Tag: Approved
Contrition wins the day for Uber in a big market
SECOND chances exist, after all. Last September Uber was sideswiped when Transport for London (TfL), the city’s transport regulator, revoked the ride-hailing giant’s licence to operate in the capital, citing concerns related to public safety and reporting of drivers’ criminal offences. The decision appeared to dent the prospects of the firm, which counts London as its largest European market and one of the most lucrative of its 600 cities. Uber continued to operate in London while appealing the decision, but a lot still hung in the balance.
Welcome news came on June 26th when a judge in London awarded the firm a licence for 15 months. In court Uber had taken a contrite and muted stance, promising to do more to provide support for riders and drivers, including launching a telephone hotline for passengers. The chief magistrate for the case, Emma Arbuthnot, decided that Uber had not acted in a sufficiently “fit and proper” manner previously, but that its new approach and leadership…Continue reading
The Trump administration plans to crack down on Chinese investment
PRESIDENT Donald Trump’s view of investment depends on who is doing it. On June 22nd he railed against Europeans exporting cars to America, demanding that they “build them here!” On June 26th he tweeted that all Harley-Davidson motorcycles should be made in America (see article). But when it comes to Chinese investors buying American technology, Mr Trump would prefer a frostier approach.
Investors have feared a clampdown since March, when the administration concluded that China’s unfair actions against American companies merited retaliatory restrictions on Chinese investments in “industries or technologies deemed important to the United States”. Mr Trump directed Steven Mnuchin, the treasury secretary, to come up with options. On June 24th it appeared policy might tighten dramatically, with reports of plans to limit investment in America in the…Continue reading
European state rail firms face scrappy new competitors
THE opening of Britain’s Liverpool and Manchester Railway in 1830 marked several firsts in rail history. It was the world’s first inter-city line. It was the scene of the first widely reported passenger fatality. And it was also the first where all trains were hauled by the track owners. Previous lines had seen competition between operators, leading to the drivers of horse-drawn passengers trains and steam-pulled coal trucks having fisticuffs on the tracks. Two centuries later, the question of whether train and tracks should be operated by the same firm still simmers across Europe.
That is because new EU rules, enticingly called the “fourth railway package”, will force all state rail firms to open their tracks to rivals from next year. It means a “tectonic shift” for the industry, argues Leos Novotny of LEO Express, a rail startup based in Prague. And it comes at a time when commuters are particularly grumpy about trains. In France three months of labour strikes at SNCF, the state rail…Continue reading
The rich world needs higher real wage growth
CENTRAL bankers and economists have spilled much ink in recent years on the question of why wages have not grown more. The average unemployment rate in advanced economies is 5.3%, lower than before the financial crisis. Yet even in America, the hottest rich-world economy, pay is growing by less than 3% annually. This month the European Central Bank devoted much of its annual shindig in Sintra, Portugal to discussing the wage puzzle.
Recent data show, however, that the problem rich countries face is not that nominal wage growth has failed to respond to economic conditions. It is that inflation is eating up pay increases and that real—that is, inflation-adjusted—wages are therefore stagnant. Real wages in America and the euro zone, for example, are growing more slowly even as the world economy, and headline pay, have both picked up (see chart).
VW opens Rwanda’s first car-assembly plant
HOW to sell cars when most people can’t afford to buy one? That is the conundrum for Volkswagen in Rwanda, where it is opening the country’s first car-assembly plant. A new Polo costs 33 times the average Rwandan income. Most cars on the road are second-hand imports. Rwanda absorbs perhaps 3,000 new cars a year, says Thomas Schäfer, VW’s chief in Africa. Past projects by carmakers in Africa, he admits, have ended in “monumental failure”.
Yet there was a hopeful mood when VW launched its operations in Kigali, the Rwandan capital, on June 27th. The moment opens ”a new chapter in Rwanda’s journey,” said Paul Kagame, the president, after taking a demonstration model for a spin. In truth, little of the manufacturing will happen locally, at least to begin with. VW will build its vehicles elsewhere, partly dismantle them, then put them back together in Rwanda.
