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QUEST MEANS BUSINESS
US Jobs Growth Slows; Dragging Down the Growth; "In-Sourcing" Industry; Record Quarter for Samsung; US Dollar Slips; Ryanair Lightens the Load; Weight Restrictions and Fuel Savings; Singapore Airlines' 747s Fly Into Retirement; Africans in China; Interview with Adrian Gore
Aired April 6, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHARLES HODSON, HOST: A big disappointment. The US economy adds fewer jobs than expected.
Smaller magazine, less ice, and no excess baggage. Ryanair goes to extraordinary lengths to shed those extra pounds.
And Samsung says its profits will be stellar thanks to the Galaxy S.
I'm Charles Hodson, this is QUEST MEANS BUSINESS.
Good evening. Well, it's not quite such a good Friday on the US jobs front, and the latest numbers show a disappointing decline in the pace of American job creation.
Only 120,000 jobs were added in March. That's a big slowdown compared to the past few months, and only just about enough to keep up with US population growth.
Economists had been expecting a lot more, perhaps 200,000, as we've seen in recent months, and the US president admitted that extra work is needed.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We welcome today's news that our businesses created another 121,000 jobs last month and the unemployment rate ticked down. Our economy's now created more than 4 million private sector jobs over the past two years, and more than 600,000 in the past three months alone.
But it's clear to every American that there will still be ups and downs along the way and that we've got a lot more work to do.
(END VIDEO CLIP)
HODSON: As Mr. Obama mentioned, the unemployment rate did fall slightly to 8.2 percent, and his chief White House economist, Alan Krueger, told CNN that we had the president to thank for the progress that's been made.
(BEGIN VIDEO CLIP)
ALAN KRUEGER, WHITE HOUSE CHIEF ECONOMIST: There's no question that the efforts that the president led with the Recovery Act, with the financial stabilization plan, helped to bring the worst recession we've seen since the Great Depression to a halt.
Just six months after the president took office, the economy began expanding. It's grown for the last ten quarters in a row. And one thing I think that we can say is we certainly don't want to go back to the policies that led to the crisis in the first place.
And just to give you one point of comparison, job growth in the last recovery, the recovery earlier in the 2000s, averaged under 100,000 a month.
(END VIDEO CLIP)
HODSON: Now, Peter Morici is a professor of international business at the University of Maryland, and he joins us from Washington. Peter, I wonder, we always like a good story, and a kind of slightly negative story is one that we perhaps like more than most. But is it fair to read too much into one set of numbers, here? Just on monthly set of numbers.
PETER MORICI, PROFESSOR OF INTERNATIONAL BUSINESS, UNIVERSITY OF MARYLAND: Absolutely. There is concern among economists that the pace of growth set in the fourth quarter is now slowing and that we need additional work to get the economy going, but we shouldn't read too much into this one quarter of numbers.
HODSON: OK, well, let's see what we can read into it, because one of the things that's interesting is that retail, which is a large part of the US economy, shed 30-odd-thousand jobs, whereas manufacturing gained some. Are we looking at a big shift, if you like, in the nature of the US economy?
MORICI: Yes, we are. Manufacturing is coming back. It's much stronger than it once was. The natural gas bonanza we have is helping a great deal.
And the real problem is that we're not getting enough jobs out of it. Manufacturers are looking for very labor-saving innovation, partially because of the high cost of health care in the United States and other uncertainty about the future.
HODSON: Looking at this from a European perspective, there's really been two models, haven't there, in terms of comping with the challenge of getting out of recession? Europe has tried to get its fiscal house in order after having run up very heavy debts. We're seeing a lot of austerity and cuts.
There's a different path being followed by the Obama administration, one which is more expansive and isn't quite so worried about actually adding to the debt. Does this progress in the jobs market suggest to you that the US model, the Obama model, is the right one?
MOIRICI: Well, no, it doesn't. I think that we need to step away from this business about stimulus versus austerity. Austerity will kill jobs, and what's going on in Europe doesn't need to happen.
Stimulus, though, should provide you an opportunity to fix structural problems that led to the crisis, and we're not doing that. The big drag on jobs growth in the United States are our energy policies in the area of oil -- we're not developing our domestic resources -- and our huge trade deficit with China, problems with the banks, and health care.
It isn't fair to say that the financial services reforms straightened out the banks, because they're not making loans to small and medium-sized companies. Health care costs continue to be double what they are in Germany, too much for American businesses to bear.
And the $600 billion a year trade deficit with China and on oil, which are correctable problems, and this administration has backed away from dealing, are a major drag on economic growth. We can't rely on stimulus forever or we'll end up like Athens.
HODSON: OK, let's look at the politics of all this. I'm not going to engage you too far into this, but clearly, as the set of numbers goes, this is kind of disappointing for the President Obama as he tries to gain reelection and, by the same token, it's marginally better for Mitt Romney.
