

The boom-to-bust cycles in the tech business can be wrenching, like the last downturn in the early 2000s after the dot-com bubble burst. Nearly everyone in the industry was hit. Yet software development and engineering jobs held up better than ones in finance, marketing, sales and administration.

For now, at least, it is a seller’s market for those who can master new technology tools for lowering a business’ costs, reaching its customers and automating decisionmaking – notably, cloud computing, mobile apps and data analytics.

Companies cannot hire fast enough.

Glassdoor, an employment site, lists more than 7,300 openings for software

© 2015 New York Times News Service

engineers, ahead of job openings for

Coding a Career Change

starting salary in 2014 as a data scientist

nurses, who are chronically in short

at a web startup in San Francisco was

supply. For the smaller category of data

more than $100,000.

scientists, there are more than 1,200

As the tech sector booms, workers are turning to the language of the digital world to reboot their careers, reports Steve Lohr.

said. “To me, it was astonishing.”

A

“Six figures, right off the bat,” Minton Stories like his are increasingly familiar

job openings. Demand is highest in San Francisco, California. The average base salary for software engineers in the

these days as people across a spectrum

United States is $100,000, and $112,000

of jobs – clerks, bookkeepers, baristas

for data scientists.

– are shedding their past for a future in

In March, the White House announced

the booming tech industry. The money

an initiative, TechHire, to coordinate the

sloshing around in technology is cascading

efforts of the US federal government,

beyond investors and entrepreneurs into

cities, corporations and schools to train

fter Paul Minton graduated

the broader digital workforce, especially

workers for the thousands of current job

from college, he worked as a

to those who can write modern code, the

openings in the tech sector. The Obama

waiter but always felt he should

language of the digital world.

administration points to coding schools

do more. So Minton, a 26-year-old math

Internet giants like Google and

like Galvanize, Flatiron and Hack Reactor,

major, took a three-month course in

Facebook have long fought over the top

which offer accelerated training in digital

computer programming and data analysis.

software engineers in the United States,

skills as a way to “rapidly train workers for

As a waiter, he made $20,000 a year. His

and that continues. But now, companies in

a well-paying job.”

Portfolio

59

Opposite page: Savannah Worth at the Galvanize school in San Francisco.

Left from top: Employees of Silicon Valley Bank work at the Galvanize school; Brainstorming notes at the Galvanize school

boom in the 1990s, the personal computer revolution in the 1970s and 1980s, and the minicomputer and mainframe eras before – have often opened doors to job seekers of diverse backgrounds.

Lois Haibt was a freshly minted graduate of Vassar College when she was hired by IBM to join the original team that created Fortran, a pioneering programming language. Recalling the hiring practices of the late 1950s and 1960s, she said, “They took anyone who seemed to have an aptitude for problemsolving skills – bridge players, chess players, even women.”

One sure way to fill job openings in technology these days would be to attract more women. Only 18 per cent of computer science graduates at four-year universities were women in 2013, the most recent statistic. By contrast, 35 per cent of students at the specialised coding schools are women.

Savannah Worth majored in English and graduated in 2014 from Colorado College. Jobs that might use her skills, she says, seem limited to writing marketing materials or blog posts for websites. “The good jobs were all in computer science,” she recalled. In college, she had dismissed computer programming as all math and

The graduating classes of these coding

boot camps, is in San Francisco, which has

schools support the trend. They will

12, followed by New York, with nine, and

graduate about 16,000 students this year,

Seattle, eight.

more than double the 6,740 graduates

Students are of a wide age range, but

in 2014, according to a survey published

most are in their 20s and 30s. The typical

by Course Report in June. The 2015 total

student is a “29-year-old career changer,”

would be about one-third of the estimated

said Liz Eggleston, co-founder of Course

number of computer science graduates

Report, which tracks these schools.

from US universities. The largest concentration of the schools, often called September 2015

Past shifts and surges in the information technology industry – the early internet

The money sloshing around in technology is cascading beyond investors and entrepreneurs into the broader digital workforce, especially to those who can write modern code, the language of the digital world.

Career

60

Right from top: Asim Jalis, centre, instructor of data engineering; Jared Thompson, a faculty member, during a meeting.

numbers and not a creative pursuit.

But she dropped into an open house one evening at the Galvanize school in Denver, Colorado. She found it filled with creative, smart people – and not at all just dry math.

Worth, 22, signed up for the Galvanize 24-week web programming class and excelled. Shortly after completing the course, she was hired

by IBM as a software developer in San Francisco. She helps IBM’s corporate clients design and build web and mobile applications that run in remote cloud data centres, and she earns a six-figure salary.

Galvanize’s 24-week web programming course is one of the largest among the coding schools. The average class length among the schools is just under 11 weeks and costs $11,000. Galvanize’s web programming course is also among the most expensive, at $21,000. The company offers scholarships and deferred payment plans and has partnerships with online lenders like LendLayer and Earnest.

The job placement rate for Galvanize students is 98 per cent. “Graduation here is you get a job,” Deters said.

Employers are recruiting for immediate needs but with the future in mind.

“What we hire for is the ability to learn,” said Rachel Reinitz, an IBM distinguished

to Denver and got a job at the coffee shop

She applied to the web-programming

in the Galvanize building there. She

course and was accepted.

found the environs, bustling with aspiring coders and fledgling startups, appealing.

from Galvanize. She graduated in June,

engineer, who is Worth’s boss. “The technology changes so fast.”

Galvanize is selective, accepting about 20 per cent of applicants. The vast majority are college graduates, but there are exceptions, like Reyna DeLoge. She grew up in Montana in a working-class family and logged long hours in part-time jobs throughout high school. She went to Montana State University but dropped out after a year, uninspired and in debt.

