Portfolio | March 2015

Portfolio

Issue 111 n March 2015

Exclusive to Emirates First Class and Business Class

Risky Business Climate and Finance Energy Diversion Russia’s New Pipeline Luxury Goods Focus On America

Robin Li Baidu’s Search King

This issue MARCH 2015

Portfolio

Exclusive to Emirates First Class and Business Class

Cover Story 32 Growth Engine When Robin Li started Baidu in 2000, China was still a relatively closed country and the internet still in its infancy. Today, Baidu is the country’s most popular search engine with a market share of more than 80 per cent. But there are challenges on the horizon.

Features 38 Risky Business

52 Oil Impacts Venezuela’s Economy

The Risky Business Project, an unlikely alliance of high-

The tumbling oil price has affected Venezuela’s flow of hard

level US leaders, is drawing attention to climate change by

currency, which has hurt the import of food, medicines and

focusing on the financial bottom line.

other basics.

42 The Pipeline Challenge

56 Internet in Orbit

Russia has scrapped its proposed South Stream gas

Companies such as Google and Facebook are looking

pipeline in favour of one going to Turkey, but there are a lot

towards space in their quest to deliver internet to

of challenges in the way.

underserved areas around the world.

46 Luxury Goods Change Focus

60 Aiming at Glass Ceilings

The US is attracting high-end luxury goods purveyors as the

Helena Morrissey, the CEO of Newton Investment

local economy booms, while Europe and Asia is faltering.

Management, is successfully pushing for more female representation on boards.

38

46

60

9

Portfolio

10

Exclusive to Emirates First Class and Business Class

Essentials 63 Path to Enlightenment When you’ve had enough of urban, boom-time China, head to Shanxi Province for ancient history, mountain landscapes and a slower pace.

68 A Spicy Contender Balti, a favourite curry in Birmingham, is now vying to become one of Britain’s traditional specialties.

63

72 Fuelled by Danish Ingenuity The tiny island of Samso off the Danish coast is a case study in renewable energy.

76 The Mosquito Net Issue Mosquito nets are meant to combat malaria, but in many waterside communities they are used for fishing with devastating environmental effects.

72

80 Time Flies: 25 Years and Counting The Salon International de la Haute Horlogerie (SIHH) is one the world’s most prestigious trade fairs and a refined celebration of high watchmaking.

84 Keeping Irish Romance Alive Willie Daly has been looking after the Irish matchmaking tradition for the last 50 years.

88 Other Business

80

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

Departments

84

13 Notebook World business in a nutshell.

21 Observer Spotting and analysing business trends.

30 Column: Frederika Whitehead Taming An Exploding Lake

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Portfolio

F O R

S H O P P I N G

L O V E R S

CA S T E L L A N A

S TO R E

S TO R E

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

DEPARTMENT STORES SPAIN & PORTUGAL

BA R C E LO N A

13

Notebook B U S I N E S S

N EW S

Miners Trim Spending by $20 Billion

B R I E F

sheets stretched. Macquarie estimates total

London Mining Plc was planning a

spending this year of $79 billion is 39 per

$400 million expansion of its Marampa

cent down on the industry’s peak outlay of

operation in Sierra Leone in July, but by

$130 billion in 2012.

October it had called in administrators.

As a result, the world’s biggest mining

African Minerals Ltd., which also

companies are moving away from Africa.

produces the steelmaking ingredient in

BHP Billiton, the world’s biggest mining

the country, shut its mine in December.

COMMODITY PRICES have fallen to

company, is moving to spin off its Africa-

In Zambia, First Quantum Minerals

the lowest in 12 years, spurring deeper

focused assets into a new company called

Ltd. and Glencore are among companies

spending cuts by the world’s biggest

South32, while Rio Tinto Group, the second-

that have suspended projects valued at

mining companies.

largest, exited its Mozambican coal business

more than $1.5 billion in Zambia because

last year after writing it down by $3 billion.

of a tax dispute, while Barrick Gold Corp.,

According to Macquarie Group miners

the biggest producer of the metal, has

will scale back spending by $20 billion

Glencore Plc’s South African coal unit will

this year. With projects planned during

cut annual output by half amid a “continued

started the process to put its Lumwana

the decade-long commodities boom now

deterioration in the export coal price,” it said

mine under care and maintenance.

being shelved, Africa is likely to bear the

last month. Anglo American Plc is looking

brunt of the cuts, investors say.

to sell platinum mines in South Africa

in capital spending in Africa was in line

and its iron-ore unit is planning to reduce

with the rest of the world, the cuts will

capital expenditure by 20 per cent.

have more impact in the continent due

Prices of minerals and metals dropped to the lowest since August 2002 in January, Images: Getty Images

I N

according to the Bloomberg Commodity

West Africa-based producers of iron ore,

Index. Companies are contending with

which has declined 54 per cent to $61.64

the slump in the wake of an era of debt-

a metric ton since the beginning of 2014,

fueled expansion that’s left some balance

have been particularly hard hit.

March 2015

While the 19 per cent decline in 2014

to its reliance on resources, according to PricewaterhouseCoopers.

Of the 20 countries most reliant on mineral exports, 10 are in Africa.

14

Notebook N U M B E R S

G A M E

THE WORLD IN FIGURES

£100

a week sickness

benefits availed by alcoholics, drug addicts and obese people could be taken away if they refused treatment that would help them get a job, says the UK government. Ministers estimate there are almost 100,000 people claiming sickness benefits on the grounds of treatable conditions.

£1

billion has been invested by China

Minsheng Investment Co Ltd, China’s largest private investment

1,215

rhinos were killed in South Africa last year marking a new record for poaching and an alarming 827 of these were said to occur in the country’s famous Kruger National Park. Traffic has cited judicial delays in prosecutions, and lack of strong political will from the government for the inability to crack down on poachers.

fund, in a Chinese-led project to develop a new financial district in London.

1,800

high-end

£41

million windfall earned by Candy

$1

billion loss for BP, recorded in the final

£197

million is the record price

air purifiers

have been purchased by the US

Crush Saga, the smartphone

quarter of the year owing to low

fetched for an artwork of two

Embassy in recent years for its

game sensation, will see

oil prices and more write-downs.

Tahitian girls by the French artist

staff members’ home in India’s

Midlands entrepreneur Mel

The company plans to cut its

Paul Gauguin. The painting titled

capital New Delhi in light of the

Morris and Italian games

exploration activity in half and

Nafea Faa Ipoipo, or When Will You

rising air pollution in the capital.

developer Riccardo Zacconi

reduce overall spending for 2015

Marry? was painted in 1892 and

Many other major embassies are

pocket a large slice of the

to $20 billion, down from a target

was owned by a Swiss collector.

following suit, as well as Indian

£195 million dividend to be

of over $24 billion in 2014.

Unconfirmed reports suggest it

companies that have also begun

was sold to a museum in Qatar.

ordering filtration systems for their

paid by the gaming owner King Digital in March.

office buildings.

Dubai Overtakes Heathrow Dubai ended London Heathrow airport’s decades of dominance as the world’s top international air hub last year.

Dubai International Airport boosted passenger numbers by 6.1 per cent to 70.5 million in 2014, almost all of them travelling to or from locations outside the United Arab Emirates. That took it past Heathrow, which attracted 68.09 million international travellers in 2014.

Dubai has used its location as a geographical crossroads between Europe, Asia, Africa and the Middle East to establish itself as a base for intercontinental transfer flights, with Emirates already the world’s No. 1 carrier by international traffic. The emirate is building a new hub at Al Maktoum airport, which could one day handle 240 million passengers.

Portfolio

16

Notebook Windows Phone targets Africa Microsoft plans to start selling mobile

a combined 280 million customers

phones and tablet computers in Africa

in Africa and the Middle East, have

that run on the US company’s operating

developed smartphone devices priced

systems to tap surging demand for

at less than $100 to boost data revenue.

smart handsets on the continent. The

They offer a growing middle class access

smartphones will cost between $75

to online retailing, social media, and

and $100.

services such as music-streaming.

Microsoft set up its 4Afrika Initiative

Microsoft joins smartphone makers including Beijing-based Lenovo Group

to sell phones that would be affordable on

and Shenzhen-based Huawei Technologies

the continent while investing in education

in trying to take advantage of a market

and local technology companies. The

with rising internet connectivity. About

company is also investing in startups

one in five Africans was expected to be

to build relevant applications and has

online by the end of last year – many

report by Ernst & Young. MTN Group

partnered with Ghanaian internet

using mobile devices – compared with

and Vodacom Group, South Africa’s

providers to tap unused slices of the

10 per cent in 2010, according to a 2014

largest mobile phone companies with

television spectrum.

world’s top crude exporters, were also featured in the list of countries selling petrol at the cheapest rates.

Saudi Arabia sold petrol at the fourth cheapest rate globally while Kuwait had the sixth cheapest price in the world.

Bahrain and Qatar were also among the top 10 countries offering cheap petrol, while Oman and the UAE were placed further down the list.

Petrol is sold at $0.47 per litre in the UAE, the highest rate in the GCC, the website showed.

COUNTRY

Countries with the cheapest petrol Venezuela has the cheapest rate for petrol globally at $0.02 per litre, according

the government, the website said.

The average price of petrol around the

to fuel price comparison website

world was found to be $1.04 per liter but

GlobalPetrolPrices.com

various levels of taxation and subsidisation

Such low petrol prices in Venezuela were due to heavy subsidies provided by

led to different pricing levels.

Venezuela Syria Libya Saudi Arabia Turkmenistan Kuwait Iran Bahrain Qatar Algeria

price/litre $0.02 $0.05 $0.12 $0.15 $0.21 $0.22 $0.24 $0.25 $0.25 $0.25

Gulf countries, which are among the Portfolio

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+++ ++ + ++++++ +++ + +++Ras + alAjman ++++++ Khaimah Sharjah +++ ++++ +++++++ +++++++++++++++++ Dubai ++++++ ++++ ++++++++++++++++++++ ++++++++ Jebel Ali ++++ ++ +++++++++++++++++++++++ ++ +++++ +++ ++ + ++++++++++++++++++++ ++++++++Fujairah + +++ ++ + + + + + + + + + + + + + + + + + + + ++++++++ +++++ +++ ++ +++++ + ++++ ++++++++ ++++++++++++ + +++++++++++++++++++++ ++ +++++++++++++++++++++++++ + + + + + + + + + + + + + + + ++++++++ ++++++++ +++++++++++++++++ +++++++ +++++++ Dhabi ++++++++ +++++Abu ++++++++++++++++++++++++++ +++++++++ + + + + + + + +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Al Ain ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++ +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++++++++++++++ ++ +++++ + + +++++++++++++++++++++++++++++++++ +++++++ +++++++ ++++++++ + + + + ++++++++++++++ ++ +++++ ++++++++ + + + +++++++ + + + +++++ ++ ++++++++ ++++++++++++ + +++++++ ++++++++ ++ ++ +++++ ++++++++ +++ ++ ++++ +++++++ 18-19 +++++++ + D U B A I D I A R Y + + + ++++ +++ +++++ +++++++ SME WORLD ++++ +++++++++++++ ++ SUMMIT 2015 ++++ Jumeirah Beach Hotel

Notebook

UNITED ARAB EMIRATES

March 2015 08-10

DUPHAT Dubai International Convention & Exhibition Centre duphat.ae Held for the past two decades, this annual pharmaceutical event will once again host pharmacists, physicians, scientists, marketing professionals and researchers, to name but a few. Exhibitors enjoy ample benefits including generating sales leads, building brand image and giving live product demonstrations to test market responses. Visitors gain first-hand insight of the pharmaceutical market including new trends and technologies in manufacturing pharmaceuticals, as well as the latest regulatory and corporate developments.

16-18

AGRAME Dubai International Convention & Exhibition Centre agramiddleeast.com The Middle East’s largest exhibition dedicated to the agribusiness will host more than 250 agriculture, poultry and horticulture businesses from over

30 countries. The three-day event will also feature a number of educational platforms covering all aspects of GCC food security, sustainable farming and food preservation. This year the agenda focuses on topics pertaining to healthy poultry production and food security. There will be in-depth analysis on the roles of farmers and governments in reaching selfsufficiency and the diagnosis and control of poultry diseases.

17-18

smeworld.ae The two-day summit will host over 100 top small and medium-sized (SME) manufacturers from across the region.

The leading enterprises will present their products and services, plus share their success stories and growth plans with investors, businesses, and governments. It will also highlight the region’s commitment to encouraging entrepreneurship by providing a strong ecosystem for small and medium enterprises. There will be panel discussions and Q &A sessions with experts and industry leaders on issues related to SME growth and development.

MIDDLE EAST RAIL

23-26

Dubai International Convention & Exhibition Centre terrapinn.com/exhibition/middle-east-rail/ The MENA region’s largest rail expo will attract 6,000 attendees, 220 exhibitors and 600 delegates. The show serves as a platform for Middle East governments to design, plan and build their future rail networks. Attendees benefit by being the first to witness multi-billion dollar deals and government development programmes and projects being rolled out. There will be plenty of networking opportunities through one-on-one partnering sessions, drink receptions and a gala dinner.

Dubai International Convention & Exhibition Centre arablab.com This show is regarded as the largest technology event serving the Middle East and Africa. It covers a wide range including research and development, forensics and security, agriculture and food. It is a onestop-shop for buyers from markets such as the Middle East and Africa, the Indian Subcontinent, China, and East Asia. Last year the event drew almost 11,000 visitors from 101 countries to see 912 exhibitors and their products.

ARABLAB 2015

Portfolio

Observer BUSINESS NEWS IN BRIEF

Hotels and resorts have long catered to travellers who cannot disengage from their jobs. But increasingly there is a new option for those who need to work but who also want the benefits of a vacation.

These new centres are an offshoot of co-working spaces, which offer the benefits of an office environment on a temporary basis. But they also provide a place to sleep, have fun and mingle with colleagues – not in humdrum office parks but in exotic locations around the world, in the European countryside close to urban centres or in warm-weather destinations like Bali. Call it the busman’s holiday for the digital age.

Matej Hrescak, a product designer at Facebook, spent several weeks at the Surf Office on Gran Canaria in the Canary Islands, near one of the island’s noted surfing beaches. “I really appreciate long uninterrupted periods of work time in order to dive deep into a particular problem, and having a destination where you’re far away from usual distractions made this possible,” he said.

Co-Working Facilities in Exotic Locales High-speed internet access and a round-the-clock work mentality have given rise to working vacations where business and pleasure mingle, reports Tanya Mohn.

The high-speed internet, fully stocked office, access to a kitchen and camaraderie “Normally when you arrive to a new

consulting firm in California, said the

and other planned group activities, he

location, you have to find a place to live

trend to blend co-working with living

added, all contributed to his productivity.

and a place to work,” he said, adding, “For

started about five years ago. He cited

“You’ll get your work done, you’ll surf

digital nomads and entrepreneurs like me,

as factors advances in technology that

and you’ll meet like-minded people,” said

it is definitely the best existing option.”

allow people to work from anywhere

© 2015 New York Times News Service

of other guests at barbecues, biking trips

there is fast internet, the round-the-clock

Hrescak, who is originally from Slovakia

Liz Elam, founder of Link Coworking

and now lives in Palo Alto, California. “I

in Austin, Texas, and executive producer

work mentality and the move toward

don’t think I’d be able to have such an

of the Global Coworking Unconference

more people travelling and rejecting the

experience while staying at a resort.”

Conference, a network of co-working

traditional work schedule.

Raphaël Harmel, a co-founder of

conferences, emphasised the focus on

But people are social, King said, so

Speecheo, a web app meant to improve

social interaction. “At hotels, travellers

they seek out spaces where they can

speeches, left his native France 10 months

shut the door and order room service,”

work with others. “I would be surprised

ago to travel the world and is now in

Elam said. “At co-working-co-living

if there were more than 20 to 30

Uruguay. He says he prefers to stay at

spaces, they are part of a community of

co-working-co-living spaces around the

co-working spaces whenever possible

shared ideas.”

world,” he said. “But I think there’s going

because they are all-inclusive and “are trying to reinvent the way people work.”

March 2015

Steve King, a partner at Emergent Research, an independent research and

to be very rapid growth.”

Elam attributes the growth to more

21

22

Observer Right: Johannes Haupt of Hannover, Germany, prepares to surf on a break from work during his retreat at the Surf Office on Gran Canaria in the Canary Islands.

Below: (L-R) A team member of Automattic, a web development corporation from San Francisco, takes a break from the Surf Office; The Automattic team at work on a new project.

Julianne Becker helped found Coconat, a “workation retreat” set to open in July about an hour from the centre of Berlin.

