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Good morning. Welcome to the

program. I'm Whitney Fitzsimmons. In 'Business

Today' - taking flight. China

Easton prepares for a reaction

to its merger with another

airline. And nurturing

environment. One company

putting its faith in younger

workers. Those stories shortly.

But first, a quick look at the

markets. Taking a look around

the region, where most indices

closed in the red.

I'm joined now by Juliet

Saly from CommSec. Wall Street

slipped last week. What can we

expect this week? This week

it's all about the kick-off of

the second quarter reporting season. Some really big names

coming out this week. Investors

want something very good to get

them excited. We have Goldman

Sachs kicking it off for the

banks tomorrow. JP Morgan Chase

on Thursday. The Bank of

America and Citigroup both

coming out with company --

numbers on Friday. Investors

want to see signs of

stabilisation. One positive

sign is that banks are starting

to lend to each other now.

Interbank lending rates are now

at a record low. Europe also

had a lacklustre week in

trade? European shares fell

further on Friday. The FT yurp

euro first index down by 1.1%.

It was down 3.3% over the week.

But the positive side is it's

still up 26% from lows reached

in March. How will regional

looking very exciting for markets trade today? It's not

regional markets today. We've

already seen New Zealand's

share market open. It's very

flat in very thin trading

volumes. The Australian share

market expected to be flat

today as well. The SPY futures

only pointing to a gain of 3

points there with lower commodity prices expected to

weigh on our market. Japan's

Nikkei looking like a fall of

about 120 points on

open. Commodities, what will we

see from oil and gold? We might

see a pick-up in the oil price.

It's fallen below US $60 barrel

over the weekend but the

International Energy Agency has

tiped that oil demand should

increase by 2% by 2010.

Hopefully a pick-up in the oil

price in the longer term N

terms of gold we might see some

safe haven buying. Before we go, what economic data should

we see this week? This week it's all about China. On

Thursday, Chinese GDP figures

are released. Production,

retail sales and inflation all

coming out on Friday. We're

tipping that China's question

is continuing to recover,

expecting GDP to lift from 6.1

to 7.3%. In the US, we have

retail sales data released

along with housing starts. Both

of those expected to be quite

positive as well. Here in

Australia we're looking for

lending finance data due out

today and import and export

data due out later in the week. Thanks for the

update. Thanks.

Now let's look at what's

happening with curb sees and

commodities. --

currencies and commodities.

China Eastern airlines

will take over ShanghaiP

airlines in a $1.3 billion

deal. The carrier will exchange

new Shanghai listed shares for each share of a smaller

airline. The 17% prepare yun on

the two closesing prices early

last month. Both carriers of on

a trading halt ahead of an

announcement. The purchase will

boost China Eastern's share to

more than 50% and give it a

fleet larger than Air China.

China Eastern's chairman has

promised there will be no job

cuts after the takeover.

General Motors may have emerged

from bankruptcy, but it could

be at least two years before

the company is able to make a

profit. Its biggest challenge

is convincing consumers it

understands what type of cars

they're looking for. GM

executives showing off the

shiny models they're banking on

insisted the new company will

hilt the road running. The

bottom line is business as

we've seen it and as we've had

it up to today, business as

usual is over in General

Motors. A much smaller GM

emerged from bankruptcy with

blinding speed. Steamrolling

over objections from accident

victims disgruntled dealers and

others who stood to lose. Both

GM and the US Government wanted

this to move quickly. Both of

them put a lot of pressure on

so that it did. The government

now majority owner gets a new

GM. Stripped of costly old

obligations. Instead of eight

core brands, four. Chevrolet,

Cadillac, Buick and GMC. To be

built in fewer factories by a

smaller work force. Sold in far

fewer dealerships. Its balance

sheet, cleared of crushing

debt, including billions owed

for retiree health care. What

is going to be so dramatically

different about the new GM

culture? A lot leaner, simpler,

we made a number of important

changes in that regard in order

to be faster. For the first

time GM's hourly labour costs

will roughly match those of

foreign competitors. The UAW

isn't the only one that's had

to sacrifice. All the

stakeholders have given up

something. At this dealership

near Chicago enthusiasm over a

new model and a new

beginning. I could sell this

thing right away! There are no

third chances. It's making sure

we take every maximum advantage

ofs situation. US Treasury

Secretary Timothy Geithner has

shrugged off recent criticism

over the greenback's reserve

currency status. France has

have been critical of the joined China and Russia, which

dollar's dominance. French

President sunshine Sarkozy has

given his support for what he

calls a multicurrency world. Mr

Sarkozy is the first European

leader to join China and

Russia, who have called for a

new international reserve

currency similar to the special

drawing rights and artificial

currency used by the

International Monetary Fund. At

last week's G 8 summit, senior

Chinese officials repeated

calls that the international

community should promote an

international monetary system

which is more diverse and

reasonable. There's concern

that detention of a Rio Tinto

executive by Chinese

authorities may affect other

companies' decisions to send

staff to China. Stern Hu, who

has been held for a week in

Shanghai accused of stealing

state secrets and undermining

China's economic security.