But should there be too much celebration in the Mitt Romney camp, or do you think that we will see the pace of jobs growth accelerating again as we go through the middle of this year?
MORICI: I think it will accelerate a bit. I think 120,000 is a bit low. Unless we see additional information about the economy slowing, and I don't think that Mr. Romney's going to be able to make jobs the centerpiece of his campaign. More likely, gas prices as an economic issue.
Also, the president's adviser, Mr. Krueger's quite correct. Mr. Bush's administration was hardly stellar. The real challenge from Mr. Romney is to define himself as, "I will offer you a third way," neither the Bush calamity scenario, nor the Obama slow growth scenario. I can give you a better way.
So far, Republicans sound an awful lot like Mr. Bush. Cut taxes, cut regulation, on and on and on. Sounds like the standard Republican prescription, and Americans identify that with catastrophe.
HODSON: One of the policy measures that the Obama administration is interested in endorsing is trying to get more jobs going through small businesses. Do you think that that is going to be a fruitful thing, that incentives can be introduced, brought into small businesses, allowing them to flourish, and that ultimately will make a difference to the election campaign?
MORICI: I don't think it's going to make much a difference for small business or for Mr. Obama. We certainly need to encourage them. However, they're burdened by a lot of this additional regulation that the president put in place to curb the big banks, the big oil companies.
But it really bites hardest on smaller businesses, because it's too large for them to cope with. A lot of small banks, for example, are looking to sell out to big banks.
As a consequence, we have a concentration of deposits we've never seen before in the hands of Wall Street, over 60 percent, and a lot of small- town banks aren't making loans anymore to businesses, to people to buy homes, and so forth. And that's a real problem.
The -- this recent legislation is really a band-aid. Small business is hurting, and we really do need some fundamental changes in banking and regulatory policy, and we're not getting them from this administration.
HODSON: OK, fascinating. Thank you very much, Peter Morici, joining us there, live from the -- from DC, but from the University of Maryland.
Well, manufacturing, as mentioned, was a bright spot in this report. To be precise about the number, that sector gained 37,000 jobs last month.
It's partly down to rising labor costs in the rest of the world. Remember the role played by the exchange rate of the dollar in all of that, and that, of course, is pushing jobs back to the United States. Poppy Harlow explains from the factory of one iconic US company, General Electric.
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: For years, this GE plant in Louisville, Kentucky, was shuttered, completely closed down. Not any more. They're making water heaters and refrigerators. And just recently, GE posted 230 job openings here, 10,000 people applied in just six hours.
BILL NAPIER, NEW GENERAL ELECTRIC EMPLOYEE: I feel that I have at least ten years offer, and I will be able to retire with dignity as a blue collar worker.
DEBBIE PATTON, TEAM LEADER, GENERAL ELECTRIC: When the people see this product we're making here, this refrigerator and how good it is and the quality that's in it, we're going to skyrocket.
HARLOW (voice-over): Just a few years ago, GE's appliance business was on the table to be sold or spun off. Today, GE's investing $800 million in it here in Kentucky. Why? Rising labor costs in China and elsewhere abroad, along with union agreement to cut starting wages.
HARLOW (on camera): Your union made concessions, you agree to lower pay to get a job like this. Is it the right thing to do, is it worth it?
NAPIER: Oh, absolutely, because of the fact that that's what's great in having a union is that once that you start to manufacture and produce and make a quality product, then when the time comes around and GE receives the profits from our labors, then Jerry can go back to the table.
PHIL MYERS, TEAM LEADER, GENERAL ELECTRIC: We had to do what we had to do to get jobs in here.
HARLOW: Or the jobs would go away?
MYERS: The jobs would have went away, yes, I feel pretty confident of that.
HARLOW: GE's CEO Jeff Immelt heads President Obama's jobs council and had come under pressure to hire more workers in America.
RICHARD CALVARUSO, TEAM LEADER, GENERAL ELECTRIC: We wouldn't do it if it didn't make business sense.
HARLOW: Some would say, look, it's an image play.
CALVARUSO: I've worked for GE for 23 years, and GE is going to perform, and we're not going to just make products for the sake of making products. We're going to make money.
HARLOW: This is an example of creating manufacturing jobs in America. But keep in mind, the United States has lost more than 5 million manufacturing jobs since 2000.
DIRK BOWMAN, MANUFACTURING LEADER, GENERAL ELECTRIC: Well, we haven't hired a lot in the last decade. Our strategy was to go to design source and sell. Now we're saying we want to be manufacturers again.
HARLOW (voice-over): So, what does it take to get a job here?
JULIE GRUNDUSKI, HUMAN RESOURCES LEADER, GENERAL ELECTRIC: We can teach a lot of the dexterity work and how to do your job. We're really looking for people who want to engage in the change we're making in manufacturing, which is embracing the mind of every operator and getting them involved in how to solve problems on the work floor and how to keep us here with continuous improvement.
