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CNN LIVE EVENT/SPECIAL
World Business Today
Aired January 26, 2011 - 04:01 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN DEFTARIOS, CNN INTERNATIONAL ANCHOR : Good morning for the World Economic Forum in Davos, Switzerland. I'm John Deftarios.
PAULINE CHIOU, CNN INTERNATIONAL ANCHOR: And good afternoon from CNN Hong Kong. I'm Pauline Chiou and this is "World Business Today." The top stories on Wednesday, January 26 - shifting focus away from recession and onto regeneration.
The U.S. economy is front and center in the U.S. president's State of the Union speech.
DEFTARIOS: Heads of state and ministry have been arriving here for the first day of the World Economic Forum. We'll tell you how they're adjusting to the shift of financial power to the emerging economies.
CHIOU: And we'll ask the CEO of one of Russia's biggest banks, how Monday's bombing in Moscow will affect investment there.
First up, a look at the European markets. Traders in the U.K. will be watching for any signs of tighter monetary policy there. The Bank of England's monetary policy committee will release the minutes of its last meeting in about half an hour and that should offer some clues as to which way interest rates may be headed in the near future and here's where the market stand at the moment, all in positive territory. So looking pretty good. The FTSE's also up by almost one percent there. And the same story across the board there, all on positive territory. There we go.
And this is what's happening on the currency markets. We start with the euro to see if it's losing some ground there. The dollar actually is losing some ground against the euro following the U.S. President Barack Obama's call for freeze on domestic spending. So there, the euro is trading at $1.36, the pound at $1.58. And the Japanese yen is now trading at 82 yen to the dollar. Pretty flat against the dollar there but the yen largely unchanged against the green buck from yesterday.
But markets here in Asia finished mostly higher this session. The Nikkei in Tokyo is the only exception. A strengthening yen drag down Japanese exporters there. It ended down for the first time in three days and you also see some profit taking by investors there as well. Coal mining companies were some of the best performers in Shanghai. Seoul's KOSPI got a lift from some good economic news. And despite a slower growth in the fourth quarter, the country's GDP reached 6.1 percent for 2010. That's the fastest pace in about eight years. Meanwhile, markets in Australia and India were closed today for a public holiday.
Meanwhile, there's trouble for Toyota. Shares of the Japanese car maker fell nearly two percent in Tokyo trade. Toyota announced a voluntary worldwide recall of almost 1.7 million cars over a potential fuel leak problems.
U.S. stocks closed flat on Tuesday. Investors were disappointed with reports on the country's economy and also fourth quarter earnings. Trading was cautious in advance of President Obama's State of the Union message before Congress. And also, as the Federal Reserve panel began a two-day policy meeting so the Dow Jones closed the session lower. The NASDAQ and the S&P stayed just within positive territory, but just barely.
Yahoo shares fell nearly half a percentage point after the internet search company released a weak first quarter revenue forecast.
U.S. markets still looking set for a higher open when trading begins later on Wednesday and this is where the U.S. futures stand in free market action. The Dow looking pretty good as well as the NASDAQ but the S&P 500 looking the best in pre-market trading. The futures look up almost a third of a percent there on S&P 500.
Well, getting the U.S. economy on firm footing will be a tough priority for Washington this year. In his annual State of the Union address, President Obama proposed a series of measures aimed at trimming the nation's massive budget deficit. Among them, a freeze on domestic spending which would save $400 billion over 10 years. He proposed lowering the corporate tax rate and he called for cooperation from all parties in government to increase America's global competitiveness, encouraging more initiatives for education and innovation.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Half a century ago when the Soviets beat us into space with the launch of a satellite called Sputnik. We had no idea how we would beat them to the moon. The science wasn't even there yet. NASA didn't exist. But after investing in better research and education we didn't just surpass the Soviets, we unleashed a wave of innovation that created new industries and millions of new jobs. This is our -
(END VIDEO CLIP)
CHIOU: Well, so how exactly is President Obama going to help the U.S. match the same level of research and development it had at the height of the space race. Well, for a closer look now at the president's address, here's Jonathan Mann. He joins us from CNN Center. So Jonathan, help us break down the speech. What did you think?
