Portfolio | May 2012

Portfolio

Issue 77 â– May 2012

Exclusive to Emirates First Class and Business Class

SOLAR POWER India Aims Green UK REAL ESTATE Two Different Stories AFRICAN GROWTH A Sensible Approach

Larry Summers The Power of Money

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This issue May 2012

Portfolio

13

Exclusive to Emirates First Class and Business Class

Economist Larry Summers has a CV that includes being the president of Harvard to Treasury Secretary under the Clinton Administration and President Obama’s Chief Economic Advisor. But now that he’s left government there is one thing that really excites him – the role of technology in economics. And the best place to explore that is Silicon Valley.

Features 38 Property Market Reveals a Divided Britain

52 India’s Solar Ambitions

In central London, the value of millionaires’ houses is rising

By 2020 the Indian government wants to obtain 20,000

even faster than expected. In Hartlepool, it’s a different story.

megawatts from solar power. Some analysts said it couldn’t be done, but they may have to eat their words.

44 China’s Secretive Tech Giant Huawei, China’s biggest exporter, has lofty ambitions. But

56 Japan Courts Investment

if it wants to crack the global market it may have to learn

Strong regulations, high operating costs and weak government

to be more open.

inducements have prevented foreign capital investment in Japan. But that may be changing.

48 Africa’s Growing Ambition The continent’s GDP is growing at five per cent and foreign

60 App Store Under Attack

investment has risen six-fold. But there are other integral

Apple’s App Store appears to be the victim of its own

reasons why Africa’s future is looking bright.

success with increasing incidents of account hacking and fraudulent apps.

48 44

COVER PHOTO: DAVID DEAL/REDUX/EYEVINE

Cover Story 32 The Power of Money

Portfolio

14

Exclusive to Emirates First Class and Business Class

65 A Reflection of Time Malaysia’s oldest city has always been a melting pot of cultures. It is this vibrant blend that creates Malacca’s unique atmosphere, architecture and food.

70 One Man’s Eccentric Passion Bernardo Paz, a Brazilian mining magnate, has created a vast garden of art that drew nearly 250,000 visitors last year.

65

74 Record Inclination When the Leaning Tower of Pisa was straightened, contenders emerged for its crown as the most tilting tower. The current record holder is in Germany, but St. Moritz may have a winner.

78 Objects of Desire On the eve of the 50th anniversary of Marilyn Monroe’s death, memorabilia associated with the screen legend

70

continues to command record-breaking prices.

82 Evita’s Buenos Aires Following in the footsteps of Eva Peron is one way to see the Argentine capital and get a history lesson at the same time.

86 Winning Ways The ML 500 4MATIC BlueEFFICIENCY, now in its third generation, is back better than ever.

74

88 Other Business

Departments

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

17 Notebook World business in a nutshell.

23 Observer Spotting and analysing business trends.

30 Column: Julie Bosman The End of Printed Encyclopaedias

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Portfolio

Notebook

17

BUSINESS NEWS IN BRIEF

Buoyant Outlook for Floating Homes It used to be the stuff of

Waterstudio has designed a network of

and floating homes on the River Maas in

science fiction, but around the world

floating islands, the first to be put in

2005. All survived the major 2011 floods

architects and city planners are exploring

place next year, to accommodate hotels, a

that forced the evacuation of villages

ways mankind and water may be able

convention centre, yacht club and villas.

along rain-swollen rivers.

to coexist as oceans rise and other

The ‘islands,’ secured by steel cables, are

phenomenon induced by climate change,

made up of pontoons with a foam core

Netherlands on the New Water estate,

including extreme, erratic floods,

encased in concrete that can be joined

600 homes and a luxury apartment

threaten land-rooted living.

together like Lego blocks. An 18-hole golf

complex on land purposely inundated.

course will also be set on such platforms,

In Britain, planning permission has

in the cutting-edge field of aqua-

each with two to three holes, connected

been granted to the first amphibious

architecture are already in place,

by underwater tunnels. The $500

house, along the banks of the Thames

including a maritime housing estate,

million project, paid for by the Maldivian

River in Buckinghamshire. In Thailand,

floating prison and greenhouses in the

government and private investors, is

which was devastated by floods last

Netherlands.

slated for completion in 2015. A floating

September, a pilot amphibious house is

mosque, originally destined for Dubai, is

attracting attention.

With the Dutch at the helm, projects

The Netherlands, a third of which lies below sea level, has been managing water since the Middle Ages and has

also part of the master plan.

The Dutch have reversed some of their

Construction recently began in the

According to the UN Intergovernmental Panel on Climate Change cities such as

thus emerged as a pioneer in the field. It

earlier strategy of tightly defending their

Tokyo, London, Jakarta, Sydney, Bangkok

has exported its expertise to Indonesia,

land with dikes by allowing the sea to

and Shanghai are projected by the end

China, Thailand, Dubai and the Republic

penetrate some areas on which housing

of this century to lie totally or partially

of the Maldives.

has been constructed. One pioneering

under water as global warming boosts

effort was the placement of amphibious

sea levels. n

In the Maldives, the Dutch firm May 2012

Notebook Unlocking Kenya’s Gridlock

getty iMages

Numbers Game

$2

billion, a recordbreaking deal for a sports team, earns Us basketball legend earvin “Magic” Johnson ownership of the Los angeles Dodgers club. the deal, financed by a consortium spearheaded

by Magic Johnson, includes investment banking firm guggenheim Capital and hollywood producer peter guber.

35,756

-feet-dive in the pacific Ocean’s Mariana trench by filmmaker James Cameron makes him the first human to dive alone to the deepest part on the planet. Cameron spent three hours collecting research samples and images for scientists before making a two hour and 36 minutes journey back to the surface.

DBs group holding Ltd a controlling stake in indonesia’s Bank Danamon. indonesia’s economy grew 6.5 per cent in 2011, the highest rate since 1996. the newly established banking platform aims to tap into this growth.

The World In Figures

€27

billion cut in budget spending by the spanish government sets the nation on one of the toughest austerity drives in its history. Changes will include freezing public sector workers’ salaries and reducing departmental budgets by 16.9 per cent.

Motorists in Nairobi, the Kenyan capital, compete with trucks ferrying cargo between Mombasa, East Africa’s biggest port, and the landlocked neighbours of Uganda and Rwanda, all on a road that runs through the middle of Nairobi.

In response, Kenya is building more roads than it has since independence half a century ago. At least 80 billion shillings ($970 million) is being spent over five years on more than 500 kilometres of new roads

4.75

getty iMages

18

$1.1

trillion financial firewall deal has been reached by eurozone nations. this creates a permanent mechanism to bail out troubled eurozone nations. this enhanced fund seeks to prevent the two-year-old sovereign debt crises from engulfing larger economies such as spain and italy.

$7.2

billion acquisition, the biggest takeover by a southeast asian lender, gains

million registered spanish jobseekers in March hit a new record high in the nation’s unemployment figures. the Labour Ministry said the number of people filing for unemployment benefits rose by 38,769, with the services sector seeing the most jobs lost.

and on widening existing ones.

The Kenyan government forecasts that the economic growth rate will double over the next two decades, to about 10 per cent. This positive economic outlook has enabled Kenya to borrow the money for much needed infrastructure upgrades.

The flagship road project is

£4.4

billion investment by samsung electronics is aimed at building its first computer chip factory. the world’s biggest memory chip maker wants to tap into the lucrative Chinese market and maintain an edge over its competitors.

the 27 billion-shilling upgrade of a route that connects Nairobi to the industrial town of Thika and onward to Kenya’s tea and farming heartland. Kenya is the world’s biggest exporter of black tea and supplies onethird of the flowers sold in the European Union.

Portfolio

Notebook

19

Banks’ Green Investments according to Bloomberg New

tonopah, Nevada. it also helped

energy Finance, global clean-

arrange $210 million in loans for

energy investments climbed five

First Wind holdings’ Whitman

per cent in 2011 to $260 billion.

County, Washington, wind farm. support for solar propelled

prices tumbled 51 per cent to

Bank of america to No. 2. the

88 cents per watt.

Charlotte, North Carolina-based

to rank banks’ environmental

lender provided a $1.4 billion

getty iMages

solar headed the list, after panel

records, Bloomberg rankings

loan to san Francisco’s prologis

looked at their efforts to

for solar systems on warehouse

reduce their own waste and

roofs. the bank also financed

acquisition of two solar parks

own greenhouse gases 6.4

carbon footprints and at their

the solarstrong project, which

in italy. it also cut total energy

per cent from 2009 levels.

investments in clean energy.

is en route to becoming the

use by more than six per cent

London’s Lloyds Banking

the Madrid-based bank

country’s largest residential

in 2010, climbing 17 places.

group provided £413 million

solar-energy installation.

Fourth-placed Citigroup inched

($656 million) to 13 projects,

from fifth after investing $157

among them scotland’s Millour

santander retained its top spot thanks to its equity investment

in third spot was italy’s intesa

in the $1 billion Crescent

sanpaolo spa, which funded

million in California’s alta Wind

hill wind farm, to complete the

Dunes solar energy plant near

a €33 million ($44 million)

energy Centre and cutting its

top five.

African Retail Opportunities Mart decided to take a majority

will be adding 12 stores in

stake in the South African

countries like Nigeria and the

retailer Massmart (MSM) last

Democratic Republic of Congo

year is proof that Africa now

by the end of June, its CE

exists on the global retail map.

Whitey Basson said.

grapheast

However, Africa does

Upmarket retailer

pose challenges for formal

Woolworths Holdings is shifting

retail operations. Lack of

its focus from Australia to

infrastructure and limited

Africa, swapping its franchise-

According to Euromonitor

product (GDP) is forecast

energy supply affects businesses,

based model for a more involved

International, global retailers

to grow above five per cent

as does the volatile currency

joint venture strategy. The

need to have an African strategy

annually over the next five

risk. In a report examining

group’s African operations

to ensure long term growth and

years – two per cent more than

the barriers that stifle cross-

currently make up three per

diversify their source of income.

in developed markets. In 2011,

border trade within Africa,

cent of its total turnover, a

“Africa’s young urbanising

sales growth for the Middle

the World Bank revealed that

number they’re hoping to push

population and underdeveloped

East and Africa reached four

Africa’s largest retailer Shoprite

to 10 per cent.

retailing market means

per cent, making it the fastest

Holdings spends $20,000 a

there’s an unmet demand for

growing region for retailing

week in import permits to truck

Ethiopia and the Democratic

consumer goods,” Cedric Bra,

in the world, according to

meat, milk and other goods to

Republic of Congo have been

retailing analyst at Euromonitor

Euromonitor International.

its stores in Zambia alone.

singled out as having large

International said.

Africa’s gross domestic May 2012

According to Bra, the fact that the world’s largest retailer Wal-

Despite high trade barriers and supply challenges, Shoprite

Countries such as Nigeria,

potential for big scale retailers in the future.

20

Notebook DUBAI EVENT: AIRPORT SHOW WEBSITE: THEAIRPORTSHOW.COM DATE: 22-24 MAY, 2012 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE The 12th edition of the Airport Show is set to be the biggest event of its kind in the Middle East with the focus on the multi-billion dollar airport expansion projects underway in the UAE and other GCC countries. With over 200 multinational companies vying to tap into this growth opportunity, multi-million dollar deals are expected. The event provides extensive networking and business opportunities through a series of roundtable discussions, innovation and project seminars, and the hosted buyer programme.

EVENT NAME: MIDDLE EAST EVENT SHOW 2012 WEBSITE: ME-EVENTSHOW.COM DATE: 1-3 MAY, 2012 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE The Middle East Event Show is the event industry’s annual gathering that promotes collaboration with experts in the field. It presents an opportunity to examine the latest developments in event production with leading suppliers showcasing innovative event solutions, networking with more than 1,500 industry peers, and learning from experts at the free-to-attend seminars and social media forums.

DUBAI

United Arab Emirates

EVENT NAME: PALME MIDDLE EAST WEBSITE: PALME-MIDDLEEAST.COM DATE: 1-3 MAY, 2012 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE This is the region’s longest standing trade event for the professional sound, light, audio visual and entertainment industries. Connecting new products and leading suppliers from over 200 exhibitors and 800 brands, the event programme includes free-to-attend PALME conferences, product training and exhibitor-led technical workshops

EVENT NAME: ARAB MEDIA FORUM WEBSITE: ARABMEDIAFORUM.AE DATE: 8-9 MAY, 2012 VENUE: GRAND HYATT, DUBAI The UAE’s largest media gathering is the premier environment for media professionals to discuss and deliberate on crucial issues impacting the regional and international socio-political scenario. The forum is expected to draw 2,800 international journalists as well as influential decision makers, opinion leaders and high-profile speakers including Abdulaziz Al Shalan from New Media Expert, Saudi Arabia; Abdullatif Mustafa, Presenter of the YouTube show Nashrat Ghaseel and Abdul Wahab Badrakan, a writer and political analyst.

EVENT NAME: AUTOMECHANIKA MIDDLE EAST WEBSITE: AUTOMECHANIKAME.COM DATE: 22-24 MAY, 2012 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE The world’s leading companies in the automotive secondary market will showcase their expertise in manufacturing, distributing and installation of vehicle parts. Last year’s event welcomed 17,000 trade visitors from 130 countries checking out the 1,100 exhibiting companies.

TEXT: HILDA D’SOUzA

Portfolio

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Observer

23

BUSINESS NEWS IN BRIEF

Rudiger Lippert works at Factual in Los Angeles, a company that is trying to become the world’s chief reference point for thousands of interconnected supercomputing clouds.

Storing the Universe of Facts Gilad Elbaz, a multi-millionaire who has already changed our lives, believes the world is one big data problem. His aim is to rectify that, reports Quentin Hardy.

At seven yeArs old, GilAd elbAz

is definitely a new thing that will

known. He is so self-effacing that he

wrote, “I want to be a rich mathematician

change business, and a valuable new

recently walked through a conference of

and very smart.” That, he figured, would

tool for computing.”

3,000 data scientists, recognised only by

help him “discover things like time

the staff members of one of his investments.

machines, robots and machines that can

where once-unimaginably huge amounts

His mental and financial assets, he says, are

answer any question.”

of information are scoured for world-

like gifts he needs to deploy so the world

changing discoveries, Elbaz may be the

works better. “If all data was clear, a lot

accomplished big chunks of these goals. He

most influential inventor and investor.

fewer people would subtract value from the

has built web-traversing software robots

Besides Factual, he has interests in 30

world,” he says. “A lot more people would

and answered some very big questions

startups, including an incubator in San

add value.”

for Google, along the way becoming a

Francisco dedicated to Big Data. Elbaz

millionaire several hundred times over.

also serves on the boards of the California

absorbed what Elbaz terms “many billions

His time-machine plans, however, have

Institute of Technology, his alma mater,

of individual facts we’ve collated.” Geared

been ditched for something he finds more

and the X Prize Foundation, which offers

to both big companies and smaller

important: trying to identify every fact

cash prizes to teams that meet challenges

software developers, it includes available

in the world, and to hold them all in a

in space flight, medicine and genomics.

government data, terabytes of corporate

company he calls Factual.

The company he sold to Google, Applied

data and information on 60 million

In the 34 years since, Elbaz has

© 2012 New York Times News service

In the booming world of Big Data,

Since its start in 2008, Factual has

“The world is one big data problem,”

Semantics, is the basis of Google’s AdSense

places in 50 countries, each described by

Elbaz says. He is a slim, soft-spoken man

business, which brings Google close to $10

17 to 40 attributes. Factual knows more

who weaves in his chair when an idea

billion in revenue annually.

than 800,000 restaurants in 30 different

excites him. “What if you could spot any error, as soon as you wrote it? Factual May 2012

While valued for his investments and guidance, Elbaz remains relatively little-

ways, including location, ownership and ratings by diners and health boards. It also

24

Observer contains information on half a billion web pages, a list of America’s high schools and data on the offices, specialties and insurance preferences of 1.8 million United States health care professionals.

There are also listings of 14,000 wine grape varietals, of military aircraft accidents from 1950 to 1974, and of body masses of major celebrities. Odd facts matter too, Elbaz notes.

