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tv   World Business  WHUT  November 14, 2010 10:00am-10:30am EST

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>>this week on world business... >>international schools take steps into china. >>it is about being clever enough to see where the opportunity is going to be in the future. >>the new business of legal outsourcing in india >>it either spells trouble for traditional law firms or it spells opportunity. >>and from the bayou to the boutique, the surprisingly big business in alligator skins. >>we might have to sort through 1000 skins before we can find ten really good ones in the size and grade that they want.
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>>hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. the market for international education is worth 45 billion dollars a year and marketers have china firmly in their sights. but not all are focused on attracting "nouveau-riche" chinese students to campuses abroad. some of the most respected english private schools are expanding in the people's republic itself. >>reporter: quintessentially english, in far flung china - though unlike its four century old namesake for the teenage sons of the world's millionaires and monarchs, harrow international school welcomes well-heeled beijing-based children as young as three, including girls. >>established in 2005, this is the harrow brand's second overseas school after bangkok. a third opens in hong kong
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in 2012. >>farthing: there are many visionaries on the harrow school board who see the value in transliterating a qualityharrow branded service into new markets. at a commercial level, there is a return from the international schools as well which goes back to help maintain a level of fee structure at a school like harrow to the benefit of that school too. >>reporter: harrow international school is a private company backed by a hong kong investor; it operates under alicence from harrow school in the uk. as for the maths, the beijing operation has over 400 students - with annual fees for the eldest, 28,000 us dollars. >>reporter: in the city of tianjin (pronounced tee-en jeen), another famous british name, wellington college, opens its doors in the autumn of 2011 - in a campus funded by a local property developer. a relative latecomer to the overseas market,
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wellington has big plans to catch-up with the competition, first in china, then india and the middle east. >>cook: they believe firstly that they have a brand at home, a quality of education in all its many guises, extra-curricula, academic, moral, spiritual and so on - which they can export, so to speak, around the world. >>mackie: mainland china hosts over 270 international schools in 43 cities and in the provinces many cater to just a couple dozens students. but for the majority of schools, they can only enrol foreigners - children of expats or returning chinese with foreign passports. so for well-off mainlanders who seek a less politicised, international education and a seamless entry to the world's leading universities, there are two options. >>reporter: option one, there are schools abroad, which, along with colleges, vigorously compete at education expos like this for a share of the 200,000 chinese
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students who study overseas annually. >>of this number, over 3,000 under 18s attend british boarding schools, while around the same amountboard in the us. most going onto universities, paying premium fees, in their countries of choice. >>these numbers are growing as anxious parents worry about their only child's competitive advantage in china's marketplace. >>gregg: there's an interesting push coming on with how parents view the importance of education and their careers. i see that there are a multiple of opportunities for kids to come back who have gone through that creative thinking and analytical thinking, good communication in english and other languages, to thrive in companies in china because they don't get that internally necessarily. >>reporter: that is, unless they opt for option two. after completing his compulsory chinese education, 16 year old dang xuyang (pronounced dang shoo-yang) was able to enter harrow international school's sixth form to study for britain's a levels - so avoiding college foundation
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courses and other problems faced by his peers. >>xuyang: most foreign universities do not recognise chinese secondary school qualifications. there was also aproblem with my english proficiency at that time. so coming to this school was one of the best waysto solve these problems. >>reporter: many leading international schools adopt the same strategy. however, another foreign player is focused primarily on domestic students. >>reporter: old etonian william vanbergen's company british education - with a mainland investment partner - isestablishing three boarding schools for the over 15s that run on the uk curriculum. >>reporter: like wellington's tianjin model, campuses are typically provided by developers - who recognise the connection in china between a reputable school and nearby property prices. >>here in qingdao (pronounced cheeng-dow), britain's oxford international college oversees the delivery of a quality, branded education that can cost up to 18,000 dollars per year.
