tv Bloomberg Business Week Bloomberg July 29, 2017 3:00pm-4:00pm EDT
editor-in-chief of "bloomberg businessweek." in the business section you take a look of a chinese company. >> a large variety of further clothing. -- feather clothing. manufacturer in china of this kind of apparel. it epitomizes so much of chinese struggle, this is a brand that they wanted to take global, these codes are very popular now -- coats are very popular now. people are seizing on this. this is a brand that you would think would be a hot item, fashion forward, manufacturing. it has struggled to capture that and globalized the business. what epitomizes is the struggle but so many chinese companies have where they have access to markets in asia and the u.s. but does not have the cache of western brands and 10 i did a
line of mass-market appeal. -- cannot get over the line of mass-market appeal. oliver: let's talk about another asian company which is forever sotheby's. let's talk about samsung, the korean company. although be different things that should have hindered his company, it continues to go forward and to be a brand. >> the remarkable resilience of samsung. we want to tell this story in "business week" for a long time. pete rouse and tribulations from exploding phones to a collection with their founder -- the browsing tribulations from exploding phones -- to the trials and tribulations from exploding phones to trial with their founder.
it is the same way that america views walmart, mcdonald's, other barometers of the economy. the company that has faced unbelievable, a phone that literally caught on fire and was banned on airplanes. your own founders seem in handcuffs and shackles going to everyday. still record profits. carol: we get more on the highs and lows at samsung. >> samsung is a company that has been around for a long time but it has been through some trying times. set the background. read: financially, the company has never been doing better. the most profitable in the world, overtaking info. -- intel. it is enveloped in a political and legal drama in its own country, south korea. just a little background on what samsung is because we attribute it to its electronics arm, but the samsung group is an informal affiliation of 60 companies. there is a founding family, the
li family. the grandson of the founder is in prison in south korea and on trial for allegedly from embezzlement -- allegedly corrupt from and embezzlement. a scandal -- corruption and embezzlement. his gamble that led to the ouster of the prime minister. what it reflects is the ambivalence or at least a sentiment around these large companies and south korea. they were really affiliated with the companies, the enormous successful economic growth over
the last 50 years. now they are viewed it little more dimly. samsung being the most visible, the largest company in south korea is in the middle of that. carol: the success of samsung has been important to south korea, correct? >> not just samsung. but samsung, the 20 years since it has emerged, there is a lot of pride in the success of this company. samsung electronics, it was associated with appliances in our home. some low-quality phones in the early 90's and now, right next to apple as the largest maker of smartphones and connected devices in our lives. that is the visible part. the invisible part is that they have an enormously successful semiconductor business. we visited a semiconductor plant south of seoul. you cannot imagine the scale at
which they operate. they have broken ground and gotten operational in this facility in the span of two years. the digs into all 3-5 years or longer to get a fabrication plant up -- it takes intel 3-5 years or longer to get a fabrication plant up. it is unrivaled. they have managed to time these plans to coincide with upswings in the technology sector, that is one major reason why samsung has been so quietly successful over the last 10 years. carol: i like that who started out the segment saying good and bad times for samsung. financially they are firing on all cylinders. but you mentioned the grandson is in jail. talk about that because that is
a bad time. brad: that is not a good look. what some people are saying is not only that he is on trial, and look, his father also went through a similar experience. in fact, many of the leaders most often end up periodically imprisoned in south korea for whatever reason. it is reflected in the conflicted relationship the country and government have with large companies. what is different this time is that the country and even the media is so pro samsung in the past and are now celebrating the idea of this luminary in grounded. you go to south korea and you see this photo every day of him in handcuffs. they are exulting in his humiliation. the cases monstrously complicated but basically he is being accused of engineering a
merger between two samsung companies to strengthen his hold on the samsung group and in particular samsung electronics. whether he did that or not is beside the point. there is been an unspoken agreement between the big companies and the government to facilitate their success. suddenly it is knocking the contract, they are under siege. carol: generations have been running this company. you talk about the family. is it possibly time for somebody else and not the li family to be running samsung? that the culture needs to change? brad: that is a good question. you talk to shareholder activists like a hedge fund in new york which has lobbied for changes at samsung over the years, they would say yes. this is archaic management structure that other investors in the samsung company have their rights reduced because of the powers of the family.
