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Quest Means Business

May: U.K. Needs a "Bespoke" Brexit Deal; U.K. Services Post Record Rise in August; Calais Port Blocked in Migrant Camp Protest; Saudi Arabia, Russia Agree to work Together on Oil; Jack Ma: I Want to bring China to the World; Obama: Cybersecurity Cannot Become "Wild, Wild, West"; Uganda Finance Ministry: Government Must Find Jobs for Youth; Anti-Rich Revolt at Burning Man Festival. Aired 4-5p ET

Aired September 05, 2016 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[16:00:00] RICHARD QUEST, CNN ANCHOR: No trading on Wall Street for Labor Day holiday, but a beautiful view of the Statue of Liberty on what is a

magnificent start of fall the day in New York. It is Monday, the 5th of September.

Tonight, Brexit is back. The British government unveils its plan, and Japan warns, don't get it wrong.

Jack Ma tells CNN how Alibaba will bring China to the world.

And billionaire battle of burning man. Wealthier revelers have an extremely rude awakening. We have all of that. We have an hour together.

I'm Richard Quest. I mean business.

Good evening from Hangzhou to the houses of parliament. Britain's new government has insisted it can forge a new path for the country in a post-

Brexit world. The U.K.'s decision to leave the European Union has returned to the front burner for the leaders of Britain and the rest of the world.

While Japan has issued a veiled threat of what could happen if Britain gets it wrong. The British Prime Minister, Theresa May left the G20 summit

after various world leaders had meetings. And her Brexit message was simple. Britain remains a vital trading destination.

(BEGIN VIDEO CLIP)

THERESA MAY, BRITISH PRIME MINISTER: Yes, the voters' message on the 23rd of June was clearly that they didn't want to see free movement continuing

as it has done up to now. They wanted some control of movement of people from the European Union into the United Kingdom. But we also want to get

the best deal possible for trade and goods and services with the EU. And I intend to go out there and be ambitious.

(END VIDEO CLIP)

QUEST: What today has shown in ever-greater clarity is there are numerous strands on definitions to this story, which often seem so simple. Brexit,

U.K. to leave the EU. But it is far from it. Let's just take the word itself. Brexit. Brexit. It is a noun. And according to Theresa May, she

says Brexit means Brexit, because it does. So far, so good. But today, the new secretary of state for exiting the European Union said that Brexit

means opportunity. David Davis talked about the overwhelming mandate for the U.K. to leave the European Union and made it clear that despite the

hopes of some, there would be no second referendum. But the Prime Minister in China, Brexit Secretary Davis took the floor at the House of Commons,

from where Isa Soares, now reports.

(BEGIN VIDEOTAPE)

ISA SOARES, CNN CORRESPONDENT: The summer holidays are now over. Now it's back to reality. For politicians here at the Houses, Parliament and

protesters who have come back from holidays highly frustrated with the lack of advancement and what a post-Brexit Britain will look like.

UNIDENTIFIED FEMALE: I'm very frustrated. It's been more than two months since we had the vote, since we had the referendum. And no action has been

taken. We keep hearing more about delays, it might be 2019, it might be later.

UNIDENTIFIED MALE: I'm a managing director. I employ people, I import goods from the EU, like almost every business does in the U.K. And I don't

know where I stand. My employees, I've frozen recruitment, I've frozen investment, I've frozen everything until I know where we're going.

SOARES: All this anger and disillusionment come on the same day that we heard from David Davis, the new Secretary of State for Brexit. It's the

first time we've heard from him in that new role. And he spoke about the fact that Brexit means Brexit, that there will be no Brexit through the

backdoor. Pretty much of what we heard from the new Prime Minister, Theresa May. But this was his moment to lay out his strategy for post-

Brexit Britain would look like. And his statement left many scratching their heads.

DAVID DAVIS, BRITISH SECRETARY OF STATE FOR EXITING THE EU: Naturally people not to know what Brexit will mean. Simply, it means leaving the

European Union. So we will decide on our borders, our laws, and the taxpayers' money. It means getting the best deal for Britain, one that's

unique to Britain, and not an off-the-shelf solution.

[16:05:00] This must mean controls on the numbers of people who come to Britain from Europe, but also a positive outcome for those who wish to

trade in goods and services.

SOARES: That was his grand moment, his opportunity to lay out his strategy, and his great, grand vision for Britain post-Brexit. Then many

believe he didn't really put enough meat on the bones of what that plan would actually look like. If the G20 is anything to go by, from what we

heard from world leaders, want they want is that vision. They want to know what Brexit means. Thus far we haven't heard anything. Isa Soares, CNN,

London.

