>> welcome to bloomberg businessweek. summer of success, despite the odds. >> the series hijacking of a million-dollar tanker. ahead onf that, bloomberg businessweek. ♪ >> we are here with the editor and chief of bloomberg

businessweek, megan. megan: they make a large variety of down feather clothing. this is the largest manufacturer in china of outdoor apparel. puffy coats. this is a brand that they want to stay global. --y were hitting on a way these codes are very popular. pular.ts are very po that you would forward,ld take it access to cheap manufacturing, they have struggled to capitalize that in globalizing its business. what it epitomizes is the struggle that some a chinese companies have. they have cheaper costs, access to markets in asia and the u.s.

it doesn't have the cachet of some western brands. they can't get over the line of mass-market appeal. oliver: let's talk about another asian company. it is a little further south and east. samsung, a south korean company. thatf the different things should have hindered this company continues to go up over it and it continues to be a good brand and make money. >> the remarkable resilience of samsung. when we look at the trials and tribulations they have gone through, exploding phones to a corruption trial. facingounders are protests in south korea. you have to understand how fundamental that shift is. been centrallways to the south korean economy. it is good for the country.

it is the same way america views walmart and mcdonald's. it maps the trajectory of an economy that has faced unbelievable -- a phone that caught on fire. your own founders seen in handcuffs and shackles and going into a trial every day and still, record profits at samsung. >> we have more on the highs and lows of samsung. we go to south korea for the story. >> samsung is a company that has been around for a long time. set the backdrop for us, brad. brad: some trying times but also some good times. financially, it is doing well. at the same time, it is really inthe love -- enveloped legal drama in its own country

of south korea. a little background on what samsung is. we attribute it to the technology arm and a strength of consumer electronics. samsung group is an informal affiliation of 60 something companies. the founding family -- the lee family, the nominal head of the lee. group is jay y. now he is imprisoned in south korea for alleged corruption. every day, over the course of this summer, he is in the courtroom in seoul, listening to testimony about these allegations. his it reflects is ambivalence or the changing sentiment around these countries in south korea. they were affiliated with the successfulnormous,

economic growth and now they are viewed a little more dimly. samsung is the most visible and largest company in south korea. it is in the middle of that. carol: the success of samsung has been important to south korea. correct? emerged as the largest company in south korea. there is a lot of pride as they should be in the success of this company. electronics,msung it was associated with appliances in our home, low-quality phones in the early 90's and now it is next to apple as the world's largest maker of smartphones. that is the visible part. the invisible part is the fact that it is enormously successful in the semiconductor business. we visited a new semiconductor plant in a city south of seoul.

you cannot imagine the scale with which samsung operates. they have broken ground and gotten to operational in this facility within the span of two years. it takes intel 3-5 years or longer. samsung, the expertise, the militaristic efficiency in terms of deploying the construction and getting the automation and the machinery up and running is unrivaled. they have managed to tie these plans to coincide with upswings in the technology sector. that is one major reason why samsung has been so quietly successful over the last 10 years. how you started off this segment saying some good and bad times. financially, they are firing on all cylinders. you mentioned that the grandson is in jail. talk to us about that, that is a bad time. brad: that is not a good look. what is so interesting is that not only is he on trial, --

look, his father also went through this experience. end upf the leaders and in prison in south korea. there is this conflicted relationship that the government and country has with his large company. the country and even the media are so pro-samsung and are now celebrating the idea of this luminary being grounded. you go to south korea and you see in the newspapers every day, a photo of jay y. lee and being led in handcuffs. they are exalting someone in his position. he is being accused of engineering a merger between two samsung companies to strengthen

his hold on the larger group. jewelularly, this crown -- samsung electronics. there has always been an unspoken agreement between the companies and the government to facilitate their success. suddenly, that contract between the government and the company is under siege. has been several generations that have been running this company. you talk about the lee family, is it time for somebody else to be running samsung? does the culture need to change? brad: it is a good question. if you talk to shareholder activists, a hedge fund in new york that has lied -- lobbied for changes in samsung would say yes. rights -- they want their rise to be reduced

