Portfolio | July 2012

Portfolio

Issue 79 ■ July 2012

Exclusive to Emirates First Class and Business Class

TUNECORE Changing Digital Music CREATIVE ACCOUNTING How Apple Saves Millions THE REPAIR CAFÉ A Sustainable Fix

Wang Jianlin The Next Media Mogul?

emirates.com

New York 717 MadisoN aveNue east HaMptoN 23 MaiN street Las vegas ForuM sHops devikroeLL.coM

This issue July 2012

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9

Exclusive to Emirates First Class and Business Class

Cover Story 24 Risky Business Wang Jianlin, the Chinese real estate tycoon who has built up a $17 billion empire, is spending $2.6 billion to acquire North America’s second largest movie theatre chain.

Some industry analysts question this move, especially as US movie attendance has hit a 16-year low. But Wang is a man who bets big and wins big.

Features 30 India’s Power Dilemma

Last year, an estimated €8 billion ($10.2 billion) in collectible

India has struggled to provide enough electricity for its

taxes were in arrears – nearly half of Greece’s budget deficit.

growing economy.

Pressure is mounting on the country’s rich to pay their share.

34 Shaking Up the Music World

50 Challenging the Throwaway Culture

Jeff Price, the founder of TuneCore, is one of the digital

The Repair Café consists of volunteers in the Netherlands

world’s most influential figures and has no qualms in

that fix things for free. This has both an environmental and

targeting the music majors.

social benefit.

38 Retailers Target the US

54 The New Prince of L’Oreal

Uniqlo’s first foray into the American market ended badly.

Jean-Victor Meyers, Liliane Bettencourt’s 25-year-old

But now the Japanese retailer, along with other foreign

grandson, now has a seat on the 14-member board that

brands, is eying rapid expansion.

runs the French cosmetics giant.

42 Sidestepping Billions in Taxes

34

46 Greece’s Tycoons Stay in the Background

Despite having some of the world’s largest coal reserves,

58 Using Technology, Not Salespeople

Most local and international tax codes were written before

Younger shoppers are increasingly using technology while

the technological revolution, which allows companies such

browsing in shops, and retailers are quick to accommodate

as Apple to benefit from creative but legal accounting.

them.

50

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10

Exclusive to Emirates First Class and Business Class

61 The Other Vienna Forget coffee houses, waltzes and Freud. The real attraction of Vienna is its people who know how to live.

66 Breeder of Champions Christine Jamar-Demeersseman is internationally respected for her horse stud, which produces meticulously bred Polish Arabians that sell for millions.

70 Senegal’s Wrestling Mania 61

Traditional wrestling, known as laamb, has become big business thanks to corporate sponsorships.

74 E-Readers Challenge Publishing Schedules In the past, novelists were fine writing a book a year. But E-readers are forcing authors to publish more.

78 Kenya’s Green Power Plan The Lake Turkana Wind Power project aims to provide reliable, low-cost wind power to the Kenyan national grid,

66

reducing its dependence on oil.

82 A Taste of the Sea The Portuguese are the largest consumers of fish per capita in Europe, and it is salted cod that tops the menu.

86 King of the Desert The 2012 Toyota Land Cruiser VXR+ is a mighty vehicle and now it offers even more luxury.

74

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

Departments

86

13 Notebook World business in a nutshell.

17 Observer Spotting and analysing business trends.

22 Column: Stephen Burgen Spain’s Olive Oil Dilemma

Published for Emirates by

PO Box 2331, Dubai, UAE. Telephone: (+971 4) 2824060, fax:(+971 4) 2824436, e-mail: emirates@motivate.ae

Editor-in-Chief Obaid Humaid Al Tayer Group Editor & Managing Partner Ian Fairservice Group Senior Editor Gina Johnson Group Editor Guido Duken Picture Researcher Hilda D’Souza Art Director Tarak Parekh Designer Charlie Banalo Senior Production Manager S Sunil Kumar Production Manager C Sudhakar Group Sales Manager Jaya Balakrishnan Email: jaya@motivate.ae General Manager – Group Sales Anthony Milne Email: anthony@motivate.ae Advertisement Manager Rameshwar Nepali Email: rameshwar@motivate.ae

INTERNATIONAL MEDIA REPRESENTATIVES AUSTRALIA/NEW ZEALAND Okeeffe Media; Tel + 61 89 447 2734, okeeffekev@bigpond.com.au BENELUX M.P.S. Benelux; Tel +322 720 9799, francesco.sutton@ mps-adv.com chINA Publicitas Advertising; Tel +86 10 5879 5885 FRANcE Intermedia Europe Ltd; Tel +33 15 534 9550, administration@intermedia.europe.com 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 27 230 373, hemant@sonneymedia.com INDIA Media Star; Tel +91 22 4220 2103, ravi@mediastar.co.in ITALy IMM Italia; Tel +39 023 653 4433, lucia.colucci@fastwebnet.it JAPAN Tandem Inc.; Tel + 81 3 3541 4166, all@tandem-inc.com NEThERLANDS GIO Media; Tel +31 6 2223 8420, giovanni@giomedia.nl SOUTh AFRIcA Ndure; Tel: +27 84 701 2479, dale@ndure.co.za SPAIN IMM International; Tel +331 40 1300 30, n.devos@imm-international.com 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, brigitte.baron@totembrandstories.com

Emirates takes care to ensure that all facts published herein are correct. In the event of any inaccuracy, please contact The Editor. Any opinion expressed is the honest belief of the author based on all available facts. Comments and facts should not be relied upon by the reader in taking commercial, legal, financial or other decisions. Articles are by their nature general, and specialist advice should always be consulted before any actions are taken.

Printed by Emirates Printing Press, Dubai, UAE

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Notebook

13

getty images

BUSINESS NEWS IN BRIEF

Solar Boom for Japan Japan is poised to overtake Germany

largest solar projects planned or under

worldwide by new installations last year,

and Italy to become the world’s second-

consideration were all announced

when it added 1.3 gigawatts of solar to

biggest market for solar power as

between October and April, as the

bring its installed base to five gigawatts.

incentives starting 1 July drive sales for

government worked out details of the

Next year builders will erect roughly

equipment makers.

feed-in tariff programme, according to

triple that level, or another 3.2 gigawatts

New Energy Finance.

to 4.7 gigawatts. A gigawatt is enough to

Japan’s Industry Minister Yukio Edano set a premium price for solar electricity

Prime Minister Yoshihiko Noda’s effort

supply about 243,000 homes in Japan.

Only China will exceed Japan in terms

that’s about triple what industrial

to cut dependence on atomic energy that

users now pay for conventional power.

provided about 30 per cent of Japan’s

of solar capacity growth as it supplants

That may spur at least $9.6 billion in

power before the Fukushima nuclear

Italy and Germany, which held the top

new installations with 3.2 gigawatts of

meltdown in 2011 will help a solar

two positions in 2010 and 2011, London-

capacity, which is equal to the output of

industry suffering incentive cuts across

based New Energy Finance estimates.

three atomic reactors.

Europe. It’s also raising concern among

Japan got about 1.6 per cent of its

Japanese business groups that clean

energy from renewables in 2011, the

will buy solar, biomass, wind, geothermal

power aid will raise bills and slow Japan’s

smallest portion among Group of Seven

and hydro power. All costs will be passed

economic recovery.

countries after Canada. It trailed the

Under the new programme, utilities

on to consumers in surcharges, which the

Utilities will pay 42 yen (53 cents)

U.S. and France in the G-7 in atomic

government said will average out at 87

a kilowatt-hour for 20 years to solar

power consumption. The shift toward

yen a month per household.

power producers, almost twice the rate

solar reflects concern that the cost of

in Germany, the world’s biggest market

imported fossil fuels will rise in the

by installations. Japan ranked sixth

coming decades. n

The new incentives will encourage utility-scale projects. Japan’s five July 2012

14

Notebook Numbers Game

€6.6

Boeing 747-400 Prices TumBle

billion worth of funds was

injected into portugal’s three

Prices for Boeing’s 747-400s, the

largest banks: Banco Comercial

most popular wide-body plane,

potugues, Banco Bpi and

are tumbling as carriers rush

state-owned Caixa geral de

to replace what were once their

Depositos. this will place them

flagship aircraft with newer and

amongst the “most capitalised

more fuel-efficient models.

Ten-year-old passenger 747-

banks in europe”. the banks, in turn, will use the funds to support economic growth

$75

million of potential dividends have been voluntarily

400s are worth a record low

passed up by apple’s boss tim Cook. he declined

$36 million, about 10 per cent

through corporate lending and

the quarterly dividends of $2.65 per share for his 1.12 million

less than similar aged planes

each bank will invest a minimum

restricted stock that apple plans to disburse starting 1 July.

last year, according to Ascend

of €30 million a year in small and

apple has nearly $110 billion in cash and in march the tech giant

Worldwide, amid high fuel costs

medium-sized enterprises.

decided it would use it to start paying dividends to shareholders

and a cargo slump that has

and buy back some of its shares.

damped interest in converting aircraft into freighters. Forty-

The World

$940

million was spent by China

In Figures flexibility to run lower cost heavy oil

auction in paris. the tintin in

eight of the 404 humpbacked

america cover, hand-drawn

passenger 747-400s worldwide

by Belgian writer and illustrator

have also been placed in storage,

herge, broke its own record

according to the London-based

set in 2008 when it sold for

aviation consultancy, as the

€764,000.

once “Queen of the Skies” is

minmetals Corporation, a Chinese

from south america, Latin america

shunned for Boeing 777s and

metals and mining company,

and potentially from Canada, if

Airbus’ A380s.

to build a replica of austria’s

the delayed Keystone XL pipeline

UNesCO heritage site, hallstatt

is built.

The first four-engine 747-400 was delivered to Northwest Airlines in 1989. The standard

Village. the replica version is expected to further draw visitors and investors to subtropical

£17

billion savings in

version can fly as far as

pension plan expenses

7,260 nautical miles (13,450

southern China. Critics say the

has been announced by Us

kilometres), carrying 416

knock-off, high-end residential

automaker general motors. the

passengers in three classes.

project, copied right down to the

company offered thousands

statues and church spire, sets a

of retiring workers lump-sum

new standard in a China known for payments and annuities instead of

Newer aircraft use less fuel

$9.69

for a gallon

because of the development of

of premium

more efficient engines and the

monthly payment. the proposed

gasoline places Norway on

use of lightweight materials.

changes will only apply to salaried

top of the list of the world’s

The Boeing 787 has a fuselage

billion expansion

employees and will not affect

most expensive gas rankings

built from reinforced plastics,

plans of royal Dutch

hourly employees whose pension

compiled by Bloomberg. Norway

compared with the 747’s heavier

shell and saudi aramco’s joint-

benefits are negotiated directly with

is the only major oil producer to

aluminium shell.

venture, motiva enterprises texas

the United auto Workers union.

have expensive fuel and that’s

The Airbus A380, which

pirated products.

$10

because instead of subsidising

surpassed the 747-400 as the

million was the

fuel at the pump, the country

world’s largest commercial plane

record price paid

uses its oil profits for services

on entering service in 2007, has

the crown as the largest in the Us. for a rare 1932 cover drawing of

such as free education and

become the flagship for carriers

this expansion gives motiva the

improving infrastructure.

such as Emirates.

gulf Coast refinery, will see the plant’s production capacity top 600,000 barrels per day, taking

€1.3

a tintin comic book at a recent

Portfolio

Notebook EuropE’s richEst Man Just as spain asked europe for a bailout

about 22 per cent of inditex’s sales

topping $125 billion, amancio Ortega, the

will come from spain this year, compared

septuagenarian spaniard who founded

with 45 per cent from emerging markets,

retailer inditex, became the region’s richest

according to anne Critchlow, an analyst

man.

at societe generale sa in London. the

the tycoon’s fortune rose $3.8 billion to

company still has most of its stores – more

$39.5 billion on 13 June, according to the

than 4,300 – in europe, with almost 900

Bloomberg Billionaires index. that places

in asia and about 400 in the americas.

the owner of the Zara clothing chain above

inditex said it plans to start online sales in

sweden’s ingvar Kamprad, who has an

China in september.

estimated net worth of $37.2 billion, and day at $22.7 billion.

Ortega’s wealth has surged even as

Amancio Ortega (left)

getty images

Ortega, 76, became the fourth-richest

France’s Bernard arnault, who finished the

individual on earth after adding $4.6 billion to his fortune so far this year. the only people richer are mexican

spain reels from a financial crisis that

and adding stores in emerging markets,

telecommunications tycoon Carlos slim,

has sent borrowing costs spiralling while

inditex managed a 30 per cent gain in

microsoft co-founder Bill gates and

joblessness hovers above 20 per cent. By

first-quarter profit, sending shares up 12

Berkshire hathaway chairman Warren

reducing its dependence on its home turf

per cent.

Buffett.

Investors Chase Lithium cells such as lead-acid. There is about 1.7 grams of lithium carbonate equivalent in a mobile phone, 2.1 grams in a smart phone and 20 grams in a tablet, according to Dahlman Rose.

Global consumption may jump to 300,000 metric tons a year by 2020 from about 150,000 tons now, Dahlman Rose said in a 7 June report. Demand for lithium batteries has been growing at about 25 per cent a year, outpacing the four to five per cent overall gain in getty images

lithium.

Talison Lithium, whose shares have gained 22 per cent in the last month, The popularity of the iPad and the

of the Prius electric-petrol car, have

together with Soc. Quimica & Minera

increase in electric cars has investors

few alternatives as they pursue higher

de Chile, Rockwood Holdings and FMC,

chasing producers of lithium for batteries.

performance and mobility, leading

account for almost 95 per cent of world

Dahlman Rose & Co analysts to forecast

supply. Rio Tinto Group, the third-biggest

lithium demand will double by 2020.

mining company, may join the largest

Prices for the conductive metal have tripled since 2000 in a market now worth $1 billion a year as uses expand

The advantage of lithium-ion over other

suppliers if it goes ahead with a mine in

in vehicles, ceramics, electronics and

battery types is that a typical cell can

Serbia it says is capable of producing 20

lubricants. Apple and Toyota, maker

generate more electricity than competing

per cent of global output of the metal.

July 2012

15

London

8/10 Hans Road London, SW3 1RX

Milan

Via Montenapoleone 21/A Milan, 20121

Moscow

Bolshaya Dmitrovka 20/1 Moscow, 107031

New York

The Plaza Fifth Avenue at Central Park South New York, NY 10019

Forte Village Resort

S. Margherita di Pula (Cagliari) Sardinia - Italy 09010

Observer

17

BUSINESS NEWS IN BRIEF

The Church of San Paolo was damaged beyond repair by the recent earthquakes in Mirabello.

Italy’s Destroyed Treasures The May earthquakes killed 24 people and left thousands homeless. They also destroyed or damaged many cultural treasures, reports Elisabetta Povoledo.

have not yet been tallied, but few expect that the already strained Culture Ministry – never mind the state – will have an easy time financing the restorations at a time when Italy, and all of Europe, is reeling from the eurozone’s worst economic

magnitude 5.8 that struck 29 May –

Mirandola, something crumbles or new

killed 24 people and forced about 15,000

Many churches and city halls have

cracks appear. “It’s like receiving a daily list

people from their homes. They revealed

set up bank accounts and are asking for

of war casualties,” said Carla Di Francesco,

the vulnerability not only of many

contributions for the reconstruction, or are

the supervisor for cultural heritage in this

modern structures, collapsing countless

drawing on local companies – like Ferrari

part of northern Italy. The second of two

warehouses and factories, but also of the

and Ducati – for money. But even back-

major earthquakes in May “compounded

area’s historic monuments.

of-the-envelope estimates by experts and

the emergency, and we had to start monitoring everything from scratch.”

Teams of art historians, restorers,

© 2011 NEW YORK TIMES NEWS SERVICE

crisis ever.

WITH EVERY NEW QUIVER IN

Dozens of churches bear the wounds, and towers crumpled as if made of matchsticks. Palazzos, fortresses and

Culture Ministry officials put the probable costs in the millions of dollars.

Emergency scaffolding has been erected

archaeologists and consulting engineers,

storied museums have all been closed,

and walls have been shored up. Bricks

accompanied by firefighters, have been

consigned to an uncertain future. There are

are being recovered and numbered, when

charting the extent of the damage to

degrees of damage, of course. But in some

possible. Movable artefacts, like paintings,

historic buildings caused by the earthquakes

cases, like that of the Church of San Paolo

statues, archives, and ecclesiastical

in the Emilia-Romagna region on a disaster

in Mirabello, or the Church of San Martino

furnishings and fittings, are mostly being

map that continues to grow.

in Buonacompra, which are split open to

moved to the Ducal Palace in Sassuolo,

the sky, there is little to be done.

which the Culture Ministry has set up

The quakes – the first on 20 May, with a magnitude of 6.0, and the second, a July 2012

The costs to Italy’s cultural patrimony

as a temporary repository. The works

18

Observer are catalogued and, officials hope, will eventually be restored.

The quakes also rattled art-rich cities like Ferrara, Modena and Mantua. The

The partially damaged clock tower in Sant’Agostino. The list of damaged historic buildings in the EmiliaRomagna region continues to grow.

Ducal Palace in Mantua, which features celebrated frescoes by the 15th century artist Andrea Mantegna, has been closed to the public “until we get the money to fix these fissures,” said Giovanna Paolozzi Strozzi, the art superintendent of Modena, as a precaution after large cracks opened in the roof.

The quake on 29 May provided the coup de grace to many already weakened structures. In Pieve di Cento, the shaking collapsed the cupola of the Church of Santa Maria Maggiore, showering debris Nearly all of its historic churches have

into the nave and threatening paintings by

amplified,” said Fabrizio Toselli, the mayor

renowned Baroque artists like Guercino,

of Sant’Agostino, whose 19th-century town

been affected, and each one is being

Guido Reni and Lavinia Fontana, which

hall has a multistorey hole in one wall.

painstakingly examined and classified

are now exposed to the elements.

“There’s been a distortion of our territory;

by on-site teams. “Right now we’re just

nothing is the same anymore.”

trying to limit the damage,” Bertoli Barsotti

In Finale Emilia, the early 13th-century tower clock that was the town’s symbol

Inside the building, on the second floor

said. After the 29 May earthquake, the

crumbled in the first quake, and the town’s

of what was once considered one of the

list of affected monuments in the diocese

15th-century Rocca Estense, a former

most elegant council halls in Italy, hangs

grew significantly, with the additions of

fortress, lost its crenelated towers. Gaping

a gigantic, and very heavy, Murano glass

the churches of Santo Stefano and San

cracks riddle the walls of the 14th-century

chandelier, a gift from Italo Balbo, a

Petronio in Bologna, the city’s jewels. But

fortress in nearby San Felice sul Panaro.

Mussolini crony, that miraculously survived

Bertoli Barsotti played down the possibility

Residents fear it will soon topple.

the earthquake. Officials hope to save

that the two buildings were in real danger.

The fortresses were among the buildings

it with the help of a team of firefighters

At the parish church of San Felice, a

that survived the last major quake in the

who specialise in recovering artefacts

medieval town in the centre of the region,

Emilia-Romagna region, which occurred

from dangerous situations. “They have an

a pendulum clock in the rectory, frozen at

in 1570 and set off periodic aftershocks for

acrobatic particularity that makes them

4:03, is a permanent reminder of when the

four years. Then, the earth slept for nearly

very useful,” said Fabio Carapezza Guttuso,

first quake shattered the sleep of thousands

450 years.

a senior Culture Ministry official, referring

and collapsed the roof of the church.

Indeed, Emilia-Romagna was considered a low-risk area for earthquakes. For

to the firefighters.

The problem, said Paolozzi Strozzi,

In Pieve di Cento, the young mayor, Sergio Maccagnani, is concerned about the

hundreds of years, buildings were

Modena’s art superintendent, is that there

town’s future and the task ahead. But he

constructed “with a total absence of a

are not enough such experts to go around.

said he drew inspiration from the mettle of

seismic culture,” which is why so many

“They are overloaded with work,” she said.

his ancestors.