The cluster of bungalows and gardens is built around a castle-like water tower from the late 1800s, and its name is a portmanteau of “community and concentration in nature.” There, Becker said, “people can work for a few hours, take a long walk, then be super refreshed and ready to go again.”

independence and flexibility in reaction

A growing number of co-working spaces

to a lack of job security and the tendency among many Americans to work too

are temporary, like Coworking Camp, a

hard and take too little vacation. “More

pop-up venture established at a beachside

young people want work-life balance,”

hotel for six weeks in November and

she said. “Maybe vacations completely

December in Kemer, Turkey.

Matthias Zeitler, founder of a software

unconnected are not feasible anymore;

company, says he got the idea for it as

maybe people won’t take traditional

a member of a small co-working space

vacations. But they can go to work in not outside the city with some fresh

in Salzburg who yearned for a larger

air to breathe, good food to eat and

community. “Co-working is really best if

intimate communal areas, amenities and

nice people to talk with around the

you have a lot of different people, with

activities of co-working and co-living

fireplace?” said Eric van den Broek, who

diverse skills; it drives the creative spirit,”

spaces. Nine remote-working employees

opened Mutinerie Village last summer,

he said.

of Automattic, a web development

an hour and a half southwest of Paris in

corporation, gathered for a work meetup

an old restored farmhouse that belonged

group of some 30 entrepreneurs, startup

in January at the Surf Office in Gran

to his grandfather.

founders, coders, designers, marketers,

paradise for two months.”

Companies, too, are drawn to the

Canaria, taking over the 10-room property for six days “to build relationships, have real-time interaction and also work on

Since then, it has hosted many corporate retreats and team-building events.

“Without being stressed and tempted

At Coworking Camp, there was a core

developers and other creative types from 18 countries.

“It was a very open atmosphere,” he

projects that are best done in person,” the

in big cities,” said William van den Broek,

said. “We shared what we really felt.

company said.

Eric’s brother and a co-founder, it is easier

Then everyone gave feedback. It was very

The idyllic locations are no accident.

to disconnect and “focus on creative or

powerful. We really focused on work,

“If you can work from anywhere, why

introspective work.”

networking – and vacation.”

Portfolio

24

Observer O N E

2

W A T C H

Text: Hilda D’Souza

controlled Banco do Brasil and one of his first tasks will be to issue audited accounts for Petrobras and provide a write-off for the losses to the tune of $22 billion as outlined in the unaudited results reported in January.

The defaults are said to have resulted from price-fixing, political kickback scandals involving top former executives, construction firms and political parties including President Rousseff’s Workers’ Party.

In his first public statement as the chief executive, Bendine addressed pressing issues including the write-downs, saying there will be write-offs but the write-downs assessed by the audit were too high and does not

Aldemir Bendine, CEO, Petrobras

reflect the reality of the company. “What we are discussing now is the methodology, the way to calculate this,” he stated on the Globo Television network’s nightly news programme.

“The results will reflect the actual situation in 2014, which could have been affected by corruption but also other variables such as

Petrobras, Brazil’s state-owned energy corporation headquartered in Rio de

prices,” he added.

Despite the company’s financial failures,

Janeiro, appointed Aldemir Bendine as

Bendine appears positive when he said that

the Chief Executive Officer on February 6,

the debt was not as high as it looked, given

a move that saw its share prices tumble

the oil company’s ability to generate revenue.

more than eight per cent. Bendine’s

Bendine, 51, joined Banco do Brasil as

predecessor, Maria das Graças Foster,

a teenager on work experience and then

resigned abruptly along with most of the

worked his way up in what is now the

company’s senior management team

country’s largest bank by assets. He took

amidst a huge corruption scandal.

up positions such as vice president of retail

Petrobras has failed to publish its third

and distribution, and vice chairman of the

quarter results since November last year

bank, and chairman of the board at Banco

when a corruption probe led to the arrest of

Votorantim SA. Bendine holds a degree in

executives, and auditors refused to certify

business administration.

the results. Industry experts say that if the

In the coming days and weeks Bendine

company fails to file its audited result by

will need to demonstrate his banking

June this year, investors can declare the

expertise by cleaning up the company

company in a state of default. This could

books and acknowledging how many

force Petrobras to repay or renegotiate as

billions of dollars the company has lost to

much as $54 billion in bonds.

corruption as he carefully negotiates some

Bendine is a 35-year veteran of the state-

tricky political and economic mine fields.

++++++++++++++++++ ++++++++++++++++++ Cars Drive ++++++++++++++++++ Mexican Economy ++++++++++++++++++ ++++++++++++++++++ A $2 billion facility, opened in November ++++++++++++++++++ ++++++++++++++++++ 2013 by Nissan Motor Company in ++++++++++++++++++ Aguascalientes, Mexico, produces 600 new ++++++++++++++++++ cars a day and employs 3,000 workers. ++++++++++++++++++ ++++++++++++++++++ The 192,000-square-metre plant is ++++++++++++++++++ one of half a dozen that have sprung up ++++++++++++++++++ ++++++++++++++++++ or been announced for central Mexico’s ++++++++++++++++++ industrial belt in the past five years, ++++++++++++++++++ ++++++++++++++++++ contributing to a nationwide $20 billion ++++++++++++++++++ investment by global automakers eager to ++++++++++++++++++ ++++++++++++++++++ establish ready access to the US market. ++++++++++++++++++ Mexican vehicle exports are expected to ++++++++++++++++++ rise to a record 2.9 million in 2015, with ++++++++++++++++++ ++++++++++++++++++ more than 70 per cent of the cars and ++++++++++++++++++ light trucks headed to the US, according ++++++++++++++++++ ++++++++++++++++++ to the Mexican Automobile Industry ++++++++++++++++++ Association, or AMIA. December exports ++++++++++++++++++ ++++++++++++++++++ alone were up 21 per cent over the ++++++++++++++++++ previous year, to 195,091. ++++++++++++++++++ ++++++++++++++++++ Mexico is also the world’s sixth-biggest ++++++++++++++++++ manufacturer of auto parts, with an ++++++++++++++++++ estimated $81.5 billion in sales in 2014, ++++++++++++++++++ according to trade group INA. ++++++++++++++++++ On the Aguascalientes Nissan site, ++++++++++++++++++ ++++++++++++++++++ construction is about to start on another ++++++++++++++++++ plant, a joint venture between Nissan ++++++++++++++++++ ++++++++++++++++++ and Germany’s Daimler AG that will ++++++++++++++++++ make both Infiniti and Mercedes-Benz ++++++++++++++++++ ++++++++++++++++++ luxury vehicles. Another maker of luxury ++++++++++++++++++ cars, Audi AG, also has plans to produce ++++++++++++++++++ in Mexico starting in 2016, joining its ++++++++++++++++++ ++++++++++++++++++ parent company, Volkswagen AG, which ++++++++++++++++++ makes more than 475,000 cars, including ++++++++++++++++++ ++++++++++++++++++ Beetles, Golfs and Jettas, in the country ++++++++++++++++++ every year. ++++++++++++++++++ ++++++++++++++++++ In December, General Motors Co., ++++++++++++++++++ which made 678,388 automobiles last ++++++++++++++++++ year in Mexico, announced it would ++++++++++++++++++ ++++++++++++++++++ spend $3.6 billion through 2018 to ++++++++++++++++++ modernise its four Mexican plants. ++++++++++++++++++ ++++++++++++++++++ Auto production, which increased 10 ++++++++++++++++++ per cent last year over 2013, according ++++++++++++++++++ ++++++++++++++++++ to the AMIA, is projected to reach five ++++++++++++++++++ million vehicles by 2020. ++++++++++++++++++ Portfolio

Observer UAE Can Handle Low Oil Prices The UAE is focusing on diversifying its economy and can ride out the recent drop in oil prices, Abu Dhabi’s Crown Prince, HH Sheikh Mohamed bin Zayed Al Nahyan asserted at a government summit in Dubai.

Sheikh Mohamed, who is also deputy supreme commander of the UAE Armed Forces, admitted that the dramatic drop in oil prices was causing panic and fear in the market. “But people forget that in 2008 oil prices were even higher than last year’s high, and then they dropped even lower [after the financial crisis] than the current low. Despite that, the UAE kept moving forward and we have seen several achievements,” he said.

Sheikh Mohamed emphasised that the UAE’s economy was buoyed by its focus on sectors such as education, health,

Reuters

26

economic diversity, and security.

“In the next 50 years or so, we may not

UAE’s nuclear programme, which aims to

The country was already seeing progress in industrial sectors through companies

supply up to 25 per cent of the country’s

have any oil or gas. And this is something

like Strata, which manufactures parts for

power needs when completed. The first

that the government is thinking about.

aircraft makers Airbus and Boeing.

plant is scheduled to go live in 2017.

Maybe in the next 50 years, after we ship

According to the UAE government, the

Dubai’s airport is also growing, becoming

off our last barrel of oil, will we be sad?

the busiest in the world after welcoming

contribution of oil revenues to the UAE’s

If we invest today in the right sectors, we

over 70 million passengers last year.

GDP is set to drop from around 30 per cent

will celebrate at that moment,” he said.

at present to only five per cent by 2021.

Sheikh Mohamed also highlighted the

China’s Football Shopping Spree Brazilian players are a major force in China’s Super League.

players in China’s 16 top division clubs are Brazilian. Transfer fees

Half of last season’s top 10 scorers are from Brazil with just one

are also rising. China bought 20 players from Brazil in 2012 for $9

Chinese player, Shanghai SIPG midfielder Wu Lei, on the list.

million in fees, FIFA said. Last year, the fees for the same number of

Chinese clubs have been involved in three of the five biggest trades during the current Brazilian transfer window, a period that allows the Latin American teams to buy and sell players from January 23 through April 16. Cruzeiro attacker Ricardo Goulart’s $18.3 million move to Guangzhou Evergrande is the most expensive football player sale from Brazil to China.

China’s clubs spent $101 million importing players in 2014, triple the $28 million spent a year earlier, according to football’s global governing body FIFA. A third of the 74 foreign

players climbed to $40 million.

China’s current football boom is the latest effort to make the world’s most populous country a force in the sport. The national team failed to qualify for a World Cup since its first appearance in 2002.

While China finished at the bottom of its group in its only World Cup appearance, Brazil is a record five-time champion. And though the squad lost 7-1 at home in last year’s World Cup semifinal, the appetite for Brazilian players in emerging nations like China remains undiminished.

Portfolio

28

Observer T H E

W O R L D

TOP Text: Hilda D’Souza

1O

TOP 10 RICHEST FOOTBALL CLUBS RANK

CLUBS

1

Real Madrid

REVENUE ($)

2

Man Utd.

587

3.

Bayern Munich

552

4.

Barcelona

549

5.

Paris Saint-Germain

537

6.

Manchester City

470

7.

Chelsea

440

8.

Arsenal

407

9.

Liverpool

347

10

Juventus

317

623

Source: deloitte.com

Emirates Brand Climbs in Ranking Emirates flew into the world’s top 200 brands for the first time in

TOP 10 BEST-SELLING VINYL ALBUMS IN THE US I 2014 SALES (UNITS SOLD)

the 2015 Brand Finance Global 500. The UAE carrier also ranked

RANK ARTISTS

TITLE

1.

Jack White

Lazaretto

86,700

2.

Arctic Monkeys

AM

58,700

etisalat and Saudi Arabia’s STC, the only other brands from the

3.

Lana Del Rey

Born to Die

42,100

Middle East to make the list.

4.

Beatles

Abbey Road

38,200

5.

Bob Marley &

The WailersLegend

37,800

6.

Black Keys

Turn Blue

34,200

7.

Beatles

Sgt. Pepper’s Lonely

33,600

Hearts Club Band 8.

Lana Del Rey

Ultraviolence

31,800

9.

Miles Davis

Kind of Blue

31,700

10

Amy Winehouse

Back to Black

27,800

Source: Nielsen Soundscan

as the world’s most valuable airline brand and finished ahead of

This marks the fourth consecutive year that Emirates has steadily climbed the table of the Top 500 most valuable brands in the world. It now sits at #196, an increase of 38 spots in just 12 months. Emirates’ estimated brand value has grown more than 21 per cent from $5.48 billion to 6.6 billion.

Lego came out on top as the world’s most powerful brand, scoring highly on a wide variety of measures on Brand Finance’s Brand Strength Index such as familiarity, loyalty, promotion, staff satisfaction and corporate reputation. Lego unseated last year’s

TOP 10 OF YOUTUBE’S BIGGEST EARNERS ARTISTS

1.

PewDiePie

2.

BluCollection

6.38

Apple, which is currently worth $128 billion, claimed first

3.

Disney CollectorsBR

5.06

4.

Smosh

4.50

spot as the world’s most valuable brand, followed by Samsung

5.

SkyDoesMinecraft

2.92

6.

Vegetta777

2.59

7.

TheFineBros

2.41

Twitter claimed the top spot as the world’s fastest growing

8.

TheWillyRex

2.31

brand; it has almost tripled its brand value in a year, increasing

9.

BFvsGF/PrankvsPrank

2.26

from $1.5 billion in early 2014 to $4.4 billion now. Fellow tech

10.

TobyGames/TobyTurner

2.18

giants Baidu and Facebook have also grown strongly, by 161 per

Source: businessinsider.com

EARNINGS ($M)

winner Ferrari that tumbled to eighth. PWC and Red Bull came

RANK

8.47

2.18

second and third.

and Google. Apple saw its brand value increase by 23 per cent, dwarfing Samsung’s four per cent and Google’s 12 per cent.

cent and 146 per cent respectively.

Portfolio

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High achievement always takes place in the framework of high expectation.

Commentary

30

Frederika Whitehead neighbouring volcano (which pumps its gassy eruptions into the lake). To get funding for a methane-powered electricity plant in a region that’s politically tumultuous, with a volcano looming over the intended site, is not an easy task.

Fund managers from the Emerging Africa Infrastructure Fund (EAIF) and the Netherlands Development Finance Company (FMO) shared out the risks Photo: Getty Images

between a group of donor government funds, and provided a “political risk insurance policy” for the energy company carrying out the project.

Taming An Exploding Lake In 1984, 37 people died on the road

to buy all of the available electricity. The

Their tests revealed that the gas in Kivu’s

a power purchase agreement with the Rwandan government, which requires them

leading past Lake Monoun in western

waters was methane, so it would be suitable

Rwandan government is confident that any

Cameroon. Survivors reported seeing a

for energy production. It was essential to

surplus energy can be sold to neighbouring

foul-smelling cloud of white gas, which

de-gas the lake before another catastrophic

countries – should they find they have more

crept low along the floor. Was someone

explosion, but at the same time, there was

than they can use.

testing chemical weapons?

huge potential for energy generation from

The UK, Dutch, Swedish and Swiss

such an enormous untapped supply of gas.

governments lent a total of $91.5m to the

of Rhode Island ruled out biological warfare

This was the beginning of the Kivuwatt

$142m needed to build phase one of the

in favour of suffocation. Following interviews

biogas project.

project. Contour Global is hoping they will

Haraldur Sigurdsson from the University

with survivors, he reached the conclusion

In May this year phase one of the project,

agree to fund phase two.

“We want to make sure that there is no

that the deadly gas cloud had emanated from

a 25MW biogas plant, will open on the

the lake. Tests on the water showed that it

banks of Lake Kivu, bringing electricity to

harm to the lake, so we will take things

was almost saturated with gas: Sigurdsson

millions of people who currently have none.

slowly for a few months,” says Jarmo

and his colleagues concluded that the deaths

Phase two of the Kivuwatt biogas project

Gummerus, Contour Global’s Kivuwatt

were a result of a limnic eruption, also known

will ‘copy and paste’ the technology from

country manager. He adds that he hopes to

as lake overturn or lake explosion.

phase one (presuming that it works), adding

start work on phase two in early 2016: “We

a further 75MW, increasing Rwanda’s

will see exactly how it works, and if we can

“exploding lakes” could be a blessing,

current installed energy capacity – around

improve the design at all, but it will be more

rather than a blight, on local communities.

183MW – by more than 50 per cent.

or less a matter of copying and pasting this

But it was another lake that revealed

Lake Kivu is 2,300km east of Lake Nyos, © 2015 Guardian News & Media

Energy firm Contour Global purchased a 25-year concession on the site and signed

As well as being life-changing for millions

one into three more spots around the lake.”