(END VIDEOTAPE)

QUEST: Opportunity, leaving the European Union, or uncertainty? Because today, we also had Brexit means uncertainty for Japan. The country's

foreign ministry released a 15-page memo that laid out the fears over the U.K.'s decision to leave the EU. In the memo it says Japanese companies

could decide to leave the U.K. Bearing in mind there are a thousand plus Japanese companies in the U.K., employing tens of thousands of workers, the

biggest of course being Nissan up in Sunderland.

We got some quotes from the various ones. Hitachi told us we will take our time to carefully assess the implications for our business as things become

clearer. Meanwhile, Honda said the situation is unclear, we will carefully monitor developments.

For these companies and indeed for Japan, this is not just an academic exercise. Having invested billions of dollars into the U.K., they now have

to decide which investments to keep and perhaps think about the unthinkable and move across to mainland Europe. I spoke to Japan's ambassador to the

United Kingdom and I asked him why Japan has spoken so forcefully and so early.

(BEGIN VIDEOTAPE)

KOJI TSURUOKA, JAPANESE AMBASSADOR TO THE U.K.: Earlier said is better than later. After the fact, it will be something that will not even be

addressed. There are two issues here in relation to how you conduct a successful negotiation of Brexit. Of course these are all decisions to be

made by U.K. We would like to be a good partner and we would like to join the work so that they will be successful in their endeavor. And the two

points, I mean, one is process and one is substance. On process this has to be all-inclusive, indicating issues and also working together to have a

position that both EU and U.K. will be able to agree. And we are willing to take part in that. On substance, as you see in the Japanese concrete

measures, we have identified very specific measures that we believe are worthy of consideration. Of course, these are requests that we've

received. How it happens? It's in the hands of both EU and U.K.

QUEST: The areas on substance that you've identified, of course, are not surprisingly -- I'm sorry, go to the very core of the number one issue,

which is access to the single market, whether it be for goods, services, or financial services. What Japan is basically saying is you want to remain

and you want the U.K. to have maximum access. Is that correct?

TSURUOKA: Maximum access to the single market I think is what the Japanese industry would like to see. Right after the referendum, and even before

that, I've been speaking to the leaders of the Japanese industry operating in U.K. All of them have told me that they would like to continue their

operation in U.K., and if possible, even to promote it further. That indicates that they are having and they are enjoying good business

environment here in U.K. Of course that is also linked with access to the single market, because U.K. has been regarded as a gateway to Europe. But

that is not the only thing. It is all the business environment that U.K. has to offer, which is attracting all the Japanese investment to Great

Britain, 1,000 more companies have done that.

QUEST: The question of access and the price that the U.K. is prepared to pay or indeed the conditions that the EU will allow, I mean, you know the

arguments as well as I do, ambassador. And if single market access cannot be guaranteed.

[16:10:00] Is there a veiled threat within Japan's position that further investment cannot be guaranteed and that some companies may actually

withdraw?

TSURUOKA: Even in the best of circumstances, government cannot guarantee additional investment. Nor can we instruct companies to withdraw their

investment. That's business decisions. And in a democratic system run under the free market economy, government cannot instruct private sector to

make certain decisions.

And that's why I think it is quite wrong to see the list of measures we would like to see addressed as indicators of threats or warning. They are

not. They are simply identifying what we believe are the relevant measures that will create or continue to maintain the excellent business conditions

existing in U.K.

(END VIDEOTAPE)

QUEST: Japanese ambassador. And there you have our last definition of what Brexit means on a day when there have been so many thrown up. Brexit

means keep calm and carry on. Not everyone has doom or gloom. The U.K. services, PMI, the Purchasing Management Index, rose to 52.9, up 5.5. Now

bear in mind, in July it was 47.4, which usually indicates a contraction in the economy ahead.

There seems to be, according to market, a stoic determination to buck Brexit. Paul Donovan is the global chief economist at UBS joins me from

London. Paul, let's start with the PMI number. We don't always get terribly excited by the PMI data. It is perhaps among the least

interesting at times. However, should we be excited by this number, or is it a dead bounce?

PAUL DONOVAN, GLOBAL CHIEF ECONOMIST, UBS: Absolutely we should not be too excited by this number. PMI data always, always overreacts, fueled by

sensationalist media and so on. And we need to be very, very careful about interpreting this. It's also a relative number. It's saying how are you

doing since last month. And last month, everything was doom, gloom, despondency and despair. It's not that surprising that there is a pickup.