HARLOW (on camera): Are these jobs here to stay?
BOWMAN: Oh, yes. We're investing over a billion dollars in our factories and products here in this country. That's a huge commitment.
MYERS: That's part of the excitement here, that we can produce in America. We used to be the leading producer in the world of everything, so I'd like to see us get back to that.
HARLOW (voice-over): Poppy Harlow, CNN Money, Louisville, Kentucky.
HODSON: Now, after the break, hitting a high note. Samsung says it's going to announce record profits. We'll tell you just how well its Galaxy SmartPhones and tablets are selling in a moment.
HODSON: Now, Apple, take note: Samsung says it's expecting record quarterly profits. The electronics giant sees operating profits at around $5.1 billion for the first quarter. That's almost double what it made in the same period last year.
The company said earnings were driven by strong sales of its Galaxy SmartPhones. Its new model will present a direct challenge to Apple's newest iPhone when they both launch later this year. Samsung's Galaxy Note mini tablet has also contributed to the bumper results, with around 5 million units sold since its launch in October last year.
Well, despite the impressive numbers, Samsung shares closed up just one sixth of a percent in light trade. Final results are out in a couple of weeks. For more on this story, we're joined from New York by the host of "Digital Life," Shelly Palmer.
Shelly, tell me, this mini tablet, is this going to be a winner? Apple clearly staking a lot on its latest iPad.
SHELLY PALMER, HOST, "DIGITAL LIFE WITH SHELLY PALMER": Interestingly, now there is a screen available in very size, from a couple of inches all the way up to ten inches. And when Samsung debuted the Galaxy Note back in -- at CES in January, a lot of people looked at it and thought it was the Goldilocks device. Is it too big? Is it too small? Is it just right?
With 5 million of them going out the door, it's obviously just right for a lot of people. It's a really, really good device. People like the size, it's convenient. And they're voting with their checkbooks. So, yes, Apple may take note. The Galaxy Note is doing a really nice job.
HODSON: And it's lighter on the checkbook, presumably, as well, because the new iPad's pretty pricey.
PALMER: Well, the -- I tell you what's getting pricey are 4G data plans when you use your iPad with 4G capability. People are eating up data. The price of the iPad, the price of the Galaxy Note, they are different, obviously. You can get a Galaxy Note for a lot less money. But AT&T is making them available subsidized.
Look, Samsung makes loveable products. They really do. And so does Apple. And Apple's got their hands full.
HODSON: OK. Well, let's concentrate on that, because Samsung, clearly on a roll. They're producing great television screens. They're producing these interesting mini tablets, some good SmartPhones as well.
And -- as if -- they're actually backing both horses, because they're major suppliers to Apple. This is -- presumably is a company that's really going places right now
PALMER: Look, they've made some very good bets. They're a very large chip manufacturer, one of the largest in the world. Apple uses their chips. And of course, by the way, Apple and Samsung are suing each other all over the place over patents.
They are the guys who are playing the reindeer games right now. Obviously, Samsung has bet the farm, bet the entire story, on the Android operating system. Apple is proprietary with its IOS system, so these guys are diametrically opposed in the way they're approaching how to make devices.
Samsung is incredibly well-run, and they've -- they're going to continue to do extremely well. Look, iPad owns the tablet market. It would be a mistake to say that the Galaxy tab is going to do any better than the iPad, but Samsung is doing all right itself.
HODSON: Shelly, let's look a little bit wider than that, because clearly we've got two -- two mighty ones have fallen. HTC, which looked like it was doing very well, Android software, the great SmartPhones, they were seen as quite cool, cheaper than the iPhone.
And equally, BlackBerry, which -- surprisingly had great following, I know, among teenagers, because it was very easy to text on. They are now retreating from the marketplace or, at least in financial difficulty. What'd they do wrong?
PALMER: Well, to tell you the truth, Apple and Samsung make loveable products, and HTC makes a luggable product. The cell phones, the SmartPhones that HTC manufacture were sort of like the massive, gigantic old-fashioned wireless phones from the very first cell phones.
They're big, they're clunky, they're not that much fun to use. They run Android, but older versions of the system. They didn't listen to the customers, they didn't listen to the marketplace. There is no woman in the world that wants to carry a phone that weighs that much with an external battery. They just weren't paying attention.
Their profits are down something like 70 percent this quarter. HTC has a long row to hoe to get back. They have got to start making products that people want to buy, not just products that are engineeringly wonderful. Because engineeringly brilliant products don't tend to ever win.
And BlackBerry's got an even bigger problem, and that is that Apple has made a very in-road into the corporate world by using a good Microsoft exchange interface, as does, by they way, most Android phones do the same.
So, BlackBerry's tie with businesses, which was, basically, the BlackBerry Exchange server or the Microsoft Exchange server, no longer is relevant. Now, people can have an iPhone or an Android phone, get into Microsoft Exchange in a good and emotionally satisfying way. BlackBerry is really, really, really going to have to do something great or they're going to go away.