because of the power of the late family. it is not a modern management structure. at the same time, you have to look at the success of the company and investments like young tech -- they are only successful because of this antagonistic management style. they are able to make these long-term capital intensive that's. you look at the japanese semi conductor companies, the hitachis of the world have faded into the dust of history. they were not able to survive like samsung. you have to give the lee family and this founding family and this management structure some credit. samsung's success into a cover story was the job of robert. how samsung was able

to survive all of the things it has been beset with. how did you does go about this? >> it is amazing how much they have been through. it was government corruption, bones exploding, that was hard to portray and literal sense. they were being tortured in all of these various but -- ways. >> samsung is a huge company, it is a family owned company. phoned hone in on the specifically. >> the phone is the most iconic. i think that when people associate problems with samsung, they think of the exploding phones. oliver: it does look like my phone. this is a fun want to put -- a fun one to brainstorm. >> at the studios, the director became excited when it let on fire. -- lit on fire.

you look like you have a time and a day up there. -- date up there. >> we want to the phone to be on. despite all of these things happening, it is functioning. of next, how turkey and germany reached a breaking point in their relationship. >> president trump is accused of reneging on his promise to the ethanol industry. >> this is bloomberg businessweek. ♪

♪ welcome back to bloomberg businessweek. i am carol massar. oliver: i am oliver renick. carol: in the politics section, once friends, now fannie mae's. ienemies.icated -- fr

the company relationship between germany and turkey. the trade between the two is upwards of $36 billion per year. the relationship goes back to the 1960's when a lot of turks moved to germany. now, there have been tensions for about a year and a half. .hey have spilled over >> i had no idea how deep this was. you have lots of german companies operating in turkey. there's a lot of back-and-forth between the two. >> sure, volkswagen, deutsche's, a lot of them had she's presences in both germany and

turkey. at one time, germans made up the biggest taurus block and turkey. the ties are complex, they are really deep. they are very substantial. >> we know they have a great relationship where they have had a great relationship. it has become strained as of late, what happened? week, turkey detained a few human rights workers. one was a german national. angela merkel uncharacteristically denounced this for the last year and a half. she has tried very lightly on turkey's the tension of journalists because of this deal that she brokered or helped to inker in march of last year which turkey agree to accept a lot of refugees coming out of syria. that has caused a lot -- cause her to want to not offend

turkey, she relies on as a partner to keep these refugees out of germany. oliver: donald trump spent a lot of time carrying the favor of the ethanol industry. that has changed since he entered the white house. >> you're looking at the state of noble fuel and alternatives. -- renewable fuel and alternatives. it is a mixed bag right now. the future looks a lot brighter for them 12 years ago when the noble fuel standard was instituted under president george w. bush. under the trump administration, it appears to be a mixed bag. outay -- they are finding how he may administer the program when he proposed value

targets. >> renewable fuel standards put into effect 12 years ago by president george w. bush, what did it require? beit required biofuels to mixed into the u.s. fuel supply. we are talking ethanol, biodiesel, etc. it was a program to reduce the payments on foreign sources of oil and also to address climate and environmental issues. oliver: there are a lot of countries where ethanol is a big export and comes from corn but in the u.s., there are certain areas where a lot of that corn farming gets done and where that ethanol gets made. this gets to the crunch of the .tory. -- crux of the story tells about those people in the u.s.. is extremely., it

concentrated in the u.s.. we are talking about iowa, illinois, indiana, nebraska. iowa, that isn battleground for presidential aspirations. >> up next, what is behind wall street's worsening diversity problem. this is bloomberg businessweek. ♪

♪ welcome back to bloomberg businessweek, i am oliver renick. carol: i am carol massar. you can listen to us on the radio and sirius xm.