DeLoge, 24, worked for years mostly as a barista and assistant manager. She moved

To help pay for the course, DeLoge got a $5,000 scholarship and a no-interest loan

one sure way to fill job openings in technology these days would be to attract more women. only 18 per cent of computer science graduates at fouryear universities were women in 2013, the most recent statistic.

immediately received a few job offers and decided to take one from Galvanize, as a teaching assistant and mentor to new students. In the past, DeLoge never made as much as $30,000 a year. Her salary now is nearly $80,000.

In a stroke, she is making more than her father, an experienced machine-tool operator and instructor. “That blows me away,” said DeLoge, who sees her new skills as a gateway to opportunity. “Who knows where I’ll be in a year.”

Portfolio

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63

Essentials

THE BEST OF LEISURE AND LIFESTYLE

The French Side of Basque Country Most people associate Spain with the Basque Country, but out of its seven provinces, three are in France. And the French side is very different from its neighbour, reports Christian Wright.

The spires of Ste. Marie, a Gothic cathedral in Bayonne, in the Basque region.

September 2015

Essentials

64

Travel

A

t the end of October, summer

route to St-Jean-de-Luz with my friend

Basque government, while the French

had returned to the Basque

Gabriella Ranelli, whom I’d persuaded to

part answers to the central government in

Country. Swimmers joined the

leave her adopted home in the Spanish

Paris. The Spanish side has had a strong

surfers along the coast. A strong sun

Basque Country, where she organises

independence movement, which has lately

turned the Atlantic Ocean from green

customized tours, to poke around in the

been eclipsed by Catalonia’s. At the height

to blue. On a late Sunday morning, in

French part with me.

of its activity in the latter part of the last

When most people think of the Basque

century, ETA, the Basque separatist group,

townspeople poured out of L’Église

Country, they think of Spain. Bilbao

did most of its fighting on the Spanish

St-Vincent, a 16th-century church with

began the so-called Guggenheim effect.

side, saving the French side as a hideout.

an octagonal tower. Some stopped to chat

San Sebastián has all those Michelin

by a tall grey cross speckled with lichen.

stars. And Pamplona, notoriously, lets

Basques,” a Basque friend from Spain

Little girls in poufy dresses ran in circles,

bulls run through its streets once a year.

explained, noting, however, that “in Spain,

squealing. Freshly coifed women with

But the Basque Country is made up of

there are many Basques who are willing

short-handled pocket books lingered in

seven provinces, three of which are in

to be an independent country. In France,

the courtyard. “Bonne journée,” called the

southwestern France.

very few people think the same.”

priest to his congregation as they headed

The Basques are an ancient people

“In France, they are also proud of being

While the French part gets

off into the narrow streets on their way

who have inhabited this territory for

overshadowed by the bounty of Spain

home for lunch.

thousands of years. Today, the Spanish

and the sunny Provençal olive-branch

part is an autonomous region with a

images of the South of France, it

I was passing through Ciboure en

Photo: Corbis

© 2015 New York Times News Service

the French fishing village of Ciboure,

Portfolio

65

would be inaccurate to say the region

we had thrown our bags into the back

– the toast of Paris – had taken over

is undiscovered, and it’s certainly not

of Gabriella’s old Mercedes van and set

Le Suisse in Place Louis XIV, the old

undeveloped. But to a world in love with

out on a three-day trip into the French

square in St-Jean-de-Luz. Painters

France, it’s the little sister who did not get

Basque Country. That’s Iparralde, which

set up their easels there, under the

invited to the dance.

means “the north country” in Euskara,

knobby arms of plane trees. In the high

the ancient Basque language that many

season, Le Suisse used to be strictly a

border into the province of Labourd,

scholars say is unrelated to any other.

tourist place. But now, joining Nicolas

heading north from Gipúzkoa, the

It’s a tiny land with a population of less

Borombo, who revamped Kaiku up

landscape changed. Green hills gave way

than 300,000, and its own defining

the street, another St-Jean-de-Luz

to the craggy foothills of the Pyrenees.

characteristics and traditions: a history

restaurant, Camdeborde and his

The beach towns of the sometimes steep

that dates back to pre-Roman times, a

partners are trying something different.

and rocky coast, from modest Ciboure

distinct architectural style, deep-seated

Not radical, but a little bar, cafe and

to glamorous Biarritz, sat less than 16

pride and old men in berets at their

terrace, where we had a glistening

kilometres from unspoiled mountain

local pubs. In recent years, a younger

arugula salad and gambas et cochons

villages. Turreted chateaus hid among tall

generation has emerged, opening

avec polenta (shrimp and meat), a

trees. And there were sheep everywhere,

design shops, rejigging the food scene

light, salty surf and turf, overlooking

some identified by blue splotches on their

and sprucing up classic red-and-white

the fishing port. In the offseason, we

rumps, soon to be shorn.

farmhouses that dot the countryside.

were surrounded by local families out

When we drove across the French

Earlier that morning in San Sebastián,

I had heard that chef Yves Camdeborde

for a fresh, simple meal.

The Grande Plage in Biarritz in the Basque region of France.

September 2015

66

Essentials

Travel

In the Basque Country under the French flag, the sociology is a bit different, since the population did not suffer under a dictator for almost 40 years, as the Spanish side did under General Francisco Franco until his death in 1975.