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>>bankers say the business plan is sound, but executing such a model in china isn't easy. >>vanbergen: you really want to try and draw on the strengths of what you have - the tradition, the history, the academic excellence. but then you've got to replicate it half way around the world. you're talking about an environment that doesn't speak english, that is very, very culturally different. >>reporter: china's cultural differences and the country's growing clout on the world stage, isn't lost on head teachers, like frances king of the exclusive roedean girls' school. >>she's here in china, not only to meet prospective elite students, but also explore potential teacher and student exchanges - and so better prepare her girls for their future roles, be it in businessor diplomacy. >>king: it's about being clever enough to see where the opportunities are going to be in the future. there are certain markets which will remain strong and constant in the west - certain markets in the uk that i can tap into. it's what kind of sharp new outlook you want to bring to your business
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which i think appeals to me. >>reporter: expanding the reach of distinguished brands in mainland china is a long-term strategy. >>for the hard pressed british treasury, these early connections should help maintain the intake of top dollar students to uk universities. while sino-british networks should deliver referral business to the schools and advance their students' careers - by broadening the old school tie network. >>india's legal outsourcing industry has grown in recent years from almost nothing to a mainstream part of the global business of law. with everyone from wall street banks to mining giants, insurance firms and multinationals looking to cut costs, hiring lawyers in india is now increasingly popular. >>reporter: welcome to the new level playing field. here in noida, a satellite city of new delhi, these young lawyers are learning the nuances of american law. christopher wheeler used to be
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the assistant attorney-general for new york state. now he manages the team of lawyers at pangea3, a legal outsourcing firm, to do the work usually done by young lawyers in the west - at one-tenth of the cost. >>wheeler: it either spells trouble for traditional law firms or it spells opportunity. it spells trouble to law firms run by dinosaurs who refuse to see that you cannot continue to bill your client 400 dollars an hour when it can be done as well and as securely by other people for a tiny fraction of that cost. and it spells opportunity for the same people who see the value and see the savings that they can pass on to their clients, and the opportunity that will give them with their clients to do more and more work. >>reporter: india's legal outsourcing industry is booming, as cash-conscious companies in the west are hiring lawyers in india to review documents, conduct due diligence, and draft contracts. lpos,
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or legal process outsourcing firms, have moved away from the traditional billing per hour model to billing per task. >>kamlani: historically in the legal services industry, when lawyers are billing on an hourly basis, and are telling you "i have no idea how long this is going to take", you have no idea how big your bill is going to be. you just know you have a higher hourly bill rate. >>reporter: the number of legal outsourcing companies in india has mushroomed to more than 140 from just 40 fiveyears ago. a few kilometres away in noida is the office of cpa global. headquartered on the island of jersey, the company uses talent from 4 continents to provide legal services to its international clients. >>sewell: india is absolutely crucial, it's central to our whole outsourcing effort. we acquired a business down here 4 years ago, and we've been developing and building that business over the course of the last 4 years. we have
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over 800 people down here now, and we plan to at least double that in the course of the next 2 years. it's the central backbone of our multi-shore offering. >>sharma: the advantages coming from india is the kind of talent available here, the kind of scalability that you can do, the kind of lawyers you can hire in short periods is not available anywhere else...what the onshore teams bring to the table is the missing technical nuance of a specific market or specific law. both of these combined together, provide a very effective solution to the client. >>reporter: outsourcing firms are able to offer low costs largely due to india's low wages and its big pool of young, english-speaking lawyers. the country churns out 80,000 legal graduates every year, and since india's legal system is based on the british colonial system, they find it easy to work for clients in the us and uk. >>chhajer: the indian legal system and us legal system are very similar, the laws are very similar
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and the structure is very similar: >>reporter: meanwhile, indian law firms are watching the booming outsourcing industry from a distance. since lpos take up only foreign cases of foreign clients and practise no law in india, indian law firms don'tsee them as competition. but they do object to foreign law firms setting up shop here, as indian lawyers have a tough time getting work permits in the west. >>bhasin: we are getting a lot of work these days from the multinational companies directly, without the intervention of any foreign law firms. so who needs? it is essentially because of the negative growth particularly in uk, that they want to capture india - the legal profession - and china. these are the green pastures for them.