oliver: also, in london and in asia on the bloomberg radio plus at. the top buses in wall street have been pledging to bring diversity to the workplace. >> the opposite is happening. max, jordan, tell me in terms of diversity, what is the backdrop? a more looking to have diverse workforce, men, women, minorities, what is going on? >> things are not looking good at some of the biggest banks in the u.s.. of the matter is that i tried to write about this a couple years ago. i may have even talked to you about it. i had this idea that writing a feature story about black diver sity, racial diversity on wall street -- the lack of it. we never found the perfect

story. it is a complicated narrative through one person. we put it on hold for a while. toeditor asked me recently update the numbers that i collected. i was surprised when i took a look at the most recent numbers for all of the banks. the numbers for diversity were not good to begin with, they were bound at some of the biggest banks in the u.s.. >> jp morgan? what are we talking about? stanley,gan, morgan although the biggest banks of america. >> they have come out right publicly and said we want to have a more diverse workfo rce. what happened? >> they all made public pledges. they were touting the idea that they were looking for an

inclusive workforce. thoseta shows that numbers are not always living up to the u.s. workforce aggregate. it is not on par with their industry at times. also, it is lagging the u.s. workforce. >> america, by and large is getting better at these problems. not everybody is. some of the things that jordan i were talking about -- and i were talking about is that media is pretty white. we have a line in the story about the information industry which involves silicon valley, parts of the media, part of hollywood, those numbers are not great. say wasfair to eye-opening for me is that black diversity in corporate america is going up. if you look at most of the country, companies with at least 100 employees, not only is black diversity going up among the

whole u.s. workforce -- that is what we're talking about. lack diversity -- black diversity is going down at some of those banks while it is going up in corporate america. >> what is going on, how do people explain why it is going down? >> we have a line in our story that there is not one explanation. from the bankers that we talked to, they offer multiple reasons why is numbers are not working out in the way we expect them to be rising. some of them stated lack of creativity and bringing in young black hires. some talked about not caring enough, maybe some of the focus goes to gender diversity or another effort to boost minority numbers. not enough effort is being put there. >> to be fair, and have the firms, are any of them doing better than the rest? >> yes, wells fargo stuck out to

us. we look up their executive suite and their total workforce. their numbers for executive were rising like 2%, 4%, 6%. it went up to 12% for the workforce. those numbers really stood out because it was really incremental. the other banks were going up or down. those were some clear percentages. >> staying in the finance section, investors are switching to online advice. >> some providers are paying for junket.junket -- fancy >> tell us what they are. they are continuing to grow? >> they are decades old. back in 2008, it started as the first railroad advisor. out thegorithms to find

users vs tolerance. then you put it in a bucket of investments. >> what an investor is comfortable with? what kind of return they want? then picking the mutual funds and the indexes and allocating across asset classes? much money they make, all of the things you would want to know to figure out how much risk is appropriate for you. >> we are talking about people who want to build out their retirement, these are people -- average people in many senses. casual investors who want a return as well? >> people who can't afford financial advisors. >> is a cheaper way of investing your money. >> much cheaper. >> who has been in charge of this? who distributes those? places thate big

people got to get this -- go to get this. is thathas happened schwab and vanguard -- they manufacture these products. the together an algorithm as a channel to sell it. -- they put together an algorithm as a child to sell it. they are the biggest players in robo or hybrid robo. banks --that the big alls fargo's, they recognize that they had to have a channel. ultimately, all of the money will die out and their kids will get the money. are morethese kids used to direct visual channels. they know they have to create this channel and that is what they are doing. they're making their own robo advisors. >> up next, what is behind

best-performing stock. >> uncovering the truth of a mysterious hijacking of a $100 million oil tanker. ♪

♪a

oliver: welcome back to bloomberg businessweek. next, the showdown of five-star mega hotels and the city of london. >> all of that ahead on bloomberg businessweek. ♪ oliver: we are back with bloomberg businessweek editor-in-chief megan murphy. let's go to the finance section.

