tv World Business WHUT July 7, 2009 6:00pm-6:29pm EDT
>>reporter: aircraft deliveries are usually a mundane affair - but not when the first made in china airbus rolled off its chinese assembly line. this brand new a320 was assembled in tianjin. it's the first time the european airplane maker has set up an assembly line outside of europe. and the reason is simple. after the us, china is now the second biggest market for new aircraft. internal aviation market is growing at 17 percent a year! and over the next two decades china will buy 3000 new planes. the market in china will be the biggest
in the world soon even before the us because you have much more population in china and the country is wider. you wouldn't have guessed it from this show but all this is taking place during the worst crisis theairplane manufacturing sector has ever experienced. anes annually, this year it will be lucky to hit 300 as falling demand and a lack of credit force airlines to cutback. >>bockman: this assembly line here in tianjin looks identical to the ones in toulouse and hamburg and thats of course deliberate because airbus wants to transfer as much work as possible out of the expensive eurozone to places like china where or course running costs are a lot lower. this factory will soon churn out 4 aircraft a month for the chinese market. officially airbus wants to capture half of the chinese market - but by having a major presence here the company's target is really around 70 percent. >>:
however no-one could accuse airbus of protectionism, the work done here is work that was once done exclusively in europe. in other words well paying skilled jobs being lost in europe. >>: despite that airbus insists it will remain a european company with a technological lead, so long as its political leaders continue to pour money into investment back home to come up with the next generation of aircraft. 13 the message for the folks back home is we need to invest into research and technology, we need to stay at the edge of technology, at the edge of engineering and manufacturing processes and then aviation in europe and elsewhere will not die but will also have a great future. this is a win win, i am absolutely convinced of that looking at the market prospects in china and elsewhere. but the big question now is whether the chinese are now getting a chance to learn how to make these planes with the aim
of building their own down the road. that's the big question everyone has when they deal with china. you have it with the helicopters or the big aircraft. are you training your next competitor? and the answer most executives will give you is possibly but we would rather take the money we can get now and worry about that tomorrow. in fact the chinese state made it clear from the start - if airbus wanted to set up in china and sell airplanes - there had to be something in return - sharing of information. this airbus design and training centre in beijing is staffed by young chinese engineers - preparing to make the carbon fiberwings for the prototype a350 xwb. its secretive work once done exclusively by europeans. if the chinese ever do challenge boeing and airbus's monopoly what these designers are learning is crucial. but don't call it spying. >>condon: spying i would not say that - that's another time. today you don't need to have spies
because you have universities - you have schools. >>reporter: it will take another twenty or so to see whether the airbus gamble in china pays off - of course by then the current bosses will be in retirement - leaving the issue of whether they helped china become an aviation superpower to a new generation of executives. >>abirached: after more than a decade of economic growth, corporate spending on advertising could hardly have been higher. it was a golden age for ad agencies and marketing departments but now as recession bites, companies are trying to reach their customers in ways that are more innovative and above all cheap. >>reporter: there's no doubt 2009 will be remembered as a year when companies significantly cut costs and advertising is an area that's been hit hard.