He keeps 500 terabytes of storage near Factual’s headquarters. That’s about twice the amount needed to hold the entire Library of Congress. He has more data stored inside Amazon’s giant cloud of

Gilad Elbaz, the founder of Factual, may be the most influential inventor in the booming world of Big Data, in which companies collect and analyse huge amounts of information.

computers. His statisticians have cleaned

campaigns. But more broadly, Factual is

first two employees in Palo Alto were Tim

and corrected data to account for things

meant for the heart of a great business of

Chklovski, with a doctorate from MIT in

like how different health departments

our age: using all the cloud-based data

artificial intelligence, and Tyler Bell, who

score sanitation, whether the term “middle

and algorithms to find patterns in nature

worked at Yahoo on maps after a decade at

school” means two years or three in a

and society, for scientists to observe and

Oxford piecing together how ancient Rome

particular town, and whether there were

businesses to exploit.

became early Europe.

revisions between an original piece of data

“Data has always been seen as just a side

Part of the difficulty, even among

effect in computing, something you look up

employees, is deciding how much data is

while you are doing work,” Elbaz says. “We

enough. “For sure, we want the correct

room with a few tables and walled with

see it as a whole separate layer that everyone

name and location of every gas station on

whiteboards, is to build the world’s

is going to have to tap into, data you want

the globe,” Bell says. “Not the price changes

chief reference point for thousands of

to solve a problem, but that you might not

at every station.”

interconnected supercomputing clouds.

have yourself, and completely reliable.”

and its duplicate.

Factual’s plan, outlined in a big orange

The digital world is expected to hold a

Financed with $27 million by a

“Wait a minute, I’d like to know every gallon of gasoline that flows around the

collective 2.7 zettabytes of data by year-

constellation of Silicon Valley luminaries,

world,” Chklovski cuts in. “That might take

end, an amount roughly equivalent to 700

Factual remains closely held. But it already

us 20 years, but it would be interesting.”

billion DVDs. Factual, which now has 50

has thousands of customers. Facebook,

At most startups, talk about doing the

employees, could prove immensely valuable

CitySearch, AT&T and others use it for

same kind of thing, only bigger and better,

as this world grows and these databases

information about places. Newsweek

20 years from now might seem like a

begin to interact.

used the database to help rank America’s

marriage of the delusional and the dull.

greenest companies.

Elbaz and his team, however, say they feel

Factual sells data to corporations and independent software developers on a

Others use Factual data for tasks like

that it makes sense. Telling everyone the

sliding scale, based on how much the

product planning and customer care.

true facts of the world is at least the work of

information is used. Small data feeds

There are no profits yet, as Elbaz puts

a lifetime.

for things like prototypes are free; contracts

money into more data sets and talent,

with its biggest customers run into the

which already includes advanced

to get more personal data,’’ Elbaz says. He

millions. Sometimes, Factual trades

mathematicians, data scientists from

doesn’t mean names and addresses, but

data with other companies, building

LinkedIn and Google, and at least one

their genetic information, what they ate,

its resources.

specialist in late Roman archaeology.

when and where they exercised – ideally, for

Some current uses are for adding

Factual also has offices in Shanghai and

“Lately, I’ve been thinking that we need

everyone on the planet, now and forever.

information like restaurant locations to

in Palo Alto, California, where Elbaz wants

“I want to figure out a way,” he says, “to get

cellphone maps, or for planning sales

to add more talent from Silicon Valley. His

people to leave their data to science.” n Portfolio

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

Donald Thompson McDonald’s Corporation has selected its president and COO, Donald Thompson, as its chief executive officer effective 1 July.

Thompson takes over from 67-year-old Jim Skinner, whose nearly eight years leadership as CEO catapulted US-based McDonald’s into the world’s biggest hamburger fast food chain.

With his “Plan to Win” strategy, Skinner turned the company around from falling stocks that were below $13 in 2003 to soaring four-fold in value. In February this year McDonald recorded its 106th consecutive month of positive growth and saw its stocks climb more than 200 per cent and eclipse $100 a share in late December last year.

Although Thompson, 48, takes the reins at a point where the burger giant is basking in nearly nine years of global sales growth, there are a number of challenges that he needs to watch closely. These include soaring commodity costs, a strong US dollar, and maintaining McDonald’s high growth rate.

The 22-year veteran is expected to bring extra value with his years of experience. The outgoing CEO has expressed his enthusiasm saying Thompson is “a very talented executive for McDonald’s, a very bright individual who’s been around 22 years and has held many jobs that have allowed him to contribute great value to the systems, including COO and president. He’s the real deal.”

Analysts are eager to find out how Thompson will see through McDonald’s expansion plans. These include investing $2.6 billion this year to open another 1,300 outlets worldwide, including nearly 175 in the US, 250 across Europe and 250 in China. Morningstar analyst RJ Hottovy says, “I’m curious to see how he can take the success and apply it to other parts of the business, and how well he navigates international growth, which will probably be his legacy.”

Fears About Arctic Gold Rush Lloyd’s of London, the world’s biggest insurer, has become the first major business organisation to highlight the huge potential environmental damage from drilling for oil in the Arctic.

The City of London institution estimates that $100 billion of new investment is heading for the far north over the next decade, but believes cleaning up any oil spill in the Arctic, particularly in ice-covered areas, would present “multiple obstacles, which together constitute a unique and hard-to-manage risk”.

The far north has become a centre of commercial attention

getty images

26

as global temperatures rise, causing ice to melt in a region that could hold up to a quarter of the world’s remaining hydrocarbon reserves.

Cairn Energy and Shell are among the oil companies that have either started or are planning new wells off the coasts of places such as Greenland and Canada, while Total wants to develop the Shtokman field off Russia. Shtokman is the largest single potential offshore Arctic project, 350 miles into the Russian-controlled part of the Barents Sea, where investment could reach $50 billion.

A BP joint venture is planning to spend up to $10 billion on developing onshore oilfields in the Yamal-Nenets Autonomous Area of Russia, despite its experiences with the Macondo oil spill in the relatively benign waters of the Gulf of Mexico. A series of onshore mining schemes are also planned, with Lakshmi Mittal, Britain’s richest man, wanting to develop a new opencast mine 300 miles inside the Arctic Circle.

The Arctic’s vulnerable environment, unpredictable climate and lack of a precedent on which to base cost assessments have led some environmental NGOs to argue that no compensation would be worth the risk of allowing drilling in pristine offshore areas.

Portfolio

Observer Disney Magic for China Walt Disney is joining an initiative to develop China’s animation industry, marking the latest push by Hollywood to expand into the world’s most populous country. the agreement unites the Burbank entertainment giant with an animation arm of China’s ministry of Culture and China’s largest internet company, tencent Holdings. getty images

China’s government has identified animation as a key area for development to boost the country’s global influence, or “soft power”.

Disney’s China partnership echoes DreamWorks animation’s announcement of a joint venture with shanghai media group, China’s second-largest media company, to build a family

getting a dedicated television channel approved in the country, considered a vital part of its marketing strategy. many studios and independent film producers and distributors

entertainment company to produce animated and live action

are hoping to capitalise on a recently negotiated trade

movies and tV shows for the Chinese market.

agreement with China that significantly eased restrictions on

Disney is currently building its first theme park in mainland

distributing movies in the country. the accord increases the

China, a $3.7-billion attraction in shanghai slated to open

number of foreign movies allowed into China under its current

in 2015. the company also operates a network of english-

quota system and gives foreign studios a larger slice of box-

language schools in China. Disney has had less success

office revenue.

US Gets Greener

shift is cutting US carbon dioxide emissions, something that international negotiations and legislation couldn’t achieve.

The shift to gas, combined with state programmes to encourage renewable energy and new rules from the Environmental Protection Agency, has put the country on course to cut domestic greenhouse-gas emissions 12 per cent by 2020, on par with what the failed cap-and-trade legislation aimed to achieve.

Carbon emissions from energy in the US, the largest source after China, probably will stay below the record level of six billion metric tonnes set in 2007 for the next 23 years, the US Energy Information Administration predicted 23 January, the first time it forecast a long-term reduction.

With the increased use of natural gas in the US, the Energy

getty images

Information Administration predicts that in 2035, carbondioxide emissions will total 5.8 billion metric tonnes, a cut of eight per cent from a forecast made last year. That’s also down 40 per cent from the prediction made in 2005, before the recession.

Fracking, a method of extracting gas from previously

New auto standards will cut emissions by a further six per cent

commercially unviable fields through hydraulic fracturing, has

or more in 2035.

opened up vast new shale-gas deposits and boosted the US’

The story in the US is in contrast to China, India, Mexico and

natural gas production. This has caused a steep decline in prices,

Russia, where demand for carbon-dependent cars and electricity

making gas more attractive than coal for energy generation. This

is surging.

May 2012

27

Observer The World

TExT: HildA d’sOuzA

Top 10

Iceland Could Power Britain

HigHEsT BirTH rATE By COuNTry Rank 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Country Niger Uganda mali Zambia Burkina Faso ethiopia angola somalia Burundi malawi

Births/1,000 population 50.54 47.49 45.62 44.08 43.59 42.99 42.91 42.71 41.01 40.85

getty images

28

soURCe: Cia WoRlD FaCtBooKs (2011 estimates)

The British energy minister, Charles Hendry, is to visit Iceland this month (May) to discuss connecting the UK to its abundant geothermal energy. “We are in active discussions with the Icelandic

HigHEsT lifE ExpECTANCy AT BirTH Rank

Country

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

monaco macau san marino andorra Japan guernsey singapore Hong Kong australia italy

Ages in Years 89.7 84.4 83.0 82.4 82.2 82.1 82.1 82.0 81.8 81.7

soURCe: Cia WoRlD FaCtBooKs (2011 estimates)

government and they are very keen,” said Hendry.

To reach Iceland, which sits over a mid-ocean split in the Earth’s crust, the cable would have to be 1,000 to 1,500 kilometres long and by far the longest in the world.

Hendry has already met the head of Iceland’s national grid about the plan. The web of sea-floor cables – called interconnectors – planned for the next decade would link the UK to a Europe-wide supergrid, which is backed by the prime minister.

The supergrid would combine the wind and wave power of northern Europe with solar projects, such as Desertec in southern Europe and North Africa, to deliver reliable, clean energy to meet climate change targets and reduce dependence on fossil

lOWEsT OvErAll lifE ExpECTANCy AT BirTH Rank 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Country angola afghanistan Nigeria Chad swaziland guinea-Bissau south africa Zimbabwe Central african Republic somalia

soURCe: Cia WoRlD FaCtBooKs (2011 estimates)

Ages in Years 38.7 45.0 47.5 48.3 48.6 48.7 49.3 49.6 50.0 50.4

fuel imports.

The government’s legally binding targets to reduce carbon emissions are a key driver for the new interconnectors, which if all built could supply a third of the nation’s average electricity demand. Interconnector cables can be laid very rapidly – at over 30 kilometres a day – but remain significant engineering projects, with each kilometre containing 800 tonnes of copper.

The UK has been energy independent for virtually its entire history. But with the North Sea’s oil and gas failing and coal banned as too polluting, the country will soon become dependent on imported energy Portfolio

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Commentary

30

JULIE BOSMAN

The End of Printed Encyclopaedias AFTER 244 YEARS, THE

Wikipedia also regularly meets the 21st-century mandate of providing

Wikipedia made an average of four errors

of print.

instantly updated material. And it has

in each article, and Britannica three.

nearly four million articles in English,

Britannica responded with a lengthy

age – and of competition from the website

including some on pop culture topics

rebuttal saying the study was error-laden

Wikipedia – Encyclopaedia Britannica will

that would not be considered worthy of a

and “completely without merit”.

focus primarily on its online encyclopaedias

mention in the Encyclopaedia Britannica.

Acknowledging the realities of the digital

and educational curriculum for schools. The

Cauz said that he believed Britannica’s

The Britannica, the oldest continuously published encyclopaedia in the English

last print version is the 32-volume 2010

competitive advantage over Wikipedia

language, has become a luxury item with

edition, which weighs 58.5 kilograms and

came from its prestigious sources, its

a $1,395 price tag. Only 8,000 sets of

includes new entries on global warming and

carefully edited entries and the trust that

the 2010 edition have been sold, and the

the Human Genome Project.

was tied to the brand.

remaining 4,000 have been stored in a warehouse until they are bought.

“It’s a rite of passage in this new era,”

Sales of the Britannica peaked in 1990,

Jorge Cauz, the president of Encyclopaedia Britannica, said in an interview. “Some

when 120,000 sets were sold in the United

people will feel nostalgic about it. But

States. But now print encyclopaedias

we have a better tool now. The website

account for less than one per cent of the

is continuously updated, it’s much more

Britannica’s revenue. About 85 per cent

expansive and it has multimedia.”

of revenue comes from selling curriculum

In the 1950s, having the Encyclopaedia

products in subjects like math, science and

Britannica on the bookshelf was akin to a

the English language. A further 15 per cent

station wagon in the garage, a possession

comes from the half a million households

coveted for its usefulness and as a

that pay a $70 annual fee for the online subscription, which includes access to the

goalpost for an aspirational middle class.

Buying a set was often a financial stretch, and many families had to pay for it in monthly instalments. But in recent years, print reference books have been almost

The last print version of the Encyclopaedia Britannica was the 32-volume 2010 edition, which only sold 8,000 sets. The print version accounts for less than one per cent of Britannica’s revenue.

its vast spread of resources, including

full database of articles, videos, original documents and to the company’s mobile applications.

Gary Marchionini, the dean of the School of Information and Library Science at the

completely overtaken by the internet and “We have very different value

University of North Carolina at Chapel Hill,

specialised websites and the hugely

propositions,” Cauz said. “Britannica is

said the fading of print encyclopaedias was

popular – and free – online encyclopaedia

going to be smaller. We cannot deal with

“an inexorable trend that will continue.”

Wikipedia.

every single cartoon character; we cannot

“There’s more comprehensive material

deal with the love life of every celebrity. But

available on the web,” Marchionini

Wikipedia has moved a long way toward

we need to have an alternative where facts

said. “The thing that you get from an

replacing the authority of experts with

really matter. Britannica won’t be as large,

encyclopaedia is one of the best scholars

the wisdom of crowds. The site is now

but it will always be factually correct.”

in the world writing a description of that

Since it was started 11 years ago, © 2012 NEW YORK TIMES NEWS SERVICE

said that out of 42 competing entries,

Encyclopaedia Britannica is going out

written and edited by tens of thousands

But one widely publicised study,

phenomenon or that object, but you’re still

of contributors, and even academics have

published in 2005 by Nature, called into

getting just one point of view. Anything

gradually accepted it as a largely accurate

question Britannica’s presumed accuracy

worth discussing in life is worth getting

and comprehensive source.

advantage over Wikipedia. The study

more than one point of view.” n Portfolio

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Profile 32

Portfolio

33

The Power of Money Economist Larry Summers has a CV that includes being the President of Harvard to Treasury Secretary under the Clinton Administration and President Obama’s Chief Economic Advisor. But now that he’s left government there is one thing that really excites him – the role of technology in economics. And the best place to explore that is Silicon Valley, reports Guido Duken.

May 2012

Profile

34

Lawrence Summers is a man who knows about money. In fact, one could argue that he was genetically programmed that way as his parents, Robert and Anita Summers, are both economics professors.

Not to mention that two of his uncles,

2001, Summers returned to Harvard as

Paul Samuelson and Kenneth Arrow, are

the institution’s president until resigning

both Nobel laureates in economics.

in 2006.

However, when the 16-year-old

In 2009, Summers joined the National

Krugman and Joseph Stiglitz.

Summers also pushed through controversial banking reforms in the US. As Bill Clinton’s Deputy Treasury

Summers entered the Massachusetts

Economic Council, eventually serving as

Secretary he endorsed the Gramm-Leach-

Institute of Technology (MIT), he originally

President Obama’s Chief Economic Advisor

Bliley Act that paved the way for massive

intended to study physics. But it didn’t take

before leaving in December 2010. In those

consolidation in the financial-services

long for him to see the light. “I wasn’t any

two years he exercised maximum sway

industry and removed the separation

good at math or physics,” said Summers,

over US economic policy during the worst

between investment and commercial

“so I became an economist.” It marked the

economic crisis since the Great Depression.

banks. “Today, Congress voted to update

beginning of a meteoric career.

the rules that have governed financial LIKE EVERY Washington insider,

services since the Great Depression

one of the youngest tenured professors in

especially those who hold or have held top

and replace them with a system for

Harvard’s history. In 1991, he served as the

positions, he has received both praise and

the 21st century,” Summers said. “This

World Bank’s chief economist for two years.

criticism. Supporters praise him for his

historic legislation will better enable

In 1993, Summers received the famed John

strong points-of-view, while his detractors

American companies to compete in the

Bates Clark Medal, which is given to the

label it intellectual bullying.

new economy.” Many critics, including

In 1983, at age 28, Summers became

top economist under 40 and is regarded

During the Asian financial crisis in

President Barack Obama, have suggested

as a stepping stone to the Nobel Prize.

the ’90s some publications compared

the 2007 subprime mortgage financial

That same year, President Bill Clinton

Summers to General MacArthur for

crisis was caused by the Gramm-Leach-

named him as Treasury Undersecretary

the way he pushed banking reform

Bliley Act that created the “too-big-to-fail”

for International Affairs, which meant

onto various countries. He was deeply

financial institutions that were publicly

he was the US’s top financial diplomat.

involved in the Clinton Administration’s

bailed out.

