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tv   Asia Edge  Bloomberg  April 24, 2016 11:00pm-12:01am EDT

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inc. i am angie lau. also coming up this hour, an theusive look inside controversial apple iphone factory in china, and bloomberg investigate claims of low pay and excessive overtime for workers. less, it is the aging auto show. scandals,rshadowed by and recovering from the revolutions of cheating, and we speak to the ceo. let's get back to the markets right now. heidi? heidi: we are retreating and we are seeing quite a lot of risk sentiment, and this is ahead of a triple whammy.
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expecting any decision to come through in terms of another rate hike. and perhaps a cut further into negative territory when it comes to those negative rates. and of course, ramping up the top three central bank decisions, and we have a lot coming through, the gdp coming through on thursday, and in the meantime, we have south korean gdp as well profits, and there is a better than expected sure we have seen, given the china macro background, and this is extending losses, following the most in a month, and we have been weakening. 1%, the weakest since march 28. and the basket of currencies going to the lowest since it was put in place in december.
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at about 9/10 of 1%, and we have rate. it is owned by some pretty big players, calling into question the transparency and the security operations. and the kiwi stocks are not trading today on the basis of that holiday. and there is a weakness of about 4/10 of 1%, and there is the greatest level coming through gas, and there are these oil sensitive stocks. rish? gating: apparently, it pace. why? there are indicators for april. and they are being thought of.
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reporter: yes, and things improved. factory output, retail sales, also first quarter gdp numbers in line with forecasts, and now we are getting the forecast for april. they are showing there is stronger demand for workers. but there is a caveat. it is not as strong a recovery as many had hoped. many are still indicating that they are reluctant to invest. probably have seen at least in the short timeframe that we are looking at here in the beginning part of the year, the forming of the slowdown. and look at the manufacturing index. it rose to 46.9. that is the highest in the year. still, 46.9. and manufacturing also increased, but conditions are still pretty much deteriorating, just not as fast.
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they are looking for any indications from the government, according to the survey. and this is rising to 50.5 in march. the services companies, and again, that are than those of traditional manufacturers. this is a sub index, and one tracks future conditions, like in the next three months. it fell to the lowest level since 2007. actually, the lowest level it has had, because that is when the index starts, 2000 seven, and that is an interesting index. it looks at factory activity in china based on satellite imagery. rose slightly in april, but still, one of the weakest readings in about four years. again, it is not a solid
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recovery, but many have changed their outlook. many have expected another interest rate cut, and now they are saying that the pboc will likely remain on hold at 4.35%, the benchmark one-year lending rate. however, they see perhaps further easing. steve, thank you very much. china is looking like a shareholder. a top 10 shareholder in about 90% of the nikkei 225. latest.n has the our colleagues did the math and dug through the documents, and, wow. shery: that is the reaction everywhere right now. they do not disclose them buying atf's and how it translates into
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by individual stakes in individual companies, but we can estimate that that is what was done. there are the regulatory findings and by etf managers, and what we found out is that the ¥3 trillion of every year, that is more than 27 billion dollars, and it is now a top 10 shareholder in more than 200 companies on the nikkei 225, a holder in more companies. if we bring out that chart, we can see that the boj is a shareholder in many, many companies in the nikkei 225, and we are seeing that with the boj, toy people are expecting it accelerate the purchase of etf purchases. when they meet this week, they think they will update it to ¥7 trillion, and that could read they are the number one by the end of next
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year, and if we estimate that that could be also ¥13 trillion. and it could hold the top ranking in at about -- basically, a big hedge fund. angie quite well, basically, it is very clear on what the agenda is. is it reflecting sentiment for that stock? : it could just write valuations, and that is what critics are saying. confidence at a time they have been down more than 5%, as we just saw the chart of there, but it could come with consequences, distorting valuations, and also undermined the efforts to improve corporate governance and the impact on the japanese bond market. and they defend the program, saying the purchases, relative to the size of the japanese stock market is not that big.
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they are using, these large etf's, and that means that their positions are concentrated. there is less impact on the companies outside, but you take a look at the company set the boj has the most influence on, they own more than 11% of, say, also more thany, 9%. operator ofthe another company. angie: ok, thank you for watching that for us, shery ahn. closing an auction after a seven-year gap, and they think it will determine if it is scheduled to start on july 25. of stock market is the last the developed nations without a closing auction.