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>>reporter: india's legal sector could well present an attractive range of both high-value services and low-costcommoditised services. with outsourcing firms already seeing annual growth of over 50 percent, mostplan to double their headcount within the next two years. >>sharma: i'm sure this momentum will continue, but it will not be long enough before law firms see this opportunity not as a threat, and start forming a tri-partite relationship. in future, you should see corporates, law firms and cpa forming a beautiful triangle, working together with each other. >>reporter: indian legal outsourcing firms are expected to see revenues hit 1 billion dollars by 2014. nevertheless, this remains less than 1 percent of the global law industry. clearly there's plenty of room forgrowth for legal suppliers here - both indian and foreign. >>reporter: but it may only be a matter of time before other english
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speaking countries wake up to the opportunity. >>still to come on world business... >>a business millions of years in the making, alligator farming and hunting in the deep south. >>and the sport where owners and punters can lose everything on a single race. >>first time out, the horse stumbles, and unfortunately has to be put down, you've effectively lost your investment. >>the risks of the racetrack... and the rest in just a moment on world business... >>there's no doubt alligators are impressive beasts, they can grow to over 16 feet and weigh half a ton. and in the southern us state of louisiana, alligators support a surprisingly large
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business supplying by far the majority of the world's skins. but like any luxury market, the industry has felt the bite of recession. >>reporter: tonight...in the marshlands of georgia's coast, a killing will take place... ...the victim an alligator ready to be dispatched with a handgun >>reporter: what these men are doing was banned in georgia from the late 60's, after alligators had almost been hunted to extinction. but following the ban their number steadily grew and since 2003 around 800 hunting licenses have been released each year for a brief month long season. >>hunter: it has gone to the right, it is coming up, it is surfacing... >>waters: we brought in the hunting because the alligator is a renewable economic resource that with proper management can be harvested in a limited quantity without affecting the overall population
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of the alligator. >>reporter: alligator numbers have now risen to around 200.000 in georgia and when these chaps do bag their gator, there is a reasonable chance its hide will end up here: located just south of atlanta, it is one of only 5 commercial alligator skin tanneries in the world and the products created from these hidescan command 10's of thousands of dollars. expensive stuff, but this is truly a labour intensive business and from marsh to market a skin will go through more than 30 pairs of hands. >>reporter: you can't sort of...there is no machine where you can throw it in and it comes out looking nice and glazed like that... >>plott-redd: that would be convenient, but no, it is done the old way. >>reporter: that is a big alligator. >>plott-redd: yes. >>reporter: wild alligator hides are larger, rarer and more valuable than farmed but either way the skins top luxury brands demand are hard to find: >>plott-redd: we may have to sort
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through 10000 skins to find 10 really good ones in the size and grade that theywant. >>reporter: around 80% of the world's alligator hides come from louisiana...most of it from farms like dane ledet's. like most farmers, he deals mainly in alligators less than 4ft long, driven largely by the demand for watchstraps. but the recession is taking a big bite out of business. >>ledet: at a high we will get like $8.50 per cm. that can drop down to like $3.50 a cm. >>reporter: things are tough all over...at the house of fleming in atlanta, demand is down by about 30% against a couple of years ago...although the company, whose products are all custom made, has been lucky to hit one niche market that's proved very lucrative...pro golfers...who are happy to pay hundreds of dollars for a belt... >>fleming: there is a lot of competition on who can out dress the other. it's just their nature.
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>>reporter: ...and the free advertising has proved priceless... >>gibson: i saw graeme mcdowall wearing one at the open and i looked in the back of the digest it said house of flemings. i wanted an alligator belt, came in and bought one. now i'm here again today. i do fancythe alligator belts. >>gillis: eeep eeep. >>reporter: what noise is that? >>gillis: the first call was one of a baby gator which sometimes can be in distress and the mother will come to see what's going on and the second call can be a mating/fighting call. >>reporter: now the near-prehistoric source material of this industry can live for around 50 years in the wild and grow to about 16ft...but even for experts like greg and jim, grabbing a good sized gator takes real skill... >>reporter: but finally, after hours of searching.... >>waters: depending on what they're making is depending on how big a scale pattern they want.
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watch bands you generally want the smaller scale pattern. purses...handbags they generally want the belly part because they've got the bigger scale patterns. >>reporter: in louisiana...there are around 1.5 million alligators and in a normal year dane ledet would gather about 60000 alligator eggs. last year, however, demand was so poor he didn't even bother to collect any...but he's hoping that strategy will eventually start playing in his favour... >>ledet: if the economy starts picking up a little bit the inventory won't be high so it should help the price per cm come up. >>reporter: as for bob fleming...he'd be happy just to see more of one particular customer...golfer darren clarke...who's already bought more than 400 of his belts... >>fleming: that's good business for you. that's great business. that's a one man economic stimulus plan.
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>>reporter: the alligator industry isn't everyone's cup of tea...but those involved can see nothing wrong with making money out of what is a renewable resource....and critics can at least take solace from the fact that no-one's making easy money... >>plott-redd: it's very cash intensive. it's very stressful. there's a lot of risk involved. >>ledet: hopefully it'll come back to where we can get $5.50 a cm and maybe get back to 8. but it'll be a long time before we get back to 8. >>plott-redd: because demand can fluctuate according to style and fashion and the economy in general. >>reporter: meanwhile, adding just one good sized gator to the supply chain can take hours. and hours. because despite bagging the odd timewaster, by the time we jumped out of the boat these chaps had got close...but not close enough... >>messenger: caught a couple. didn't get the big one.