I think there are some issues in the detail which are worth looking at. We're not seeing a panicked loss of jobs. That's an important positive.

Companies are not firing. They may not be hiring, but they're not firing. At the same time, we're also seeing price pressures. That's something

we'll have to pay attention to. Because that is going to start impacting on the consumer in the future.

QUEST: Right, now we'll put price pressure just to one side, but we haven't forgotten about it. Are we in a position where it really is still

way too soon to say what any medium term effect of Brexit, bearing in mind we don't even know what the negotiating mandate looks like?

DONOVAN: Absolutely. We can say with some certainty that there will be shifts in focus in the U.K. And I think that there will probably be some

reduction in the trend rate of growth of the U.K. economy over the medium term. But to be precise on that, at this stage, for goodness sake, we

haven't even announced we're going to be leaving. We haven't formally invoked article 50 at this stage. It's way too soon to be considering

this.

QUEST: You talked about price pressures, Paul. If there are price pressures, that could eventually spill over into the generate of inflation,

which would absolutely complicate Mark Carney's -- the current view is there's likely to be a further easing, maybe not of the headline rate, but

certainly underlying rates and liquidity levels. What do you expect now?

DONOVAN: I think the thing is, that any competent economists, and there are competent economists at the Bank of England, would realize that what we

are seeing is a very unusual consequence of a one-off move in sterling. This is not likely to impose a serious long term inflation threat unless

you start seeing it coming through in wage pressures in the future.

As long as the wage rates remain relatively well-behaved, I think the one- off consequences of the sterling drop will be rather overlooked by the Bank of England including by Carney. So therefore I think there is still an

opportunity freezing. Now I agree, I don't think it's likely, sadly, that my mortgage rate is going to come down any further. I think the headline

interest rate is probably going to be kept at around a quarter percent. The bank is very reluctant I think to go to zero and has been very explicit

that it doesn't think rates are something for the U.K.

[16:15:00] QUEST: Now I just want to quickly bring you to this side of the Atlantic. It is the Labor Day weekend, as you're well familiar.

DONOVAN: Indeed.

QUEST: As we went into the weekend, I asked readers of the QUEST MEANS BUSINESS newsletter, I appointed them honorary members of the FOMC. And I

asked them whether they should vote, A, for an immediate rate hike, bearing in mind the data. Or, B, wait, wait, and wait. Now our wise viewers said

56 percent of them said raise rates now, 44 percent said wait, wait, wait. Where would you have voted?

DONOVAN: Well if I was voting for what I would do -- and of course I have the wrong accent to sit on the FOMC -- but if I was allowed to vote I would

be voting to raise rates now. I would side with the majority of the wise viewers of CNN.

I think the FOMC is not going to raise rates now. In other words, they're not going to listen to a British economist. But I look at the inflation

precious in the United States. I look at the tightness of the labor market. This is an economy where nearly every single inflation measure is

at or above its 20-year average. Interest rates are nowhere near that 20- year average. That's a problem I think that needs to be at least partially remedied.

Paul, wonderful to see you. Thank you for taking time and joining us tonight, Paul Donovan, joining us from London.

DONOVAN: Thanks very much.

QUEST: There have been protests in Calais, which are adding to the sense that there's something very strange going on in France at the moment. Add

in that to the burkini debate, the presidential election, and modestly the publicist will be with us after the break to try and make sense of the

French conundrum.

(COMMERCIAL BREAK)

QUEST: Protesters have been blocking the main routes in and out of Calais in France, that includes the ones out of the channel tunnel entrances and

the main motorway. There's been major disruptions at the French port. The truck drivers and the farmers are calling for the French government to

close the migrant camp there. The one that is known as the jungle. They say the migrants and criminal gangs are trying to stow aboard vehicles

bound for the United Kingdom.

When you take this on top of the disagreement and row over the burkini on the beaches of France. You add in the presidential election. You throw in

the question of the negotiating stance of France in Brexit, you end up asking what is going on in France at the moment. Maurice Levy, is the

chairman and executive, Publicis. How good to see you, sir, on what looks like a delightful night in France, in Paris. What is happening in France?

MAURICE LEVY, CHAIRMAN & CEO, PUBLICIS GROUPE: A lot is happening in France. There are some very good news and there is some less good news.

The good news is the fact that the economy is starting to come back.

[16:20:00] And we see some signs of growth, not enough to create the kind of jobs that we need, and the bad news is clearly what we are seeing in

Calais due to, as you said it so correctly, the fact that there are these migrants who would like to join the U.K., and they are blocked in Calais.

