Posts in category Business


ApprovedBusinessBusiness and finance

Flying blind

Have you seen my balance-sheet?

AN OWNER who is lying low in London, a slew of government agencies investigating fraud, a consortium of 17 banks facing hefty losses: winding up Kingfisher Airlines, an Indian carrier that stopped flying in 2012 under a pile of debts, always looked likely to make the fortunes of a few bankruptcy lawyers. It now seems that forensic accountants may get a fat payday as well, after the airline told a government agency its books had vanished. As with all important documents, it seems, a backup is nowhere to be found, if it ever existed.

The airline’s missing accounts—apparently stored on servers seized by a vendor who had gone unpaid—is an unwelcome complication for those who had hoped the Kingfisher saga might be inching towards some sort of resolution. To the dismay of Vijay Mallya, the booze scion who founded the airline in 2005 (pictured left, with Prince Charles), the case is now a tangle of bankers’ civil claims and criminal ones from authorities investigating allegations that some of the loan money went towards his foreign property purchases (accusations that Mr Mallya says he has…Continue reading

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ApprovedBusinessBusiness and finance

From noodles to poodles

Pots of money no more?

SOARING sales of instant noodles have for years been a reliable indicator of the insatiable appetites of China’s rising consumer class. China is the world’s biggest market for these flash-fried snacks infused with monosodium glutamate (MSG), a chemical that makes flavourless food more palatable. Locals slurp down over 40 billion packets each year. Now comes news of a nasty noodle meltdown. It is less a sign that China’s long consumer boom is waning than that Chinese tastes are changing.

The volume of instant noodles gobbled last year fell by 12.5%, according to a new report on China’s consumer market from Bain, a consultancy, and Kantar Worldpanel, a market-research firm. The consequences for firms such as Tingyi, whose Master Kong noodles are found everywhere from railway canteens to kitchen cupboards, have been severe. Profits for China’s biggest instant-noodle firm fell by 36% in 2015, to $256m, as hungry Chinese consumers turned their backs on its wares. Even more shocking, the volume of beer sold in China—the world’s biggest guzzler—fell by 3.6% last year, largely because of plunging…Continue reading

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ApprovedBusinessBusiness and finance

Ticking all the boxes

Clicking your rights away

IF A prize were to be awarded for the world’s clunkiest prose, the paragraphs of indecipherable text that make up “terms of use” agreements would surely win. These legal thickets are designed to protect companies from litigious online shoppers and users of web services. Some firms require agreement, as when users are asked to click a box before creating an Apple ID. Other sites explain their policies without seeking customers’ explicit consent. Few consumers read these terms, let alone understand them. Because they involve no negotiation between customer and company, firms often insert language conferring broad protections to lower their risk of liability. But in a new twist, legal disclaimers designed to limit lawsuits are now unleashing litigation.

A surge of lawsuits in America claims that companies’ online agreements violate consumers’ rights. Consumers are banding together in class actions against targets including Apple, Avis, Bed Bath & Beyond, Toys R Us and Facebook. The cases have a tinge of the bizarre, citing a law passed before companies even had websites. And the lawsuits…Continue reading

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ApprovedBusinessBusiness and finance

In the rough

“Real is rare”, bidders were rarer

“I’VE seen grown men with tears in their eyes” in front of it, an auctioneer from Sotheby’s said as he opened bidding on June 29th on the 1,109-carat Lesedi La Rona, the biggest diamond to be discovered in over a century. Within minutes the tears were, if anything, of embarrassment. Bidding, which started at $50m, was desultory. A rough stone that Sotheby’s had put in the same league as the 3,107-carat Cullinan diamond, discovered in South Africa in 1905, failed to make its $70m reserve. “I’m a bit disappointed. There were no private buyers and the diamantaires stayed away,” said Lukas Lundin, chairman of Lucara Diamond, a Canadian firm that unearthed the stone in Botswana last year.

It was the latest disappointment to befall an industry that has had little to celebrate. Two days before, William Lamb, Lucara’s chief executive, said he believed the auction would symbolise the allure of diamonds and their promise for African development. He hoped to “dispel the rumour that all diamonds are bad”. That reek of notoriety has clung to the industry in recent years, especially…Continue reading

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ApprovedBusinessBusiness and finance

Window dressing

BROWSERS, pieces of internet software that people probably spend more time with than they do in bed, have long been boring affairs. Save for occasional innovations such as tabs, these programs have remained fundamentally the same since the release of Mosaic, the first mainstream browser, nearly a quarter of a century ago. Just four browsers account for nearly all users: Apple’s Safari, Google’s Chrome, Microsoft’s Internet Explorer and Mozilla’s Firefox. It is difficult to tell them apart.