HODSON: All right, Shelly Palmer, I can tell that us digital nerds are really going to have a lot of fun discussing this and what happens next. Fascinating to talk about all those devices. Shelly Palmer of "Digital Life," thanks very much, indeed, for joining me.
Well, coming up on QUEST MEANS BUSINESS, Ryanair does everything it can to lighten the load. We'll ask the company just how far it's prepared to go to slim down fuel costs.
OK, now, with the stock markets close except in Asia, we're turning to currencies for a bit of continuing market action, and it does look as if those weak job numbers have hurt the US dollar, 1.3095, there, against he euro, 1.5886 the cable pound.
And Swiss franc, by the way, both up around a third of one percent against the greenback. The euro -- that figure there, one shade below 1.31, also up by around a quarter of one percent.
HODSON: Ryanair has hit the headlines over its latest push to drive down costs. The papers say that the crew has been urged to lose weight to help cut fuel bills. We'll investigate whether that's true. There's also the added incentive of appearing in the rather racy Ryanair calendar.
But while Ryanair agrees that every little bit counts, the crew's waistline is not its biggest concern. Stephen McNamara told me what the airline is really doing to cut costs.
STEPHEN MCNAMARA, SPOKESMAN, RYANAIR (via telephone): Where this came from is that we have recently cut the size and weight of our in-flight magazine, which will save us around half a million euros a year in printing costs alone.
And then we go into the wider debate of the knock-on effect, as in the weight of the magazine is less and therefore, there will obviously be a small amount of fuel saving. And we got into the debate, then, on what else we might be looking at in terms of cutting the weight on the aircraft to save fuel.
So, things like the -- we serve less ice, the carpets are lighter, the seats are lighter. We were considering getting rid of armrests, that type of thing. And then it came onto the debate about passengers and passenger weight, and while there's absolutely no way to control passenger weight, we obviously got onto the debate, then, of cabin crew.
And with cabin crew, of course, they have to be fit, but their weight really isn't that much of a consequence on the overall weight of the aircraft. So while the headline said we were absolutely demanding our crew go on diets, that simply isn't the case. But our crew do have to stay fit for the duties, but hopefully, they'll be enjoying a few Easter eggs this weekend as well, though.
HODSON: Well, you did suggest, though, that your cabin crew like to keep their weight down in order to get themselves into the company calendar.
MCNAMARA: Absolutely. We have a very dynamic, professional, and young cabin crew, and most of them see the calendar every year, and they want to try and get into next year's calendar.
So, in terms of the weight of the cabin crew, it's not really an issue for us at the moment. But we do, of course, ask our crew to maintain a certain weight so that they can carry out their duties. It's nothing over the top. They just have to be fit and healthy to make sure that they can - - they can assist passengers if required.
And in terms of the weight aspect for fuel saving, it's not really there. But if you do a lot of small things in terms of cutting the weight of the magazines, cutting the amount of ice, cutting the weight of the trollies, then you can bring the weight of the overall aircraft down slightly.
HODSON: Sure, but one really wonders whether some of these measures make that much difference. I mean, having a slightly lighter magazine or a slightly lighter carpet, if you compare that with the overall weight of the aircraft and its engines and, indeed, all the passengers and the crew onboard, it seems this is pretty marginal and you might as well save yourself some of the bad publicity that you're getting out of this.
MCNAMARA: We don't think it's really bad publicity. I think all of this -- with highlight yet again that Ryanair in particular will always look at costs, stripping back costs, making things lighter so that we burn less fuel so that our costs our lower so that our fares are lower.
HODSON: We're looking at the moment at some pretty steep fuel prices. You look at the price of a barrel of oil in $120-odd per barrel.
Do you think that there are going to be some nasty surprises in terms of your having to ramp up your fares, your fuel surcharges, if you charge them, by the end of this year? Because frankly, fuel is going to cost substantially more than it has in the years of expansion, which you had just behind you.
MCNAMARA: Well, I think -- well, we don't have a fuel surcharge, first of all, and we very much believe that airlines that are charging fuel surcharges is absolute con. In terms of the fuel prices, we have a fairly good hedging policy in place. I think we have a bit of an advantage over the other airlines.
But all of the airlines will face the same problems going forward. Fuel prices are historically high. So, we are encouraging passengers to travel with less baggage. We want people to bring a cabin bag only. If you want to bring a check-in bag, we're going to charge you for that.
So, it is about trying to get the price right and get the weight right. And if you get both right, and if you've a good hedging policy in place, then you can protect your fares and keep the fares low.
HODSON: Stephen McNamara, there. Well, we've crunched the numbers, and using the rough averages of fuel costs, this is how much money an airline would save in a year on a daily flight between London and New York.