And we have also the fear of terrorism and a few other things. Clearly we are in a situation where there are some good and bad news.

QUEST: Is there a feeling, though, that there is a lack of leadership in the ability to handle these very difficult situations?

LEVY: If you look at the situation in the world, and particularly in Europe, you see that the migrants and the fact that we are seeing the surge

of a lot of populism, is creating a situation which is extremely difficult to handle. Spain has no government. In Germany, Mrs. Merkel has just

lost the election. And in France we are confronted with a lot of issues. So it's a situation which is not easy to handle. I'm not sure that it's

only a question of leadership. It is also the fact that we have a lot of trends which are difficult, and people who are in an antagonistic

situation. For example, in Calais, there is a lot of people in the population who would like that we take care of what we call the jungle and

the migrants. Why there is majority of people who are against. So we need to manage the situation, which is not really easy.

QUEST: In France itself, does the situation, does the environment, for want of a better phrase, the political environment, does it become more

poisonous as the presidential election gets closer?

LEVY: Obviously this is a situation that you see in all the countries and in France even more so, simply because the population is not very happy

with the last five years, and the see that the situation has not improved, and people are hugely disappointed. The standard of living has not

improved. And the unemployment has risen to a very high level, more than 10 percent.

And you have the terrorists which are behind the spirit of everyone. Everyone is fearing to see the terror coming back. And the rise of an

anti-Islamic situation, or at least a phenomenon that we are seeing rising in many areas of the population. And also the fact that we see the risk of

a confrontation again between Sarkozy and Hollande. All this is creating a situation which is quite explosive.

QUEST: Let's talk about, as we come to an end, I'm going to tell you well and truly into deep waters, Maurice. Let's talk about the U.S.

presidential election. As you view it from Paris, what's the view of a Donald Trump presidency, from your point of view?

LEVY: The Donald Trump presidency in the U.S., what we see that there is a rise of the populism. So we believe that this is something which is not

impossible to happen. And we see in France that Marine Le Pen is probably the one who will come first in the first run of the election. And

therefore she will be leading the second term. So we are extremely cautious about what can happen in the U.S. as well as what can happen in

France. And in most European countries.

[16:25:00] No one would have thought that the Brexit would be voted this way. And by the way, even the promoters haven't thought that Brexit will

win, that the reason why they have all decided to resign, because they were all extremely embarrassed with this hot potato that they cannot manage.

QUEST: Maurice, thank you, sir, you have beautifully explained the situation and given us great perspective, we're grateful for you tonight,

sir. Thank you, Maurice Levy joining us from Paris, and elegantly, as only he can, putting it into the perspective.

To the markets, to Europe. No trading in the U.S., because it is Labor Day holiday. But in Europe, only these Zurich SMI, eked out a small gain. The

rest were hit by RBS and Lloyd's Banking Groups which had downgrades. The smallest loss of the day came in the CAC.

Think of this as a rare example of a tentacle market move coming from a G20 summit. Oil prices jumped after Saudi Arabia and Russia met on the

sidelines in China and agreed. Let's go and have a look at the market and you'll see what I mean.

They agreed together to stabilize the market. Crude has certainly rebounded. Remember way back at the early part, January of this year,

maybe even February, but January of this year, we saw the low point. There's been quite a rebound back. This is the higher point when it got

back up to just around 50 or just under 50. It came down and came back up again. Now you see it's around $45 a barrel. Now, that is still 50

percent lower than its top point in 2014.

But this oil price rebound we have seen before, as you can tell from the graphs. On similar hopes of cooperation between OPEC and non-OPEC,

particularly Russia. It all gets dashed in the end. But as John Defterios explains from Abu Dhabi, the reason why they can't sustain the gains is

because the hurdles remain.

(BEGIN VIDEOTAPE)

JOHN DEFTERIOS, CNNMONEY EMERGING MARKETS EDITOR: The market has been waiting for a breakthrough from the world's two largest exporters.

Investors have that, but it didn't include a strong signal of whether they'll freeze production. Hadeed al Folio, Saudi Arabia, and Alexander

Novak of Russia, co-signed a statement to cooperate in the oil market, which would include a joint task force to review market fundamentals.

This follows a bilateral meeting on the sidelines of the G20 between the Deputy Crown Prince of Saudi Arabia, Mohammad bin Salman and Vladimir

Putin. The Deputy Crown Prince said cooperation on energy would bring benefits to both. President Putin suggested it would be correct to find

some sort of compromise. The reality is, however, both players have never produced much crude, which has capped prices around $50 a barrel.