>>: ad spending in the uk fell by 4% in 2008 and barclays has estimated advertising in the usa will drop10% in 2009. >>: but some ad agency executives believe this recession could also be an opportunity for companies to re-evaluate how they market their brands. >>woodford: recessionary times actually really force you to think really hard about what your business stands for and where your business is going. it really forces you to think very, very hard about what this brand, product or what this company really stands for. >>reporter: hewlett packard used to advertise to all customer segments from both the consumer and commercial markets. >>: since the downturn, hp has begun to focus on specific consumers with significant purchasing power that they'd not previously targeted - women and young people. >>broggi: we start really talking to those people in a very direct way, getting from them the information about what
they were interested in, what they wanted to get from us, how they wanted to engage with us and developing products that are 100% targeted to those audiences. >>reporter: one of the company's most innovative projects was to develop a partnership with fashion designer vivienne tam to create the digital clutch. >>broggi: we launched the product in fashion week in new york on the catwalk and we launched it as a 'digital clutch', which is a very different way of positioning a notebook, it's moving a notebook from a it product to an accessory. >>reporter: hp advertised very little, instead focussing on pr, fashion events and social media. >>: many companies are cutting costs by moving away from traditional advertising such as tv. it's known as above the line costs and it means they're now engaging with their customers in a much
more directway. >>hoornik: the battle is in the shop floor, all our competitors are doing that as well, but you do now see while the media spend probably is bit less on above the line acquisition, you see that the spend on the shop floor is still very stable even in this downturn period. >>reporter: less demand for advertising means businesses can buy media space for less but still be just as visible to their customers. >>: and this could be good news because according to many in the advertising industry companies that advertise less due to economic conditions do so at their own peril. >>woodford: many many studies have shown that the firms that advertise through recessions at a higher rate than their competitors come out faster, come out stronger. the firms that cut back more than their competitors, it's the opposite, they come out slower, they come out weaker. so time and time again, over the last 5 or 6 recessions. >>reporter: for companies like sony ericsson, there's no question
that maintaining and increasing market share during this recession is crucial and the answer is online. >>hoornik: the whole landscape is completely changing so one hand economic downturn, on the other hand the whole digital space is changing so rapidly and i think now the web becomes our center of gravity in our advertising strategy. >>reporter: but ultimately the key to success during these difficult economic times may be knowing who you are as a company. >>woodford: i think the brands that stick to their long-term values are the brands that do things best but also reflect the pressures that people are under. >>reporter: so when it comes to advertising, the 21st century's first recession may mean reverting to one of thebasics of marketing: the customer is king. >>abirached: still to come on world business... >>abirached:
a third of the world's population suffer from vitamin and mineral deficiency, but a joint strategy aims to tackle the problem with help of the private sector. >>abirached: and we have an interview with the executive director of gain marc van ameringen. >>abirached: plus rally may be struggling to stay on the road, but some sponsors are convinced the sport can go the distance. >>abirached: keeping the power on... and the rest in just a moment on world business >>abirached: >>abirached: while the effects of the global recession might be damaging to the developed world, in the world's poorest countries they can be disastrous. the economic crisis has already pushed another 100 million people into poverty, meaning malnutrition is becoming
an increasingly serious issue. one unique solution to the problem is bringing together ngos, governments and the private sector to help in some ofthe world's most heavily populated countries - including bangladesh. >>reporter: friday -- a day of rest in guderghat: children find food any way they can in this shanty town on theoutskirts of dhaka. here 24-year-old lipi feeds her child, adding a vitamin and mineral supplement to the infant's food. >>pop: the baby doesn't want to eat...if i feed her a supplement her appetite will be better. >>reporter: it's not just little limonsheike who's malnourished. more than 40 percent of children under five at many levels of society suffer the same fate. >>: sprinkles or monimix:
a micronutrient sachet is one solution to this growing problem. >>pop: my first baby is six years old, when he was one years old then i first saw that he's anaemic, very much anaemic. then when i found, when my second child was ... ten months only i heard about monimix. >>easen: cyclones, flooding, and a doubling of food prices last year have all affected the rates of malnutrition here in bangladesh. coping with higher food prices people have got themselves deeper into debt. and this has made things even worse. >>ahmed: the people in the lower social economic stratum of the society: they need to be aware. you see micronutrient deficiencies are not visible. ....a very good and effective way is home fortification. and that can be done if the mother is told and given a supply of small sachets -- that contains a daily requirement of the micronutrients for this young child.