New, more interesting browsers have started cropping up. In August internet users will be able to download the first full version of Brave, the brainchild of a co-founder of Mozilla. Mozilla itself is working on a new type of browser which will give users suggestions on where to navigate next. Both are only the latest in a series of such efforts: last year Microsoft unveiled Edge, meant to replace Internet Explorer; March saw the release of Cliqz, a browser developed in Germany; a month later came Vivaldi.

If most browsers are boring and unwieldy, it is because they are expected to do more than ever before: not just surfing the web, but editing documents, streaming music and much more besides. As a result, priority is given to stability and ease of use. Too many fiddly buttons could scare away novice users. Innovation is outsourced to developers of…Continue reading

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ApprovedBusinessBusiness and finance

Squeezing the tube

BUSINESS theorists routinely instruct managers to look over the horizon. “Blue Ocean Strategy” is the most successful book on business master-planning in recent years. In it W. Chan Kim and Renée Mauborgne of INSEAD, a business school in France, argue that companies should trawl for profits in “blue oceans” that their rivals ignore rather than “red oceans” that they squabble over. Companies often search for ways to disrupt their industries lest a rival or new entrant does the same and pulls the rug from beneath them. But reinventing a business from the ground up, to avoid being consumed by the fires of new technology, comes with huge risks as well as a potential for great rewards.

Ships that set sail for blue oceans are often becalmed in the middle of nowhere. AOL-Time Warner’s catastrophic merger in 2000 failed to remake the media business for the internet age. News Corp’s foray into social networking ended with the sale of Myspace for a small fraction of its purchase price. Sometimes being cautious, incremental and pragmatic when others are gambling on bold and visionary thinking is more sensible. Why take the chance when there is lots…Continue reading

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ApprovedBusinessBusiness and finance

Print my ride

A bumper business

ANOTHER milestone has been passed in the adoption of additive manufacturing, popularly known as 3D printing. Daihatsu, a Japanese manufacturer of small cars and a subsidiary of Toyota, an industry giant, announced on June 20th that it would begin offering car buyers the opportunity to customise their vehicles with 3D-printed parts. This brings to drivers with more modest budgets the kind of individual tailoring of vehicles hitherto restricted to the luxury limousines and sports cars of the super-rich.

The service is available only to buyers of the Daihatsu Copen, a tiny convertible two-seater. Customers ordering this car from their local dealer can choose one of 15 “effect skins”, decorative panels embellished with intricate patterns in ten different colours. The buyers can then use a website to tinker with the designs further to create exactly the look they want. The skins are printed in a thermoplastic material using additive-manufacturing machines from Stratasys, an American company. The results are then stuck on the front and rear body panels.

Copen buyers will like selecting unique add-ons…Continue reading

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ApprovedBusinessBusiness and finance

Sleepy giant

CHINESE business leaders will gather on June 26th in Tianjin, a charmless industrial city near Beijing, for the annual “Summer Davos” conference. This talking shop for big shots, organised by the World Economic Forum, will feature endless discussions about the fourth industrial revolution, panels on the internet of things and briefings on other whizzy topics that occupy the minds of business leaders the world over. China’s bosses will lap it up. The country wants to shift from its position as the world’s sweatshop to become a powerhouse of creativity and invention. The priority for corporate chiefs, runs the fashionable refrain, must now be to embrace trailblazing innovation and technology. In fact, a better bet would be to concentrate on the nuts and bolts of management.

China does need to shift from brawn to brain, but Chinese companies are not going to turn into Google or Apple overnight. Most of them, especially those controlled by the state, will continue to plod on in unsexy industries, such as steel or cement, for some time yet. For this cohort of firms, the central problem is not a lack of futuristic thinking or transformative innovation…Continue reading

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ApprovedBusinessBusiness and finance

Short and sweet

THE unpredictable ways of “Masa” Son, the founder of SoftBank, a Japanese telecoms and technology firm, are well known in Japan. Even so, the news that he would immediately part company with Nikesh Arora, a former Google executive he named just over a year ago as his successor, was a shock. “He and I love each other,” gushed Mr Arora in one of a hail of explanatory tweets afterwards. Circumstance would suggest otherwise.