And they are fierce competitors in Asia, especially in China. Four years ago, Saudi Arabia was at 20 percent market share, and Russian at just 9

percent. Today, Saudi Arabia is at 14 percent and Russia just slightly behind. And there are other players to bring under a common umbrella, if

you will, notably Iraq and Iran. Iraq is enjoying record production and has plans to expand further. Iran's output is hovering around 3.8 million

barrels a day and repeated its desire Monday to find that higher. President Putin supports giving breathing room to Tehran to get that done,

but Saudi Arabia has reserved judgment on its regional rivals. And it's these sort of hurdles which held back a deal last April in Doha when the

talks collapsed. John Defterios, CNNMoney, Abu Dhabi.

(END VIDEOTAPE)

QUEST: As we continue our nightly conversation, the Alibaba chairman, Jack Ma, tells us he wants his company to have no boundaries.

(BEGIN VIDEO CLIP)

JACK MA, EXECUTIVE CHAIRMAN, ALIBABA: And we want to position ourselves as the engine of innovation. With our engine, with our technology, with our

ideas and know-how, then we can help most of the industries.

(COMMERCIAL BREAK)

[16:31:21] QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in a moment. When Jack Ma tell us about his dark days as the

master of Alibaba. And the hippies are revolting, well, revolting. Rich Revel has found themselves under attack at burning man. Before we get to

that story. This is CNN, and on this network, the news always comes first.

It's just been announced from the White House that President Obama has cancelled his meeting with the Philippine President, Rodrigo Duterte. The

pair were scheduled to meet hours from now at the ASEAN meeting in Cambodia, in Laos. It follows abusive comments from Duterte towards

President Obama. Russian President Vladimir Putin says a deal with the United States to ease tensions in Syria may come within days. President

Putin said there had been a rapprochement against all odds at the G20. However, President Obama said gaps of trust were still getting in the way

of the talks.

Dozens of people are dead and injured after twin bombings near Afghanistan's defense ministry. The attack in Kabul killed at least 24

people and wounded 90. Authorities say the second blast was a suicide bombing. The Taliban has claimed responsibility.

Two people died and five are still trapped after a parking garage in Tel Aviv collapsed on Monday. Israeli defense forces are leading the rescue

effort. The four-story garage was still under construction when the top three floors imploded.

Health officials in Singapore have confirmed 16 new cases of the Zika virus. It means the total number has jumped from zero to 258 in just a

week. Authorities are now fumigating the affected areas to kill the mosquitoes which transmit the virus. Zika has been linked to neurological

disorders in unborn babies from infected mothers.

The government of Indonesia has asked Alibaba's chairman, Jack Ma, to act as an adviser as the country builds its e-commerce industry. Indonesia's

e-commerce market has been increasing attracting global investors. And of course, it's still very much in the early stages.

However, in China, Ma has designed Alibaba to be that indispensable consumer product to consumers as they go about their routines, whether it

be checked the weather to eating breakfast to buying things online. Jack Ma aims now to do the same thing in other countries. He envisions a

company that in his words, has no boundaries. He told CNN's Andrew Stevens he wants Alibaba to be as ubiquitous as the internet and electricity

itself.

(BEGIN VIDEOTAPE)

MA: People ask, do we have boundaries, almost everywhere. No we don't have a boundary. What we are doing is internet. Internet is like last

century's electricity. Electricity has no boundaries. They are the movie industry of electricity. So internet should be everywhere. Alibaba's

position is that we want to position ourselves as the engine of innovation.

[16:35:00] With our engine, with our technology, with our ideas and know- how, then we can help most of the industries.

ANDREW STEVENS, CNNMONEY ASIA PACIFIC EDITOR: in ten years' time -- and this is something you spent a lot of time thinking about where you would be

in ten years' time -- describe what Ali will look like.

MA: Well in ten years we will bring China to the world and the most important to bring the world to connect together. The is what we call e-

WTP. We want to make sure that because the e-commerce, or we call it commerce infrastructure, will build up. Anybody in the world, if you have

a mobile phone, you can do global trade.

STEVENS: As you conquer China in e-commerce, you would like to replicate that on the world stage?

MA: We do not use the word "conquer China." As we help China. We want to help more countries.

STEVENS: There's a quote in a book about you and about Alibaba, of one of your employees who says, "Jack Ma gets as excited about life." Which is a

wonderful thing to say about anybody. But you must have had a few dark moments, a few doubts in your corporate life.