“Our grandparents went through

succumbed, said Gian Michele Calvi, a

“Of our churches in those areas,

professor of seismic engineering at the

there isn’t one that’s still open, if only

much tougher times,” he said, citing the

University of Pavia.

for precautionary reasons,” said Anna

hardships of World War II and the years of

Maria Bertoli Barsotti, who works for the

poverty that followed. “Italy was destroyed,

may be as deep as the physical damage.

cultural heritage office of the Diocese of

and they rebuilt a country,” he said, and his

“The problem is that this wasn’t a seismic

Bologna, which encompasses several of the

generation can do the same. “We just need

area, so citizens’ reactions have been

earthquake-hit towns.

to act responsibly.” n

The psychological impact on the region

Portfolio

Observer O N E 2 W AT C H TExT: HildA d’sOuzA

In appointing Harriet Green as its new Chief Executive Officer, troubled Thomas Cook Group – the 171-year-old British travel group – seeks fresh perspective to transform its struggling business. Green will take the position on 30 July and succeeds interim CEO Sam Weihagen, who will stay with the company until 30 September to ensure a smooth transition.

Former chief executive Manny Fontenia-Novoa resigned in August last year.

Green, 50, is new to the travel industry but she is a seasoned electronic industry veteran. She joins Thomas Cook after serving six years as CEO of leading UK electronic business Premier Farnell.

Green, a London University graduate with a BA in medieval history and a postgraduate degree in business psychology, started her career in 1985 as Managing Director of electric component firm Macro Group.

Married with two children, Green takes the helm at Europe’s second largest tour operator at a very crucial phase as the shares of the debt-laden holidaymaker have nosedived nearly 90 per cent in the past year. This has forced the firm to sell a number of assets to pay its debts, including a 77 per cent stake in Thomas Cook India and a Spanish hotel chain.

Green has confidently accepted the challenge, saying: “Thomas Cook is an iconic brand in the leisure travel industry. I am very excited to be joining the team at this time, to lead the business forward as we rebuild shareholder value through innovation and sustained focus on the needs of our customers, suppliers and employees.”

Thomas Cook has been hit particularly hard by the recession as consumers increasingly turn to the internet to book their own holidays and eschew traditionally popular vacation destinations such as North Africa following the uprisings that began last year.

Green’s vast experience in procuring new business, moving into new markets, and more importantly her internet credentials that saw profitable e-commerce online sales at Premier Farnell, will be put to the test in reviving the travel firm. In addition to executing the series of disposals initiated to reduce the company’s £890 million debt, and sale and leaseback of part of its aircraft fleet, Green’s turnaround plan for the UK business focuses on fewer and betterquality hotels and effectively using the internet to drive more online bookings. Thomas Cook chairman Frank Meysman described Green’s appointment as marking the start of a new era for Cook.

July 2012

getty images

Harriet Green

Resurgent Coal Threat to Carbon Emissions There has been a three per cent increase in world carbon

emissions from energy use in 2011, due to increased use of coal and other fossil fuels such as oil and gas.

Coal has a 30 per cent share of the global energy market – its highest level in more than 40 years – undermining attempts by governments to reduce their carbon emissions, according to the latest figures.

China and India both increased their use of carbon-heavy coal by over nine per cent but Europe, where political consensus against global warming is strongest, also saw a four per cent increase, according to the BP Statistical Review of World Energy.

Industrialisation of developing countries and cheap prices are driving coal demand.

According to the BP statistics, global oil consumption grew by less than one per cent to reach 88 million barrels a day in 2011 despite the Brent crude price averaging $111 a barrel, an increase of 40 per cent on the previous 12 month period. Annual production of oil increased by 1.1 mb/d due to record output in Saudi Arabia, the UAE and Qatar while demand was strongest in China – up 5.5 per cent.

Oil remains the world’s leading fuel, at 33 per cent of global energy consumption, but it continued to lose market share to reach its lowest level since 1965, BP says.

The statistics show UK oil production falling 17 per cent and gas output down 21 per cent, while global oil reserves are still large enough to serve current demand for 54 years, according to BP. A move from coal to gas would help reduce CO2 emissions quickly, as would technological breakthroughs in the renewable energy sector.

19

Observer US AttrActS BArgAin HUnterS a weak dollar and the tumbling house

ago. the dollar’s weakness has also

prices that resulted in foreclosures

drawn new buyers.

Five states accounted for 55 per cent

across america have attracted a wave of buyers from europe, asia, Canada and

of purchases – Florida, California, texas,

Latin america.

arizona and New york. Florida was the fastest growing destination, accounting

international buyers accounted for

for 26 per cent of foreign sales.

$82.5 billion of homes sold in the Us in

more than half of foreign buyers came

the year to march, nine per cent of sales, according to a survey by the National

from Canada, China, mexico, india and

association of Realtors – a jump of 24

Britain. Four in 10 wanted somewhere

per cent from the previous year.

Us house prices crashed spectacularly

getty images

to live and a similar portion were looking for holiday homes or buying to let. more

in 2007 and are still more than 30 per

out. the s&P/Case shiller index of prices

than 60 per cent paid in cash, and many

cent lower than at their peak in 2006, but

gained 0.1 per cent in march, though it

chose not to live in the Us for more than

recent data suggests they are bottoming

was still down 2.6 per cent from a year

six months a year for tax reasons.

Microsoft’s Policy U-turn Microsoft has unveiled its own Windowspowered tablet computer called Surface, altering its strategy from focusing on software and relying on partners to make

Microsoft CEO steve Ballmer recently unveiled the Windowspowered surface tablet.

the new machines. This approach mirrors Apple, which has had huge success with the iPad. The world’s largest software maker is stepping up its assault on the tablet market as consumers choose the devices over laptops, weakening the personalcomputer market and curbing Windows revenue. The new strategy threatens to

getty images

20

sour Microsoft’s relationship with some PC makers, many of which have been investing to develop their own Windows 8

Tablet shipments, by comparison, are

the Zune music player. It didn’t fare any

tablets and may not want to compete

forecast to almost double to 116 million

better against the iPod, and Microsoft

directly with Microsoft.

units this year, Gartner estimates.

discontinued the product last year.

The company wants to release

Apple’s success with the iPad may

The addition of a tablet or other

Windows 8, the new version of its

be pushing Microsoft to seek greater

hardware device may erode profitability

software that is optimised for touch-

control over the hardware design so

in the Windows business, which currently

screen tablets, in time for the end-of-year

it works seamlessly with the software,

sells just software with operating margins

holidays. Windows 8 will arrive amid a

like Apple does. The last time Microsoft

of more than 60 per cent. By comparison,

deteriorating PC market – research firm

opted to make its own hardware because

computer maker Dell’s operating margin

Gartner cut its 2012 PC shipment growth

its partners weren’t gaining traction

for the most recent fiscal year was about

forecast to 2.7 per cent from 4.4 per cent.

against Apple, the company produced

seven percent.

Portfolio

Luxury Services Expected to Boom

Mohammed bin Rashid Award for Young Business Leaders (Winner 6th Cycle, 2010)

getty images

The Law Firm Leaders Trust One-of-a-kind adventures for the world’s super rich appear to be the latest status symbol. A study by Boston Consulting Group (BCG)

Deaifis won an important intellectual property dispute in our favor.

Swiss Arabian Perfumes Group Founder, Hussein Adam Ali

identifies a shift from “owning a luxury to experiencing a luxury” with bespoke treats now accounting for more than half of the $1.4 trillion spent on luxury goods and services last year.

Helicopter skiing in Alaska or a getaway to luxury goods group LVMH’s exclusive hideaway in the Maldives are the current trends

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Al Saqr National Insurance Company Manager – Legal Department, Amer Shatnawi

for the growing number of millionaires, according to a report. It predicts that, despite the eurozone crisis, spending on luxury goods will hit $1.5 trillion this year.

Luxury sales have boomed in the last two years as the industry recovered from the hiatus caused by the 2008 financial crisis, which

We deal with them almost every day on everything from labor issues to major contracts.

Tech Group CEO, Ali Ghaleb Jaber

provoked a sharp fall in conspicuous consumption.

The sector has also been buoyed by the growing number of millionaire shoppers in markets such as China and Brazil, who are picking up the slack as consumers in traditionally important luxury markets such as western Europe, Japan and the US continue to spend more cautiously.

The business of providing luxury experiences – from art auctions

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China Harbour Engineering General Manager, Li Guowei

to exclusive travel packages – is now worth $770 billion according to the study. BCG predicts a seven per cent increase in luxury spending this year.

The growth of the middle class in emerging markets getty images

such as China, Brazil and Russia are turning major cities into powerful luxury hubs and their residents are a shopping force abroad. BCG says that by 2020, 330 Chinese cities will have the same level of disposable income Shanghai had in 2010.

July 2012

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Commentary

22

STEPHEN BURGEN

Spain’s Olive Oil Dilemma Olive oil is the loss leader par excellence of Spanish supermarkets.

“In Argentina, Chile and China there are immense plantations with the olives grown on espaliers so they can be harvested mechanically,” says Pere Sole on his farm at La Bisbal del Penedes in Catalonia. “We can’t compete with that.”

He explains that it costs him ¤2.70 to REUTERS

produce a litre of oil with a market value

Bumper harvests, competition from emerging markets and a supermarket price war have pushed olive oil prices to a 10-year low. Spain’s boutique labels are still thriving, but the future is bleak for volume producers.

of ¤2.50.

To add to Spanish troubles, in February the European Union lifted import tariffs on Moroccan olive oil, putting it in direct competition with Spain. Agustin Martinez, spokesman for the Andalusian small

IN HORTA DE SANT JOAN IN

farmers’ federation, said the freeing up of

Tarragona there is an olive tree known

countries such as China, India, Latin

Moroccan imports would lead to “thousands

locally as el Parot that has been bearing

America and Morocco,” says Luis Carlos

of small farms going out of business”.

fruit for two millennia. Revered because

Valero, an olive growers’ representative

of its great age, oil from its olives sells

in Jaen. Andalusia’s 800 olive oil

world’s olive oil, followed by Italy (18

for ¤30 a litre. But round the corner in

co-operatives sell 80 per cent of their

per cent) and Greece (12 per cent). Olive

the local supermarket olive oil retails at

product to big operators, with the result

oil accounted for ¤1.8 billion of Spanish

¤2 a litre. A combination of consecutive

that nearly three-quarters of olive oil in

exports in 2011, behind meat products

bumper olive harvests in Spain,

Spain is sold as a white label product for

(¤2 billion) and wine (¤4.6 billion).

competition from emerging countries

retailers to sell as own-label.

and a supermarket price war have

Cash-strapped consumers are

Spain produces 46 per cent of the

Pere Sole and his family are clear that producers have lost out on added value by

pushed prices down to a 10-year low that

increasingly turning to cheaper vegetable

letting their product be devalued by mass

threatens one of the country’s primary

and sunflower oils and the wholesale price

marketing, by allowing supermarkets to get

industries at a time when Spain is on the

of extra virgin oil is now less than half the

away with selling oil as extra virgin when it

edge of an economic abyss, with one in

$6,000 a ton it fetched at its peak.

exceeds the regulation 0.8 per cent acidity

“Prices for the producer have fallen

and in general by pursuing a marketing

by 50 per cent over the past five years,”

strategy equivalent to selling fine wine

Sant Joan in Jaen the olive growers are

says Josep Carles Vicente of the Catalan

in plastic bottles. Unable to compete

lamenting what would normally be cause

farmers’ union. “The reason is a price

with growers that manage thousands of

for celebration – the biggest olive harvest

war between three big supermarkets who

hectares, the trick is to be smaller and

in history. Jaen, a sparsely populated

dominate distribution in Spain.” Under

more independent. “The next stage is to

region in Andalusia, accounts for a third

Spanish competition law it is illegal to

press the olives ourselves,” says Sole.

of Spain’s olive oil output and 15 per cent

sell below cost, he says, but supermarkets

of world production. Andalusia produced

get round this by selling at a few cents

theirs there is cause for optimism,

1.3 million tons of Spain’s bumper

above the cost price without factoring in

but things look bleak for the volume

1.56-million ton 2011-12 harvest.

transport, labour or fixed capital costs.

producers of Andalusia. n

five of the working population out of a job.

Some 650 kilometres south of Horta de

© GUARDIAN NEWS & MEDIA 2012

“We can’t compete with emerging

For a small, family operation like

Portfolio

M ESURE ET D ÉMESURE *

TONDA 1950

Rose gold Ultra-thin automatic movement Hermès alligator strap Made in Switzerland

* EXACT AND EXULTANT

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Profile

24

Risky Business

Wang Jianlin, the Chinese real estate tycoon who has built up a $17 billion empire, is spending $2.6 billion to acquire North America’s second largest movie theatre chain. Some industry analysts question this move, especially as US movie attendance hit a 16-year low. But Wang is a man who bets big and wins big, reports David Barboza.

Portfolio

25

July 2012

26

H

OLLYWOOD STUDIOS,

Wang Jianlin, a rags-to-riches tycoon,

biggest in Asia. With 730 screens, it has

facing steep challenges in

is taking over AMC Entertainment, North

a 14 per cent market share in mainland

the North American movie

America’s second-largest movie theatre

China, based on company figures.

market, are taking more

chain behind Regal Entertainment. And

Now, by paying $2.6 billion to acquire

interest in China. The Walt Disney

he is promising to integrate it into a new,

AMC, the Wanda Group is extending its

Company and Marvel Studios, a division

made-in-China, global brand called the

reach globally. The deal, announced on

of Disney’s Marvel Entertainment

Wanda Group.

20 May, is still subject to the approval of

subsidiary, are producing Iron Man 3

Announcing the deal, Wang said in a

United States regulators, although there

in China; News Corporation recently

statement: “This acquisition will help

are no hints it will be blocked. With the

bought a stake in Bona Film Group in

make Wanda a truly global cinema owner.

AMC purchase from a group of private-

Beijing; and an agreement with Chinese

We share with AMC a passion for the

equity investors, Wanda will own more

authorities will allow more United States

growth of the worldwide movie industry.”

than 5,000 movie screens mostly in the

companies to distribute more movies and

Wang, 57, is regarded as one of the most

US and Canada in addition to its 86

reap a greater share of the box office in

successful Chinese real estate tycoons.

movie theatres in China. The purchase

China, the world’s biggest market.

His $17 billion empire includes huge

signifies a new era for Wang and in

commercial property developments, five-

China’s development.

But at least one billionaire businessman is betting that the United States movie

star hotels, tourist resorts and a film and

However, the deal has raised eyebrows

market is still the ticket to international

television production company. Wang’s

in the industry because of an apparent

success. And he is Chinese.

Wanda Cinemas movie theatre chain is the

lack of synergies between the US and

Wanda Cinemas’ movie theatre chain is the biggest in Asia and has a 14 per cent market share in mainland China. The AMC purchase will add a further 86 Chinese screens and more than 5,000 in total.

Portfolio

Profile

27

Chinese operations and falling US movie attendance even as China’s box office surges. US movie attendance fell to 1.3 billion in 2011, a 16-year low, according to Hollywood.com.

HOWEVER, IT should be noted that Wang has never been scared of seizing an opportunity. In 2008, when the world’s financial crisis was in full swing, he spent five billion yuan purchasing land and way: “If everybody waits till the optimal time before making any investment, what he can earn will be an average profit. Only those braving big risks can win fat profits.”

Wang is investing an additional $500 million in AMC to update the facilities, which will strengthen the company’s

REUTERS

© 2012 NEW YORK TIMES NEWS SERVICE

kicking off projects. Wang explained it this

Wanda Group President Wang Jianlin with AMC CEO Gerardo Lopez before the start of a media conference after an official signing ceremony in Beijing on 21 May.

In 2008, when the world’s financial crisis was in full swing, he spent five billion yuan purchasing land and kicking off projects. Wang explained it this way: “If everybody waits till the optimal time before making any investment, what he can earn will be an average profit. Only those braving big risks can win fat profits.” competition in the market. He said

headquarters in Beijing, Wang, the Wanda

new ideas to bring Americans back to

chairman, said he was pondering his

theatres, including adding business-class

next international destination: Europe.

sections. To rev up consumer awareness,

“We’re already negotiating,” he said.

he also will prod AMC to launch major advertising campaigns.

He doesn’t expect big profits from this

Wanda is a private company in a nation dominated by state-owned enterprises. But the AMC deal is closely

investment within the short term, as

aligned with the Chinese government’s

updating the theatres will take at least

priorities, which include encouraging

a year. The entire effort to rebuild AMC

Chinese companies to “go global,” pushing

will take at least three years, according to

an overhaul of Chinese media and

Wang. “This is a long-term investment,”

entertainment properties and placing

he said, adding, “private equity lacks the

greater emphasis on consumer spending.

long-term vision that we have.”

Companies in China are moving away

July 2012

In an interview at his spacious

he would encourage AMC to consider

Policymakers in Beijing also want to bolster China’s “soft power” capabilities to

from low-cost manufacturing and going

extend its cultural influence internationally,

abroad in search of natural resources and

and the film industry is considered one

global consumer brands, part of an effort

of the most promising venues for doing

to upgrade the nation’s economy.

so. But whether Wanda, a 24-year-

28

CORBIS

Wang Jianlin made his fortune in real estate, but has since branched out.

The Wanda Group currently controls nine million square metres of retail space.

old enterprise with little international

a northeastern city, and moved its

to focus on commercial property. When

experience, can make a success of such a

headquarters to Wanda Plaza in Beijing,

everybody was chasing commercial

big acquisition and create a global property

is a colossus with 17 million square metres

property, he was eyeing culture and

and entertainment brand is debatable,

of land under development or operation.

tourism – the industries that the

analysts say.

“China has great entrepreneurs,” says

In 1988, Wang – who entered the army at 15, after middle school – says he left a

government is stressing and cultivating.”

That few Chinese companies have

Duncan Clark, chairman of BDA China,

job as a local government official in Dalian

managed to establish global brands is of

a Beijing-based investment advisory firm.

and borrowed $80,000 to start a business

little concern to Wanda’s chairman. And

“But the question is: How will they take

he now describes as a “sprinting elephant.”

buying a stake in a company focused on

these companies international? Are they

Wang Yongping, founder of the China

a quintessentially American experience

going to be willing to learn and adapt?”

Commercial Real Estate Association,

– moviegoing – seemed hardly daunting

described the chairman of Wanda as

for a man who survived the Cultural

ONE OF the biggest experiments in

usually a step ahead of other Chinese real

Revolution, a period of social and political

this area is being undertaken by Wang,

estate barons. “He always has a vision,”

upheaval in China.

a former army officer who has turned a

said Wang Yongping, who has no relation

tiny real estate venture into a national

to Wang Jianlin. “When everybody was

strategy, Wanda is sophisticated,” said

brand. Wanda, which started in Dalian,

doing housing property, he jumped out

Wang. “We have good systems and

“In setting goals and executing a

departments. If targets are not reached,

“Some analysts have suggested that Wang’s acquisition of AMC was political, an effort to curry favour with Chinese leaders, who are pushing their nation to enhance its influence by exporting cultural products. Others contend Wang is eager to establish himself as China’s first global corporate chief.”

a yellow light goes off.”

Wang usually hits his targets, he says.

The company has experienced 30 per cent growth in the past year, even in a down market. And he promises that by 2015 the Wanda Group will have overall revenue of about $30 billion. Which raises the question: Why invest in the American cinema market at a time of weakness, Portfolio

Profile

29

when box office receipts are sluggish and American film producers are looking to China?

SOME ANALYSTS have suggested that Wang’s acquisition of AMC was political, an effort to curry favour with Chinese leaders, who are pushing their nation to enhance its influence by exporting cultural products. Others contend Wang is eager to establish himself as China’s first global corporate chief.

