Business - Issue 6 - Magazine | Monocle

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Strait talk


Dubai, Hong Kong, Singapore… Gwadar? Pakistan is developing a new deep-sea port and trading hub out of a remote fishing village that sits on the Arabian Sea in its wild Balochistan province. The port is close to the Strait of Hormuz, through which 90 per cent of Gulf oil exports pass, a proximity it hopes to exploit by providing oil storage and refining facilities. Gwadar’s construction has been funded by Pakistan’s ally, China, which has provided 450 engineers to work on the scheme.

Green giant


China has been spending tens of billions of yuan on education and labs to become a hi-tech superpower on a par with the US. So far results such as alternative standards for mobile phone networks and Wi-Fi have yet to cause Apple or Microsoft to sit up and take notice. But making better places to live might help the creative process.

The poor quality of life in Chinese cities is a factor that is tipping many of the country’s best and brightest to head west. Monocle thinks China could do better and others appear to agree. In July of this year, the mayor of Shenzhen asked residents to stop buying cars, and Shanghai is trying to go a modest shade of green with the building of Dongtan, an “eco-city” on Chongming Island in the polluted Yangtze.

But some of the best prospects lie in the far southwest corner of the People’s Republic in the province of Yunnan, only a few hours’ flying time from Shanghai, Hong Kong and Bangalore. While the region matches the tech-rich city of Boulder (see Monocle issue 5) and Bolzano for great peaks and fresh air, like Switzerland its dozens of picture-postcard towns are wired for broadband and mobile services yet remain light on cars.

If China’s mayors stopped taking their city-planning cues from Los Angeles, they might start creating cities that people actually want to live in. That in turn could very well lure bright sparks from Europe and the US towards the east to hatch plans for the next technological sensation. That would be a revolution.


Carlo Molteni

President of Molteni & C

Milan, Italy

Which country do you think has the best brand image and why?
I honestly believe that the country with the best brand image in the world is Italy. We’re known all over the world and there is a global demand for our design, our food and our fashion. No one can beat us in these areas. The words “made in Italy” alone mean quality, beauty, uniqueness.

Which country would you like to see get a brand makeover and why?
Well, I could also say Italy. We still have a lot of work to do on its image. We need to wipe out the stereotype of an inefficient, unruly country always on the lookout for barely legal shortcuts. We also need to give more value to our human and national resources.

Kaliningrad takes off


Creaky gangways, car parks full of potholes and not a shuttle bus in sight: Khrabrovo Airport in Russia’s Baltic enclave of Kaliningrad is still as Soviet and shabby as ever. But beyond the 1970s airport buildings there are signs of change. A new terminal has opened thanks to a €44m investment from the federal government in Moscow. Its departures board lists flights to Tyumen, Chelyabinsk and Omsk as well as Barcelona, Gatwick, Amsterdam and Hamburg.

Kaliningrad, about a third of the size of Singapore, is Moscow’s westernmost outpost and is surrounded by Baltic states that now belong to the EU. After years of neglect the area is enjoying an economic boom – industrial production grew by 16 per cent in the first quarter of 2007 thanks to western companies such as Hipp, the German baby food producer, investing there. Now, Moscow wants its outpost to become a modern east-west aviation hub and is pouring money into the airport and KD Avia, the local airline which, with its fleet of Boeing 737-300s, links 12 cities in western Europe via Kaliningrad with 12 destinations in Russia and Kazakhstan. “The project offers brilliant prospects,” says Georgy Boos, governor of Kaliningrad.

Dr Heiko van Schyndel, a Berlin-based Russian aviation consultant, agrees: “Transferring through Kaliningrad is going to be much less hassle for passengers than connecting at one of Moscow’s four airports”. It’s true: switching between terminals at Sheremetyevo, Moscow’s main gateway, is not a pretty process.

Wine futures: up


Until recently, even Brazilians wouldn’t drink Brazilian wine. But a booming artisanal winemaking industry is creating a new demand for local wines.