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>>reporter: you did see it though didn't you. quite close. >>messenger: o yeah. >>reporter: a little bit closer and it would have been...pop. >>messenger: o yeah. >>reporter: enjoy it though? >>messenger: o yeah... >>reporter: later that night they settled for an 8 footer. and who knows...one day its hide may pass thru 30 pairs of hands, as one small part of a rollercoaster industry that's been 180 million years in the making... >>while sport has not been immune to the global economic downturn, the glamour and excitement of horseracing still attracts a wide range of followers around the world. but there are huge financial risks involved, and not just for the punters betting their shirt on an outsider at the track >>reporter: it's called the sport of kings. >>and racing at goodwood, on the duke of richmond's
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estate in southern england, has royal connections that date back centuries. >>fabricius: the horse racing's been going on for over two hundred years, but it came about as a result of the first duke of richmond, being the illegitimate son of charles 2nd, having a fascination for hunting and he would come down to sussex and hunt with the charlton hounds which were kenneled here on the estate. >>reporter: the highlight of the calendar here is a meeting called glorious goodwood. never mind all the talk of double dip recessions and belt tightening, on a festival afternoon the crowds still flock here to enjoy themselves. >>attendances have remained robust in recent years, with around 100,000 racegoers over the five dayspaying up to $100 a head. >>and it's by 100-year old royal decree that there's a more relaxed atmosphere here than at rival courses:
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>>fabricius: it was king edward the seventh who referred to it as a garden party with racing tacked on and of course it was his influence that led to goodwood being regarded as a more informal and socially relaxing sporting event as compared to say royal ascot, where people are dressed in their morning suit and their top hats. >>reporter: but goodwood and other courses have suffered with a reduction in corporate hospitality, reflecting less money in the sector, and a more selective approach to business entertaining. >>trainers too are feeling the pinch, finding fewer owners wishing to re-invest at the yearling sales each year. and revenues into the industry from betting are in decline, causing prize money to comeunder pressure. >>but it's not all bad news: >>fabricius:
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i'm pleased to say that right now field sizes, that's the number of horses running in races, seems to be holding up remarkably well. >>reporter: and of course down at the trackside there are many people hoping to cushion the effects of the economic downturn: >>baldwin: the bookies are hoping for a good day, and so are the punters, but they're not the only ones having to weigh up the odds at the races: >>reporter: when a winner gallops across the line here, its value can immediately double or even treble. there can't be many assets these days which turn a profit like that so quickly. >>and the assembled worth of the bloodstock is phenomenal... the thoroughbreds running here add up to between 40 and 80 million dollars with perhaps half that amount concentrated in one race, the day's main event, the sussex stakes: >>redfern:
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they're all proven group one horses, and we'd be looking at twenty to twenty five million dollars worth of bloodstock in that one race, so they're very valuable assets. >>reporter: the dramatic escalation in a horse's value after a win is based not only on future prize pots, but for enhanced stud fees: >>driver: the stud fees are very high, a hundred thousand, two hundred thousand in some cases and if a stallion turns out to be infertile, then that's a huge loss, so it's big values. >>reporter: and as the saying goes, values go down, as well as up; in this business, just as fast. >>weller: if you've got bloodstock, you've really got to consider the unforeseen situation to make it worth your while, to cover your initial outlay really ... now the first time out, the horse stumbles, and unfortunately has to be put down, you've effectively lost your investment. >>reporter: that's a risk covered by specialist insurers like markel international, at goodwood today celebrating
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a year since launching its equine and livestock division in the uk, in an industry worth around 400 million dollars globally. >>redfern: the london market is basically the global centre of the insurance market, so we don't just write business in england, we write business all over the world, australia, new zealand, south africa, all over the states, south america, japan, and all over europe, so we get a very broad spread of business because most of the equine insurance comes into the london market >>reporter: but of course this being racing, some are so rich that despite the massive sums and risks involved, money really is no object. >>redfern: some people view it as a commercial operation and for other people, it's much more of a hobby, they've made their money elsewhere, it's just a hobby for them so they don't feel the necessity to insure. >>thomas: a lot of people are that wealthy they don't need to insure their horses, but for the bloodstock value and the side of racing when the horses are retired, i think it's important to have your horse insured, for the worst case scenario.
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>>reporter: still, with owners wealthy enough to write off several million dollars when a horse takes a bad stumble, the sport of kings looks set to gallop home comfortably for years to come. >>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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