“It was simply worth it,” Wang said from the company’s operational headquarters in Beijing. “If you buy a screen in China, it costs three million yuan (about $473,500). If you buy the same screen in the US, it’s less,” he said.

“This is kind of a statement deal for him,” said an executive familiar with the Wanda-AMC talks but not authorised to discuss them. “He’s coming out of China, and this is an area he has great interest in. He kept emphasising he just wants to learn how cinemas are operated in the US. It’s not just about the money.”

But to pull off the deal, Wanda needed plenty of that: more than $3

With the purchase of AMC Entertainment, the Wanda Group will become a truly global brand. Wang has not ruled out buying a Hollywood movie studio, but he is currently more interested in hotels and shopping malls.

billion in cash, including $500 million it has promised to invest in AMC in North America. Financing such a big deal in a tough credit environment, and with China’s property market in a slump, was some feat.

In the end, much of the cash came from China’s big, state-controlled banks.

TO ENSURE the deal succeeds, Wang said he will keep AMC’s management in place with long-term pay incentives and invest heavily in renovating older American theatres in an effort to bolster revenue.

“We don’t have the strategy to go global in real estate,” he said.

“But for globalisation and going out, we would like to buy hotels and hotel management companies. We also like department stores.”

twirled his thumbs – said he was focusing on targets and executing strategies, fast.

Buying a Hollywood movie studio was not planned, he said, but would not rule it out. More likely targets, he said, were hotels and United States shopping malls.

“We don’t have the strategy to go global in real estate,” he said. “But for globalisation and going out, we would like to buy hotels and hotel management companies. We also like department stores.”

Wang said he hopes Wanda will become the world’s largest retailer by space by

Asked whether AMC would show “We knew each other and were very

2015, reaching 25 million square metres

found offensive, Wang said he would

familiar with one another,” he said. “But

(269 million square feet) from its current

not interfere with decisions by his

it was just a working relationship. There

nine million. By year-end, he expects to

was no personal relationship.” He said

have 13 million square metres.

films that the Chinese government

management team in the United States.

He also dismissed speculation in China that his ties to Bo Xilai, the fallen Politburo leader who also got his start in Dalian, could harm the Wanda Group.

July 2012

the government had not asked to investigate the group.

Throughout the interview, Wang – who spoke calmly and quietly, and occasionally

Time will tell whether the acquisition of AMC was a shrewd move or not. But one wouldn’t want to bet against a man with Wang’s business acumen. n

30

INDIA’S POWER DILEMMA Despite having some of the world’s largest coal reserves, India has struggled to provide enough electricity for its growing economy, reports Vikas Bajaj.

INDIA HAS LONG STRUGGLED to provide enough electricity to light its

The power sector’s problems have

even bigger problem. His company loses three hours of power every evening. And

homes and power its industry around the

substantially contributed to a second year

all day on Wednesdays and Saturdays –

clock. In recent years, the government and

of slowing economic growth in India, to

euphemistically called “power holidays”

private sector sought to change that by

an estimated seven per cent this year, from

– it receives only enough electricity to turn

building scores of new power plants.

nearly 10 per cent in 2010. Businesses

on the lights but not enough to use its

report that more frequent blackouts have

large metal-cutting machines.

But that campaign is now running into

“It’s very frustrating,” said Murthy.

difficulties because the country cannot

forced them to lower production and

get enough fuel – principally coal – to

spend significantly more on diesel fuel to

“Power is a basic need. Everything is

run the plants. Clumsy policies, poor

run backup generators.

dependent on power.”

It was not supposed to be this way. Two

management and environmental concerns

The slowdown is palpable at Sowmya

have hampered the country’s efforts to dig

Industries, a small company that makes

years ago, more than two-dozen large power

up fuel fast enough to keep up with its

metal shutters that hold wet concrete in

projects were planned near the company’s

growing need for power.

place while it solidifies into columns

workshop, but most of them have been

and beams, a crucial tool for the

scrapped or put off because India cannot

construction industry.

dig up enough coal to fuel them.

A complex system of subsidies and price controls has limited investment, © 2012 NEW YORK TIMES NEWS SERVICE

mining has also limited coal production.

The company, located outside the city

Murthy’s frustrations reflect a

natural gas. It has also created anomalies,

of Nellore on the southeast coast of India,

broader national problem. Analysts

like retail electricity prices that are lower

is struggling with several issues, including

say India’s economic woes could

than the cost of producing power, which

a 20 per cent increase in the price of

have been easily avoided if

lead to big losses at state-owned utilities.

raw materials and falling orders. But

policymakers had better addressed

An unsettled debate about how much

Sowmya’s manager, R. Narasimha Murthy,

problems like its electricity

of its forests India should turn over to

said the lack of reliable power was an

shortage, weak infrastructure

particularly in resources like coal and

India isn’t producing enough coal to fuel its power plants, which has resulted in power outages and slowed the economy.

Portfolio

GETTY IMAGES

Energy

31

July 2012

32

and restrictive regulations. Instead,

like Andhra Pradesh, where Nellore

been importing coal, but that option has

policymakers have been distracted by

is, and in neighbouring Tamil Nadu,

become more untenable recently because

scandals and turf battles.

blackouts have become so common

India’s biggest supplier, Indonesia, has

that many factories report getting more

doubled coal prices.

“There is virtually no new investment by both the government and private

electricity from diesel generators than

sector,” said Ashok M. Advani, executive

they do from the power grid, at a cost

reserves of coal but it has not been able to

chairman of Blue Star, the biggest maker

that is roughly three times higher.

exploit it effectively, largely because a state-

of commercial air-conditioners in India.

“We have such an uncertain environment.”

India has one of the world’s largest

owned company, Coal India, controls 80 A MAJOR problem is the anaemic

per cent of production. The company has

In the last year, the nation’s power

production of coal, which provides 55 per

been hamstrung by political decisions like

problem has grown acute, with the gap

cent of India’s electricity. Coal production

a policy that requires it to sell coal at a 70

between demand and supply jumping

increased just one per cent last year

per cent discount to market prices. Critics

to 10.2 per cent in March, from 7.7

while power plant capacity jumped 11

also say it has not invested aggressively

per cent a year earlier. In some states

per cent. Some electricity producers have

enough in new mines and technologies.

Policy disputes have also caused problems. In recent years, coal regulators tried to open new areas to mining, but they did not coordinate their decisions with environmental regulators, who have blocked much of that mining because it would destroy dense forests.

India also appears to have a lot of cleaner-burning natural gas, but it has not fully exploited those reserves either.

Private firms have few incentives to do so because the government has capped

Sowmya Industries, close to Nellore, suffers from a lack of reliable power. On Wednesdays and Saturdays it receives enough electricity to turn on the lights, but no heavy machinery can be used.

the price of that fuel.

“There is a huge crisis looming,” said Chandan Roy, a retired executive at a

Imported coal is unloaded at Krishnapatnam port in Nellore.

Rising coal prices have made it too expensive for India to import the large fuel quantities it needs.

Portfolio

Energy

33

state-run electricity producer, the National Thermal Power Corporation. He added that potential solutions were well known but political leaders were reluctant to carry them out because it would mean raising prices for electricity and fossil fuels.

For many businesses, the power shortage has become debilitating.

In the southern state of Tamil Nadu, Srihari Balakrishnan, a textile factory owner, said he goes through 24,000 litres of diesel fuel on an average day to keep his operation running, spending $3,000 more than he would if power were available around the clock. “We are not able to use 20 to 30 per cent of our capacity,” he said.

A power plant under construction near Nellore. Although many power plants have been approved, few have been built as Coal India cannot guarantee the required fuel.

“We can’t use grid power for two full days Balashowry, a former member of

of the week. When we have power, we

business in a small shed nearly eight years

have a six-hour cut,” he added, using an

ago, and together the two have built it into a

Parliament for the governing Congress

Indian term for blackouts.

business with $390,000 in annual revenue.

Party, has already bought 465 hectares

They primarily supply small contractors in

of wooded and pasture land, including

said that his production could be 30 per

the Nellore area, where rice farming and an

340 hectares from the state of Andhra

cent higher if he had access to reliable

expanding port dominate the economy.

Pradesh, and has secured environmental

Murthy of Sowmya, the shutter-maker,

power. On a recent Friday afternoon, his

approval for his plant. But no bank will

Just 28 kilometres from their workshop

workers were rushing to cut metal plates

is the site of several proposed power

give him money to build it until Coal

by the end of the day. They would not be

plants that should have eliminated the

India agrees to give him fuel.

able to use the machines the next day,

need for arranging their work around the

when they would turn to welding the

power schedule.

plates into shutters, which can be done

“We have resources in India, but they aren’t able to do the proper thing,” he said, referring to government officials, during a

V. Balashowry, the entrepreneur behind

with conventional power from the grid

one of those power plant projects, Kineta

rather than industrial-grade power.

Power, applied for a supply of fuel from

recent interview in New Delhi.

Other companies are also stuck.

Coal India four years ago. He had hoped

Reliance Power, which is controlled by the

machine here will work,” Murthy, 35, said

to be producing nearly 2,000 megawatts

billionaire Anil Ambani, says it has stopped

as he walked through his workshop. “We

of power by now, which would have

construction work on a large electricity

have to plan in advance.”

increased the electric capacity in the state

plant nearby because it can no longer afford

of Andhra Pradesh by about 15 per cent.

to buy coal from Indonesia as planned.

“When the power shuts down, no

Murthy’s brother started the shutter

GLOBAL DISTRIBUTION OF PROVEN COAL RESERVES

MURTHY’S BUSINESS suffers a double blow from such delays – he does not get enough electricity and there is less construction in the area, which means less demand for shutters. He says a couple of years ago, the company was thriving because the power shortage was not as DATA FROM BRITISH PETROLEUM

acute and government infrastructure

July 2012

projects and private construction bolstered demand for its products. He now has 10 employees, down from 15 two years ago.

“It was a very rapid drop-off,” he said.

“Last year, we had a night shift as well.” n

34

SHAKING UP THE MUSIC WORLD Jeff Price, the founder of TuneCore, is one of the digital world’s most influential figures. He has no qualms in targeting the music majors and their business practices, reports Ben Sisario.

LIKE ANY BIG MUSIC COMPANY, the offices of TuneCore, a digital distributor in Brooklyn, New York, are lined with official-looking plaques certifying blockbuster record sales. But rather than the industry’s standard gold and platinum records, they are TuneCore’s own awards for its clients – like a rippled black disc representing 500,000 downloads for Nine Inch Nails – and the first sign of a company looking to challenge music’s status quo.

TuneCore was founded six years ago

by Jeff Price, a veteran independent label owner, as a service for artists working Portfolio

Music

35

under the radar of the mainstream music industry. Without a label, most acts cannot get their music onto iTunes and Spotify, but for $50 a year TuneCore

the ways of the music business. Through

will place any album on dozens of online

aggressive posts on the company’s blog

mechanisms for paying royalties. But

services around the world and route all

with titles like “How They Legally Steal

his excitable manner – and his tendency

royalties to the artist.

Your Money,” and occasional outbursts at

to portray business disputes as pitched

industry conferences, he has established

battles between right and wrong – do not

when introduced – has made TuneCore

himself as a particularly vocal gadfly,

always endear him to his colleagues.

one of the world’s major suppliers of

denouncing its opaque accounting

music, and made Price one of the digital

systems and sometimes hurling insults at

about how artists need to get paid, usually

world’s most influential figures. In the

companies he dislikes.

some party is posturing for political

That simple model – revolutionary

© 2012 NEW YORK TIMES NEWS SERVICE

United States, TuneCore represents about

Price, a trim 45-year-old who speaks

“Typically when you hear people talk

positioning,” said Michael Robertson, a

10 per cent of the 20 million songs on

so rapidly he sometimes seems to be on

digital music pioneer who has also fought

iTunes, and it accounts for almost four

fast-forward, says his actions are a form of

the industry with his companies MP3.com

per cent of all digital sales.

advocacy in line with TuneCore’s original

and MP3tunes. “Jeff has done a fantastic

mission of serving musicians. “The plan,”

job with TuneCore. But I think his

the customers sold 600 million units of

he said in a recent interview, “was to start a

bombastic style drives people crazy and

music and earned $300 million off their

company that righted a wrong.”

doesn’t always serve him well.”

“You wake up one day and go, ‘Oh, wow,

recordings,”’ said Price, the company’s chief executive.

As TuneCore has grown, it has also served as a pulpit for Price to criticise July 2012

Price has inserted himself into some

Price co-founded spinART Records

of the most contentious issues in the

in 1991, putting out music by the Pixies,

music business, like the legal obligations

the Apples in Stereo and others, and

of streaming services and the complex

learned about digital music through a gig

36

TuneCore will place artists’ songs on dozen of online services for a flat fee of $50.

at eMusic. By the mid-2000s, with his

“A real temptation in this industry is to

Agency, which processes music licenses

label winding down, he began to rethink

think there’s a quick fix, that all you need

in the United States. “Getting royalties

the way artists get their music for sale

is one thing to be successful,” said Travis

for international online exploitation is a

online. Rather than taking a cut of sales

Yetton, one of the Civil Wars’ managers.

problem at every level of the music industry,

and offering marketing services, as many

“For us TuneCore was great. They did the

and many folks are trying to solve it.”

distributors do, he decided to charge a flat

service we needed. But if we need them to

fee to deliver music to retailers and leave

break a band, then we are doing a bad job,

register songwriters’ works around the

the rest to the bands.

not them.”

world and collect any money owed, for a

“I’m not going to promise anyone they’re

TuneCore’s publishing service offers to

one-time $50 fee and a 10 per cent cut

going to be a star,” Price said. “I am going

LAST YEAR, TuneCore expanded into

of recovered royalties, which Price says is

to promise that if you pay me a fee for the

music publishing, which deals with the

necessary given the intensive work. So far,

service, I will distribute your music to the

copyrights for songwriting. Already a

he said, he has signed up roughly 4,000

places you want it to go, and I will deal with

daunting business, publishing has become

clients and collected about $41,000.

all the hassles that come along with that.”

even more complex in the digital age, since

TuneCore can be lucrative for musicians

Recently, Price has become even more

songs that can be sold around the world in

aggressive as an artists’ advocate. In

who already have a following or can build

an instant may still have to filter through

January, after TuneCore releases were

one on their own. Major acts like Jay-Z

multiple layers of international middlemen

removed from Amazon’s download

and Keith Richards have used it, and two

before all parties are paid. As a result,

stores in Britain and Europe, he accused

clients, the rapper Hoodie Allen and the

millions in royalties sit unclaimed around

Amazon of not paying royalties properly

Americana band the Civil Wars, recently

the world; Price believes that TuneCore’s

there. In April, he lashed out against the

hit No. 1 on iTunes after extensive social-

customers may be owed up to $70 million.

streaming service Grooveshark, saying

media campaigns. But most of TuneCore’s

“This is a mighty problem to solve, and

that its executives “are immoral and could

700,000 acts – as well as the clients of

not just for the band in the garage,” said

care less about who and/or what they hurt

competing services like CD Baby and

Michael Simon, the senior vice president

as long as they make money.”

Zimbalam – have very low sales.

of business affairs at the Harry Fox

Price is far from alone in criticising Portfolio

Music

37

REUTERS

The Civil Wars recently hit No. 1 on iTunes after an extensive social media campaign.

TuneCore leaves all marketing to the artists.

TuneCore can be lucrative for artists who already have a following, such as Keith Richards.

AS MUCH as he has been criticised for his tone, Price has also shown that he gets results. He recently announced that TuneCore’s dispute with Amazon had been resolved and that its songs would be restored. (Amazon declined to comment for this article.) And however tempestuous his public exchanges with Grooveshark may be, the two sides are still negotiating.

“If people don’t take Jeff seriously, they do so at their peril,” said Eric Garland, Jeff Price, the founder of TuneCore, in his Brooklyn office. Last year the company expanded into music publishing.

chief executive of BigChampagne, a media analysis firm owned by Live Nation Entertainment. “They are confusing his personality with his business.”

Grooveshark, which is being sued by all

they were owed only $500. “When

major record companies for copyright

somebody comes in and attacks us like

infringement and other issues. But his

this, that’s just intimidation,” Tarantino

flipped through a slide show of TuneCore’s

attack is perhaps the most personal.

said. “This space has worked through

successes and excitedly sketched charts

After his blog post was copied to Pho,

intimidation and extortion before, and

of how royalties are paid overseas, Price

an email discussion list about media and

we’re not going to have it.”

disputed a suggestion that his public efforts

technology, he wrote more than 15,000

When asked for a response to

Sitting in his office in Brooklyn, where he

were meant to attract new clients.

“Yes, I run a business; I am not running

words in dozens of heated messages

Tarantino’s statements, Price wrote – as

defending his stance.

part of a long email including royalty rate

a philanthropy,” he said. “But I’m not

Sam Tarantino, the chief executive

charts and excerpts from correspondence

writing those things because I’m trying to

of Grooveshark, called Price’s criticism

with Grooveshark executives – that he did

get customers. I’m writing what I write

unfair. He said that Price had demanded

not know how much Grooveshark owes

because I believe it.”

$25,000 for his publishing clients but that

because it has not supplied necessary data

according to Grooveshark’s accounting

about its streams.

July 2012

“Whether I had this company or not,” he added, “I’d still have a big mouth about it.” n

Retail

38

Many aMerican retailers are cutting back at shopping malls. Chains like Gap, Abercrombie & Fitch, Coldwater Creek and Talbot’s say they have too many stores at too many malls. Hundreds of stores are on the chopping block.

Now, that pain is being seen as an opportunity – for some foreign retailers.

Uniqlo, the Japanese basics brand, is starting aggressive growth plans at shopping malls that are expected to include 20 to 30 new stores a year over the next eight years.

In its first move, Uniqlo, which has three stores in New York City and one opening this autumn in downtown San Francisco, has signed a lease at the Garden State Plaza mall in Paramus, New Jersey.

The store will be in a space previously occupied by an Old Navy store.

Other international retailers, from the low end, like Massimo Dutti and Topshop, to the high end, like the PPR brands Yves Saint Laurent, Bottega Veneta and Balenciaga, are also adding new stores in the United States.

© 2012 New York Times News service

Overall, the retail real estate market is starting to recover from the recession.

Rents rose in the first quarter and retail vacancies declined for the first time since 2005 as some companies opened new stores and expanded existing ones, according to the research firm Reis.

“This is a country of shopaholics,” said

RetaileRs taRget the US Uniqlo’s first foray into the American market ended badly. But now the Japanese retailer, along with other foreign brands, is eying rapid expansion, reports Stephanie Clifford.

Portfolio

39

Uniqlo is Japan’s most popular apparel retailer and a worldwide leader in casual wear. The company is now targeting the US market.

something new,” Consolo said.

Faith Hope Consolo, chairman of the

easy access to credit, fewer regulations

retail group at Douglas Elliman, who

than in some other countries, cheaper rents

is handling inquiries from retailers in

because of the recession and the promise

because it has succeeded in selling basic

Australia, New Zealand and Canada about

of getting Wall Street’s attention, she said.

and affordable clothing, a category that

opening in the US.

And many shoppers here like the panache

American companies like Gap and Old

of clothing from abroad. “It’s a fickle

Navy once dominated. But it failed in a

market here – the consumer always wants

previous effort to expand into American

Overseas companies are looking to the United States market because of relatively July 2012

Uniqlo is drawing particular attention

“Our brand is still not a household name, so we need a bigger box than some of our competitors.” shopping malls. In 2006, it closed stores in three malls in New Jersey it had opened in 2005.

This time, company officials said, they have learned from their mistakes – most notably, a recognition that the Uniqlo (pronounced YOU-nee-klo) brand needed a bigger introduction in the United States. size mall locations – about 650 square

AFP

Last time, the retailer leased standard-

Although Uniqlo has reached saturation in Japan, its international division grew 68 per cent to $1.07 billion in the first half of this fiscal year.

metres each – that did not distinguish the brand from competitors. The new Garden State Plaza space, by contrast, is roughly 4,000 square metres, and it has external exposure, meaning Uniqlo’s signs can be seen from a nearby highway and the mall’s parking lot.