About 19 kilometres up the coast, the slate rooftops of Biarritz’s grand villas appeared. Up until 1650, well before it became a storied summer playground

modern theatre, and all the turreted villas

for European royalty, Biarritz was a

that sit high above the sea.

significant whaling port on the Bay of

There’s a different allure at the other

Biscay. The chic resort town developed

end of town, near the market: residential

when Empress Eugénie persuaded her

and grittier. We set up at Hôtel de

husband, Napoleon III, to build a palace

Silhouette, a converted stone house from

there in 1854. The palace was converted

the early 1600s that has a garden in back,

into what is now the Hôtel du Palais, a

and did some exploring on foot.

grand, Old World behemoth that hovers above the north end of the Grande Plage.

It was a short walk to the Port Vieux,

Above: The harbour at St-Jean-de-Luz in the Basque region of France.

Below from left: A view of Rocher de la Vierge, the rocky outcropping in Biarritz; The Pyrenees rises above St-Jean-Pied-de-Port.

There’s an unmistakable joie de vivre in Spain, whereas on this side of the border, there’s an elegant reserve. In the

a tiny cove that’s lit up at night. By 10

Basque Country under the French flag,

pm, the streets were mostly empty. “It’s

the sociology is a bit different, since

architecture, from the Romanesque

so quiet,” Gabriella said. In Spain, where

the population did not suffer under

12th-century church of St Martin to the

she’s a gastronomic expert who teaches

a dictator for almost 40 years, as the

Gare du Midi, the old art nouveau train

at the Basque Culinary Institute, her day

Spanish side did under General Francisco

station that has been converted into a

can easily end at 1 am.

Franco until his death in 1975. There

Biarritz is distinguished by its

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67

is solidarity – if you’re Basque, you’re Basque through and through – but also a natural cultural divide.

The weather had turned to bluster and rain by the time we got to Bayonne. The capital of the French Basque Country,

Clockwise: Basque farmers shear their sheep; Espadrilles for sale in St-Jean-de-Luz; Artists and their paintings in the old square under the plane trees.

Bayonne is a fortified city where the River Nive meets the Adour. It has many bridges, and at moments along the quais, it seems like a mini Paris or a Basqueflavoured Amsterdam. Four- and fivestorey houses, some only two windows wide, have faded brick chimneys and shutters in light blue, red, hunter green.

Their foundations slant, their sills sag and they are squashed together, dormer windows at the top and little storefronts at street level. A florist here. A beauty parlour there.

As we heAded southeast out of town, the Pyrenees suddenly came into view, and the countryside opened up, a vista of staggering autumn colours. It was pitch dark when we pulled up to the Hôtel des

Sleepy at night time, on Monday –

While Gabriella went back to the hotel

Pyrénées, a classic auberge in St-Jean-

market day – it was bustling. Up a hill

to pack up, I climbed up to the citadel

Pied-de-Port. We had the glass-enclosed

in Place des Ramparts, in the renovated

high above town. Ivy crawls up its grey

dining room of the Michelin-stared

covered market building, old women

walls now and the grounds are wild with

Arrambide restaurant to ourselves. “I hope

in calf-length skirts shopped for the

hydrangeas. From this vantage, I could

the chef is in the kitchen,” said Gabriella,

region’s famous ewe’s milk cheese, organic

see the tiled roofs of the village spread out

darkly. In Basque family tradition, Firmin

vegetables displayed in woven baskets and

below and the heavily wooded peaks all

Arrambide has passed the torch to his son

wooden crates, confits, honey, tinned pâté

around. Spain was only eight kilometres

Philippe after decades of cooking duty.

de foie gras, and saucissons.

from here, but it was a world away.

September 2015

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Cuisine

A Taste of London We head to London to sample a selection of culinary establishments with a traditional and historic flavour. From afternoon tea to fish and chips, old-fashioned pubs and elegant dining rooms, there is something for everyone, reports Andrew Marshall.

sustaining and the clientele is an East End mishmash of manual workers, trendy

S

Cafe in Pimlico (17-19 Regency Street)

stepped off the set of Lock, Stock And Two

‘greasy spoons’, London cafés have

is so exemplary of a classic café in the

Smoking Barrels.

been part of the cityscape for more

Modernist mould that it’s often used for

A marriage made in the 19th-century to

than half a century and these snug, warm

movie and fashion shoots to obtain that

provide cheap and nutritious food for the

havens beloved of workmen and famed for

retro-chic backdrop.

working masses, battered fish and thick-

their all-day breakfasts, are microcosms Photos: Andrew Marshall

arty types and geezers who could have

ometimes described as ‘caffs' or

Another excellent caff is E.Pellicci

cut potato chips - both deep-fried, salted

of British urban culture, architecture and

(332 Bethnal Green Road ) which boasts

and sprinkled with vinegar - are as much

interior design.

a glorious yellow Vitrolite façade and

a part of the nation's fabric as discussing

wood-panelled interior adorned with

the weather. One of London’s top chippies

deco exterior with a lovely typeface logo,

sepia pictures of different generations of

is Poppies (6-8 Hanbury Street), winner of

cream-tiled interior and distinctive red-

the Pellicci family, who have run the café

the 2014 Best Independent Fish and Chip

and-white check curtains, the Regency

since 1900. The breakfasts are large and

Restaurant in the UK. Poppies is situated a

Featuring an imposing black-tiled art-

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69

stone’s throw from Old Spitalfields Market,

deliciously fat chips and daily

where Pat ‘Pops’ Newland, the owner, has

specials from red mullet to

recreated the ambience of a seaside town

trout, it’s the perfect venue

from the 1950s, complete with waitresses

for that after-show pit stop.

in vintage clothing and retro memorabilia.