>>reporter: one million sachets are now sold every month for around three us cents each. the benefits for growing children are huge, but convincing both the public and the government to stay the course is a tough. >>chowdhury: nutrition is a public good. and nutrition is one of those tricky public goods where results are not easily visible. so even the government found it difficult to justify investing in nutrition - because you couldn't see things happening...... except that you have a generation of malnourished children. their real impact on the economy comes only five, seven years down the road. >>reporter: that is why smc is making a song and dance. >>: the privately-managed not-for-profit organization - spearheads the project with more than 600 of these theatres across bangladesh every month. the goal: to raise awareness about malnutrition
and the benefit of using sachets. >>rasheed: donors can buy and give free to the people but then there is a limit to it. so you social market - so you change the behaviour of the people. so they understand the worth of it. and if they are buyingthen you know that it is going to sustain. and that is what it is, the product will sustain itself. >>reporter: that is because the government has yet to legislate on fortifying staple foods with vitamins and minerals. instead a private-public partnership fights malnutrition - ngos do the marketing, while a generic drugs company produces the sachets. >>kabir: i think business coming into this area is actually very beneficial. if you can establish that this is a viable business. private sector is going to come in and solve and address the issue of malnutrition more effectively than any government program could. >>reporter: it's already happening in bangladesh, with gain: the global alliance for improved nutrition is
investing three million dollars with the support of usaid to help market sprinkles. the aim is to reach nearly 7 million children. >>bhagwat: gain has always opted to work in countries where the need is high and where also there is a potential of showing some success. bangladesh the problem is huge. there is a malnutrition problem. in addition bangladesh has also capacity to run a program. it has a robust private sector which can actuallydo such things. >>reporter: with the successful roll out of sachets through private-public partnerships -- hopes are now pinned on adding micro-nutrients to cooking oil, rice and wheat flour. >>: the focus: fortifying not only food, but bangladesh's future generations. >>chowdhury: we are trying to lift our country out of poverty...at the route of everything lies the question of health. we need a healthy population. we need a population that is
productive -- as productive as therest of the world. >>abirached: the head of gain was inspired to tackle the problem of malnutrition by the fall of apartheid and what can be achieved by a few dedicated people working together. but the scale of the problem is still huge, and poor nutrition can hold back the economic development of entire countries. eckart sager sat down with the executive director of gain marc van ameringen to find out more... >>ameringen: people have been working on malnutrition for 30-40 years, but from the statistics we are seeing now it is not working. so gain was created as a new initiative to bring some innovation, trying bring some alignment and also to take the issue of malnutrition out of the public domain. i think there was a strong realisation
that governments are critical, but lot of the food and food products are produced and distributed by the private sector. so we need to move, think outside the existing paradigms to bring new partners together. so gain was created with a view to let's just not do an all bunch of small pilot programs which might reach ten-twenty thousand people, we are trying to reach 2 billion people if we are going to make a difference here. so we need large scale solutions. so you will see,our programs are to take things to scale and our performance targets organisationally was to put programs on the ground that are scaled to reach over a billion people over the next 5 to 10 years. >>sager: so you are looking now at some of the most populated countries literally from china to bangladesh toindia and into africa. what are the key challenges that you are facing? >>ameringen: absolutely. i think we are targeting particularly countries in sub-saharan african and south asia. that
is where you have 80% of the burden of malnutrition. in many countries we do not have products available on the market that can reach poor people, but we find that we have good products with high nutritional value that can reach the rich, but for the majority of the population there is nothing there. and many companies do not produce those products because they can make more money off the rich. so, how do you incentivize the private sector to do this? governments can play a key role in regulation; in our fortification program, which is really about taking staple food - wheat, maze, or vegetable oil, cooking oil - which everybody eats and adding micronutrients to it, those projects do notcost very much, for pennies they can have a major impact,
but what you see is that it is hard to get governments and the private sector to come together to actually do these programs. so there is a real need to play a convening role that brings together all the stakeholders around a problem like fortification. you find that, if you take away food aid, food assistance programs, the amount of resources is going into nutrition is maybe 300-400 million dollars a year. malnutrition is responsible for about the same disease burden as hiv-aids which receive 2 to 3 billion dollars a year. now that isa good investment in hiv-aids but it really shows a dramatic underinvestment in malnutrition so we need donors to come to the table and starting to prioritize that.