JONATHAN MANN, CNN CORRESPONDENT: Well, it was, as you say, an annual duty of every president. And this year, in particular, short on specifics, apart from devoting new attention and money to education and some of the other areas you mentioned but Republicans actually are in no mood to add money to anything. They want to spend less money and the president's remark about that issue speaks volumes. Here's what he said.
(BEGIN VIDEO CLIP)
OBAMA: So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. Now this would reduce the deficit by more than $400 billion over the next decade and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president.
(END VIDEO CLIP)
MANN: Freeze spending. The problem is the Republicans don't want a freeze. They blame Obama for raising spending to unsustainable levels. They don't want to freeze spending at those current levels. They want to cut it back dramatically. So even on the topic that Republicans really care about, Obama's offer is very far short of the mark. And the situation in the United States is this. There are three power centers when it comes to running the U.S. government. There's the White House, of course. Well, the White House - Obama is in power. The House of Representatives, there, the Republicans now have the majority and the power. The Senate, well, because of the new diminished Democratic majority, there is no one really in power in the Senate.
So Democrats have the White House. Republicans have the House. No one really has the Senate. President Obama's plans aren't entirely his to make. The power is so divided the disagreements are so profound that this speech is just the start of the conversation or maybe more likely the battle over what's ahead. Pauline.
CHIOU: So Jonathan, with this divided Congress, how difficult of a challenge will it be for President Obama to, as he said, out innovate, out educate, and out compete with this divided Congress.
MANN: It's going to be enormously difficult. The Republicans are really making very, very severe demands. In part, because of public concern. Americans, many Americans feel that the government has been spending too much. That President Obama has been legislating too much and so this State of the Union was short on specifics about specific programs, specific spending because there isn't much appetite in the United States for that and there's enormous appetite to see the government restrained a little bit. It's budgets cut, it's deficit addressed and that's really going to be the immediate battle. Beyond that, the president's plans are really maybe far off in the future.
CHIOU: Yes, it's interesting to hear what the - the words they used. For example, the Democrats say investing. The Republicans say it's really spending. So we'll see what happens.
Jonathan Mann at CNN Center. Thanks so much.
MANN: Sure thing.
CHIOU: Organizers of the 2011 World Economic Forum have set shared norms of the new reality as the event's theme. The changing landscape of the global economy will indeed be top focus of world business leaders gathered in Davos, Switzerland this week. While western nations such as Ireland, Greece and Spain struggled with their debt, emerging countries such as China, India and Brazil are increasingly defining the economic discussion. So one of the so-called new realities they'll talk about is the sharing of power from the long- established economies to the emerging ones.
John Defterios is there in Davos. And John, it's really a directional shift as well isn't because we're hearing a lot of people say it's a move from north to south, west to east.
DEFTERIOS: I think that's a fair comment, Pauline. Think of it as a gyroscope here because the greater tilt is to the east right now - China, India, Southeast Asia and even the Middle East and then tilting south to Africa and more importantly to Latin America with Brazil driving growth. It's quite interesting to look at the State of the Union and go back to President Obama's comments. He's trying to inspire Americas to the next level and to be candid. This is the discussion here at the halls of the World Economic Forum because the next wave of competition is going to be intense and I think we've seen this tilt to the east and to the south because the economic crisis we've seen over the last two years is so severe. So the west almost standing still in recession and the east still growing.
Let's take a look at what I'm talking about. This is the economy if you look at it in 2010, 2011. The top five economies, looking at trillions of dollars. And if you look at the list, the only emerging market right there right now is China. The U.S. at $15 trillion, China at $6 trillion, Japan at just over five and a half. Germany at $3 trillion and then France at $2.6 trillion.
And this is what's getting the business leaders here so excited at Davos over the next 20 years. Let's fast forward 20 years to the year 2030. We're in a so-called super cycle right now of growth. This is the top five economies in 2030. Look at the growth of China, $74 trillion. The U.S. going from a level of 14 to 38, not bad, of course, but certainly about half the size of China. India at $30 trillion, it's only at $1.6 trillion right now. Brazil, I talked about Latin America, at $12 trillion and Indonesia, this is another one of the (INAUDIBLE) countries, a second wave of bricks coming on to the scene at $9 trillion..