SoftBank’s official reason for Mr Arora’s resignation is that Mr Son decided he wanted to carry on as chief executive for another five years or more. Mr Arora wanted to take over sooner. But his brief record at the company must have had something to do with his departure.

Mr Son believed his protégé’s connections in Silicon Valley could land him the right tech deals. Mr Arora’s investment spree include a $1 billion punt on Coupang, a loss-making South Korean unicorn. Hundreds of millions also went into an array of cash-bleeding ride-hailing firms in Asia, including India’s Ola. But the mood has shifted. Now SoftBank’s activities are widely viewed as symptoms of the frothiness and mania that have…Continue reading

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ApprovedBusinessBusiness and finance

Free and easy listening

A chorus of disapproval

IN LOVE or in business, it is not a good idea to be on the wrong side of Taylor Swift. She has slated ex-boyfriends in her songs. And last year she publicly criticised Apple Music’s plan not to pay artists during the streaming service’s launch period. Apple quickly relented. Now Ms Swift has joined nearly 200 musicians and record labels in a campaign aimed at the largest streaming service, YouTube. They complain that it gives away too much of their work for free.

Their call for a change in copyright law is sure to fail, but the underlying gripe with Google’s streaming service will find sympathetic ears. Streaming of music via on-demand video services more than doubled in America last year, to 172.4 billion songs, according to Nielsen, a research firm. Ms Swift, Sir Paul McCartney, U2 and others signed a letter, published in several Washington periodicals on June 20th, asking Congress to make it more difficult and costly for those streaming services to host versions of songs uploaded by users. Google and Facebook, among others, will vigorously oppose any change to the Digital Millennium Copyright…Continue reading

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ApprovedBusinessBusiness and finance

Oi boy

A bad call

“OI” IS a cheerful, informal greeting in Brazilian Portuguese. But after the telecoms operator of the same name made the largest bankruptcy-protection filing in Brazilian history on June 20th, the country may finally be saying goodbye to its hopes of creating a strong, state-backed national champion. Brazil’s interim government says it will not bail out the company, which is in debt to the tune of 65 billion reais ($19 billion). State-controlled banks have not been prepared to forgive what the firm owes to them. Parts of the company could be sold off to foreign buyers.

Oi was once treated more favourably by the government. The product of a state-sponsored merger eight years ago aimed at building a homegrown giant in a market dominated by foreign firms, Oi was even regarded as a potential global player. It is the country’s largest fixed-line firm, but has struggled to compete with international rivals in the much more lucrative mobile market, where it is Brazil’s fourth-largest operator, despite lots of official funding and regulatory changes in its favour.

Like many…Continue reading

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ApprovedBusinessBusiness and finance

All about the base

THE project to understand the human genome has long promised to revolutionise the way that diseases are diagnosed, drugs are designed and even the way that medicine is practised. An ability to interpret human genetic information holds the promise of doing everything from predicting which drugs will work on a particular patient to identifying a person’s predisposition to develop diseases.

Genomic information is already transforming some medical practices. Sequencing has changed the way that fetuses are screened for Down’s syndrome, from a risky invasive test to one where abnormalities in fetal DNA can be picked up from blood drawn from the mother. In time this sort of method will extend to other genetic disorders and other medical applications. One area of promise is treating some types of cancer. Using blood tests to detect genetic changes in tumours could allow doctors to discover more quickly when drugs are no longer effective. This is so promising that there is already speculation that performing such “liquid” biopsies could be a $11 billion business by 2022.

Realising the vast potential of genomic medicine is a commercial project…Continue reading

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BusinessBusiness and financeIncoming

Clouds appear

ELON MUSK, a South African entrepreneur, embodies the creative daring of Silicon Valley. He has defied sceptics and overcome setbacks over the years, all the while pushing on with innovations of improbable ambition. Yet even a man of his self-belief will have been taken aback by the negative response to an announcement on June 21st that Tesla Motors, the electric-carmaker and battery-manufacturer he runs, would buy SolarCity, a company that makes solar panels and that counts Mr Musk as its largest shareholder. Tesla will pay with up to $2.8 billion of its own shares if investors vote the deal through (Mr Musk says he will not take part in the ballot).