Australian consular officials

visited him on Friday and say

he raise nod health or welfare

issues. Business leaders are

watching the diplomatic

situation closely. They need to

be extra cautious at this particular time. And I think

China also needs to be aware

that this hardly helps

commercial linkages between the

two countries. China is one of

the Australia's biggest trading partners and business believes

the issue has to be dealt with

in a sensitive way to preserve Sino Australia relations.

There is a lot of focus on

entering the growing business

markets in mainland China. Hong

Kong is a market that shouldn't

be overlooked. Recently,

there's been a number of Chinese enterprises setting up

in order to internationalise

operations. So as a result of

all this activity, Hong Kong

represents an important market

in its own right, and as a

stepping stone to China. To

look at why Hong Kong is very

different place to do business

than China I'm joined by Phil

Ingram, Hong Kong Austrade

commissioner. Good morning,

welcome to the program. Good

morning. How has thes is --

the business sector been faring

in Hong Kong at the

moment? Obviously like the rest

of the world, the financial

services industries have been

hit. But overall, Hong Kong a

is very resilient place and

they had the financial crisis

in '97. They got through SARS. They've transformed their

economy from manufacturing to

one that's based around

services so they're actually

doing quite well. Even the

level of unemployment hasn't

gone up as much as they

expected. It's about the same

as Australia's at the moment.

So they're weathering the storm

fairly well. Where are we

seeing the investment coming

from then? Is it mostly from

China? It is. China now is the

fourth largest foreign direct

investor in Hong Kong, and a

lot of the Chinese companies

are use ing as the base to

internationalise their

businesses. So they're

recruiting local Hong Kong

people who obviously speak good

English, and have dealt with

and do business with the west,

and it's a way for them to

accumulate knowledge and learn

about how to do business in the

west in an environment which is

still part of China. It's

interesting. I was recently in

Hong Kong. There was a lot of

debate about its position now

and going into the future, and

in the past Hong Kong has been

a gateway for China to do

business, but it's reversing now? Quite fascinating to see

that. The Chinese Government is

encouraging the Chinese

business sector, whether it be

the state-owned enterprises or

the private sector, to set up.

So last year, we saw a couple

of the largest Chinese

state-owned enterprises list on

the Hong Kong Stock Exchange,

like the China railway construction company, as well

as a number of large private

companies such as Ali Baba.

They're doing that because they

do see it as a way for China to

understand international

markets an then move from there

into world markets. And Ali

Baba is a good case in point.

They have also established an

office in Australia. They're China's largest on-line

business to business. Looking

at the impact of the global

financial crisis has it

provided more of an opportunity for Chinese companies to snap

up cheaper assets in Hong

Kong? We haven't seen too much

of that. As I said they're

continuing the process of

moving into Hong Kong and setting up their businesses

there. And this year, there's

been over 25 IPOs in Hong Kong

of Chinese companies , mainly

private sector companies, and

mainly small and medium sized

enterprises, and most of those

companies are not actually

buying assets in Hong Kong.

They'll using it to establish

operations from which they'll

look at buying assets

offshore. Let's look at another

issue, this debate that's been

growing and that's the reserve

currency debate. Chinese

officials have been quietly and

not so quietly pushing the yuan

forward. What does it say about

China's clout that the

companies in Hong Kong, Macau

and South East Asia can now do

business in yuah? Well, it says

a lot as you say towards -

about China's move towards

making the yuan an

international currency. It's

the Chinese think long term.

But for the moment the Hong

Kong dollar is tied to the US

dollar, and when the Hong Kong

government is asked, is that

going do change, they always

reply, not any time soon. So

although the

although the long-term future

is for the yuan to take over,

it's going to be a gradual

step. Earlier this year the

government allowed for some

transactions to take place, mainly Hong Kong businesses

that have factories in the

Pearl River delta are now able

to use yuan as a convertible currency. It is interesting,

because as you mentioned the

Hong Kong dollar is peged to

the US greenback, so if that

changes, what sort of impact

would that have on Hong Kong's

position as a financial hub,

because it is attractive to

foreign investors because of

that greenback pegging. That's

true. But as I say, I think we

can assume that the Chinese

Government will do it

gradually, just as they've

gradually unpegged their own

currency from the US dollar, I

think you will see the same

thing happening. They're not

going to rush into it. One

thing that's really interesting

about Hong Kong is that it has

in fact thrived since its

become part of China, and the

China government has done

everything it can to help Hong

Kong to continue to be a major

international business centre.