I talked about a super cycle. This is very historic. We had a super cycle at the end of the 19th century and then we had a big pause into World War II and that rebuilding with the marshal plan after World War II. And the third super cycle, according to Standard Chartered Bank, who helped us with this, started in the year 2000. Even though we had a technology crash, the introduction of the internet combined with the lowering of trade barriers has launched all these growth. You see the trade barriers coming down in India and China and Southeast Asia, Latin America and the other interesting point here, I think, Pauline, is that they're trading amongst each other right now. It's not all trade with the United States, it's not all trade with Europe but right now it's a trade in the east that's really driving the global economy.
CHIOU: Fascinating. And fascinating comparisons there with your graphics. We will check in with you once again, John, there's a lot more to come from the World Economic Forum in Davos. And we'll hear from the CEO of one of Russia's biggest banks on how Moscow's recent bombing might affect business there. That's coming up next.
CHIOU: Welcome back from CNN Hong Kong and the World Economic Forum in Davos, Switzerland. This is "World Business Today."
The heads of hundreds of companies are at the World Economic Forum in Davos all these week, including CEOs from some of the world's biggest banks. And our John Defterios is there with them, John.
DEFTERIOS: Thanks very much, Pauline. He may not be a household name yet but Russia's VTB Bank is growing and continue to expand its international footprint. Now, let's give you a little bit of background before we speak to the CEO, VTB is Russia's second biggest bank and focuses primarily on corporate lending. The bank was established in late 1990 with government support.
It went public in 2007 with listings in both Moscow and London. It raised almost $8 billion in its initial public offering. Russia's government is the biggest shareholder controlling nearly 90 percent of the bank. VTB stock performed well over the past year gaining more than 50 percent and the company reported a net profit of $2 billion in its last report of 2009.
I'm joined now by Andrei Kostin. He's the chairman and chief executive of VTB. Good to see you again, Andrei.
First things first, I'd like to talk about the politics if we can of Mr. Medvedev deciding to, in fact, come to Davos. A question of whether he's going to come and deal with the security situation there, it's important is it not to come with a message, "look we have our security issues but we I do need to articulate that we want people in this market of better than 150 million consumers."
ANDREI KOSTIN, CHAIRMAN AND CEO, VTB BANK: Yes, absolutely. The Russian government is now trying to bring home to the national (INAUDIBLE) that Russia is quite serious about modernizing Russian economy, bringing innovative technologies in (INAUDIBLE) areas including energy sector, including IT., including telecommunications and also, as you know, probably that the reasons that the Russian government announced quite a broad problem of privatization and actually VTB will be one of the first bank to be privatized. So I think it's important for the Russian (INAUDIBLE) Mr. Medvedev coming to Davos, it will be a very short visit because of the event in Russia. But it's the first trip of a Russian president to Davos actually.
DEFTERIOS: This is not easy to understand but every five to six months is quite a severe security flare up and that scares off foreign direct investment. What are you hearing realistically in the halls? Like how bad is this fight against some of the Islamic pockets that we see in Russia, which has been an on-going battle as you know for the better part of two decades. KOSTIN: You know, one of the things that we share, I'm quite sure Mr. Medvedev will underline - he also that to combat terrorism you really also have to focus on economic development of the regions. Because with the very high unemployment in the regions, with the lack of new jobs -
KOSTIN: It's really very difficult to resolve these issues. So I think this issue should be tackled from all points of view, from security - security forces, by political -
DEFTERIOS: Along with economic reform.
KOSTIN: Along with economic reform.
DEFTERIOS: With privatization as well. A severe recession, nearly minus eight percent in 2009, a recovery to around 3.8 percent, can you sustain better than four percent in this sort of climate? Oil prices around $90 a barrel. That's going to serve Russia well, I would imagine.
KOSTIN: Well, I mean, our conservative approach and the estimation that probably will be between four and five percent for this year, which I think is reasonably good. And the growth of the banking loan (INAUDIBLE) is probably around 15 percent.
DEFTERIOS: (INAUDIBLE) you heard the word reasonable. I don't mean to be jumping on top of you but if you look at the growth in India, and the growth in China or even in the ASEAN states, people say that Russia is underperforming, doesn't really belong as part of the brick countries.