Euromoney called him “the most ambitious

effort to bail out Mexico and Russia

Harvard professor to come to Washington

when those nations had currency crises.

endorsed the deregulation of financial

since Henry Kissinger.”

Summers encouraged then-Russian leader

derivatives, saying at the time that the

Boris Yeltsin to use the same “three-

big banks were “eminently capable of

Treasury Secretary and took the top post

‘ations’” of policy he advocated in the

protecting themselves from fraud and

four years later. During his two-year

Clinton Administration – “privatisation,

counterparty insolvencies.” Those same

tenure as Treasury Secretary, Summers

stabilisation, and liberalisation.” He also

derivatives played a central role in the

used budget surpluses to repurchase

pressured the Korean government to raise

financial crisis, leading them to be dubbed

Treasury debt and pay down the deficit,

its interest rates and balance its budget in

as “financial weapons of mass destruction”

which hadn’t happened since the 1920s.

the midst of a recession, a move criticised

by Warren Buffett. On 18 April 2010,

When President Clinton’s term ended in

by renowned economists such as Paul

in an interview on ABC’s This Week

In 1995, Summers became Deputy

As Treasury Secretary, Summers also

Portfolio

35

programme, Clinton said Summers was

was reasonable to expect that the subprime

Timothy Geithner led marathon

wrong in the advice he gave him not to

credit crisis would be a financially

discussions with other Obama economic

regulate derivatives.

significant event but not one that would

advisers over how to restructure the

threaten the overall pattern of economic

financial rescue to demand more

contemporaries in recognising that the US

growth. This is still a possible outcome but

accountability from banks in how they

subprime mortgage crisis could very well

no longer the preponderant probability.”

used bailout money. The two plotted to

Still, Summers was ahead of his

lead to a recession. In November 2007,

During the presidential transition in

Summers warned: “Three months ago it

2008, Summers and Treasury Secretary

try using government funds to reduce the number of home foreclosures. And they designed the outlines of an $800 billion

Summers served as Director of the National Economic Council in the Obama Administration from January 2009 to December 2010.

stimulus package comprised of tax cuts and vast new spending in a range of areas.

In February 2009, Summers quoted John Maynard Keynes, saying: “When circumstances change, I change my opinion”, reflecting both on the failures of Wall Street deregulation and his new leadership role in the government bailout.

Although Summers had endorsed the Gramm-Leach-Bliley Act, he now took a leading role in revamping financial regulation, which was shepherded through Congress by Senators Christopher Dodd and Barney Frank.

The bill allowed for the orderly dissolution of big financial institutions whose destruction would threaten the entire US economy at no cost to taxpayers; for the first time, the derivatives market was regulated, which was blamed for helping cause the 2008 financial meltdown; it created a financial council overseen by the Treasury Department to coordinate and monitor risk in the financial markets; and created an independent consumer watchdog inside the Federal Reserve to give US

In February 2009, Summers quoted John Maynard Keynes, saying: “When circumstances change, I change my opinion”, reflecting both on the failures of Wall Street deregulation and his new leadership role in the government bailout.

May 2012

37

“Look, I think that for too long, financial innovation has been about big, rich institutions. Square’s innovation is fundamentally about making it easy for a piano teacher or tutor to get paid, or reducing the friction involved in using a car service.”

technology.” He later singled out e-commerce as a particularly important segment. “The penetration of e-commerce and the movement toward IT platforms of commerce is going to have a larger and larger impact on the real economy, simply because high percentage rates from a substantial base make more difference

and a store of value, and I think it always

Institutions can change what they hold,

than high percentage rates from a very

has been,” he told Technology Review.

they can change their risk profiles much

low base.”

“It’s been a long, long time since most of

more quickly than they used to be able to,

the money was hard currency; most of

and that means they need to be watched

SQUARE IS a rising mobile payments

the money has been deposits in a bank

more quickly. It also means that we may

company based in San Francisco that not

of one kind or other. I think many of the

not be able to focus quite as much on what

only facilitates credit card transactions on

basic principles underlying money that

their risk profile is at a particular instant,

mobile devices, but is chasing an aggressive

economists understand – that if you create

as we focus on what their systems are for

goal to replace credit cards altogether. Its

too much of it you will get rising prices,

managing risk. But there’s no question that

this kind of innovation that stirs both the

for example – actually are constant even

risk management is going to be one of the

economist and technologist in Summers’

as technology does change.”

growth areas for the next decade or two.”

Summers believes that technology has

heart. In a recent interview, he outlined

There’s one thing Summers won’t be

his motivation for joining the startup. “I

accelerated the flow of money around

doing in Silicon Valley, and that’s giving

was excited,” said Summers. “Look, I think

the world and that requires a different

one of his Harvard lectures. “I am not sure

that for too long, financial innovation

approach to regulations. “I think we need

there is the attention span for some of my

has been about big, rich institutions.

a system that’s as modern as the markets.

lectures out there,” he joked. n

Square’s innovation is fundamentally about making it easy for a piano teacher or tutor to get paid, or reducing the friction involved in using a car service.

I was excited about the idea of financial innovation for the benefit of regular people. I thought they had an exciting product and the prospect of getting to a very substantial scale quite quickly.”

But doing away with credit cards will put Square on a collision course with some major financial institutions. And that’s where someone with Summers’ knowledge and influence will prove ultra useful.

At Andreessen Horowitz, Summers works with venture capitalists Marc Andreessen, Ben Horowitz and their partners, as well as with their start-ups, to advise them on global markets and on economic thinking.

The firm has an investment philosophy that already appealed to Summers while he was Treasury Secretary. “They have an audacity of vision and really support transformation.”

Even as technology transforms the way nature of money remains basically the same. “Money is a medium of exchange

GRAPHEAST

we do business, Summers believes the

Summers with Ben Bernanke, Chairman of The Board of Governors of the US Fedral Reserve.

Summers changed his viewpoint to support more financial regulations.

38

ProPerty Market reveals a DiviDeD Britain In central London, the value of millionaires’ houses is rising even faster than expected. In Hartlepool, it’s a different story, reports Hilary Osborne.

Portfolio

“It Is a frenzy out there,” says

Humberts. “There’s a reasonably

Tracy Kellett, a buying agent who searches

responsible government, the fiscal plan

London and the south-east for properties

does seem to be working, we have a very

for her well-off clients. “I said prime

transparent legal system when it comes to

London would go up five per cent this year,

property, we fare well on transaction costs

but I think it is already up that much.”

– and, of course, you can set up a tax-free

Almost five years after the first stirrings of the credit crisis, Britain’s housing market

These are not the kind of investors you

is deeply divided. The price crash that many

see elsewhere in the UK: they do not need

analysts had predicted failed to materialise;

income, just a safe place for their capital.

but while Kellett struggles to find enough

They will typically stay in the property for a

properties to sate the appetites of wealthy

few weeks each year, and leave it empty the

buyers in the capital, much of the rest of the

rest of the time. The hassle of dealing with

country remains deep in the doldrums.

tenants is not for them.

“There is definitely a London story versus

buyers, Nurmohamed says he is seeing

has done better over the last year or so

existing clients snapping up properties

while many parts of the country have seen

for their extended family – in one block

prices fall,” says Martin Ellis of Halifax.

in Mayfair, the same family owns four

Kellett recently viewed a two-bed

multimillion-pound apartments. “We

property at £1.25 million. After 80 viewings

do have buyers on our books who are

in two days, it has attracted bids of more

looking specifically to add to that prime

than £1.6 million, and the agent has

holiday home.”

Taylor says he has seen clients “buying

many of her clients are searching – £1

second, third, fourth, fifth and sixth

million to £2 million – she says the market

properties – they buy one for them and

is booming.

then one for the kids.” Recently he had a call on behalf of a buyer asking if he had

Kensington and Chelsea, Mayfair or

any houses for sale for £30 million. “I had

Knightsbridge – neighbourhoods in

one at £50 million, so I said is there room

London that are central, boast some of the

for movement, and they said no – the other

capital’s swankiest shops and restaurants

children had £30 million spent on their

and, say agents, have developed some

properties, so it wouldn’t be fair.”

cachet abroad thanks to their association with Princess Diana.

According to the Land Registry, prices

The properties Adams is currently selling cost an average of £12 million, but he has one on the market for £120 million. At

in these areas are up by nine per cent

the bottom end of his book, at around £1.5

year-on-year. The average is still below

million, your money could get you a two-

£1 million, but there are many for sale for

bedroom pied-a-terre in a location such

much, much more.

as Kensington or Chelsea with no garden.

Wealthy British buyers are vying with

C The Observer

David Adams of estate agents John

cash offers. In the price bracket where

Most of these properties are in

May 2012

As well as money coming in from new

the rest of the country. It is London which

advised that the seller will only consider

Property prices in London are up nine per cent year-on-year, but the picture is different for the rest of the UK.

vehicle to hold the property.”

Higher up the market, things are much

overseas investors who see sterling as a

more luxurious, with bespoke bathrooms,

safe haven during the euro crisis. “London

kitchens and spa rooms. If you have £30

offers a unique mix of attributes that

million or so to spare, you may even get

few other places in the world have,” says

great views alongside your state-of-the-art

Mohamed Nurmohamed, director of the

security and valet parking.

Mayfair branch of estate agents Chesterton

But money doesn’t always secure your

Real Estate

39

reUTers

Real Estate

40

A woman looks at properties for sale at an estate agent in central London. In the capital it is a seller’s market.

heart’s desire. Nurmohamed says: “In Mayfair we’ve had people with £30 million who can’t get what they want.”

This is a market where the seller is king – or often minor royalty – and to even get in to the most expensive properties to take a look, you may need to show your

“In some, very rare, cases people will prevent viewings unless they have evidence that the person can perform.”

credentials. “In some, very rare, cases people will prevent viewings unless they

Property Auction.

Hartlepool saw house prices fall by 17 per cent in 2011, and despite a 0.5 per cent rise in January they remain at an average of just £78,623, compared with a peak of £113,352 in 2008. During the boom years, between 150 and 200 homes a month were selling, but since the end of 2008 that

Across the road, Eden Estates is

figure has only once hit 100, according to

have evidence that the person can perform,”

marketing homes at a guide price, and

the Land Registry – and some properties

says Nurmohamed.

properties are being advertised for as

have been on the market for all of that time.

little as £10,000 in the Great North

Ellis at Halifax says the city is by no

two hundred and fifty miles away, the story is very different in Hartlepool, whose fortunes seem to sum up commentators’ talk of a two-track British housing market.

The north-eastern town is struggling with rising unemployment as a result of public sector cuts and the loss of manufacturing jobs. On York Road, one of the main streets running through the town, the blinds are down at the huge branch of Whitegates estate agents, which closed two years ago. Further up the road, the window reading for sellers: at least one in three properties advertised has been reduced and on one, buyers are told: “All serious offers considered”.

£30 million doesn’t guarantee that a buyer will get what he wants in exclusive areas such as St James.

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Real Estate

42

means alone. “Although Hartlepool may be at the extreme, there are other places that have also seen steep drops, in the northeast and across northern England.”

Ed Stansfield, property economist at consultancy Capital Economics, says that while the downturn in the London market was short-lived, the correction is by no means over in much of the rest of the country. “When you talk to people outside London, they say it’s still going on,” he says.

The Hartlepool branch of Manners & Harrison is buzzing with phone calls and activity, but manager Sharon Richardson admits things have been difficult. She says: “I’ve been in the business 20 years and it’s one of the hardest years I’ve done.” One of the challenges has been educating sellers about what to expect. “They come in and

In the seaside town of Hartlepool real estate prices are still dropping and it can take years to find a buyer.

say, ‘I saw on television, house prices are on the up’, and we say, ‘they’re not on the up in Hartlepool, our prices are still falling’.”

As with the UK as a whole there are pockets that seem to be driving down the average. One terraced house in the centre sold for just £20,000 last year, and there are many others on the market for less than £30,000.

“First-time buyers are not interested in the town-centre terraces for the simple reason that investors buy them and they tenant them,” says Kay Rhodes, branch manager for estate agent Reeds Rains. A price war between landlords has driven rents down, she says, leading to tenants who don’t value the properties as much.

“Those who remain as owner-occupiers

In the Hartlepool town centre prices are being slashed for small, terraced houses.

Meanwhile, builders are still constructing

Seaton Carew on the outskirts of town. He

will cut their losses and go – and they will

new homes. Just across the road, the

put the property on the market last Easter

probably sell to an investor.”

Blakelock Gardens development has three-

because his family wanted a home with

bedroom homes with en-suites, gardens

a bigger garden. By September he’d had

road of 54 small terraced houses where

and off-street parking starting at £104,950.

“minimal interest” and just three viewings,

three are to let, two are for sale by an agent

It’s easy to see why would-be buyers might

so he switched estate agent and reduced his

and one boarded-up property is for sale by

decide to sit tight until they can afford one

asking price from £209,950 to £205,950.

auction. According to the website Property

of those.

One of these streets is Rydal Street, a

Bee, one has been on the market since

In Hartlepool, buyers hold the cards:

But it took another price cut, to £185,950, before he got an offer – and that

2008, while another, on since 2011, has had

Richardson says some sellers accept cheeky

was £10,000 below asking price. But the

its price cut from £59,950 to £47,950. They

offers “because they are worried another

slow market has worked in his favour on

are the kind of homes that, in other towns,

buyer won’t come along”.

the purchase: the sellers of the home his

might be lived in by students, but there is no university here to supply that kind of tenant.

Lee Brown has just accepted an offer after 11 months of trying to sell his house in

family fell in love with accepted a lower offer than originally agreed. n Portfolio

Industry

44

China’s seCretive teCh Giant Huawei, China’s biggest exporter, has lofty ambitions. But if it wants to crack the global market it may have to learn to be a bit more open, reports Juliette Garside.

Portfolio

Industry

45

people’s republic, Huawei is headed by a

RIM and Taiwan’s HTC. To succeed, it will

former Red Army engineer, Ren Zhengfei.

have to redefine what “Made in China”

Unlike other Chinese IT firms, such as the PC maker Lenovo and telecoms

is the electronics workshop of the world,

Hong Kong stock exchange. A private

churning out iPhones for Apple and PCs

company owned entirely by its founders

for Dell, its produce usually bears the

and employees, the names of its board

stamp of a foreign company. Aside from

members were only published for the first

PC maker Lenovo, it is hard to name a

time last year.

Chinese brand known to European and

But it is also a flagbearer for China’s

by economic liberalisation in the

the quality is no good,” says Francisco

1980s to compete on the world stage.

Jeronimo, an analyst at research firm IDC.

Entrepreneurial and unbureaucratic, it

“Huawei needs to change that perception.”

It sells everything from mobile mast

Jeronimo believes Huawei products have the quality to compete, but says it will need to raise its public profile. The charge will

radios to software, data-centres and laptop

be led from the UK, where no expense has

dongles. Founded in 1987, Huawei only

been spared in recruiting British executives

began exporting in earnest in 2000, but

and an advisory board to help find friends

already over 65 per cent of its revenues are

in high places.

from abroad. Last year, they totalled 185.2 Getty iMaGes

“Consumer perception is that a Chinese product is cheap and looks cheap because

a shareholder.

billion yuan (£18.51 billion), just half a billion pounds less than the world’s largest telecoms equipment group, Ericsson.

Now Huawei is preparing to step out of

© 2012 Guardian news & Media

American shoppers.

first generation of corporations created

has prospered without having the state as

The securiTy guard’s mirrored

the shadows. While its governance remains

sunglasses reflect Barcelona’s pale winter

veiled, the company is pushing its brand

sunshine. His job is to keep the crowds

to the fore. It wants to place its products

attending the sprawling trade fair at bay.

in the hands of millions of western

Behind him, a pavilion the size of

consumers, and become the fourth largest

a bus garage houses the latest technology

manufacturer of smartphones by the end

produced by China’s Huawei. Those

of this year.

without a meeting to attend are told

While Huawei’s hometown of Shenzhen

group ZTE, Huawei is not listed on the

“going out” policy of encouraging the

Engineers test networking equipment at the Huawei Technologies campus in Shenzhen, China.

The company employs 140,000 staff.

stands for.

At the Mobile World Congress in

“Now Huawei is preparing to step out of the shadows. While its governance remains veiled, the company is pushing its brand to the fore.”