what is this hungarian company? it is a big one. megan: it is a big one but it only had little sales in 2016. the stock has rocketed based on the owner's association to oregon. it has been incredible controversial in what he has done. hungary knows that adapted quite quickly after the fall of the berlin wall. along with so many other eastern economies. since he has been in power, he has centralized authority. he has bolstered resiliency. he has attracted controversy for centralizing control. he is suspected of enriching his friends closest to him. one of those people is the owner of this company.

oliver: any credible story in the futurist section, this is the hijacking -- the futures section. you can't not read this story. -- the you didn't, writing is amazing. what is so fascinating about this is that it sheds light on two things. -- getting whole behind the london market, i spent most of my career in london. the lack of transparency in this market, this is a hijacking. there is a hundred million payout from ensuring this ship. also the murky connections to the treacherous high seas. this can be connected to someone making a mark with a fountain -- on a desk in london.

we told the story, we got to the heart of how callous people can be in talking about human lives on this boat and putting that at risk. it is an immense story. >> we talked to matt campbell in london. >> tell us about the supertanker and what happened to it a few years ago. >> it was a large tanker carrying about 140,000 tons of fuel oil. somewhere in the ballpark of $109 upon a fairly routine journey ukraine to china. this was in july of 2011. it manages and pretty in the body trouble of water between yemen and somalia. it was attacked by men carrying assault rifles. ,t was hijacked by these men the crew lost control in the course of this attack, there was

a fire that was never explained. a very severe fire that crippled the ship and caused the crew to abandon it. is one of the world's most dangerous waterways. this attack would fit what most people would think of as piracy. it ended up being evacuated because the crew was let go during the fire. the crew was able to get off and be rescued by the u.s. navy. some very strange things started happening. >> this reminds me of the tom hanks movie captain phillips. it reminds me of that story. >> i was thinking of the same thing. that became so cultural to the point that that movie -- these are dangerous waters. these are places where pirates and captains know what they're getting into. if you could set the scene for us, is this a typical path that this tanker was going on? was this a typical time of day? what was the situation that led to this happening?

>> the tanker had made with a gentleman named mario to bring on board a security team for the transit through the gulf of aden. that is not unusual, some vessels will travel through particularly risky areas. what was more unusual was the manner in which this would occur. attacker made arrangements to pick this team up in aden. they were going to drift overnight and wait for this team to turn up. the biggest thing -- all of anti-piracy- the handbook says that a big ship's

best friend is speed. you can outrun these guys. >> a lot of unusual things connected this accident. what were some of the others? >> the u.s. navy began asking questions about this as you probably know. there is a significant european-u.s. operation to police these waters. they are interested in piracy how it leads to the disruption of a vessel like it did in this case. pirates are generally somalian. these men were reported by the captain of the brilliante virtuoso. they spoke arabic. omalianss spea -- smalley somalian.

the question was about what circumstances would lead a a ship.o burn if you are a pirate, the whole idea is to get on the ship. goal is to hold the crew, the vessel and the cargo for ransom. right from early doors, the people brought into the situation thought that it was a and atypical pirate attack began asking pretty hard questions about it. >> speaking of crimes, in the economic section, help you'll became a $1 billion a year business in mexico. >> we got the investigative story. thisll us about market in mexico. withxico has had a problem this for a long time. it has been an issue that has gone on for three decades. so,he past six years or

what we have seen is that the problem has multiplied. how it works is that fuel thieves or people involved with dig trade essentially up on by the state on company. they tapped them and then they siphon out the fuel. then they sell it. sometimes by the side of the road to truckers and then even within market where cars can actually come through to what is effectively a drive-through being attended by these black marketeers. existed for as very long time but certainly, it is becoming more of an issue in the past six years. it has been a very popular business for people in mexico. oliver: why did the margin make the most sense now? why is the proliferation coming

