tv World Business Today CNN June 29, 2011 1:00am-2:00am PDT
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>> do you? >> yeah. i mean, it was just such an innocent introduction and to have people just kind of -- that must really be horrible. >> i don't think he's moaning. trust me. hare linked to charlize theron. it's not the worst worst day of your life. i'm zain verjee at cnn in london. the main story this hour. terrified hotel guests jumped from windows. one even wrote his will. the luxury continue anyone tall hotel is still smoking after a taliban terrorist attack overnight. one man who hid in his room said the assault lasted for hours. a reporter is there with the
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latest. >> reporter: this morning as the sun rose over kabul, the building still smoking, we understand a fire was ignited when the building was attacked. the police very cautiously still searching through the building looking for more victims and indeed survivors but also very wary in the chaos, there may still be taliban insurgents hiding in the buildinging. in the previous attack in 2008 the attackers described themselves as policemen and when the police eventually made it into the building, it was only by chance that they spotted one of the attackers in his uniform as he tried to flee. there's no suggestion that last night's attack that the insurgents used police disguises. eyewitnesss said they saw these men laden with explosives. one said an attacker was carrying at least ten rocket
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grenades attached to his belt. we understand they were wearing afghan robes. >> i'm zain verjee at cnn in london. "world business today" starts now. good morning from cnn london and welcome to "world business today." i'm nina dos santos and these are the top stories. whatever the outcome it's baptism by fire for the new imf chief, christine lagarde. what sony knew and when about the massive attack. first, though, there's one vote. if greek politicians bound to public pressure and dismiss a
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new wave of austerity measures, well, the domino effects could be sudden and so sizeable. and weighing in to the new maelstrom is the new imf, christine lagarde. investors themselves seem pretty optimistic themselves. the markets also rallying in the hope that they'll be thwarted. for the second day all of the european markets got off to quite a buoyant start. the ftse 100 up, shy by 1%. some other the others, the dax, the contact 40, pushing over 1%. oochz. hong kong and shanghai did lose mow mmentum later on. utilities also boosted by hopes that tepco's rivals might
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not have to share in its compensation payout to qes by the fudge s the fukushima daiichi disaster. in the meantime in the u.s., a rally on tuesday took place with a triple-digit gain for the dou dow jones industrial average. the nasdaq ended the day up by 1.5%. both of those indices havery risen about 1.2% at the close. and taking a look at how u.s. futures are fairing right now to give us an indication of how the markets could start on the other side of it, we're currently seeing a little bit of a higher open, but as you can see, pretty modest gain, some of those markets perhaps likely to
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teeter back flat. but, of course, all of the investors' attention is firmly focused on greece. now, she's broken new ground, but christine lagarde has not broke through another aspect. she's the 11th european to take on the foundation and her selection comes at a time when europe is in the spotlight for all the wrong reasons. there's a tough challenge facing madame lagarde. we're going to talk about the developments overnight. good to see you. christine lagarde taking the helm at a pivotal time. knowing her character, what do you think she's going to do first to resolve the situation? >> reporter: well, definitely we hear what we hear. she will definitely follow
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dominic strauss-kahn's economy line. strauss can really started tackling the greece problem. at the same time i're sure christine lagarde is going to be very tough with the greek, asking them to respect what they've been asked to do and definitely would be the very first challenge to face. at the same time she's aware of the fact that she has to bring europe in a new economy governance because as you said europe right now is under the spotlight. we have a lot of crisis in greece, you know, but everybody things about ivan, portugal, spain. so we are in a very bad economic state, global europe. she will have to focus on all of that. but i think she's a woman who knows how to deal with these kind of problems. >> she's also a woman who knows how to talk in senses. would you say, christian, that that's one of the most important things because that's what's
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really thwarted these kind of negotiations surrounding greece for a year now. >> reporter: yes, but, you know, grease is a world prochblt recently i attended a debate about that. the thing is there's a split inside europe u the northern countries, the germans in particular and other northern european country being fed up with helping the south. so probably christine lagarde will have to fight and try to prevent europe from having a real split between the north and the south definitely because we know about the situation in fort gull, spain. i should say even italy. i don't talk about france yet. we never know. the situation is very critical. as you said, she comes at a very powerful, critical moment, and there are a lot of expectations that she has to weigh, all of these challenges to be faced.