You won't see anything that

will detract from that. Do you think that the legacy of

British colonialism has been a benefit for Hong Kong in terms

of being a financial and

business centre? Oh

undoubtedly. What's interesting

about Hong Kong it it's good

all the advantages of a western

business environment such as

Australia. You have the rule of

law, you have clear,

transparent regulatory system,

Hong Kong's a very open

economy, very little

restrictions on trade or moving

of capital. So it's got all

those benefits but it is now a

Chinese city. It's been a

Chinese city for 12 years and

the Chinese are heavily engaged

in doing business in the city.

Therefore, we are finding that

you've got the benefits of

being able to operate as if you

were in a western democracy,

but at the same time being able

to take advantage of that huge

and very quickly growing market

of mainland China. So I don't

see it as - I see it as a

positive thing that they have

allowed the British systems to

be maintain ed yet they've

become more integrated with

mainland Chinese economy.

Unfortunately, we've run out of

time. But thank you. Oh thank


The dairy industry in

Australia's southernmost State

Tasmania is facing a crisis.

Producers have announced

dramatic cuts in the price they

pay for milk. Now there are predictions 1 in 20 dairy

farmers will be forced off the

land while nearly half of those

left will need to look at new

ways of running their business.

Over a year ago, Tasmanian

dairy farmers were enjoying

record high prices for milk.

But now the State's largest

milk buyer Fonterra is offering

40% less. It's going to be a

very hard year to make ends

meet. Brett and his wife moved here from New South Wales last

year, bringing their cows with

them they borrowed more than $3

million just as milk prices

were peaking at 50 Cents a

litre. Since then, prices have

halved, and they're now looking

for other ways to pay the

bills. We're going to try to

grow some poppies. The returns

per hectare will be much

greater than we could out of

just the cows. Survival

strategies were the main

talking point at a dairy

industry conference in Burnie.

One expert believes as many as

5% of farms will be forced to

sell up. There will be a proportion of the industry that

will go to the wall. There will

be another proportion of the

industry that will have to take

very significant steps . But

the pain's not limited to dairy

farmers. Dairy farms typically

probably spend 80 to 90% of

what they turn over, so there's

going to be massive flow yon

effects from in as well. Few are prepared to predict when

things will improve? We'd

certainly hope to see some

changes in price direction by

the end of the year but we

don't hold a strong hope there

will be a dramatic turnaround.

Others are hoping for praying

for good spring rains. India's

exporters are feeling the

impact of falling global demand

with some struggling to stay

afloat. Exports are one of the

main drivers of the economy

making up around 15% of its

GDP. Many are calling on the

government to provide a

desperately needed lifeline.

Naked T-shirts, pyjamas -

making T-shirts pyjamas and

other goods for buy years

overseas. This factory has been around for 30 years and

business has generally been

good. Last fiscal year it it

had two record years but and

then everything went on a

downward spiral. This company

exports materials to the

west. In January the owner

was forced to do something he

had never done before. Lay off

workers. He has recently

managed to rehire some of them

thanks to a slight uptick in business. It was such a sense

time, says this man,

remembering the days he was out

of work. I had no money to send

back to my family in the

village. The workers here are

used to producing around 6,000

units per day. These days, they

produce just about 2,500 to

3,000 pieces. There simply

aren't enough orders. Hit by

recession, buyers in the US and

Europe are losing their

appetite for gems, clothes

handy crafts and other products

from India. Indian exports fell

29% in May, leaving people like

this man struggling to keep

their businesses going and

labourers like this man

jobless. He used to work in a

scaffolding unit. "I've been

out of a job for months.

Because there nor orders from

abroad. I do odd jobs here and

there I have to look after my

family of six on $3 a day."

Exporters say they desperately

need a lifeline. The government

made some tax concessions for

them in this year's budget.

Exporters hope that will help

them recover by the end of the

year. Back at the factory, this

worker cranks out as many items

as he can each day. He isn't

taking any chances. He knows he

could be unemployed again.

Australia the downturn

forces businesss to cut back on

expenses, many apprentices are

finding themselves on the scrap

heap. So much so that training

companies are concerned there

will be a lot of generation of

young workers. But one

Australian landscaping company has the firm belief that you reap what you sow.