Now, let's assume that a crew member weighs about 100 kilos. That's about 220 -- or 4 pounds, actually. I'm about 80 kilos, if you need a comparison. Now, it costs the airline almost $10,000 a year in fuel to fly them, assuming that they show up for work every day, of course.
Now, here, here's the clever bit on this graphic. If they were to lose weight. You can -- you can see how quickly the airlines start saving money. So, for example, let's try moving this all the way down to, let's say, about 50 kilos. So, that's actually, by comparison with 100 kilo, quite skinny.
But look at this number here. They will have saved their employers nearly $5,000 every year. But it's a fragile situation, because roughly speaking, every kilogram that you put on is another $100 in fuel costs. So, you'd have to pick and choose your in-flight meals carefully.
I'm going to sneeze. Sorry about that. But that's not to be sneezed at, I think.
Now, after commanding the skies for almost 40 years, the first of the true wide-bodied jets is going into retirement at Singapore Airlines. The company has taken the last of its Boeing 747s out of service to make way for a new generation of planes.
I should say so. I remember them flying when I was a teenager. Our Ramy Inocencio was at the gate for the final farewell.
RAMY INOCENCIO, CNN ASIA BUSINESS ANALYST: This is what the retirement party of a queen looks like. As of today, Singapore Airlines is decommissioning its entire fleet of Boeing 747s. And here at the Hong Kong International Airport, there was no shortage of sentiment.
UNIDENTIFIED MALE: I was a bit sad, because it was the first flight I ever caught over 30 years ago.
UNIDENTIFIED MALE: I think it's very sad because maybe this is my last time to fly with the Boeing 747.
UNIDENTIFIED MALE: I'm very, very sad about the retirement of the 747. My first 747 flight was in 1971.
MAK SWEE WAH, EXECUTIVE VICE PRESIDENT, COMMERCIAL, SINGAPORE AIRLINES: For many, it will be difficult to say good-bye to this great aircraft after nearly 40 years of service.
INOCENCIO (voice-over): Mak Swee Wah explains why everyone is waxing nostalgic. He's an executive vice president of Singapore Airlines.
MAK: We would not be where we are today without the 747 because it was really the backbone of the long-haul fleet. It enabled us to mount a number of groundbreaking flights. For example, the first nonstop to London and back, and also across the Pacific.
INOCENCIO (on camera): Right now, ground crew is prepping this plane for its return flight to Singapore. It came here as SQ flight 747. It returns as SQ flight 748. From there, it will be decommissioned.
INOCENCIO (voice-over): After more than 38 years, many agree the writing was on the wall.
UNIDENTIFIED MALE: The newer aircraft are much quieter, and they are more comfortable to fly in.
UNIDENTIFIED FEMALE: We all talk about economy and green, so it's about time that the queen of the skies maybe to retire.
INOCENCIO: That's got as much to do with the 747's advanced age as it does with advances in technology. Many say this, the new Airbus A380, viewed as masculine, spacious, and modern, is the clear replacement for the old, elegant queen.
UNIDENTIFIED FEMALE: Like an enduring nana. Something to look back on fondly.
UNIDENTIFIED MALE: I'd call it a Picasso that's gone into retirement and there is hanging up in an art gallery somewhere in France.
INOCENCIO (on camera): The last Singapore Airlines 747 flight is now pushing back from the gate, but 70 other airlines are still using the warhorse, from Cathay Pacific to British Airways and to Qantas, so there's no reason to be sad. But perhaps the only thing that I'm sad about is that I am not on that plane.
Ramy Inocencio, CNN, Hong Kong.
MAK SWEE WAH, SINGAPORE AIRLINES, EXECUTIVE VICE PRESIDENT, COMMERCIAL:
. a number of groundbreaking flights. For example, the first non-stop to London and back, and also across the Pacific.
(on camera): Right now ground crew is prepping this plane for its return flight to Singapore. It came here as SQ Flight 747, it returns as SQ Flight 748. From there it will be decommissioned.
(voice-over): After more than 38 years, many agree the writing was on the wall.
UNIDENTIFIED MALE: The newer aircraft are much quieter and they are more comfortable to fly in.
UNIDENTIFIED FEMALE: We all talk about economy and green, so it's about time that, you know, the "Queen of the Skies" made to retire.
(on camera): That has got as much to do with a 747's advanced age as it does with advances in technology. Many say this, the new Airbus A380, viewed as masculine, spacious, and modern, is the clear replacement for the old elegant Queen.
UNIDENTIFIED FEMALE: Like an endearing nana. Something to look back on fondly.
UNIDENTIFIED MALE: I'd call it a Picasso that has gone into retirement, and is hanging up in an art gallery somewhere in France.
: The last Singapore Airline 747 flight is now pushing back from the gates. But 70 other airlines are still using the warhorse, from Cathay Pacific, to British Airways, and to Qantas. So there's reason to be sad. But perhaps the only thing that I'm sad about is that I am not on that plane.