Patience Wheatcroft, the former editor of the London-based Sunday Telegraph is an

they cannot enter, and cameras are

Barcelona this February, Huawei’s devices

adviser, as is Amazon’s ex-UK boss Brian

banned inside.

chairman Richard Yu said that by the end

McBride, and Sir Andrew Cahn, recently

Huawei is China’s biggest exporter, and

of 2012 he hoped to have sold 60 million

chief executive of UK Trade & Investment,

its equipment helps run the BT broadband

smartphones, up from 17 million last year.

the government trade promotion body. To

network, but the brand is unknown to

Hitting that target would vault the firm

promote the smartphones, Bartle Bogle

most UK households. Regarded as a

into the big league, behind Apple, Samsung

Hegarty, ad agency to Google and BA, will

secretive organisation even within the

and Nokia, and ahead of BlackBerry maker

create a global campaign from London.

May 2012

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46

Samsung has shown it can be done.

The Korean company moved from fifth to second spot globally in smartphone sales last year, the only one in the top five to grow in the face of the unstoppable iPhone.

There are those who wonder why Huawei is so keen to risk its hard-earned yuans by chasing capricious mobile phone customers. The answer is that this is a high-growth market. Even in an early adopter nation like the UK, only half of users have a smartphone. And the handset market has the attraction of being a less

Former Chinese Premier Wen Jiabao (L) with Ren Zhengfei, the CEO of Huawei Technologies.

reuters

reuters

politically sensitive one than infrastructure.

The Huawei Ascend P1 S, unveiled in January, is claimed to be the world’s thinnest smartphone at 6.68mm.

huawei is already big in Europe, having last year won a breakthrough contract to overhaul the network of the UK’s largest operator, Everything Everywhere. But an offer to donate £50 million of equipment to bring a mobile signal into the London Underground in time for the Olympics was never taken up. A spokesman for Huawei says the deal fell apart not because of security fears, but because commercial agreement could not be reached between all the various players involved.

Bengt Nordstrom, a strategic adviser to European mobile networks, says Huawei has succeeded because of its ability to learn

reuters

fast. “Ten years ago they were really only

The Huawei pavilion at Barcelona was huge, but entry was invitation only. A lack of transparency is challenging the company’s expansion plans, especially in the US.

selling on low prices,” says Nordstrom. “It was hard to find people that could speak English well enough to conduct a business discussion. But for every quotation they produced, their quality increased.”

“It’s imperative we are seen as a global

can’ and ‘splendid act’, designed its quad

brand and not a Chinese brand,” says Mark

core processors in house and has become

Mitchinson, a Samsung veteran running

known in recent years for innovating. Some

the China Development Bank, the pattern

Huawei’s UK devices arm.

62,000 of its 140,000 staff work in research

of Huawei’s international expansion has

and development, and there are 23 R&D

followed its philosophy, borrowed from

centres around the world.

Chairman Mao, of encircling the cities by

His newest stock are phones and tablet computers running Google’s Android interface, which house computer chips

Without a recognised brand, Huawei’s

Backed by a $30 billion credit line from

winning the countryside.

Beginning in Africa and Russia, it has

that have four rather than the now usual

phones will sell on price. Its mission will

two processors, allowing them to handle

be to mop up those mobile subscribers who

moved successfully west. Only America

multiple instructions at the same time.

don’t yet own a smartphone, rather than

has blocked its advance. Efforts to expand

They are fast, particularly when it comes to

trying to poach Apple’s customers.

have been repeatedly neutralised by

downloading video.

“There are certain manufacturers that

Washington. Offers to acquire Motorola’s

have dropped the ball over recent years and

wireless division and a broadband

to leave chips to specialists like Intel,

others can pick up that ball and run with

software group were quashed after the

Huawei, whose name stands for ‘China

it,” says Mitchinson.

sellers were informed that regulatory

While most phone makers prefer

Portfolio

in October, the company he founded is facing a succession crisis. In her letter published in last year’s annual report, Huawei’s charismatic chairwoman, Sun Yafang, thanked the staff for re-electing her, saying: “I am sincerely grateful to our employees’ trust and confidence in me.” It was a short statement that masked an internal power struggle. While Ren, who does not give interviews, has been criticised in the Chinese press for a lack of transparency, Sun is increasingly being seen as Huawei’s public face, a networker who was among corporate China’s most senior representatives at Davos this year.

But in October 2010, a report in Meiri Jingi Xinwen (Daily Economic News) suggested Sun had been offered one billion Getty iMaGes

yuan to leave Huawei so that Ren could prepare the ground for the appointment

Huawei has 62,000 staff working in 23 R&D centres around the world.

to the 13-member board of his son, Meng Ping, who is customer relationship

approval would not be forthcoming. A

they know they could get if they opened up

management director. The company denies

contract to modernise mobile operator

their equipment market to them.”

this. Whatever the truth, Sun survived in a

Sprint Nextel’s network was squashed,

Huawei’s stated ambition is to become as

post she has held since 1999 and Meng did not join the board.

and the US commerce department last

big as Cisco or IBM, with annual revenues

autumn barred Huawei from an emergency

of $100 billion in 10 years. Nordstrom

services contract. A British executive

says this is unlikely without conquering

Huawei; Ren’s daughter Meng Wanzhou

whose company buys from Huawei says US

America: “This is an industry where you

is chief financial officer. According to a

politicians are using espionage as a scare

need to be truly global to have a future.”

report in Zhengquan Ribao (Securities

tactic to protect domestic businesses.

“What the Americans are really trying to do is stop Huawei getting the business

But the Ren dynasty holds sway at

Observers say the most serious threat

Daily) from April 2011, she is married to

to Huawei’s ambitions comes from within.

fellow director Xu Wenwei, although the

As Ren approaches his 68th birthday

company denied this. Meanwhile, Ren Shulu, the founder’s younger brother, is a member of the five-strong supervisory board that oversees the directors.

Succession is not just an issue at Huawei.

China’s first generation of entrepreneurs at Lenovo and white goods maker Haier are also nearing retirement. “These companies’ futures hinge on how effectively the incumbents manage leadership transitions.

Indeed, the choices the founder CEOs make may well reshape their companies as well as the Chinese economy,” says Liu. Ren has resisted a stock exchange listing,

reuters

but ownership could help shed light on the business and build trust. Huawei may Wan Biao, chief executive officer of Huawei, at a product launch Beijing. The company is betting its cloud-computing smartphones will help the firm grab market share.

May 2012

have to open its own doors before America decides to do the same. n

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AFRICA’S GROWING AMBITION The continent’s GDP is growing at five per cent and foreign investment has risen six-fold. But there are other more integral reasons why Africa’s future is looking bright, reports David Smith.

IT HAS BEEN DESCRIBED AS THE NEW scramble for Africa. The continent has awoken from the nightmare of its mid-90s civil wars.

Coups and dictators appear to be going out of fashion. Now, with six of the world’s 10 fastest-growing economies, there is a growing consensus that Africa’s time has come.

Africa’s GDP growth will average five per cent in the coming decade, according to Ernst & Young, with Ghana, Ethiopia and Uganda set to top seven per cent a year.

Foreign direct investment, which has risen six-fold in the past decade, is forecast to reach $150 billion by 2015.

There is growing confidence in Africa as an investment destination, with the highest © GUARDIAN NEWS & MEDIA 2012

Africa

48

returns in the world. In the World Bank’s most recent Ease of Doing Business rankings, 14 African countries ranked ahead of Russia, 16 ahead of Brazil and 17 ahead of India.

But with expectation comes the potential for disappointment. The question now is can Portfolio

Africa

49

Africa build on the opportunity and avoid the pitfalls of the past?

Some are in no doubt that the continent is in better shape this time. In April, Tony Blair, who once described Africa as a “scar on the conscience of the world”, told businessmen in London: “There is no doubt: Africa is changing for the better, the perceptions of Africa are also changing for the better. There is a new sense of hope and confidence, an optimism and an expectation that is based on evidence not dreams.

“Above all, I am noticing in my frequent visits there that there is a new generation of leaders in politics, business and civic society who don’t simply have a new competence about how they approach their tasks but

Employees work in the Amingos fibre hair factory in Lagos. Nigeria is slowly diversifying away from oil.

a new attitude, a new frame of thinking, a new way of looking at their own situation.”

Whereas in the past these opportunities may have been squandered, or cancelled out by a global financial crisis, it now appears that Africa is better positioned to withstand shocks. During the meltdown of 2009, while developed western economies were shrinking an average of two per cent, sub-Saharan Africa was still growing at about 3.5 per cent.

Mthuli Ncube, chief economist at the African Development Bank, gave three reasons: “First, the growing domestic demand in Africa itself, the rise of a middle class, acted as a shock absorber. Second, there was improved macroeconomic management from a generation of managers who trained

BLAIR SAID the growing influence of

from $10.6 billion in 2000 to $160 billion

during the restructuring programmes of

China was another reason for optimism.

in 2011 and investment totalled $13 billion.

the early 90s. Third, African economies

Three years ago it overtook the United

have diversified: Nigeria is now not only

States as Africa’s biggest trading partner.

blind “resource colonialism”. But in his

oil but also tourism and agriculture.

China, which has a thirst for Africa’s

speech in London, Blair said: “The fact

Diversification is very helpful when there

natural resources, says bilateral trade grew

is that China has both the capital and

is a decline in commodity prices.”

The bank estimates the middle class at 313 million people in 2010, 34 per cent of the continent’s population, and predicts PHOTOS ON THIS PAGE: REUTRS

Kenya’s rich and new middle classes have a growing taste for coffee and ice-cream.

That’s just one sign that African states such as Kenya are changing.

it will grow to 1.1 billion (42 per cent) by 2060. There are now more than 100,000 Africans with at least $1 million to invest, according to the consultants Merrill Lynch and Capgemini.

May 2012

Sceptics accuse China of a morally

“First, the growing domestic demand in Africa itself, the rise of a middle class, acted as a shock absorber.

Second, there was improved macroeconomic management from a generation of managers who trained during the restructuring programmes of the early 90s.”

Africa

50

“The lack of economic diversification, in terms of both export products and destinations, explains the high volatility of African trade in recent years, and the strongly adverse impact of the global economic crisis through trade.”

Alexandra, a Johannesburg slum, provides a stark contrast to the affluent Sandton area in the background. But Africa’s middle class is expanding, especially in South Africa.

Ncube added. “Most trade is between Africa and the rest of the world. It will take a while to fix.”

Intra-Africa trade, punished by lack of regional integration and poor infrastructure, makes up a woeful 10 per cent of total exports, compared with 60 per cent for south-east Asian countries.

Such weakness led to a warning from the Africa Progress Panel, whose members include Blair, Kofi Annan and Bob Geldof.

“The lack of economic diversification, in terms of both export products and destinations, explains the high volatility of African trade in recent years, and the strongly adverse impact of the global economic crisis through trade,” said the

REUTERS

panel in its 2011 report.

“It also explains why so little of the continent’s high GDP growth translates into social development and tangible

the capacity to get things done. This is

improvements to people’s lives ... It is thus

especially true in infrastructure.

hardly surprising that, despite a decade of strong economic growth, poverty remains

“How many times do you see in Africa

pervasive throughout the continent.”

a road promised for years, that finally

Africa remains the poorest continent,

the same time as we make legitimate

with only one in four people having access

points about the methods of investment

to electricity. The experience of Angola

sometimes used, have to face up to the

and others suggests that economic growth

uncomfortable fact that this didn’t happen

may deepen, rather than reduce, the gap

with us.”

between rich and poor.

HOWEVER, AS the good times roll, there is a danger of Africa becoming too dependent on exporting mineral resources and not investing in manufacturing,

GETTY IMAGES

is being built; and we, in the west, at

Mthuli Ncube, chief economist at the African Development Bank, believes the continent is better positioned to withstand global economic shocks.

There appears to be no causal relationship between growth and democracy and human rights. Corruption is still rife and agricultural productivity frustratingly low. These issues could Portfolio

GRAPHEAST

GRAPHEAST

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51

Former British Prime Minister Tony Blair (L) shakes hands with Alphe Conde, Guinea’s president. Blair believes that Africa has undergone many positive changes.

REUTERS

China has launched a fund to encourage Chinese firms to invest in Africa, setting the scene for a ‘new type of strategic partnership’ not solely based on profit.

Porsche officially opened a new car dealership on 16 March in the heart of Lagos’ wealthiest district, Victoria Island, a place with one of the world’s highest concentrations of millionaires.

undermine the growth narrative.

“The common bottlenecks to doing business on the continent – excessive bureaucracy and government inefficiency - coupled with a lack of regulation in many countries mean that it will be a number of years before the potential is fully realised.”

countries mean that it will be a number of years before the potential is fully realised.”

is hoped, could be in place in three years.

senior editor/economist for Africa at the

BUT DESPITE the persistent caveats,

“The penny has also dropped in most

Economist Intelligence Unit, warned that

Africa, where 70 per cent of the

capitals that Africa needs to start making

the projects were still at a very early stage.

The oil and gas finds have the potential

As one Reuters commentary put it:

to translate into riches. But Philip Walker,

population is under the age of 30, is

more goods and selling them internally

“The common bottlenecks to doing

thinking big. Talks began last year on a

rather than just digging up minerals,

business on the continent – excessive

planned Cape-to-Cairo free trade zone

putting them on a ship to China and

bureaucracy and government inefficiency -

encompassing 26 countries, 525 million

importing washing machines or shoes on

coupled with a lack of regulation in many

people and $1 trillion in output which, it

the return run.” n

May 2012

Energy

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iNdiA’s sOLAR Ambitions By 2020 the Indian government wants to obtain 20,000 megawatts from solar power. Some analysts said it couldn’t be done, but they may have to eat their words, reports Vikas Bajaj.

S

olar power is a clean energy source. But in Khadoda, an arid part of northwest India, it can

also be a dusty one.

Every five days or so, in a marriage of low and high tech, field hands with longhandled dust mops wipe down each of the 36,000 solar panels at a 25-hectare installation operated by Azure Power.

The site is one of the biggest examples of India’s ambitious plan to use solar energy to help modernise its underpowered national electricity grid and reduce its dependence on coal-fired power plants.

Azure Power has a contract to provide solar-generated electricity to a stategovernment electric utility. Inderpreet Wadhwa, Azure’s chief executive, predicted that within a few years solar power would be competitive in price

Anand Mahindra (L), vice chairman of multinational company Mahindra and Mahindra, and Farooq Abdullah, minister for New and Renewable Energy, unveil a five megawatt solar power plant in Rajasthan that will provide energy for 60,000 homes.

© 2012 New York Times News service

GrAPHeAsT

with India’s conventionally generated electricity. “The efficiency of solar technology will continue to increase, and with the increasing demand in solar energy, cost will continue to decrease,” Wadhwa said.

Two years ago, Indian policymakers said that by the year 2020 they would Portfolio

Energy

53

A worker cleans solar panels at the 63-acre solar panel installation operated by Azure Power in Khadoda. india is trying to decrease its dependence on fossil fuels.

drastically increase the nation’s use of

could reach those numbers even a few

Power and Yingli Green Energy helped

solar power from virtually nothing to

years before 2020.

drive the drop in solar-panel costs. The

20,000 megawatts – enough electricity to

“Prices came down and suddenly things

firms aggressively increased production of

power the equivalent of up to 3.3 million

were possible that didn’t seem possible,”

the panels and cut costs in 2011 by about

modern US homes. Many analysts said it

said Tobias Engelmeier, managing

30 per cent to 40 per cent, to less than $1

could not be done. But, now the doubters

director of Bridge to India, a research and

a watt. Developers of solar farms in India,

are taking back their words.

consulting firm based in New Delhi.

however, have shown a preference for the

Dozens of developers like Azure, because of aggressive government subsidies and a large drop in the global price of solar panels, are covering India’s northwestern plains – including this village of 2,000 people – with gleaming solar panels.

So far, India uses only about 140 megawatts, including 10 megawatts used by the Azure installation, which can provide enough power to serve a town of 50,000 people, according to the company.

But analysts say the national 20,000 megawatt goal is achievable, and India May 2012

Chinese manufacturers like Suntech

“Over the last decade, India has opened the state-dominated powergenerating industry to private players, while leaving transmission, distribution and ratesetting largely in government hands.”

more advanced, so-called thin-film solar cells offered by suppliers in the United States, Taiwan and Europe. The leading US provider to India is First Solar, based in Tempe, Arizona.

India does not have a large solar manufacturing industry, but is trying to develop one, and China is showing a new interest in India’s growing demand.

China’s Suntech Power sold the panels used at the Azure installation, which opened last June.