The final nuts and bolts are currently

straddling the border of the Democratic

of Rwandans – 78 per cent of whom

Republic of Congo (DRC) and Rwanda. It

currently live without electricity – Kivuwatt

being tightened on phase one of the Lake

is 2,000 times bigger than Nyos and two

will have a colossal impact on the Rwandan

Kivu energy project. “We are energising

million people live along its shores. The

economy. So how did they manage to get the

units, checking wiring – seeing that

Rwandan government immediately began

project off the ground?

everything is functioning,” says Gummerus.

seeking a solution to prevent a catastrophic explosion at Kivu.

There were three main hurdles to overcome: technology, funding and the

“We are almost at the summit. It was long way to come.”

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Profile

32

Portfolio

33

GROWTH

ENGINE

Photos: Getty Images, Reuters

When Robin Li started Baidu in 2000, China was still a relatively closed country and the internet still in its infancy. Today, Baidu is the country’s most popular search engine with a market share of more than 80 per cent. But there are challenges on the horizon, reports Guido Duken.

March 2015

Profile

34

T

alk about a tough day at the office. On February

10, Robin Li’s fortune dropped by $1.8 billion.

Not that he’ll feel much of a squeeze, as Forbes estimates his Baidu shares are still worth $14 billion, including stock held by his wife. That makes him the second richest person in China after

fellow internet entrepreneur Jack Ma, the founder and CEO of the Alibaba Group.

Third is Ma Huateng, who turned his company Tencent Holdings into a giant on the back of profits generated from online games.

The reason for Li’s hefty hit was that Baidu Inc, owner of China’s dominant search engine, reported a lower-thanexpected 47.5 per cent rise in quarterly revenue. Most shareholders would be overjoyed if a company reported revenue of 14.05 billion yuan ($2.26 billion) for a quarter. But then Baidu isn’t an ordinary company – not many take on Google and come out on top. Today, Baidu has around 82 per cent of China’s search engine market, followed by Google at around 10

far from an overnight success, but when

would make a lot of money. But I sleep

per cent and Sougou at four per cent.

the firm went through its initial public

so little not because I want to make a lot

offering on the Nasdaq in 2005, its name

of money but because I really enjoy the

Li had studied information management

and Li’s were soon known around the

work. I just work from the heart. It is not

at Peking University before leaving China

world and he was propelled into the ranks

true that I can’t stop working.”

for the United States, where he earned

of the super-rich. Not that money was Li’s

a Master of Science degree from the

driving force. “I must clarify, the goal of

WHEN BAIDU WAS first set up, China

University of Buffalo. His first job was

my career is not to make money,” he told

was still relatively cut off from much

at IDD Information Services, where he

2,000 delegates at the Asian Financial

of the world. The rise of the internet

worked with search engines. He then

Forum. “When I decided to set up the

opened up doors for Chinese people and

moved on to further his knowledge of the

business, I knew if I was successful I

Baidu’s role was to provide the nation

Li and Eric Xu founded Baidu in 2000.

field at Infoseek between 1997 and 1999.

with information it previously did not

These jobs gave Li enough confidence to set up his own company. He wasn’t merely applying what he had learnt but was also innovating. The core at the heart of all market search engines is Hyperlink Analysis, which was written and patented

by Li prior to (Google co-founder) Larry Page’s patent for Page Rank.

It took many years to build Baidu up from the bottom and the company was

have access to. As Li said in 2005: “People

China is the world’s largest online nation. It is also one of only four countries in the world – along with the United States, Russia and South Korea – to have its own core search engine technology.

can get information – on entertainment, politics, finance – much easier than before. That will change the way people do business, the way people live.”

Li was right about that. Today, China is the world’s largest online nation. It is also one of only four countries in the world – along with the United States, Russia and South Korea – to have its own core search Portfolio

35

Left: A woman walks past the Baidu Inc. logo in the reception area of the company’s headquarters in Beijing, China.

Above: Baidu, China’s most-used searchengine, is available around the world but more than 99 per cent of its revenue comes from China.

invest in apps and content to keep users engaged. Moreover, foreign companies are very competitive in the smartphone field.

But Li says he holds no fears about increased competition, especially from foreign companies. “If foreign companies have the competence, that is good,” he says. “It is good to have competition because the market grows very rapidly.

If there is competition, everyone will become more competitive. We will

engine technology. In a country with a

be of a higher standard. This is

population of 1.4 billion, the number of

good.”

people with internet access is 568 million.

This gives an internet penetration of 42.3

Baidu’s figures for

per cent, which is substantially lower than

2014 prove that Li is

the 81 per cent of the United States. In

serious about taking

other words, there is still plenty of room

on the competition and

for growth.

completing the transition to a mobile internet

Yet at the same time, internet usage patterns are changing and that poses a challenge for Baidu. More users are switching from PC’s to mobile devices, which have less space for more lucrative forms of advertising. In the last quarter of 2014, mobile revenue represented 42 per cent of total revenue, up from 36 per cent in the third quarter. That, in turn, explains the lower-than-expected rise in quarterly profits and why investors are worried. Baidu is also facing increased competition on smartphones as companies such as Alibaba and Tencent March 2015

China’s search engine market

Baidu

82%

Google

10%

Sougou

04%

Others

04%

Profile

36

The company’s most notable move was its Baidu Japan service, although this has been generally regarded as a flop as it has less than one per cent of the search engine market share in Japan. Baidu is currently targeting South America, the Middle East and South-East Asia for expansion.

It opened an office in Brazil at the end of 2013, and has already launched four products in order to understand internet usage in the country. Although the Brazilian expansion is still in its initial stages, Baidu plans to move into other Latin American countries, starting with Argentina, Chile and Mexico, as they are the strongest economies in the region. By avoiding Google’s key markets, developed economies, Baidu has a strong chance to succeed.

LI IS CLEAR on the fact that Chinese internet companies will continue to move beyond their homeland and play a big role in transforming regional economies.

“Companies need to know how to connect to the ground,” Li says. “If you don’t understand the local market environment, it will be very difficult to succeed.” However, he rules out attacking the US market.

“Surely we will reach out, and we have done so already. But our path is not that we are going to attack the US market. In the business-based company. Baidu’s total business turnover in 2014 was reported at $7.8 billion, with its research and development investment at around $1.1 billion, up 70 per cent from the previous

Left: Uber CEO Travis Kalanick (L) and Baidu Chairman and CEO Robin Li shake hands after signing a strategic investment and cooperation agreement.

Above: Li runs Baidu on the maxim of “underpromise and overdeliver”.

US market there are very strong internet companies. But there are other countries without a very strong market – Thailand, Brazil, Indonesia have our presence,” he says. “In the years to come we will surely go out and operate in other countries.”

year. Baidu’s investment in tech research

Li runs Baidu on a maxim he learnt

and development was more than that of its major competitors Google and

currently have over 500 million monthly

from an early investor who told him to

Facebook. “2015 will be an important

active users, while Baidu Map has over 240

“Underpromise and overdeliver”. “I took

year for Baidu as we execute our plan

million monthly active users, which means

it to heart then and still rely on it today,”

and invest in the next phase of mobile

the integration of Uber’s “request a ride”

says Li. “I believe the loyalty from Baidu’s

growth,” Li said.

buttons will benefit both companies.

customers, users, employees and investors

Last year, Baidu bought 91 Wireless –

Baidu is predominantly based in China,

today is due in large to that approach.

one of China’s largest app stores - for $1.9

and has no English service as it is designed

People trust that when we set out to do

billion. Baidu claims it is currently China’s

for mainland Chinese users. However,

something, we do it well.”

largest mobile app distribution platform,

Baidu has made its first moves towards

with an average of 160 million apps per day.

expanding outside of China by moving

changing market and ambitious expansion

Baidu also became an investor in Uber last

into other East Asian countries where

plans, 2015 is the year that Li’s maxim will

year. The company’s mobile search products

user behaviour is similar to that in China.

be tested to the fullest.

Face with increased competition, a

Portfolio

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Climate

38

Risky Business The Risky Business Project, an unlikely alliance of high-level US leaders, is drawing attention to climate change by focusing on the financial bottom line, reports Burt Helm.

Portfolio

39

Opposite page: New York and the Northeast are increasingly being hit by heavy winter storms.

Left: Former New York City Mayor Michael Bloomberg, a member of the Risky Business Project, in a boat on the Bosphorus in Istanbul.

a wool sport coat layered over a zip-up

crop yields in many states will most likely

sweater. “I’m 63 years old, and I’ve grown

fall, the costs of cooling chicken farms

up in the upper latitudes. I’ve seen too

will rise, and floods will more frequently

much change to presume we might not

swamp the railroads that transport

get more.”

food in the United States. He wants US

Page is not a typical environmental activist. He says he doesn’t know – or

agribusiness to be ready.

Page is a member of the Risky Business

particularly care – whether human activity

Project, an unusual collection of business

causes climate change. He doesn’t give

and policy leaders determined to prepare

much serious thought to apocalyptic

US companies for climate change. It’s

predictions of unbearably hot summers

a prestigious club, counting a former

and endless storms. But over the past nine

senator, five former White House Cabinet

months, he has lobbied members of the

members, two former mayors and two

US Congress and urged farmers to take

billionaires in the group. The 10 men

climate change seriously. He says that

and women who serve on the governing

over the next 50 years, if nothing is done,

committee don’t agree on much. Some are Democrats, some Republicans.

I

t was -13 degrees Celsius in Minneapolis, and out on Interstate

© 2015 New York Times News Service

394, snow whipped against the

windshields of drivers on their morning commutes. But inside the offices of Cargill, the food conglomerate, Greg Page, the company’s executive chairman, felt compelled to talk about global warming.

“It would be irresponsible not to contemplate it,” Page said, bundled up in March 2015

Even when it comes to dealing with

The committee started last June as a way to promote a study that it commissioned, “Risky Business: The Economic Risks of Climate Change in the United States”.

climate change, they have very different perspectives. Some advocate a national carbon tax; some want to mandate companies to disclose their climate risks.

Page suggests that the world may be able to get by without any mandatory rules at all. Some members want to push investors to divest from fossil fuel companies. Several favour construction of the Keystone XL pipeline while one

Climate

40

“The rationalist, evidencedriven, faith-in-thepolitical-process approach to solving environmental problems has been really effective in many realms,” said hal harvey, who advised the risky Business group and is chief executive of energy innovation, a green policy firm.

former chief executive of Goldman

all of which would be served by making

Sachs and the Treasury secretary under

the climate threat feel real, immediate

President George W. Bush; and Michael

and potentially devastating to the

Bloomberg, New York City’s former mayor

business world.

and the billionaire founder of financial

To understand how the Risky Business

information company Bloomberg LP.

Project came to be, it’s helpful to look

Each spent $500,000 to commission the

at how the climate change battle has

Risky Business research and each has his

been waged over the years. In the early

own particular goals for the initiative,

days, discussion was focused on fixing the problem and staving off disaster.

This has been the strategy environmentalists have used to respond to all sorts of risks for years: scientists identify the harm, publicise it, debate with the responsible industry and expect legislators to take action. But climate change defied that

member has spent more than $1 million

playbook. There was no immediate crisis

lobbying to stop it. But they all do agree

to point to. There was no one industry to

on one issue: shifts in weather over the

target or overwhelming constituency to

next few decades will most likely cost US

push legislators.

“The rationalist, evidence-driven,

companies hundreds of billions of dollars,

faith-in-the-political-process approach to

and they have no choice but to adapt.

solving environmental problems has been The commiTTee sTarTed last

really effective in many realms,” said Hal

June as a way to promote a study that

Harvey, who advised the Risky Business

it commissioned, “Risky Business: The

group and is chief executive of Energy

Economic Risks of Climate Change in the United States”. But it has since evolved into a loose network of missionaries who publicise the report’s ominous data far and wide, in talks at the Clinton Global

Innovation, a green policy firm. “But it has Above: Henry Paulson, a member of the Risky Business Project.

Below: Global warming, which is implicated in more severe storms and droughts, will affect company profits.

done bupkis for climate change.”

Indecision and indifference have prevailed instead. A majority of Americans in 2014 surveys by Pew

Initiative conference, briefings with the American Farm Bureau Federation and breakfast meetings with local chambers of commerce.

On January 23, the group released the second chapter of the Risky Business project, focused on the effects on the Midwest: “Heat in the Heartland.” A report on California is next. With $1.7 million in grants from the MacArthur Foundation and others, the group is hiring a full-time staff.

The group is led by three men: Tom Photos: Getty Images

Steyer, the hedge fund billionaire whose Super PAC spent $73 million last year attacking Republicans who denied climate change and promoting awareness of the issue; Henry M. Paulson Jr., the Portfolio

41

Gordon pitched Steyer on an american version – what would become the Risky Business report. It would be a way to discuss in a practical, dollarsand-cents way how businesses would have to adapt to climate change, while also making a clear case for taking action to mitigate the coming environmental crises.

clear case for taking action to mitigate the coming environmental crises. Steyer liked Research and Gallup acknowledged

regarded thinkers to help him brainstorm.

climate change was happening, and 83

Attendees included environmentalists

per cent of Americans say that without

Bill McKibben and Harvey, and political

research firm, the Rhodium Group. They

emissions reductions, global warming will

strategists John Podesta and Chris Lehane.

also reached out to Paulson, a Republican,

be a problem in the future, according to

The participants tossed ideas around the

and Bloomberg, an independent, to see if

a January survey conducted by The New

kitchen table. McKibben discussed his

they would co-sponsor the study and help

York Times, Stanford University and the

fossil fuel divestment campaign.

form a bipartisan committee. Both agreed.

environmental group Resources for the

While Steyer was devising his

what he heard.

The team contracted an economic

Through a contact of Gordon’s, they

Future. But in survey after survey, those

political strategy, staff members at Next

signed up Henry Cisneros, the former

same Americans rank climate change at

Generation, his non-profit group, were

housing and urban development secretary

or near the bottom of pressing issues, far

at work trying to solve another critical

under former president Bill Clinton.

behind jobs, the economy and health care.

question: how do you make climate change

Steyer called Robert E. Rubin, the former

feel real and immediate for people?

secretary of the Treasury under Clinton.

In the meantIme, powerful lobbies

Kate Gordon, senior vice president

In May 2014, the committee members

stand in the way of regulation. Climate

of Next Generation, found inspiration

gathered at the Bloomberg Philanthropies

change has become a partisan issue.

in a British report called the Stern

offices in New York to hear two of the

Review, published in 2006. It was an

authors commissioned by the Rhodium

2012, Steyer convened a meeting at

economic analysis, sponsored by the

Group present their findings. Among their

his Pescadero ranch in California. The

British government, which examined all

conclusions if the status quo persisted:

month before, he had stepped down from

the costs of climate change, eventually

climate change would increase energy

running his hedge fund, Farallon Capital

concluding that the price of curbing

demand in Texas by between 3.4 and 9.2

Management, to devote himself to the

global warming paled compared with the

per cent by mid-century. Crop yields in

environment. He wanted to devise a way

costs of doing nothing.

Missouri and Illinois would face a 15 per

It was in this context that in November

to fight climate change more effectively, and he had assembled some highly

Above: Padraig Palisi wades through flooding in the streets in New York.

March 2015

Gordon pitched Steyer on an American

cent decline over the next 25 years. And

version – what would become the Risky

in the Northeast, annual property damage

Business report. It would be a way to

from severe storms – from hurricanes to

discuss in a practical, dollars-and-cents

blizzards – would likely increase $11.1

way how businesses would have to adapt

billion, to a total of $15.8 billion by the

to climate change while also making a

end of the century.

Energy

42

The Pipeline Challenge Russia has scrapped its proposed South Stream gas pipeline in favour of one going to Turkey, but there are a lot of challenges in the way, report Stanley Reed and Sebnem Arsu.

P

resident Vladimir Putin surprised

Netherlands government to let it keep

pipeline,” Gazprom’s chief executive,

the world in December when

working with Gazprom, despite European

Alexey Miller, told reporters in Moscow

he aborted long-laid plans for a

sanctions against Russia over the invasion

in January. “There are no other variants

of Ukraine.

possible. Our European partners have been

natural gas pipeline under the Black Sea to Europe, saying Russia would run pipes to Turkey instead.

Many in the West thought it might be

notified of this, and their task now is to

actively negotiating with government

establish the necessary gas-transporting

officials – who are said to be driving a hard

merely a bluff, to make the European

bargain – while trying to buy into a leading

Union reconsider its opposition to the

Turkish gas distribution company.

pipeline project, known as South Stream.

© 2015 New York Times News Service

On the Turkish front, Gazprom is

And all the while, Gazprom is continuing

But in recent months, the Russian state-

to pay to keep two big pipe-laying ships

owned company Gazprom has shown signs

and their combined crews of 200 people on

that it is serious about proceeding with

standby in the Black Sea.

what it calls Turkish Stream.