Mr Musk’s pitch is that combining Tesla and SolarCity creates a vertically integrated energy company that can sell consumers all they need for green living. The rich and virtuous can already buy an electric car from Tesla, and a Powerwall, a battery that stores solar energy and powers the home at night. A combination of Tesla and SolarCity could put solar panels in the carmaker’s retail stores, expanding SolarCity’s range of customers and helping them charge their cars in a cleaner…Continue reading

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BusinessBusiness and finance

Private security firms are on the rise in Europe

REFUGEES arriving on Aegean islands are whisked to “hotspots”—registration centres run by the European Asylum Support Office. It is often a traumatic moment. Those who fear being sent back to Turkey can turn angry or violent. “We have had a number of riots, staff have had to be evacuated quickly”, says an EASO spokesman, Jean-Pierre Schembri. So, for the first time, a private-security firm, G4S, has been contracted to guard the hotspots, bolstering the efforts of Greek police. “We felt we needed additional security”, he adds.

Such firms are increasingly active across much of Europe. “More missions previously done by the police, or by public authorities, are now given to private companies” says Catherine Piana, head of COESS, a pan-European industry lobby group in Brussels. She estimates there are 2.2m licenced guards in Europe, roughly as many as there are police. Infrastructure, such as airports, ports, nuclear power plants and hospitals, are mostly protected by privately contracted firms these days.

Migration is one reason that such firms are flourishing. Austrian officials, as they struggled with a refugee influx…Continue reading

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ApprovedBusinessBusiness and finance

Lord of the jungle

The magic middle kingdom

A BOLD reimagining of the tale of Tarzan is one of the principal attractions at Shanghai Disneyland, a theme park twice the size of California’s original Disneyland, that opened on June 16th. Even more impressive than the acrobatic stunts on display are the gyrations performed behind the scenes by Robert Iger, chairman of the Walt Disney Company, to ensure that his firm’s vast investment in China brings equally huge rewards.

In pursuit of bumper returns Mr Iger boasted this week that the new park is “by far the most creatively ambitious and technically advanced” his firm has ever built. As evidence, he pointed out that it has the world’s tallest Storybook Castle; puts on more live shows than any new Disney park, all in Chinese; and that its heart-stopping “Tron” and “Pirates of the Caribbean” rides (based on blockbuster films) feature advanced technologies that Disney is launching in China. Disney has certainly had long enough to conjure this up; over 15 years has passed from inception to opening day.

After such a long wait, will it make money? Disney already runs four of…Continue reading

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ApprovedBusinessBusiness and finance

Keeping on the northern lights

An unusual glow

THE list of candidates for the most beleaguered part of Europe’s nuclear-power industry is long. But since last year Sweden, which generates about 40% of its electricity through nuclear energy, has been a strong contender. A tax increased to punitive levels in 2015 by the anti-nuclear Green Party hit its operators so hard that they threatened to close all ten of the country’s plants unless it was scrapped. On June 10th the government, including the Greens, caved in and threw them a lifeline. It has promised to phase out the tax from next year and will allowed operators to replace ageing reactors with new ones.

This was a rare piece of good news for an industry that looks like it is on its last legs in much of western Europe. Germany is decommissioning all of its reactors and France is cutting the share of nuclear in the energy mix to half, from 75%, by 2025. The country’s main power provider, Electricité de France (EDF), is under fire for the shortcomings of the as-yet-unfinished European Pressurised Reactors (EPRs) under construction in Finland and France. Its proposed EPR scheme at Hinkley Point in…Continue reading

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ApprovedBusinessBusiness and finance

Wider impact

WORKERS at a fish market in Panama City disagree on the benefits of the country’s newly widened canal. One optimistically hopes the government will have more funds to pay for air-conditioning in their broiling workplace. Another draws a finger across his throat and says, “The people will get nothing.” A third calls it “the biggest opportunity” in Panama. The last verdict is certainly true of the government’s take. The revenue it receives each year from the Panama Canal Authority (ACP) is expected to double to around $2 billion in 2021. This is a country that knows how to reap the benefits of its geography.

The ACP will be able to charge more for passage to bigger ships now that massive new locks have been built at both the Pacific and Atlantic ends of the canal and channels have been deepened and widened. The $5 billion venture will be inaugurated on June 26th when the first vessel officially sails through. The widening of the canal was initially mooted before the second world war, but became more urgent as ever larger ships were unable to use it.