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and the company is saying it will delay the release of the forecast, and the company says the suspension of its facility due to a recent earthquake may have an adverse impact. they said they will release the forecast from may, in stead. and we will find out this week if they will likely get to the next stage. spending the weekend narrowing fromthe field raising it four billion dollars to $8 billion, and there is a consortium led by bain capital. another winner. it is supposed to be a month away. and we go over to, and you will find reports about data, it more on bloomberg today. sees amorgan stanley
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risk of a recession, and we will ask where the biggest risks are, but after the show break, we will be live at the beijing auto show, where we will hear from bmw about its prospects ahead. you are watching "asia edge edge."- "asia ♪
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minutes past 11:00 in hong kong, 12 minutes past noon in tokyo, and the prime minister shinzo abbé meeting rescue teams with the survivors there. this killed 48 people and disrupted production in several companies. go towards would housing and infrastructure, 1% of the gdp. at a 12-year-old palestinian girl thought to be the youngest palestinian ever to be jailed, she was given for an half months
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after confessing to a stabbing attack in the west bank. she was freed earlier on appeal. is a wave ofe violence on palestinian leaders, and they are looking at the israeli occupation. and in the philippines, holding their last televised debate, consecrating on their traffic. they were looking to a sure that they would have an elevated train line. create newy it would transport into indications. have 150 bureaus around the world, thousands of journalists working with us. angie: shares of commercial properties have been suspended ahead of an announcement that
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comes as a billionaire looks to take the development private. we have got bloomberg, tracking -- of the developments, >> he has promised his backers a return between now and august 2018. so what he basically needs to do is decide which assets he wants , and that will, of course, affect it. it is something like 250 companies waiting on the exchange, so there is no guarantee he will be able to do it in time, and he will have to air -- reimburse all of his backers. angie: it is very interesting. our others slated to follow
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suit? >> there were suggestions that another wanted to take it private, and this is actually listed offshore, where it is incorporated in china. if you are trying to bring all of your assets, there are huge is much,ons, so it much more complicated for them, where at least this is a fairly smooth process. angie: both of these companies are looking to buy insurance. them, theyook at also have a football team. they have got online finance. they have a health arm, so what -- in china, they are looking a lot more like conglomerates. as china slowed down, it is about consolidation. is it the right strategy?
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sort -- sourcedy of cash. as you say, this always happens during consolidation, and that is what is happening right now. in this is opposed to having to spend more cash. he will pay out of his pocket. >> well, i guess he has got so many pockets. angie: ok, good to talk to you. all right, checking other stories we are following for dealsources say they will with an oilfield by the end of may. to a million rise
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barrels a day. over 10 million barrels last month, and it could go to 12 and a half million. they say they will continue to invest in oil production. and its biggest jump in more than 35 years after announcing a deal in china. the chipmaker soared on friday. and this is the biggest increase. million with $293 affect venture that will the domestic market. it will be overseen by the chinese academy of sciences, and we are going to be watching alliance shares. this is after profit jumped to its highest in more than eight years. and it will help improve margins.
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reliance looks at petrochemical and other projects. lotright, we have got a more coming up on asia edge. stay with us. we are back again. ♪
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♪ angie: welcome back. you are watching "asia edge your quote -- "asia edge." guest, who our next oversees sales 4 p.m. w, and, tom, how are their prospects looking this year? of focus hasot and they areuv's,
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trying to get some action. and the electric vehicles, as well, and a chinese company usually known for its tv offerings, and this was a move into the electric vehicles phase. we have heard from the clay on expect to double their sales, more withant to sell their confidence, and this is on the back of around 7% last year in the market in china, and it picked up a little bit towards the end of last year. and i am pleased to say i enjoyed by the global head of ands and marketing for bmw, looking at the suv behind you, and this is the equal. the e class.
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was a runaway success, and it was a natural step, and this will be the first in the segment. this was a first mover, and we had enormous success. bill, it isinto the running at a huge rate, and this is all around the world at the moment. numbers, we at the know that they are really catching up with you, and we are in danger of losing the luxury spot. >> we saw 460 5000 sales, our largest market in the world. this year, with the model changeovers that are coming and seers in the pipeline, we growth, but we had a good first
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quarter, and we continue to build on this success. of bringing the five series sedan? i think it is scheduled for 2017. >> from that perspective, it is a great success story. we are in the process of bringing the next generation in, and they will be here in china as a localized model. models in the very near future. i think you will see a lot more growth potential. engines, withiter the government at the end of last year, and we spoke to a ceo about this last night, and they said they will look at the economics that whether to maintain it.