As if to dispel any lingering doubts about

Gazprom quickly bought out its

its intentions, Gazprom’s chief executive

European partners in South Stream

recently made it clear that Turkey is its

Transport, the Amsterdam company

new focus – and that if Europe wants more

that was to build the Black Sea leg of

Russian gas then it will need to find its

the pipeline. And the chief of that

own way to tap into it.

Dutch company has petitioned the

“There are no other variants possible. Our European partners have been notified of this, and their task now is to establish the necessary gastransporting infrastructure from the borders of Turkey and Greece.”

“Turkish Stream is now the only Portfolio

43

weaken Kiev in its struggle with Moscow.

hit by falling oil prices. So a new pipeline

EU officials had insisted that South

estimated to cost as much as $40 billion

Stream could not bring gas into Europe

to deliver gas mainly to small European

be simply accepting the current

unless it conformed to European energy

countries like Hungary and Serbia made

geopolitical realities.

competition rules, which would include

little sense. Industry analysts estimate that

allowing other suppliers to put gas into

the cost of Turkish Stream would be about

Stream’s planned route – including

the pipeline. They also successfully put

$10 billion for Gazprom, which so far has

Bulgaria, Hungary and Serbia – had

pressure on Bulgaria – where South Stream

spent an estimated $4.7 billion on the

initially welcomed the proposed project as

would first enter the EU after crossing the

Black Sea project.

a source of transit fees and an alternative

Black Sea – to block it.

infrastructure from the borders of Turkey and Greece.”

Rather than bluffing, Gazprom may

Some European countries along South

With European negotiations at an

had long been wary of the idea, and its

impasse, and expensive work on South

The company and the German chemical

opposition stiffened last year after Russia’s

Stream contractually scheduled to

giant BASF in December scrapped their

intervention in Ukraine.

commence, Putin turned to Turkey.

agreement for Gazprom to take full

Brussels feared that South Stream Photos: Getty Images

The South Stream cancellation fits

source of gas. But the European Union

Energy economics played a role, too. The

would increase Russia’s dominance of the

price of natural gas has not plummeted the

European gas market and that Gazprom’s

way that the cost of crude oil has fallen.

plan to shift the large volumes of Russian

But slow industrial demand is expected to

gas that now flow to Europe through

mean sluggish growth for the European gas

Ukraine to the new pipeline would further

market. And Russia’s finances have been

March 2015

with other recent moves by Gazprom.

Opposite page: The North Stream pipeline was inaugurated in 2012.

Above: The South Stream pipeline to Europe was launched with great fanfare in 2012 but was cancelled last December.

Energy

44

control of their trading and distribution joint venture. And earlier last year Gazprom signalled a shift toward Asian markets by signing two big pipeline deals with China, with one of them worth an estimated $400 billion.

While some analysts doubt the feasibility of Turkish Stream, others say a route to Turkey makes strategic and economic sense. Russia would solidify its position in that country, a fast-growing gas market that is already Gazprom’s secondlargest gas customer in the European region after Germany.

“This makes far more sense than South Stream,” said Jonathan Stern, chairman of the gas programme at the Oxford Institute Above: Russia’s President Vladimir Putin and Gazprom CEO Alexei Miller (L) look at a scale model of the proposed South Stream gas pipeline in 2012.

Left: Two sections of the North Stream pipeline are joined in Belarus.

for Energy Studies. “What Russia needs to do is nail this market down; everything else is not growing.” The pipeline to Turkey would also partly cut Gazprom’s dependence on Ukraine as a transit route.

About half of the gas Turkey imports from Russia now comes through Ukraine and would be replaced by Turkish Stream.

Gazprom said it was buying out its

As it proceeds, Gazprom is revamping its

Western partners: Italy’s oil giant, Eni; the

Amsterdam venture. The Dutch company

French utility Électricité de France; and

had already assembled an armada of

BASF’s Wintershall oil and gas subsidiary.

skilled personnel and billions of dollars

The companies said they would be

of equipment to build the 930-kilometre

compensated for their cash outlays so far,

Black Sea portion of South Stream.

an estimated $750 million.

To avoid wasting years of preparation and lengthy contract negotiations,

IN ADDITION, GAZPROM is paying

Gazprom has quickly secured control of

Saipem, the big Italian oil field engineering

the Dutch company. In late December

company, to keep two huge pipe-laying vessels and at least 200 people ready to

Gazprom said in December it would UKRAINE cancel the South Stream gas pipeline and replace the Black Sea portion of it with a pipeline to Turkey.

CRIMEA ROMANIA

Black Sea

Varna BULGARIA

GREECE

100 MILES

were poised to start when Putin’s surprise announcement called off the South

Anapa

RUSSIA

Stream project. Saipem has ¤2.5 billion ($2.9 billion) in contracts with South Stream Transport.

) anceled tream (c South S

The Dutch company is also seeking support from its home government for the

Alternate paths

Istanbul

begin work in the Black Sea. The ships

GEORGIA

imposed by the EU on Russia to punish Moscow’s actions in Ukraine, companies

Samsun

now require permission to export oil and

TURKEY

Source: The Oxford Institute for Energy Studies

change of mission. Because of the sanctions

gas equipment to Russia.

THE NEW YORK TIMES

On December 19, Oleg Aksyutin, who is Portfolio

45

South Stream Transport’s chief executive and a Russian, wrote to Lilianne Ploumen, the Dutch minister for foreign trade and international development. The letter discussed a license the company had previously obtained to provide ¤1.5 billion in pipelines and technical assistance for South Stream.

In the letter, which a person involved in the discussions shared with The New York Times, Aksyutin notified the Dutch official of the possible change of route from Bulgaria to Turkey. He wrote that, in the company’s view, the switch “does not impact the continued validity of the license,” though it was willing to discuss the matter.

South Stream Transport declined to comment on the letter. A Dutch Foreign Ministry spokeswoman said that the government was “still studying the matter.”

Another potential sticking point is Turkey itself. For one thing, the country

Above: President Putin applauds after Gazprom CEO Miller (C) and China’s CNPC Chairman Zhou Jiping signed a multi-decade gas supply contract.

Right: A section of pipeline is delivered to a pipe-laying ship in the Black Sea. Below: Istanbul might be the end point for the new South Stream pipeline.

obtains about 60 per cent of its gas from Russia, a dependence the government is not necessarily eager to increase. Talks

use Gazprom’s need for a face-saving

between Russian and Turkish officials on

alternative to South Stream as leverage

matters like the precise route and financial

to negotiate lower prices for Russian gas,

terms of a deal are said to be proceeding

according to a Turkish official, who spoke

slowly. That is partly because the Turkish

on the condition of anonymity because of

government appears to be trying to

the sensitivity of the negotiations.

Turkish officials also presumably have leverage because they know that if Gazprom cannot proceed quickly with the Turkish route and continues to pay idle contractors, a lot of the potential cost savings may be lost.

Putin already publicly offered a six per cent reduction to Turkey. But Ankara, which pays substantially more for Russian gas than Germany does, is pressing for a better deal. “Nothing is being discussed while we have not achieved a desirable discount on gas prices,” the Turkish official said.

March 2015

Retail

46

Luxury Goods Change Focus The US is attracting high-end luxury goods purveyors as the local economy booms, while Europe and Asia is faltering, reports Hiroko Tabuchi.

Portfolio

47

I

n Houston, Texas, Chanel’s new

the biggest increase in the world and

the Italian luxury shoemaker. “There are

galleria is styled after Coco Chanel’s

dwarfing the 90,000 Chinese who crossed

opportunities on the West Coast, with the

Baroque-inspired apartment, with

the million-dollar mark since then, Credit

tech industry there and Asian tourism,”

Suisse estimates.

Norsa said. “There are opportunities in

bronze screens, an antique fireplace and a

In 2014, Americans with net wealth of

Miami, which is becoming important

more than $50 million outnumbered their

as a window to Latin America. We see

Rodeo Drive, in Beverly Hills, is the label’s

Chinese counterparts eight to one. And

opportunities not just this year, but in the

biggest and features white marble and

the United States is set to remain by far

long term.”

polished brass with a discreet back-alley

the wealthiest country, Credit Suisse says,

entrance for celebrities.

with aggregate wealth of over $114 trillion

The sTrong luxury spending is

in 2019.

welcome news for an industry grappling

chandeliered shoe salon.

Yves Saint Laurent’s flagship store on

And in downtown Manhattan, Hermès, Salvatore Ferragamo and Paul Smith are set to open locations at a $300

Luxury retailers now see America’s

with slowing growth in Europe and in

ultrarich, over Hong Kong magnates or

emerging markets that once seemed to

million luxurious redevelopment of the

offer the most potential for growth, but

World Financial Center on the Hudson

are now hit by weaker asset prices,

waterfront, with a glass pavilion and European-themed gourmet market.

Purveyors of high-end luxury goods are chasing millionaires in the United States, as upper-income spending falters in Europe and in the emerging markets once considered luxury’s promised land. And the wealth, they say, is not just confined to the

yves saint laurent’s flagship store on rodeo Drive, in Beverly hills, is the label’s biggest and features white marble and polished brass with a discreet back-alley entrance for celebrities.

American coasts.

Fast-growing industries, like technology

Luxury sales in China, especially, have slowed in the face of a crackdown on bribery, and probably led to the first decline in luxury sales there in more than a decade, according to Bain consultancy. A weak ruble and low consumer confidence have of big luxury spenders: moneyed Russians.

Russian moguls, as their biggest drivers

Houston, Dallas and San Jose, California,

of growth.

“If you look in the past year, the

In the United States, spending on personal luxury goods rose a steady five per cent last year to about $73 billion,

of wealth in the world. Since 2012, the

United States has been at the top of our

Bain estimates, compared with negative

number of high-net-worth individuals

investment plans,” said Michele Norsa,

growth in previous juggernauts like China

has jumped as much as 20 per cent

chief executive of Salvatore Ferragamo,

and Russia.

in Dallas and 18 per cent in Houston, according to a Capgemini and RBC © 2015 New York Times News Service

political turmoil.

taken a toll on spending by another group

and energy, are transforming cities like into some of the densest aggregations

currency pressures and economic and

Wealth Management tally.

Propelled by market gains and a skewed economic recovery, the United States’ share of the world’s super-rich is rebounding. Since mid-2013, the number of millionaires in the United States has grown by 1.6 million, by far

Opposite page: (Clockwise) Hermés is set to open a new store in downtown Manhattan; Cartier’s flagship store in New York; Rodeo Drive in Beverley Hills caters for the super-rich.

Right: Yves Saint Laurent's flagship store in Beverley Hills is the labels biggest and features a discreet back-alley entrance for celebrities.

March 2015

Retail

48

Left: Some of Elizabeth Taylor’s jewellery on display at Christie’s Auction house.

Below: Salvatore Ferragamo is opening a new location in downtown Manhattan at a $300 million redevelopment of the World Financial Centre.

And last month’s report by LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury-goods maker, underscored the market shifts. The company said that annual sales in Asia dropped six per cent in 2014 from the previous year because of the ailing Chinese luxury market. Sales in

on luxury spending at Bain.

Europe grew a tepid three per cent. But its

International tourism to the United

bright spot was the United States, where annual revenue jumped eight per cent

States, which has grown steadily to an

from the previous year.

estimated 74 million visitors last year, has also bolstered luxury spending, experts say.

“There’s a whole new generation of

Labels like Yves Saint Laurent are

30- and 40-year-olds making millions of dollars a year in hedge funds and

seeing how the American turn is paying

technology and real estate,” said David

off. The company’s Paris-based parent,

Friedman, president of the wealth

Kering, reported in October that luxury

consultancy Wealth-X.

sales rose 3.5 per cent for the third quarter, disproportionate share, are driving high-

compared with a year earlier, to $1.91

a textile company in New York, said

end consumption. The world’s brain drain

billion, led by a 12 per cent jump in North

business was looking up and that he felt

– and America’s brain gain – is transferring

American sales.

flush enough to upgrade his wardrobe this

more wealth and more luxury spending to

year. “I wanted the larger buckle,” Troche

America, experts said.

Milton Troche, 29, whose father runs

HerMèS, THe FreNCH luxury brand, is increasing the size of its stores in Dallas,

said, stepping out with his $450 belt from

“The US is helped by wealthy

Ferragamo’s flagship store on Fifth Avenue.

immigrant flows, giving additional

Houston, Miami, Boston and Seattle,

“You can wear a T-shirt with it, but you still

impetus to the luxury market in New

and plans a new boutique in Palo Alto,

get the girls.”

York, Miami, even university cities like

California. Hermès is also set to open a

Boston,” said Claudia D’Arpizio, an expert

location at Brookfield Place, its third in

Much of the growing wealth in America comes from equity markets that have performed well, adding to the wealth of upper-income Americans who are most

Photos: Getty Images, Reuters

likely invested in stocks. In the United States, the rich also have relatively more of their money left over to spend, because of lower top marginal income tax rates.

And across America, highly skilled, high-income immigrants, of which the United States continues to attract a

“The US is helped by wealthy immigrant flows, giving additional impetus to the luxury market in New York, Miami, even university cities like Boston,” said Claudia D’Arpizio, an expert on luxury spending at Bain.

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Retail

50

Manhattan, which will be a perfumery that sells Hermès fragrances, said Robert Chavez, president of Hermès US. “Before, growth was really focused on the BRICS,” he said, referring to the five major

Place in the spring.

Not all luxury retailers are doing well,

spending, some analysts say. (But in a sign of the strength of the US luxury consumer,

however. The jewellery chain Tiffany cut its

European luxury brands have not been

annual forecast in January, citing sluggish

slashing prices.)

November and December sales.

Still, Brookfield’s clientele is not

And economists at Morgan Stanley

easily affected by exchange rates, said

India, China and South Africa. “But the

wrote in a recent report that rapid year-

the developer’s chief executive, Dennis

world changes constantly, and the US is

over-year growth in luxury spending might

Friedrich. Brookfield invested $300 million

now a strong foundation.”

simply be unsustainable. “How many

to revamp the former World Financial

personal aircraft can one buy?” they wrote.

Center. “The change in exchange rates

emerging economies of Brazil, Russia,

No place seems to say new luxury in America more than Manhattan. New York City spent more than $25.5 billion on

The weakened euro and yen also threaten to crimp tourist traffic and

won’t dissuade them,” Friedrich said. “We serve a very wealthy demographic.”

personal luxury goods last year, more than the whole of Japan, the second-biggest market, Bain estimates. And luxury’s focus is shifting to downtown Manhattan, once the domain of harried commuters and office workers. The Westfield Group is set to open a second luxury mall in the neighbourhood later this year.

“It’s a market unto itself, and it’s got tremendous growth,” said Gerald Storch, chief executive of Hudson’s Bay, the parent company of Saks Fifth Avenue, which is set to open a store at Brookfield

Above: Construction is underway in Miami’s Design District. Twelve square blocks of warehouses have been torn down to make way for luxury brand stores.

Right: A shopper looks at the jewellery display of Cartier in New York.

Portfolio

ROGER FEDERER ARTIST Enjoy responsibly – www.moet.com

Economy

52

M

ary Noriega heard there

lines snaking for blocks. Some states have

would be chicken. She hated

barred people from waiting outside stores

being herded “like cattle,”

overnight, and government officials are

she said, standing for hours in a line of

posted near entrances, ready to arrest

more than 1,500 people hoping to buy

shoppers who cheat the rationing system.

food, as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.

But Noriega, a laboratory assistant with three children, said she had no choice, ticking off the inventory in her depleted refrigerator: coffee and corn flour. Things had gotten so bad, she said, that she had begun bartering with neighbours to put © 2015 New York Times News Service

food on the table. “We always knew that this year would start badly, but I think this is super bad,” Noriega said.

Venezuelans have put up with shortages and long lines for years. But as the price of oil, the country’s main export, has plunged, the situation has grown so dire that the government has sent troops to patrol huge

Oil Slump Impacts Venezuela’s Economy The tumbling oil price has affected Venezuela’s flow of hard currency, which has hurt the import of food, medicines and other basics, reports William Neumann.

Because Venezuela is so dependent on oil sales to buy imports of food, medicines and many other basics, the drop in oil prices means that there is even less hard currency to buy what the country needs.

Even before oil prices tumbled, Venezuela was in the throes of a deep recession, with one of the world’s highest inflation rates and chronic shortages of basic items.