Over 960m cubic metres of cargo passed through the canal in 2015, a new record and an amount that…Continue reading

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ApprovedBusinessBusiness and finance

No business like show business

Bastard, orphan, hero, scholar

“HAMILTON”, a hip-hop musical about one of America’s founding fathers and the architect of its financial system, is an unlikely smash. Lin-Manuel Miranda’s creation has been the hottest ticket on Broadway since the show started in July last year. On June 12th it won 11 Tony awards, theatre’s equivalent of Oscars. Michelle Obama called it “the best piece of art in any form that I have ever seen in my life”. Its success is widely credited with convincing the Treasury to keep Alexander Hamilton on the $10 bill. But if its cultural heft is clear, its commercial achievements may be just as remarkable.

“Hamilton” serves as a reminder that although Broadway is rarely regarded as a big business in the same way as Hollywood is, the most successful musicals can outperform the silver screen. No film has ever banked $1 billion at the box office in North America, but three musicals—“The Phantom of the Opera”, “The Lion King” and “Wicked”—have exceeded this benchmark on Broadway, admittedly over long runs. The gap widens further when counting performances worldwide. Andrew Lloyd…Continue reading

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ApprovedBusinessBusiness and finance

The imperial CFO

THE days of imperial CEOs have long gone. Today’s chief executives do their best to contain their egos and, instead, project a modest image. They talk about “servant leadership” and make a point of cultivating their “stakeholders”. Many bosses leave the limelight to company founders and big-name investors. And yet a new authority figure has emerged within companies, much less exuberant than old-fashioned autocratic CEOs but just as determined to amass power: the imperial CFO.

Chief financial officers barely existed 50 years ago: company accounts were administered by mysterious people called “comptrollers”. Today, CFOs are at the heart of all the world’s big firms. They are the only corporate officers other than the boss who are able to monitor every corner of an organisation. They are the only executive other than the chief who is feared by everybody: a “no” from the CFO means that your precious project is dead. Russell Reynolds, a search firm, calls them “co-pilots”. At one high-profile company, Twitter, the CFO, Anthony Noto, is arguably doing most of the piloting.

Finance chiefs play a growing role in shaping the…Continue reading

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BusinessBusiness and finance

Making sense of Microsoft’s acquisition of LinkedIn

“IMAGINE a world where we are no longer looking up to tech titans such as Apple, Google, Microsoft, Amazon and Facebook…because we are one of them.” So wrote Jeff Weiner, boss of LinkedIn, in an open letter on June 13th. Not much imagination is necessary. Microsoft had just announced it would pay $26.2 billion to buy the professional social network, making it the third-largest acquisition in the history of the tech sector. The deal was accompanied by substantial promises from Mr Weiner and Microsoft’s boss, Satya Nadella, that the deal would transform businesses’ and workers’ productivity. Those pledges now seem more fanciful.

Microsoft is paying a high price for a firm that has suffered its fair share of setbacks. Although LinkedIn is the largest professional social network by far, with around 430m registered users and 100m visitors to its site each month, some analysts have questioned how much bigger it can grow. LinkedIn makes most of its money by selling subscriptions to corporate recruiters, who prowl through its database of executives looking for prospective employees. Expansion has been slower than expected and has come at a higher…Continue reading

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ApprovedBusinessBusiness and finance

No El Dorado

WHEN phone footage came to light last year of a stripper opening the throttle during the take-off of a commercial jet operated by Aerolíneas Argentina, the public outcry was predictably fierce. Argentina’s state-owned flag carrier swiftly sacked the pilots who had invited her into the cockpit and the lady herself was banned from the airline for five years. Endangering the safety of passengers is a serious concern. Yet the company’s assault on the public finances is almost as reckless: Argentines have tolerated vast subsidies and huge losses at their national airline.

Even without the drag of state ownership, other South American airlines have recently either lost money or made only meagre profits (see chart). Airlines in Latin America as a whole (whose performance is flattered by the inclusion of Mexico’s mostly profitable flyers) even surpassed Africa’s beleaguered carriers in their ability to lose money in 2015, according to IATA, an industry body. That marks them out at a time when the tailwinds of growing passenger numbers and cheap fuel have carried many other airlines to unusual heights of profitability.

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ApprovedBusinessBusiness and finance

The germ of an idea

No more soft-soaping

“HARMLESS to humans”, assured the slogan on humidifier disinfectants sold to South Koreans in the early 2000s by Oxy, a local unit of Reckitt Benckiser, an Anglo-Dutch consumer-goods company. A widening criminal investigation by South Korea’s government into dozens of cases of lung disease, some of them fatal, suggests the opposite. It is now examining compensation claims by another 750 victims, on top of the 530 lodged since 2011.