it is certainly not a modern management structure. but at the same time, you have to look at the success of the company. and the investments like pyongtech. the are only possible because of his unorthodox and anachronistic management style. -- this unorthodox and anachronistic management style. the family is comfortable in leadership and make long-term bets. you will get japanese semiconductor companies, -- look at japanese semiconductor companies, they have faded. they were not able to make long-term bets in the future of technology. you have to give the li family, this founding family some credit. carol: turning a samsung's success to recover image was a job. -- into a cover image was a drop. >> -- job. oliver: how did you go about this? >> reading the story, it is about how much they went
through, this wide range of things from corruption, this was hard to portray a name literal sense so we went through a metaphorical sense. carol: samsung is a huge company. it has been around for a couple of generations. it is a family-owned company. >> but you mentioned, it produces so many different things but the following is the most iconic things. they associate them with the exploding phone. oliver: november a lot of things happening to it -- you have a lot of things happening to it. did you brainstorm many different ways you could attribute this up? >> the director was on set and the studio got excited when you put it on fire. anytime you can like something on fire, do it. oliver: this is not post. this is a phone lit on fire. >> we definitely wanted the
phone to be on to show that despite the things happening to it, it is still functioning. oliver: that is at the end of the day, all of these things to happen. carol: up next, have turkey and germany reached a breaking point in the relationship? oliver: president trump accused of reneging on his promise to the petrol industry. mark: this is "bloomberg businessweek." -- carol: this is "bloomberg businessweek." ♪
once friends and now frenemies. the relationship between germany and turkey. oliver: neither company can go too far. >> germany and turkey have had long and deep ties. tell me how long and how deep. >> the trade between the two is upwards of $36 billion a year. the relationship goes back to the 1960's when a lot of turks moved to germany for worker shortages. but matt, there have been tensions for about a year and a half that in the last week spillover over human rights -- spilled over, over human rights, mostly. carol: i had no idea of the is was. once of german companies operating in turkey, a lot of workers, back-and-forth. >> correct. deutsche bank, siemens, volkswagen. the biggest companies, german companies in the world have a huge presence in turkey. germans for a long time made of
the biggest tourist block in turkey. and turks are one of germany's biggest ethnic minorities. the ties are complex and deep and substantial. carol: we know they have had a great relationship. it has become strained. >> so last week, turkey detained a few human rights workers, including a german national. angela merkel, the chancellor, uncharacteristically denounced this. the last year and a half, she has been treading very likely on turkey's detentions of journalists and whatnot because of a deal that she brokered last year in which turkey agreed to accept a lot of refugees coming out of syria. so that has caused her to want to not offend, let's say, turkey, who she relies on as a partner to keep these refugees
out of germany. oliver: and the politics section, donald trump is a candidate spent a lot of time -- as a candidate spent a lot of time trying to creamy favor of -- to curry the favor of the ethanol industry. carol: that has changed in the white house. oliver: you're looking at alternatives to traditional energy. tell us where some of these people in midwestern areas of the u.s. are thinking about the future right now and what it means? >> is a mixed bag right now. the future looks brighter for them about 12 years ago when the renewable fuel standard was instituted under president george w. bush. now, under the trump administration, it appears to be a mixed bag. we had our first referendum on where he may stand and how he may kind of administer the
program earlier this month when he proposed value targets refiners have to use for next year. carol: renewable fuel standards put into effect of years ago by president george w. bush. what did it require? >> it required escalating amounts of fuels to be mixed into the u.s. fuel supply if you will. we are talking ethanol, biodiesel, etc. the objective of the program at the time was to reduce foreign sources of oil and also to address climate and environmental issues. oliver: there are a lot of countries where ethanol is a big export and comes from corn, but in the u.s. there are certain
areas were a lot of that corn farming is done and that ethanol gets made. that gets to the courts of this story -- crux of this story. tell us who those people are and where they are in the u.s. >> in the u.s., the industry is very, extremely concentrated in the u.s.. we're talking about iowa, illinois, indiana, nebraska, etc. of course, when we mentioned iowa, but is also, you know, i battle ground for presidential aspirations -- a battleground for presidential administrations. carol: what is up with washington's diversity problem. oliver: brokers. carol: this is "bloomberg businessweek." ♪