(INAUDIBLE), CNN, Hong Kong.
HODSON: Welcome back. I'm Charles Hodson. These are the main news headlines this hour. A U.S. Navy jet has crashed into an apartment complex in Virginia Beach, Virginia. The Navy says the two-person crew ejected before the F-18 hit the ground. At least one crewmember and at least one person on the ground have been injured. Firefighters are pouring water onto the wreckage of the plane, and the apartment complex, which is heavily damaged.
The Syrian government continued its attacks in various parts of the country on Friday. That is despite a promise to withdraw its troops from towns and cities by Tuesday. Thousands of additional refugees are reported to be fleeing into neighboring Turkey.
A man at the center of last year's anti-government protests in Bahrain is said to be near death after a two-month hunger strike. Some believe street protests will erupt again in the tightly-controlled kingdom if the activist dies.
The president of Malawi is dead. The government says President Bingu wa Mutharika suffered a fatal heart attack on Thursday. They say his body was then flown to South Africa. The 78-year-old former World Bank economist had served as president since 2004.
Supporters of an Islamic militant leader stomped and burned American flags on Friday at protests across Pakistan. They're angry that the United States is offering a $10 million reward for the arrest of Hafiz Muhammad Saeed. The U.S. says Saeed masterminded the 2008 Mumbai terror attack. But Pakistan says it needs concrete evidence, as it put it, to take action against him.
Barack Obama says there is a lot more work to do after today's jobs numbers came up a bit short. And the U.S. president will hope that his brand new JOBS Act can get the economy back on track.
Well, JOBS stands for Jumpstart Our Business Startups. And the president signed it into law on Thursday. You may have heard me discussing it with Peter Morici a little but earlier on in the program.
Now the plan here is to make it easier to invest in small businesses. But as Jessica Yellin reports, critics say it could end up hurting investors.
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT (voice-over): It's touted as a major bipartisan accomplishment.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Startups and small business will now have access to a big, new pool of potential investors, namely, the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.
REP. ERIC CANTOR (R-VA), MAJORITY LEADER: It's a straight-up, solutions-oriented bill.
YELLIN: The JOBS Act is meant to help companies raise money from investors, allowing them to advertise with direct mail online and other means, use the Internet to raise small dollar investments, and let private companies go public without some SEC regulations and disclosure requirements.
But critics say this bill roles back protections that go back to the Great Depression.
ROBERT JOHNSON, INSTITUTE FOR NEW ECONOMIC THINKING: This bill should make us very angry because it's more business as usual.
YELLIN: Take, for example, the major investor losses after accounting irregularities at Groupon, a dot-com, right before it went public.
Darren Robbins is suing on behalf of investors.
DARREN ROBBINS, ROBBINS GELLER RUDMAN & DOWD LLP: And the remedies that are now available to investors who have been victims of this alleged wrongdoing might well not be available had the JOBS Act been law when the claims were brought.
YELLIN: That's because this bill allows companies to avoid disclosing some critical financial information. For example, companies worth less than $1 billion don't have to get an outside accounting firm audit before going public.
The bill also lets investment banks once again peddle the research on the very investments they're selling to their clients.
ROBBINS: By decreasing regulation and allowing for less disclosure, I think it will be harmful to investors and ultimately harmful to honest companies because it subsidizes those who are willing to take advantage using false and misleading statements in raising capital.
YELLIN: But the president says.
OBAMA: I directed my administration to keep a close eye as this law goes into effect and to provide me with regular updates.
YELLIN (on camera): Even the head of the SEC has said parts of this bill could lead to abuse. No doubt to combat that in the Rose Garden, the president called on Congress to keep funding the SEC to watch these companies closely.
Jessica Yellin, CNN, the White House.
HODSON: Up next on QUEST MEANS BUSINESS, the legacy of a motoring legend. We look back on the life of Ferdinand Alexander Porsche, and his timeless design that lives on.
HODSON: Well, you don't need to be too much of a motoring fan to have heard of the Porsche 911. It is one of the most desired vehicles in the world. The man who designed it, Ferdinand Alexander Porsche, has died in Austria aged 76.
Phil Han takes a look at his long-lasting legacy.
PHIL HAN, CNN CORRESPONDENT (voice-over): Classic curved lines, a sleek roof and the hallmark rear engine. The 911 was Ferdinand Alexander Porsche's gift to the motoring world. They are mourning his death.
The 76-year-old grandson of the Porsche founder died just shy of the 50th anniversary of the 911's debut. F.A., as he was known to friends, first designed the 911 in the early 1960s as a replacement to the Porsche 356.
In the 911 he created a sports car stripped of frivolity and unnecessary flashiness. Instead, a design so timeless that it has stayed relatively the same for nearly half a century.
The 911 first went on sale for $6,500 and was kitted out with a 128- horsepower engine. Since then there have been seven versions of the coupe, from the Carrera to the turbo-charged Cabriolet.