One of the nation’s most prestigious public hospitals shut down its heart surgery unit for weeks because of shortages of medical supplies. Some drugs have been out of stock for months, and at least one clinic performed heart operations only by smuggling in a vital drug from the United States. Diapers are Portfolio

53

“If things are so bad now, I really cannot imagine how they will be in March when some of the lowest oil prices materialise in terms of cash flow,” said Francisco Monaldi, a professor of energy policy at the Harvard Kennedy School of Government in Massachusetts.

so coveted that some shoppers carry the birth certificates of their children in case stores demand them.

Now economists predict that shortages

charismatic leftist Hugo Chávez.

“I’ve always been a Chavista,” said

more than 95 per cent of its hard currency income. Chávez used the oil riches to fund

will get even more acute and inflation,

Noriega, using a term for a loyal Chávez

social spending, like increased pensions

already 64 per cent, will climb further.

supporter. “But the other day, I found a

and subsidised grocery stores. Now that

The price of Venezuelan oil dropped in

Chávez T-shirt I’d kept, and I threw it on

income has been slashed.

January to $38 a barrel, down from $96

the ground. I was so angry. I don’t know if

“If things are so bad now, I really

in September. “Things are going to be

this is his fault or not, but he died and left

cannot imagine how they will be in

even worse because oil keeps Venezuela

us here, and things have been going from

March, when some of the lowest oil prices

going,” said Luis Castro, 42, a nurse,

bad to worse.”

materialise in terms of cash flow,” said

standing in line with hundreds of others at a grocery store.

He had arrived with his wife and sixyear-old son at 6 am, but by 11:30 am, they had still not entered. “We’re getting used to standing in line,” he said, “and when you get used to something, they give you only crumbs.”

The shortages and inflation present another round of political challenges for President Nicolás Maduro, who has vowed to continue the socialist-inspired revolution begun by his predecessor, the

Above: Thousands line up to buy difficultto-find items – like sugar, cooking oil, milk, rice, toilet paper and baby diapers – at subsidised prices during a government organised event.

Right: People line up for soup at a government-sponsored event that included free food and a nutrition class in the settlement of Los Teques, Venezuela.

March 2015

Venezuela has the world’s largest

Francisco Monaldi, a professor of energy

estimated petroleum reserves, and when

policy at the Harvard Kennedy School of

oil prices were high, oil exports made up

Government in Massachusetts.

Economy

54

Left: Doctors protest the lack of medical supplies, holding signs about patients in need of care that they cannot properly treat, in front of the state-run University City Hospital in Caracas.

Below: (L-R) Allanys Ruiz, three, receives treatment for an asthma condition in the pediatric ward at a state hospital; Vendors illegally sell black market butter, soap and cooking oil outside of the Quinto Crespo government market for more than five times the prices set by government price controls.

finally come to do so. And he reiterated

January travelling the globe in an effort

his position that the country’s economic

to court investment and persuade other

ills are the fault of an economic war being

oil-producing nations to cut production

waged against his government by right-

and push the price back up. “We have

wing enemies.

serious economic difficulties regarding

Many economists argue that

the country’s revenue,” Maduro said to

government policies are a big part of the

the legislature during his annual address,

problem, including a highly overvalued

which had to be pushed back because of

currency, price controls that dissuade

the trip. “But we will get, and we have

manufacturers and farmers, and

gotten, the resources to maintain the

government restrictions on access to

country’s rhythm.”

dollars that have led to a steep drop in

After months of toying with the

imports. Some investors fear Venezuela

politically taboo idea of raising the price

will default on billions of dollars in bonds,

of petrol sold at pumps here, the cheapest

but Maduro has said the country will pay

in the world, he said that the time had

its debts.

Typically, in an election year like this one, when voters will choose a new legislature, the government showers supporters with goods, like refrigerators and washing machines, or other benefits, like free housing. But now there may not be enough foreign currency to import appliances and construction materials.

In interviews, shoppers did not say they were going hungry. Rather, many said the economic crisis meant eating canned sardines instead of chicken, or boiled Portfolio

Illustration: Charlie Banalo

Many economists argue that government policies are a big part of the problem, including a highly overvalued currency, price controls that dissuade manufacturers and farmers, and government restrictions on access to dollars that have led to a steep drop in imports.

Maduro spenT 14 straight days in

55

Left: National Guard soldiers stand by to ensure order as people buy difficult-to-find items.

Below: Henrique Capriles, an opposition party politician and past presidential candidate, greets people at an “empty pans” march, a protest over food shortages.

day off so that it will last longer.”

On a recent morning, hundreds of people stood in line outside a big-box store, similar to Costco. Inside, many shelves were stripped clean. The large appliance and electronics section was empty. One aisle displayed hundreds of boxes of a single brand of toothpaste.

There was no fresh meat; a cooler was filled with frozen chicken feet.

Most people came to buy only three items sold at government-mandated prices: laundry detergent, vegetable oil and corn flour. Every purchase was entered into a database, ensuring that

food instead of fried because vegetable oil

But social media in Venezuela is full

is so hard to get. Many said they ate meat

of urgent pleas from patients trying to

shoppers did not try to buy the same

less frequently because it is out of stock

find prescription medicine. Ana Guanipa,

regulated staples at the chain for at least

or too expensive.

75, a retired government office worker,

seven days.

Fresh fish can be harder to find, in

said that she had searched numerous

Soldiers patrolled the line outside,

part, fishermen said, because they find it

pharmacies for her hypertension

police officers were stationed inside

more profitable to use their boats to sell

medicine. “I’ve been looking all month,

and government officials checked

subsidised Venezuelan diesel on the black

and I can’t find it,” she said, adding that a

identification cards, looking for fake ones

market in a high-seas rendezvous instead

neighbour who takes the same drug gave

that could be used to cheat the rationing

of hauling in a catch.

her some. “I take it one day on and one

system – or for immigrants with expired visas. An official from the immigration and identification service said that offenders would be arrested.

“This is pathetic,” said Yenerly Niño, 18, adding that she had waited more than five hours to buy the three subsidised products because she could not afford to buy them at the higher prices charged by street vendors. “You do what you have to,” she said. “If you don’t do it, you don’t eat.”

Many said they ate meat less frequently because it is out of stock or too expensive.

March 2015

56

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Illustration: Tarak Parekh. Photos: Getty Images

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Portfolio

Technology

57

Internet in Orbit

Companies such as Google and Facebook are looking towards space in their quest to deliver internet to underserved areas around the world, reports Conor Dougherty.

G

oogle has never shied from novelty or spending big to find ways to connect more people to the internet. Over the last two years, its ideas have included fleets of little

satellites, solar-powered drones that would fly around the world and balloons that float high into the stratosphere, beaming the internet to those below.

Building on that, Google and the mutual fund giant Fidelity announced a $1 billion investment in January into Space Exploration Technologies, a growing private rocket company that is still trying to prove itself on the world stage. The company, also known as SpaceX, could give Google a way to put its devices into outer space.

With that growing collection of devices in the sky, Google believes it can spread the internet to underserved areas around the world. The investments also reflect a bit of enlightened selfinterest, since the more people who are connected directly to Google, the more ads it can show them. And that is how Google makes its money.

“Anything they provide, if it’s going through their own pipe, they have more control over the experience and more potential for revenue,” said J.P. Gownder, an analyst at Forrester Research.

That means those consumers are more likely to stick with Google services like search, Gmail or YouTube rather than going somewhere else.

Google’s interest in satellites is anything but original. In January, the Virgin Group and Qualcomm, a maker of communications semiconductors, announced they had invested in OneWeb, a network of internet connectivity satellites, while Planet Labs, a maker of shoebox-size satellites that offer Earth imagery, announced it had received $95 million in financing.

altitude, unmanned planes to deliver internet service to parts of the world that have little connectivity now. The company is also experimenting with satellites and lasers to deliver internet services.

These companies have different technologies and different ideas for making money, but the bind among them is a common

March 2015

© 2014 New York Times News Service

Last year, Facebook bought a British drone maker and hired a bevy of top aerospace scientists, with the goal of deploying high-

58

assumption that there is no economic way

Jurvetson, a founder and partner at Draper

Station, was a sort of stratospheric blimp

to physically wire the world’s underserved

Fisher Jurvetson, a Menlo Park, California,

that would hover over areas that needed

consumers. So the only way to do it is with

venture capital firm. He is on the boards of

broadband internet service. It was not

satellites and other wireless technologies.

both SpaceX and Planet Labs.

successful, mostly because there was not much demand for the high-speed access it

There is another benefit for Google: The company is always looking for ways to

THIS IDEA OF sky-high internet

could provide, said Martine Rothblatt, the

get around internet service providers. As

connections seems to be a fixture of

inventor of the satellite service SiriusXM

Google executives have shown with new

technology booms. In the mid-1990s,

who was a partner in Sky Station and

offerings, from insurance shopping to the

there were similar efforts. One, called Sky

is now the chief executive of United

growing Google Fiber broadband service, if there is one thing they believe, it is that

Therapeutics, a biotechnology company.

“Twenty years ago, when people were

their company’s interests are best served

like really happy to get a phone call on a

by going directly to the consumer.

mobile phone, it was inconceivable that

And as first reported on the tech

most people’s television platform would

website The Information, Google has been

be their mobile” device, Rothblatt said.

in talks with cellular network companies

Today, Rothblatt added, the demand for

with a goal of providing its own wireless

bandwidth is “essentially insatiable.”

service, according to two people familiar

The interest in satellites also extends to

with Google’s efforts.

“If you’re a big internet company, you don’t want to have to deal with every cable company, every telco, that are potentially or actually trying to interfere with your freedom to do business,” said Steve

Left: Elon Musk, the founder of Space X, recently received a $1 billion investment from Google and Fidelity.

Below: Viasat satellites allow airlines to offer inflight broadband wi-fi.

Portfolio

Technology

59

Left: A SpaceX rocket, carrying supplies to the International Space Station, lifts off.

Above: New technologies mean that communication satellites are becoming smaller and cheaper.

services. Last year, Google spent about

the boundaries of miniaturised electronics,”

and that cover the world to put the three

$500 million to buy Skybox Imaging, a

said Will Marshall, co-founder and chief

billion people who do not have internet

maker of small high-resolution imaging

executive of Planet Labs.

access online.

satellites that could do things like

There is nothing new about connecting

Low-earth-orbit satellites are already

monitor crops or map the terrain below

to the internet via satellite. People do it on

revolutionising imaging technologies by

a forest canopy.

airplanes, at sea and in remote corners of

allowing companies to receive continuously

But be it imaging or connections, the

the world. ViaSat, a Carlsbad, California,

updated pictures of earth, which lets them

recent interest in satellites stems from

satellite company, beams satellite internet

do things like measure a mall’s hourly

a reduction in satellite cost. Unlike the

to 700,000 homes and apartments in

parking lot traffic. But whether these

first space race, when governments had

the United States. But this is done with

satellites can be used to connect people

to make almost everything themselves,

bigger, higher-orbiting satellites that sit

to the internet more cheaply has yet to be

there are now all kinds of off-the-shelf

in a geosynchronous orbit, meaning they

proved, Dankberg said.

chips, batteries and other components

move at the same speed as the earth and

that can be mixed and matched. And

so stay above a fixed point.

just as the camera on your mobile phone

One advantage is that low-earth satellites could have less lag between typing a search into Google and receiving

becomes better with each upgrade,

MARK DANKBERG, VIASAT chief

the results. But since most of the world is

the advancement in space imaging

executive, estimated that dozens of

water and barren land, Dankberg said, a

technology has been rapid.

companies around the world are working

fleet of internet-connected satellites would

“Aerospace is following business

on satellite-based internet services that

have many of its components hovering

because the dominant research and

are regional in scope and use these

over unpopulated areas.

development dollars are no longer in the

higher-orbit technologies.

Air Force or NASA, but they are in Google and Apple and all these places pushing March 2015

But the satellites internet companies have become enamoured of using orbits

“It has yet to be proven that lots of little satellites can provide internet more cheaply than a handful of big ones,” he said.

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60

The approach has produced some remarkable results. Since 2010, the percentage of women on Britain’s top boards has nearly doubled, to 23 per cent, while in the United States, the figure has crept up a few percentage points to 17 per cent.

“There is a spotlight and visibility there that is not present here,” says Brande Stellings, vice president for corporate board services at Catalyst, a non-profit focused on increasing opportunities for women in the United States.

That Morrissey is credited with spearheading those results while raising nine children – ages five through 23 – could have made her the target of ire in a country that does not always celebrate success. Or it might have fuelled the debate about whether a woman can or cannot have it all. It has done neither.

“She’s an anomaly, not a template,” said her husband, Richard, 51, who is a Buddhist and former journalist who cares for the children at home.

S

uggest to Helena Morrissey that she is Britain’s version of Sheryl Sandberg, and she smiles politely.

“I think I am meant to be flattered,”

Morrissey, a 48-year-old money manager, said recently in her office in the City, London’s historic financial district. “But I am doing my own thing.”

Like Sandberg, the Facebook executive, Morrissey has become the face of women’s advancement in business in her country.

Four years ago, she founded the 30% Club, an organisation that seeks to increase the representation of women on boards to that number.

But Morrissey has taken a rather

Aiming at Glass Ceilings Helena Morrissey, the CEO of Newton Investment Management, is successfully pushing for more female representation on boards, reports Jenny Anderson.

in positions of power. But progress in the United States has been glacial, making the 30% Club’s methods, and results, all the more compelling.

“If we could in any way, shape or form replicate the success she has had in such a short period of time, we would be doing a good job for the business community here,” said Peter Grauer, chairman of the news and information company Bloomberg and the founding chairman of the American chapter of the 30% Club, which was started last year.

The 30% Club’s approach is distinctive, and heavily influenced by Morrissey, whose English-rose approach masks a

different approach than Sandberg and © 2015 New York Times News Service

Groups like Catalyst in the United States have worked to get more women

relentless determination. “My style is not

others have. Sandberg has implored women to assert themselves and find

steely focus on Britain’s most powerful

to tell people what to do but to show a

sponsors who can help advance their

men. Working behind the scenes, she

path that is appealing,” she said. And she

careers. And countries like Norway and

has persuaded 120 of the country’s top

does not go negative. For example, she

France have mandated legal quotas for the

chairmen that they want what she wants:

will not name those who would not join

percentage of women serving on boards.

more diverse boards that will produce

the 30% Club in its early days. Equally,

better company returns.

she is supportive of anyone trying to effect

Instead, Morrissey has directed her

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61

name the group for the target she means

change rather than complain about the lack of it. “I see so much confrontation and negativity and I don’t see that it achieves very much,” she said.

Morrissey is a Sandberg fan and compliments her for starting an important dialogue. “Women do need to lean in but I don’t think it’s fix the women or fix the system. It’s not binary,” she said.

Morrissey is adamant that the group is

Morrissey is a Sandberg fan and compliments her for starting an important dialogue. “Women do need to lean in but I don’t think it’s fix the women or fix the system. It’s not binary,” she said.

of women by 2015. She said she believes the group will get to 27 per cent by the end of the year, and more if it focuses on the 10 per cent of nonexecutive directors who have held seats for more than nine years.

The movement has not been without detractors. One chairman told her she was going to destroy business; others wonder why she is not doing more for broader

not promoting a women’s initiative or a

categories of diversity, like race. Also,

diversity initiative, but a business issue. She cites research from McKinsey, Catalyst and

chairman of the companies in the FTSE

women’s numbers in senior executive roles

Credit Suisse as evidence that more diverse

350 stock index, alphabetically.

in Britain remain paltry. Still, the 30%

boards provide better shareholder returns,

When she reached the H’s some

Club has expanded, with groups in Hong

because homogeneous boards often provide

unfriendly mail from the A’s started

Kong, South Africa and Ireland as well as

little fresh thinking about customers,

pouring in. She quickly learned there was

the United States, and plans for Canada

risks or outcomes. Not coincidentally,

a better way. “It’s best to get chairmen to

and Australia.

30 per cent representation is the level at

recruit each other than to use me,” she said.

which organisational psychologists agree a minority voice can be heard.

To that end, she has encouraged men Photo: Getty Images

to reach: 30 per cent of boards made up

to lead the charge, and once they are on board employed them to recruit others.

Perhaps the 30% Club’s greatest asset

The open tent, no-pressure strategy

is its ability to try new approaches.

seems to be effective in Britain, where

Recognising that boards turned to

complex rules around confrontation seem

executive search firms for lists, it lobbied

to permeate every level of society.

and won the support of some search

“Where I think Helena has been

firms. Hearing that midcareer women

When she was trying to build support for

uniquely successful is in quiet advocacy, in

wanted mentorship, but not always within

the group, she set out to send notes to each

getting people who have the power to make

their own organisations, it created a

a change, believing that they want to make

cross-mentoring group where a female

a change,” said Robert Gillespie, a member

lawyer might be mentored by a male asset

of the Royal Bank of Scotland board and a

manager, because she might not want to

former banker at Evercore and UBS.

talk to her boss about balancing children

Morrissey is vehemently against

and work, or taking time off to care for an

Opposite page: Helena Morissey believes that more diverse boards provide better shareholder returns.