radio plus app. in the front at section, wall street's top bosses have pledged four years to bring diversity -- for years to bring diversity to the workplace. carol: the opposite has happened. tell us about the backdrop. working to have a more diverse workforce, men, women, minorities, what is going on? max: a very simple way to describe it is that things are not going good for diversity. i tried to write about this years ago, i might've talk to you about it. editor, -- our editor, we had no idea about talking about lack of
diversity on wall street. we never really ended up finding the perfect story. it had five main characters because it is hard to tell such a complicated narrative through one person. on hold for a while that a couple of weeks ago, robert, my editor said let's go update the diversity numbers you collected. i did and i was honestly surprised me to a look at the most recent numbers. which for most banks is 2016. the numbers for black diversity, not great to begin with, were down at a couple of the biggest banks in the u.s.. carol: the big bank, what are we talking about? jpmorgan? >> wells fargo, bank of america. carol: all of the big banks. these banks have come out publicly, a fair amount of them, and said that we want to have a more diverse workforce. jordan: all of them have made public pledges. we all have diversity pages on their websites touting the idea that they are looking for a diverse and inclusive workforce. but like the davis euros, -- the
data shows, those are not living up to the workforce advocate, not on par with their industry at times, it is lagging. oliver: america, by and large, is getting better at these problems. not everyone, this is something that your name i have been talking about, media is pretty white. so, we have a line in the story about the information industry which includes silicon valley, parts of the media, hollywood, those numbers are not great too. what is so interesting and eye-opening for me as i was reporting the story is that black diversity in corporate
america is going up. if you look at most of the country, countries with at least 100 employees basically, not only is black diversity going up among the whole u.s. workforce, which, by the way, is what we're talking about here. workforce of the six largest banks in the u.s.. black diversity is going down at those banks while it is going up in corporate america, executive and workforce out lo -- at large. carol: how do we explain what is going on? jordan: we have a line in the story that there is no one a commission. academics and bankers offered multiple reasons why these numbers are not working out of the ways we expected them. some of them stated of a lack of creativity and really bringing in young black hires. some say it's not even caring enough, some of the focus goes to gender diversity and other efforts to boost minority numbers. not enough effort. carol: to be fair, any of the firm's, goldman sachs, and the of the rest? jordan: wells fargo really stuck out to us when we look at their
executive suite and their total workforce. the numbers for executive at least were rising 2%, 4%, 6%. i think it went up to 12% for the workforce of african-americans. those numbers really stood out because it was really incremental and the other rights, either going -- in the other banks, either going up or down. carol: investors. are increasingly shifting to online -- to online advice. oliver: phone providers are still paying for junkets. >> this is just to remind everybody for those who might not know what they are, they are continuing to grow. >> there almost a decade old is a phenomenon. -- as a phenomenon. taking in funds using a logarithm and putting them in the appropriate bucket. oliver: basically taking input on what investors are comfortable with.
what kind of return they want. essentially taking the mutual funds or indexes across asset classes. >> then we gauge how much money they make, all of the things you would want to go to figure out how much risk is appropriate for you. >> this is what we are talking about. either retirement, these are average people in many senses, as well as casual investors looking for some kind of return. >> people who cannot afford a full price financial advisor. carol: it's cheaper. >> much cheaper. oliver: that brings us to the topic of who is in charge. who offers those as products. where are those big shots? -- shops? >> schwab and vanguard have taken it. they are the manufacturers of these products, taking together the logarithm.
immediately who bring up assets. -- hoovering up assets. what brings us today, the big brokerages like morgan stanley's and wells fargo's of the world, they have all recognized that they need to have this channel. ultimately, all of the people with money will die out, their kids will get the money, kids are more used to direct digital channels rather than dealing with. -- dealing with people. -- dealing with people in front of the mahogany table. they know they need to create this channel. that's where they are doing --
oliver: welcome back to "bloomberg businessweek." carol: the showdown of five-star mega-hotels in london. oliver: all of that of ahead in -- up ahead in "bloomberg businessweek." ♪ oliver: we're back with "bloomberg businessweek." editor-in-chief. with go to the finance section, a story. tell us about this from gary and company.