“Our brand is still not a household name, so we need a bigger box than some of our competitors,” said Shin Odake, the chief executive of Uniqlo’s American division.

Well saturated in Japan, Uniqlo is now posting most of its growth overseas. Fast Retailing, the Uniqlo parent company based in Tokyo, said sales in Uniqlo’s international division grew 68 per cent to 84.8 billion yen ($1.07 billion) in the first half of its fiscal year, from September to February. Profits increased 45 per cent to 11.4 billion yen for non-Japan stores in that period.

Uniqlo posted a loss at its United States stores for that period, but analysts say the region is crucial for the company’s growth. “They need to have a competitive positioning in the world’s largest market,” said Masafumi Shoda, an analyst at Nomura Securities, in an email.

Unlike other low-priced international brands, like Zara, H&M and Mango,

corbis

Retail

40

Floor to ceiling shelves inside Uniqlo’s flagship store in New York City.

Portfolio

corbis

41

Chairman, president and chief executive officer of Fast Retailing Co, Tadashi Yanai, poses with the company’s new clothing line. Fast Retailing owns Uniqlo.

officer for Uniqlo’s American division, said

according to Kantar Media, with ads

the company was able to get prices that low

pushing its prices. With the promotions

because it did not change its merchandise

started, Uniqlo executives said it was time

plans based on the latest fashion fad.

to re-enter malls.

geTTY imAges

Instead, it books factory capacity in

shopping mall, there’s no reason for a

steady pace year-round, rather than

customer to buy at your store because we

rushing to produce trendy items from

are selling clothes, and it is not so much

specialty factories.

different from the clothes that other people

“Typically in retail there’s a seasonality Uniqlo signed tennis star Novak Djokovic to a five-year contract in an attempt to increase its brand appeal among European and US-based shoppers.

“If you have just another store in a

advance, and produces garments at a

are selling,” Odake said. “So unless the

to the products you sell and therefore a

customer knows about your brand or what

seasonality to factories – when they’re

the company stands for, there is no reason

running at full capacity and when they’re

for the customer to shop at your store.”

not,” Kyogoku said. “To be able to balance

To hit the company’s stated target of

which rush fashionable items into stores

out, over 365 days a year, full capacity,

$10 billion in sales in the United States by

weeks after trends are seen on runways,

you’re able to create more efficiencies.”

2020, “we need to go where the customer

After retreating from its last foray

is, and in the United States, malls are the

Uniqlo’s clothes are simple. There is “a strong emphasis on fabrication,” said Faye

into American malls, Uniqlo took a

premier location where Americans shop,”

Landes, a retail analyst with Consumer

different approach, opening a store in

Kyogoku said. The Uniqlo executives

Edge Research.

New York’s high-traffic SoHo district in

declined to discuss specifics about the

2006 and adding two more stores in

expansion plans, beyond saying they also

and striped basics like T-shirts, shorts

New York last year, on 34th Street and

included stores in other big American

and cashmere sweaters, available in

on Fifth Avenue. The stores, filled with

cities. The company is also working on an

a wide spectrum of colours. Uniqlo

spinning mannequins and steel and white

e-commerce site in the United States, the

emphasises high-tech fabric, for example,

decor, serve in part as an advertisement

executives said.

in a moisture-wicking T-shirt it sells in

for Uniqlo.

Uniqlo is best known for its solid

“Even though I think it may be too early

summer. And prices are low – T-shirts start

The company almost quadrupled its

to go to mall locations,” Shoda, the retail

at $9.90, and cashmere sweaters at $79.90.

spending on advertising in the United

analyst, said, the company “needs actual

States in 2011 versus 2010, to $8.3 million,

trials in there.” n

Yasunobu Kyogoku, chief operating July 2012

Technology

42

Braeburn Capital Reno, Nevada

Profits Routed Through The Netherlands

Apple offices around the world

Apple Operations International, Apple Sales International, Ireland

iTunes S.ar.l.

Luxembourg

British Virgin Islands or other tax haven

SIDESTEPPING BILLIONS IN TAXES Most local and international tax codes were written before the technological revolution, which allows companies such as Apple to benefit from creative but legal accounting, report Charles Duhigg and David Kocieniewski.

A

PPLE, THE WORLD’S

and invest the company’s profits out of

an anonymous office in Reno – that help

most profitable technology

Reno, just 320 kilometres away, Apple

cut the taxes it pays around the world.

company, doesn’t design

sidesteps state income taxes on some of

iPhones in Reno, Nevada. It doesn’t run

© 2012 NEW YORK TIMES NEWS SERVICE

AppleCare customer service from this city.

those gains.

California’s corporate tax rate is 8.84

Almost every major corporation tries to minimise its taxes, of course. For Apple, the savings are especially alluring because

And it doesn’t manufacture MacBooks

per cent. Nevada’s? Zero. Setting up

the company’s profits are so high. Wall

or iPads anywhere nearby. Yet, with a

an office in Reno is just one of many

Street analysts predict Apple could earn

handful of employees in a small office

legal methods Apple uses to reduce its

up to $45.6 billion in its current fiscal

here in Reno in a company subsidiary

worldwide tax bill by billions of dollars

year – which would be a record for any

named Braeburn Capital, Apple has

each year.

American business.

done something central to its corporate

As it has in Nevada, Apple has created

Braeburn is a variety of apple that is

strategy: It has avoided millions of dollars

subsidiaries in low-tax countries like

simultaneously sweet and tart. When

in taxes in California and 20 other states.

Ireland, the Netherlands, Luxembourg

someone in the United States buys an

and the British Virgin Islands – some little

iPhone, iPad or other Apple product, a

more than a letterbox in Luxembourg or

portion of the profits from that sale is

Apple’s headquarters are in Cupertino, California. By putting an office to collect

Portfolio

43

often deposited into accounts controlled

by Braeburn, and then invested in stocks, bonds or other financial instruments, say company executives. Some profits from those investments are shielded from California tax authorities by virtue of Braeburn’s Nevada address.

Since founding Braeburn in 2006, Apple has earned more than $2.5 billion in interest and dividend income on its cash reserves and investments around the globe.

What’s more, Braeburn allows Apple to lower its taxes in other states because many of those jurisdictions use formulas that reduce what is owed when a company’s financial management occurs elsewhere.

While Apple’s Reno office helps the company avoid state taxes, its international subsidiaries – particularly the company’s assignment of sales and patent royalties to other nations – help reduce taxes owed to the American and

The offices of Braeburn Capital, an Apple subsidiary that manages and invests Apple’s cash in Reno, Nevada.

other governments.

Some profits at companies like Apple,

is now one of the US’ largest and most

iTunes S.ar.l., has just a few dozen

Google, Amazon, Hewlett-Packard and

valued industries, many tech companies

employees, according to corporate

Microsoft derive not from physical goods

are among the least taxed, according to

documents filed in that nation and a

but royalties on intellectual property,

government and corporate data.

current executive. But when customers

like the patents on software that makes

across Europe, Africa or the Middle East

devices work.

The Luxembourg subsidiary, named

has remade industries, ignited economic

– and potentially elsewhere – download a song, television show or app, the sale is recorded in this small country, according to current and former executives. The country has promised to tax the payments collected by Apple and numerous other tech corporations at low rates if they route transactions through Luxembourg.

“Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.”

growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create them.

Apple, say former executives, has been particularly talented at identifying legal tax loopholes and hiring accountants who are

Taxes that would have otherwise gone to

known for their innovation. In the 1980s,

the governments of Britain, France, the United States and dozens of other nations

Even among tech companies, Apple’s rates are low. And while the company

Other times, the products themselves

for instance, Apple was among the first

go to Luxembourg instead, at discounted

are digital, like downloaded songs.

major corporations to designate overseas

rates. In 2011, iTunes S.ar.l.’s revenue

It is much easier for businesses with

distributors as “commissionaires,” rather

exceeded $1 billion, according to an Apple

royalties and digital products to move

than retailers, said Michael Rashkin,

executive, representing roughly 20 per

profits to low-tax countries than it is,

Apple’s first director of tax policy, who

cent of iTunes’ worldwide sales.

say, for grocery stores or automakers. A

helped set up the system before leaving

downloaded application, unlike a car, can

in 1999. Because commissionaires never

be sold from anywhere.

technically take possession of inventory

APPLE SERVES as a window on how technology giants have taken advantage

The growing digital economy presents

– which would require them to recognise

of tax codes written for an industrial age

a conundrum for lawmakers overseeing

taxes – the structure allowed a salesman

and ill-suited to today’s digital economy.

corporate taxation: Though technology

in high-tax Germany, for example, to sell

July 2012

44

‘Double Irish With A Dutch Sandwich’

BY COMPARISON, Wal-Mart last year paid worldwide cash taxes of $5.9 billion

START HERE

Numerous companies take advantage of loopholes in international laws to move profits around the world, dodging taxes. Many of these techniques rely on transferring profits on patent royalties to places like Ireland. Here is one technique typical of what Apple and others pioneered.

U.S. consumer

on its booked profits of $24.4 billion, a tax

PRODUCT

rate of 24 per cent, which is about average

If the profits from the sale of a product stay in the United States, they would be subject to a federal tax of 35 percent.

But if money is paid to an Irish subsidiary as royalties on patents the company owns, it can ultimately be taxed at far lower rates.

for non-tech companies.

Apple’s domestic tax bill has piqued particular curiosity among corporate tax Manufacturing subsidiary

Overseas consumer

PRODUCT

When the same product is sold overseas, money from the sale is sent to a second Irish subsidiary.

Irish subsidiary Because of a quirk in Irish law, if the Irish subsidiary is controlled by managers elsewhere, like the Caribbean, then the profits can skip across the world tax-free.

Second Irish subsidiary

At one time, a company would actually manufacture products in Ireland. But today, it’s more likely to use factories in China, Brazil or India that ship directly to consumers.

experts because though the company is based in the United States, its profits – on paper, at least – are largely foreign.

While Apple contracts out much of the manufacturing and assembly of its products to other companies overseas, the majority of Apple’s executives, product designers, marketers, employees, research and development and retail stores are in the United States. Tax experts say it is

Caribbean or other tax haven The profits can land in an overseas tax haven where they are stored, invisible to authorities, for years.

therefore reasonable to expect that most of Apple’s profits would be American as well. The nation’s tax code is based on the concept that a company “earns” income where value is created, rather than where products are sold. However,

Netherlands And because of Irish treaties that make some inter-European transfers tax-free, the company can avoid taxes by routing the profits through the Netherlands …

... and then back to the first Irish subsidiary, which sends the profits to the overseas tax haven.

Apple’s accountants have found legal ways

NO-TAX COUNTRY 0%

to allocate about 70 per cent of its profits overseas, where tax rates are often much lower, according to corporate filings.

THE NEW YORK TIMES

Neither the government nor

N.Y. Times News Service Date: 05/01/12 computers on behalf of a subsidiary in lowGraphic Slug: APPLE-DUHIGG-BSPR tax Size: Singapore.

6.8 x 7.9 With Story: (BC--APPLE-DUHIGG-BSPR--NYT) In addition, Apple was a pioneer of

corporations make tax returns public,

an accounting technique known as the

outlays for income taxes in their annual

‘Double Irish with a Dutch Sandwich,’ which reduced taxes by routing profits through two Irish subsidiaries – today named Apple Operations International and Apple Sales International – and the Netherlands and then to the Caribbean.

In 2004, Ireland, a nation of less than five million, was home to more than one-third of Apple’s worldwide revenues, according

“Apple was a pioneer of an accounting technique known as the ‘Double Irish with a Dutch Sandwich,’ which reduced taxes by routing profits through two Irish subsidiaries – today named Apple Operations International and Apple Sales International – and the Netherlands and then to the Caribbean.”

and a company’s taxable income often differs from the profits disclosed in annual reports. Companies report their cash Form 10-K, but it is impossible from those numbers to determine precisely how much, in total, corporations pay to governments. In Apple’s last annual disclosure, the company listed its worldwide taxes – which includes cash taxes paid as well as deferred taxes and other charges – at $8.3 billion, an effective tax rate of almost a quarter of profits.

to company filings.

Without such tactics, Apple’s federal

HOWEVER, TAX analysts and scholars

tax bill in the United States most likely

the world on its reported profits of $34.2

said that figure most likely overstated

would have been $2.4 billion higher last

billion last year, a tax rate of 9.8 per cent.

how much the company would hand

year, according to a recent study by a

(Apple does not disclose what portion of

to governments because it included

former Treasury Department economist,

those payments were in the United States,

sums that might never be paid. “The

Martin Sullivan. As it stands, the company

or what portion are assigned to previous

information on 10-Ks is fiction for most

paid cash taxes of $3.3 billion around

or future years.)

companies,” said Kimberly Clausing, an Portfolio

Technology

45

economist at Reed College who specialises in multinational taxation. “But for tech companies it goes from fiction to farcical.”

Apple, in a statement, said it “has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules. We are incredibly proud of all of Apple’s contributions.”

The statement also said that Apple “pays an enormous amount of taxes which help our local, state and federal governments.

In the first half of fiscal year 2012, our US operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of US income tax.”

The statement did not specify how it arrived at $5 billion, nor did it address the issue of deferred taxes, which the

Steve Jobs with Steve Wozniak, co-founders of Apple Computers Inc, at the debut of the Apple II computer. Wozniak attended De Anza College, a community college that is threatened by closure due to California’s budget gaps. The usage of tax loopholes is one reason for the budget shortfall.

company may pay in future years or

“The statement did not specify how it arrived at $5 billion, nor did it address the issue of deferred taxes, which the company may pay in future years or decide to defer indefinitely. But the $5 billion figure appears to include taxes ultimately owed by Apple employees.”

decide to defer indefinitely. But the $5 billion figure appears to include taxes ultimately owed by Apple employees.

THE SUMS paid by Apple and other

PHOTOS: GETTY IMAGES

tech corporations is a point of contention

Apple CEO Tim Cook presents Apples’ first quarter results. Wall Street analysts believe Apple could earn $45.6 billion in its current fiscal year. It is estimated the company’s federal tax bill would have been $2.4 billion higher last year, if Apple did not make clever use of tax loopholes.

budget crisis, De Anza has cut more than

are seen by officials like Murphy as

a thousand courses and eight per cent of

symptomatic of why the crisis exists.

its faculty since 2008.

Now, De Anza faces a budget gap so

“I just don’t understand it,” he said in an interview. “I’ll bet every person

in the company’s backyard. Two-and-a-

large that it is confronting a “death spiral,”

at Apple has a connection to De Anza.

half kilometres from Apple’s Cupertino

the school’s president, Brian Murphy,

Their kids swim in our pool. Their

headquarters is De Anza College, a

wrote to the faculty in January. Apple, of

cousins take classes here. They drive

community college that Steve Wozniak,

course, is not responsible for the state’s

past it every day, for Pete’s sake. But

one of Apple’s founders, attended from

financial shortfall, which has numerous

then they do everything they can to

1969 to 1974. Because of California’s state

causes. But the company’s tax policies

pay as few taxes as possible.” n

July 2012

46

W

HILE MONEY POURS

foundation created from Greek shipping

out of Greek banks and

wealth that has become Greece’s largest

Europe debates whether

charitable donor in recent years.

or not Greece deserves its next handout,

Greeks from the richest to those of modest

to help shore up the nation’s finances are

means have traditionally done: pay as

mainly keeping their heads down.

little as they can in the way of taxes.

They are among the wealthiest

Many economists say the oligarchs are

Greeks – whether shipping magnates,

a big part of Greece’s economic problem,

whose tax-free status is enshrined in the

because they have capitalised on the

constitution, or the so-called oligarchs who

insular, quasi-monopolistic approach to

have accumulated vast wealth via their

business that is one reason their nation

dominance in core areas of the economy like

has long lagged the far more competitive

oil, gas, media, banking and even cement.

economies of many other eurozone nations.

Astute investors, they have been

© 2012 NEW YORK TIMES NEWS SERVICE

Mainly, though, they have done what

the people potentially in the best position

The moneyed elite in Greece have

reluctant to lend a hand to the Greek

always been secretive in nature, especially

treasury through the risky proposition

when it comes to their fortunes. Assessing

of buying government bonds. But they

the ultimate value of Greek private sector

have also been slow to dispense funds

wealth is a nearly impossible task, because

to philanthropies trying to combat the

much of the money exists offshore,

mounting social ills that their nation’s

secreted away in Swiss bank accounts

economic collapse has wrought – drawing

or invested in real estate in London and

a sharp rebuke from the head of a

Monaco. And now, with the country’s top Portfolio

Greece’s Tycoons Stay in the Background Last year, an estimated ¤8 billion ($10.2 billion) in collectible taxes were in arrears – nearly half of Greece’s budget deficit.

Pressure is now mounting on the country’s rich to pay their share, report Landon Thomas and Eleni Varvitsioti.

country’s budget deficit.

The nation’s tycoons have every incentive to keep their country in the euro

co-president of the Stavros Niarchos

currency union. The question is, are they

Foundation, which was set up in the 1990s

willing to bear the cost of doing so?

to put to charitable use the winnings of

“The oligarchs want to keep the euro

its shipping tycoon founder. “Everyone is

– largely because of the banks which are

saying let someone else do it, and so far

so deeply integrated in the euro system,”

I am seeing little action.”

said Costas Lapavitsas, an economist at

This January, the Niarchos Foundation,

vote-getter, the leftist firebrand Alexis

the University of London. “But they are

which describes itself as an international

Tsipras, talking more and more about

keeping quiet about it.”

charity with offices in Athens, New York

nationalising companies and industries

ILLUSTRATION: TARAK PAREKH

“I get the sense that almost nothing is being done,” said Andreas Dracopoulos,

But as children go hungry in Greek

and Monaco, said it would donate ¤100

and, in the words of his top economic

schools because their parents have no

million to a series of projects aimed at

adviser, “taxing the rich,” there is even

money with which to feed them, and the

helping Greeks cope with the economic

more incentive to lie low.

streets of Athens become home to growing

crisis. Plans include food vouchers to

Of course, the left is not alone in this

numbers of desperate, jobless people,

help destitute parents feed their children

view. “Let’s be frank – the well-off need

pressure is mounting on the country’s

and programmes to attack the growing

to pay their fair share of taxes,” Bob

rich to do what the state can no longer

epidemic of homelessness in big cities

Traa, the International Monetary Fund’s

effectively do: write cheques.

like Athens and Piraeus.

representative in Greece, said in a speech

After all, philanthropy is a Greek word.

Shipping analysts guess that the value

in Athens. Last year alone, an estimated

But with many wealthy Greeks still fearful

of Greek shipping assets alone is about

¤8 billion ($10.2 billion) in collectible

of showing their financial hand, private

$85 billion – although they hasten to add

taxes were in arrears – nearly half of the

giving to date has been relatively meagre.

that those assets underpin a substantial

July 2012

Finance

47

48

debt burden of around ¤300 billion

worst years on record and was likely to

youth, among whom employment is

($380 billion) for the industry, used to

lose money in 2012.

around 50 per cent. That is why, despite

finance vessels that can cost hundreds

the slump in his business, he said he had

of millions of euros each. And in the

STILL, HE and some other shipping

slack global economy, shipping – and

billionaires say they are doing their part.

refrained from laying off workers.

shipping magnates – are feeling the pinch.

In addition to philanthropic giving,

young people,” he said. “It is giving

Thanassis Martinos, a second-generation

Martinos said it was important that

them jobs.”

shipping heir, said his company, Eastern

wealthier Greeks contribute by providing

Another rich shipper, who insisted

Mediterranean, was having one of its

jobs for the country’s increasingly rootless

on not being identified because he did

“The biggest problem is not feeding

not want to draw attention to himself,

“What the shipping magnates are not doing, though, is paying taxes. Martinos’ company, for example, bases its fleet of tankers offshore – as do all shipping companies here – although the administrative offices are in Athens.”

said that he was providing thousands of free meals to families in and around his ancestral village.