Charlie Evans took up

landscaping in the early 1990s

after a career as a chef. He

employs seven staff, including

three apprentices, and each

year spends about $5,000 per worker on additional

training. I can see rewards

from the training because I

travel and for me to be able to

come back and see that my staff

are producing an outcome which

is exactly the same result that

I used to produce myself, I

know that our training is

working. While training is

rooted in Urban the Eco's core values the global financial

crisis has led to many

businesses abandoning their

apprentices. 250,000 people

aged between 15 and 24 are out

of work. We employ our

apprentices through a company

called WPC. They're a registered training

organisation. If times are difficult we can simply hand

the apprentices back. I came

into the beginning of this year

very, very concerned about it

and was certainly starting to

think how lucky I was to be

with a company like WPC and be

in a position to hand people

back but it hasn't really

eventuated yet. The only way to

get good at this is to do it

over and over again. You put a

lot of effort into apprentices.

It takes at least a year or two

before you get any sort of

reward from them other than

pure labouring, but once they've learnt the craft, you

can rely on them to produce the

sort of outcome that you

want. In terms of effects from

the global financial crisis,

I'm expecting to see them any

minute but they haven't

actually eventuated through us.

I'm certainly seeing the corporate side of things close

up a little bit. People I think

when times get difficult are

quite comfortable spending

money at home on their main

investment. For them garden ing

and landscape something a

pastime. People don't struggle

too much with parting with

small amounts of money to do

lifestyle improvements at home.

We do very natural liveable

family-friendly spaces. We try

to use plantation-grown

timbers. We avoid mirbu for

example because it comes out of the rainforest in Indonesia.

We're careful about the stones

and pebbles we use, because

obviously they're quarried. So

balance right and make it's very hard to get the

As well as cultivating a decisions on your materials.

training culture within his own

company, Charlie Evans is

hoping to plant a seed in the

minds of the next generation of

landscape designers. I decided

a few years ago it wws a few years ago it was

important to get involved with a few years ago it was

training specifically because I want ed to create another branch to my business.

As far as the future for us,

it's looking pretty rosy. I

mean, I'm planning to grow the

training part of our business.

I'm keen to be doing more

teaching, more training, so

that I've got a life beyond the physical landscaping.

It's clean, green and for

many it's best way to travel.

Pedal power is becoming

increasingly popular. Last year

in Australia, there were more

bikes sold than new cars. Now,

business is getting on the and

wagon, reaping the rewards of

the healthier work force. --

bandwagon. The Tasmanian

premier loves to ride. So much

so that he has had a bike rack

fitted to his government

vehicle. And his advisers know

if they want more time in his

busy schedule they better be

willing to saddle up. All

around Tasmania, people are

working out that their premier

is a mad keen cyclist F getting

out on my bike and endeavouring

to remain fit through this job

is a symbol for other

Tasmanians to do the same, that

can only be a good

thing. Keeping fit on the job

is especially hard for shift

workers like Vicky Kent. The

Perth train driver has signed

up for a program giving

transport workers the chance to

score a free bike if they ride

to work regularly. You're awake

by the time you get to work instead of having to drive to

work and have a cup of coffee

awake because you have done to wake up, you're kind of

some exercise. So far, 150 train drivers have been through

the program, riding 60

kilometres a week for six months. Typically people have

lost weight, felt much better

and also much better for their

family at home, their family

lives have improved as well.

Are not ABC's Sydney weatherman

Graham Creed, cycle something a

way of life and the daily

commute gets him in the right

frame of mind for work. It's

great. The days I don't to it,

I feel like part of the day is

missing. For every cyclist

that's out there, it's

subsidising the health system

by 1,000 euros. I would be

guessing in Australia, we'd be something similar. With the

right support, including

lockers and showers, pedal

power is proving to be an

understated ally in boosting

workplace well-being. Now a

look at what's making headlines

around the region. The standard

heeds with the expectation that

Hong Kong's mortgage battle

will heat up in the second half as interest grows in a string

of new residential projects.

The 'Financial Times' looks at

how Japan's Liberal Democratic

Party is struggling for power

after suffering a defeat in

elections yesterday. The 'Wall Street Journal' reports

Australia has warned the Rio

Tinto spy case could have

chilling effects on Sino

Australia business relations.

That's all for this edition of

'Business Today'. If you want

to look back over any of our

interviews, please visit our

web site. We look forward to

your feedback. I'm Whitney

Fitzsimmons. Thanks for joining me. Enjoy your day.