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no doubt i think after strauss can, she is the woman of the situation. this is the feeling here that public opinion and politicians ha have. >> briefly, christian, this question is probably premature. knowing christine lagarde as you do over there in france what are her reasons for wanting the job so much? do you nink five years' time we could see her running for president in france? >> reporter: no. no. i don't think she wants to become president of france. i think she really wants to serve the imf, and definitely she wants to work for the balance of time on the crisis. i don't think she has at all any presidential or political things. no, no. she is really focusing on the
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economy of the world and the world as you know is very sick. >> okay. christian malard from paris. many thanks. a little later on in the show we're going to be finding out how asia has reacted to her selection and what exec skpekations the world's fastest growing economies may have for the leadership of the imf. you're watching "world business today." coming up, anger on the streets and a moment of truth that could send shock waves through the global economy. that's just ahead on "world business today."
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affect every single citizen in this country or instead face default. that would, of course, have dire financial consequence. the default begins one day after general strikes across the country by thousands of workers. those strikes generated into violence on the streets as you can see. this is greece's own parliament building where in just a few hours lawmakers will be voting on the austerity measures. outside, protesters once again gathering together for a massive demonstration. until tuesday the protests had been largely peaceful, but then thousands of protesters hailed stones at riot police and were met with tear gas, round after round after that. it's against that kind of backdrop that they're going to
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be meeting. they're looking for a bailout and a second huge bailout late thoern year. the vote, as one would expect, is expected to be very close indeed. now, as you might expect, the mood on the streets of athens is very tense right now as of course that vote approaches. we've been covering the politics and protests from greece. she joins us from greece live with the latest developments. diana, i can see the crowds behind you. you can see the people are starting to converge upon the streets. this vote is being watched. tell me what people have been saying about it in grease and elsewhere. >> reporter: that's right, nina. they're saying this is a critical moment. critical hours for greece, for the euro-zone and the entire global financial economy. also the commissioner saying
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that there was no plan b. if the parliament does not pass the austerity program, then european policy makers do not have an alternative. it will not receive that $17 billion fifth installment of the original bailout plan, and it will be forced into a default and a messy one at that. so you can just see how much pressure is on those lawmakers ahead of that vote in these final few hours of debating. pressure from outside of greece and pressure also from the street. yesterday, as you said, we saw some real violence here on the first day of two days of general strikes protested and now gathering again outside of the parliament and i spoke to one member of the ruling party today who said that everybody inside was very sad, very worried by the mood in the street, which, of course, they can hear as they continue that debate, nina.
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>> diana, i hesitate too use the term "$64,000 question" because it's now a 17 billion dollar question. it's a difficult one to ask. this vote, do you think it will get passed today? >> reporter: well, it's expected to go through, but it will be very, very close. jonch pop andreas george pop andreas has the majority. already one member of his party has said they're going to vote against the program. yesterday i spoke to another member of parliament who is undecided. not least because he thinks there's more room for negotiation. it's essentially blackmail on the part of the european.
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>> translator: will they risk the debt? they must also be responsible. this is not just a greek crisis. it's a world crisis. imf leaders haven't done enough. they've been incapable and indecisive. >> reporter: i will say one member of the opposition party has already said she will vote for the program. so we're going to see a sort of a bit of mixing and matching here. the expectation is that it will go through, but it will be very, very close, and it will be a very explosive moment, of course, when the results of that vote are broadcast to the people out here on the street as to how they respond to what will determine their immediate and long-term future, nina. >> i'm sure you'll be bringing us the latest reaction from the scene as we get it. diane magnay, thanks. one problem sun employment,
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and another is productivity. spanish workers spend more hours on the job than most europeans, but their output, it seems, is relatively low. we go to madrid to find out why. >> reporter: like many spaniards, he leaves a downtown train station and walks to the office, arriving before 9:00. he gets started at his private tax consultancy for another long day, ten hours long because of extended breaks. normal for spain but unusual else where in europe. the first break at 11:00 a.m. at a nearby cafe. >> translator: i personally think it would be better to have a continual work shift. you would use your time better at work and enjoy the rest of the day. >> reporter: he returns to work while the rest of the people are thinking about lunch.
