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Business
14 сентября, 17:54

Global LNG giants turn to poor countries for new markets

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Bringing rivers of the liquefied stuff WHEN it comes to liquefied natural gas (LNG), the supermajors have supersized appetites. The likes of Royal Dutch Shell, ExxonMobil and BP make discoveries described as “elephants”; their cost overruns alone can run into the tens of billions of dollars; and projects take the best part of a decade to complete. For years, the industry has demanded fixed, long-term contracts from their customers to justify the size of these megaprojects. The producers also have pretty big problems. They are in the midst of a vast expansion in Australia and elsewhere just as the shale revolution and the start of American LNG exports has brought an unexpected burst of gas onto markets, clobbering prices for the foreseeable future and forcing producers into concessions. Demand in rich countries such as Japan and much of western Europe appears to be in long-term decline. At least one big customer, China, is making life easier...

14 сентября, 17:54

A legal vulnerability at the heart of China’s big internet firms

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COMPANIES’ legal structures are usually mind-numbing fare. But occasionally it is worth pinching yourself and paying attention. Take “variable interest entities” (VIEs), a kind of corporate architecture used mainly by China’s tech firms, including two superstars, Alibaba and Tencent. They go largely unremarked, but VIEs have become incredibly important. Investors outside China have about $1trn invested in firms that use them. Few legal experts think that VIEs are about to collapse, but few expect them to endure, either. One sizeable investor admits loving Chinese tech firms’ businesses while feeling queasy about their legal structures. Like scientists appalled by their monstrous creations, even the lawyers who designed VIEs worry. They are “China’s version of too-big-to-fail”, says one. As well as being spooky, VIEs are another instance of how China’s weak property rights hurt its citizens. What are VIEs? Over 100 companies use them. Since the 1990s private firms have sought to break free of China’s isolated legal and financial systems. Many have done so by forming holding companies in tax havens and listing their shares in New York or Hong Kong. The problem is that they are then usually categorised as “foreign firms” under Chinese rules. That in turn prohibits them from owning assets in some politically sensitive sectors, most notably the internet....

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14 сентября, 17:54

The business of sperm banks

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Fruit of a global supply chain BROWSING websites that list sperm donors is weirdly similar to online dating. “Sanford is the total package,” begins one online ad, describing his strong jawline and piercing blue eyes. With a degree in finance and a “charming demeanour”, he is more than a pretty face. You can listen to a voice recording from Sanford himself. If all that wins you over, you can have his baby without ever having to go on a date. For $635, Seattle Sperm Bank (SSB) will post you a vial of his frozen swimmers. The fact that the main customers for many sperm banks are now single women explains the marketing technique. “They tend to be highly educated, impatient and picky,” says Ole Schou, founder of Cryos International, the world’s largest sperm bank, based in Denmark’s second-biggest city, Aarhus. Its website is designed to resemble Match.com, a dating site, because “finding a donor should be as close to finding a natural partner as possible.”...

14 сентября, 17:54

New rail routes between China and Europe will change trade patterns

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ASTANA in Kazakhstan is one of the world’s most remote capitals, surrounded by thousands of kilometres of empty steppe. This summer Astana attempted to launch itself onto the global stage by hosting the World Expo, which closed on September 10th and underwhelmed many attendees. But there are other ways to have an impact. On the city’s north side, away from the Expo’s exhibits, a series of diesel trains, each pulling dozens of containers, roll through the old railway station. Most are heading from China to Europe. Last year over 500,000 tonnes of freight went by train between the two, up from next to nothing before 2013. Airlines and shipping firms are watching things closely. The trains rumbling through Astana result from a Chinese initiative, in tandem with countries like Kazakhstan, to build a “New Silk Road” through Central Asia. The earlier overland routes were once the conduits for most trade between Europe and China and India; they faded into irrelevance when...