Industry executives credit government policies with India’s solar boom, unusual

Energy

54

praise because businesses usually deride

into greater competition, helping push

solar power. And being behind is now

Indian regulations as Kafkaesque.

down costs.

benefiting India, as panel prices plummet,

Over the last decade, India has opened

In December, the government held its

enabling it to spend far less to set up

the state-dominated power-generating

second auction to determine the price

solar farms than countries that pioneered

industry to private players, while leaving

at which its state-owned power trading

the technology.

transmission, distribution and rate-setting

company – NTPC Vidyut Vyapar Nigam –

largely in government hands. European

would buy solar-generated electricity for

NTPC is not creating open-ended

countries heavily subsidise expensive solar

the national grid. The average winning

contracts. The last auction, for example,

power by agreeing to buy it for decades

bid was 8.77 rupees (16.5 US cents) per

was for a total of only 350 megawatts,

at a time, but the subsidies in India are

kilowatt hour. That is about twice the

which will cap the government’s costs.

much lower and solar operators are forced

price of coal-generated power, but it was

The assumption is that the price of solar

about 27 per cent lower than the winning

power will continue to decline, eventually

bids at the first auction held a year ago.

approaching the cost of electricity

Germany, the world’s biggest solar-power

generated through conventional methods.

user, pays about 17.94 euro cents (23 US cents) per kilowatt hour.

India, to be sure, still significantly lags

Most IndIan power plants are fuelled by coal and generate electricity at about

behind European countries in the use of

four rupees (7.5 cents) per kilowatt hour.

solar. Germany, for example, had 17,000

Yet, even in the December auction,

megawatts of solar-power capacity at

the recent winning bids were already

the end of 2010. But India, which gets

comparable to what India’s industrial

more than 300 days of sunlight a year,

and commercial users actually pay for

is a far more suitable place to generate

electricity – from eight to 10 rupees. And

reuTers

“Solar’s costs are competitive with power plants and back-up generators that burn petroleum-based fuels, whose electricity costs about 10 rupees per kilowatt hour.”

In its solar-power auctions, moreover,

Vendors use solar powered lights at an open air evening market in the western indian city of Ahmedabad.

Portfolio

reuTers

Energy

55

Chinese workers sort solar panels in Hefei. Chinese companies have brought down the cost of solar panels and are now actively targeting the indian market.

solar’s costs are competitive with power plants and back-up generators that burn petroleum-based fuels, whose electricity costs about 10 rupees per kilowatt hour.

“At least during daytime, photovoltaic panels will compete with oil-generated electricity more than anything else” in India, said Cedric Philibert, a senior GeTTY imAGes

analyst at the International Energy Agency in Paris. “This comparison is becoming better and better every month.”

In addition to the federal government, several of India’s states like Gujarat, where

A monitor shows the power output from North delhi Power's Keshavpuram power station in New delhi. india, which gets more than 300 days of sunshine annually, aims to generate 20,000 megawatts of solar power by 2020.

Khadoda is located, are also buying power at subsidised rates from solar companies

enough or at low enough cost to survive.

Wadhwa, of Azure Power, said that

like Azure Power.

Consequently, or because their bids were

a solar-industry shakeout in India was

merely speculative, some developers are

almost inevitable.

Analysts do not expect India’s solar rollout to be problem-free. They say

trying to sell their government power

some developers have probably bid too

agreements to third parties, analysts say,

sector,” he said, “and then the market

aggressively in the federal auctions and

even though such flipping is against the

settles with a few players who have a

may not be able to build their plants fast

auction rules.

long-term commitment to the industry.” n

May 2012

“Initially, a lot of new players enter the

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56

Japan Courts Investment Strong regulations, high operating costs and weak government inducements have prevented foreign capital investment in Japan. But that may be changing, reports Hiroko Tabuchi.

Portfolio

help,” Muroi said. “Whether you are based

in the next decade. A special focus is on

in China or America, we want you to please

the three prefectures most affected by the

come do business in Aizu-Wakamatsu.”

March 2011 disasters: Iwate, Miyagi and

Call it the post-tsunami economic order.

Japan, once a manufacturing powerhouse

abroad in the disaster zone, which will

investment, is confronting a new reality.

help with reconstruction,” Prime Minister

A year after natural and nuclear

Yoshihiko Noda said in a recent interview

catastrophes forced wrenching change on

with journalists.

Direct investment from China to Japan

from years of downsizing and moving

jumped twentyfold in four years, to $314

factories offshore, the country is finding it

million in 2010, according to data from

must do what it has long resisted: welcome

Japan’s Finance Ministry – though as

foreign manufacturers.

an overall percentage of investment into

The new dynamic in Japan also signifies

Japan, money from China remains small.

part of a larger regional power shift. A small

Some experts say the true figure is much

but rapidly increasing amount of foreign

higher, however, because a large amount of

capital comes from its rising neighbour,

Chinese investment is carried out through

China, which last year surpassed Japan as

Hong Kong and other regions.

the world’s second-largest economy and

The new openness, if it lasts, will require

is looking to diversify its export-oriented

Japan to break decades of habits that have

approach to business.

discouraged foreign investment, even

Other recent Chinese manufacturing

as most other developed countries have

deals with Japan include plans for a plastics

done everything possible to lure foreign

plant in Tottori and a heavy machinery

capital. The Japanese impediments have

factory in Kochi, both in western Japan.

included relatively strong regulations,

“The Chinese are starting to look

high operating costs and tax rates, and

like saviours,” said Kotaro Masuda, an

weak government inducements – not to

economist at the government-affiliated

mention what outside observers have often

Institute for International Trade and

described as overt xenophobia.

Investment in Tokyo. “Any investment

According to data compiled by the

Japan gets is basically a plus, wherever it’s

United Nations, Japan has one of the lowest

from, because it means more jobs, more tax

levels of foreign investment. Japan’s inflow

income, more opportunities.”

of direct foreign investments came to just

Mayor Shohei Muroi knowS it iS

In February, the government invited a

0.24 per cent of its gross domestic product

a tough sell to get new companies to invest

delegation of 80 Chinese trade officials and

in 2009 – and even turned negative overall

in Aizu-Wakamatsu, a struggling industrial

executives for an investment tour. Japan

in the two years after that. In 2011, overseas

city just 96 kilometres from Japan’s most

now says it aims to double the flow of

companies moved 183 billion yen ($2.3

notorious nuclear plant. So in September,

foreign direct investment into the country

billion) more out of Japan than they put in, according to the Finance Ministry.

Muroi did the unthinkable. He flew to China to ask a fast-growing maker of heavy © 2012 New York Times News service

“We greatly welcome investment from

known for its exports and overseas

Japan’s economy, which was already listless

A couple walks near the Aizu-Wakamatsu castle in Aizu-Wakamatsu Fukushima prefecture in Japan. The area was devastated by last year’s earthquake and nuclear disaster.

Fukushima, where Aizu-Wakamatsu is.

machinery to set up shop in his town. His move was a stark role reversal in a nation more accustomed to sending factory jobs to China, rather than recruiting them to move the other way.

“We’ve come to a point in Japan where we can no longer grow without outside May 2012

“Any investment Japan gets is basically a plus, wherever it’s from, because it means more jobs, more tax income, more opportunities.”

Even now, many of Japan’s own companies are preferring to put their money into growth opportunities abroad rather than at home. The same figures show that the net outbound investment from Japan reached 9.1 trillion yen ($113 billion) in 2011, accelerating the so-called hollowing out of Japanese industry long bemoaned by

Investment

57

Investment

58

Mayor Shohei Muroi at his office in AizuWakamatsu. He recently flew to China seeking out manufacturers to invest in his city of 125,000 people.

the nation’s policymakers.

It is a dangerous imbalance, economists

economic crisis in 2009, a semiconductor plant run by Fujitsu, a cornerstone of

say, particularly since Japan is struggling

the local economy for almost 40 years,

to reinvigorate economic growth, protect

announced it would eliminate a third of its

employment and uphold living standards.

2,000 jobs.

Moreover, recent studies have suggested

The outlook for Japanese manufacturers

“Everybody is fretting that Japanese companies are moving overseas. If that’s the case, Japan should balance that out by opening up more to more foreign investment.” that continues to be punishingly strong,

that foreign-affiliated businesses in

has only worsened since then. Disruptions

have lowered profits and pushed exporters

Japan tend to create more jobs than

from last March’s disasters and the

to move even more production offshore.

domestic ones, and that they tend to

resulting energy shortages, along with a yen

No wonder that when Muroi returned

have higher productivity.

“Everybody is fretting that Japanese companies are moving overseas. If that’s the case, Japan should balance that out by opening up more to more foreign investment,” said Kyoji Fukao, an economics professor at Hitotsubashi University.

“Foreign companies that are successful enough to think about coming to Japan are highly competitive and productive,” he said, “which means they will invest, create jobs, pay high salaries, spark new demand.”

Aizu-Wakamatsu, the fourth-largest city geTTY images

in Fukushima prefecture with a population of 125,000, has already found that domestic industry can no longer sustain local employment. At the height of the global

Towns such as Namie, that sit within the evacuated 20 kilometre exclusion zone around the Fukushima Daiichi nuclear plant, are still abandoned.

Portfolio

Investment

59

from China with a manufacturing agreement by the heavy equipment-maker Zoomlion, he received a hero’s welcome in this city and Fukushima prefecture.

“The deal could create jobs and revitalise Aizu,” the newspaper Fukushima Minpo said in an editorial. “It’s a ray of hope for Fukushima.” the ChineSe are also buying struggling Japanese companies. Last year, the washing machine and refrigerator business of Sanyo Electric was bought by Haier, a Chinese company, for 10 billion yen ($124 million).

In 2011, for the first time on record, the Chinese companies in Japan exceeded those

Japan’s economy has been stagnant for over a decade now. Jobs, especially in the electronics sector, have moved offshore and foreign investment is needed to stimulate the economy.

by American businesses in the country.

from whoever is willing to offer it.

number of mergers and acquisitions by

For Chinese companies, learning to

In February, the central government

“We are No. 1 in Japan for location subsidies,” Yuhei Sato, the Fukushima

appeal to the demands of finicky Japanese

designated districts in Iwate and

governor, said at a recent investment

customers could also help refine goods

Miyagi prefectures as “special disaster

seminar. One company lured by the

and services for their growing domestic

reconstruction zones” that offer incentives

subsidies, Canadian Solar, which is based in

economy – not to mention make them

and tax breaks to new investors. In Miyagi,

Ontario and has strong links to China, is in

more globally competitive. “Our aim is

for example, companies that invest in the

talks to set up a solar panel factory in either

to build products that satisfy Japanese

new zones are exempt from corporate tax for

Miyagi or Fukushima.

standards,” Zoomlion’s chief executive,

five years. But some of the most generous

Zhan Chunxin, said at a September news

subsidies could come in Fukushima, which

could be crucial to Japan’s effort to attract

conference. The company was expected

has allocated 225 billion yen ($2.8 billion)

foreign investment, said Shojiro Nakamura,

to set up an office in Aizu-Wakamatsu

to industry in the prefecture, including 30

a consultant at Accenture, the global

in April and work with a local partner to

billion yen to hand out to new companies

consulting company, which opened an

build a small manufacturing plant in the

that open in the prefecture.

office in the city last June. Rent and other

Regional cities like Aizu-Wakamatsu

city to make concrete pump trucks for the

costs are cheaper in Aizu-Wakamatsu

Japanese market.

than Tokyo, and it has a skilled work force, making it an attractive investment

Some people in the disaster zone have

proposition, Nakamura said.

expressed concern that foreign companies,

But the longer-term challenge for Aizu-

helped by generous subsidies, will hurt local businesses trying to rebuild. But the

Wakamatsu, Nakamura said, is to create

overriding impulse seems to be to seek help

lasting employment that is not contingent on subsidies or cheap costs. “Even if companies set up here to take advantage of the subsidies, they would all leave again once those are gone,” he said.

Instead, a joint initiative with the city, a local university and Accenture aims to make Aizu-Wakamatsu a centre for

reUTers

research and development, a “smart city”

May 2012

Japan’s Finance Minister Jun Azumi (R) escorts his Chinese counterpart Xie Xuren (C) at the Finance Ministry in Tokyo. The Chinese are buying struggling Japanese firms.

that runs on renewable energy and supports high-tech jobs. Investment from China is fine, Nakamura said, “but ultimately, we want to be more like Silicon Valley.” n

The popularity of Apple’s devices and the resulting surge in app sales has made it an appealing target for hackers.

App Store Under AttAck Apple’s iTunes Store appears to be the victim of its own success with increasing incidents of account hacking and false apps, report Evelyn Rusli and Brian Chen.

In a lIttle more than an hour,

up, checked my email, and I could see

Ryan Matthew Pierson racked up

these purchases happening in real time.”

Pierson raised the issue with Apple and

have been hijacked or that some apps

currency that he could use to buy guns,

his bank, and the problem was eventually

are falsely advertised. And they come

nightclubs and cars in iMobsters, a

resolved. But his experience is hardly

from creators of apps, who say they are

popular iPhone game. One problem:

unique, as reflected by hundreds of online

having to deal with fraudulent purchases

Pierson, a technology writer in Texas,

complaints saying that Apple’s iTunes Store,

that drain their time and resources.

has never played iMobsters.

and in particular its App Store, which the

Software-makers also complain that

company has portrayed as the safest of

competition in the App Store has

shopping environments, is not so secure.

become so brutal that many companies

$437.71 in iTunes charges for virtual © 2012 New york times News service

The complaints come from consumers like Pierson, who say their accounts

“This was fraud,” said Pierson, recalling the November incident. “I woke

Portfolio

getty images

E-commerce

60

resort to artificially inflating their popularity rankings to grab attention.

The scale of the problem is difficult to gauge without Apple’s cooperation,

complained about stolen funds.

In February, Daniel Saewitz, a 20-year-

It’s a change for Apple, which was once

though there is widespread anecdotal

old Syracuse University student, was

criticised for its micromanaging of the App

evidence, even on Apple’s own site. On

charged $81 for purchases related to a

Store. Now the problem is not too much

one Apple support forum, a thread titled

Chinese iPhone game. He alerted Apple

control, but too little.

“iTunes store account hacked,” there are

and changed his iTunes password. But

some 1,370 replies, starting in November

24 hours later, he said, his account was

time a platform is successful,” said David

2010 and extending to 15 March. The

hacked again. In an email, Apple said

Edery, chief executive of Spry Fox, a small

week prior, more than 100 people on

it was refunding Saewitz’s money, but

software company that sells games in the

Twitter who said they were iTunes users

added that it was making an exception to

“This kind of thing just happens any

its usual rules.

App Store. “People start flooding into it and it starts to get crazy.”

The App Store offers more than 600,000 applications for iPhones, iPads and iPod Touches, and has generated billions in revenue for Apple and its developers. That makes it both the best deal going for software-makers and consumers, and also a hulking target for those looking to manipulate the system and cheat people.

Apple declined a request for an interview, but said in a statement that it was working to enhance security.

It advised customers whose payment information had been stolen to change

E-commerce

61

“Apple declined a request for an interview, but said in a statement that it was working to enhance security. It advised customers whose payment information had been stolen to change their iTunes passwords and to contact their financial institutions.”

For developers, the scams can cause big headaches, eating up resources and damaging their reputations. Several game-makers in China, where many of the hacks appear to originate, said they had lost hundreds of thousands of dollars because of fraud.

Hoolai Game, a Beijing-based developer that introduced an iPhone app last year, looked at its monthly payments from Apple and found that they were roughly 20 to 50 per cent less than the sum of the daily reports it gets from the company. Hoolai and others say they believe these missing payments are

their iTunes passwords and to contact their financial institutions.

In the shadowy world of hacking, it’s often unclear how criminals get iTunes passwords or credit card information. But the App Store, and Apple’s broader iTunes Store, have become playgrounds for illicit transactions. And the web is rife with App Store scams. On some Asian online marketplaces, like Taobao or DHgate, some sellers are offering access to iTunes accounts for as little as $33. One seller on DHgate, for instance, has sold 56 iTunes accounts for less than $35 each, promising thousands of dollars in “credit”.

There are services that claim to reuters

generate codes for iTunes gift cards, and forums that explain how to use prepaid Visa cards to get free App Store purchases.

May 2012

Apple CEO Tim Cook highlighted that 25 billion apps had been downloaded during an Apple event on 7 March in San Francisco.

E-commerce

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Above: Jian Huang, the CEO of Hoolai, says its monthly payments from Apple are less than the daily sales reports. The company believes the missing payments are fraudulent transactions that were wiped out by Apple.

Below: iTunes customers use a single password and account to access all Apple services.

fraudulent transactions that are wiped out

developer, who spoke on

by Apple.

the condition of anonymity, said he started to notice

more troublIng for developers is

discrepancies in payments

that consumers whose accounts have been

last summer. The developer

improperly charged often blame the game-

said his team had sent

makers. The reviews in the App Store

multiple emails to Apple,

for Kingdom Conquest, from the Japanese

but that it had not addressed

game giant Sega, include dozens from

whether the missing

incensed users who accuse Sega of robbing

payments were a result of

them. Sega, which first noticed a burst

fraud. Over the past year,

of fraudulent transactions last summer,

the gap has amounted to

is still working on the problem, according

millions of dollars, according

to Ben Harborne, a brand manager at

to internal documents

the company.

provided by the developer.