MA: Oh, I had a lot of dark moments. I had more --

STEVENS: What was the darkest?

MA: Well, the darkest? I forgot it.

STEVENS: So many?

MA: So many. Because people know the wonderful days of Alibaba today. But they never see the past 17 years how we've gone through the tough --

nobody believes in internet. No banks will work with you. All the people have counterfeit issues and people cheating. It's like every minute, work.

So I said, to succeed is a short time, paying for it is long. Everybody in the company knows that, today is difficult, tomorrow is more difficult, the

day after tomorrow is beautiful, but most people die tomorrow evening. We have to realize that good things can never be achieved easily. Life is not

only about Alibaba. I have run my first 100 meters. I should be giving this to the next generation.

STEVENS: And once you've passed that baton on, can you imagine yourself sitting back and relaxing?

MA: No. I have so many -- the education, environment, and going around and meeting the entrepreneurs. There are a lot of things. Life is so fun

and I never, ever focus on one thing. We come to this world not to work. We come to this world to enjoy life. This is what I believe.

(END VIDEOTAPE)

QUEST: The president of the United States is warning that a new era in cyber warfare is upon us. Before he departed from the G20 in China,

President Obama said companies must work together before the world of cybercrime becomes the "wild, wild west."

(BEGIN VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT: What we cannot do is have a situation in which this suddenly becomes the "wild, wild west," where countries that

have significant cyber capacity start engaging in competition, unhealthy competition or conflict through these means when, you know, I think wisely,

we've put in place some norms when it comes to using other weapons.

(END VIDEO CLIP)

QUEST: Clare Sebastian is here. What did he mean?

CLARE SABASTIAN, CNNMONEY REPORTING: Well, the "wild, wild West," Richard, I mean, we've heard this before about the cybersecurity realm but it's not

a phrase the president takes lightly. And I think we can look at two key events over the last six months or so that really exemplify this.

First, the hack on the Democratic National Committee. Now this is what he was being asked about today. But that really changed the game. Because

that was essentially, by being linked back to Russia, that was, you know, exerting political influence through hacking. That was essentially trying

to change the course of history in another country through cyber hacking.

The second event is the hack on the Swiss interbank payment system, it started in February with $100 million being stolen from bank account of the

Bangladesh bank at the New York Fed. So that isn't just stealing information, that is stealing money, emptying bank coffers through the

internet essentially. So we really do have what amounts to a "wild, wild west," here.

Hackers are getting more and more sophisticated. And it really needs to be tackled at the international level. That's where the G20 comes in. There

has to be an international response. That is what Obama was saying today. The real irony, Richard, while sitting there at the G20, talking about how

to regulate cyberspace. Talking about how to deal with this. It really could, experts tell me, be happening to them right under their noses.

(BEGIN VIDEOTAPE)

SABASTIAN (voice-over): It was September 2013, a crucial G20 summit in St. Petersburg dominated by the conflict in Syria. The leaders at this point

unaware some of their computers had been infiltrated. Two months before that meeting, according to cyber research firm, FireEye, Syria-themed e-

mails had been sent to foreign ministries.

[16:40:00] They contained attachments, which once opened, downloaded malicious software allowing the hackers to spy on their targets. FireEye

said it traced that hack to China. Beijing denied any involvement.

And it wasn't the first time the G20 had been targeted. Two years earlier, French government computers had been infected with malware before a G20

finance minister summit in Paris. There was no conclusive evidence on who was behind it.

TONY COLE, VICE PRESIDENT, FIREEYE: It's definitely a major target for hackers, especially nation state attackers, because they're trying actually

to steal data that can actually help them understand a government's negotiating position.

SEBASTIAN: Spying at international gatherings is nothing new. The difference now, the internet makes it easier.

COLE: In years past, if you think about espionage, when it took place, it would cost any government an enormous amount of money. Today, for a

minimal amount of money, a couple of hundred thousand dollars, you could be very well equipped.

SEBASTIAN: Experts say G20 delegations need to equip themselves against potential threats. They advise using clean or burner phones to avoid

caring personal data. Avoiding hotel Wi-Fi and even adding cybersecurity experts to their physical security detail.

SEBASTIAN (on camera): We contacted several G20 delegations to see what precautions they were taking for the summit in China. None would comment,

although a former U.S. official speaking on condition of an anonymity told us, President Obama and all his staff, all use encrypted phone and

satellite links when they travel. The president even takes portable soundproof tents for secure communication. This is one from a 2011 trip to

Brazil.