London’s oldest restaurant,

The beautifully flaky, lightly-battered

Rules (34-35 Maiden Lane)

fish and perfectly-fried golden chips are

has been serving British

wrapped in newspaper (specially made with

fare such as game, pies,

edible ink) just like the olden days.

oysters and puddings ever

In Covent Garden, near the theatre

since Thomas Rule opened

district, is the Rock & Sole Plaice (47 Endell

its doors in 1798. With its structure

Street) London's oldest surviving fish

reinforced with thick wood, Rules even

Steamed Steak & Kidney Suet Pudding,

and chip shop, dating from 1871. Serving

stayed open during the Second World

Leg & Saddle of Rabbit and Apple &

War, when it offered the compulsory rationed meals at

Another eatery keeping the traditions

five shillings, in addition to

of the English kitchen alive is the

non-rationed grouse, rabbits

17th- century heritage-listed English

and pheasants. This posh and

Restaurant (50-52 Brushfield Street) near

very British institution owns

Old Spitalfields Market, which serves

the Lartington Estate in the

scrumptious British classics like Bread &

High Pennines and is able to

Butter Pudding.

source quality game and meat

September 2015

Rhubarb Crumble.

It was the 7th Duchess of Bedford who

produce that helps shape its

decided that the time between lunch and

menus throughout the year.

supper was too long a period to go without

Some typical dishes include:

food. Her grace then decreed that every day,

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Cuisine

Left: A potential customer checks the menu outside Rules – London’s oldest restaurant.

Below: Fruit and vegetable stall inside Borough Market.

watering cuisines make it the ideal destination for a food and drinks foray.

“Welcome to the East End Food Tour,” says Eating London guide Oliver Gully inside Old Spitalfields Market, the tour’s starting point. The 3.5-hour tour offers eight authentic food and drink stops, interspersed with entertaining facts and tales en route.

Gastro highlights include tucking into London’s best bacon sandwich at St. John Bread & Wine (94-96 Commercial Street), a drinks stop at local establishment Pride of Spitalfields (3 Heneage Street) and she would take tea at 3pm, freshly-brewed

clotted cream and preserves with a choice

a bagel stop at Beigel Bake (159 Brick

leaves from India partnered with delectable

of tea or coffee.

Lane), an East End institution famous

morsels. Thus the concept of ‘afternoon

The Berkeley in Knightsbridge (Wilton

for its melt-in-your-mouth saltbeef bagels

tea’ or ‘high tea’ was born – a ritual that

Place) adds a creative twist to the classic

slathered with hot English mustard.

remains dear to both Londoners and

afternoon tea elements with it’s Prêt-à-

Other classics sampled along the way

visitors alike.

Portea (a Fashionista’s Afternoon Tea),

are bread-and-butter pudding, fish and

offering bite-size cakes and pastries

chips, British cheeses and curry. My advice

teas can be enjoyed at the National Portrait

inspired by the latest fashion season’s

is: go easy on breakfast on the day of your

Gallery’s fabulous roof-top restaurant,

catwalk designs.

tour (eatinglondontours.co.uk).

One of London's best-value afternoon

with bonus city views of Trafalgar Square,

London’s East End is a neighbourhood

The curious little green huts you may

Big Ben and the Houses of Parliament.

like no other. Its tapestry of diverse

see at places like Grosvenor Gardens,

For around £20 you are served a selection

cultures, amazing street art, fascinating

Hanover Square, Chelsea Embankment,

of savoury sandwiches, pastries, scones,

history and, most importantly mouth-

Temple Place and Kensington Road are some of London’s few remaining Cabman's Shelters – city institutions that date back to the 1870s, when the Earl of Shaftesbury set up a charity to provide Victorian cabmen outside in all weathers, ‘wholesome refreshments at moderate prices’.

Of the 61 original shelters built between 1875 and 1914, only 13 remain, and all are Grade II-listed buildings. The rules are that only taxi drivers are allowed to eat and drink inside, but other customers can place their orders at the serving hatch outside.

These quirky survivors from another era provide an excellent insight into local London life and are great places for a value cup of tea and a sandwich.

Right by the South Bank near Southwark Cathedral is the historic Borough Market Portfolio

Essentials

Cuisine

(8 Southwark Street), one of the largest,

tastings on offer, in addition to takeaway

elegant London hotels, tea is undeniably

oldest and best food markets in London. A

stalls selling sizzling sausages, gourmet

Britain’s favourite beverage and has long

market has operated here, in some form or

wraps and wild venison burgers. Opening

played an important role in its culture. It’s

another, since medieval times and during

hours are Wednesday to Thursday 10am

fitting then, that London's oldest shop,

the past decade ‘London's Larder'’ has

to 5pm, Fridays from 10am to 6pm, and

Twinings (216 Strand) is still found in

enjoyed a significant renaissance.

Saturdays from 8am to 5pm.

its original location where fine teas have

From mugs of tea at classic caffs to Producers come from all over

delicate teas served in bone china at

produce at this fantastic market, including meats, cheeses, breads, coffees, cakes and pastries. It’s a culinary feast for the senses and the place is abuzz with traders selling

been traded since 1706. Stephen Twining, a 10th-generation Twining and roving ambassador for the company, recommends

the country to sell their locally-sourced Clockwise: Waitress in vintage attire at Poppies; Enjoying hot salt-beef bagels from Beigel Bake; The Cross Keys pub in Covent Garden.

matching certain teas with particular foods.