-- hungarian company. >> it is a big one, only sales of $900,000. what this story talks about is how this stock has rocketed based on association with hungry's prime minister, who has been incredibly controversial in what he has done. everybody knows that hungry developed quite rapidly after the fall of the berlin wall along with so many other eastern european economies but since the president has been in power, he has centralized authority, bolstered the resiliency in terms of lack of reliance on imf funding but also attracting
controversy for centralizing control. he is suspected of enriching his friends close to him, and one of them is the owner. oliver: an incredible story in the futures section that we want to talk about, the hijacking. carol: it is a movie, almost. oliver: you cannot read it without thinking about the movie. even if you have not seen it, the narrative is awesome. megan: what is so fascinating about this is that it should say light on two things, -- sheds a light onto things, piracy and the lack of transparency in this market. this was a hijacking with a hundred million payout and murky connections between what we see all the treacherous high seas and what can be connected to somebody making a mark on a fountain pen in london to ensure a wide chain to connect.
i think when we told this story, we got to the heart of it, talking about human lives on the ship and putting them at risk. it is an immense story. >> we talked to our reporter, matt campbell, with more. tell us about the supertanker and what happened to it a few years ago. matt: it was a very large tanker carrying fuel somewhere in the market of $100 million from the ukraine to china. it ran into quite credit straw for trouble -- catastrophic trouble in the gulf of aden. it was intact for mentoring kalashnikov assault rifles. -- it was attacked by men carrying kalashnikov assault rifles. there was a fire that was never explained, a severe fire that
crippled the ship and caused the crew to abandon it. in the middle of the mad, and one of the most dangerous waterways, unattractive it would fit what people think of as piracy. the crew and up evacuated. the crew were able to get off, they are rescued by the u.s. navy. and then strange things start happening. carol: his remarks merely of a tom hanks movie. cannot remember the title. >> "captain phillips." these are very dangerous waters. these are places were captains know what they are getting into. -- where captains know what they are getting into. was this a typical path, a difficult time of day? -- typical time of day?
what was the situation? matt: the tanker made arrangements through its owner, a greek gentlemen, to bring on board a security team for the transit through the gulf of aden, this dangerous area. that is not unusual. vessels, more a few years ago, travel through particularly risky areas with an embarked security team. what was more unusual was how that occurred. the tiger made an arrangement to pick them up some part into the gulf of aden rather than the start of the dangerous area and drift overnight, cut engines overnight while it waited for the team to turn up. now, the biggest thing that all of these sort of anti-piracy" say is the biggest ally of a large vessel is to keep moving
and outrun. the idea of having a very large ship floating immobile was unusual. carol: that was one of many unusual things connected with this hijacking. what were the others? jillian: -- matt: the u.s. navy began asking questions. as you know, there is a significant u.s. navy and european union cooperation to police waters. they are very interested in piracy. especially if it leads to the destruction of a vessel. things did not match hollywood expected pirate attack to unfold. pirates are generally somali in that part of the world.
these member reported by the captain to have instructed them to go to somali except the days arabic -- except that they spoke arabic. they had and skin -- tan skin. what circumstances would lead a pirate to burn a ship? if you are a pirate, getting on the ship is the whole point. you do not abandon the ship and you do not damage it. leadership is valuable to you, your goal is to hold them for ransom -- the ship is valuable to you, your goal is to some. right from early doors, they thought it was an atypical pirate attack. carol: speaking of crimes, in the economic section, how stealing fuel became a $1 billion a year business in africa. >> we talked about the black gasoline market in mexico. carol: so mexico has had a problem with fuel for a long time. this is an issue that has been going on for about three
decades. but in the past six years or so, what we have seen is that the problem has multiplied. how it works is that ful -- fuel fees, or people involved in this trade, dig up pipelines owned by the big oil companies. they tap them, siphon out the fuel, and salad, sometimes by the side of the road contractors or even -- to workers or even at the market where cars can come through in what is effectively a drive-through attended by lack of marketeers -- black marketeers. the problem has existed for a very long time but it has become more of an issue in the past six years as it has been controversial in mexico. oliver: why is the profitability, why do the margins make sense?