DMITRI ALPEROVITCH, CO-FOUNDER, CROWDSTRIKE: There's no question that the landscape is changing.

SEBASTIAN (voice-over): Dmitri Alperovitch's firm, Crowdstrike, uncovered evidence back in June that the Russian government was behind a hack on the

U.S. Democratic National Committee.

ALPEROVITCH: Before nation states were primarily engaging in espionage where they would come into your network, steal your documents. Nowadays

you have to worry about the public leaking of that information, information that would influence operations that could be conducted against you.

SEBASTIAN: So amid public shows of unity at the G20, there could be more complex political plays in cyberspace.

(END VIDEOTAPE)

QUEST: As Snowden showed, and as your reports points out, they're all at it. Nobody comes to that table with clean hands.

SEBASTIAN: Absolutely, Richard. This is exactly what the president said today, the capabilities are growing. The number of countries that have

these capabilities are growing.

QUEST: He's as guilty.

SEBASTIAN: Well, he said that himself. He says, you know, we have the defensive and the offensive capabilities more than everyone else, everyone

is doing it. And the G20 has made strides in the past --

QUEST: Oh, come on. The G20 has absolutely no ability to deal with this.

SEBASTIAN: They had an accord in November that said, they would commit not to perform cyber espionage activities for commercial gain. Experts I spoke

to have said that they have seen a reduction in activity, particularly when it comes to China.

QUEST: For commercial gain.

SEBASTIAN: Right. So it is the tip of the iceberg. But it was a start.

QUEST: Does anybody believe for one moment that they're all going to stop doing this?

SEBASTIAN: When it comes to cyberespionage, to them spying on each other at these summits, I'm afraid not. But I think there is some hope that when

it comes to hacking into companies for commercial secrets and the kind of financial hacks that we saw was swift, that could be brought to an end if

countries can commit to work together and can commit to stop doing this.

QUEST: Clare Sebastian, thank you.

More QUEST MEANS BUSINESS after the break.

(COMMERCIAL BREAK)

[16:45:33] QUEST: Welcome back. Uganda's finance ministry is warning the country could face instability in the future if there are not enough good

jobs for its young population. More than half of Uganda citizens are under the age of 18. In this week's "AFRICA LOOKS EAST", Isa Soares looks at one

of the country's top family-run businesses, and its Japanese approach.

(BEGIN VIDEOTAPE)

ISA SOARES, CNN CORRESPONDENT (voice-over): Looming from the red earth, glimmering in the golden light. This extensive plant just outside Kampala,

is home to one of the largest companies in Uganda.

OLIVER LALANI, EXECUTIVE DIRECTOR, ROOFINGS GROUP: We at Roofings, are the market leaders in the steel sector. We control about 35 percent of the

market in Uganda. But that includes exports. As the name suggests, obviously we make roofing sheets. But we go way beyond just roofing

sheets, all the way from the foundation of your construction up to the roof.

SOARES: With the gross revenue of $162 million last year, it is run by Sikander Lalani and his son, Oliver.

LALANI: Over here we're loading our export cargo. We have one truck which is going to Congo and the other truck is going to Burundi.

SOARES: As workers continue to load. A special deliver arrives.

SIKANDER LALANI, CEO, ROOFINGS GROUP: This is coils from Japan. Through Mombasa port they are coming into our yard.

LALANI: Japan is invested in roofing. So there is no roofing without Japan. (SPEAKING IN FOREIGN LANGUAGE) It means thank you very much.

SOARES: It's a relationship that dates back more than four decades. Sikander was running an electronics business in Rwanda when he was

introduced to a Japanese businessman who eventually became a close friend.

SIKANDER LALANI: 1974, Mr. Hirowa (ph) visited us in Rwanda. He said, "Why don't you start an iron sheet factory?"

SOARES: What all began as an idea soon took form, and a partnership with Yodogawa Steel in Japan was cemented. Today the company, which is now

based in Uganda, employs around 1,700 workers, including some from Japan.

UNIDENTIFIED MALE: We are very happy to producing roofing sheets with Roofing Groups, because this roofing sheets covers all Ugandans' house. So

the Japanese take a lot of these. Yes, we are very happy.

LALANI: We have procured our technology through Yodogawa Steel Works, which is our Japanese equity partner in the project. So the kaizen

approach of Japan is what we tried to replicate here in Uganda, obviously with Japanese expertise on the ground, kaizen being a system in which we

always try to improve even in the littlest things that we do.