KOSTIN: Yes but I think for Russia, the phase of growth is important, of course. But the structure of the economy is probably not less important. So I think the focus on restructuring Russian economy of becoming less dependent on oil and gas, I think that's a very important agenda for Russia.
DEFTERIOS: And dealing with security at the same. I'm going to - (INAUDIBLE) interest of what president has to say during this opening ceremony speech tonight. It's good to see you again, Andrei.
KOSTIN: Thank you very much.
DEFTERIOS: Thanks a lot for handling the other questions as well. Andrei Kostin, of course, the chief executive of VTB Bank. Pauline.
CHIOU: John, we got an update on more protests in the street of Tunisia's capital and why this one on Tuesday was very different than the ones before that toppled a government. We'll be right back.
(COMMERCIAL BREAK) DEFTERIOS: Welcome back, you're watching "World Business Today." We're live in Davos here for CNN. Got a little dusting last night, Pauline, with snow. Perfect, picturesque framework to start the first day of the opening sessions,
CHIOU: It's a beautiful picture there behind you. Thanks so much. And it's Australia day, and the nation has been urged to dig deep into its pockets to raise money for Queensland's flood victims. The (INAUDIBLE) premiere, Anna Bligh, says around $170 billion has been raised so far, but more money is needed. Well, if the floods in the east weren't bad enough, now a tropical cyclone is headed for western Australia.
Meteorologist Jennifer Delgado joins us now from the International Weather Center. Jen, it is one punch after another, after another for Australia.
JENNIFER DELGADO, CNN METEOROLOGIST: Yes, absolutely. Now, the cyclone that you're talking about is actually on the western coastline of Australia and it is moving right along the border. If you noticed, you can see it on the satellite imagery, still rather unorganized but as we go through the next several hours, we're going to start at seeing getting a better form and that is going to be moving, as I said, over towards the west.
Right now, we have winds at 102 kilometers. This is a tropical cyclone, Bianca, and the winds are going to be intensified. Notice by tomorrow, let's say by 11:00 a.m., it's just going to be moving towards the northwest of Exmouth. And again, notice those winds coming up about 148 kilometers and then sweeping off and away from parts of Australia and that's good news. The problem is this is still going to be bringing some heavy rainfall as well as some strong gusty winds and those winds are going to be picking up as we head late into night and this model just kind of showing you how it's going to be located, moving right along that western coastline, getting fairly close to (INAUDIBLE) residents there certainly need to be aware of that tropical cyclone.
But there's another one. This is in the Pacific. This is Wilma. Wilma with winds at 213 kilometers. Right now, it's not affecting (INAUDIBLE), it actually moved through the Samoa Islands. And as we go from the next 24 to 48 hours, it's going to be moving towards the south and then by Friday morning, bringing some heavy rainfall to the northern island of New Zealand and it's going to continue to weaken but certainly we're going to look at some problems, isolated problems with some flooding across that region.
I also want to point out, you have some photos here and they're coming out of Australia and you mentioned that it's Australia day and the photos are going to show you, hey everybody is excited about this. And the good news is, Pauline, residents are actually going to be using this day to raise money for those flood victims affected over the last several weeks. Back over to you, Pauline.
CHIOU: So they're having a good time and also doing good as well. All right. Thanks so much, Jen. Well, anti-government groups in Egypt are calling for a second day of massive street protest. Coming up on WORLD BUSINESS TODAY what the protesters are demanding, how police are responding and the impact it's having on Egyptian markets.
DEFTERIOS: Live from the World Economic Forum in Davos, Switzerland, I'm John Defterios.
CHIOU: And I'm Pauline Chiou at CNN Hong Kong. Welcome back to "World Business Today." Let's see what's going on in Europe right now, where the markets are about 90 minutes into the trading day. It's still a bit early on how the FTSE will react to those minutes from the Bank of England. Those are due out in just a couple of minutes. But here is where the market stands at the moment. All in positive territory following mostly the gains in the Asian markets. So looking good right there.
Meanwhile, Asian markets finished mostly higher this session. Except for the Nikkei in Tokyo. A strengthen, a slightly strengthening yen dragged down Japanese exporters there. Coal mining companies were some of the best performers on the Shanghai Composite. Seoul's KOSPI got a pretty good lift from some good economic news. Despite slower growth in the fourth quarter the country's GDP reached 6.1 percent for 2010. Now, that is its fastest pace in about eight years. Meanwhile, the markets in Australia and India were closed for public holidays today.