Several shippers said they had also donated to a nascent campaign being organised by the trade group that represents Greek shipowners in Athens – although its president, Theodoros Veniamis, declined to say how much money they hoped to raise.

What the shipping magnates are not doing, though, is paying taxes.

Martinos’ company, for example, bases its fleet of tankers offshore – as do all shipping companies here – although the administrative offices are in Athens.

Greece’s income tax revenue is 7.3 per cent of gross domestic product, well below the 11 per cent average for eurozone countries, according to Eurostat. Even so, there has been little talk by recent governments or even by Greece’s financial backers about imposing taxes on shippers – a move, it is assumed, that would prompt them to take their business elsewhere.

That is a blow Greece would have trouble absorbing. The shipping industry employs about 200,000 people. And it brought in ¤13 billion in foreign exchange in 2010, making it the country’s top single foreign-exchange earner.

Would shipping’s special tax exclusion change under a left-wing government?

It is hard to say. Euclid Tsakalotos, a top

Andreas Dracopoulos, co-president of the Stavros Niarchos Foundation, which said it would donate €100 million to a series of projects aimed at helping Greeks cope with the economic crisis.

economic advisor to Tsipras, said in an interview recently that the first thing Tsipras would do was to “tax the people that past governments have been afraid of taxing.”

Martinos says such an outcome is unlikely, given shipping’s vital role in the Portfolio

“Nomikos is also building a microbrewery on Santorini, the island of his shipping forefathers.

He says that he hopes to create a few jobs in the community and that he plans to contribute 50 per cent of the profit to the foundation.”

A ship is guided through Greece’s Corinth Canal. The Greek shipping industry employs around 200,000 people and brought in €13 billion in foreign exchange in 2010.

march out of the eurozone. But privately, they cannot ignore the increasingly grim economic and social environment – which is why some have bolstered their already tight security forces by hiring more bodyguards.

PETER NOMIKOS, a 33-year-old shipping scion, has started a campaign to raise money from Greek businesses and individuals and then, through a foundation he set up in the United States, use those funds to buy back as many of Greece’s deeply discounted bonds on the open market as possible. The plan would be to retire them to help bring down the country’s

It is expected that Greece’s tourism industry will fall 10 to 15 per cent this year, fuelled by economic uncertainty. Tourism accounts for one in five jobs and is vital to the country’s economy.

staggering debt burden, which is now ¤350

economy. Greek shippers are also some

on Santorini, the island of his shipping

of the country’s largest investors, owning

forefathers. He says that he hopes to

large tracts of real estate and interests in

create a few jobs in the community and

tourism, banking and media.

that he plans to contribute 50 per cent

Nomikos is also building a microbrewery

of the profit to the foundation.

“I don’t think the policy will change,” he

PHOTOS: GETTY IMAGES

billion – 165 per cent of the nation’s GDP.

said. “Shipping is a net profit for Greece.”

“No single person is rich enough

Many shipowners and other wealthy

to bail out Greece – not least myself,”

Greeks took the long view, correctly

said Nomikos, who through his

arguing that Greeks would come to

brewery company has already bought

their senses in the past election and not

¤100,000 worth of bonds at current

vote in large numbers for Tsipras if they were convinced that it mean a forced July 2012

Alexis Tsipras, head of the leftist Syriza party, wants an end to austerity in Greece.

rock bottom prices of around 15 euro cents on the euro. n

Finance

49

50

Challenging the Throwaway CulTure The Repair CafĂŠ consists of volunteers in the Netherlands that repair things for free. This has both an environmental and social message, reports Sally McGrane.

Portfolio

Recycling

51

An unemployed mAn, A retired pharmacist and an upholsterer took their stations in Amsterdam, behind tables covered in red gingham. Screwdrivers and sewing machines stood at the ready. Coffee, tea and cookies circulated. Hilij Held, a neighbour, wheeled in a zebra-striped suitcase and extracted a well-used iron. “It doesn’t work anymore,” she said. “No steam.”

Held had come to the right place.

At Amsterdam’s Repair Cafe, an event originally held in a theatre’s foyer, then in a rented room in a former hotel and now in a community centre a couple of times a month, people can bring in whatever they want to have repaired, at no cost, by volunteers who just like to fix things. reduce waste, the Repair Cafe concept has

A volunteer repairs a laptop charger for a resident at the Repair Cafe in Amsterdam. The city’s Repair Cafe encourages people to bring old items, that they might have thrown away, to have them restored by expert volunteers.

Conceived of as a way to help people taken off since its debut 21/2 years ago. The

that helping people fix things was a

sawed off the vacuum’s broken nozzle. “My

Repair Cafe Foundation has raised about

practical way to prevent unnecessary waste.

husband died, and there are all these little

$525,000 through a grant from the Dutch

“Sustainability discussions are often about

things around the house that he used to fix.”

government, support from foundations

ideals, about what could be,” Postma said.

and small donations, all of which pay for

“After a certain number of workshops

to some, the project’s social benefits

staffing, marketing and even a Repair Cafe

on how to grow your own mushrooms,

are as appealing as its ecological mission.

bus. Thirty groups have started Repair

people get tired. This is very hands on,

“What’s interesting for us is that it creates

Cafes across the Netherlands, where

very concrete. It’s about doing something

new places for people to meet, not just

neighbours pool their skills and labour for a

together, in the here and now.”

live next to each other like strangers,” said

few hours a month to mend holey clothing

Nina Tellegen, the director of the DOEN

and revive old coffeemakers, broken lamps,

three per cent of its municipal waste

Foundation, which provided the Repair Cafe

vacuum cleaners and toasters, as well as at

into landfills, there is still room for

with a grant of more than $260,000 as part

least one electric organ, a washing machine

improvement, according to Joop Atsma,

of its “social cohesion” programme, initiated

and an orange juice press.

the state secretary for infrastructure and

“In Europe, we throw out so many

the environment. “The Repair Cafe is

things,” said Martine Postma, a former

an effective way to raise awareness that

journalist who came up with the concept

discarded objects are indeed still of value,”

after the birth of her second child led her

he wrote, in an email.

to think more about the environment. “It’s

“I think it’s a great idea,” said Han van

a shame because the things we throw away

Kasteren, a professor at the Eindhoven

are usually not that broken. There are more

University of Technology who works on

and more people in the world, and we can’t

waste issues. “The social effect alone is

keep handling things the way we do.

important. When you get people together

“I had the feeling I wanted to do © 2012 New York Times News service

While the Netherlands puts less than

to do something for the environment,

something, not just write about it,” she said.

you raise consciousness. And repairing a

But she was troubled by the question: “How

vacuum cleaner is a good feeling.”

do you try to do this as a normal person in your daily life?”

That was certainly true for the woman who took her 40-year-old vacuum, bought

Inspired by a design exhibit about the

when she was a newlywed, to a Tuesday

creative, cultural and economic benefits

night Repair Cafe. “I am very glad, very

of repairing and recycling, she decided

glad,” she said, as John Zuidema, 70,

July 2012

“At Amsterdam’s Repair Cafe, an event originally held in a theatre’s foyer, then in a rented room in a former hotel and now in a community centre a couple of times a month, people can bring in whatever they want to have repaired, at no cost, by volunteers who just like to fix things.”

Recycling

52

in the wake of the politically-charged killings of Pim Fortuyn, a politician, in 2002, and Theo van Gogh, a filmmaker, in 2004. “That it’s linked to sustainability makes it even more interesting.”

Tellegen added that older people in particular find a niche at the Repair Cafe.

“They have skills that have been lost,” she said. “We used to have a lot of people who worked with their hands, but our whole society has developed into something service-based.”

Evelien Tonkens, a sociology professor at the University of Amsterdam, agreed.

“It’s very much a sign of the times,” said Tonkens, who noted that the Repair Cafe’s anti-consumerist, anti-market, do-itourselves ethos is part of a more general movement in the Netherlands to improve everyday conditions through grass-roots social activism.

“It’s definitely not a business model,” Postma said. She added that because the Repair Cafe caters to people who find it too expensive to have their items fixed, it should not compete with existing repair shops.

The Repair Cafe Foundation provides interested groups with information to help get them started, including lists of tools, tips for raising money and marketing materials. Postma has received inquiries

The Repair Café idea has spread across the Netherlands. Besides sustainability, the movement also has a social element that brings people together.

from France, Belgium, Germany, Poland,

the raw materials reused (although not

because they’re poor. Others look well-

Ukraine, South Africa and Australia.

necessarily repaired ad nauseam), also

off, but they are aware of environmental

inspired Postma. “The value of the Repair

concerns. Some seem a little bit crazy.”

Tijn Noordenbos, a 62-year-old artist in Delft, started a Repair Cafe there four

Cafe is that people are going back into

Theo van den Akker, an accountant

months ago. “I like to repair things,” he

a relationship with the material things

by day, had taken on the case of the non-

said, noting that the repair shops of his

around them,” McDonough said.

steaming iron. Wearing a T-shirt that

younger days have all but vanished. “Now, if something breaks, you take it back to the store and they say: ‘We’ll send it to

Take, for example, Sigrid Deters’ black H&M miniskirt with a hole in it.

“This cost five or 10 euros,” about $6.50

read “Mr. Repair Cafe,” van den Akker removed the plastic casing, exposing a nest of multicoloured wires. As he did, Held

the factory and it costs you ¤100 just to

to $13, she said, adding that she had not

and van der Rhee discussed the traditional

check out the problem. It’s better if you buy

mended it herself because she was too

Surinamese head scarves that Held, who

a new one.”’

clumsy. “It’s a piece of nothing; you could

was born in Suriname, makes for a living.

William McDonough, an architect, said, “What happened with planned obsolescence is that it became mindless –

throw it out and buy a new one. But if it were repaired, I would wear it.”

Marjanne van der Rhee, a Repair Cafe

When van den Akker put the iron back together, two parts were left over – no matter, he said, they were probably not

just throw it away and don’t think about

volunteer who hands out data collection

that important. He plugged the frayed

it.” His “cradle to cradle” design philosophy,

forms and keeps the volunteers fortified

cord into a socket. A green light went on.

which posits that things should be built

with coffee, said: “Different people come

Rusty water poured out. Finally, it began

so that they can be taken apart and

in. With some, you think, maybe they come

to steam. n Portfolio

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Cosmetics

54

The New PriNce of L’oreaL Jean-Victor Meyers, Liliane Bettencourt’s 25-year-old grandson, now has a seat on the 14-member board that runs the French cosmetics giant, reports Liz Alderman.

Jean-Victor Meyers has succeeded his grandmother on the L’Oreal board.

Portfolio

O

members of the Bettencourt

me,” Meyers, with dark, gelled hair, a black

family owns through a holding company.

family, heirs to the vast L’Oreal

suit and an easy smile, said on a video

(Nestle, at just under 30 per cent, is the

cosmetics fortune, strode into the Palais

L’Oreal beamed over the stage to persuade

second-largest shareholder.)

des Congres de Paris, the grand convention

shareholders to approve the transition.

centre, for a meeting with L’Oreal

“My first thought is of my grandmother.”

ne rainy morning in April,

© 2012 New York Times News service

shareholders. One person was missing

“This is a very important moment for

His entree onto the 14-member board,

play for the 30 per cent of the stock the

Whether Meyers, who has so far worked as a salesman at a Louis Vuitton store and an assistant product manager at

from their entourage: Liliane Bettencourt,

as the youngest administrator at any

L’Oreal’s Yves Saint Laurent cosmetic

the wizened matriarch of L’Oreal and one

publicly listed company in France, comes

line, can stand tall in Bettencourt’s stead

of the world’s richest women. Bettencourt,

at a pivotal time for the family and for

is foremost in people’s minds. He has a

89, had stayed behind in her mansion in

L’Oreal. The owner of the Body Shop,

degree in management.

the Paris suburb of Neuilly, having given

Lancome, Maybelline and an eye-popping

“But he’s only 25 years old, he’s

up the board seat she held for 17 years

list of beauty products found in bathrooms

inexperienced, and he seems to lack

after a bitter family fight that captivated

around the world, L’Oreal rang up a record

maturity,” said Cathy Boutard, a longtime

France and even shook the office of Nicolas

¤20 billion in global sales last year, and

shareholder who donned a red coat and

Sarkozy, the French president who in May

it is angling to conquer one billion new

Chanel pearl earrings for the meeting. “We

lost an election to Francois Hollande.

consumers in the next decade to beat

all miss Madame Bettencourt, and we have

its rivals.

followed the scandal that’s happened with

Taking her place was a willowy figure,

Stalking that news, though, is the

the family and that’s rocked L’Oreal,” she

old grandson, a sheltered, publicity-shy

question of whether Nestle, the mighty

added. “It feels like she was pushed out,

scion with a taste for fashion but little

Swiss food empire that in a longstanding

and it’s shocking.”

experience in business affairs. His main

alliance with the Bettencourts owns a big

qualification is his family name.

stake in L’Oreal, might one day make a

Jean-Victor Meyers, Bettencourt’s 25-year-

A L’Oreal researcher tests hair products and dye formulas at the company’s laboratory near Paris.

On the stage, Jean-Paul Agon, the chief executive of L’Oreal, hailed Bettencourt’s lifetime involvement in the company, which her father, the chemist Eugene Schueller, founded in 1909 after concocting a new type of hair dye in Paris. Agon said the succession showed “the engagement of the Bettencourt-Meyers family,” now in its fourth generation.

Meyers, who will sit on the board alongside his parents, insists he’s ready.

“I may be only 25 years old,” Meyers said. “But I’m sure of my experience with the family.”

For years, Meyers has been thrust into the role of diplomat between his grandmother and his mother, Francoise Bettencourt-Meyers, whose maneuvers to keep a playboy photographer and others away from Bettencourt’s ¤20 billion fortune erupted into a Balzacian scandal that became known in France as “l’affaire Bettencourt.”

Several years ago, the daughter grew suspicious that people in her mother’s entourage were trying to profit from her.

She was especially wary of photographer Francois-Marie Banier, 64, a dandy who befriended celebrities including Salvador

July 2012

Cosmetics

55

Cosmetics

56

discovered that her mother was investing in a gambling company at the behest of one of her lawyers, who has since been fired, she pressed for legal guardianship.

Bettencourt exploded and declared herself ready for “nuclear war.”

Since then, Banier and de Maistre have been dragged through the courts. Banier was indicted in December on charges he abused Bettencourt’s weakness, and de Maistre has been in jail since March as judges investigate accusations that he abused his position as Bettencourt’s adviser. Bettencourt-Meyers was made her mother’s legal guardian. Meyers, who is close to his grandmother and watched the events with dismay, now watches over her health and personal life after a judge determined he was the only one who could “ward off all conflict Jean-Paul Agon, chief executive of L’Oreal, has welcomed Jean-Victor Meyers to the board.

Dali and Johnny Depp, and whose

frets that Banier had grown demanding,

friendship with Bettencourt deepened after

asking her to “give me this, give me that.”

her husband’s death in 2007.

Other parts of the tapes raised

between Liliane Bettencourt and Francoise Bettencourt-Meyers.”

Meyers’ ascent to the L’Oreal board – where mother and daughter had passed each other in a frosty silence during

allegations that even reached the Elysee

their Cold War – may not change much:

billion in gifts on the man she called her

Palace, the official residence of the

The family always votes in unison, and

“enfant cheri,” including annuities, Picasso

president of France. With their outsize

decisions are swayed by Bettencourt-

and Matisse paintings and an island in the

influence, L’Oreal and the Bettencourts

Meyers and her husband, Jean-Pierre

Bettencourt lavished more than ¤1

Seychelles. Banier also received a 700,000 euro-a-year contract from L’Oreal as “an artistic consultant.”

The matter boiled over in 2007, when the daughter, Bettencourt-Meyers, sued Banier, saying he exploited her mother’s frailty. That set off an incendiary five-year

“With their outsize influence, L’Oreal and the Bettencourts have always helped grease French political wheels.”

Meyers, who consult each other regularly on family and business matters.

The son, despite his role as buffer between mother and grandmother, is close to his parents and seems unlikely to raise boardroom challenges. Besides, the younger Meyers is more interested in fashion: He is pouring his energy into his startup

battle in which Bettencourt unleashed

men’s label, Exemplaire, selling high-end

counterattacks to keep her daughter from “obsessively” meddling in her life, and at

have always helped grease French political

one point threatened to disinherit her.

wheels. Erik Woerth, then Sarkozy’s labour

cashmere sweaters and leather bags.

minister, resigned last July after the tapes

Meyers declined requests for an

worried that Bettencourt, who had an early

showed de Maistre had arranged to send

interview. But during a short conversation

form of Alzheimer’s disease, was being

him a large donation for Sarkozy’s political

at the Palais de Congres, he said he

duped gave the police in 2010 more than

party in 2007.

was proud to take on the role. “My

Suspicions hardened when a butler who

21 hours of secret recordings he had made

Mother and daughter called a truce in

grandmother is very pleased about my

in her Neuilly home. In them, Bettencourt’s

2010, around the same time Bettencourt

entree, next to my mother and my father,

wealth adviser, Patrice de Maistre, is heard

learned her advisers had lost $22 million

onto the L’Oreal board,” he said later in

telling her that she had given her island to

by investing in Bernard Madoff ’s Ponzi

emailed responses to questions. “I’ll bring

Banier. “I wanted to give him an island?”

scheme. But the peace was short-lived:

energy and enthusiasm to L’Oreal.”

she asks de Maistre. Later, Bettencourt

Last October, as Bettencourt-Meyers

In 1963, L’Oreal stock was sold on Portfolio

reuTers

reuTers

Cosmetics

57

Jean-Victor Meyers with his grandmother, Liliane Bettencourt.

Jean-Paul Agon stands in front of a display stand at the L’Oreal headquarters in Clichy.

The company’s stock value has increased by more than 750 per cent since 1963.

Nestle to take an indirect holding in

“In the next 10 years we will have

L’Oreal in 1974, fearful that Mitterrand,

one billion more consumers who are

then the Socialist candidate for the

questioning how they will spend their

French presidency, might nationalise it.

new money,” said Pierre Tegner, an

A pact scheduled to expire in 2014 made

analyst at Natixis bank in Paris. “Nestle

Nestle a sleeping shareholder, owning

would have a big interest in putting

29.7 per cent of the firm, and allowed the

cash on the table to increase its reach to

Bettencourts, with their 30.9 per cent,

these consumers by adding personal and

to retain control of L’Oreal through a

cosmetic care to their portfolio.”

holding company, Tethys.

The move proved unnecessary, but

Nestle’s chief executive, Paul Bulcke, has recently been mounting a charm

nearly 40 years later it has put Nestle in

offensive in France and was installed on

a position to take action once the pact

the L’Oreal board as one of Nestle’s three

expires. Nestle executives have said they

representatives.

are not interested in pursuing Bettencourt

Boutard, the shareholder, was alarmed.

Testing new cosmetics. A hair dye concocted in 1909 was the foundation of the L’Oreal dynasty.

shares or selling, and will not reveal their

“Putting Mr Bulcke on the board is like

intentions until 2014. Analysts say that an

putting a fox in the henhouse,” she said.

expensive cosmetics company, no matter

“L’Oreal is a national icon. We don’t want it

the Paris exchange, a gold mine for the

how profitable, does not mesh with Nestle’s

to become Swiss.”

Bettencourt family. The group’s stock

enormous portfolio of global food and

market value has increased by more than

health brands.

750 times since then as the company grew

“They would be very unlikely to do

Agon said the move was not out of the ordinary. And besides, Nestle had been a steady, loyal partner of L’Oreal and the

into a behemoth, acquiring Kiehl’s, the

something that does not fit with their

Bettencourts for 40 years. Asked how

Body Shop, Biotherm – the list goes on.

strategic outlook,” said Alex Molloy, an

L’Oreal would react if Nestle grew too

analyst at Credit Suisse. “Buying L’Oreal at

interested, Agon said: “We will see.”

