Posts in category Business and finance


ApprovedBusinessBusiness and finance

Peak tycoon

Used his noodles

REACHING the top is difficult in Nepal, as any mountaineer will tell you. But scaling the heights of business is scarcely easier: the landlocked former kingdom, which in recent decades has swung between kleptocratic monarchy and chaotic democracy, can be as tough for entrepreneurs as the upper Himalayas are to trekkers. Only the hardiest—and those perhaps willing to take a few cunning short cuts along the way—will succeed. Binod Chaudhary, whose interests range from noodles to cement by way of hotels and banking, has trodden the trail and come out as Nepal’s sole billionaire, according to Forbes.

Most tycoons seek to downplay the role of political connections in their ascent. Not Mr Chaudhary. In an autobiography recently updated for an English translation, he offers candid advice: “In Nepal, you do not need great ideas to become a great person. All you need to do is to hobnob with the right people.” His account of which palms were greased or whose son-in-law co-opted leaves little to the imagination.

The Chaudhary Group (CG) he now runs traces its roots back to the 1880s, when…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Up on the farm

THE main street of Hangbu, a town in Anhui, one of China’s poorer provinces, features the usual mix of rural businesses. Shops selling seeds and fertiliser; others stocked with tools and machinery; a few simple restaurants and a motel. And then there is a shop with a shiny display of iPhones and iPads.

The gadgets are a clue that rural China, long overshadowed by the country’s booming cities, is beginning to do better. More controversially, it also suggests that inequality, epitomised by a huge gap in wealth between cities and the countryside, may be declining. “I would not have opened up if people didn’t have money to buy,” says Yuan Yue, owner of the shop selling iPhones. “The money comes from sweat and toil, but incomes are rising.”

The gains from China’s remarkable growth of the past 35 years have not been evenly shared. Studies, both official and independent, show that the country has changed from a very equal society into a deeply unequal one. The most commonly used measure of income inequality is the Gini coefficient, a number between 0 and 1 (0 means that all people have the same income, while 1 means that one person…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

A chronic problem

DEBT levels grew spectacularly in the rich world from 1982 to 2007. When the financial crisis broke, worries about the ability of borrowers to repay or refinance that debt caused the biggest economic downturn since the 1930s.

It could have been worse. The danger was that, as private-sector borrowers scrambled to reduce their debts, the resulting contraction in credit would drive the world into depression. Fortunately, this outcome was averted. First, the governments of rich countries allowed their debts to rise, offsetting the reduction in private debt. In addition, emerging markets (notably China) continued to borrow. So there was no global deleveraging; quite the reverse (see chart). Central banks also helped, slashing interest rates to zero and below. Although lower policy rates have not always resulted in cheaper borrowing costs (in Greece, for example), debt-servicing costs have fallen in most developed countries.

Although this approach has staved off disaster, it has not got rid of the problem, as a research note from Manoj Pradhan, an economist at Morgan Stanley, makes clear. “High debt forces interest rates to stay…Continue reading

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BusinessBusiness and finance

Island story

[T IS EASY to succumb to the romance of Jamaica over dinner with Chris Blackwell in GoldenEye, his boutique hotel in the grounds of Ian Fleming’s Caribbean retreat. Mr Blackwell’s mother was Fleming’s mistress, muse and supposedly the model for Pussy Galore. Mr Blackwell’s record label, Island Records, turned Bob Marley, among many others, into a star. In 1989 he sold Island for £180m ($300m) and bought eight hotels in Miami Beach, which was then run-down. Now he is focusing on his Jamaican properties instead.

There are some reasons to think that Mr Blackwell’s nose for the market has not deserted him. Jamaica has produced a striking number of global superstars (such as Marley and Usain Bolt) and global brands (including Blue Mountain coffee and Jamaican Lion marijuana). The weather is warm, the beaches idyllic. A brand new toll road, built by a Chinese company, links the south with the north. But there is a darker story. Over the past 30 years Jamaica’s growth rate per person has averaged just 1%. A third of young people are unemployed. One of the island’s most famous products, marijuana, is illegal and controlled by criminal gangs….Continue reading

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Business and financeGulliver

Resentment of first-class passengers can be a cause of air rage

MOST instances of road rage come about in the same way. Drivers are frustrated with other drivers who, in one way or another, impede their ability to get where they’re going as quickly as they’d like. “Air rage” can’t really follow the same pattern, since passengers on a plane have no control over the speed with which they’ll reach their destination. Instead, it stems from a variety of sources, including poor service, discomfort and flight delays.