Well shares in Asia's biggest casino operator opened 8.7 percent lower in Hong Kong this morning. SJM, which is controlled by aging billionaire Stanley Ho, has been at the center of a bitter dispute between Ho and his family members. On Tuesday Ho said that his third wife, and some of his children had duped him out of his 32 percent stake in SJM's parent company, but local media reports are now quoting Ho as saying there is no dispute after all and that he agreed to give him his stake in the business. Shares in SJM recovered slightly during the day. To close just short of five percent lower.
Now, for the Dow Jones industrial average, that elusive 12,000 remains elusive. Wall Street stocks finished flat on Tuesday investors were disappointed with reports on the U.S. economy and fourth quarter earnings. Trading was pretty cautious ahead of President Obama's State of the Union speech. And as the Federal Reserve panel began its two-day policy meeting. So the Dow closed the session lower. The Nasdaq and the S&P stayed just within positive territory, barely. All three stock futures are in the positive range for today's open.
Johnson & Johnson was among blue chip companies dragging on the Dow with some disappointing earnings. J&J shares fell nearly two percent there.
Back to the World Economic Forum in Davos now, where the unrest in Tunisia has pushed the economic and political effects of rising food prices to the top of the international agenda. John has a little bit more on that from Davos. John.
DEFTERIOS: Thanks, Paulina.
In fact there are going to be some sessions this afternoon starting at about 1:30 local time with Amr Mousa of the Arab League. Tunisia interim government is facing a reshuffle today after scuffles between its supporters and opponents in the capital. Hundreds of Tunisia supporting the new coalition took to the streets for the first time on Tuesday calling on people to back the government as it prepares for elections six months from now. They were met by angry rival protests demanding the government be purged of members of the former regime lead by deposed President Zine Abidine Ben Ali.
More violent protests have erupted in Egypt, where people's anger against the government has boiled over right onto the streets. Three people have been killed in fighting between protestors and police and a security source says the country's interior ministry will clamp down on further protests going forward. Demonstrators are frustrated with the rising cost of living, failed economic policies, and even corruption. But most of all, they have had enough of President Hosni Mubarak, who has kept a tight grip on power there for the past 30 years.
The wave of anti-government protests sweeping North African countries has hit Egypt's capital markets as well. The benchmark EGX 30 index has lost about 6 percent since Tunisia's president was toppled just under two weeks ago. As Egyptians protest the rising cost of living against their president, the United Nations' agriculture chief says there is another global food crisis could be on the way.
Sugar has doubled in price in less than a year. In the past couple of months it reached a 30-year high, soaring to 34 cents a pound. On Tuesday the price of wheat hit its highest level since the last food crisis in 2008, at $8.35 a bushel. And the price of cotton has doubled in the past year to $1.62, and that too, is an all-time high.
CHIOU: John, I want to get back to the issues going on in Tunisia and Egypt. You know, markets don't like uncertainty. And is security going to be a big focus there, at Davos, because of the effects it is having on markets?
DEFTERIOS: Well, there is no question about it. In fact, we have two sessions, one at 1:30 and one at 1:00, with leaders of the Middle East. Both from the government side and the economic side. And this food crisis has really bitten very close to home in North Africa. India, for example, is one economy that has 15 percent food inflation, but in North Africa, where the job creation is not there, right now, we see food inflation of 8 to 9 percent. Unemployment, for example, in Tunisia was 14 percent. It is nearly 10 percent in Egypt. It is about the same in Jordan, but the rule of thumb and this is the most important thing, Pauline, is that the unemployment amongst the youth is double that. So if you look at the streets, of the protests, it is mainly the youth and many times the educated youth, with college degrees that don't have opportunities. Well, as Pauline knows, a little bit earlier in the program, we were talking about this shift to the East. Well, one company that has tried to use information technology to position itself as an architect of the emerging global economy is Bangalore-based Infosys. It offers IT services to help companies save money and compete worldwide. And it has been quite successful. Infosys says its net income for the quarter, ending December 31, was $397 million. That represents a quarter-on-quarter growth of 6.1 percent, on revenues of more than $1.5 million. Of that total, two-thirds is coming from the U.S. market. I asked Infosys' CEO Kris Gopalakrishnan, whether U.S. growth is really sustainable.