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there will comes below effects? >> it slow down, and there were a number of stimulus actions, and i think what you are seeing is the first step towards a much situation, and so on a lot of local products , andg into this segment there is a series that was unheard of in recent times. tom: the tesla in fact, they will have fully electric vehicles by the end of this year? we started with our brand, and they have been in the market for three and a half years, and this is now coming into the
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core. we have plug-in hybrids on the five series, the two series, and we tend to not look over our shoulder. tom: let me ask you about the talent. how does that impact you? how is that ramping up? >> we have a very low turnover. from time to time, we do lose some people, but i can tell you, bmw has some strength and depth, as well. tom: there is the daimler ceo, so i need to get your take on it. the emissions scandal. when you look at the bmw business, how confident are you also for the spirit of the law when it comes to the tests being done in your laboratories? you look at the evidence being recorded all
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around the world, bmw is in a good place. that is not to say that technology is not going to have new requirements in the future, because there are the lap tests tests, and bmw does comply all around the world to these legislative frameworks, but they are going to develop further in the months and years to come, and that means new technology. head of at the global sales for bmw, it we are speaking to the ceo of renault later in the day. you, toml right, thank mackenzie live for us at the auto show. let's look at market action around the region, starting in south korea, where we are seeing just fractional losses this morning, and that seems to be a place where we are seeing all of the markets. let's go to hong kong, and this is the view from here. we have got the hang seng index
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down, and asian stocks retreat and oil is changing with the strengthening yen. in tokyo, the latest, after this break. ♪
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our top story, oil is changing, the yen strengthens, and gains among major currencies. most are expecting some easing later this week. and the fuel inefficiency scandal, they say companies are delaying their reports, and some say that mitsubishi had 27 models that failed to provide
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standards, and economic rebound in april, suggesting the recovery we saw in march is lasting. there may be expectations for additional easing dialed back even further. the business outlook shows businesses are still reluctant to invest. right. 150 bureaus around the world, we are bloomberg. let's get straight to the market action. significant downside on this trading day in asia, and the chinese in particular extending the worst to clients we have seen in months, off the session lows at the moment, but still down by 9/10 of 1%. data, and itic tends to boat not particularly well when it comes to further expectations.
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at around the region, quite a lot of risk aversion, down by 7/10 of 1%. basic materials leading losses across the region, down about 2/10 of 1%, and these losses, 1%, andei 225, 8/10 of this despite the yen recovering from that 17-month stall that we saw on friday. again, expectations of the boj easing, further cuts into negative rates, seeing a mixed picture. and let's take a look at where we are. and this is also lower, to the tune of about 1%. watching theely
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yen ahead of the boj decision day. this is still holding above the 111, certainly doing better than the 107. here in asia. the yen rebounding off of a three-week low, and it dropped the most in 17 months after bloomberg reported that the bank of japan is considering sending relief to its banks affected by the subzero rates. we are taking a look into this. the yen took a tumble on this report. it has since strengthened. what happened there? on friday, the boj has thistrying to stop strength, but we are some 7% up the year to date, but yes, a significant pullback on the yen last week, but some may have been an overreaction to what is
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speculation as we head into this boj meeting, but, yes, they are saying the boj maybe trying to spur some lending. basically, it is a relief measure here for the boj for the banks in japan, and some interpret that, hey, this may be a relief measure for what can happen on thursday, which could mean a bigger negative rate cut on reserves already, so those are in conjunction. for the short-term, some say don't expect too much appreciation with the yen leading up to this meeting. in fact, looking at the euro/yen , they hit a record high.
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and if we expect long-term, they have to give back what they saw. they: a rococo roto -- were feeling a lot of pressure from the markets. reporter: and we could expect to see more on thursday, particular when it comes to the more etf buys. as well as expecting and they expect the dollar/yen to continue to weaken. dollar/yen will move higher in coming months, and there is the inflationary trade.
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they continue to deliver further accommodation for the time being. toy say the yen could get 130 per dollar. angie: ok, thank you so much. remaining profitable despite trading. the ceo saying the company is adding the staff in the americas in the coming months with a 10% increase in headcount. let's go over to tokyo. they are choosing to expand this time. so many other banks, like nomura, arc cutting. reporter: you are exactly right. with the securities unit, we spoke to the new ceo last week, and they are looking for about 50 or 60 new people, the headcount, in the united states. in a couple hundred staff the banking unit.