Today the fastest 911, the GT2 RS, can reach speeds of over 330 kilometers an hour, with its 620-horsepower engine, making it one of the fastest on the road, a legacy of Ferdinand Alexander Porsche's that will not soon be forgotten.
Phil Han, CNN, London.
HODSON: I've never driven in a Porsche 911. I nearly did though, it was too icy. This was the test track -- a Porsche test track near their factory in Stuttgart. And I was driven by a Porsche professional driver. That was scary in all that ice.
HODSON: Anyway, that's QUEST MEANS BUSINESS. I'm Charles Hodson in London. "MARKETPLACE AFRICA" is next.
ROBYN CURNOW, CNN INTERNATIONAL ANCHOR: We're in Chinatown in Johannesburg. I'm Robyn Curnow. You're watching MARKETPLACE AFRICA.
Now China's presence here in Africa has been well-documented. But a growing number of Africans are moving to China, looking for jobs and opportunities. But, as Eunice Yoon now reports from China, Africans working there still face many obstacles.
EUNICE YOON, CNN CORRESPONDENT (voice-over): Stroll around this neighborhood in China, and you'd be forgiven if you thought you had landed in Africa. Here in the manufacturing town of Guangzhou, tens of thousands of Africans work and live, including Nigerian shop owner C.J. Cajetan.
Cajetan moved here two years ago as a student, but decided to try his luck in trade.
C.J. CAJETAN, SHOP OWNER: What I found, I realized there are a lot of opportunities in (INAUDIBLE) like here.
YOON: This trading community is at the heart of the African-Chinese business relationship. As China gains in economic stature, it has been scouring Africa for oil and other resources to feed its growing needs, attracting attention and criticism.
But its rise is also luring more Africans to China's shores, most to export goods from the world's factory, now the biggest trading partner of the African continent.
(on camera): Cheap Chinese goods end up at warehouses like this one. And then they're shipped all over Africa every day.
(voice-over): Trade is only part of the burgeoning relationship between the two, as China gets wealthier, African companies are looking to tap into the Chinese consumer. South Africa's SABMiller has been working for years with a local brewer and now produces China's biggest selling beer, success more African companies can deliver as their nations gain firmer footing, according to consultant Kobus van der Wath.
KOBUS VAN DER WATH, FOUNDER, BEIJING AXIS: China is repositioning itself continuously for that new Africa that is emerging. We're very well received, you know, we don't come with baggage. China is very open for business for us.
YOON (on camera): The bustling trade has led to this warren of markets where you can always find Africans and Chinese negotiating deals.
(voice-over): But sometimes those negotiations break down and lead to misunderstand and conflict. Some Africans here complain of discrimination, restrictions on religious practices, and visa issues.
Residents like shipper Festus Mbisiogu, who has been working in China for six years, say they have trouble getting documents to bring their families here, making it harder to settle down.
FESTUS MBISIOGU, BLUE DIAMOND LOGISTICS: Our children are not allowed to reside in China. And our joy is not fully complete. We are not living with our children, you know? To make the money is not a problem, it's not all about life, what about your family?
YOON: Near Beijing, South African factor manager Graham Hughes is new to China. He says navigating potential pitfalls, like protecting intellectual property, is a challenge.
GRAHAM HUGHES, FACTORY MANAGER: I think if people bring things into China to get them manufactured here, I think keeping that technology secret, as it were, would be very, very difficult.
YOON: The Chinese government says it's fighting to protect intellectual property rights. It says it welcome foreigners to work and live in China, and says its visa policies have been applauded.
Despite the opportunities, many Africans still feel the overall relationship is far from a two-way street. Amid the criticism, the Chinese government is sponsoring programs at its universities to encourage Africans to study here.
These students are taking part in a Masters program in Beijing, learning economic models they hope can spur their nations of Liberia, Ghana, Tanzania, and Uganda, to have sweeping transformations of their own.
SUSANNE NAMBATYA, STUDENT: I believe the social (ph) problems affecting China, we have the same problems affecting Uganda. I keep asking my question, what is China doing that Uganda can't do?
MARTIN LARBI, STUDENT: I believe industrialization promotes the development of the economy. But the other side (INAUDIBLE) policing of the environment, it's hard for me to see the blue skies I used to see in my country.
YOON: Back in Guangzhou, clothes seller Cajetan has adapted his environment. Like the students in Beijing, he wants to help modernize his country of Nigeria, one day drawing on his experience here.
CAJETAN: My plan is to establish a factory because I like to (INAUDIBLE) the one to help people. I want to employ people to work for -- in my factory.
YOON: Creating new industries back home, growing an increasingly important relationship in the developing world.
Eunice Yoon, CNN, Guangzhou.
CURNOW: As more Africans move to China, so too are African companies. After the break, we speak to one of Africa's largest health insurers about their push into China.