14 сентября, 17:54

China moves towards banning the internal combustion engine

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“A DEFINING moment for the auto industry.” That is how usually restrained analysts at Sanford C. Bernstein, a research firm, described the news that China’s government wants to move towards a ban on gas guzzlers. On September 9th, Xin Guobin, vice minister of industry and information technology, told an automotive conference in Tianjin, a grimy industrial city near Beijing, that the government is developing a long-term plan to phase out vehicles powered by fossil fuels. The news reverberated around car firms, for which China is the largest market. William Russo of China’s Gao Feng Advisory, a consultancy, who was previously a senior executive at Chrysler, says China is simply far too big to lose out on. “If China says no more fossil-fuel powered cars, global carmakers must follow.” No timeline for a ban was suggested. China already has ambitious medium-term goals for automotive efficiency and climate change, including a cap on carbon emissions by 2030. Experts reckon...

14 сентября, 17:54

Is Margrethe Vestager championing consumers or her political career?

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EVEN her enemies admire the bloody-mindedness of Margrethe Vestager, the European commissioner in charge of competition policy. Last autumn, not long after she had ordered Apple to pay €13bn ($14.5bn) in back-taxes to Ireland, to the fury of many in America, she flew across the Atlantic on a charm offensive. The Americans were not charmed; Ms Vestager was unmoved. Buckling up for the flight home, she tweeted that she had never felt so European. Since she assumed her current role in November 2014, Ms Vestager has had several high-profile clashes with American tech firms. In May she fined Facebook €110m for misleading EU trustbusters about its takeover of WhatsApp, a messaging service. In June a long-running investigation resulted in a €2.4bn fine on Google for using its search engine to promote its own comparison-shopping service. EU trustbusters have also charged Google with using its Android operating system to promote its mobile-phone apps and services over those of rivals. That...

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14 сентября, 17:54

Rivalry between Apple and Samsung in smartphones will grow fiercer

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NEVER shy about hype, on September 12th Apple’s boss, Tim Cook, presented the firm’s latest iPhones to a packed auditorium in its glitzy new headquarters in Cupertino. He made a grand prediction: its new, premium phone, the iPhone X (pronounced “ten”), will “set the path of technology for the next decade”. Set to be released this November, ten years after the first iPhone launched, the iPhone X has new features such as an edge-to-edge OLED screen (a thinner screen that does not use a backlight), wireless charging, facial-recognition technology and a dual-lens camera. On the same day, Samsung, a rival smartphone-maker, held a lower-key event in Seoul. Koh Dong-jin, president of Samsung Electronics’ mobile business, announced that next year Samsung could reimagine the smartphone entirely and launch a new design with a foldable screen, which can close like a small book. On September 15th its latest premium smartphone, the Galaxy Note 8, will go on sale, boasting many of the features offered by the iPhone X. Both are trying to convince consumers to spend around $1,000 for their new gadgets. Samsung’s new phone will cost $960; Apple’s high-end iPhone X will cost $999, 45% more than the average selling price of an iPhone in 2016. (The iPhone 8, simpler than the X and available for sale in September, will start at $699.) ...

14 сентября, 17:54

Why do European companies bother to hire ex-politicians?

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THIS month Gerhard Schröder starts a new job. Shareholders in Rosneft, a Russian energy giant with a market value of nearly $60bn, are set to appoint Germany’s ex-chancellor as a board director on September 29th. Russia’s government, Rosneft’s majority-owner, nominated Mr Schröder, who is pals with Vladimir Putin. Despite Western sanctions imposed on the firm after Russia’s invasion of Ukraine in 2014, Mr Schröder’s move is no surprise. He has worked for years with Gazprom, another energy arm of the Russian state, to promote a gas pipeline to western Europe. His ties to Russia win him few friends at home. His successor as Germany’s leader, Angela Merkel, calls his behaviour “not OK”. She also vows to reject offers of “any posts in industry once I am no longer chancellor”. Other politicians are happier to follow Mr Schröder’s example. It emerged last month that a former German president, Christian Wulff (pictured), is also employed by a foreign company. He advises a German arm of a...