KRIS GOPALAKRISHNAN, CEO, INFOSYS TECHNOLOGIES: The U.S. has recovered faster than all of us would have thought, and because of that we started growing. Last year we grew 3 percent, this year we are growing 26 percent, projected growth. So that is based on the recovery in the U.S. Europe is taking longer to recover, but we hope that through proactive investment we can grow Europe. And the reason is simple, that Europe as a region is as large as the U.S., in terms of technology spending. So we have to make sure that we take advantage of that.
DEFTERIOS: We are looking at an Indian economy of $1.6 trillion, now. Going to $30 trillion--$30 trillion by 2030, this is substantial growth, predictions of growth between 8 to 12 percent in that time frame. Is that realistic?
GOPALAKRISHNAN: So right now India is growing at 8, 9 percent. If we are able to stimulate the infrastructure, if we are able to address some of the issues of governance, if we are able to invest in education so that we add to the workforce, I believe we can get double-digit, maybe 10, 11 percent growth. And then we can sustain it, and sustaining will happen through proper governance and things like that. It is achievable.
DEFTERIOS: One vulnerability for emphasis, I would say is the fact that you are not facing East yourself, even though you are based in Bangalore. Are you going to change that strategy to harness growth in China? And the growth in Aussian (ph) and Southeast Asia?
GOPALAKRISHNAN: So practically we are investing in China, Japan, of course, the Indian market. We are also looking at Indonesia, Malaysia, Japan, Australia. So practically that is where we are investing.
DEFTERIOS: So, you don't feel like you are behind the curve on this? Because you have been tilted West?
GOPALAKRISHNAN: Well, we took advantage of where the markets were. Now, that the markets are moving. You know, we are investing and we are taking advantage of that. I don't believe you are ever late. What you have to do is, if you are late, you have to at it with new and innovative products so that you can sell into the markets. And this, we believe we have. (END VIDEOTAPE)
DEFTERIOS: Kris Gopalakrishnan, the CEO of Infosys, Pauline. Again, highlighting this tilt to the East, an Indian company that was facing West, now looking to China, India for the next wave of growth in technology.
CHIOU: Yes, lots of corporations realigning their market strategies these days.
Well, the World Economic Forum is all about building business relationships. And that is what the CEOs are doing, that we are following in our special series, "The Boss". Just ahead we'll show you how this boss is a team player.
CHIOU: Welcome back to WORLD BUSINESS TODAY. The World Economic Forum is all about fostering leadership and responsibility, inspiration and relationships. And ask any boss at Davos and they'll tell you these are also key components to a successful business. In our special series, "The Boss" two of the CEOs we have been profiling show us why it is so important to listen and to give something back.
UNIDENTIFIED MALE: Previously on "The Boss", Michael Wu checked in on his latest project, Canteen, to see whether the renovation was paying off.
MICHAEL WU, CHAIRMAN, MAXIM'S GROUP: We feel that we need to give it rejuvenation.
UNIDENTIFIED MALE: And in London, Sarah Curran, raised her profile by facing the camera lens for "Marie Claire" magazine.
SARAH CURRAN, CEO, MY-WARDROBE.COM: I think the customers want to see that it is not just a faceless site.
UNIDENTIFIED MALE: It is early on Saturday morning in Hong Kong, and some of the biggest companies are already doing their bit for charity. Leading his company is Michael Wu.
WU: Hi, good morning.
UNIDENTIFIED MALE: The chairman of Maxim's Group is getting together with some of his employees and their families.
WU: Hello, nice meeting you.
UNIDENTIFIED FEMALE: Hello, nice to meet you. I'm Susie (ph).
WU: Thanks for coming.
UNIDENTIFIED FEMALE: Oh, thank you for having us. This is Jessica and Hanna. WU: Oh, hi, Jessica.
UNIDENTIFIED MALE: They are all meeting at Hong Kong Stadium, to take part in a charity walk they believe will help serve their local community.