Below: Morrisey, the CEO of Newton Investment, at a company function in London. She is also the founding chairperson of the 30% Club.

government-imposed quotas, bucking the trend from much of Europe, but she did

elderly parent.

Morrissey has begun the new year by taking the group’s message to schools.

Teaming up with another charity, Speakers for Schools, the 30% Club is blanketing a handful of British schools, with the chairmen explaining to students how diversity benefits business.

On January 26, Douglas Flint, the chairman of HSBC, offered 400 students in a high school audience in east London some advice.

When he goes to promote a man, he said, the reaction is often: “What took you so long? I’ve been ready for ages.” Women, he said, often question if they have the necessary skills.

“Don’t be too self-effacing,” he told the crowd, channelling Sandberg.

March 2015

63

Essentials

THE BEST OF LEISURE AND LIFESTYLE

Path to Enlightenment

Images: Getty Images/Brian Johnston

When you’ve had enough of urban, boom-time China, head to Shanxi Province for ancient history, mountain landscapes and a slower pace, reports Brian Johnston.

March 2015

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Essentials

Travel

I

like feeling insignificant. Instead of being intimidated, I find something soothing about vast dimensions

of time or space that make my life seem trivial. And that’s just the way I’m feeling now, standing in a cave dwarfed by a soaring 17-metre Buddha sculpted 1,500 years ago. The cave glows with a honeyed light, and two serene Bodhisattvas stand on either side of the Buddha, softly smiling.

They’ve been smiling as 50 generations have come and gone: a thought to make my own troubles unimportant.

These statues ought to be more famous.

In Yungang in northern China, they’re just a few among 50,000 sculptures of Buddhas, dragons, strumming musicians and flying angels that stretch along a one-kilometre hillside. The sculptural range dazzles. Artists from across Asia worked in these caves for a century from

congregation of emperors and disciples.

453 CE, and they display Greek, Persian

The earliest sculptures are bold and

and Hindu motifs among a Chinese

simple, but their size impresses. Later sculptures are more detailed; some still

Clockwise from right: Buddha carvings in Cave 9 at Yungang; Taihuai temple complex on Wutai Mountain; A finely carved room inside Yungang; Sculpture student at Shuanglin temple.

have their plaster casings and multicoloured paintwork. These Buddhist grottoes are easily among the most fabulous cultural sights anywhere.

Buddhists say renouncing earthly desires will let you glimpse nirvana. I’m far too fond of my creature comforts for such lofty ambitions, but there’s something both soothing and uplifting about following China’s Buddhist trail.

Having ‘done’ the classic sights such as Shanghai and Beijing, it offers me another whole glimpse of this varied country. I’m in Shanxi Province which, though scarcely 400 kilometres west of Beijing, is a crumbling land in brown and ochre, framed by barren hillsides, just south of the dusty Gobi Desert.

Corn and apricots ripen in valleys where sluggish brown rivers wander, and giant Buddhas smile enigmatically from caves, serenaded by whispering winds.

Thanks to its location on the Yellow River, the vast and fertile plateau region that is now Shanxi saw the emergence of Chinese civilisation in ancient times.

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The first Chinese state was founded here in 2200 BCE. Within five centuries, its people had created walled cities, bronze vessels and weapons, silk and wheeled vehicles, and were well on their way to being the world’s greatest civilisation.

SHANXI PROVINCE IS now something of an outdoor museum of sculpture, imperial mausoleums, red-roofed temples and ancient buildings excellently preserved both by the dry climate and relative isolation. Like much else in China, this history makes me feel small.

It makes me feel there’s much beyond just my own culture to understand. Shanxi is an alien place, full of mysterious history and unpronounceable names and alien religions. What better place to be?

I’ve started in Datong, once an ancient capital under two Chinese dynasties, now one of China’s powerhouses, supplying a quarter of its vital coal needs. The local tourist office runs mining tours that are followed by lunch in the miners’ cafeteria, providing an interesting glimpse into China’s contemporary industrial boom – and a change from all things ancient.

Datong also has some good shopping, and an enticing row of souvenir and antiques March 2015

Clockwise from top left: Yungang Caves; An elderly monk catches the afternoon sun at Xiantong temple on Wutai Mountain; Tourists on a guided tour of Jin temple outside Taiyuan; The Yungang Caves (Wuzhoushan Grottoes in ancient time) are near the city of Datong in the province of Shanxi; A street in the old town of Pingyao.

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Essentials

Travel

shops along its recently-opened replica

me with worries about the dizzying drops

‘ancient’ Huayuan Street.

and groaning wood – I’m a lot heavier than

The Yungang Caves are the reason most people come to Datong, but southwest

Above: Hanging Temple in northern Shanxi Province.

a skinny monk. Nirvana is all very well, but I don’t want it to arrive too soon.

of the city in the Heng Mountains you

century, Wutai is one of China’s most

can challenge yourself (as did several

DEEPER INTO SHANXI Province,

revered mountains. By the fourth century,

emperors past) by ascending its highest

the mountains get higher. In the Wutai

the remote region was a thriving centre

peak, the 2,000-metre Xuanwu, passing

range, five peaks soar over 3,000 metres

of Buddhism and boasted hundreds of

many a venerable temple along the

into fresh blue skies above with hillsides

temples and monasteries. These days,

way. The most extraordinary sight is the

blanketed in flowers. In ancient times,

some 40 remain, and Wutai is still an

Hanging Temple, more easily reached on a

pilgrims used to take two years to ascend

important site of pilgrimage, particularly

tour coach than by hiking. Like something

each in turn. These days, minibuses haul

for Tibetans and Mongolians. It’s

from a kung-fu movie, the temple is hewn

tourists at least part of the way up several

dominated by the soaring 50-metre White

from rock halfway up a cliff and extended

of the peaks, though many visitors seem

Stupa, which sticks out like a giant thumb

outwards in a series of wooden walkways.

satisfied just with glimpsing the temples

from the rocky brown hills and tinkles

The monastery houses small shrines to all

at the summit through telescopes set up at

prettily with breeze-blown bells that can

three of China’s main religions (Taoism,

souvenir stalls in the valley far below.

be heard across the valley.

Buddhism and Confucianism), but distracts

With a history dating back to the first

The most spectacular group of buildings Portfolio

67

Clockwise from top left: Traditional architectures in Jin Memorial Hall; Climbing the staircase to Pusading temple on Wutai Mountain; Shanxi Province’s final must-see is the eighteenth-century Qing Dynasty town of Pingyao, one of the most delightful places in China.

is at Taihaui, where temples cover an entire hillside with yellow roofs, a giant white stupa and even an elaborate Bronze Palace covered in animals, flowers and Buddhas. A steep set of 108 steps connecting two of the temples is said to represent the 108 earthly worries that are cast off as pilgrims, monks and tourists alike ascend upwards. True, by the time I’m at the top, I only really have one worry, and that’s getting enough breath in the thin mountain air. It’s well worth the climb, though, for the meditative view of

highlight is one of the earliest wooden halls

an early banking centre has graced it with

temple roofs and snowy peaks.

in China, where life-size figurines in pastel-

impressive mansions, civic buildings and

painted court dress, carrying jugs and

six-kilometre city walls from which I peer

FROM HERE, A bumpy 200-kilometre

brooms, attend to an empress. Wonderful

down onto dragon-draped temple roofs

drive takes me through a rugged landscape

dragons writhe around pillars on the

and into courtyards where ears of corn are

towards Taiyuan, the provincial capital

exterior of the hall like a set from Game of

strung out to dry.

and another mining and industrial centre.

Thrones. Life-size guardian warriors made

Just before town, a superbly kitschy Song

of iron dot the grounds, provide a useful

isn’t the China we hear about in often

Dynasty complex known as Jin Temple,

prop for holiday photography.

negative news coverage. It’s the China

It’s a happy ending to Shanxi, which

dotted through a sprawling park and

Shanxi Province’s final must-see is the

I love, a place of wonders and marvels,

forested hillside, is also guaranteed to

eighteenth-century Qing Dynasty town of

oozing culture and history, where red-

reduce earthly worries. The first temples

Pingyao, one of the most delightful places

cheeked ladies in red aprons giggle as you

were knocked up in the fifth century and

in China. Although it’s a mere newcomer

walk past their fruit stands, local apricots

added to over hundreds of years. The

by Chinese standards, its importance as

laid out like treasures before them.

March 2015

Essentials

68

Cuisine

A Spicy Contender

© 2015 New York Times News Service

Balti, a favourite curry in Birmingham, is now vying to become one of Britain’s traditional specialties, reports Stephen Castle.

T

he year after opening a small

prawns, combined with vegetables and

and religious and ethnic differences

restaurant in Birmingham in

a spicy sauce, and cooked over a high heat.

seem to be growing ever sharper, this

1977, Mohammed Arif spent two

Arif ’s recently refurbished restaurant,

adaptation of Pakistani cooking to

weeks in his native Pakistan, where he saw

Adil’s, is thought to be the place where

British tastes is a symbol of culinary

spicy, aromatic curries being cooked and

the first Balti curry was served in 1978,

cross-fertilisation in one of Britain’s most

served, sizzling, in the same dish.

and lies in a colourful immigrant area of

multicultural cities. Most customers at

Birmingham where bustling shops sell

Balti restaurants are non-Asian – a tasty

South Asian food, spices and clothing.

retort to the much-mocked reports that

“It just came into my mind that I could take this idea back,” said Arif, whose thought gave life to a new dish – the Balti, a curry usually made of meat, chicken or

More than 35 years later, at a time when tensions over immigration, assimilation

areas of Birmingham, and of a number of other European cities, had become “no-go Portfolio

69

“Let’s hope the popular Birmingham Balti recipe follows in the footsteps of our other iconic foods like the Cornish pasty in achieving protected status,” said Liz Truss, Britain’s secretary of state for environment, food and rural affairs, referring to a traditional savoury pie that has won a related European status.

zones” for anyone but strict Muslims.

The area around Adil’s is now known as Birmingham’s Balti Triangle. Restaurants in other cities have their own recipes and precooked Balti meals occupy supermarket shelves. But does that make Birmingham’s Balti one of Britain’s traditional specialties?

ThaT quEsTion is being pondered

by European Union officials. They are now debating whether Birmingham Balti should be recognised and registered alongside famous European foods like Italy’s Neapolitan pizza and its mozzarella cheese, and Spain’s Jamón serrano.

The British government wants European recognition. “Let’s hope the popular Birmingham Balti recipe follows absorbs and adapts external influences.”

in the footsteps of our other iconic foods

savoury pie that has won a related

like the Cornish pasty in achieving

European status. Curry is “a great part

protected status,” said Liz Truss, Britain’s

of the UK’s food heritage, along with fish

Britain, India’s former colonial overlord,

secretary of state for environment, food

and chips and pies,” Truss said.

has had a long love affair with food

and rural affairs, referring to a traditional

Opposite page: A traditional Balti cooking pot at Shabab in the “Balti triangle” area of Birmingham, England.

Above right: A king prawn curry served in a Balti pot.

March 2015

She is not the first British politician to

Both politicians have a point because

inspired by the subcontinent, but adapted

make such claims. In 2001, Robin Cook,

to palates unaccustomed to hot spice.

who was then foreign secretary, described

Even small British towns generally

chicken tikka masala as “a true British

have an Indian restaurant and takeout,

national dish.” With its spicy, but creamy,

and Indian-influenced food features in

orange-coloured sauce it was, Cook said,

everyday staples like sandwiches.

a perfect illustration “of the way Britain

Balti emerged at a time when curry

Essentials

70

Cuisine

Left: Chicken Balti at Shabab.

Below: Adil’s, which is thought to be the place where the first Balti curry was served in 1978, in Birmingham, England.

Eating Balti in Birmingham was, and

glass table tops, and, in line with Muslim

Indian restaurant, Veeraswamy, opened

remains, a different experience. Usually it

beliefs, did not serve liquor (though most

in London in 1926). By the 1980s, such

is consumed not with a knife and fork, but

allowed customers to bring their own, and

food was found all over the country, but

with large naan breads, dipped into hot

still do).

was often eaten by late-night diners, their

wok-style cooking pots made from thin-

taste buds dulled by an evening’s drinking.

pressed steel.

Photo: Getty Images

was well established here. (Britain’s oldest

Many restaurants, according to Arif, “just put it on a plate and microwaved it.”

During the 1980s, Birmingham’s Balti restaurants were basic places, usually with

Cooked in less than 10 minutes over a high heat and in vegetable oil, Birmingham Balti usually contains less cholesterol than curry recipes using

Cooked in less than 10 minutes over a high heat and in vegetable oil, Birmingham Balti usually contains less cholesterol than curry recipes using ghee, a sort of clarified butter. This is hardly health food, however. It tastes simple but full of flavour, spicy but not fiery, oily but not too heavy.

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71

ghee, a sort of clarified butter. This is hardly health food, however. It tastes simple but full of flavour, spicy but not fiery, oily but not too heavy. Arif ascribes its success to the fact that it is “fresh cooking and people like the fact that it is served sizzling.”

In the kItchen at Shabab restaurant, on Birmingham’s Ladypool Road, the owner, Zafar Hussain, demonstrates the cooking technique over a fierce flame. One of his helpers rolls out a large naan bread and then, with an unexpected flourish, pulls out a pillow that is the perfect size to shape the bread, and then places it carefully into a hot, circular tandoori oven.

“We get visitors from all over the world,” Hussain said. “Balti has a distinctive taste because it is cooked in a unique way.” authenticity and a quality guarantee,

executive body of the 28-nation bloc,

ingredients include turmeric, fenugreek,

providing they cook according to a set

says its deliberations are continuing,

cumin, garam masala and coriander.

of rules. These would apply only to

and Arif, 62, who came to Britain in the

Each restaurant has its own sauce but

Birmingham Balti, Munro said. Balti

late 1960s, said he welcomed the bid for

name Balti, one theory being that it

meals prepared elsewhere, or those not

European recognition. He said he had

was derived from a South Asian term

identifying themselves with the city, would

some personal regrets that he did not

for “bucket” because at large gatherings

not be affected, providing they did not

exploit Balti more commercially. “This

on the Indian subcontinent, food was

describe themselves as “Birmingham Balti.”

was my brand,” he said, “but I never really

There is debate over the origin of the

sometimes served from buckets. Another is that it refers to a mountainous area of northern Pakistan, known as Baltistan.

Arif said the name was invented because it was easier to pronounce than the Pakistani cooking pot known as a karahi.

Andy Munro, adviser to the Birmingham Balti Association, has led the campaign to gain the European quality mark known as TSG, which stands for traditional specialty guaranteed, and is one of three programmes intended to protect European agricultural products and foodstuffs.

If successful, restaurants will be able to use the designation as a proof of

Above right: Patrons and employees at Adil’s, which was recently refurbished.

Right: Balti curries are cooked over high heat in vegetable oil.

March 2015

The European Commission, the

bothered about it.”

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Essentials

Technology

Fuelled by Danish Ingenuity The tiny island of Samso off the Danish coast is a case study in renewable energy, reports Diane Caldwell.

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73

Opposite page: Arne Kremmer Jensen, director of the district heating plant places hay bales used for heating on an assembly line on Samso.

Top: Hans Jorgen Buur, an investor in the offshore wind farm, times his solar energy use to when power is cheapest.

long-term transformation. It won a

about 60 swells to include hundreds of

government-sponsored contest to create

residents and thousands of tourists in the

a model community for renewable energy

summer. They – along with generations

and, through a combination of wind and

of artists like Edward Hopper, Rockwell

solar (for electricity) and geothermal and

Kent and Jamie Wyeth – have been drawn

plant-based energy (for heating), the

by the island’s lost-in-time charm and

island reached green energy independence

picturesque setting in the Gulf of Maine.

in 2005. That means Samso generates

Monhegan faces challenges as stark as

more power from renewable sources than

its beauty. Foremost among them – and

it consumes overall. Attached by a power

the spur for the journey to Denmark – is

cable to the mainland 18 kilometres away,

dependence on expensive, dirty fuels

the island sells its excess electricity to the

B

for heating and electricity. Even with

national utility, bringing income to the

efore dawn one morning in

the recent fall in oil prices, Monhegan

hundreds of residents who own shares in

October, a handful of Americans

residents pay among the highest power

the island’s wind farms, both on land and

gathered at a lonely pier on

rates in the US – almost six times the

at sea.