to a peak where the coverage -- i know you guys said you have the story, why is this coming to a climax? >> one of the issues that is becoming increasingly concerning is that you are seeing organized crime getting involved in fuel theft. witharted off 30 years ago some workers that were doing it on the side and using stolen fuel for their own particular transport businesses. since the practices have grown, basically, thieves have found it very easily to do. it has gotten bigger and bigger. now people are more aware of it so people will go and actively seek out stolen fuel. also, it is important to know that it is cheaper. it is about 20% cheaper than what you would get at a gas

station. cents. -- er: up next, it makes a lot of sense. oliver: this is bloomberg businessweek. ♪

♪ oliver: welcome back to bloomberg businessweek. i am oliver renick. carol: i am carol massar. you can find this on businessweek.com this is the ability to cover sport without covering itself and adds. here is -- itself in ads. >> tells about the athletic. -- tell us about the athletic. >> this is a subsection based -- website for-based

sports. the idea is that we don't need to get everyone, we can get eight to 12,000 people per city. here, as you put it off the top of your story, espn, fox sports, sports illustrated, yahoo! sport, these guys have been cutting back on their sports staff. what has the athletic got that makes them a new entry into this market? >> the big companies have been reshuffling their efforts a little bit. they have all but this talent into the market. basically, the athletic is small and nimble. it has 25 people right now and saw a chance to raise some money, hire what they would see as a lot of new staffers and expand. it has low cost. they get $40 per subscriber or the year. -- for the year.

that gives them a different model as opposed to getting as as possible per video. editor, jeff. >> this is not something i thought we would be discussing on businessweek. sonic booms. the effective speed limit on most overland flights -- it has been about 650 miles per hour. traveling at about 30,000 feet, that is this be limit for most commercial plans. any faster than that and the planes will break the sound barrier, creating a 30 mile wide continuous sonic room. it will shatter any windows below. >> a 30 mile wide sonic boom? >> that's right. >> we have been here before. then they went away.

>> particularly because of this problem. hurdlesve been some they need to cross. carbon emissions, airport engine noise. wind has been the biggest problem by far. just keeping interested parties in the startup and bigger aerospace world from getting too far away from this projects -- these projects. oliver: tell us about where this new technology is coming from that both allow you to not worry about the sonic boom? inthere will be a huge surge long-distance travel specifically and air travel, generally over the next decade. in order to address that, they designed a plane with lockheed martin. thanks to new fluid dynamics and

powerful computers, they can disperse the sonic boom acrostic is logical the plane. the resulting loud hum that you can hear isn't much louder than what you would hear inside a mercedes on the highway. like so many industries have been disrupted whether it is technology and getting health care, the financial community. i'd like not a lot has changed -- i feel like not a lot has changed in the aerospace industry. this could be a lo big change. make avancement could flight from the east to west coast cut in half. reporterasa told our that it would have the time spent going from new york to l.a. cut in half. >> i feel like new york to new york or london to london, i feel like this would be used much

more widely. >> dissipating the sonic boom is the key to that. the reason that concorde can fly between jfk and europe is you can't open it up to sonic boom of the speed over u.s. soil. >> up next, one of the only places on earth where you can interactively -- interact with elephant in the wild. >> this is bloomberg businessweek. ♪

♪ -- er: >> welcome back to bloomberg businessweek, i am carol massar. >> i am oliver renick. you can catch us on these stations.

>> also, in london and asia on the bloomberg radio plus one at. >pp. >>. , i feel like the idea of a french vacation keeps popping up. they take a month off. >> they do, and they enjoy. i talked to a woman who runs a bmd. -- bnb. she says that it is like a right as if it were handed down from revolution of something 89, we take our vacation, though he gets in the way. maybe i am willing to vacation to stay on top of the good chain. >some of the people that i talkd

to a knowledge that america has a pretty high standard of living. the question is what you are willing to sacrifice -- are you willing to sacrifice anything? americans were fairly long hours. germans were far fewer hours per year than americans do. have an enviable lifestyle. not only is the gdp per capita quite strong but they go home, pet the dog, go for a jog, tune up their porsche in the driveway. >> it is interesting that you bring this up. with has been this debate our own u.s. congress about -- they get this nice august recess. maybe they should be working longer to get things done?