Chemical sanitisation in homes and offices is prized as a sign of the country’s rapid progress since its economic take-off in the 1980s lifted millions from squalor and disease. Killing germs, says Lee Duck-hwan, a professor of chemistry and communication at Sogang University in Seoul, became the “single most important topic of daily discussions” in the 1980s. Since then, everything from baby soap to washing machines has claimed to act as a steriliser—something Mr Lee decries as “phobia marketing”. So it is a particular blow when it turns out that products which should improve cleanliness might do harm.

The government suspended sales of the…Continue reading

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ApprovedBusinessBusiness and finance

Trust me

JUNE is usually a cheerful month for admen: they are scheduled to celebrate their feats at the humbly titled Cannes Lions International Festival of Creativity, which starts on June 18th. Yet the get-together this year may be abuzz with darker talk. On June 7th America’s Association of National Advertisers (ANA), a trade group for marketers, published a report accusing advertising agencies of accepting rebates, or kickbacks, from media companies. A group representing American ad agencies slammed the report as “anonymous, inconclusive, and one-sided”. The brawl is sure to continue.

The ANA’s report is the culmination of years of conjecture about such rebates, whereby media companies reward agencies for buying chunks of ad space by giving them cash, fees or other benefits. In some countries advertisers know of such rebates and plan for them. In America the practice has haunted the industry.

Big advertising holding companies such as WPP, which owns several big ad agencies, deny the existence of rebates. Others in the industry say rebates are a shadowy practice, undermining clients’ interests. Last year a former WPP executive declared rebates to be widespread. In October the ANA hired an independent company, K2, to investigate.

Its report has fanned advertisers’ fears. Based on interviews with 150 anonymous sources, K2 found that rebates are…Continue reading

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ApprovedBusinessBusiness and finance

Where the smart is

THE fanfare has gone on for years. Analysts have repeatedly predicted that the “internet of things”, which adds sensors and internet capability to everyday physical objects, could transform the lives of individuals as dramatically as the spread of the mobile internet. Providers have focused on the home, touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out. But so far consumers have been largely resistant to making their homes “smart”.

That’s not for want of trying by tech firms, which have poured cash into their efforts to connect everyday objects to the internet. In 2014 Google made the biggest statement of intent so far, spending $3.2 billion to acquire Nest, a smart thermostat-maker, and $550m to buy Dropcam, which makes home-security cameras. Nest absorbed Dropcam; it is now one of the best-known smart-home brands. But it is also a warning about how long it will take for such gadgets to enter the mainstream.

Nest has undoubtedly disappointed Google. It sold just 1.3m smart thermostats in 2015,…Continue reading

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Alpha minus

Who’s the Terminator now?

“EMPOWERING great entrepreneurs and [allowing] companies to flourish.” This was one of the reasons Larry Page, the co-founder of Google, gave when he announced almost a year ago that the firm would restructure itself. Google, which comprises the internet-search and advertising business, now sits as a subsidiary in a holding company called Alphabet, alongside the “other bets”, a dozen startup businesses that range from fibre networks and smart cities to robotics and life sciences. Yet for now at least, the flourishing is limited and the entrepreneurs seem somewhat less than empowered.

When Tony Fadell, the boss of Nest, which makes wireless thermostats and other “smart home” devices (see article), resigned last week, it was not only because of Nest’s disappointing results and his abrasive management style, but the fact that he no longer got along with Mr Page. Even before Alphabet was launched, Andy Rubin, who ran the company’s robotics…Continue reading

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Bloated but still bingeing

Aiming high

GUO GUANGCHANG made headlines around the world in December when the billionaire industrialist suddenly disappeared, supposedly to co-operate “voluntarily” with Chinese anti-corruption investigators at a secret location. Shares in his company, Fosun, China’s biggest private-sector conglomerate, tumbled. Potential takeovers abroad began to unravel. He was released without accusation of wrongdoing, but the incident served as a warning about political risk in China. Mr Guo recently downplayed the incident: “Half a year has already passed…we are back to normal.”

That is not the good news it seems, because “normal” involves an even bigger risk. Fosun has vast debts after an orgy of foreign acquisitions that has cost, by one estimate, around $30 billion. In recent years, it has acquired France’s Club Med, a resort operator, and bought stakes in Britain’s Thomas Cook, a travel agent, and in Canada’s Cirque du Soleil, an entertainment troupe.

Fosun has also been buying insurance firms worldwide. That is not going entirely smoothly. It confirmed on June 4th that one recent acquisition, of…Continue reading

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