Samso, a small Danish island about four

national average – and the electric

hours from Copenhagen. Bundled in

company, locally owned and operated,

for its accomplishments. Soren

layers of fleece and wool, the Americans,

struggles to keep the lights on.

Hermansen, 55, and his wife, Malene

mostly from islands off the Maine coast, © 2015 New York Times News Service

Monhegan, Maine, whose population of

Twenty years ago, Samso faced similar

Samso has attracted global attention

Lunden, 49, worked for years to develop

had come to get a closer look at a wind

problems. Its farming and fishing

the programme on the island and have

farm – 10 mighty turbines spinning in the

industries were in decline, and its

created an institute, the Samso Energy

Kattegat strait – that has helped make

electricity and heating costs, mostly from

Academy, to spread their story and

Samso a symbol for a greener future, one

diesel and coal, were rising. Its young

methods to international visitors.

powered entirely by renewable energy.

people were leaving the island to attend

Among them was Marian Chioffi, the bookkeeper at the electric company in March 2015

high school and choosing not to return.

But in 1997, the island began a

The Maine islanders, along with students from the College of the Atlantic in Bar Harbor, had travelled to Samso to

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Essentials

Technology

and plans were finally moving ahead for a long-term, public-private demonstration project that would place two turbines there. There are not yet any full-scale offshore wind farms in the United States, so the Mainers were eager for a rare chance to see one up close.

It was still dark as the group boarded the Ocean Cat, a former whale-watching boat. Willy Mortensen, the captain, started making coffee and chatting with the visitors. He and his mate are on call to ferry repairmen to the wind farm, which starts about 3.5 kilometres from Samso’s coast. That’s what they were doing on that damp morning, with the Mainers tagging along. The repair crew often works for 12 hours on a visit. Mortensen said: “There’s attend the academy and hear the Danes’

a lot of trouble with the turbines. You’re

advice. If all went well, each islander

repairing and repairing and repairing. By

would go home with a team of students

the time you get one fixed, the next one

dedicated to solving an energy problem

doesn’t work.”

using ideas borrowed from Samso.

Beyond that, the planners hoped, new

Indeed, when Mortensen nudged the bow of the boat through the heaving

Maine island projects could become

waters to settle near turbine No. 6,

templates for broader adoption of

another stood idle, victim of a cracked

renewable energy. Because of their particular geography, islands often lack the resources and infrastructures to meet their own needs. Fuel, like other necessities, is often imported – sometimes with great difficulty – and electric grids, when they even exist, are often underdeveloped or out of date, all

Top: Soren Hermansen, who created the Samso Energy Academy, on a wind turbine on the Danish island Samso.

Below: The main harbour of the small island town of Vinalhaven, home to the Fox Islands Electric wind site.

of which leads to higher prices and less reliable service. With residents open to cheaper and better alternatives, islands are becoming seedbeds of innovation – living labs in which to test and refine technologies and approaches that are too new or expensive to establish on a mainland. And their small size makes the systems easier to manage and analyse.

For Chioffi, seeing how the people of Samso had come to accept new technologies had particular significance.

In 2009, Maine designated a patch of ocean off Monhegan’s coast that is part of the state’s lobstering grounds as a test site to study renewable energy development, Portfolio

75

about 20 per cent from government subsidies, to turn the island into a renewable-energy community, Hermansen estimates. But in the end, the island’s accomplishments seem to stem not so much from government policies and subsidies as from Hermansen’s ability to show people how the changes could benefit them.

On tiny Monhegan, the year-round residents are focused on Maine Aqua Ventus, a wind project with public and private financing that may arrive near their shores whether they want it or not. Conceived as a demonstration of the potential for offshore wind, it would put two enormous turbines – 100metre towers atop 10-metre platforms, bearing that would require a special

hay to heat water, which then circulates

as opposed to the roughly 70-metre

crane boat to fix. As the workmen put on

through underground pipes to radiators

machines near Samso – in a pristine

harnesses and climbed off the bucking

and heat exchangers for warmth and hot

section of the Atlantic Ocean. Some

deck to a small platform encircling the

water. But the plant near the academy is

residents say they like the idea of potential

steel tower, Chioffi craned her neck to

experimenting with elephant grass as a

benefits of the farm, including better

look at the machine looming overhead.

new source of biomass, Hermansen told

“Does seeing these give you more

the group, because it grows faster and

of a sense of the reality?” asked Sam

has a higher energy content than hay.

Saltonstall, a retired Maine schoolteacher

“We are still looking for the elephants,”

who now lives on Peaks Island, near

Hermansen joked of the dense field.

Portland.

“Yeah,” she said softly, stunned by

Part of the appeal of using the biomass is that even with low oil prices it is

how big they were. “But the ones they’re

cheap – about one-eighth the cost of

talking about putting up are twice as high

oil, which is heavily taxed in Denmark,

as that.”

he said. But as with some of the other

“I’m not on a mission of saving the polar bears in the Arctic or changing the climate – I am on a mission of saying it is not good for us to be depending on imported fossil fuels.”

renewable technologies in use on Samso, One sunny afternoon during their

the system is not so easily replicated

weekslong stay on Samso, the five Maine

elsewhere. The island has open, fertile

broadband service and access to central

islanders and about 15 students rode on

land and ground soft enough to bury the

Maine’s grid, which would relieve them of

bikes with Hermansen to an open field.

hot-water pipes. Maine’s flinty landscapes

the burden of running and maintaining

Huge, plastic-encased bales of hay sat

are not so accommodating. Hermansen

their own system. But they also worry that

alongside a large plot of a dense, tufted

and Lunden acknowledge as much but

it could harm tourism and lobstering, as

plant called elephant grass.

argue that specific natural resources and

well as birds and marine life.

On the island, many private houses

technologies are irrelevant to developing

and public buildings connect to central

a green community without an appeal to

Monhegan work through those questions

heating plants established as part of the

people’s direct and practical self-interest.

by borrowing engagement strategies

energy project. The heating plants burn

Top: Island Energy Conference attendees tour the Fox Islands Electric wind site on Vinalhaven island in Maine.

March 2015

“I’m not on a mission of saving the polar

Chioffi’s project is intended to help

from Hermansen and Lunden. So far, the

bears in the Arctic or changing the climate

approach is having some effect. When

– I am on a mission of saying it is not

the Danish couple visited Monhegan in

good for us to be depending on imported

October, most island residents showed up

fossil fuels,” Hermansen said.

for a discussion and were still talking about

It has taken $80 million in investment,

it along the dirt roads the next day.

Essentials

76

Environment

O

ut here on the endless swamps of the Bangweulu Wetlands in Zambia, a harsh truth has

been passed down from generation to generation: there is no fear but the fear of hunger. With that always weighing on his mind, Mwewa Ndefi gets up at dawn, just as the first orange rays of sun are beginning to spear through the

The Mosquito Net Issue Mosquito nets are meant to combat malaria, but in many waterside communities they are used for fishing with devastating environmental effects, reports Jeffrey Gettleman.

papyrus reeds, and starts to unclump a mosquito net.

Nets like his are widely considered a magic bullet against malaria – one of

bugs and the occasional green frog. “I

mosquito-net fishing is a growing

the cheapest and most effective ways

know it’s not right,” Ndefi said, “but

problem, an unintended consequence of

to stop a disease that kills at least half

without these nets, we wouldn’t eat.”

one of the biggest and most celebrated

a million Africans each year. But Ndefi and countless others are not using their

Across Africa, from the mud flats of Nigeria to the coral reefs off Mozambique,

public health campaigns in recent years.

The nets have helped save millions of

mosquito nets as global health experts have intended.

Nobody in his hut, including his seven © 2015 New York Times News Service

children, sleeps under a net at night.

Instead, Ndefi has taken his family’s supply of anti-malaria nets and sewn them together into a gigantic sieve that he uses to drag the bottom of the swamp ponds, sweeping up all sorts of life: baby catfish, banded tilapia, tiny mouthbrooders, orange fish eggs, water Portfolio

Essentials Environment anyone fishing with a mosquito net.

“We need a regulation to deal with these

“If you’re using freshly treated nets in a smallish stream or a bay in the lake, it’s quite likely you’re going to kill fish you don’t intend to kill,” said Dan strickman, a senior programme officer for the Bill and Melinda Gates foundation, which has invested heavily in malaria research and development.

people,” Museveni said.

Many of these insecticide-treated nets are dragged through the same lakes and rivers people drink from, raising concerns about toxins. One of the most common insecticides used by the mosquito net industry is permethrin, which the US Environmental Protection Agency says is “likely to be carcinogenic to humans” when consumed orally. The EPA also says permethrin is “highly toxic” to fish.

Most scientists say the risks to people are minimal, because the dosages are

lives, but scientists worry about the

relatively low and humans metabolise

collateral damage: Africa’s fish.

Part of the concern is the scale.

smaller than mosquitoes, traps much

Mosquito nets are now a billion-dollar

more life than traditional fishing nets do.

industry, with hundreds of millions of

Scientists say that could imperil stressed

insecticide-treated nets passed out in

fish populations, a critical food source for

recent years, and many more on their

millions of the world’s poorest people.

way. They arrive by the truckload in poor,

Scientists are hardly the only ones

waterside communities where people have

alarmed. Fistfights are breaking out

been trying to scrape by with substandard

on the beaches of Madagascar between

fishing gear for as long as anyone can

fishermen who fear that the nets will

remember. All of a sudden, there are light,

ruin their livelihoods, and those who say

soft, surprisingly strong nets – for free.

they will starve without them. Congolese

Many people said it would be foolish not

officials have snatched and burned the

to use them for fishing.

nets, and in August, Uganda’s president,

“The nets go straight out of the bag into the sea,” said Isabel Marques da Silva, a marine biologist at Universidade Lúrio in Mozambique. “That’s why the incidence for malaria here is so high. The people don’t use the mosquito nets for mosquitoes. They use them to fish.”

But the unsparing mesh, with holes

March 2015

Yoweri Museveni, threatened to jail

Opposite page: (Top) Fishermen, their canoes loaded with mosquito nets, at Bangweulu Swamp, Zambia.

Opposite page below: (L-R) A boy stands by a makeshift football net made from a mosquito net in Lagosa, Tanzania; Fishermen drag mosquito nets across shallows.

Clockwise: A child sits on mosquito nets that a family is sewing together to use for fishing; Women fish traders ready and waiting to buy fish from men returning from a night of fishing on Lake Victoria, in Kenya; Jane Adhiambo, a mother of two, using a mosquito net for fishing.

77

78

Essentials

Environment

BASF, a major net maker, said, “We want to avoid any form of contamination.” He acknowledged that “if it’s a small pond, say maybe 10 metres, it could be a problem.”

Though experts say that the vast majority of mosquito nets are used exactly the way they were intended – hung over beds – the full extent of mosquito-net fishing is unknown. “No one is going to come forward in a survey and say, ‘That thing you’re giving me, we’re not using it properly,’” said Seth Faison, a spokesman for the Global Fund to Fight AIDS, Tuberculosis and Malaria, which has financed the purchase of 450 million nets.

Yet Faison and several other public health officials maintained that mosquito-net fishing was “anecdotal”.

permethrin quickly. But with coldblooded

and Melinda Gates Foundation, which

animals, it’s a different story. “If you’re

has invested heavily in malaria research

using freshly treated nets in a smallish

and development. “That’s definitely an

said, “it’s an infinitesimal problem, maybe

stream or a bay in the lake, it’s quite

environmental hazard.”

one per cent.” But that would still amount

likely you’re going to kill fish you don’t

The leading mosquito net

“In regards to what we face,” Faison

to millions of nets.

One of the few detailed studies on

intend to kill,” said Dan Strickman, a

manufacturers insist that their products

senior programme officer for the Bill

are not dangerous. Still, many nets are

the issue showed that in several villages

labelled: “Do not wash in a lake or a river.”

along Lake Tanganyika, an essential body

Some labels go even further, warning Above: Fish for sale at a market in Katumbi, Tanzania.

Below: A woman sits under mosquito netting with her young children who are being treated for malaria, at a medical center in the the village of Kirando.

of water shared by four East African

people to pour any water used in washing

nations, 87.2 per cent of households used

a net into a hole in the ground, “away

mosquito nets to fish. When that study

from home, animals and wells.”

was presented at a malaria conference last

When asked about this, Egon Weinmueller, a public health executive for

year, the reception, according to some of those in attendance, was decidedly cool.

“People are very defensive about this topic,” said Amy Lehman, an American

When the nets land on the beach, it’s like peering into the stomach of the sea: a squishy mass of sand, seaweed, dead blowfish, dead baby eels and thousands of baby shrimp, their bodies translucent, their tiny eyes black dots no larger than specks of sand.

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79

from 7,849 metric tons in 2002.

physician and the founder of the Lake

beautiful northern coast, fishing crews

Tanganyika Floating Health Clinic,

drag seines made from mosquito nets

which conducted the study. “The

through the putty-coloured sea. When the

a crucial shrimping area, Madagascar

narrative has always been, ‘Spend $10

nets land on the beach, it’s like peering

recently banned the use of ramikaoko

on a net and save a life,’ and that’s a very

into the stomach of the sea: a squishy

nets there. But the government has been

compelling narrative.”

mass of sand, seaweed, dead blowfish,

in such disarray since a military coup a

dead baby eels and thousands of baby

few years ago that enforcement of the

“But what if that net is distributed

shrimp, their bodies translucent, their

decree is up to a group of threadbare

in a waterside, food-insecure area where

tiny eyes black dots no larger than specks

vigilante fishermen.

maybe you won’t be affecting the malaria

of sand.

rate at all and you might actually be

The Malagasy word for these nets is

Because Antongil Bay is considered

Clearly, there are no easy answers. In all these places, the people fishing with

hurting the environment?” she said. “It’s a

“ramikaoko,” or the thing that takes all

mosquito nets tend to be those without

lose-lose. And that’s not a very neat story

things together. The extent of the damage

boats or even tackle, often women and

to tell.”

is unclear, but recent surveys show that

children, the most dispossessed. They

Madagascar’s industrial shrimp catch

work from shore, tugging the nets through

plummeted to 2,851 metric tons in 2010

shallow waters, precisely where many

Every morning at sunrise in Antongil Bay, along Madagascar’s ruggedly

species spawn, creating another potential problem: the slow, steady destruction of sensitive aquatic breeding grounds.

Lehman, the American physician on Lake Tanganyika, wonders if there might be better malaria solutions for waterside communities. Specially treated wall coverings? Custom-fit window screens?

“Why is this question not being asked?” she said, a bit exasperated. “Is it that we don’t really want to know the answer?”

Top: (L-R) Children separate fish that were caught with mosquito nets; Mosquito nets stored by the Red Cross, awaiting distribution.

Left: A maternity clinic nurse gives a free mosquito net to a pregnant woman.

March 2015

Essentials

80

Luxury

Time Flies: 25 Years and Counting The Salon International de la Haute Horlogerie (SIHH) is one the world’s most prestigious trade fairs and a refined celebration of high watchmaking reports Nick Rice.

of music, movies and sport appear at the booths and add glamour to the procession of parties. Kevin Spacey performing a play at an ostentatious IWC event, Gerard Butler hanging out at the Roger Dubuis booth, the likes of Zinedine Zidane, Cate Blanchett and Hugh Jackman browsing the stands – all par for the course.

SIHH is distinctly A-list. An environment pitched somewhere between a first class

T

Cartier, Montblanc and Ralph Lauren

five-star VIP suite. It’s well curated with

International de la Haute

showcase their latest creations and fill up

meticulous finishing and impeccable taste.

Horlogerie (SIHH) in January

the order books.

In comparison, BaselWorld is a sensational

is an eagerly awaited event for all those

What in 1991 occupied 5,500 square

souk – a vibrant, bustling multitude of

connected to the luxury watch industry,

metres with just five exhibiting brands –

people visiting hundreds of exhibitors.

as the creative and commercial direction

Baume & Mercier, Cartier, Piaget, Gérald

Back in 1990, the luxury goods

for the exhibiting brands is gauged here.