SOARES: It's a philosophy which extends beyond the factory floor and into the kitchen.

UNIDENTIFIED MALE: This is about both. But it tastes a little bit different. This is Ugandan taste.

SOARES: For Oliver, adopting a Japanese approach in the Ugandan market has proved to be invaluable.

LALANI: Our investment value when we started was $2 million. Today we have committed over $250 million into the Ugandan economy.

(END VIDEOTAPE)

QUEST: Fascinating story.

There is trouble in utopia. Silicon Valley elites are being made to feel most unwelcome at Burning Man. There's been a ruckus in the desert. We'll

explain.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Not even Burning Man could escape class warfare. An exclusive luxury camp called White Ocean was vandalized at the annual Nevada

festival. It's an apparently a rejection of White Ocean's wealthy Silicon Valley backers and entrepreneurs who've been flocking to what was once a

hippie haven in the middle of nowhere.

White Ocean says that the hooligans glued trailer doors shut. They cut the power cables, and they dumped 200 gallons of drinking water into the camp

ruining the whole thing. The camp posted to Facebook," We have felt like we've been sabotaged from every angle. But last night's chain of events,

while we were out enjoying our beautiful home, was an absolute and definitive confirmation that some feel we are not deserving of Burning

Man."

Now, you may well be of the opinion that such goings-on is inevitable. After all, a festival designed to be egalitarian, and all for one and one

for all. Well, James Porto is a photographer who has attended Burning Man several times. I read the comments from some of those who attacked, they

basically said that White Ocean had put up this elitist camp. They were not welcoming toward the burners, and therefore they got their just

desserts.

JAMES PORTO, PHOTOGRAPHER: I would disagree with that, for the reason that White Ocean brings so much beauty to the playa. They have a huge sound

system, and they're gifting, you know, all these great deejays that they bring to the playa every year. So they have thousands and thousands of

people coming through their camp. Did they feed every single burner that came through? Maybe not.

QUEST: But that's not really the idea, is it, to have wealthy people sort of -- I mean, what you've described this wonderful noblesse oblige. The

wealthy will set up a camp and feed the others and let them enjoy the wine and circuses.

PORTO: No, no, it's not like that at all. Burning Man is a collective. It's many, many people contributing and most people giving abundance so

that there's abundance for everyone. That's usually how it goes down. The plug and play camp has had a lot of air play in the media, in the news for

the last couple of years. The truth is, people from Silicon Valley have been coming to Burning Man since the early `90s. They go there to get

ideas, to get creative. That has been --

QUEST: Right. I've not been to Burning Man, and perhaps controversially so, I don't think I particularly wish to. However, that said, I can make

an analogy to Davos, what started out as a Swiss mountain for everyone to talk about important things has become a retreat for elites. Has Burning

Man become leisure for elites?

PORTO: Well, I was there last year. From my experience, it was as good a burn as I've never been to. I did not experience personally this elitist

thing. I have heard a lot of talk about it. And there were some complaints from some of my burner friends. There are some complaints.

QUEST: Isn't that inevitable, because there's always going to be those miserable lot that will say, well, it's not like when I first came 40 years

ago.

[16:55:00] PORTO: Exactly. Exactly. There's a lot of that. My first burn was 2002.

QUEST: You're an old fogey. You'll be saying to them -- when I first came they were using porta potties over there.

PORTO: Yes, I think there's a little bit of both. But what is the phenomenon that is taking place, is that there's 70,000 people go to

Burning Man now. Out of those 70,000, half of them are virgin burners. So half of them are just coming there for the first time. And I think all

these newbies is changing the dynamic of Burning Man. And there also are these richer camps that are coming in. But I don't think it's quite a big

a phenomenon as the media is making it, honestly, between you and me.

QUEST: James, with virgin burners and newbies and elites, thank you, sir.

PORTO: Thank you very much.

QUEST: And I'm still not going to Burning Man. I can imagine nothing more -- we'll have a Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment. Jack Ma said on this program, the day after tomorrow will be beautiful, but most people die tomorrow night. A

clear implication we should live for now, live in the day, just for today. But balance that with the fact that we need to make proper provision for

tomorrow. What about pensions, and mortgages, and school fees and health care? When you put it altogether, I know what Ma was saying, but actually

doing it is just about impossible. We all want to enjoy today but make proper preparation for tomorrow. Because after all, who knows what might

happen between now and then. Well, you heard Jack Ma say it on this program. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest

in New York. Whatever you're up to in the hours ahead, I hope it's profitable. And you will join me tomorrow.

END