“We are very worried about reputation,”

With little action from

said Jian Huang, president of Hoolai, who

Apple, some affected developers have

and developers said they did not blame

hopes to introduce a game in the United

banded together. One Chinese developer,

Apple for their misfortunes, nearly all said

States this year. “We have no way to tell the

CocoaChina, has created an anti-fraud

the company could be more responsive,

customer that we’re victims too.”

alliance of roughly a dozen developers.

and noted that it lacked even a dedicated

One successful United States game

While many of the affected consumers

phone line to deal with complaints. “Apple Portfolio

that it is a scam and should be removed.

wants to pretend that everything is magic,”

not what they seem to be. Apple has strict

said Alex Stamos, co-founder of iSEC

guidelines for developers, and it has tools

John Casasanta, owner of the iPhone

Partners, a security firm. “They need to

and human reviewers to screen apps. But

app studio Tap Tap Tap, said the issue of

admit that their products can be used by

bad ones do slip through. One $2 app, for

developers manipulating the App Store

bad people to do bad things.”

example, promises extra virtual coins for

remained largely unaddressed. “Apple has

people playing the game DragonVale. But

been doing the barest minimum to keep

iTunes customers use a single account

when customers download the app, no coins

these things under control, because from

and password to access all Apple services.

appear. The app has received dozens of one-

their perspective, there’s simply not a

For example, the same login can be used

star reviews from customers complaining

problem,” Casasanta said. n

One problem, Stamos said, is that

E-commerce

63

to download a $1 game or buy a $2,000 laptop through the Apple Store app.

He said Apple could adopt a two-step verification method like Google’s. For example, if a user wanted to log in to the iTunes store on a new device, Apple could send a message to his iPhone containing a code, which he would enter to verify his identity.

Some App Store problems are the fault of the developers themselves – including those who make it harder for consumers to trust the store by cheating the system.

The easiest ways to find new apps are Apple’s Top 25 lists for different categories, including “most downloaded”. But some of those downloads may not be generated by real people.

Walter Kaman, an independent programmer, said he was disheartened by a phone call from a service that offered to put his game in the Top 25. He said the promoter, whom he declined to name so as not to attract clients to the service, had hired someone to build an

Ryan Matthew Pierson, a blogger at the tech blog Lockergnome, had purchases made via his PayPal account in the App Store without his knowledge.

army of software ‘bots’ that automatically download apps and drive up their rankings. The company wanted $5,000 for this service, said Kaman, who declined.

Edery of Spry Fox said his company was approached in October by a firm called GTekna, which offered to push its apps into the Top 25 for $10,000. ChangMin Pak, GTekna’s chief executive, said offering such a service because Apple reminded developers in February that it was not allowed.

Then there are the customers who have been tricked into downloading apps that are May 2012

Analysts project that iPad sales will exceed 13 million in the first quarter of this year and could exceed 60 million by the end of the year.

getty images

in an interview recently that it stopped

www.moet.com

65

Essentials

THE BEST OF LEISURE AND LIFESTYLE

A REFLECTION OF TIME The Malacca Straits Mosque is located on a man-made island near Malacca. At high tide it looks like a floating structure.

May 2012

GETTY IMAGES

Malaysia’s oldest city has always been a melting pot of cultures. It is this vibrant blend that creates Malacca’s unique atmosphere, architecture and food, reports Naomi Lindt.

O 66

n the tranquil grounds of the Cheng Hoon Teng Temple, Malaysia’s oldest Taoist house of worship, late afternoon visitors bowed and offered burning wands of incense to the Goddess of Mercy, the deity for whom the temple was founded in the 1600s. Tourists quietly watched or focused cameras on the structure’s ornate, figurine-covered roof. afternoon in Malacca, Malaysia’s oldest

buildings, the people, the culture,” said

muezzin’s call from the nearby Kampung

city, just two hours south of Kuala

a local resident, Colin Goh, 66, at Cheng

Kling Mosque, an amalgam of Corinthian

Lumpur and about four hours northwest

Hoon, surrounded by a pair of red-and-

columns and Portuguese tiles built by

of Singapore. But underneath that

gold sedan chairs and black-and-white

Indian Muslims in 1748. And down the

sleepiness, its foundation of vibrant

photos that chronicled decades of the

street at the 230-year-old Sri Poyyatha

multiculturalism, which dates back

temple’s religious festivals. “Everything

Vinayagar Moorthi Temple, the country’s

centuries, is very much alive and

you touch that is not new is old.”

oldest Hindu temple, bare-chested and

increasingly accessible, as it welcomes

barefoot men in pastel-hued sarongs and

a handful of hotels and millions of

Chinese and “God only knows what else”

garlands made of yellow blooms gathered

international visitors a year.

heritage, Goh, a retired civil servant who

The placidity was interrupted by the

to pray.

“I just love Malacca – its laid-back,

now manages 8 Heeren Street, a restored

slow pace of life and the history in the

18th-century Dutch shophouse, embodies

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It was another seemingly sleepy

With his mix of Portuguese, Dutch,

Cheng Hoon Teng (the Temple of the Green Cloud) is situated close to Jalan Tukang Emas, also known as ‘Harmony Street’ because of its proximity to the Kampung Kling Mosque and the Sri Poyatha Moorthi Temple.

Portfolio

Essentials Travel the city’s colonial past. Founded around 1400 by a Malay-Hindu prince, Malacca, within a century, became Southeast Asia’s most important trading port, luring an international cast of colonialists and merchants seeking a piece of the region’s lucrative spice trade.

The hub of Malacca’s civic colonial sites is Dutch Square – also called Red Square because of the colour of its buildings – where tourists pose in front of the centuryold Queen Victoria Fountain and trishaws festooned with plastic flowers gather. fort, one of Asia’s oldest European-built structures, erected by the Portuguese 500 years ago, and the imposing Stadthuys, or

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Nearby are the ruins of the A’ Famosa

Malacca’s lively Chinatown district is famed for its decorative shophouses that date from the 19th century.

GETTY IMAGES

town hall, built by the Dutch in 1650 and

The Malacca River divides the city in two, with most of the major tourist attractions found on the west bank.

and grand residences with ornately tiled

identities. At Temple Street, a shop run

stoops built by wealthy families of the past.

by a local artist, watercolours and hand-

For centuries, these streets served as the

painted tiles depict idyllic street scenes.

town’s commercial and residential centre.

In another building, Nancy’s Kitchen, a

Malacca’s eclectic charm, with some

no-frills restaurant known for its local

help from a UNESCO World Heritage

Nyonya cuisine, sells addictive delicacies

designation in 2008 and its reputation as

like buttery pineapple tarts and onde-onde,

later painted salmon red by the British,

one of Malaysia’s most exciting culinary

glutinous rice balls filled with Malacca’s

Malacca’s last foreign rulers, whose reign

destinations, has resulted in a steady

famous palm sugar, known as gula Melaka,

lasted until 1957.

growth in tourism. Last year 12 million

and covered in fresh coconut.

visitors came, an increase of over 17 per

This rich cultural heritage is also

ON THE west side of the Malacca River,

cent from 2010, according to a state

being celebrated in new lodging options.

which flanks the square, along the old

tourism committee.

In 2009, a 100-year-old residential

centre’s narrow, atmospheric streets, are

While some heritage buildings are

property down the street was converted

hundreds of lantern-hung shophouses,

still occupied by generations-old family

into the 14-room Courtyard @ Heeren

some distinctly Chinese in style, others

businesses – silversmiths, watchmakers,

hotel, which blends era-appropriate

bearing geometric Art Deco trademarks,

dim sum purveyors – others have newer

furnishings with modern amenities.

May 2012

67

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At the Snail House nearby, a charming French-Malaccan couple, Serge and K.C. Jardin, rent rooms in their carefully restored century-old home, with an open courtyard, a grand spiral staircase and high ceilings, offering

Malacca is famed for its food, and there’s no shortage of restaurants serving classic Nyonya cuisine.

travellers the chance to appreciate the nuances of Peranakan architecture.

“When you’re inside, you feel as if you’re in the presence of a wealthy Baba,” Jardin said. “And though you’re in the city centre, it’s so quiet you forget where you are.”

Josephine Chua, a self-described “busybody housewife,” history buff and proponent of Malacca’s historic preservation, agreed. “This place has been built on harmony since the 15th century,” she said.

Chua, 55, traces her local roots back

race and religion, but what we do always

grandmotherly spot with lace curtains

ask each other is, ‘Have you eaten?”’

and pastel walls just a short drive from

nine generations, to 1765, when one of her

the historic centre, septuagenarian

paternal ancestors migrated from Fujian,

WHERE ONE has dined is not a

chefs cook mouthwatering renditions of

China. “The religions have coexisted side by

question to be taken lightly in a city of

classic Nyonya dishes – chicken stewed

side for centuries – that’s what makes us so

restaurants serving home-cooked dishes,

with earthy, smokey keluak nuts; a fluffy

unique and the town so great to live in,” she

many of which have been passed down

omelette flavoured with dried shrimp and

said. “We don’t ask each other about one’s

through generations. At Aunty Lee, a

chilli; and cendol, a shaved ice dessert

Dutch Square, also known as Red Square, is Malacca’s colonial heart and was the centre of civic administration.

Portfolio

Essentials Travel laughing Buddha statues, antiques and old family photos.

A few streets away, at Teo Soon Loong Chan restaurant, the energetic Tan brothers sweat over a pair of woks, producing ridiculously tasty southeastern Chinese teochew fare, like handmade pillowy, deep-fried tofu cubes with minced meat, and platters of steamed pomfret, a local fish, served with shiitakes and cilantro. The restaurant, in a 120-year-old building whose low ceilings are hung with a pair of fraying chandeliers, was once a store run by the brothers’ 85-year-old father, who escaped to Malacca in the 1930s when the Japanese invaded China.

Jonker Street, which was once known for its antique shops, now caters for tourists. On weekends there’s a food and retail market.

THOUGH AUTHENTIC culture is easy to find in the city, residents like Chua and Goh worry about its future. The old centre is now home to a recently opened Hard Rock Cafe, and many historic buildings have fallen into disrepair or been transformed into conventional souvenir shops and hostels, with no government financing to protect them.

Perhaps the most glaring example is Jonker Street, officially called Jalan Hang Jebat. Once known for its antiques shops, the strip now draws tour groups trawling stores stocked with Birkenstock knockoffs, batik linens and cheeky T-shirts with sayings like, “If YouTube MySpace, I’ll Google Your Yahoo.” It’s particularly raucous on weekends, when a food and

Donald & Lily’s is a small establishment that is known for its Nyonya laksa – a popular local curry.

retail night market takes over.

topped with coconut milk and gula Melaka.

entrepreneurs centuries ago never

Still, what captivated explorers and seems far away, whether it’s during a

At Donald & Lily’s, locals and tourists

contemplative moment in a crumbling

and piquant concoction of fresh coconut

fort or a stroll along the old town’s back

milk, sliced fish cakes, cockles, crunchy

streets and its fragrant Chinese medicine

bean sprouts, and pounded galangal,

shops. Or while you are sipping a

garlic, lemon grass and shrimp paste.

steaming cup of tea during a downpour at

The retired proprietor, Donald Tan, who started selling laksa from a trishaw 30 years ago, now offers food in two rooms attached to his majestic Peranakan house.

He is happy to give inquisitive visitors a peek into the home, which is jammed with May 2012

GETTY IMAGES

alike snack on Nyonya laksa, a creamy

There are so many different types of laksa that it even confuses the Malaysians. But the chicken curry is a staple that is found around the world.

Zheng He Tea House, a hidden spot two blocks from Jonker Street. “Once you step into Malacca, you can feel the positive energy,” said Pak Siew Yong, the teahouse’s friendly owner. “Foreigners, once they come here, they don’t want to go home.” n

69

70

Essentials

Art

A view through ‘Viewing Machine,’ by the Danish artist Olafur Eliasson, at Inhotim in Brumadinho, Brazil.

ONE MAN’S ECCENTRIC PASSION Portfolio

71

Bernardo Paz, a Brazilian mining magnate, has created a vast garden of art that drew nearly 250,000 visitors last year, reports Simon Romero.

May 2012

NO WONDER THEY CALL BERNARDO PAZ THE “EMPEROR OF INHOTIM.” Some 1,000 employees, including curators, botanists and concrete pourers, swarm around Inhotim, his contemporary-art complex in the hills of southeast Brazil.

Globetrotting art pilgrims absorb stunning works like Doug Aitken’s ‘Sonic Pavilion,’ which uses high-sensitivity microphones placed in a 192-metre hole to deliver the bass murmur of the Earth’s inner depths.

A whiff of megalomania seems to emanate from Inhotim’s eucalyptus forests, where Paz has perched more than 500 works by foreign and Brazilian artists. His botanical garden contains more than 1,400 species of palm trees. He glows when speaking of

72

public, like Eugenio Lopez’s Coleccion Bernardo Paz, a mining magnate, employs 1,000 people at Inhotim, his 5,000-acre complex of contemporary art and exotic gardens.

Jumex in Mexico City. And much farther afield, in an archipelago in Japan’s Seto Inland Sea, the Benesse Art Site similarly blends cutting-edge architecture with contemporary art.

But none of these places have the hotclimate exuberance of Inhotim, situated in mining-scarred hills far from Brazil’s collecting scenes in Sao Paulo and Rio de Janeiro. Art historians and curators often come away marvelling at the sheer scale and chaotic vision that Paz has created at Inhotim.

“The amount of space given to single artist projects is unparalleled, as is the way visitors travel from building to building, refreshing their senses, being in nature,” said Beverly Adams, an authority on Latin American art who curates the private Diane and Bruce Halley Collection in Scottsdale, Arizona.

Overwhelming the cognoscenti still seems to thrill Paz, a high school dropout whose first work experience involved pumping petrol at filling stations owned by his father.

He went on to work at Belo Horizonte’s stock exchange, which he said he loathed, before going into mining for iron ore and cobbling together a privately held business empire that finances Inhotim’s operations.

SOME WORKS in Inhotim seem to question, if not actually insult, the concept

Brazilian artist Cildo Meireles’ ‘Desvio para o vermelho’. More than 500 artworks by foreign and Brazilian artists are scattered around Inhotim.

Inhotim’s rare and otherworldly plants, like

said of Inhotim during a rare interview.

of profiting from mining the Earth’s treasures. For instance, an installation by the US artist Matthew Barney within geodesic domes includes a scene of

It is hard to say what people might

unmistakable environmental violation: a

make of Inhotim (pronounced in-yo-

huge mud-caked tractor clutching a tree

Paz, a lanky 61-year-old mining

TCHEEM) centuries from now. Some

and its roots. To arrive at this creation,

magnate, speaks in barely audible

masterpieces from Brazil’s booms still

visitors trek through mineral-bearing

whispers. He married his sixth wife in

survive as testament to past extravagance,

hills, largely cleared of Mata Atlantica,

October. He has white hair down to his

like the celebrated opera house built at

the forest that once covered the region.

shoulders and pale blue eyes, giving him

the height of the rubber boom at the end

an appearance reminiscent of the gaunt,

of the 19th century in Manaus, the largest

in 2011, and it expects well more this year.

debauched Brazilian rancher played by

city in the Amazon.

But Paz, who says his companies provide

the titun arum from Sumatra, called the “corpse flower” due to its hideous stench.

Klaus Kinski in Werner Herzog’s 1987 film, Cobra Verde.

“This is a project to last 1,000 years,” Paz

Elsewhere in Latin America, majestic

Inhotim received nearly 250,000 visitors

Inhotim with about $60 million to $70

private contemporary-art collections

million for operations each year, sees

have also been made accessible to the

no need to stop there. In order to make Portfolio

Essentials Art Inhotim self-sustaining, he said he was

hundreds of artworks, including a pavilion

as an idol for Brazil’s growing number of

planning to build no fewer than 10 new

he built for one of his ex-wives, the

millionaires. “He broke every company he

hotels there for visitors, an amphitheatre

Brazilian artist Adriana Varejao.

had until he was 50 years old.”

for 15,000 people, even a complex of

Seated in one of Inhotim’s restaurants

Paz also waved off claims in Brazilian

“lofts” for those who want to live amid the

one sweltering day in February, he

newspapers that Inhotim’s expansion was

collection. He said Inhotim, which sprawls

proceeded to quickly consume three

partly due to money laundering, calling such accusations a “mountain of nonsense

Work by the Cuban artist Diango Hernandez.

and lies.”