Some of Stephen’s favourite pairings include a delicate Darjeeling with a strong cheese, a pungent high-grown Kenyan

fresh seafood, slabs of local cheese, home-

with dark chocolate and a robust English

grown honey, crusty artisan spelt bread,

Breakfast tea to accompany kippers at

exotic mushrooms and organic fruits and

breakfast. 216 Strand is a showcase for

vegetables in every colour of the rainbow.

Twinings’ range of specialty teas, along

There’s plenty of free food and drink

with teapots and all the paraphernalia for making that perfect cuppa. To the rear of the shop is the delightful Twinings Museum, full of stories and artefacts from the past.

The humble curry has long been Britain’s adopted national dish, and when it comes to London’s Indian restaurants, two words immediately spring to mind – Brick Lane, otherwise known as the ‘Curry Mile’.

Situated in the heart of this street of spice is the standout Aladin (132 Brick Lane) winner of the ‘Taste Brick Lane Curry Award’ and frequently listed among London’s top 10 Indian restaurants.

From the middle of the 19th century until just after the Second World War, spiced-eel pie (the Thames was once writhing with them) served with mashed potatoes was the staple lunch for many Londoners. These days, authentic pie and mash shops are a dying breed, but one of the best intact examples is L. Manze (76 High Street) in Walthamstow, northeast London.

It’s well worth the effort to take the tube to Walthamstow Central and hike along the

Photos: Eating London Tours

72

High Street to this Grade II-listed pie and mash masterpiece. Slide into one of the wooden booths to enjoy a crisp homemade pie with creamy mash and parsley liquor – and if you are feeling adventurous maybe add a side of jellied eels...

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74

The Path Ahead for Korea’s Kimchee The Koreans are so passionate about their fermented cabbage that it has become a point of friction with neighbouring China, reports Alexandra Stevenson.

T

he fate of South Korea’s kimchee

States. And neither South Korea nor China is

industry rests on whether China

part of the negotiations over the Trans-Pacific

considers it pickled or not.

Partnership, a US-led trade deal that the

When China reclassified the fermented

cabbage dish several years ago, Korean

Obama administration has said is a way to strengthen its economic links in Asia.

exports of kimchee evaporated. As a pickled

China is pursuing a string of smaller

product, it did not meet China’s strict import

pacts across Asia, using its financial heft

hygiene standards. Now, China has pledged

and global influences to its advantage. In its

to reconsider the designation, a concession

first major move, China signed a free-trade

that could pave the way for a new boom in

agreement with South Korea in June. Under

exports since the two countries sealed a

the agreement, each country will scrap tariffs

broad trade deal.

on more than 90 per cent of goods, including

The episode over kimchee, a source of deep

medical equipment, electronics and kimchee,

culinary and cultural pride in South Korea,

over the next 20 years. The deal is expected

reflects the sometimes complicated relationship

to increase trade between China and South

that China has with its neighbours. As China

Korea to $300 billion, according to estimates

looks to deepen its regional trade ties, such

from the South Korean Ministry of Trade,

pockets of tension could flare up, creating

Industry and Energy.

challenges for its ambitions.

For years, cheaper Chinese kimchee

President Xi Jinping of China called the deal a “monumental event.” President

imports flowed into South Korea,

Park Geun-hye of South Korea hailed it as

undercutting local producers, who were not

a “historical milestone,” according to local

permitted to export to China. The subject

media reports. For South Korea’s kimchee

became such a sore point that kimchee was

industry, it should have been a victory.

left out of important trade talks with China for years.

© 2015 New York Times News Service

To the vendors at one bustling food

KIMCHEE, A PUNGENT cabbage that, traditionally, is buried for months and carries

market in downtown Seoul, the prevalence

a powerful smell, holds a special place in

of Chinese kimchee products is a reminder

South Korea. Historically, it has been on the

of China’s reach into the lives of ordinary

table at every meal. But the producers, in

South Koreans. “We cannot make much

factories across the country, are still reeling

without importing things from China,” said

from a bureaucratic change in China. By

Chu Kwi-soon, 67, a seller of kimchee and

classifying kimchee as pickled goods, the

condiments like salted and sauced octopus in

Chinese government basically blocked all

the Gwangjang market.

imports of the product from South Korea.

China looms large in South Korea’s

Kimchee is fermented and has high levels of

economy. It is South Korea’s biggest partner,

bacteria. As such, it did not pass the hygiene

with bilateral trade totalling $235 billion,

standards normally applied to pickled goods,

according to the most recent figures from the

which are sterilised and have low amounts

Korea International Trade Association. That

of bacteria. In a few short years, South

is roughly twice the amount with the United

Korea’s once-growing kimchee trade with Portfolio

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September 2015

75

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Culture

market in South Korea, local producers have struggled to hold on to their business.

Some have moved their factories to China to keep costs down. Others have closed their factories. Kim Soon-ja, the chief executive of Hansung Food, said she had been left with little choice but to lower the price of her kimchee products.

“We are the leaders in kimchee making,” she said. “But because the material and costs are cheaper in China, there is more Chinese kimchee in Korea.”

“Now, there is too much coming from China,” added Kim, who has three factories in South Korea.

The government is trying to preserve kimchee’s cultural and historical significance, if not its economic import. It successfully lobbied the United Nations to name kimchee to its cultural heritage list.

At the World Institute of Kimchi, a research institute financed by the South Korean government, scientists have been told to “nurture and develop the kimchee industry that will boost the national growth.”

Despite such efforts, kimchee is losing some of its relevance in modern South Korea. The country transitioned from an agricultural economy to a technology economy in the span of several short decades. Younger generations spend more time online – on smartphones and other gadgets – than they do at the dinner table.

Once-common family traditions like gathering to make kimchee every autumn, China evaporated, from hundreds of thousands of dollars of exports a year to just $108 in 2013 and $16,800 in 2014.