WU: It is an annual event, and we always participate in this event. And it is a great way for us and our staff to come out and do something meaningful, and at the same time, have a fun day.
UNIDENTIFIED MALE: To Michael this is the opportunity to raise his company's profile. And to show that it, too, can be socially responsible.
WU: Before we were actually quite discreet about doing charity events, or doing things to serve the community, but I think in the past few years we've become much more public about it. And the reason, really, is that we are a very visible organization. And what we do, the public sees. And our staff sees it.
UNIDENTIFIED FEMALE: We are going to start now!
WU: Oh, I'm excited. Ready to go.
UNIDENTIFIED MALE: But Michael doesn't force his employees to participate. It is their decision whether or not to be part of the cause.
WU: At the company we-part of our mission is that not only do we want to make good profits, but we also want to contribute back to society, and by participating in this event, it is a way of demonstrating that commitment.
UNIDENTIFIED MALE: As "The Boss" Michael also wants to send a positive message to his employees. He wants them to know that they work for a meaningful company.
WU: It is great when the staff see that the company shares the same values which they do, and for them to participate in this event with me is a great cause.
CURRAN: There have been some changes internally.
UNIDENTIFIED MALE: Sarah Curran is not used to standing in front of a crowd.
UNIDENTIFIED MALE: You should put your cards down.
CURRAN: No, let me do it like that.
UNIDENTIFIED MALE: Today, she doesn't have a choice. In just a few minutes she'll be giving a speech to the My-Wardrobe executives. First, though, she needs to prepare.
CURRAN: In April I asked John-better?
This is really an opportunity for us to speech to the investors directly, update them on what's happened, and the plans for the next six months.
UNIDENTIFIED MALE: This isn't the first time Sarah has faced her executive board.
UNIDENTIFIED FEMALE: Where do you want it?
CURRAN: Maybe at the back.
UNIDENTIFIED FEMALE: Back?
UNIDENTIFIED MALE: Still, she wants to make an impression, after all they are the cash fueling the business. As the moment closes in, nerves and excitement begin to show.
UNIDENTIFIED MALE: Are you ready?
UNIDENTIFIED FEMALE: Be brave.
CURRAN: As a brand, as a team, and as a business, there have been some changes internally. In April, I asked John Mark (ph) to step up and work with me as exec chairman.
UNIDENTIFIED MALE: Sarah doesn't have to memorize her lines. She knows them inside out, after all, it is her business.
CURRAN: The really changes that happened over the last few months have really been in place to help drive business forward.
UNIDENTIFIED MALE: To Sarah this presentation isn't about convincing her board. As "The Boss" she wants to inspire them. She wants them to share her vision for My-Wardrobe.
CURRAN: The investors are a pretty sort of powerful group of people. So, you know, you have to stand up in front of people, who may not necessarily understand the sector. So you need to sell the business, sell the story, them excited, and get them to see the passion and feel it, and want to be a part of it.
UNIDENTIFIED MALE: Sarah bagged the first round of investment for her company in 2007. That, too, was nerve-wracking.
CURRAN: I remember my throat, sort of, as I started to speak, gradually closing, closing, closing up. At one point I had to shout out, water! Because I couldn't talk.
UNIDENTIFIED MALE: Not only does she have to face potential investors she also had to beat the competition. One investor, however, was convinced right from the start.
ELIZABETH HAMMOND, INVESTOR, BOARD MEMBER, MY-WARDROBE.COM: For me it seemed like a very real tangible, credible investment. And I fully, I was a very, very early adopter. Because I totally got e-tail, so to be honest they didn't have much of a job to persuade me to invest. I don't think they knew that, but I was desperate to put my money in at that point.
CURRAN: I think all these presentations have been a massive learning experience. Every part has helped to get us to where we are today. And has help us grow.
UNIDENTIFIED MALE: Next week, on "The Boss" Michael Wu tells us where he finds inspiration for new ventures. And we catch up with Richard Braddock, as he takes to the stage in Manhattan.
CHIOU: Welcome back. Live from CNN Hong Kong and the World Economic Forum in Davos, Switzerland. This is WORLD BUSINESS TODAY. And Davos is where John Defterios is catching up with all the movers and shakers.
John, how is day one going?