“Clearly, no one is totally transparent,” he acknowledged. Still, he asserted, “The newspapers never proved anything.”

FOR NOW, he seems more concerned with luring the masses to Inhotim to see works like ‘Restore Now,’ a mammoth send-up of academic norms by the Swiss artist Thomas Hirschhorn, in which texts by French

The ‘Sonic Pavillion’, by Doug Aitken, uses high-sensitivity microphones placed in a 192-metre hole to deliver the bass murmur of Earth’s inner depths.

A pavilion Bernardo Paz built for one of his ex-wives, the Brazilian artist Adriana Varejao.

over nearly 2,020 hectares, has room for at

cocktails, murmuring about the

philosophers like Jacques Derrida and Gilles

least 2,000 more works of art.

machinations of bankers and the global

Deleuze are interspersed with images of

financial crisis. “Don’t turn that on,” he said,

mutilated bodies.

Inhotim’s growth over the past decade has provided a jolt to the surrounding economy,

pointing at a digital recorder on the table.

Asked about specific works, Paz deftly shifts the conversation to other topics.

with many of the adult residents of villages

A day later, in an air-conditioned

nearby employed as labourers by Inhotim,

building that incorporated ‘Narcissus

He smiled when speaking of his new

making them dependent on Paz’s vision of

Garden,’ a work by the Japanese artist

wife, Arystela Rosa, 31, pregnant with his

assembling a “Disneyland” for contemporary

Yayoi Kusama, into its design, he seemed

seventh child. Other things at Inhotim

art in the state of Minas Gerais.

to revel in disparaging some other titans

draw his interest, like the towering

“Before Inhotim, our men worked

of business in Brazil, and contending that

tamboril trees or the traira, a carnivorous

in the mines or moved to Sao Paulo to

poor visitors to Inhotim were often better

fish in the ponds here that can draw blood

make money,” said Profira de Souza, 74, a

able to absorb the complex’s importance.

from visitors foolish enough to dip their

resident of the village of Marinhos whose

He also reserved some special disdain for

fingers in the water.

son and grandson work at Inhotim. “God

Brazil’s richest man, Eike Batista.

“There are works of art here which I haven’t entered yet, which everyone told

lowered Bernardo Paz down to us, and I

“Suddenly, he appears with billions

pray he doesn’t take him back too soon.”

and billions, saying he’s going to be the

me were spectacular, but why should I

Still, Paz insisted he was no emperor.

world’s richest man,” he said of Batista,

go in there?” Paz said. “I don’t consider

He called himself an “isolated person”

a mining entrepreneur who gets largely

myself passionate for art. But gardens,

who lacks real friends, opting to live amid

glowing treatment in the news media here

that’s what I like.” n

May 2012

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74

Architecture

RECORD INCLINATION

When the Leaning Tower of Pisa was straightened, contenders emerged for its crown as the most tilting tower. The current record holder is in Germany, but St. Moritz may have a winner, reports John Tagliabue.

IN AN EARLIER ERA IN EUROPE,

Zurich, the country’s largest city, where

contend for the Guinness title.

engineers have plotted a course to keep it

it was not unusual for the sudden and

In the Swiss ski resort of St. Moritz,

unexpected departure of a monarch to

better known for cashmere than cows,

from toppling over. “This is for us what

touch off a prolonged period of claims

leans a tower that some say should

the bell tower is for Pisa, or St. Peter’s for

and counterclaims until one of the

hold the real claim to the title. The 12th

the Vatican,” said Baracchi, 69, leading

pretenders finally prevailed.

century structure, known as the tower

a visitor to the top of the square tower,

of St. Mauritius, for a church it once

which unlike Pisa’s leaning tower is

broken out after engineers performed

accompanied, not only leans, it stands on

closed to the public.

extensive renovations on the legendary

shifting ground that ensures that every

When an earthquake shook the

Leaning Tower of Pisa, sharply reducing

few years hydraulic jacks must be called

Friuli region of northeastern Italy in

its tilt. While that assured that the

in to straighten it up.

1976, the tower in St. Moritz lurched so

Something like that seems to have

tower would survive to delight future

For 35 years, until his retirement four

dangerously that some among the city

generations of tourists, the repairs ended

years ago, Pietro Baracchi worked in the

fathers believed the time had come to tear

its status as leaning-est tower, moving it

St. Moritz building department and was

it down. “It tipped as much in one night

to somewhere in the middle of the pack

responsible for the safety of the 33-metre

as it should in one year,” Baracchi said.

and touching off a competition, which

tower. To see him gaze up at it is to see a

still simmers, for the crown.

parent fondly regarding an exceptional,

The matter seemed to have been settled a few years ago, when Guinness

The church that gave the tower its name was dismantled in 1893, when

if slightly different, child.

He still visits

World Records in London awarded

the tower once

the title of ‘Farthest Leaning Tower’ to

a month and

one that accompanies a solid red brick

employs sensitive

church in the village of Suurhusen, in

instruments

northern Germany. It leans at an angle

installed inside

of 5.19 degrees, compared with the Pisa

to measure its

tower’s 3.9 degrees.

inclination.

He then sends

The German newsmagazine Der Spiegel,

the results to

in an article last year, listed at least

the Technical

three other German towers it said could

University in

© 2012 NEW YORK TIMES NEWS SERVICE

But then other contenders emerged.

The 12th-century tower of St. Mauritius in the Swiss town of St. Moritz might be a contender for the record of ‘Farthest Leaning Tower’. It is named for the church it once accompanied.

Portfolio

it was deemed to be in acute danger of collapse. In typical Swiss style, the tower’s fate was put to a general vote of the adult population, and about 84 per cent voted to save it.

Even before the earthquake, horizontal supports of reinforced concrete had been installed under the base of the tower to stabilise it.

Then, in 1983, hydraulic lifts were used to straighten the tower slightly and pads were inserted underneath it to further ensure its safety. In 2005 the hydraulic lifting was repeated to correct the inclination and another correction is planned.

“Whether this is the most inclined tower in Europe, with a 5.364 degree inclination angle, I do not know,” wrote Alexander Puzrin of the Technical University in an email.

“We are planning a new vertical

May 2012

Economics

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76

“Towers lean for different reasons, Puzrin wrote, but the St. Mauritius tower tilts because it, and the entire neighbourhood surrounding it, are essentially perched on a landslide that creeps inexorably down toward the shore of the lake on which St. Moritz lies.” adjustment campaign for 2013,” he added.

Towers lean for different reasons, Puzrin wrote, but the St. Mauritius tower tilts

Pietro Baracchi employs sensitive instruments installed inside the tower of St. Mauritius to measure its inclination.

because it, and the entire neighbourhood surrounding it, are essentially perched on a landslide that creeps inexorably down toward the shore of the lake on which St. Moritz lies. Recently, three seismographs were installed, including one at the base and another at the top. When they begin registering later this year they will transmit data on the tower’s tilt directly to the experts in Zurich. Baracchi says he will continue his monthly visits.

The landslide, Puzrin said, which is about a 1½ kilometres and a eight-tenths of a kilometre wide, can move by as much as 45 centimetres a year. Nadia Scartaccini, who moved here from Italy 26 years ago and now works in the Bata shoe store just below the tower, believes him.

“We have to get out by the end of the year,” she said, then lifted a corner of carpet to reveal jagged cracks in the concrete floor.

Other more modern buildings in the neighbourhood were built to withstand the landslide, but older buildings will be torn down to enable the city to inject concrete into the slide, slowing its movement.

GRAPHEAST

Sidewalks and streets show rippled asphalt,

This picture taken in 1993 shows the start of the stabilisation works at Pisa’s famous leaning tower.

where the downward movement of the slide has forced up the ground beneath them. Last year, electrical and water mains in the area had to be replaced.

Portfolio

Essentials Architecture PISA, FOR its part, is not feeling the threat from Suurhusen, St. Moritz or anywhere else.

“Frankly, we hadn’t heard about it,” Daniela Purchielli, director of tourism in the Pisa city government, said by telephone. “Our numbers are increasing.”

Last year, more than 426,000 visitors came, compared with 402,000 the year before.

No one counts the numbers of visitors to St. Moritz’s entry in the leaning tower approached Guinness for recognition of its tower, Sara Roloff, director of public relations for the local tourism organisation, replied, “Not to my knowledge.” Yet the tower remained, she

REUTERS

duel. Asked whether the town had

A 15th-century church with its tilting tower in the small northern German village of Suurhusen is listed by The Guinness Book of World Records as the most tilted tower in the world.

said, “one of the emblems” of St. Moritz.

“For us it will always be there, with its huge history,” she said.

Ludwig Guertler, from Berlin, clutched a snowboard while awaiting a bus ride to the slopes. He said he was in St. Moritz on business, living in a chalet not far from the tower, but had only recently noticed its tilt. “This is the first time,” he said, glancing up.

Other visitors were astonished that anyone could miss it. “We just stumbled on it. We didn’t know about it,” said Alessandro Barzaghi, 37, a restaurant chef from Italy on vacation here. “And

“In 2005, the St. Moritz tower tipped to an angle of 5.4 degrees, more than the Guinness titleholder in Suurhusen, but it was hoisted back to a safer angle of 5.08 degrees.

Puzrin said he would not again let the tower tilt beyond 5.36 degrees before correcting the inclination.”

May 2012

The St. Mauritius tower stands on shifting ground that causes it to lean more every year. The tower is inclined 5.364 degrees, which is more than the 5.19 degrees of its competitor in Suurhusen.

imagine that they wanted to demolish

to an angle of 5.4 degrees, more than the

it!” Francesca Buttini, a lawyer who

Guinness titleholder in Suurhusen, but it

accompanied Barzaghi on the tour, said

was hoisted back to a safer angle of 5.08

she doubted Pisa had much to worry

degrees. Puzrin said he would not again

about. “Now, Pisa,” she said, throwing up

let the tower tilt beyond 5.36 degrees

her hands. “That’s an entirely other thing.”

before correcting the inclination.

To a certain extent, it has to be

But that is not to say, however, that

admitted, the whole competition is

the contest for the title of tippiest tower

pointless. Barring human intervention,

is inconsequential. Frank Wessels, the

some of the leading contenders, such

pastor of the church in Suurhusen said

as those in Pisa and St. Moritz, would

the benefits were striking. “We always

have long since have reduced to rubble.

had tourism,” he said by phone from

(Suurhusen’s bell tower is considered

Germany, “But it has increased tenfold.

pretty stable.)

There’s even interest from Japan and

In 2005, the St. Moritz tower tipped

South Korea.” n

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78

O

TS C E J B

E

On the eve of the 50th anniversary of Marilyn Monroe’s death, memorabilia associated with the screen legend continues to haunt the world’s auction rooms commanding record-breaking prices, reports Andy Round.

Of DE Sir

Margaret Barrett, the director

down the phone. “Sometimes people come

you want a major return on your

of Entertainment Memorabilia for

into my department and start moving

millions forget shares or property, you

Bonhams & Butterfields is on the phone

things around to sit down and I tell them

need an item of clothing that once hugged

from LA. She says she is sitting beside

to be really careful, some of those things

the curves of the world’s most famous

a table that once belonged to Marilyn

used to belong to Marilyn.”

screen goddess.

Monroe with a book of Jim Morrison

Barrett has good reason to be careful,

In 2011 the LA auction house Profiles

poetry on top of it. “Two of my favourite

celebrity memorabilia is big business and

in History sold Monroe’s famous white

icons together in one place,” she laughs

it doesn’t get any bigger than Monroe. If

‘subway’ dress from The Seven Year Itch Portfolio

Essentials Investment for $5.52 million. It was a new world

mysterious she becomes. You see so many

said to be from Nelson’s Victory. Today

record for a movie costume and shattered

celebrities reinventing her look and so

his collection includes 20 dresses as well

the previous record held by Audrey

many pictures of her everywhere that she

as dozens of other items of memorabilia

Hepburn’s little black dress from Breakfast

doesn’t seem real. I think memorabilia

such as pill boxes found with Monroe

at Tiffany’s sold for $807,000 in 2006.

reminds us that she was a real person.”

when she died and a postcard stating ‘No,

Despite dying tragically of an apparent

I’m not pregnant’. Many of these items are

office, the glamour of Monroe outshines

overdose at the age of 36 in August 1962,

on display at the American Museum in

everyone. Christie’s 1999 $1.2 million

Monroe’s seductivity continues to endure

Britain until 30 October.

auction of the dress she wore to sing

half a century later. “If she had lived she

‘Happy Birthday Mr President’ is still the

would have been 86 in June [2102] but we

also loaned dozens of items from his “six-

most expensive gown every sold. Even for

will never see her ravaged by time,” Monroe

figures-or-more collection” to exhibitions

smaller items the prices are stratospheric.

collector, former wrestling promoter,

dedicated to the star. “My favourite items?

“I recently attended a sale at Julien’s

probation officer and retired investment

I feel particularly protective of items in

and watched in disbelief as a white terry

banker David Gainsborough Roberts says.

my collection that Marilyn considered

robe that belonged to Marilyn sold for

“I’ve probably spent about $450,000 on

favourites when she owned them such

$120,000,” life-long Monroe collector

my collection but it’s worth a gigantic

as a mink fur collar she’s photographed

Scott Fortner tells Portfolio. “In 1999 it

amount now, possibly even $20 million.

wearing several times in 1955 and 1956,”

sold for $18,400.”

But at the time I didn’t buy to sell, I don’t

says Fortner. “I also have items from when

buy to sell anything.”

she was young such as her first camera.”

So what’s behind these incredible prices?

“You ask little kids today and they know

Gainsborough Roberts is a flamboyant

Like Gainsborough Roberts, Fortner has

Both collectors source their material

who Monroe is even if they have never

legend in memorabilia circles. He was

from reputable auctions as well as reliable

seen her films,” says Barrett. “I think the

first inspired to collect as a child when his

individual sources. Gainsborough Roberts

further we get away from her life the more

grandmother gave him a piece of wood

says he became friends with Monroe’s

A visitor looks at a 1960 picture of Marilyn Monroe, shot by acclaimed photographer Eve Arnold on the set of The Misfits. It was Monroe’s last movie.

May 2012

grapheast

When it comes to the auction house box

79

Essentials

Investment

masseur Ralph ‘Rafe’ Roberts before he

And new Monroe

died. “He saw her almost every day for

memorabilia is always

three years and was probably one of the

being discovered. No

last people who spoke to Monroe before

matter how insignificant or

she died,” the collector says. “He’s always

bizarre, if an item has been

maintained that she didn’t kill herself and

touched with the magic

that the overdose was a terrible accident.”

dust of Marilyn it’s worth a fortune. American auction

Monroe is also a focus for hero worship

house Julien’s recently sold

from contemporary celebrity collectors.

X-rays of Monroe’s chest

Lindsay Lohan, who recreated Monroe’s

taken in 1954 for $45,000

‘Last Sitting’ Vogue photo session with

and the couch she used to

original photographer Bert Stern for New

sit on when she visited her

York, told the magazine she had bought an

psychiatrist for $2,625.

“Can you imagine the

apartment where Monroe once lived and

stories that couch could

filled it with “a lot of Marilyn stuff ”.

tell?” says Darren Julien,

During the landmark sale of Monroe’s estate by Christie’s in 1999, singer Mariah

the company’s CEO,

Carey bought Monroe’s childhood piano for

speaking from Tokyo.

$662,000 (“It belonged to her mother and

“Why am I in Asia? Well,

was a piece of her childhood,” the singer

in China and Japan,

said); Tommy Hilfiger bought a pair of her

there is a fascination with

jeans and boots for $112,000 and Massimo Ferragamo bought back a pair of his company’s red stiletto heels for $42,000.

The highlight of the auction, however, was

gettY IMages

An authentic autographed picture of Monroe at a memorabilia sale. Monroe’s assistants often signed photos on her behalf.

Western pop culture and plenty of large bidders.

The combination of Monroe’s troubled private

the sale of that dress Monroe wore to sing a breathy Happy Birthday to US President John F Kennedy.

“The fact that the sale achieved a total of $13.4 million from 576 lots is a reflection of the incredible enduring appeal of Monroe’s legend,” explains Christie’s London memorabilia expert Katherine Williams. “A lot of actresses get lost in the mist of time but Monroe endures whether it’s in Warhol paintings or her association with historic figures, there is no doubt she is an icon.”

“A lot of actresses get lost in the mist of time but Monroe endures whether it’s in Warhol paintings or her association with historic figures, there is no doubt she is an icon.”

gettY IMages

80

Monroe at the 1957 groundbreaking ceremony for the Time & Life Building in New York.

Monroe's allure has only grown stronger since her death in 1962.