CURNOW: Like many companies here in Africa, Discovery Health is looking to China for new consumers and growth. The health insurer already operates in the U.S., the U.K., and here in Africa.
And it hopes that its goal of creating healthy employees for companies can be replicated in China. Well, for this week's "Face Time" interview, I sit down with the CEO of Discovery Health, Adrian Gall (ph), and we talk about his company's plans for China.
CURNOW: What is Discovery?
ADRIAN GORE, CEO, DISCOVERY HOLDINGS: Discovery is a financial services company, primarily life insurance and health insurance. But I would say we've developed (INAUDIBLE) model of (INAUDIBLE), I think very different in how we operate and how we penetrate markets.
And in that context we've been very successful in developing entirely new models for funding health care.
CURNOW: And what is the basis of that new model? Give you incentives to behave well.
GORE: The basis is that it's a universal problem. Health care is over-consumed, and wellness is under-consumed. The reason that health care is over-consumed is at the point of once you're covered, at the point of care it's free, and the benefits are needed, you feel them.
Whereas wellness, the process is huge. You've got to go out for the run. You've got to avoid the fatty food, and the benefits of training (INAUDIBLE). So we're learning more and more how irrational people are through behavioral economics, and we've got to change that cycle.
So I think in a sense our breakthrough is about using incentives to get people to change how they behave, and to do healthy things today.
CURNOW: So how do you incentivize somebody to lose weight or just stop smoking?
GORE: The concept is that you, as maybe (INAUDIBLE) a wide range of wellness activities. So you have home nutrition to fitness activities to screening to disease management, ultimately.
And when you do these things, you earn points. You (INAUDIBLE) you earn vitality points. If you eat healthy foods you earn vitality points. And then you've created a very powerful structure of, in a sense, reward.
So, you know, we have to deal with our largest (INAUDIBLE) where other people (INAUDIBLE) foods. You get access to gyms at an 80 percent discount. You get discounts on your credit card based on how you manage your health. It's kind of the world (ph) for the individual.
CURNOW: And China? South African company going into China, how do you do it?
GORE: (INAUDIBLE) should be spending their (INAUDIBLE). What has been good about our approach is that we've managed to attract the best partner. So in China (INAUDIBLE) the Chinese probably are (INAUDIBLE) our research, one of the best insurance companies in the world today.
We work here with whoever we have but we've essentially bought into the health insurance company. And we're kind of embedding vitality into that (INAUDIBLE) using our R.P. (ph) and the health insurance (INAUDIBLE).
So to an extent I think the first (INAUDIBLE) is about the quality of (INAUDIBLE) and the (INAUDIBLE) local market. And then it's about trying to understand how the local norms and cultures would respond to these kind of incentives.
It's embryonic. It's still early. There are a half (ph) million (ph) lives I think that are covered by (INAUDIBLE) Health that I think we're very optimistic about how people respond to the incentives. We've done a lot of market. And the people we've research and surveyed have been remarkably receptive to these kind of ideas.
CURNOW: In a place like China, growing middle class, the growth of businesses like yours is key, isn't it? I mean, that's one of the first signs of affluence in a way, is protecting your future, isn't it?
GORE: Health care and health insurance is just a natural requirement of people as they enter the middle class. The Chinese health system, it's fairly extensive, has gaps in the cities where people have co-payments when they're covered in hospital.
So there's a rapid increase in demand, about buying coverage, that you cover those co-payments or let you buy stuff that's not covered by the social health insurance. So it seems to be, from our research, one of the really up and coming markets that's emerging. And it seems like to an extent one of our best.
I think the complex (ph) is how you straddle that market, how you capture it, how you add value in the right way. But again I think that's where you have to rely on the right kind of partners to navigate that environment.
CURNOW: When you talk about going into China, setting up with a local partner, the fact that South Africa is recently a member of BRIC, the sort of group of emerging economies, has that helped, do you think?
GORE: I think it probably has helped. We've been welcomed in China. We worked with the regulators that have been remarkably receptive to us. Approval of the transaction we did was relatively swift.
So the receptivity to us and our country I guess has been very good. And I'm hoping that it is part of those reasons. That I've been part of BRICs (INAUDIBLE) countries that hope (INAUDIBLE) as being socially aware and socially constructive.
So I do think that does help on balance.
CURNOW: There is a message here in the way that you've created this world class product in a developing country that is relevant to everyone.
GORE: I think in the last probably century the idea that the developed world had all the solutions, and those would be exported ultimately to the developing world as a given.
I think it's changing. I think to a large extent the developing world has challenges and obstacles and all kinds of difficulties that once they're solved in that space, those ideas and models are transportable, ironically to the developed world.
And the more that we can do, I think the better.
CURNOW: The links to our Twitter and Facebook pages on our Web site, which is cnn.com/marketplaceafrica. I'm Robyn Curnow. Thanks so much for watching. See you again next week.