Instead, cabbage is flowing in the opposite

Top: Kimchi at the shop of Park Soonja, a kimchi maker and merchant, in the Kwangjang Traditional Market in Seoul.

Above: Chinese tourists buy Korean kimchi at a supermarket for tourists in Seoul.

preparing the cabbage and storing it underground in jars for months, are fading.

Today, few young South Koreans make their own kimchee. Some rarely even eat it.

Park Soon-ja has had a stall in this

direction, with China now exporting

market for more than 30 years. “Back then,

hundreds of millions of dollars’ worth of said it would revise its regulations on

we only had rice and we had many children.

kimchee in a move that was seen as a last-

We were poor. We had limited choices,” she

owners of kimchee,” said Kim Young-rok,

minute concession to South Korea. But

said. “I grew old in this market,” she said,

a South Korean politician. Other Chinese

it is not clear whether the classification

refusing to disclose her age.

agricultural products have also undercut

has been changed, since the World Trade

local business and dominated food markets

Organisation has not yet confirmed the

market stall owners, tourists and the

and grocery stores, touching a nerve for

new designation. Even if the rules change,

occasional housewife. “Nobody wants to

farmers in South Korea, Kim said.

it may be difficult to reverse the damage.

make it at home,” she said. “It’s a bother,

As cheap Chinese kimchee has flooded the

and they are too busy making money.”

kimchee a year to South Korea.

“We are feeling a sense of crisis as the

In February, the Chinese government

Now, most of Park’s customers are other

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78

Photos: Getty Images

Culture

I

Mogao Caves Under Threat

Mogao Caves for the central government

Dunhuang, China, Li Lingzhi watched

since 1944, even before the Communists

as workers in blue suits inspected

took power. “We’re monitoring humidity

the Buddhist frescoes commissioned in this Gobi Desert cliff grotto more than a millennium ago by a local ruling family.

It has taken a decade to restore the cave. © 2015 New York Times News Service

A plan to build a theme park next to the Mogao Caves, a UNESCO World Heritage Site, has alarmed scholars and preservationists, reports Edward Wong.

n the cool shadows of Cave 98 in

and temperature now in this cave.”

Such is the delicate work that goes into preserving these small, centuries-old caves, with nearly 500 of them providing

Metal scaffolding still surrounds the central

a time capsule of art along the Silk Road

statue, a three-storey seated Buddha with

and ranking among the world’s greatest

orange robes. “We’re waiting for an expert to

Buddhist treasures.

inspect this, and then we will discuss when

There are statues and figurines and

we can open it to the public,” said Li, who

frescoes of Buddha with curly hair

works on conservation for the Dunhuang

and sharp noses, a style common in

Research Academy, which has managed the

ancient Central Asian art; Tibetan-style Portfolio

79

It has taken a decade to restore the cave. Metal scaffolding still surrounds the central statue, a threestorey seated Buddha with orange robes. “We’re waiting for an expert to inspect this, and then we will discuss when we can open it to the public. visitors who flood the area between May and October.

Officials in Gansu province, which includes Dunhuang, and a company in Beijing have drawn up plans for a sprawling theme park connecting the caves with a separate area of sand dunes that already exists as a tourist playground (think dune buggies and camel rides). The connecting strip of desert would be filled with faux temples, folk villages and souvenir stands.

“We hope it won’t become reality,” said Fan Jinshi, 76, known as the “Daughter of Dunhuang,” who has worked at the academy since 1963 and directed it for 17 years, until March. “The Mogao Caves are irreplaceable and non-renewable. Not only do the caves have to be respected, but the atmosphere around them must be protected, too. The atmosphere around them is part of their integrity.”

He Shuzhong, founder of the Beijing bodhisattvas with a thousand arms drawn

An entire school of scholarship called

Cultural Heritage Protection Centre, a non-

in the time of Mongol rule; and disciples

“Dunhuang Studies” has sprung up in

profit preservation group, expressed his

wearing Indian dhotis. Most of the caves

the decades since, and the area has been

concerns in an essay in the March issue of

with art were paid for by royal families

designated a World Heritage Site by the

World Heritage Magazine, a publication of

seeking a place for private worship. The

United Nations.

the Chinese Foreign Ministry. “For 20 years,

oldest one dates back 1,600 years.

But the modern era’s threats to the art

the city has never stopped trying to exploit

have been legion: sandstorms, rainwater,

the caves for money,” he said in an interview.

of Chinese empires and the eastern one of

local tomb raiders, plundering foreign

“The plan would destroy the environment of

Central Asian kingdoms. Camel caravans

archaeologists (Stein and Pelliot among

the caves.”

crossed the Hexi Corridor here laden with

them), and White Russian soldiers who

spices, silks and scriptures, some of which

once lived in the grottoes.

The caves marked the western frontier

were deposited in the famous library cave

Scholars and preservationists now warn

The plan, requested by Gansu officials, was completed in October by the Boya Strategy Consultation Group, a company in

that drew the explorers Sir Aurel Stein

of an even greater looming threat: tourist

Beijing that develops commercial tourism

and Paul Pelliot in the early 20th century.

hordes, even beyond the thousands of daily

sites across China. The proposal has

September 2015

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Essentials

Culture

circulated among Gansu officials and the

suggested by the provincial government

tourists generates anxiety at the academy.