According to Ed Motta, soul singer and wine columnist for Veja magazine, “Brazilian wine was a joke, it was disgusting. But lately there’s been a revolution with the quality of the wines.” So much so that Pedro Hermeto and his mother Ana Castilho, owners of the popular hillside restaurant Aprazível in Rio’s Santa Teresa district, have now dedicated most of their 10-page wine list to local wines.

About 90 per cent of Brazilian wine comes from the south in Serra Gaúcha. But the big opportunity now is in the northeast Vale do São Francisco. Here, it’s possible to produce a continual (2.5 per year) harvest because of the tropical conditions. José Gualberto Almeida, president of the Vale do São Francisco’s Wine Institute, says, “This is the only place in the world where you can harvest during the whole year. In the past few years foreign conglomerates, such as Portuguese Dão Sul and the Spanish Osborne, have acquired large properties, where they operate in joint ventures with Brazilian companies.”

One acre in the Vale do São Francisco costs €730, whereas an acre in Serra Gaúcha is more than €7,300. Almeida says investors coming to Brazil will find few restrictions, “They have been trying to lower taxes, in order to attract more foreign companies. Long-term loans are also granted to the investors who want to buy a winery in the Vale.”

Brazilian wine exports have tripled since 2003 – €2.3m in 2006 – but they still have a ways to go to catch up to Argentina, where viticulture earned €360m in 2006.

Wine futures: down


Just a few years ago, Moldovan wines accounted for nearly 75 per cent of all wine sold in Russia but last May the Russians claimed that Moldovan wines were contaminated with dangerous chemicals, and stopped sales and imports overnight.

“There may have been some low-quality wines but it was obviously largely a political decision,” says Vlad Spânu, president of the US-based Moldova Foundation. Moldova had been looking for closer EU ties before the ban was imposed. “Russia wants to be in the World Trade Organisation, but it doesn’t play by WTO rules,” says Spânu.

The decision hit Moldova hard – a quarter of its GDP came from alcohol exports, and 80 per cent of these exports went to Russia. Now Russia has agreed to lift the ban but only for a handful of exporters (all under Russian ownership), and at an unspecified date. Meanwhile, Russian supermarkets have filled the empty shelves with South American wines, and budget French and Italian lines – choices the Russian consumer may prefer to Moldovan plonk.

Moldova’s basic, super-sweet wines are unlikely to find many friends in western Europe but one or two of its premium brands have made minor inroads. “It’s getting some good reviews,” says Robert Halstead of Wine Intelligence, a London-based consultancy. “However, it has to be developed in a professional manner, and that requires investment, which Moldova has severely lacked.”

Bargain bazaar

Middle East

Japanese shoppers love a bargain almost as much as they love a luxury label – which explains the astonishing rise in recent years of the ¥100 (€0.62) or “hyakkin” shop – Japan’s 99-cent store. Daiso is the leading so-called One-coin store chain in Japan, with 60 per cent of the €3.1bn market and a network of 2,400 outlets.

Based in Hiroshima and founded by president Hirotake Yano, who has shaped the ¥100 business in Japan, Daiso ships in 125 containers of goods every day and offers 90,000 mostly own-label products – everything from cosmetics to coat-hangers to crockery.

Recently it has found a new geographical niche for its bargain-priced goods: the Middle East. The first Daiso joint-venture store opened in Dubai in 2004; now there are 16 of them across the region in the United Arab Emirates, Kuwait Bahrain, Oman and Qatar with more due to open. Daiso’s five-dirham stores in UAE (which becomes a six-rial store in Qatar) offer an impressive array of 85,000 products with 700 new arrivals every month.

Five things you can buy for five dirhams:

01 Pair of doggy-chews shaped like shoes 02 Trio of Japanese fortune cats 03 Five-plate dish drainer 04 A wrench 05 Origami set for all the family

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