>>sager: establish for me the link between poverty, nutrition and economic development. >>ameringen: i think what you see is that people who are at the bottom of the economic pyramid who do not have access to good food and adequate nutrition, tend to perform poorly in later life in terms of either them being a burden to the house system or in terms of not being as productive as those who did and unfortunately in many parts of the world governments are not able, even if they have the awareness, they are not able to reach a large part of their own population and i think that is where you need thnternaonal community to step in. the other issue, and this is a bit of a complicated issue, is that a lot of people think that malnutrition will simply get addressed through economic development and the fact is that it is not an automatic
thing in any stretch. as economic growth has been going up in india, malnutrition has been going up at the same pace. so, economic growth is not the only determinant of malnutrition, it really depends on high level of awareness of government, private sectorand civil society coming together and having very specific interventions that will address malnutrition. >>abirached: it's not the best time to be involved in a business that combines both the automobile and entertainment industries with both having taken heavy hits from the global recession. but don't tell that to abu dhabi which believes that sponsorship of the world rally championship - as well as cosponsoring its own team - is bringing the emirate substantial benefits. >>reporter: it's a baking hot morning at the world rally
championship in sardinia but while the sun might be shining on the spectators, the sport itself, as well as the industry that drives it, are going through dark times. simon long is ceo of the company recently brought in to promote the sport >>long: we're in the middle of the automotive industry. we're in the media industry those are the two sectors arguably alongside banking and finance the most hard hit so i'd be lying is i said this was a walkin the park - it isn't. >>reporter: not only that the series is losing competitors fast. high profile former winners peugeot, mitsubishiand toyota have all left the championship and this year subaru and suzuki joined them. but despite having only 5 teams and 3 manufacturers left those who stayed claim the sport's still attracting huge audiences. >>deans: 800 million people globally watch the sport ... you have places like argentina and you have 1.25 million people out on the stages physically looking at our cars. >>reporter: those numbers are one of the reasons the emirate of abu dhabi decided to sponsor both the wrc and run a badly needed team
in the competition. ahmed hussein is the deputy director of the emirate's tourism authority. >>hussein: the whole wrc is the right destination for ... marketing abu dhabi as a destination. we were lookingfor a number of platforms but generally motor sport is i think one of the great things to be involved in. >>reporter: the sport itself is naturally eager to make a case for sponsorship. >>long: typically a manufacturer who wants to run a full wrc race programme over lets says 12 events will get, depending on their own level of activation, they will get in the order of three to five times return on investment. >>reporter: and it's not cheap to race in the wrc, costing between two and three million euros a year to run a rally car, but, like its vastly more expensive cousins formula one, the sport is trying to reduce costs, which might help it attract new teams to replace those high profile exits. >>deans: we're all very conscious of trying to extract the maximum value we can out
of the pro game and, in conjunction with the fia, bit by bit by bit, we've driven those costs down. >>hussein: there is more than 4000 rooms coming on by october ... it is just enough to cater for a good percentage of the visitors or teams or technical people but by 2012 we will have another 10,000 almost rooms. but we will be ready. the circuit is ready. the marina is ready. >>reporter: abu dhabi is also trying to bring forward its own, indigenous, drivers - three of whom already competing on the same course as wrc drivers in the fiesta sport trophy. ron cremen is their team manager. >>cremen: we started with quite a large selection of drivers and they were gradually eliminate down through different exercises. >>reporter: and although the drivers are novices to the sport - they're not short of confidence. ahmed mansoori came second in his first race in kuwait. >>mansoori: i hope i win the fiesta trophy to prove myself and then gradually get up on the grid and be the world champion -
eventually >>reporter: the emirate's current star driver however is sheikh khaled al qassimi who was fia middle east rally champion 2004 and is now driving in the world rally championship. >>qassimi: i believe we can be a motor sport hub in the near future: formula one and wrc and one day we can host an event and become the hub of the motor sport. >>reporter: that day might well be some way off in the distance- but there's no questioning that abu dhabi, withone tenth of the world's oil reserves, has enough money, and fuel in the tank, to make the journey. >>abirached: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.
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