why is the proliferation coming to a peak, where, you guys have the story, we have looked at this story before. why is is coming to something of a climax? >> yes. one of the issues that is becoming increasingly of concern is that you are seeing organized crime groups get involved in fuel theft. it started off 30 years ago with some mx workers that were doing it on the side and using fuels for their particular transport businesses. since then the practice has grown and basically fuel theft, thieves have found it easy to do. people are more aware of it so they will actively seek out stolen fuel. also, it is important to remember that it is cheaper. it is 20% cheaper than what you get at a gas station so it makes a lot of sense.
oliver: welcome back to "bloomberg businessweek." carol: you can find us online on businessweek.com. oliver: a new sports site is gaining traction. carol: its ability to cover sports without covering itself and ad -- in ads. >> this week you are running around interesting new form of sports media. >> the athletic is a subscription-based website for local sports. they operate right now in the four cities. the idea is that we do not need to give everyone, we can get a thousand-4000 per city and make
-- we can get 8000 to 12,000 people per city and make a business that does not have to rely on ads. carol: right off the top of your story, espn, fox sports, sports illustrated, yahoo! sports. these guys have been cutting back on sports staff. what has the athletic got, what is the approach that makes sense for them to be a new entry in the market? >>? muscle so the really big companies have been reshuffling their -- >> yeah, so the big companies have been reshuffling their efforts. the athletic which is small and nimble, it has 25 people right now, saw a chance to raise money and hire what you would see as a lot of new staffers and expand. it has low costs. that gives them a different model than having to rely on getting as much advertising revenue per article or per video. carol: also wounded technology
section, nasa and lockheed martin have been buying -- vying for his supersonic aircraft quieter than the inside of a car. >> the effective speed limit on most overland flights in the u.s. and around the world for 45 years has been 660 miles per hour. currently at 30,000 feet, that is about the speed limit for most commercial planes because any faster than that and the planes are going to break the sound barrier, creating a 30 mile wide continuous sonic boom that is going to shatter windows. oliver: 30 mile wide. wow. carol: we have been here before with the concorde. they went away. >> because of this problem. there have been hurdles that
supersonic transports need to cross, notably carbon emissions. the sonic boom has been the biggest problem by far in securing the concord and keeping interested parties in the startup and the bigger --in the bigger errors for from getting involved in projects. oliver: there has been technology advancing us to a point where we could not get a sonic boom. tell us where this is coming from. >> nasa. researchers determined that according to their calculations there is going to be a huge surge in long distance travel specifically and air traffic in general over the next decade. in an effort to address that, they developed a design with lockheed martin that they say that uses fluid dynamics and powerful computers to disperse
the sonic boom across the fuselage of the plan so that the resulting loud hum but you hear is not louder than a mercedes on the highway or the din in a restaurant. carroll: jeff, i've like so many technologies have been disrupted. time --el like not a not a ton has changed in the aerospace industry. but this could be a big change because you write in this story that this advancement could make a flight going used to west coast, cut in half. >> the researcher leading the project on there and told our reporter, thomas, but effectively it would -- that effectively it would have the time going from new york to l.a. -- half the time going from new york to l.a. carol: this would be something that would be used much more widely.