Dunhuang Research Academy but has not

after it established a tourism industry

After 1979, when the caves were opened

been publicly released.

leading group,” said Dou Wenzhang, a

to the public, 10,000 to 20,000 people

Peking University business scholar who

visited annually. In recent years, the crowds

shortcomings in the area around the

founded Boya. “The goal is to establish 20 of

have sometimes reached that number in a

caves, including a lack of hotels, live

these zones across Gansu province.”

single day in the peak season, with a total of

In the plan, Boya designers list

entertainment, large shopping areas and

Jiang Jianhong, director of daily

810,000 last year.

bus parking lots, according to a copy

operations at the Dunhuang City Tourism

obtained by The New York Times.

Bureau, said, “There is no timeline as to

on a plan to control tourism that is just

Fan and her colleagues worked for years

when construction will start on the tourism

now taking effect. The academy built a new

and campground complete with a drive-in

zone.” He added, “Protection of the caves is

visitors’ centre north of the caves. People are

movie theatre, a vineyard and wine cellar,

of the highest importance.”

required to watch two 20-minute films about

The plan proposes building a trailer park

and a “Silk Road Village” between the caves

Perhaps most worrying to the Dunhuang

the caves before taking shuttle buses to the

and the sand dunes with hotels, shopping

Research Academy, the plan calls for

site. There, guides lead groups of 25 in tours

malls, museums, performance halls,

the creation of a provincial government

of one to two hours through about eight

restaurants, bars and movie theatres.

commission to oversee tourism, potentially

caves, with a limit of 6,000 visitors a day.

Its authors give generous estimates of

stripping the academy of some or all of its

One of the films, in 3-D, is projected on the

potential income. By 2017, it says, the main

authority. Dou argued that the academy

inside of a dome that brings the viewer into six

tourism zone will attract more than 2.13

would retain much of its power and that its

caves, including one with an 25-metre-high

million tourists a year, with revenue of 496

rules on tourism would be respected.

sitting Buddha. “The point is to have people

million renminbi ($80 million). By 2020, the revenue will grow to $123 million.

“The concept of the tourism zone was

In the eyes of Fan and her colleagues, the

look at the art but without going into the

imperatives of preservation must be placed

caves,” Fan said. “This is the first place in all of

well above tourism. Already, the number of

China to experiment with this method.”

Right: (clockwise) Restoration work in one of the 500 Mogao Caves in Dunhuang, China; The site is composed of 252 grottoes with more than 51,000 Buddha statues and statuettes; An intricate rock carving; Covered Cave 96 holding a 34.5-metretall Buddha statue.

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Dubai, United Arab Emirates Tel: +971-4-327 5151, Fax: +971-4-327 5252 Email: mepc@eim.ae Web: www.educationmalaysia.gov.my

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Music

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Czech Company’s Unexpected Hit GZ Media in the Czech Republic expects to produce 20 million albums this year, thanks to an explosion in global vinyl demand, reports Rick Lyman.

H

e was a businessman, not a clairvoyant. Zdenek Pelc did not really foresee, a generation

ago, that vinyl records would one day make a return from near-extinction. But he was smart enough to keep a vinyl record factory in Lodenice, a relic of the Communist era, through all those years when albums gave way to CDs and then to iTunes and streaming, and to be ready when vinyl suddenly got hot again.

And that is why this village of 1,800, nestled in a lush furl of the Bohemian hills, improbably finds itself a world leader in the production of vinyl albums.

“I realised when I came to the company 33 years ago that vinyl would be finished one day,” said Pelc, 64, who now owns GZ Media and serves as president. “But I wanted our company to be the last one to stop making them.”

Above: Zdenek Pelc, owner and president of GZ Media and its vinyl record factory, in Lodenice, Czech Republic.

© 2015 New York Times News Service

Republic’s transition to quirky capitalist

only enough machines running to meet the

colt from cranky Communist nag, all

dwindling demand, moving the rest into

played to the kind of rock soundtrack that

storage and using their parts as needed.

Instead of getting rid of the old machines into their space – as most music

“Frankly, if someone had told me back then that vinyl would return, I wouldn’t have believed it,” he said.

In 1994, a year after the Czech

production companies around the world did

Republic was founded with the division of

in the late 1980s and early ‘90s – Pelc kept

Czechoslovakia, the company turned out

September 2015

In 2014, driven by a global explosion of 14.5 million, Pelc said.

village it once dominated – traces the Czech

equipment and moving CD-making

of analogue enthusiasts around the world. interest in vinyl, the company produced

The trajectory of the company – and the

accompanies many modern Czech tales.

300,000 albums for a dwindling coterie

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Music

Left: A worker fixes a father copy of a record and gets ready to place it into an electroforming bath to make a mother copy.

Bottom left: A pedestrian passes a vinyl and turntable store in Prague.

town,” said Jaroslava Bezrova, 67, the village’s registrar since 1976. “They employed everyone.”

Albums were popular around the world, but they have a special resonance in the region, where they became underground totems in the rock-infused Velvet Revolution that overthrew Communism in Czechoslovakia in 1989. Under Communism, the company produced many records for sale in other countries, including rock classics forbidden in Czechoslovakia. Copies smuggled out of the plant or sold on the black market were extremely valuable.

All the Lodenice plant was turning out for local consumption were official records to accompany weddings, funerals and various patriotic celebrations, as well as recorded fairy tales and hits from stateapproved singers.

“You would buy the record on the black market and bring it home and invite all of your friends over,” Bauer said. “It was an occasion.”

By the time Pelc joined the company in the early 1980s, vinyl had already been losing ground to cassette tapes. But the arrival of the CD seemed to seal its doom.

By the early '90s, the vinyl album was all but extinct. Yet something else was happening in Lodenice at the same time.

NOW, BEZROVA SAID, only eight per This year, the company expects to produce around 20 million albums,

and woodworkers.”