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07 сентября, 17:44

America’s utilities prepare for a nuclear threat to the grid

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When the lights go out WHEN North Korea said on September 3rd that it had developed a hydrogen bomb, adding that it could be used for a “super-powerful” high-altitude electromagnetic pulse (HEMP) attack, America’s electricity industry was already on alert. Sceptics tend to dismiss as far-fetched the idea that the rogue regime would knock out the electricity grid by detonating a nuclear bomb high in the atmosphere. Regulators have not mandated safety measures. But the utilities are taking it seriously enough. They are more than a year into a three-year programme, funded by about 60 electricity firms, to understand the potential impact of a HEMP attack on the generation and transmission of electricity, and to find ways to shield the network. Such concerns are not new. In 1962, when America exploded nuclear devices high above the Pacific, electrical damage was found in Hawaii. The industry has also studied analogous space-weather effects on power systems,...

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07 сентября, 17:44

Mobile technology is revamping loyalty schemes

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THOSE of a cynical bent might think Tom Stuker a glutton for punishment. Over the years, Mr Stuker has flown more than 18m miles (29m kilometres) on United Airlines, a carrier not always renowned for treating its passengers tenderly. Mr Stuker may possess the world’s most impressive frequent-flyer account. Over the past half-decade he has averaged over 1m miles a year with United. Mr Stuker is extreme in his devotion. But engendering customer loyalty is something that nearly all firms strive for. Most fail. The average American household belongs to 28 loyalty schemes. The country is home to 3.8bn scheme memberships in total, according to Colloquy, a research firm, up from 2.6bn in 2012. More than half of these accounts go unused. Frequent-flyer programmes, introduced in the 1970s, were the first examples of modern loyalty schemes. They proved to be a clever bit of marketing. Flyers value plane seats highly, so a free one feels like a substantial reward....

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07 сентября, 17:44

A craft-beer boom with Chinese characteristics

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EVIDENCE unearthed at Mijiaya in Shaanxi province proved that the Chinese have an ancient tradition of making beer. Brewers were operating 5,000 years ago, using grains such as millet and Job’s tears (a kind of pearl barley). This year a couple of small-scale brewers lovingly recreated that Neolithic ale. The cloudy, hop-free beverage would challenge even the bravest microbrew devotee. Ladislao Raphael of Moonzen Brewery in Hong Kong describes it as “sour and funky”. Yet Mr Raphael and his fellow craft-beer evangelists are winning converts. The Chinese market, which is the world’s largest, is dominated by mass-produced lager. But craft breweries are sprouting up around the country—by 2016 there were around 150, up threefold from 2015. Consumption of their brews has surged by two-thirds over the past five years, figures from GlobalData show, even as overall beer-swilling declines. This mirrors a global pattern: consumers often crave better beers as they get richer. Trend-setters in...

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07 сентября, 17:44

An infrastructure for charging electric vehicles takes shape

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A NEW phrase, “range anxiety”—the fear that an electric vehicle (EV) will run out of power before it reaches a charging-point—entered the Oxford English Dictionary in 2013. At the time a Nissan LEAF, the world’s best-selling EV, could travel only 120km between charges. A car with a full tank of fuel will travel 650-800km between refills. A motorist relying on batteries has to find a public charger, a rare sight in 2013, or plug in at home to cover the same distance. Range anxiety has not gone away as EVs have advanced. But the problem now feels much more soluble. Many governments are pushing hard to replace the internal combustion engine (ICE) with cleaner EVs—this summer both Britain and France said that by 2040 new cars completely reliant on petrol or diesel will be illegal. By 2050, half the cars on the road globally, a billion in total, will be battery-powered, reckons Morgan Stanley, a bank. Falling battery costs mean that the total cost of EV ownership will soon hit parity...