But if a strong performance enriched the Bettencourts and L’Oreal’s

a 30 per cent premium is good for L’Oreal’s

shareholders, it is also a reason for

shareholders, but not for Nestle’s.”

nagging questions about Nestle’s ambitions. The Bettencourts invited July 2012

But others say Nestle has every reason to want to acquire L’Oreal.

In the meantime, Meyers will step into the role of defending his family’s interests.

“He’s very young but clever and serious,” Agon said. “He’s a natural choice.” n

58

A young boy watches as his father browses a display of Nike shoes at Unknwn. Stores and brands are embracing technological change by creating new personal touches that feature gadgets rather than doting sales staff.

USING TECHNOLOGY, NOT SALESPEOPLE Younger shoppers are increasingly using technology while browsing in shops, and retailers are quick to accommodate them, reports Stephanie Clifford.

WHEN NADIA KARIM GOES

instead of getting defensive, some stores

shopping, she doesn’t wait around for

and brands are embracing the change by

salespeople. She saves items from apps

creating new personal touches that feature

and websites on her cellphone as a

gadgets rather than doting sales staff.

© 2012 NEW YORK TIMES NEWS SERVICE

shopping list. And as she browses one

Bobbi Brown has touch-screen

store – recently trying on Sam

televisions to demonstrate the perfect

Edelman flats at Nordstrom – she uses

smokey eye, something that was once

the phone to check out styles at

the exclusive domain of makeup artists.

competitors like Macy’s.

LeBron James’ shoe store in Miami has 50

“In all honesty, because I shop so much,

iPads to describe its merchandise. Macy’s

I feel sometimes I know the brands better

is testing cosmetics stations where tablets

than some of the associates,” said Karim,

offer reviews and tips. And at C. Wonder,

26, an analyst at Intel in Phoenix.

shoppers use a touchpad to personalise

For a generation of shoppers raised on

the lighting and music in dressing rooms

Google and e-commerce, the answer to

(there is also a button in case, olden-days

“Can I help you?” is increasingly a firm

style, they need to call for help).

“no,” even at retailers that have built their

The self-service theme, which started

reputations around customer service. But

years ago with checkout at groceries, has Portfolio

Retail

59

progressed to the point where shoppers can navigate entire stores without once having to say, “Just looking, thanks.”

Companies are adding the technology now because it has become cheap enough to make it feasible and because Apple and other tablet and touch-screen makers are increasing their sales efforts. Stores also don’t want to risk losing those customers who are not content shopping from home but nonetheless prefer Pinterest recommendations, Zappos reviews and Fashism feedback to interacting with someone behind the counter.

“There’s a tendency to believe that if you talk to somebody, they’re going to waste your time or sell you something you don’t need,” said Ricardo Quintero, global general manager of market development for Clinique, which uses touch screens at its counters. “It’s taking the pressure off.”

IN NORDSTROM’S case, customers have surprised the retailer. Nordstrom introduced an app last autumn that executives expected people would use remotely to order items while they were watching TV or waiting for a train. In addition to that, though, customers used

Thyra McKelvie uses an iPad provided by a Nordstrom sales representative to research the shoes she has tried on.

the app while shopping at Nordstrom rather than approach the sales staff.

The plain truth, some retail analysts

“The point is not to be nostalgic for the

say, is that businesses of all sorts have no

good old days, but to ask ourselves, what

and wants service to be delivered is

choice but to accommodate consumers

kind of society do we want?” said Turkle,

changing pretty rapidly, and a lot of

who are trained to do research on their

the author of Alone Together, a book on

that is driven by technology,” said

own – and prefer doing so. Quicken

people’s relationships with technology.

Erik Nordstrom, president of stores

Loans Arena in Cleveland now gives suite

With technology replacing human

for Nordstrom. “A lot of customers

visitors an iPad so they can order food and

interaction, she said, “you’ve taken out a

like to touch and feel and try on the

drinks directly from it, while Aloft Hotels,

lot of the richness, the messiness and the

merchandise, but they also want that

a Starwood division, has installed tablets

demandingness of actually having to deal

information that they get online.”

instead of concierge stations.

with people.”

“How the customer is defining service

Nordstrom has added Wi-Fi to almost

The replacement of salespeople with

Karim, the Phoenix shopper, says that

all its stores, in part so its app will work

screens is not without its detractors.

she does not avoid all salespeople, but that

fast, and is testing charging stations and

Some people worry about jobs, though

technology has given her the freedom to

clusters of iPads and computers at a few

stores say that for now they are not

be choosy. She still enjoys chatting with

stores. It does not limit what people can

getting rid of employees to accommodate

makeup-counter salespeople, for example,

do on the in-store devices, Nordstrom

their digital counterparts. And Sherry

and getting suggestions from personal

said. “It’s to have our stores be relevant, be

Turkle, a professor at the Massachusetts

shoppers.

a helpful place for people to be whether

Institute of Technology, said that shoppers

they’re shopping from us or stopping to

lost something intrinsic to the human

touch the fabrics, and try on shoes,” she

check their email,” he said.

experience when they avoided salespeople.

said. “It’s a social experience.” n

July 2012

“It’s fun to see things in person, and

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VIENNA Forget coffee houses, waltzes and Freud.

The real attraction of Vienna is its people who know how to live, reports Guido Duken.

July 2012

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Travel

efore I retired, I

I did, it is quite common for Viennese

travelled lots on

pensioners to drive taxis two afternoons

business,” said my

or so a week. My taxi driver told me

elderly taxi driver as

he did it “to break the monotony of

we drove towards

retirement, have some fun and to meet

Schonbrunn Palace. “I’ve visited every major

people.” He assured me he didn’t do it for

city in the world, but none of them come

the money, which would have made his

close to Vienna.” “What’s so special about

business travel story rather suspect.

city, but it’s also the people. Plus we have a

previous day I had checked into the Hotel

good lifestyle – music, culture, food, history,

Topazz, strategically located in the historic

nature. Vienna has everything.” He wasn’t

1st district and a stone’s throw away from

the first to tell me that during my stay in

the imposing Stephansdom (St Stephens

Vienna, nor would he be the last.

Cathedral). This 31-room, design hotel

Now before you conclude that the

pays homage to Vienna’s artistic heritage

Viennese need an attitude adjustment,

of the late 19th and early 20th century.

consider the following. For three

The exterior is something to marvel at

consecutive years (2009-2011), the human-

with its large oval windows, while the

resource-consulting firm Mercer ranked

interior is equally tastefully done.

Vienna first in its annual ‘Quality of Living’

But however alluring the hotel room

survey of hundreds of cities. The Economist

is, you won’t be spending much time in

Intelligence Unit ranked Vienna first (in a

it – not with 60 museums, cathedrals,

tie with Vancouver, Canada) for quality of

luxury shopping, music venues, dining and

life in 2005, and last year Vienna came in

famous coffee houses all within easy reach.

second, behind Melbourne. The Innovation

PHOTOS: GUIDO DUKEN

But let’s get back to quality living. The

The DO & CO Restaurant on Stephansplatz has stunning views over the city.

Sauntering through Dubai malls I’m

Cities Index, who’s scoring system covers

always struck by how repetitive the shops

culture, infrastructure and markets, ranked

are. Vienna is the opposite – especially

Vienna first in 2007 and 2008, and second

when you are walking along the ‘Golden U’,

in 2009. Plus the five million tourists who

which consists of Kärntner Straße, Graben

visit Vienna annually can’t all be wrong.

and Kohlmarkt. This central shopping

Just in case you’re wondering, because

GETTY IMAGES

Vienna?” “Well,” he said, “It’s a beautiful

area is seriously bad for one’s cash flow.

Lobmeyr in Kärtner Straße has been making glassware since 1823.

The wide, pedestrianised cobbled streets house everything from the standard highstreet brands to high-end brands. But the most interesting shops are the ones you’ll only find in Vienna. A case in point is the Österreichische Werkstätten in Kärntner Straße that was founded by Josef Hoffman and remains true to art nouveau styles. A handbag for my wife lightened my wallet by ¤300, but then you can only buy it in Vienna or online.

There’s two ways to explore Vienna’s city centre in style: by horse-drawn carriage or in a 1958 Rolls-Royce.

Another Vienna institution is Lobmeyr, a shop famed for its crystal chandeliers Portfolio

Essentials Travel

and glassware since 1823. Andreas Rath, the affable Managing Partner, explained the history and processes behind their works of art. For example, the Lobmeyr chandelier workshop has over 10,000 cast models, which allows for the authentic recreation of every style of chandelier plus creating endless possibilities for new ideas.

An interesting Middle East connection is that you will find Lobmeyr-supplied chandeliers in many mosques, including the Holy Mosque in Mecca. The items in the shop are as beautiful as they are pricey,

The Albertina Passage is a trendy dinner club that offers live jazz daily. Later in the evening it turns into a nightclub.

with the smallest chandelier starting at

But the granddaddy of all delicatessens

glass-walled VIP section right on the roof

five figures. A more affordable option

has to be Julius Meinl am Graben, an

with a stunning 360-degree panorama

for crystal-lovers is Swarovski’s Vienna

epicentre of epicurean delights that

of Vienna. We were there at sunset,

headquarter in in Kärntner Straße.

stretches over three floors and offers

the perfect time to see Vienna’s rich

more than 16,000 delicacies. Meinl’s

architecture and the Stephansdom turn

ONE THING I love about continental

Restaurant, on the first floor, is one of

orange before fading into dusk.

Europe is the bakeries and delicatessen

Austria’s top five restaurants and offers

that entice you with great smells and

tables with unique views down Graben

AFTER DARK, Vienna remains lively

amazing window displays. It’s one thing

and Kohlmarkt streets.

and cosmopolitan. Now we all know about

getting a great cup of coffee and a freshly-

Another gourmet establishment with

Vienna’s great balls and the famed Vienna

made sandwich at seven in the morning.

a view is the DO & CO Restaurant in the

State Opera, but there’s much more

It’s quite another to be served by a wide

hotel of the same name on Stephansplatz.

going on. A case in point is the Albertina

awake and friendly Viennese shopkeeper.

For an absolute treat you can reserve the

Passage, a sophisticated dinner club

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situated in a former pedestrian underpass.

During my wanderings I had come

hosts had a surprise in store for us the

The dishes are a mix of international and

across the famed Loos American Bar

next evening when two 1958 Rolls-Royces

Viennese cuisine, but the daily special is

that has been in business since 1908

pulled up in front of the hotel. These two

live jazz. This is the place where Vienna’s

and is famed for it minimalist interior

classic beauties belonged to Dr Jakob

beautiful people come to play, and I’ve

and maximum atmosphere. This small,

Barnea, who started his car collection as

never seen so many tall, stunning and

crowded place counts George Clooney and

a medical student. Driving our ‘Princess-

chic women in one place. In many cities

Brad Pitt among its patrons, so it seemed

Royal’ was none other than the good

this could equal to pretentious snobbery,

the perfect spot for a nightcap. This is a

doctor himself, a jovial man who clearly

but not in Vienna. As always, everybody

place where you just squeeze in wherever

was enjoying himself. As we drove along

is warm and friendly and the mood is

there’s space, and you’ll end up making

the Ringstrasse the Viennese rush hour

upbeat. Later in the evening, when the

new friends until the early hours.

commuters looked at the car fondly, but

DJ takes over, the Albertina Passage becomes a happening nightclub.

Vienna, up to this point, had been solely explored on foot. But my Vienna Tourism

totally ignored the occupants.

The same was true when we stopped at the huge Hofburg Palace that has housed some of the most powerful people in European and Austrian history. People were clicking away at the cars, while we enjoyed the sunset. Then it was off to the vineyards for a typically laidback dinner in a traditional Austrian ‘Weinstube’. Here the ethos is to eat and drink at leisure, this being as much a social event as about food.

VIENNA HAS no shortage of historical figures, ranging from the Habsburgs to Johann Strauss and Dr Siegmund Freud. But one person who is seemingly

Sampling vinegars at the Naschmarkt. This market has supplied Vienna with produce since the 16th century.

unavoidable is Gustav Klimt, a prominent member of the Vienna Secession movement.

Every type of cuisine is catered for at the Naschmarkt’s many restaurants.

Portfolio

Essentials Travel Naturally, there are also plenty of restaurants there, many with sunny outside terraces. We stopped at Orient & Occident, which whips up Turkish cuisine with an international twist. But there are plenty of alternatives. On Saturdays there’s also a fleamarket next door that sells everything under the sun.

There was one more ‘must do’ tourist attraction on my agenda, and that was Schonbrunn Palace. This former 1,441room Rococo Palace is set in beautiful parklands, and everything is on such a grandiose scale that not even the numerous tour groups can fill it up. To do true justice to Schonbrunn Palace you need at least half a day, so I only got a taster during my one hour there.

The controversial artist and architect, Adolf The exterior of the Topazz Hotel pays Loos, was a pioneer of modern architecture homage to Vienna’s 19th and 20th century in Vienna. He designed Loos American Bar artistic heritage. in 1903.

Definitely worth another visit.

ACTUALLY, THE whole of Vienna is worth another visit. In four days, armed with the excellent planning of Austrian Tourism, I still felt like I’d barely scratched the surface. After two full days I had seen plenty of the 1st district, but by no means had I exhausted its possibilities.

For one, I didn’t manage to scratch the famed Sachertorte off my to do list. In fact, I didn’t even visit one of Vienna’s coffeehouses, a sad oversight on my part.

But the lasting impression – and perhaps the city’s main attraction – is the people. Everything seems to work in a laidback and fairly egalitarian way, not quite what you’d expect from a former Imperial city.

A chandelier at Lobmeyr will easily cost you five figures.

One late evening we were standing opposite the Vienna State Opera at what

After seeing Klimt exhibitions advertised

16th century, has more than 120 stands

may perhaps be the best-frequented

all over town, I decided to head to the

that offer everything from vegetables to

‘Wurstbude’ (sausage stand) in the city.

Belvedere Museum to view his most famous

cheese and seafood. But it also has some

The patrons were a curious mix of city

work ‘The Kiss’. The Belvedere Museum is

pretty unique Viennese touches, such

suits, clubbers, tourists, old and young.

housed in one of two Baroque palaces and

as the stand that specialises in vinegars

When the opera comes out, men in

has plenty of other artworks. But if art isn’t

and salad dressings. I write plural for

evening suits and ladies in all their finery

your strong suit, the architecture and the

vinegars as there is an astounding array

join the queue for a snack while dissecting

palace gardens are worth the trip.

sequestered in the small wooden barrels.

the evening’s performance. You won’t find

The stall owner is more than happy to

that in any other city, which brings me

Naschmarkt is highly recommended. This

dispense advice and let you have a taste.

back to my taxi driver. He knew what he

market, which has been around since the

Inevitably, you will buy something.

was talking about. n

For something more down to earth the

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BREEDER OF

CHAMPIONS Christine Jamar-Demeersseman is internationally respected for her horse stud, which produces meticulously bred Polish Arabians that can sell for millions and are fit for kings, reports Scott Adams.

Portfolio

Essentials Profile Hidden away in rural Belgium,

the right body shape. They must have the

feel something and connect with the

about 100 kilometres east of Antwerp, is

special ‘look’ with big, beautiful eyes.”

animal. There are moments when you just

an outstanding horse stud run by a more

It’s hard to imagine that the handsome

know that you have a winner in front of

than outstanding female entrepreneur.

creatures in the field are assets, but at

you,” she says. “My clients say that to have

Christine Jamar-Demeersseman has

the end of the day, that is what they are.

a good eye for horses is a gift from God.”

pushed ahead in a male-dominated

They are bred to sell and in turn earn

Given that horse breeding is still a high-

arena to attract clients as diverse as

their mistress seven figure sums for their

stakes, male-dominated world, that ‘gift’

sheikhs, kings and equine connoisseurs

beauty and exquisite character. Those

– to be able to find the right combination

from around the world with her award-

traits are minutely appraised by those who

of stallion and mare – has brought her into

winning Arabians.

wish to pass on the horse’s genes to future

contact with, and gained her the respect

generations. “What people also look for in

of those who count. Her list of clients

as it is highly functional. The brick and

an Arabian is a good character,” explains

reads like a who’s who of Middle Eastern

timber-gabled mansion, which forms

Christine. “They must love people and be

royalty and her office is filled with first

the main residence for Christine and her

very gentle. In the past they used to sleep

prize trophies and rosettes marking her

husband Guy, is surrounded by stables,

with their owners in the Bedouin tents.

numerous successes.

a state-of-the-art artificial insemination

They were part of the family.”

Jadem Arabians stud is as picturesque

Her first contact with a pure-bred

facility, covered training tracks as well

Christina is not only a top breeder, but

Arabian was at her local stables. “He

as acres of bucolic pastures, a lake and

also an experienced judge at horse shows

was such as magnificent animal,” she

forests. The resident horses spend a lot of

across Europe. “When I’m judging, I must

remembers fondly. “He captivated me with

time in the open air and it’s a grand sight to see up to 20 yearlings galloping across the fields. These equine teenagers are all youthful power and energy, but their beauty is well defined even to a novice in horses. As they come to the fence, their curious faces, with fuzzy mussels and sensual dark lashes, combined with muscular bodies and long sleek tails, make it immediately clear that they are the well thought-out work of an experienced breeder.

Speaking to Christine, a feisty and clearly spoken woman, she explains that her horses sell for up to ¤4.4 million a piece. With 20 in one field, the total figure is more than impressive. “Not all of them,” she amends, “there are some which will sell for ¤500 if they don’t have a pretty face or

“They must love

people and be very gentle. In the past they used to sleep with their owners in the Bedouin tents.

They were part of the family.”

July 2012

Christine JamarDemeersseman owns the Jadem Arabians Horse Stud. She is internationally renowned for breeding Polish-Arabians.

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his size, posture and personality.” Christine admits that her fascination with horses is in her blood. Both her great-grandfather and grandfather were keen horsemen and she followed in their footsteps while still a teenager, to become a serious show jumper.

Her life as a true horse woman began back in 1978 when, her then fiancé, Guy Demeersseman bought her two Arabian mares with the idea of breeding. “I think he was worried about me getting hurt while show jumping, so working with the mares were a good compromise,” she says.

After 30 years, the initial investment from her husband has paid off handsomely.

“I eat, sleep and breathe Arabians,” said Christine with a broad smile. “I know I’m obsessed, but I think it’s a healthy and passionate obsession,” she muses. Her husband likes horses, but not all aspects of the life that go with it. “There is a lot of travelling involved, going to meet people, long hours attending competitions and time in the stables,” she explains.

Christine certainly has drive and commitment. From those first two mares she has built the world-renowned horse stud Jadem Arabians. Walking around the property you soon realise that it’s a five star hotel for horses, a place where they are totally pampered. There are open fields for them to run in, covered exercise areas and a building dedicated solely to artificial insemination, which uses state of the art equipment and techniques. The results speak for themselves. At any one time you’ll find about one hundred horses in the stables. Half are Christine’s and the other valuable horses to her for breeding. She

Top and above: Arabians need to be perfectly proportioned, have beautiful faces and a gentle character. An imperfect Arabian can sell for €500, while a perfect specimen can fetch more than €4 million.

has specialised in Polish Arabians – a line

with the Arab world began 22 years ago.

success in the Moroccan king’s stables

of Arabians which originally came from

She was first contacted by King Hussein II

quickly spread to other royal houses in

the Turkish Ottomans in the 18th century

of Morocco. “I’m told his stud manager

the Middle East. These important clients

– and today has one of the largest Polish

followed my fortunes for eight years before

are today central to her business and have

Arabian studs in Europe.

he finally got in touch,” she confides. “We

provided the prestige she deserves. “It

half belong to customers, who entrust their

started buying and selling horses on the

was wonderful,” she remembers. “My first

this hardworking woman has carved out a

king’s behalf immediately,” she recalls with

Middle Eastern client was royalty from

place as a trusted adviser and confidante

obvious pride.