>> exactly, and dissipating the sonic boom is the key to that. the reason the concord could only fly between jfk to europe, could not open up to the sonic boom level speed over u.s. soil. carol: up next, one of the only places on earth were you can interact with elephants in the wild. oliver: another set of crown jewels. five star hotels. carol: this is "bloomberg businessweek." ♪
area. carol: in london and on asia in the bloomberg radio plus app. peter mccoy writes about what the u.s. congress could learn. -- peter coy writes about what the u.s. congress could learn from the french. peter coy, i think the idea of the french vacation, they take a month off. peter: they do, and they enjoy it. i talked to a woman who runs a b&b in provence. actually a place we stayed. she said, look, it is almost a right, as if it is handed down from the french revolution of 1789, we take our vacation, nobody gets in the way. oliver: you think they do the vacations right. america does the top gdp in the world. maybe i am willing to sacrifice my vacation to stay on top of the food chain. peter: some of the people that i talked to acknowledge that america has a pretty high
standard of living measured in gdp per capita. the question is, what are you willing to sacrifice for that? or do you need to sacrifice anything? for example, americans work for a long hours, germans work for fewer hours per year than americans do, and yet they have an enviable lifestyle. but only is the gdp per capita quite strong, but they go home, pet the dog, go for jogs. oliver: now we know what peter coy does in his free time. [laughter] carol: there has certainly been this debate with our own u.s. congress about, they get this nice little august recess. maybe they should be working longer to get things done. maybe work through some of president trump's agenda. peter: the funny thing is, the
recessed from the formal idea of an august recess for congress, goes back only to 1971. before then, in the early years of congress, they just finished their work in the spring and went home. starting in the 1960's it became more of a year-round job and they were sweating through the washington august, which is not a pleasant place to be. carol: right. peter: tempers were raised, nerves were frazzled. they said, this is crazy. we should take a break, gather ourselves, rejuvenate, talk to constituents. so they put this in. from the beginning of august through labor day, they are off. you always get some puritans saying, no, we have the people's work to do. oliver: speaking of vacations, and the pursuit section, a five star resort in thailand.
carroll: and it's a must visit for elephant lovers. >> a lot has been in the news recently about elephant tourism. being not a good thing to do. you spend your money on, to go to places where you can ride elephants because elephants are not treated well in a lot of these resorts. in africa, there is a lot of poaching. in asia, where this resort is, there are a lot of elephants held in captivity and becoming street performers. mistreated. anyway, this place, as you said, does not do that. >> it was created 15 years ago as a sanctuary for mistreated elephants. and of the elephants there are rehabilitated. you can interact with them in a way that is not cruel. carol: so, have breakfast in the elephant comes up to you.
>> and eats with you. carol: i love that. >> i know. a -- the that works as the writer that works as a travel writer and she is obsessed with elephants so this is a bucket list item and she was so excited to go. he said it was nice to be so close to these humongous animals that are so intelligent also and to see how they interact with each other and how they interact with humans. it is really an amazing place to go if you can, it is in thailand. >> i wrote in my notes, plum assignments. cool for her. i love the phrase of her story, responsible wildlife tourism. >> that is big right now in wildlife travel.
we mentioned in africa, i lot of safari resorts are on the forefront of animal conservation. this is one that is in southeast asia and that is what they're trying to do which is to create spaces for these animals that are safe and they are protected and we can also go and it is funded by the people that go, that is how they make their money and create these refuges, basically. carol: since we are only five star theme. oliver: our digital editor thoughts about five star hotels in the city of london. >> the city of london is viewed as a place to get your business done and leave at the end of the day. it is where the banks are. lately it has become cooler and these hotels, the four seasons, they want to capitalize. >> it seems like a distinction between the greater london area and a specific part. what is the specific area? what the city of london is a district in london. it is on the thames and that is where the banks are. carol: let's talk about two new crown jewels in london. what is the four seasons. >> the four seasons opened this year. it is a classic for seasons, very chic and posh. but it also has a private club aspect. people who live in the city can
hang out as well. it is trying to make a nod to the way the contemporary business travelers want to use a hotel, a lounge aspect and it stays open until 9 p.m. -- 9:00 p.m. this hotel recognizes the people want to use hotels. carol: what is the decor? >> it is a four poster bed type thing/ -- thing. it feels posh. carol: talk to us about the ned. >> the beloved waiting for a long time. it is huge. it was founded by the group that does the nomad hotel in new york. very cool, very trendy hotel. carol: "bloomberg businessweek." available on newsstands now. carol: -- oliver: as well as
through our mobile app. a lot of cool stories. carol: the wildlife tourism, the elephant resort. rescuing elephants from bad situations. let them interact with tourists. the pictures are amazing. oliver: it really is cool. carol: got a say, you're investigating a robo advisor, using their objective but not completely. oliver: i like the story about sam's like him of a cover story. whenever one goes to the freighter, the tank -- my number one goes to the freighter, the tanker. we do not know what happened, lives at stake, money at stake. a reporter in mexico looking at oil and the black market. a dangerous investigative report. carol: reporting.