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nomura, we had people telling us that they had been firing a thousand people. so i think the trading situation at the moment has been pretty severe. they are trying to cut costs, as , it is a growth market for them. and the spreads are shrinking and shrinking. importanttill very with the security businesses and to score some m&a advice. and also, the bond issuance from the security side. yes, a much better idea because it is the banking reporting season. what are we expecting to learn?
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>> yes, nomura is reporting on wednesday this week. with the analysts, it looks like it will be well down in this quarter. after the big holiday here next week, there will be a report, and that, for us, i think that is the first time the bank has really come out to give us a picture of what next year is going to look like for them. it is the first since we started the negative rates here in japan. looking forward to that next year and a half. and this is in japan, as well. thanks. angie: checking other headlines, we are expecting the latest -- ation reading, prices falling.
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and if the forecasts are correct, price declines on record. and there is a diplomatic path forward, with the billions, and the 2012 collapse of the airline was a general commercial failure. islions to pay up, and there an arrest warrant. push forward will with the plan to build hybrids despite the lack of government subsidies. a are looking to bring a hybrid version to the chinese market. the compaq last year, and they have received strong demand for their models.
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and there are some license plate restrictions. the scandal over many related data could cost a company. john is talking about how companies can rebuild. >> i think it actually takes a lot longer to truly destroy a brand, and you spend time building the brand equity, and a crisis can make a lot of that equity leak right out of your brand. company nowy big has the realization that everyone speaks for the brand. the chief executive officer, an employee on the front line of their manufacturing, the people making decisions about risk management. everything contributes to the
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equity of the grant, and that is just the world we live in. rishaad: this is damaged on. and mitsubishi specifically, how do they deal with the problem? how do they get their brand equity back? youell, the first thing have to do is understand you have a problem, what was the source of that problem, and explain what happened and why, so it can start the process of rebuilding trust, and there are many, many companies who have had serious problems and overcame them, and the ones who do not do that so well are the let'sho do not say, realize we have a problem, and let's get to the root of it as quickly as we can. for justo not helpful you to say you have had a problem and fixed it. the more you can have others describe what you're doing about
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it, the better. the danger is that you get a trip, drip, drip of bad news. some ofre is talk in the other news organizations that there could be something like 2 million vehicles effective, 600,000 many cars that we were originally told. >> you're absolutely right. the worst thing with a brand is the slow, steady -- you think you have all of the facts. you do not. it leaks out over time, so the most important thing is to get to this as quickly as possible and scale the problem, so if it has been something that is systematic, then try to come to grips with that as quickly as possible so you can start to take the actions to rebuild trust. angie: coming up, the morgan stanley warning about growth in china. we are going to get all of the details from the chief asia
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economist when "asia edge" returns. ♪
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1243 -- 12:43 in hong kong. mr. koch singh hillary clinton may be the best presidential candidate. and donald trump' his plan to says is all muslims he monstrous and reminiscent of nazi germany. korea and its growing ability to attack enemies. this traveled about 30 kilometers, much shorter than the typical range of some launched weapons, which usually fly 300 kilometers.