Saudi Arabia. He had never seen a Western

In what is traditionally a man’s world,

in royal stables in Saudi Arabia, Dubai, Kuwait and Qatar. This special relationship

In the horse-breeding world, everyone seems to know everyone, and word of her

woman before and spoke hardly a word of English.” Christine sold him a beautiful Portfolio

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of a horse and its breeder. The animals with the best bloodline are bought and sold for astronomical sums, are presented as lavish gifts and play a big part in oiling the wheels of business in the Middle East.

It’s also a world of unlikely friendships and fiery professional jealousy. But the cementing factor is a deep love of these noble animals.

There are many aspects to running the stud, but Christine’s voice softens as she speaks about her brood mares. “It’s a special moment each year when the babies are born and the mares give me this unique gift of happiness. I love the whole process, cleaning the newborn foal, then feeding and watching it grow,” she says tenderly.

“I can never bear to part with my brood mares, even when they are old.”

Besides breeding winners, Jamar-Demeersseman is also a respected horse judge.

One of her prize fillies at the moment

black filly belonging to the Moroccan king.

are now my sister.’ That allowed them to

is the two-year-old Glamour Girl. As she

He was delighted with the purchase and

look me in the eye and talk to me,” she

is prepared to enter the ring to be judged,

came back looking for more. “Working in

reveals. She is now everyone’s ‘sister’, and

the groom fusses around her shiny flanks

this business is a long game which requires

the situation is much more relaxed and

making sure she’s perfect. She looks

building up trust and respect for local

facilitates doing business. She admits that

beautiful with her soft mussel and large

tradition over years,” she says. She now

their mutual love of horses transcends all

lark eyes framed with long lashes. Christine

speaks rudimentary Arabic, which she says

cultural boundaries. “When the crown

comes over and wishes her ‘good luck’.

had gained her respect more than being

prince of Saudi Arabia’s mare became the

They make a grand pair, Christine with

essential for business.

world champion, his stable manager, Sheik

her blond mane, and the chestnut filly.

Mutiaq bin Mushrif, was so excited he

Both show a sense of pride, elegance and

jumped up,” she enthuses.

strength as they stand together. Christine,

The cultural differences between her own strict Catholic upbringing in Belgium and Middle Eastern ways were not so different. “In my family we all went to

Horse breeding is a world where the tiniest detail can be the making or breaking

Mass on Sundays with our heads covered and the men and women sat separately,” she explains. “At home too, there was a degree of segregation with the men doing things together and the women engaging in their own work.” On her first visits to Saudi Arabia she felt relaxed and used common sense. “I showed the men respect, I took a step back and lowered my eyes when they spoke and I avoided all physical contact, even shaking hands,” she says.

Christine explains how a convenient relationship was eventually established to enable her Middle Eastern clients to deal with her easily and on equal terms. “After we had been doing business together for a couple of years, they announced, ‘You July 2012

The Jadem Arabians Horse Stud is a five-star equine hotel. There are normally around 100 horses residing at the stud.

whose life is based around creating perfect pairings, must know that already. n

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Senegal’S Wrestling Mania Traditional wrestling, known as laamb, has become big business in Senegal thanks to corporate sponsorships, reports Nicholas Loomis.

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the late afternoon, welcomed by musical

the stage name Yekini; and Omar Sakho,

odes and a chorus of erratic drumming.

who goes by Balla Gaye 2 – each received

Each defied his massive frame, nimbly

about $300,000, according to the local

performing the “dance of champions”

news media.

and taking measures to repel black

Such payouts are made possible

magic before stepping into the ring. The

through the sponsorship of multinational

preparations at the stadium for the fight in

corporations operating in Senegal, which

April lasted hours; the bout, mere minutes.

has experienced average annual gross

For the wrestlers and their fans, however,

domestic product growth of more than

the outcome would endure for years.

four per cent over the last 20 years. But

Although traditional wrestling exists

the country is plagued by wealth disparity.

in various forms throughout West Africa,

With nearly half of the population living

the version in Senegal, known as laamb,

below the poverty line, laamb represents

has reached unparalleled heights. Laamb

an opportunity for many young men to

ends when one of the wrestlers puts his

lift themselves, and the families they are

opponent’s head, back or both hands

responsible for, above that line.

and knees to the ground. Unlike other forms, laamb allows punches in certain matches. Those matches are the ones upon which wrestlers, spectators, sponsors, promoters, musicians and journalists descend every weekend.

“We used to wrestle for the honour of the village,” said Malick Thiandoum, a sports broadcaster for Senegalese Radio and Television. “Today, with the televised events, with the sponsors who inject lots of money to have visibility, it has become a breadwinner for lots of wrestlers.”

© 2012 New York Times News service

Yahya Diop, left, who goes by Yekini, and Omar Sakho, who goes by Balla gaye 2, wrestle during their title match in Dakar. Balla gaye 2 won.

“Today, with the

televised events, with the sponsors who inject lots of money to have visibility, it has become a breadwinner for lots of wrestlers.”

The centuries-old sport began as a leisure activity for fishermen and farmers,

“I want to become a champion and a

as those with catches and crops to spare

millionaire,” said Ousmane Sarr, 23, who

would occasionally wager them on

has competed in many “simple” matches –

the outcomes. Laamb became a viable

in which punching is not permitted – but

profession around the time Senegal

only one full-contact bout. “I need to get

Many called it the biggest

achieved independence from France in

more matches with punching, then I can

match of all time. Others, just the biggest

1960; wrestlers began receiving about

stop working as a mechanic when the

of the season. Either way, it was too big

$200 for a match.

season ends.”

for the limited seating at Demba Diop

Today, the going rate is $100,000

Stadium in Dakar – a fact not lost on

for top-tier matches, not including the

become rich in the sport is minuscule.

those who started lining up outside at

sideshows. With appearance fees and

Of more than 3,000 registered wrestlers,

9 am, 10 hours before the main event.

kickbacks surrounding the bout in April,

only a dozen earn more than $100,000

the combatants – Yahya Diop, who uses

per combat, and those wrestlers have only

The marquee combatants arrived in July 2012

But the percentage of wrestlers who

Essentials

Culture

one match per year.

“There is a mirage, a sort of dream, that the youth of the country are living,” Thiandoum said. “But we are in the process of telling them, ‘Be careful, because there is a gap between what you believe and reality.’” During a season, he added, a vast majority will earn less than $2,000 in the ring, and many will earn nothing.

The sport, like much of the population, is migrating from rural to urban and finding a home in the dense suburbs of Dakar – where opportunities are low.

The magnitude of the recent Yekiniwhich was partly realised before the event.

At a weigh-in style news conference at the luxury Radisson Blu Hotel in Dakar less

REUTERS

Balla match created the threat of violence, Senegalese boys perform a traditional Ekonkon wrestling dance. Wrestling is more popular than football in the African country.

than two weeks before the combat, a brawl erupted inside between the wrestlers and their entourages, and outside among their supporters – who were dispersed by tear gas when the riot police arrived.

Such incidents have put the sport under greater scrutiny. Starting next season, the National Committee for the Management of Wrestling, a 13-member board under the government’s Ministry of Sport, will expand its regulatory jurisdiction from the matches alone to all aspects of laamb.

The decision was a response to the hotel incident, for which it could not penalise the wrestlers under the current system. the French telecommunications giant Orange, the principal sponsor of the

REUTERS

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Senegalese wrestling, known as laamb, was once all about the honour of villages and not big money.

Yekini-Balla bout, is also rethinking its

Senegalese subsidiary. “The sponsorship of

approach to laamb in light of the violence.

wrestling gives us an emotional proximity

After the brawl, billboards reading “the

to the Senegalese consumer.”

passion is more intense with fair play,” and

The show is not just in the ring, and

“the model of a sport without violence”

neither are the sponsors’ logos. A ticket

replaced images of the two wrestlers next

for the gala allows the fan to watch five

to the Orange logo throughout Dakar.

or six matches, which can last from a few

The company has not publicly discussed

seconds to 40 minutes (depending on

“The sponsorship

of wrestling gives us an emotional proximity to the Senegalese consumer.”

its approach for next season, except to

the wrestlers’ style and the risks they are

say that laamb is an indispensable part of

willing to take). With long breaks between

its interests in Senegal. “According to our

the matches, the traditional spectacle is

Their warm-up suits, emblazoned with

surveys, it is the most popular sport here –

part of the show – including the mystical

the Orange logo, came off to reveal magical

even more than soccer,” said Magatte Diop,

preparations, which were lavish on the

talismans called gris-gris (pronounced

director of sponsorship at Sonatel, Orange’s

day of the Yekini-Balla match.

gree-gree) as they prepared to douse Portfolio

Essentials Culture

Balla gaye 2 presents himself before his title match against Yekini. each one of the wrestlers made around $300,000 for the bout.

themselves with protective baths of varying size and colour. “The gris-gris and baths

and other elements.

When it was time for the match to

everything, we risk losing everything.”

His 24-year-old opponent presented

are just for protection against negative

begin, the referee, in his Orange-supplied

Yekini with a painting, a Quran and a

tongues and eyes,” said Mbaye Gueye

uniform, blew his whistle to deafening

traditional boubou, or Senegalese tunic.

Dieng, a marabout, or spiritual guide in the

roars. After two minutes, six seconds of

“Every wrestler dreams of nothing but

mystical Sufi tradition prevalent among

grappling and the occasional punch, Yekini

meeting Yekini in the ring and beating

Senegal’s Muslim majority.

suffered his first defeat in 20 professional

him,” Balla Gaye 2 said. “For what he has

matches over 15 years when Balla Gaye 2

done in the sport, I give him these gifts

their bodies for the combat, training

put the back of the 145-kilogram “King of

along with my best wishes.”

hours a day at their local facilities and

the Arena” into the sand.

Both wrestlers spent months preparing

abroad, where they have access to better

Balla Gaye 2 ran to his corner and

Not long after the match, speculation about the next one began. Another

equipment and training. But many

hugged his manager, while Yekini’s team

promoter has started planning a bout

believe that bouts are won and lost on the

went to help the fallen, visibly shocked

between Balla and the last wrestler to

spiritual plane.

champion to his feet and out of the ring.

defeat him, Eumeu Sene, who does not

“The most important preparations

On his way out, his smiling face betrayed

respect the reign of the newly appointed

are made in the home of the marabout,”

an air of relief. Yekini, 38, would later say

King of the Arena. “I am the Emperor of

Dieng said of the gris-gris containing

that he was considering retirement. “I have

the Arena,” Eumeu Sene said.

Quranic verses, the baths infused with

sacrificed my life and dedicated myself

protective bark from the local baobab tree

to my career,” he said. “In wanting to win

July 2012

The revenge match is being talked up as next year’s biggest match of all time. n

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AFP

Publishing

E-REadERs Challenge Publishing sChedules In the past, novelists were fine writing a book a year. But E-readers are forcing authors to publish more, reports Julie Bosman.

© 2012 New York Times News service

F

or years, it was a schedule as

novellas or even an extra full-length

deal,” said Lisa Scottoline, a best-selling

predictable as a calendar: Novelists

book each year. They are trying to satisfy

author of thrillers. “You could saturate the

who specialised in mysteries,

impatient readers who have become used

market. But today the culture is a great big

thrillers and romance would write one

to downloading any e-book they want at

hungry maw, and you have to feed it.”

book a year, output that was considered not

the touch of a button, and the publishers

only sufficient, but productive.

who are nudging them toward greater

publishers and booksellers are desperately

productivity in the belief that the more

looking for ways to hold onto readers being

metabolism of book publishing. Authors

their authors’ names are out in public, the

lured by other forms of entertainment,

are now pulling the literary equivalent of

bigger stars they will become.

much of it available nonstop and almost

But the e-book age has accelerated the

a double shift, churning out short stories,

“It used to be that once a year was a big

The push for more material comes as

instantaneously. Television shows are rushed Portfolio

75

“Some of the extra work is being pushed by authors themselves, who are easing their own fears that if they stay out of the fickle book market too long, they might be forgotten.” online only hours after they are originally broadcast, and some movies are offered on demand at home before they have left theatres. In this environment, publishers say, producing one book a year, and nothing else, is just not enough.

At the same time, the internet has allowed readers to enjoy a more intimate relationship with their favourite authors, whom they now expect to be accessible online via blogs, Q and A’s on Twitter and updates on Facebook.

Some of the extra work is being pushed

Author Lisa Scottoline, who writes thrillers, is producing more books a year to satisfy readers who are increasingly used to on-demand entertainment.

are published in digital-only format, an

Even John Grisham is working overtime.

by authors themselves, who are easing

increasingly popular strategy to drum up

Grisham, who used to write one book

their own fears that if they stay out of the

attention for the coming publication of

each year, now does an additional series

fickle book market too long, they might

a novel.

aimed at middle-grade readers, the

be forgotten. Scottoline has increased her

Child’s first story, a 40-page exploration

popular “Theodore Boone” novels that are published annually.

output from one book a year to two, which

of Reacher as a teenager, was released last

she accomplishes with a brutal writing

August, several weeks before his latest novel

schedule: 2,000 words a day, seven days a

came out in print. On the advice of his

short story, timed six to eight weeks before

week, usually “starting at 9 am and going

publisher, he is planning to write another

a big hardcover comes out, can entice new

until Colbert,” she said.

digital-only short story this summer.

readers who might be willing to pay 99

“Everybody’s doing a little more,” said Child,

cents for a story but reluctant to spend $14

who created the indelible character

who is published by Delacorte Press, part

for a new e-book or $26 for a hardcover.

Jack Reacher, is now supplementing his

of Random House. “It seems like we’re all

That can translate into higher preorder

hardcover books with short stories that

running faster to stay in the same place.”

sales for the novel and even a lift in sales of

The British thriller writer Lee Child,

July 2012

Publishers say that a carefully released

Essentials

76

Publishing

older books by the author, which are easily accessible as e-book impulse purchases for consumers with Nooks or Kindles.

Jennifer Enderlin, the associate publisher of St. Martin’s Paperbacks, said the strategy had worked for many of her authors, who saw a big uptick in hardcover sales, book over book, once they started releasing more work. “I almost feel sorry for authors these days with how much publishers are asking of them,” Enderlin said. “We always say, ‘How about a little novella that we can sell for 99 cents?”’

geTTY imAges

ThaT has replaced a carefully plotted print publication system, when readers waited eagerly for the yearly release of a favourite author’s novel. At that rate, publishers reasoned, readers would never

Al Roker and John Grisham appear on NBC News’ Today show. Grisham, who used to write a book a year, now also does the ‘Theodore Boone’ novels.

be overwhelmed by content.

for his Kindle.

Today’s readers seem incapable of being

There is “no limit” to the number of

like reclusiveness, which once created an aura of intrigue around an author, is not a

Child’s books he would buy, Schiefelbein

viable option in the age of interconnectivity.

said. “I’ll give basically anything he

“Particularly now with social media,

Oregon, wrote an enthusiastic review in

writes a chance,” he wrote. “With my

authors are constantly in contact with their

April on Amazon.com of Second Son, a

favourite authors, I always want to read

fans in a way that they never were before,”

short story by Child that Schiefelbein read

more from them.”

said Liate Stehlik, the publisher of William

overwhelmed.

Scott Schiefelbein, a lawyer in Portland,

after buying his latest novel, The Affair,

Some of the biggest authors have become

HarperCollins. “Now it seems to make more

impossible act to follow. Airport bookstores

sense to have your author out in the media

these days can feature not just one stack of

consciousness as much as you can.”

James Patterson books, but an entire rack

only short stories for the money. Advances

time. Patterson produced 12 books last year,

are typically not part of the bargain, and

aided on some titles by co-writers. He will

the works are priced so low (usually $0.99

publish 13 this year.

or $1.99) that they don’t produce much

looked at what James Patterson is doing and realised, ‘I may not be able to publish

revenue, even if they take several weeks or months to write.

But some authors said that even

nine books a year, but certainly I can do

though they are beginning to accept them

two,’” said Brian Tart, the publisher of

as one of the necessary requirements of

Dutton, an imprint of Penguin. “They were

book marketing, they still find them taxing

able to grow him and grow the readership

to produce.

using that strategy.”

(The new expectations do not apply to geTTY imAges

Authors don’t seem to be writing digital-

of them, sometimes more than six titles at a

“A lot of publishers and authors have

Thriller-writer Lee Child is supplementing his hardcover books with short stories that are published in digital-only format.

Morrow, Avon and Voyager, imprints of

so productive that they are nearly an

“I have been known to be a little grumpy on the subject sometimes,” said Steve Berry,

literary novelists like Jeffrey Eugenides

a popular thriller writer who writes short

and Jonathan Franzen, who can publish a

stories that are released between books. “It

new novel approximately every decade and

does sap away some of your energy. You

still count on plenty of high-profile book

don’t ever want to get into a situation where

reviews to promote it.)

your worth is being judged by the amount

Publishers also believe that Salinger-

of your productivity.” n Portfolio

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78

Environment

Kenya’s Green Power Plan The Lake Turkana Wind Power project aims to provide reliable, low-cost wind power to the Kenyan national grid, allowing the country to reduce its dependency on hydroelectric power and oil, reports Clar Ni Chonghaile.

K

enya’s remote turkana region was briefly a top Twitter

Somewhat ironically, as Kenya dreams

largest windfarm.

Construction on the ¤582 million

of joining Africa’s oil giants, the arid

Lake Turkana Wind Power project

Oil said it had struck oil in one of the east

region surrounding the jade waters

(LTWP) is due to start in June, pending

African country’s poorest areas. The news

of Lake Turkana is already poised to

the finalisation of risk guarantees from

prompted a flurry of #TurkanaOil tweets

make a serious contribution to Kenya’s

financial institutions IDA and MIGA,

with some predicting a windfall but many

ever-growing energy needs with the

both part of the World Bank, according to

others wondering whether oil would be a

construction of sub-Saharan Africa’s

company officials.

trend after British firm Tullow

© 2012 C guardian 2012

blessing or a curse.

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Essentials Environment

79

“A total of 365 wind turbines will be erected once 204 kilometres of roads have been built or improved to allow access for trucks, which will need to make around 12,000 trips to bring materials to the area.”

megawatts, compared with 780MW in

and Kenya Power on this since August

2002, due to economic growth.

last year. They are completing their

diversifying its power sources. Kenya

the due diligence on the project. They

is the first African country to tap

are well advanced and we hope they will

geothermal power, harnessing power

have completed and reached their board

from steam released by hot rocks beneath

approvals in the next two months,” Carlo

the Rift Valley. The abundant sun and

Van Wageningen, head of LTWP, said.

wind are also being harnessed in a variety project is the most audacious, both

the largest single private investment in

because of the scale and the location.

Nick Nuttall, spokesman for the

country to diversify from hydroelectric

United Nations Environment Programme

power, which provides around 60 per

(UNEP), said Kenya was among a group

cent of its electricity needs but is prone

of developing countries where UNEP had

to drought and irregular rainfall, leading

mapped potentially windy sites and ones

to blackouts and shortages that dampen

with good solar potential. He said LTWP

economic growth.

had plans to expand the windfarm once

Only about 18 per cent of Kenyan

July 2012

of projects: of these, the Lake Turkana

by the African Development Bank, marks Kenya’s history, and should allow the

The Olkaria Geothermal Power Plant near Naivasha. Kenya generates around 180MW of geothermal energy, equal to around 15 per cent of the country’s total energy generation.

The government is committed to

internal approval processes including

The ambitious project, which is backed

Aerial view of Nabuyatom Volcano at Lake Turkana. The area has been selected for Kenya’s first windfarm.

electricity demand has risen to 1,200

households have access to power,

the first phase is under way.