Genta and Daniel Roth – is now 16

impresario and former Head of Cartier,

Alongside the BaselWorld fair, from which

heavyweight brands spread across 30,000

Alain Dominique Perrin, decided that

SIHH derived, this is a focal point on the

square metres. The event has also grown

the organised chaos of BaselWorld was

industry’s calendar.

in guest numbers and now welcomes

not a befitting stage for brands occupying

more than 14,000 people, including brand

the upper echelons of the luxury goods

Geneva, the fair occupies a huge indoor

representatives, retailers, distributors,

market. He proposed a more eminent

exhibition space with kilometres of thick-

collectors, experts, VIPs and journalists.

space – less sausage and fried onions

Within the rarefied purlieus of the

(a typical meal at the Basel fair then)

Located within the Palexpo centre in Photos: © SIHH 2015

lounge, an opulent art gallery and a

he annual arrival of The Salon

carpeted promenades leading to lavish brand enclosures. Luxury titans such as

Palexpo’s great halls, stars from the worlds

– and more champagne and caviar Portfolio

81

1

Back in 1990, the luxury goods impresario and former Head of Cartier, Alain Dominique Perrin, decided that the organised chaos of BaselWorld was not a befitting stage for brands occupying the upper echelons of the luxury goods market.

2

the brand” into corporate parlance. So (or beef carpaccio, a popular dish at

Perrin elected Geneva as the location for

SIHH). However, the watch business is

a new event and established the Salon

famously traditional and conservative and

International de la Haute Horlogerie

accordingly the Basel organisers didn’t

in 1991 – his coining of the term ‘haute

agree with Perrin. The Basel fair had been

horlogerie’ bestowed an immediate sense

the same since the early 20th Century and

of sophistication and éclat upon the new

change was not forthcoming.

rival fair.

Perrin was undeterred though. He was

The SIHH tripled in size in a few

a marketing mastermind – this is the

short years and some of the participating

man who, for better or worse, is credited

‘maisons’ changed, but it wasn’t until 1999

with bringing such phrases as “DNA of

that the longevity of the fair was sealed –

March 2015

Opposite page: The opening party started the 25th anniversary celebrations in style.

Above: (1) Huge carpeted corridors link all the exhibiting brands at SIHH. (2) Fabienne Lupo applauds 25 years of the SIHH.

the number of exhibiting brands grew to 17 and it has hovered around this figure ever since.

Fabienne Lupo, Chairwoman and Managing Director of the Fondation

82

Essentials

Luxury

de la Haute Horlogerie – the group

and a half decades. From 1990 to 2013,

Swiss watches – a restriction on giving

tasked with organising the SIHH, says,

Swiss watch exports increased from

watches as corporate gifts in China, and

“That an event which originated from a

approximately $5.4 billion to $24 billion.

an unsteady rouble. Yet these issues

creative vision should reach its quarter

However, there is a sense of caution on the

were pale in comparison to the Swiss

century is exceptional in itself. Even

opening day of this year’s event – markets

National Bank’s sudden announcement

more exceptional is the magic that

always fluctuate but there is genuine

before the fair that the Swiss Franc

happens year after year, thanks to the

concern afoot as growth is down to

would cease to be pegged to the Euro at

exhibiting maisons – 16 of them this year

around two per cent – a marked decrease

the 1.2 exchange rate, causing the Swiss

– that make each SIHH as exciting and

from the average expansion of 17 per cent

Franc to soar against the Euro. While

innovative as the very first one.”

in the three years leading up to 2012.

the SIHH was celebrating 25 years, the

Several factors have caused the slowed

Swiss stock market suffered its highest

The SIhh haS grown in tandem

growth, including the negative impact

one-day fall in 25 years, losing nine per

with the watch market itself, which has

brought about by civil unrest in Hong

cent of its total value. The majority of the

seen revenues balloon over the last two

Kong – the world’s biggest market for

exhibiting brands at the SIHH are owned

SIhh TIMeLINe OF CRUCIaL DaTeS SIHH – 25 years in 10 Key Dates

The Salon International de la Haute Horlogerie is established in Geneva with five exhibitors who leave BaselWorld and commit to the new event. Baume & Mercier, Cartier, Piaget, Gérald Genta and Daniel Roth pioneer a new home for Fine Watchmaking.

The SIHH expands to 11,000 square metres.

Further expansion to 18,000 square metres and the entrance of eight new brands, including independents Audemars Piguet, Bovet, Breguet, JeanRichard, GirardPerregaux and Perrelet.

1991

1995

The first edition lasts five days and covers 4,500 square metres at the Palexpo.

As large watch groups consolidate and acquire new brands the group of exhibitors changes again. Breguet joins the Swatch Group and Daniel Roth and Gérald Genta are acquired by Bulgari, leaving the SIHH.

For its 15th edition the SIHH adopts a new décor entitled ‘La Cité du Temps’. Designed by architect, designer and creative force at Richemont, Giampiero Bodino.

1999

2002

2005

Changes in the six exhibitors – Franck Muller departs, Gérald Genta and Daniel Roth return to join Baume & Mercier, Cartier, Piaget and Alfred Dunhill.

The SIHH opens its doors to a new total of 17 exhibiting Maisons. In the same year the euro became the single currency of 11 European countries.

A. Lange & Söhne, IWC, Jaeger-LeCoultre and Van Cleef & Arpels join the Richemont group. A new total of 18 exhibiting maisons.

The SIHH now covers 24,000 square metres and attendance has grown to reach almost 10,000 guests.

The 20th edition – the SIHH hosts two major exhibitions: the first given over to masterpieces from the Sandoz Collection, and the second a series of conceptual photographs of watches.

Following another buoyant year for watchmaking, the SIHH continues its expansion.

Exhibition space grew again to 30,000 square metres.

Record attendance on the back of a period of spectacular growth in the watch sector.

Visitor numbers reach almost 15,000, of which 10 per cent are journalists.

2009

2010

2011

2014

Despite a challenging economic climate, the number of media representatives tops 1,500 and the Ralph Lauren Watch & Jewelery Co makes its debut at the SIHH, now with 17 exhibitors.

Greubel Forsey and Richard Mille join and bring the total number of exhibitors to nineteen in a year when Swiss watch exports reported a significant upturn, ending the year on a record 22 per cent increase.

The SIHH makes the significant move of changing the event’s date from March to January.

The number of exhibitors remains unchanged at nineteen.

The same 16 maisons celebrate the 25th anniversary of the SIHH, widely regarded as the foremost event for Fine Watchmaking in the world.

2015

The number of exhibitors totals 16, following the departure of Girard-Perregaux and JeanRichard.

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83

Right: An employee of German manufacturer of writing instruments and watches Montblanc, owned by Richemont, the world’s second-largest luxury goods firm, shows a new watch model on the opening day of the Salon International de la Haute Horlogerie.

Below: An Excalibur model wristwatch by Swiss watchmaker Roger Dubuis, part of the luxury goods group Richemont.

by the luxury holding group Compagnie Financière Richemont, and following the announcement the company shares were down 14 per cent.

What the announcement means for watchmakers is essentially that their products, indeed all Swiss products, become much more expensive on the world market. In the case of wristwatches, the estimate is around 20 per cent more

on coming… from the Richard Mille

inventory… whilst rolling with whatever

expensive. Considering that 95 per cent

RM 19-02 Tourbillon Fleur ladies watch

punches the global market throws.

of the watches produced in Switzerland

launched in a series of 30 and priced

are exported – equating to 28.1 million

at $800,000, through to the $620,000

exclusive trade fair is a tribute to the

timepieces in 2013, it’s understandable

Rotonde de Cartier Grande Complication

skills and expertise that have established

that the news caused a whirlwind of talk

Skeleton – the most complicated watch

Geneva as the foremost centre for fine

and speculation.

Cartier has ever produced. Horophiles

watchmaking in the world. The SIHH is

need not fear, the watchmaking business

the pulse of the watchmaking profession,

CEOs remained calm. No doubt with

is here to stay. The core challenges for

and as always when emotion is at its

good reason. Richemont employs 20,000

luxury watch brands in 2015 will be to

height, this pulse beats stronger than ever.

people in more than 30 countries and

adjust growth forecasts, consolidate

Fine watchmaking is in its prime, and the

turns over approximately $10 billion per

growth and efficiently manage existing

SIHH is where its heart lies!”

Photos: Getty Images

And yet, the experts and the brand

year, and this seems to be a storm they will confidently weather.

And so the exceptional pieces will keep

Several factors have caused the slowed growth, including the negative impact brought about by civil unrest in Hong Kong – the world’s biggest market for Swiss watches – a restriction on giving watches as corporate gifts in China, and an unsteady rouble.

March 2015

As Fabienne Lupo concludes, “This

Essentials

84

Culture

Keeping Irish Romance Alive Willie Daly has been looking after the Irish matchmaking tradition for the last 50 years, reports Sally McGrane.

A

fter 50-odd years in the business

Ireland’s rural west coast. “To be cherished,

of romance, Willie Daly has a lot

to feel special.”

of stories to tell.

© 2015 New York Times News Service

Like the one about the man who fell to

Daly – who thinks he is in his early seventies but does not know precisely

his knees in front of a woman, followed

because, he says, the priest who kept such

her to the altar and only later admitted

records drank a lot – has been thinking

that he had not meant to propose – it had

about love most of his life. A horse

been a long night, and he had tripped.

farmer by trade, he is one of Ireland’s last

Or the one about a woman whose

traditional matchmakers, best known for

potential suitors kept hanging up after

presiding over the annual matchmaking

inherited from his matchmaker father

asking her age, until Daly advised her to

festival in nearby Lisdoonvarna – a weeks-

and possessed, he says, of supernatural

say she was young at heart. After that, the

long autumnal event famed for its all-day

romantic powers (if you touch it with one

83-year-old widow enjoyed two months of

dancing and spontaneous, often late-

hand, you will fall in love in six months;

delightful conversation before dying.

night, marriage proposals.

both hands, you will be married in six

“We are all looking for the simple

While the festival is on, Daly conducts

months; and if you are already married,

thing of love,” Daly said, as one of his

business in a pub. For a small fee (usually

you will fall in love all over again). Then,

six daughters – he also has two sons –

$10 to $15), he takes down the details of

sometimes with no more than a twinkle

stoked the peat stove in his kitchen

those seeking partners. He keeps these

and a nod, he might introduce two people,

on a raw winter morning recently

details in a large, overflowing book held

buying a woman a drink or nudging a

outside Ennistymon, a village on

together with tape and a shoestring,

farmer toward the dance floor.

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85

“We are all looking for the simple thing of love,” Daly said, as one of his six daughters – he also has two sons – stoked the peat stove in his kitchen on a raw winter morning recently outside Ennistymon, a village on Ireland’s rural west coast. “To be cherished, to feel special.”

“There’s a good deal of magic in it,” he said. “I’m not a big believer in too many words.”

ThE rEsT of the year, Daly makes matches by mail and by telephone, although visitors from as far away as New York have turned up on the doorstep of his County Clare farmhouse. “I know a lot of people are going on the internet now,” said Daly, who has just recently decided to learn how email works. “But it’s cold – it’s a machine.”

Above: Couples at a matchmaking event in Lisdoonvarna, some successful at getting together, others, not.

Right: Afternoon dancing at the Rathbaun Hotel and Restaurant.

March 2015

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86

Culture

Right: The town of Lisdoonvarna is famed for its annual matchmaking festival which attracted 60,000 people last year.

Below: Willie Daly takes down the details of those seeking partners. He has facilitated around 3,000 marriages.

Daly was privy to his father’s negotiations from a young age. Back then, marriage was more of a practical matter.

“I remember a big, tall, good-looking fellow, with a big red face, who came to wait for my father in the parlour,” Daly said. “My sister asked him, ‘What kind of a girl would you like?’ and his mother answered, ‘Michael wants a girl who will help with the sheep.’”

Bound to the land, bachelor farmers had little free time and were often shy.

And because of land inheritance rules,

Sunday Mass, and that she had blushed, too, he decided to help them meet.

“One day I was looking in the local

men were often decades older than their

paper, and her father had a fat sheep for

brides; love was expected to come later,

sale,” Daly said. “I says to John, ‘Why don’t

with children. Still, Daly said, even these

we pretend we want to buy the sheep?’”

business-like arrangements had a gaiety he found infectious.

Photos: Getty Images, Corbis

when he walked past a young woman at

By the time he was 12, Daly had

It worked. After challenging the sheep’s fatness and receiving a tart reply, the farmhand looked the farmer’s daughter

dropped out of school and was working

in the eye and asked if they might eat it

full time on his father’s potato farm.

together. Shortly afterward, they married.

At 15, Daly made his first match. Seeing that a farmhand named John had blushed

“These good, decent men who didn’t marry, now they’re 60, 70 years old, and there’s no one to take over the farm,” he said.

“When they die, it will be sold, and that’s a soft, sweet personality, a way of life, that’s gone.”

Despite early success, Daly was in his mid-20s before he thought seriously of continuing the matchmaking tradition.

He was running the family farm and, following a lifelong passion, had bought his first horses. For fun, he played music and told fortunes at local festivals. He says he suspected that matchmaking was on its way out until a neighbour asked him to find him a wife. He did, and Daly estimates that he has facilitated around 3,000 marriages since, although there is no official record. In this part of Ireland, though, much remains to be done.

“These good, decent men who didn’t marry, now they’re 60, 70 years old, and there’s no one to take over the farm,” he said. “When they die, it will be sold, and that’s a soft, sweet personality, a way of life, that’s gone.”

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87

Left: Potential suitors discuss their prospects at the Lisdoonvarna Matchmaking Festival.

Below: Daly, one of Ireland’s last traditional matchmakers, pets some of his horses in a field close to his farmhouse in Ennistymon.

A look through Daly’s matchmaking book shows how things have changed.

While details now include “personal preferences,” like a love of travel, an entry from his father’s time reads, simply: “12 cows.”

Women’s desires have shifted the most, he said. “In the past, women needed a roof over their heads, a little house of their own. Now, they want to like the man.”

Marriage is no longer a primary concern. Daly, who is himself in the process of divorce, also caters to those just looking to date. “What men need hasn’t changed,” he said. “Someone to share their life with, someone to share their love with.

Not to grow old alone.”

More recently, an influx of out-oftowners has added new dimensions to his work. While American women and Irish men often click instantly, “like a cow in a cock of hay,” other combinations are more challenging, he said.

In his experience, Italians simply do not drink enough to count as real romantics.

“Proposals are more likely when you’ve been drinking,” he said.

Germans, on the other hand, drink plenty but are generally unromantic.

Dubliners are picky, and American men sometimes have strange demands.

“One fellow wrote and said his future bride had to be ‘untouched by scalpel,’” said Daly, whose daughter had to explain what the man meant. “Around here, cosmetic surgery, it means getting false teeth.”

The Lisdoonvarna matchmaking festival attracted 60,000 people last autumn, something that pleases Daly. “Everyone should be in love, all their lives,” he said.

March 2015

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88

Other Business

BMW Fixes Security Flaw German luxury carmaker BMW

users of mobile devices.

BMW drivers can use the

has fixed a security flaw that could have allowed hackers to unlock the

software and SIM cards to activate

doors of up to 2.2 million Rolls-

door locking mechanisms, as well as

Royce, Mini and BMW vehicles.

a range of other services including

BMW said officials at German motorist association ADAC had

real-time traffic information, online entertainment and air conditioning.

The security risk occurred when

identified the problem, which affected cars equipped with the

data was transmitted, BMW said,

company’s ConnectedDrive software

adding it did not impede the car’s

using on-board SIM cards – the

critical functions of driving, steering

chips used to identify authorised

or braking.

Gauguin Breaks Record

World’s Biggest Wind Farm The world’s biggest offshore wind farm has

possible location for offshore wind farms as

Yorkshire coast.

the shallow seabed, only about 30 metres

The Dogger Bank Creyke Beck project will

deep, should make it easier to lay

cover 430 square miles and is expected to

foundations and construct large turbines

generate enough electricity to power nearly

there, but no company has yet ventured into

two million homes and support 900 jobs.

the area.

The project, more than twice the size of

A painting of two Tahitian girls by the

Dogger has long been mooted as a

been approved by the UK government for the

If built, the Creyke Beck turbines would be

the UK’s current biggest offshore wind farm,

the furthest offshore that have ever been

is expected to cost £6 billion to £8 billion

attempted. They would be the first stage of a

and could fulfil 2.5 per cent of the UK’s

project that could eventually be three times the

electricity needs.

size, if further tranches are also constructed.

French artist Paul Gauguin has been sold for $300 million (£197 million), making it the most expensive work of art ever sold.

Nafea Faa Ipoipo, or When Will You Marry?, was painted in 1892 and had been owned by a Swiss collector.

Unconfirmed reports suggest it was sold to a museum in Qatar. The oil-rich state paid the previous highest price for a painting, a work by Paul Cezanne, which sold for a reported £158 million.

The world’s third most expensive Photos: Getty Images

painting is Three Studies of Lucian Freud

by Francis Bacon, which sold for £89 million after six minutes of fierce bidding in November 2013, according to auction house Christie’s.

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