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there is an operational submarine which can't launch missiles, and pyongyang is making progress. some suspects detained in beijing will be put on trial along with chinese citizens also deported from kenya earlier this month. beijing says it has jurisdiction because the alleged victims are chinese. powered by over 2400 journalists in over 150 bureaus around the world, this is bloomberg news. all right, joining us now, the cohead of a group at morgan stanley. you say consumption growth will not be enough to pick up the chinese economy, which are people think it already has. but why does morgan stanley not think that? >> we are getting a
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rebalancing in china which is more mathematical. consumption growth. that is how you are getting the consumption to gdp higher, and what we want is strong wage growth. with a sustainable manner. right now, we are seeing the deflation is hurting corporate revenue growth, which is then translating into lower wage growth. we are seeing jobs growth stabilize. >> we are seeing a demographic change. this has changed significantly. but if you look at the wage growth data which they have put out, it is decelerate in, so therefore the aggregate consumption growth is also decelerating. in some sectors like, for example, cars, and the internet-based spending item category, like coffee shop sales, but not really an
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aggregate level of overall consumption growth. that is actually continuing to slow. this is academic, but the data we just got, the private data, worst is over with. was a big shock, and china was going to collapse, that is not happening. china, the big issue with is the slow grind. it goes slower, where your deflation pressures persist, and more or less, this is similar to what japan faced in the 1990's, so if you were worried about a big crash, which we were not. at that particular time, is it not apples and oranges? hetan: the debt to gdp shooting
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up, and china is going to go through a big shot, and we are saying no, it is not going to go through a big shot, because it is similar to japan, and they have a high level of reserves. china has better control. yes, there are items in the system, but you have insolvency problems, but you need liquidity, and therefore, there is not going to be a shock. therefore it is similar to japan. another way to compare this is with asia and the asian crisis. results,not have fx and there was the cost of capital spiking up, and you had a financial system shock, so as long as you do not have a financial shock, you do not get what investors are looking at. we do not see that kind of a financial shock that you saw in
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the u.s. in china, because it is different. if there is a softer landing, you are saying a 30% chance of a global recession, that is a huge chunk. what do you say on the back of that then, if you are not that worried about china? etan: first of all, let me qualify what we call a recession. it is below to it have percent on an average annualized basis, and looking at the historical experience of the last 45 years, the chances are 20%. one in five years. the global in economy, growth below two and a half percent. now, 30%, because it is not looking like a normal distribution today, with the macro environment that we have, and the starting point. december 2015, and first quarter 2016, we are
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already clocking below to an a half percent in the global economy today, so we say the chance is greater than 20%, 30%, and if you look at the discussions, they are also indicating something like that, that there is more than a 20% probability, which is the usual probability. angie: we had this typical issue with the banks. do you think this is going to spur lending and if it is really going to weaken the yen? n: this is not really effective in weakening the yen or solving the problems of the economy, and so we have actually been arguing that there is a need in japan. there is the tightening that japan did with the consumption backfiring has been in the climate today. for me, that would be a more
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important thing to watch. angie: they have not said that. and, in fact, we did hear from the ministry of finance, saying they are going to go ahead with it. just japan.s not policy losingry its traction, and it is time now that you look at fiscal policy and structural reform. understand that structural reforms are politically difficult. it is easy for us to argue, but it is something that can be done. they have looked at fiscal policy. for japan, i would look at that as a more important sign that the basis points. academic, because surely at the end of the day, is aales tax hike ridiculous idea, and it is not going to happen, is it? use the wordld not
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"ridiculous idea." because a logic of it, it has always been known that if the government is running large deficits and dealing with stability, that does not solve the problem, because the government does not boost growth by its spending, so the natural -- the thinkers, on macro, to reverse the fiscal easing on the first option, but you will be coming from a situation that the country has a long period of deflation, so any kind of preemptive fiscal tightening i think will not help us. this is a different recession. this is a balance seat -- sheet recession. and you gone it is good to see you. thank you for joining us, from morgan stanley. all right, coming up. cleaning up. ashaad: and there his been
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slam for labor prices. angie: a special report coming up next. stay with eyes. you are watching "asia edge." ♪
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♪ angie: welcome back. you are watching "asia edge." rishaad: china has been attacked for poor labor practices. angie: yes, some say they are forced to work long hours, grueling hours, for low hey. let's bring in a guess. angie: you went to their. what did you see? >> i saw a fairly carefully scripted visit. obviously, they are very concerned, but i would say overall, this is among the nicest. they are still spending long hours, and that is just kind of
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the fact of the game, but i think they are trying to have syrian efforts to comply with a 60 hour work week at the most, and this is within the context. seems quite stringent, the links they go to to try to stop people from doing overtime and not working extra hours. >> yes, a lot of this has to do with security. this is one of the most secure. leaks. you have got hundreds of thousands of people working on apple products. >> i think preventing corporate espionage is part of it, but also, we need to figure out a way -- this has been a core mission for apple to show that -- apple is a profitable firm not just because it is a firm but because it is a brand.
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people feel good about buying it. angie: people feel good about buying it until they hear about factory conditions and the like. foolproof, and it is also very transparent for the workers. what is interesting is a whole system where i cannot be cheating on my hours or have my under aged cousin at work with a face scan, and they can see, ok, i have worked this many hours, so i cannot work this saturday because i am already over. and this happened three years ago. and this is part of what they do now. there were these issues. and this is the argument, where people lie on their resume, so at this factory, their -- if you are lying
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to get a job, for whatever reason, and you have to be with the chief of police, as well. rishaad:
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>> nothing athens this garden neglected on an area to do something about it. their weapon of choice, the works gt 2.0.


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