Portfolio

Essentials Investment

81

life, her appearance in incredible films, a tragic death and her personal connection to iconic personalities in America’ history from JFK to Joe DiMaggio is an intoxicating celebrity mix. Some celebrities may just be as well known in specific countries. But Monroe, like Elvis or The Beatles, has an international fan base.”

So where do you begin if you want to add a few Monroe pieces to your own investment porfolio? “Always start with provenance,’’ Julien warns. “We do not sell anything that we cannot authenticate through photographic evidence or reputable sources. Marilyn had a lot of reUters

assistants and every week we are shown things that are fake. On one occasion we were offered hair curlers that were supposed to be Marilyn’s but they had been manufactured in the 1970s long

Telephone bids are taken at the 1999 Christie’s auction of Monroe’s personal belongings in New York. The dress Monroe wore to sing “Happy Birthday” to President John F. Kennedy sold for $1,267,000.

after her death.”

Barrett at Bonhams & Butterfields says the most heart-breaking part of her job is telling would-be sellers that a studio assistant probably signed the ‘Marilyn’ autograph they have just inherited from their grandmother. “There are also people who think you can buy a 1950s fur, add a fake letter of authenticity and sell it for a fortune,” she says. “The good thing about Monroe is that she was photographed every day of her life so it’s comparatively straightforward to check items.”

But when a genuine item arrives at an auction house, the sensation is indescribable. “I can remember handling an identity card that once belonged to Monroe and it was a genuine electric thrill,” says Barrett. “Even in an ID picture she looked glamorous.”

For Gainsborough Roberts that electricity is overwhelming. “These things are linked to real people, not images in a photograph or actors in a film. The sensation is childlike. I actually own this piece of history! And it’s actually in my reUters

front room! People say that I could have had a holiday for what I paid for an item, but I don’t want a week in France. I want this excitement.” n May 2012

Monroe's personal address book was sold by Julien’s at a 2005 auction. Any item associated with Monroe fetches top dollar.

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82

Culture

EvEry city has its hEroEs – people who, for whatever reason, leave an indelible mark. Washington is awash in monuments to past presidents. Paris is studded with plaques honouring luminaries from Joan of Arc and Victor Hugo to Edith Piaf.

Yet few cities are in thrall to a single person the way Buenos Aires is to Maria Eva Duarte de Peron. The wife of Juan Peron, who was president of Argentina from 1946 to 1955 and again in 1973-74, Evita, as she was known to her fans, lived in the capital for less than two decades before dying of cancer in 1952, at age 33. One of the most controversial and influential women in the Western world, to her supporters she was a saint-like defender of the poor; to her detractors, an irresponsible spender out for personal glory. Either way, her presence continues to be felt all over Buenos Aires and beyond.

WhErE that soNG Was sUNG The Casa Rosada – also known as the Pink House – is the Presidential Palace, home to the balcony that Evita often used to address throngs of Peronists, also known as the shirtless ones because many were poor labourers, who gathered in the Plaza de Mayo and up Avenida de Mayo. It became iconic as the setting for “Don’t Cry for Me Argentina,” the signature song of the musical Evita. Free weekend tours of

© 2012 New York Times News service

the palace allow visitors to peer from the balcony themselves.

The Museo del Bicentenario, sometimes called the Presidential Museum, opened in 2011 behind the Casa Rosada. It contains objects related to the Perons, such as presidential regalia, clothing and

Evita’s

Buenos Aires Following in the footsteps of Eva Peron is one way to see the Argentine capital and get a history lesson at the same time, reports Michael Luongo.

campaign posters.

Portfolio

Essentials Culture Items for sale in the souvenir shop at the Evita Museum in Buenos Aires. Evita Peron was a controversial figure in Argentinean politics, both loved and despised.

flowers and notes at the tomb nearly every day, and the crowds grow to the thousands on 26 July, the anniversary of her death.

On 17 October, the date Juan Peron came to power, the arrangements – many from political leaders and unions – grow in size and number. thE PLacE thEy MEt? Legend has it that Juan Peron first laid eyes on the rising starlet Eva Duarte at a 1944 fundraiser for earthquake victims at the Luna Park concert and sports hall near the Puerto Madero neighbourhood. The moment is marked by the song “Charity Concert” in Evita, though some historians say it is likely that they had already met.

EvEN hEr corPsE Was coNtrovErsiaL The General Confederation of Labour (Confederacion General Del Trabajo) is a union office building constructed by the Perons in the late 1940s. Tourists will recognise it by the portrait of Evita on its central tower, lighted by an eternal flame. Her body was embalmed in this building and it lay here until 1955, when a military coup forced Juan Peron from power. (The body was brought FashioNista MUst-stoP

Historical Foundation, including some of

back to Argentina in 1974.) The room

Under Evita’s direction, the Argentine

her early films. The foundation behind the

where the body was embalmed is now a

state bought a mansion in the tony

museum is run by her grandniece, Cristina

small museum.

Palermo neighbourhood in 1947 and

Alvarez Rodriguez.

Nearby is the Fundacion Eva Peron Engineering School. This imposing

turned it into a shelter for single mothers.

After Juan Peron was deposed in 1955,

Pay yoUr rEsPEcts

Doric-columned structure was once

the building remained in government

After 24 years of being shuttled about

the headquarters for the Eva Peron

hands as an office for the disabled. In

Argentina and even being buried in Italy

Foundation, which she established to

2002, the 50th anniversary of Evita’s

for a few years, Evita’s body came to rest in

distribute money to needy families – and,

death, the building reopened as the Museo

1976 in the simple black tomb belonging

some say, to draw funds for her personal

Evita showcasing her lavish wardrobe,

to the family of her father, Juan Duarte, in

use. The building bears a tiny plaque that

as well as items from the Eva Peron

the Recoleta Cemetery. Her admirers place

is the sole remnant of its former use.

May 2012

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Essentials

Culture

Eva Peron addresses supporters in 1951. Peron secured the vote for women and organised workers.

WoMEN oNLy, PLEasE

magazine covers, from Evita’s film and

its 97-metre clock tower, is just off the

The grey granite Congress (Congreso)

radio career from the late 1930s to 1945.

Avenida de Mayo, a few blocks from

building is among the most impressive

Visitors might also have the chance to

the Casa Rosada. Though its legislative

neo-Classical-style structures in Buenos

speak to one of the volunteers here who

chambers are still active, the building

Aires. After women gained the right to

actually knew Evita.

maintains one of Evita’s satellite offices

vote in 1947, a wave of female politicians

The City Legislature building, with

for her foundation, which is open to the

came into office. Evita opened the womenonly Salon Rosado, or the Pink Room, so that they could discuss issues important to them without men around. Now called Salon Eva Peron and open to the public, the room bears a plaque explaining its importance, contains a bust of Eva Peron, and has retained its original furnishings.

The building’s rotunda was a viewing site during the official two-week mourning period for Evita. oh i coULD tELL yoU storiEs The La Muestra de Evita, which opened in 2009 in a union hall, houses material related to public works from the Peron era as well as objects, like rare photos and old

A steel image of Maria Eva Duarte de Peron on the side of the Ministry of Health Building in Buenos Aires.

Portfolio

Essentials Culture public. The room, now called the Salon Eva Peron, contains objects she used. Nearby, see Evita Vive, a tango show celebrating her life, inside the Moreno Hotel Theatre.

10 storEys taLL One of Buenos Aires’ tallest structures, the Ministry of Health was built by the Perons and dominates Avenida Nueve de Julio. Because it was too large to demolish during the 1960s expansion of the avenue, a process that made it the world’s widest boulevard, the road simply goes around it. A stage at the base of this building was the site of a 1951 rally at which the crowd, estimated at two million people, called for Evita to announce her candidacy for vice president. (She decided against it.)

Clementina Beba Gil, who worked on the women’s suffrage campaign with Eva Peron, at El Museo Del Pueblo.

Today, the building is home to the city’s newest Evita monument: two 10-storey images of Evita’s face on the central tower, made of steel. The work on the south facade was unveiled on 26 July, 2011, the 59th anniversary of her death, by President Cristina Fernandez de Kirchner, a former first lady herself who has drawn comparisons with Eva Peron. A defiant Evita on the northern facade harangues the city’s wealthy oligarchs, while on the south facade, facing a poor area, she is smiling.

BroNZE GoDDEss There was no official monument to

The Casa Rosada, also known as the Pink House, is the presidential palace and home to the balcony Evita used to address her supporters.

Evita until 1999, when a bronze statue, reminiscent of a 1960s church sculpture, was unveiled. It’s on a hillside below the National Library, which sits at the site of the former presidential residence, where Evita died. (The residence was demolished after the coup.) The statue roughly marks the spot where Juan Peron had planned to build a colossal monument to himself, Evita and a symbolic worker, or Descamisado. After you’ve seen it, have coffee nearby at Un Cafe con Peron inside the presidential archive and research office Instituto Nacional Juan Domingo Peron, where tourists and locals pose with a statue of Juan Peron. n May 2012

Patrons at the outside restaurant of the Evita Museum in Buenos Aires.

85

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Essentials

Test Drive

WINNING WAYS The Mercedes ML 500 4MATIC BlueEFFICIENCY, now in its third generation, is back better than ever, reports Guido Duken.

I

WAS ACTUALLY EXPECTING some

experiencing year on year growth since

The thick, sharply angled C-pillar is carried

tire-burning action in the C63, but

2008, and 2011 was the best yet in terms

through from the second generation. Weight

Mercedes requested that I rather test

of sales. For the 2012 model year, the

has also been targeted, with aluminium

the brand new ML 500 4MATIC. “You’ll

M-Class enters its third generation and

replacing the fenders and engine hood that

be the first journalist to drive it in the

while the revisions may appear minor, they

were previously steel.

UAE,” the PR person assured me. OK,

are aimed at keeping this SUV at the top

luxury SUV it was.

of its game against competitors such as the

THE MOST dramatic changes Mercedes

BMW X5, Audi Q5 and Cadillac SRX.

has made in its latest vehicles are the

When it comes to Mercedes’ SUVs, the compact GLK is the C-Class of the line up,

Externally, the new ML has undergone

upgraded interiors. The ML’s interior

the ML mirrors the mid-range E-Class,

some subtle changes. Firstly, it’s marginally

is a mix of old and new – the radio,

while the GL is the equivalent of the top-

longer and wider, and the stance has been

HVAC controls and central COMMAND

of the range S-Class sedans. Naturally, this

lowered slightly. The swept-back headlamps,

screen are familiar, but the rest of the

is also reflected in the price tag.

LED running lights and wide rear arches

gauges, seats and controls are new. Like

from Mercedes’ latest sedans and coupes is

the exterior, the cabin shares many

back in 1998 and has been a major

incorporated. The front gets the new bold,

themes with the E-Class sedan, but

sales success for Mercedes-Benz. In the

upright family grille, the waistline has been

the materials are first rate. Soft-touch

Middle East, the outgoing ML has been

raised and 19-inch wheels are standard.

plastics and leathers mix well with

The first-generation M-Class debuted

The ML 500’s swept-back headlamps, LED running lights and wide rear arches have been carried over from Mercedes’ latest sedans.

Portfolio

87

The interior of the ML 500 is a mix of old and new. The radio, HVAC controls and central COMMAND screen are familiar friends, but the rest of the gauges, seats and controls are new.

chrome. The front seats adjust in many different ways, and the rear seats plus

14-speaker Harmon Kardon stereo.

The ML 500 might be well insulated,

The ML 500’s stance has been slightly lowered and the waistline has been raised, while 19-inch wheels are standard.

Coming around a corner I suddenly hit a sizeable patch of sand, but the ML 500

the cargo area are more spacious than

but it’s definitely not soulless. When

didn’t even feel it. Those 19-inch tires and

before – the 2,010 litres of boot space

you step on the accelerator the V8 4.6-

permanent all-wheel-drive just ploughed

is actually the best in the segment.

litre engine emits a pleasant soundtrack

right through. In those conditions I was

that underlines the 300kW it delivers

happy to have Mercedes’ safety equipment

does listen to its customers, the indicator

between 5,000 – 5,750rpm and 600Nm

on board. The standard equipment

signal stalk has been swapped with the

of torque. The ML 500 is definitely

package includes the drowsiness detection

cruise control stalk.

no slouch as it hits 0-100km/h in 5.7

system ATTENTION ASSIST, the

seconds, yet it uses around 25 per

anticipatory safety system PRE SAFE

cent less fuel than its predecessor.

and a tyre pressure loss warning system,

And just to prove that Mercedes-Benz

THE DAY I picked up the ML 500 a sandstorm was raging across Dubai,

It’s comfortable as well. The sandstorm

reducing visibility and creating mini

could do its worst, but inside I was nicely

Brake Assist (BAS). The optional active

dunes on the roads. A good day to stay

cocooned against the elements. The

assistance systems such as Active Lane

home. But if you do have to be on the

suspension eats up most bumps with

Keeping Assist and Active Blind Spot

road, the ML 500 is a good vehicle to

quiet efficiency, cornering is stable and

Assist where fitted to my test vehicle, and

be in. Wind or no wind, the ML 500 is

this SUV drives more like a sedan. The

I think they’re worth the money.

amazingly quiet. Thicker windshield glass,

steering feels good at high speeds, but it

new door seals, and sound-absorbing

seems a bit sloppy when you’re going slow.

up where its predecessors left off. Better

panels make this the quietest-riding

The ML now uses electric assistance for

comfort, more space, improved looks and

M-Class yet. At freeway speeds, road noise

its power steering, which doesn’t quite

increased fuel efficiency combined with

is subdued and wind noise only becomes

provide the feedback that the hydraulic

driveability and safety make the ML 500 a

audible when speeds approach triple

pump systems did. Mind you, the new

wise and entertaining choice. Prices start

digits. Not that this worried me as I was

Porsche 911 gets it right, so there’s room

at $73,200, but the option-packed model

busy cranking up the optional 610-watt,

for improvement.

I drove hit the $100,000 mark. n

May 2012

as well as adaptive brake lights and

The third generation ML 500 picks

88

Essentials

Other Business

Cash Mobs Latest Craze Flash Mobs have been around for a while, but now a group of online activists is harnessing social media like Twitter and Facebook to get consumers to spend at locally owned stores in cities around the world in so-called Cash Mobs.

At the first International Cash Mob day last month, wallet-toting activists gathered in as many as 200 mobs in the United States and Europe, with the aim of spending at least $20 a piece in locally owned businesses, according to the concept’s founder, Cleveland lawyer Andrew Samtoy.

The 32-year-old dreamed up the Cash Mob idea last year after spending time in Britain during summer riots that unleashed looting in cities including London, Manchester and Birmingham. His first Cash Mob, in Cleveland last November, brought around 40 shoppers packing in to the Visible Voice book shop, on a welcome spree in which each of them spent on average $40 within an hour-

Expensive Penny Withdrawn

and-a-half.

After the original Cash Mob in Cleveland, Samtoy’s Facebook friends in other cities picked up on the idea and organised their own gatherings. According to Samtoy there are only three rules: “You have to spend at least $20, meet three people you never met before and have fun.”

Canada is withdrawing the penny from circulation this year, saving taxpayers about C$11 million ($11 million) annually and forcing retailers to round prices to the nearest nickel (five cents). It costs the government 1.6 cents to produce one penny, which has been made of copper-plated zinc and copper-plated steel since 1997.

The Royal Canadian Mint, which has produced 35 billion pennies since it began production in 1908, will cease power. Production and handling cost for the one-cent

Driven to Fly

coin are a C$150-million drag on the economy, according

The flying car has escaped the realm of science fiction,

to a 2006 study by Desjardins, a Levis, Quebec-based

according to the US company Terrafugia. The vehicle –

financial institution.

dubbed the Transition – completed its first test in March.

distribution this autumn due to the coin’s low purchasing

Business groups welcomed the move, which follows other countries such as Australia, Brazil and Sweden, and economists said it would have little impact on inflation.

The savings to financial institutions alone may be about

The Transition reached 500 metres altitude and flew for eight minutes.

The Transition has two seats, four wheels and wings that fold up so it can be driven like a car. Around 100 people have

C$20-million a year, as banks reduce transportation,

already put down a $10,000 deposit to get a Transition when

storage and handling costs.

they go on sale. But don’t expect it in too many driveways as it’s

The mint used 1.5 million kilograms of steel, 70,000 kilograms of copper and 23,000 kilograms of nickel last

expected to cost $279,000. As the Transition needs a runway, it won’t allow you to escape when you’re stuck in traffic.

year to make pennies at its facility in Winnipeg, Manitoba.

Terrafugia has been working on flying cars since 2006.

It put 1.3 billion coins in circulation in 2011, half of which

The Transition uses standard automotive fuel and can reach

were freshly minted and half made from recycled materials.

180km/h in the air and 110km/h on the highway.

Por tfolio

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