DEFTERIOS: Not bad, it is just warming up, to be candid, Pauline. But some of the major speeches are happening this morning. Some very important policies speeches, in particular, about the security situation in the Middle East; and then the financial system and this rising unemployment that we still see in the G7 countries as well.
There is a question that people ask every year, including somebody like me who has been poking around the hallways here for about 20 years, beyond all the glitz, the World Economic Forum really serve a purpose. To try to answer that very difficult question, Richard Quest took a long hard look at Davos, breaking down its essential components.
RICHARD QUEST, CNN FINANCIAL CORRESPONDENT (voice over): D stands for decision makers, destination, Davos. Each year at the end of January, the elite from government business and finance take their limos through this tunnel.
They have been making this same journey for 40 years. All in a bid to find some common ground.
(On camera): A is for the Alps. High up in the Swiss mountains they come, to create lofty goals.
(Voice over): V is for value. At Davos there is always a lot of talk. Does anything actually come of it? Or is it just hot air? (On camera): When you talk about values it is all too easy to take cheap shots at the annual meeting as a gab fest for the global elite. But the fact is there is value in people who have the power to change things coming together.
O is for organization. This is where everything will take place. In the new enlarged Congress Hall where improving the state of the world seems to have taken on industrial proportions.
(Voice over): The Congress Center has had a revamp. There are new lounges, nooks and crannies, with suitable 21 century themes.
(On camera): S is for skis. Whether it is downhill or cross country there is plenty of them here in Davos. Just don't think of ever using them if you are here for the economic forum. For me, it is more suits than skis.
I think this is yours.
Skiing may be off the agenda, but here we can still learn an economic lesson or two.
UNIDENTIFIED MALE: Classical, slow, but always forward.
QUEST: Classical, slow, but always forward. Heaven forbid you move backwards.
Come back, Gerhardt! (ph)
UNIDENTIFIED MALE: No, we should always go forward, and you called me and I came backward.
UNIDENTIFIED MALE: Oh.
QUEST: A morale we could all do well to learn. Richard Quest, CNN, Davos.
DEFTERIOS: All this week, Richard and I are reporting live from Davis as CNN focuses on the event's theme this year, "The New Reality". We are asking what that means for business, social and political leaders. Special coverage on WORLD BUSINESS TODAY and QUEST MEANS BUSINESS, all this week, on CNN.
CHIOU: I know that Richard Quest, in the past, has snuck out for an hour or two, to go out on those skis. And he did in denim jeans one year.
But, John, you have been to Davos many, many years, as you mentioned. So you get to meet a lot of these executives that come in and out, and go to a lot of the panels. What does it mean, for you? What do you get out of it?
DEFTERIOS: First and foremost is the chance to meet people that you normally don't see on the street, of course, and then have a very serious off the record conversation about what is happening in the regions that we cover. For example, right now, with all the protests that you see in the Middle East, and what we saw in Tunisia and Egypt. Another thing is that in the last couple of year, Pauline, we have been talking about the impact of social media. The conversations around the impact social media is having on governments in the Middle East, in Europe, and the United States and Asia, is also going to be fascinating. Because it is moving like wildfire, right now, as you see through Tunisia and Egypt.
I haven't skied in the 21 years that I have been to Davos. I'm not going to say I work very hard. I just haven't had a chance to bring the ski boots as well.
CHIOU: Oh, do say you work very hard. The bosses are listening. All right. Thanks so much.
Well, let's take a last look at the stock markets this hour before we go. And let's take a look at how things are going in Europe. They are looking pretty good following a strong lead from the Asian markets, most of which ended on the upside. So, looking pretty good, there, as a couple of hours of trading are underway. And also here, in Asia, most of the indices fared well, in positive territory. Except for the Nikkei, the Nikkei was down by about 0.60 of 1 percent. It was dealing with a slightly stronger yen. And there was also some profit taking there, as well. The markets in India and Australia were closed for a holiday.
You are watching WORLD BUSINESS TODAY. Thanks for joining us. I'm Pauline Chu in Hong Kong.
DEFTERIOS: And I'm John Defterios at the World Economic Forum, in Davos, Switzerland. "WORLD ONE" starts now. Here is Zain Verjee and Monita Rajpal.