The building at the heart of the GZ

cent of the village’s population works for GZ Media.

Much to the surprise of Lodenice, and

most likely edging out global rivals like

Media complex today is more than 100

United Record Pressing in Nashville,

years old and originally housed a weaving

to executives at GZ Media, vinyl records

Tennessee, and Optimal Media in Robel,

company. Later, in a nod to the village’s

began to show new signs of life a decade

Germany. “Vinyl rose from the ashes,”

woodworking tradition, workers produced

ago, driven by their use in nightclubs and

Pelc said happily.

cabinets for gramophones. In 1951, the

their embrace by a new generation drawn

“In the historical records, the village is

Communist authorities decided to move

to the format’s warmer sound. “From

mentioned as far back as the 11th century,”

the country’s vinyl-record production to

around 2005, the demand for vinyl grew

Lodenice Mayor Vaclav Bauer, 53, said.

the plant as well.

steadily,” said Michael Sterba, GZ Media’s

“Originally, it was a town of lumbermen

“In those days, this was a company

chief executive. “Then, it really took off in Portfolio

With a personal account manager you’ll skip the bank fees and bag World First rates whenever you transfer money overseas.

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86

Essentials

Music

the last two or three years, like, whoosh.”

There are no reliable statistics for global sales of vinyl records, taking into account the large players like GZ Media, as well as the many small operations that turn out a few thousand units. Optimal, one of the company’s largest competitors, estimates that it will produce 18 million albums this year, nearly matching GZ’s projections.

In 2011, the number of vinyl albums sold in the United States, the world’s largest market, was 3.9 million, according to Nielsen and Billboard’s annual US Music Report. That rose to 9.2 million units in 2014.

Other countries that have experienced skyrocketing vinyl sales include Australia, Britain, France, Germany and the Netherlands.

In one of the mastering rooms, a diamond knife cut narrow grooves into a copper plate, the first step in the album-making process. There are only 23 such machines left in the world.

“Only an idiot thinks this can go on forever,” Sterba said. “Maybe making vinyl is a fashion that will disappear in a few years. Who knows? No one predicted this.”

Sterba strode rapidly through the labyrinth separating the cluster of GZ Media buildings. In one of the mastering rooms, he watched intently as a diamond knife cut narrow grooves into a copper plate, the first step in the album-making process. There are only 23 such machines left in the world, he said, and GZ Media

Top: A worker presses black records at GZ Media’s vinyl record factory.

Above: A worker trims a stamper to make a final record size.

new machines built by a Czech company to GZ’s specifications. They are the first new equipment manufactured in decades to produce vinyl records, Sterba said.

Pelc, unexpectedly finding himself atop

has four of them.

a Bohemian gold mine, said he, too, would

In a noisy factory space, workers grab pucks of vinyl, heated to about 77 degrees

pliable vinyl into an album that is slipped

like to know how long the boom will last.

Celsius, and gently place them on the

out of the machine and placed on a tall

“I know this,” he said, grinning broadly.

stamp, a nickel plate made from the

metal spindle to cool for 16 hours.

“We’re seeing 50 per cent growth now, and

master. The pressing machines squash the

GZ Media has 49 presses, including six

it is a long way from 50 to zero.”

Portfolio

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Essentials

88

Other Business

Photo: Getty Images

Harry Potter Rules

France has been named European Quidditch champions after sweeping aside the British favourites in an intense Harry Potter-inspired final played out in the Italian countryside.

Less than 20 years since author JK Rowling invented the sport on the pages of the Harry Potter series, Quidditch now boasts an international governing body and teams in over 20 countries.

The complicated sport involves seven players on each side, five balls and a total of six hoops, which serve as goals. Competitors must abide by a 170-page rule book, with tournament organisers making sure each team has the correct equipment.

The 90-50 result saw the French win the first European Quidditch Games, hosted in Sarteano, a hillside town in Tuscany. The champions beat 11 teams, all on broomsticks.

Lego Prosthetics Children could soon see their favourite

the Danish toy company’s

toy grafted on to the end of their arm,

experimental research department,

thanks to designs for Lego prosthetics

and Cirec, a Colombian foundation for

that allow everything from mechanical

physical rehabilitation, the modular

diggers to laser-firing spaceships to be

prosthetic incorporates myoelectric

screwed on to the end of a child’s limb.

sensors that register the activity of

Iko is the work of the Chicago-based

the muscle in the stump and send a

Colombian designer, Carlos Arturo

signal to control movement in the

Torres, and is a modular system that

attachment. A processing unit in

allows children to customise their own

the body of the prosthetic contains

prosthetics with the ease of clicking

an engine compatible with Lego

together plastic bricks. The only limit is

Mindstorms, the company’s robotics

their imagination – and what they can

line, which lets the wearer build

find at the bottom of the Lego box.

an extensive range of customised,

Designed with Lego’s FutureLab,

Ireland Scraps Heritage Certificates

programmable limbs.

Heritage scheme in August.

Introduced in 2011 as an “expression of the importance the government attaches to recognising people of Irish descent”, the certificates have been presented to famous figures such as US President Barack Obama, former president Bill Clinton and actor Tom Cruise.

But others, who like Cruise may have

Ireland’s call to its 70-million-strong

been able to trace their Irish lineage

diaspora to make a show of their ancestry

back to the 13th century, were less

at up to ¤120 ($132) each went largely

willing to part with ¤45 – ¤120 for

unanswered and the government as a

a framed copy – to prove it, and just

result scrapped its Certificate of Irish

3,000 were sold.

Portfolio

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