“Kenya has no oil or coal that has

according to the United Nations, and

been exploited to date, which means the

demand is increasing. Kenya’s peak

country is dependent on imports and

reuters

“The World Bank Group has been working with the Kenyan government

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80

Environment

He said it was too early to comment

the vagaries of an oil price that can soar

in Loiyangalani district in north-eastern

to some $150 a barrel and drop to $40

Kenya, stretching from 450 metres at the

on what the consequences of the oil

a barrel – whereas the sun and wind are

shore of Lake Turkana to 2,300 metres

discovery in Turkana would be. “We hope

free once the upfront costs have been

above sea level at the top of Mount

and expect that the two investments can

covered,” he said.

Kulal. Because of the daily temperature

coexist without interfering with each

fluctuations, there are strong, predictable

other. We are also not sure yet on how

“Combined with the expansion of geothermal electricity generation near

winds between the lake and the desert,

Naivasha, where there is now a near-

with LTWP estimating average speeds of

term target of about 1,300MW and the

11 metres per second.

potential of solar in Kenya, which has

A total of 365 wind turbines will be

hardly been tapped yet, Kenya could

erected once 204 kilometres of roads have

become a zero-emission economy in

been built or improved to allow access for

the field of electricity generation over

trucks, which will need to make around

the coming years, by some estimates,”

12,000 trips to bring materials to the area.

said Nuttall.

LTWP says it will provide 300MW

“The challenges will be many but greatest of all … is the ability to manage

of low-cost power to the national

the co-ordination of interface risks

grid, equivalent to about 20 per cent

between the six EPC (Engineering,

of the current installed electricity-

Procurement and Construction) contracts

generating capacity.

this project is composed of to ensure

The windfarm will cover 40,000 acres

“There is no reason to suggest the windfarm in Turkana could be anything but positive for local people, especially if it generates jobs in maintenance and diversifies livelihoods either by direct employment or via the availability of clean electricity to nearby communities.”

timely completion,” Van Wageningen said.

grapheast

Wind turbines already provide power in the Ngong hills, some 25 kilometres south-west of Nairobi. But the ambitious Lake Turkana Wind Power Project will mark Kenya’s first large-scale entry into wind power.

Portfolio

Essentials Environment Countries (Norfund).

near the discovery is to the LTWP site,”

LTWP says that the carbon credits the

he said.

project creates should earn 26 billion

Production of the first 50MW is

clean electricity to nearby communities,” said Nuttall.

LTWP says the project will create 2,500

expected to start by December 2013

Kenyan shillings (¤200 million) over the

jobs during the 32-month construction

with the windfarm due to be fully

life of the project, and this income will be

period and 200 full-time jobs during

operational by late 2014. A 428 kilometre

shared with the government and invested

its operations.

transmission line will be built to link the

in the surrounding community.

According to the Earth Policy Institute,

“Under our Corporate Social

wind energy developers installed a record

farm to the national grid.

Responsibility programme, we will also

41,000MW of electricity-generating

to utility company Kenya Power and it

be constructing and delivering four 33KV

capacity last year, with more than 80

says wind power will be the lowest-cost

transmission lines and substations to

countries now harnessing the wind. In

power-generation option available, along

bring power to four small towns in the

Africa, Ethiopia brought its first windfarm

with geothermal power.

area,” said Van Wageningen, adding that

online last year, and both Nigeria and

the company expected to source most

Mauritania have projects on the table.

labour locally.

Until now, Morocco, Egypt and Tunisia

LTWP will sell the electricity produced

The LTWP consortium is made up of Dutch firm KP&P Africa B.V.,

“There is no reason to suggest the

Aldwych International, the Industrial

have led the way, although South Africa is also believed to have substantial potential.

Development Corporation of South

windfarm in Turkana could be anything

Africa (IDC), the Industrialisation Fund

but positive for local people, especially

for Developing Countries (IFU), Wind

if it generates jobs in maintenance and

zero in 2009 to $1.3 billion in 2010 across

Power A/S (Vestas) and the Norwegian

diversifies livelihoods either by direct

technologies such as wind, geothermal,

Investment Fund for Developing

employment or via the availability of

small-scale hydro and biofuels. n

reuters

In Kenya, investment grew from virtually

Kenya powers telecommunications transmission stations in remote areas with solar power. The United Nations Environment Programme has singled Kenya out for having huge solar power potential.

July 2012

81

Essentials

Cuisine

A TAsTe of The seA The Portuguese have always been great seafarers and it’s no wonder that they are the largest consumers of fish per capita in Europe. What is surprising is that salted cod tops the menu, reports Scott Adams.

Lisbon, like Rome, is built on seven hills.

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83

The Lisbon Oceanarium was designed by Peter Chermayeff. The main exhibit is a 1,000 m2 tank that house around 100 species of fish.

Lisbon’s reLationship with the sea has always been its raison d’être. A nation of great seafarers, explorers and fishermen, the locals all have a strong

“Portugal holds the title of being the largest

consumer of fish per capita in Europe and the fourth world-wide.”

affinity with what lies beyond their shores. This love of the ocean manifests itself in many ways, but perhaps the

was tried with many other fish, but it was

flavoursome dishes. If you really want to

most obvious is through the city’s cuisine.

only with cod that optimal results were

understand Lisbon’s gastronomy you have

Seafood and fish dishes feature on

found. Portugal holds the title of being

to look at its history. The Portuguese were

almost all the city’s restaurant menus but

the largest consumer of fish per capita in

on the frontlines of sea exploration in the

bacalhau – cod, is the pièce de résistance

Europe and the fourth world-wide.

15th-century and travelled to India, Japan,

and a true Lisbon favourite.

Today, salted cod is a ubiquitous part of

China, South America and the Caribbean

the Portuguese diet and the number one

where they traded for cloth, gems and

fish-loving nation, cod is the only one

ingredient to many dishes explains Jorge

exotic spices with the locals. With its access

which is not eaten fresh. It’s bought dried

Mendhao, proprietor of the restaurant La

to new food stuffs, Lisbon became the

and salted. This process has been used

Casa do Bacalhau, which has been serving

epicentre of a European culinary revolution.

for over 500 years and dates back to 1497

up cod in Lisbon for over one hundred

Such delicacies as nutmeg, cloves, pepper

when the Portuguese fleet travelled around

years. “There are over a thousand written

and saffron all made their way to European

Scandinavia and discovered the cod-rich

recipes using cod, which means you could

kitchens only after they had been absorbed

waters in this northern part of Europe.

try a new dish every day for almost three

into Portuguese cuisine first.

Before refrigeration there was a need to

years without repetition,” he boasts. “We

preserve the fish, and the Portuguese were

have here on the menu over 20 recipes with

maritime explorers there are numerous

quick to discover that drying and salting it

bacalhau as the main ingredient,” he adds.

spices and condiments used in dishes that

Curiously, of all the fish eaten in this

conserved the important nutrients while making the cod tastier. The same process July 2012

Portuguese cuisine in general is characterised by rich, filling and

With the country’s abundance of

have their roots in the ‘old colonies’, such as India. Chilli, coriander and black pepper

Essentials

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Cuisine

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84

Bacalhau, Portugal’s famous dried cod, is ubiquitous in Lisbon. There are even shops that specialise in this delicacy.

are popular additions to many dishes.

Rua Augusta is Lisbon’s lively pedestrian-only main street that is famed for its shopping.

The backdrop to all this food and eating

Extra virgin olive oil is used both for

is also highly inspiring. Much like Rome

cooking and flavouring dishes.

they call Lisbon the City of Seven Hills

Salted cod is highly visible around Lisbon.

for good reason. Wherever you go you’ll

It can be bought from just about any

be going up or down a hill, and the views

food shop. Although there are specialised

are always inspirational. From the higher

bacalhau shops, where the walls and shelves

points there are stunning vistas of the

are covered with large slabs of the white

Tagus River and the mammoth, Golden-

crystallised fish, you’ll also find it in grocery

Gate-style bridges that cross it. However,

stores and in supermarkets, where almost a

much of Lisbon’s charm comes from the

whole aisle is dedicated to it.

unexpected – a family group enjoying a

Lisbon is all about seafood. Sardines are typically served on the Feast of San Antonio in June.

“The funky decor is

calculated to attract the scene-savvy and it’s a good idea to keep an eye out for both local and international glitterati.”

Before cooking, salted cod must be

get-together in a cobblestoned square, the

rehydrated and desalinised before it can

ornately decorated façade of a nobleman’s

Gomes Da Sá – a rich mix of cod, rice and

be eaten. To do this the fish is immersed

palace or a row of brightly painted shops

potato cooked in the oven before being

in warm water, which is changed regularly

and houses in the old-quarter.

topped with chopped hard-boiled eggs and

for up to three days. Once rehydrated the

You don’t need starched white table

black olives.

cod is ready to be cooked. Although there

cloths and Reidel stemware to have a great

are a myriad ways to prepare it, a large

meal in Lisbon. At the rustic-styled Toma

stiLL frequented by artistic types,

number of dishes use potatoes and onions

Lá Dá Cá you’ll find there are queues to

intellectuals and locals, Antiguo 1 de Maio

as accompanying ingredients. One of the

get a table, so it pays to go early. The menu

packs a punch for old-world ambience and

most popular recipes is Bacalhau à Gomes

covers the best classic Portuguese dishes

some of the best home-cooked Portuguese

de Sá, which is a hearty casserole with

all cooked to perfection. Of the starters,

food served in town. The two small

chunky potatoes, boiled eggs, onions, garlic

the grilled cuttlefish are a must. Second

dining rooms are decorated with original

and, of course, cod. The dish is flavoured

courses are nicely split between meat and

19th-century white and green wall tiles

with parsley, nutmeg and white pepper.

fish. Their best cod dish is Bacalhau a

and cheerful checked table cloths. Go with Portfolio

alamy

85

Guests at Casa Fundada. The building hails back to 1782 and houses a number of restaurants and coffee shops.

Bacalhau a Espanhola is a classic Portuguese dish made with salted cod.

an appetite as the portions are more than

cafeteria shares space on street level with

the menu. It’s Lisbon’s only Michelin-

generous. Must try dishes include clams

the establishment’s gastronomic citadel,

starred restaurant and lives up to its

with garlic sauce, roasted sardines with

the restaurant. With double height ceilings

reputation. Decorated with impressive

green beans and Cod Piri Piri, which uses a

and designer furniture, the interior is sleek

pieces of contemporary art, it opens

spicy red pepper as flavouring.

and chic, while the food takes brilliant

onto a panoramic view of the city. Chef

liberties with traditional Portuguese

Joachim Koerper’s specialties, each based

charm, it’s a city on the move and the

cuisine. Stellar examples include seafood

on market-fresh ingredients in harmony

area along the waterfront emphasises

broth with grilled red prawns and Asian

with the seasons, have received world

that point perfectly. What once was an

vegetables, cod salad in olive oil and veal

acclaim. He uses locally grown, natural

industrial area is now where the coolest

knuckle browned in olive oil, with garlic,

produce, creating a luminous, elegant

Lisbonites go. There are discos, clubs, bars

sautéed potatoes, and bay leaves.

and innovative cuisine. Starters include

While Lisbon has plenty of old-world

If you have spent the morning exploring

a foie gras terrine with banana chutney

the Tower of Belem, the Monument to the

or scallops carpaccio with black truffles.

Discoveries, the Jerónimos Monastery and

Follow on with fish dishes such as sea

trendiest restaurants but it still has

the Coach Museum, you’ll find the Vela

bass with beetroot, or roasted lobster with

bacalhau on the menu. The funky decor is

Latina restaurant nearby for a refuelling

butter beans. There is always room for cod,

calculated to attract the scene-savvy and

stop. With views of the Tagus river it’s the

and you’ll find a delicious interpretation

it’s a good idea to keep an eye out for both

perfect setting to enjoy some traditional

of a classic bacalhau recipe in the guise of

local and international glitterati. In fact it

Portuguese flavours. Specialties include

char-grilled cod with fresh parsley.

was actor John Malkovich, along with four

ravioli filled with shredded cod and tiny

Lisbon is one of Europe’s most

other partners, who transformed, what

prawns or Bacalhau Com Migas e Pão de

fascinating cities with a long association

had once functioned as a boat factory, into

Milho – a tasty casserole with chunks of

with the sea. Spending time in the

a three-part restaurant that pulls a lively

cod, bread, onions and potatoes.

restaurants discovering the cod-based

and restaurants all vying for the spending power of the city’s new affluent class.

Bico do Sapato may be one of Lisbon’s

crowd virtually every night. A sushi bar is set one floor above ground level, and a July 2012

The avant-garde building where Eleven is housed is a taste of what’s to come on

cuisine is the perfect way to immerse yourself in the culture. n

86

Essentials

Test Drive

KING OF THE DESERT

The 2012 Toyota Land Cruiser VXR+ is a mighty vehicle and now it offers even more luxury, reports Guido Duken.

F

IRST-TIME VISITORS TO the UAE tend to marvel at

who’s the real king of the desert.

Black and white are the colours that

does have a plush, luxurious feel and there was no problem figuring out

dominate local Land Cruiser sales, so

the controls. There’s plenty of sitting

architecture and the sheer number of

I was pleasantly surprised when my

space both at the front and back, the

Toyota Land Cruisers on the road. Having

2012 VXR+ turned out to be a daring

leather seats are comfy, driving position

lived in the UAE for 11 years, I’d kinda

dark red Mica metallic that really

good, the wood trim tasteful and the

forgotten about the sheer popularity of

added impact. Or maybe that was due

finishing is solid. It all underlines

this 4X4. That was until I turned onto Al

to the redesigned front bumper with

the Land Cruiser’s ethos of rugged

Ain highway recently and counted eight

enlarged overhangs, the new radiator

reliability matched with class and style.

Land Cruisers around me at one time,

grill, wider wheel flares and larger

and 17 on my side of the road within a

18-inch aluminium rims that express

with a new independent double wishbone

two-kilometre stretch. Apparently the

the Land Cruiser’s power so succinctly.

type front suspension, and a new coil

two things: the glitzy modern

Emiratis call the Land Cruiser ‘Abu

Toyota has also boosted the look and

The suspension has been upgraded

spring has been inserted to enhance

Shanab’, which means ‘The Pride of the

feel of the interior, and improved the

riding comfort and the strength to

Land’. Toyota humbly says that the Land

ergonomics and functionality for the

withstand the most rigorous use.

Cruiser is “one of the most popular off-

controls and switchgear. This being

roading vehicles in the region”. Unless

my first Land Cruiser test, I’ll have to

features includes Turn Assist, which

you count camels, I say it’s no contest

take their word on it. But the interior

works in conjunction with the Crawl

Off-road, the raft of new handling

The 2012 Land Cruiser has a redesigned front bumper and radiator grill, as well as wider wheel flares and larger 18-inch aluminium rims.

Portfolio

Essentials Test Drive

Toyota has further improved the quality of the interior. Leather seats all round, and the two front seats are air-conditioned.

no slouch in the acceleration department, especially when you consider its 2,590kg kerb weight. Going through corners there’s that noticeable body roll that is the hallmark of all big SUVs, and there are no electronic adjustments available to firm up the suspension on the tarmac. Pity, firmer The VXR+ has tasteful wood trim and improved ergonomics. All controls are readily accessible.

suspension – especially in Sport mode – would definitely add to the driveability.

But hey, let’s not carp about details. The

Control function, in addition to the five

with extras such as a remote engine

Land Cruiser started life 60 years ago as

mode Multi-terrain select (MTS) and

starter, sun roof, front fog lamps and rear

an uncomfortable rugged go anywhere

Multi-terrain Monitor. The Turn Assist

seat entertainment to list just a few.

vehicle. Today, it’s a luxurious can go just

System enhances turning ability and

First impression after pushing the

about anywhere vehicle. The essence of

minimises the driver’s effort in tight

Start/Stop button is that the Land Cruiser

the Toyota Land Cruiser is that it manages

U-turns where K-turns are necessary,

VXR+ runs very quietly. The second is

the tricky combination of off-road prowess

by applying the brake on the inside rear

that it’s a big vehicle, which makes one

and comfortable on-road driving so well.

wheel. The monitor helps drivers to

thankful for the reverse camera. The third

Plus it has plenty of space for the whole

observe their surrounds through front,

one is that the Land Cruiser is so good at

family and all the camping equipment

side and rear cameras. No more smashing

soaking up bumps and road noise that it

you need for a good desert safari.

into rocks hidden in the blind spot.

feels like a luxury sedan. Initially, I was

At Dhs305,000 the Land Cruiser VXR+

disappointed with the power. Like every

is slightly more expensive than some

line Land Cruiser with a V8 5.7-litre,

Dubai citizen, I’m used to being passed

rivals, but then it is a tried-and-tested

32-valve engine that puts out 362HP

by seemingly jet-propelled Land Cruisers.

Toyota. Oh yes, least I forget, the 2012

at 5,600rpm and 530Nm of torque at

So maybe my expectations were too high,

Toyota Land Cruiser also comes in three

3200rpm through a six-speed automatic

but once I put it into sports mode things

new colours: White, Attitude Black and

gearbox. Naturally, it also comes loaded

became a lot more exciting. The VXR+ is

Light Blue. I dare you, get the red one! n

The 2012 VXR+ is the top-of-the-

July 2012

87

Essentials

88

Other Business

A Taxing Job

Spy Versus Spy

Gayus Tambunan, who bribed his way out of jail while awaiting conviction for taking kickbacks to

the mysterious cloak and dagger world

cut companies’ taxes.

of international espionage and its real-life heroes and villains are exposed in a new

getty images

“It is very important to build character,” said Dedi Rudaedi, a

exhibition, the first to be sanctioned by Us

spokesman at the tax office. “We

intelligence agencies.

have 32,000 employees and the

“spy, the secret World of espionage,”

majority want to make a change,

includes hundreds of artefacts, some from

they want the office to be cleaner.”

the vaults of the Cia and FBi and the National Reconnaissance Office (NRO). they range

President Susilo Bambang Yudhoyono has made fighting

from a World War ii-era collapsible motorbike

Tax collecting can be a dangerous

graft a priority but progress

that could be dropped by parachute and

job, so it seems perfectly logical

has been slow and his own

deployed in 10 seconds and a german

that Indonesian tax collectors

political party is mired in several

eNigma machine used to create secret

will get three weeks of military

corruption scandals, hurting his

messages to a camel saddle used by one of

physical training from the

popularity and making corruption

the first Cia agents in afghanistan after the

president’s security forces.

a major risk for investors.

9/11 attacks to bugging devices, microdots and surveillance equipment.

Tax collection is also low

However, this is an effort to

the exhibition, which runs through march

build up the moral fibre of an

in Southeast Asia’s largest

organisation that has been

economy, limiting state revenue

2013, traces the world of international

plagued by scandal.

and reducing the ability of the

intrigue from the start of World War ii, to the

government to fund an overhaul

establishment of the first Us spying agency,

of infrastructure.

Office of strategic services (Oss), after

Indonesians were shocked last year by revelations of tax official

Japanese forces attacked Pearl Harbour in

Nobel Cutbacks

1941, through the Cuban missile Crisis, the Cold War, the downing of Pan am flight 103 in 1988 and the september 11, 2001 attacks.

A decade of overspending has forced the Nobel Foundation to cut the prize money given to Nobel laureates by a fifth.

The Nobel Foundation said the getty images

money for the awards, given for excellence in the fields of science, literature and peace, would fall to eight million Swedish crowns

past decade, making it necessary

($1.12 million).

to lower the prize money from

The capital that forms the base for the awards was donated in

the previous 10 million crowns.

The foundation said it had

the will of dynamite inventor

also begun work to cut costs

Alfred Nobel and is managed by

in administration and expenses

the foundation, which was set up

related to the Nobel Prize

in 1900.

celebrations, which take place

The foundation said in a

every December in Stockholm

statement that costs had exceeded

and Oslo. This year’s laureates

returns from interest and

will receive the reduced prize

investments on the capital over the

money.

Portfolio

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