But one of the most common sources of air rage has nothing to do with negative experiences on board a plane. Quite the opposite. According to a new study, passengers are far more prone to misbehaviour if they see that other passengers are having a better experience.

Published in the Proceedings of the National Academy of Sciences the study finds that passengers in economy class are 3.8 times more likely to become unruly if the plane also contains a first-class section. If those passengers have to walk through first class to get to their seats, their odds of experiencing air rage double again. “We…Continue reading

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ApprovedBusinessBusiness and finance

Sumner Redstone’s $42 billion empire remains in his hands

AN ELDERLY patriarch in declining health, a spurned lover, and an empire in the balance—the lawsuit over the mental competency of Sumner Redstone, a business titan with controlling stakes in the media companies CBS and Viacom, had all the makings of a television soap series.

But the decision by a Los Angeles judge on May 9th to throw out a lawsuit brought by Manuela Herzer, one of the media tycoon’s former romantic partners, puts that drama on hold for now. The abrupt dismissal, which came after videotape of Mr Redstone’s profanity-peppered testimony was screened for the court last week, was a victory for the status quo. It means that the mogul’s decision last autumn to write Ms Herzer out of his will and health-care agent remains in force, and that Mr Redstone’s voting stakes of nearly 80% in Viacom and CBS will remain under his control, rather than reverting to a family trust (as they could have if the court had declared him incompetent).

The dismissal does not mean the drama is nearing its finale, however. Already, Ms Herzer has signalled her intention to appeal against the ruling, and both sides have announced plans to file…Continue reading

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Business and financeGulliver

Lufthansa is attempting to bulk-up Eurowings

LUFTHANSA is already Europe’s largest group of airlines, counting the flag-carriers of Germany, Switzerland and Austria among its portfolio of subsidiaries. It may be about to get even bigger. Impressed with the results of consolidation in North America—now the world’s most profitable aviation market—Lufthansa’s chief executive, Carsten Spohr, is shopping for more airlines. Efforts to lift the group’s shareholding in Brussels Airlines to 100% were disrupted by terrorist attacks in its home city in March, but remain on-track. Scandinavian Airlines (SAS), the shared flag-carrier of Norway, Sweden and Denmark, and Condor, the German leisure carrier, are also now rumoured to be in its sights.

As well as increasing the number of hubs operated by the sprawling organisation, the acquisitions would help Lufthansa scale up Eurowings, its newly relaunched low-cost carrier. Eurowings is Mr Spohr’s answer to Ryanair, EasyJet, Norwegian Air Shuttle and the other low-cost carriers that have come to dominate the short-haul market in Europe. Unlike…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Wright’s wrongs

ANOTHER Satoshi has bitten the dust. On May 2nd Craig Wright, an Australian entrepreneur, published on his blog what he claimed was proof that he is Satoshi Nakamoto, the mysterious creator of bitcoin, a cryptocurrency. Within 90 minutes the post had been debunked on Reddit, an online forum. He then said that he would present “extraordinary proof” that he is indeed Mr Nakamoto by moving some bitcoin from accounts thought to be under control of the currency’s creator. But on May 5th he wrote on his blog that he did not have the strength to continue trying to prove his identity, prompting most to add his name to the long list of false leads in the hunt for Mr Nakamoto.

In October 2008 somebody who went by that name posted an academic “white paper” online, outlining the design of a cryptocurrency the author dubbed bitcoin. The following January the same person switched on a system like the one outlined in the paper. But nobody, not even his closest collaborators, ever met Mr Nakamoto in person. They communicated with him only electronically. And a couple of years into the project, he stopped joining in. “I have moved on to…Continue reading

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ApprovedBusinessBusiness and finance

Golden oldies

THE forecasts are clear: by 2050 the number of people aged over 80 will have doubled in OECD countries, and their share of the population will rise from 3.9% to 9.1%. Around half will probably need help with daily tasks—particularly those with enduring chronic illnesses such as Alzheimer’s, heart disease and osteoporosis. Health systems designed only to offer hospital care for acute cases will struggle to provide such support.

To maintain the well-being of wrinkly populations, hospital stays can be replaced by residencies in purpose-built facilities at less cost. A forthcoming report covering 20 countries from KPMG, a consultancy, suggests the number of care-home residents could grow by 68% over the next 15 years. How care is managed in any one country reflects a tussle between cultural attitudes, national budgets and gritty demographic realities. The increasing availability of technology that would allow the elderly to stay in their homes for longer will also affect demand for such options.

Residential care in America and Japan is flourishing. But in an era of tight public finances, some governments are trimming the…Continue reading

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