The real novelty is how the cars will be used. VW is linking production to a ride-hailing and car-sharing service,…Continue reading
Harley-Davidson shifts some production out of America
AMERICAN companies “will react and they will put pressure on the American administration to say, ‘Hey, hold on a minute. This is not good for the American economy.’” So said Cecilia Malmström, the European Union’s trade commissioner, on news that Harley-Davidson plans to move some production out of America to avoid tariffs imposed by the EU on motorcycles imported from America. Those tariffs had themselves been introduced in retaliation for American duties on steel and aluminium imports.
President Donald Trump showed no signs of absorbing this salutary lesson. In one of many splenetic tweets about Harley, he said: “If they move, watch, it will be the beginning of the end.” Other American firms are no doubt watching. Will any follow?
Harley is unusually vulnerable to Mr Trump’s escalating trade war. Not only have its inputs, namely metals, risen in price, but it makes a fair chunk of its sales, 16%, in Europe. It puts the cost of…Continue reading
Carrot, a Silicon Valley startup, takes a novel approach to funding IVF
IN 2016, 71,000 babies were born in America after in vitro fertilisation (IVF), triple the number two decades earlier and 1.8% of all births. The share of births that are by IVF varies around the world, rising as high as 4% in Denmark, Israel and Spain. One consistent trend, however, is growth. Fertility technology is steadily improving and women are choosing to delay child-bearing, meaning more couples need medical help to conceive.
For many would-be parents the main impediment to conception is now not science but finance. Data for 2017 gathered by ICMART, an international non-profit organisation, show vast variation in prices. A single IVF attempt costs around $3,000 in Japan, $4,000 in Cameroon and up to $10,000 in Europe. In America it costs more. The countries with the highest IVF birth rates are those where taxpayers pay for treatment. (There are a few exceptions, such as Croatia, where medical tourism pushes the IVF birth rate…Continue reading
User-rating systems are cut-rate substitutes for a skilful boss
IT OFTEN arrives as you stroll from the kerb to your front door. An e-mail with a question: how many stars do you want to give your Uber driver? Rating systems like the ride-hailing firm’s are essential infrastructure in the world of digital commerce. Just about anything you might seek to buy online comes with a crowdsourced rating, from a subscription to this newspaper to a broken iPhone on eBay to, increasingly, people providing services. But people are not objects. As ratings are applied to workers it is worth considering the consequences—for rater and rated.
User-rating systems were developed in the 1990s. The web held promise as a grand bazaar, where anyone could buy from or sell to anyone else. But e-commerce platforms had to create trust. Buyers and sellers needed to believe that payment would be forthcoming, and that the product would be as described. E-tailers like Amazon and eBay adopted reputation systems, in which sellers and buyers gave feedback about transactions. Reputation scores…Continue reading
John Flannery gets down to business restructuring General Electric
THIS should have been one of the darkest weeks in the history of General Electric (GE). The firm founded by Thomas Edison has been a member of the Dow Jones Industrial Average, a stockmarket index comprised of leading American companies, for over a century. Alas, mismanagement and a failure to move with the times have turned the erstwhile icon of innovation into a disorganised, debt-laden mess. GE’s shares have plunged to below a quarter of their peak value in 2000. On June 26th GE was ejected from the Dow index and replaced by Walgreens Boots Alliance, a big health-care firm.
Yet on that same day a ray of sunshine also fell on GE. John Flannery, an insider known for his number-crunching skills who took over as the troubled firm’s boss last August, announced details of a much-awaited restructuring plan. Over the next couple of years GE will spin off its healthcare division and unwind its newish stake in Baker Hughes, a petroleum-services firm. He had previously confirmed the sale of…Continue reading
Abraaj, a private-equity firm, files for provisional liquidation
UNTIL recently the Abraaj Group, a private-equity firm based in Dubai, was riding high. It was one of just a few such firms focused on emerging markets, and a darling of “impact investors”, who seek social or environmental returns, not just financial ones. Assets under management of $13.6bn made it the largest private-equity firm in the Middle East, and the 42nd-largest globally in 2017. Its Pakistani founder and boss, Arif Naqvi, a regular at Davos and a patron of the arts, had won awards for philanthropy. It is all the more surprising, then, that basic corporate-governance missteps led his firm to file for provisional liquidation on June 14th.
The problems began in late 2017 when four investors in its $1bn health-care fund, including the Bill & Melinda Gates Foundation and the private-sector arm of the World Bank, grew worried. Nearly $280m of $545m they had been asked for was not promptly spent on acquisitions, as is standard in the industry. Abraaj blamed delays in the…Continue reading