>> the funny thing is that the recess, the formal idea of an august recess goes back only to about 1971. the early years of congress, they would finish their work at home. in the 1960's, he became a year-round job. they were sweating through washington and august, that is not a pleasant place to be. nerves were raised, frazzled. they said this is crazy, we should take a break, regather ourselves, rejuvenate, talk to some constituents and put this in. from the very beginning of august and labor day, they are off. you always get some puritans say that we have the people's work to do. oliver: speaking of vacation, a trip to a five-star resort in northern thailand.

>> and this is a must visit for elephant lovers. >> a lot has been in the news being nothant tourism a good thing to do. when you can spend your money on these places where you can ride elephants, a lot of times element are not treated well in these resorts. is,sia, where this resort elephants heldof in captivity, they are becoming street performers. that, ite does not do is created with that in mind. mistreateduge for elephant. the elephant are rehabilitated and you can interact with them in a way that is not cruel. >> have breakfast and a nelson comes up to? elephant comes up

to you? >> and eats with you. go, it waswanted to a bucket list thing. people want to be near these humongous animals. they are so intelligent. it is really an amazing place to go if you can, it is in thailand. i love the phrase that was in her story, responsible wildlife tourism. >> that is a big trend in travel , in general. a lot of safari resort are on the forefront of animal conservation. this is one that is in southeast asia. that is what they are trying to do. they want to create spaces for these animals that are safe and protected. you can go and it is funded by the people who go.

that is how they make their money and create these refuges. chris -- editor give us aitor, chris tour of this hotel in a city of london. where all the banks are, only finance headmans, it is becoming a little bit cooler. they wanted to capitalize on this and say that you want to stay here. >> this seemed like a discussion between the greater london area and this other part. >> this is where a lot of banks were. it is the oldest part of the city. >> let's talk about two new crown jewels in terms of hotels in london. 154 season -- one is the four seasons. >> it is very chic and posh.

it has a private club aspect. there are people live in the city that can go there and hang out. it is trying to make it not to the way contemporary business travelers want to use the hotel. it has that cool, lounge aspect to it. untilota stays open 9:00 p.m. >> does it feel like you are in london? what is the decor? products, it is fancy, it feels posh. >> talk to us about the ned. ,> this is an entire city block it is a huge thing, over 240 rooms. it was founded by one of the founders of the soho house. trendy hotel.y

>> bloomberg businessweek is available on newsstands now. oliver: great issue, a lot of stories. what is your favorite? >> i liked the one about the responsible wildlife tourism. they are rescuing elephants from bad situations. oliver: that is so cool. >> it looks gorgeous, the pictures are amazing. they are doing things in the right way. in an idea,nvesting this is a story you will want to read. it is worth reading. >> i liked the story about the samsung cover story. i think my number one goes to the $100 million tanker. it was an incredible hijacking. lives are at stake. >> more bloomberg

television starts right now. ♪

♪ >> coming up on "bloomberg best," the stories that shaped the week and business around the world. the federal reserve holds the line. the central bank sees balance sheet normalization starting relatively soon. we hear what that will mean for markets going forward. >> that means to me is slightly higher 10 year rates, perhaps 2.5% over the balance of the year, but not much. david: an earning bonanza. the busiest week of the season, we hear from tech giants alphabet, samsung, amazon, and facebook. >> we had a really strong second-quarter and it was based on increased engagement and increased ability to work with marketers. david: deutsche bank earnings disappoint, revenue falls the most in three years.