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the spaniards work long hours here but many economists say that doesn't always add up to more productivity. >> and because we might spend some money. >> reporter: it's seen as a key to solving spain's economic crisis. this spanish school teamed up with harvard to work on making government more efficient. >> now we have a challenge that's efficiency with the priesht sector because we need to do more with next. >> reporter: but it's not a uniform problem. economists say spain's automotive and retail banking sectors are among the most productive in europe. not so with the most labor-intensive construction and touristing sectors. they say the 21% unemployment rate has scared people who now value job security above all else it's developed into kind of a it's more important to be present than what are the results. >> reporter: it's now 2:00 and
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he goes to lunch when most of europe is returning from lunch. we catch up with him at 4:00 p.m. for the afternoon shift. they need two jobs to pay the bill bills. >> translator: it's deeply ingrained from long ago. >> reporter: this worker says they aren't the biggest problems to reactivate the economy. >> translator: what's in it is more investment, research, development, and location. you have to fight. we do it but with different deadlines. >> reporter: for him his day is done at 7:00 p.m. lights out is easy. spain's economic problems won't be solved overnight. al goodman, cnn. sony in the spotlight. there's pain in the boardroom as the company tries to assuage the anger of the customers.
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the chairman says the pay is going to be going down 15%. don't feel too sorry for him because he'll still be comfortable with a bonus and salary of more than $3.4 bill. the man who may take over for him, he'll be taking home less as well. i can't say exactly how much that, is but he's going to be taking less than one would already think he's paying less than howard stringer's $4 million. the question is how far will pay cuts go toward rebuilding confidence among investors and users of the online services. months after the attack on sony's playstation network. millions of users are still wondering whether their identities have been stolen. could sony have done more to inform its customers and done so more quickly. our reporter looks into this and
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talks more about the data breach that was kept quite. >> reporter: consumer rage against sony was swift and vocal. they got ahold of usernames pass word and more importantly the credit card numbers. >> we who are using playstation three, we are furious and we're going to bring nothing but more drama. >> reporter: now a sony document filed with japan's government and obtained by cnn shows sony was aware of the scope of the breach days before revealing it to the public. april 19th, a government document shows that sony was aware of it. they shut down their network. they could not log on but did not know why. april 23rd, sony was able to confirm an intruder obtained
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illegal access and for the first time realized it was a hacker. it wasn't until two days later that sony was able to confirm stolen personal information including names, e-mail addresses, dates of birth, passwords and network ids. they couldn't identify exact ly whose information was stolen. april 27, two days after they knew a lot of information was taken, sony began e-mailing customers and posting on its website that accounts had been compromised. on may 1st, sony held its first news conference. the executive downplayed it. as for personal information that might have been taken, we're still talking about a possibility. we're still investigating what data and to what extent it was taken. now eight weeks later sony will still not speak to cnn on
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camera, but in a statement e-mailed to cnn sony says we believe we have notified the public promptly after reporting it to the government. sony says in the government document that it was concerned that releasing information before it was fully analyzed would confuse the consumer. >> the right people and people who could possibly be affected by those threats need to be notified immediately so that they can take steps to protext their own identities. >> reporter: internet security expert mohan koo has no knowledge of the internal breach but he believes sony's delay should concern consumers. >> we're not talking only financial data. any person's personal data is valuable on the black market. >> reporter: it's a game of cat and mouse. your personal information and the company standing in the
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midd middle. consumers are not helpless. before sharing your information, consider the stakes. le what would happen if the thief could read what you're typing. kyunglah, cnn, tokyo. that loss last month was sony's biggest annual net loss in some 16 years and the company will have a plunge in profits this year. sony's shares have plunged 20% in three months. there's heightened concern about online security since the sony hacker attack. there's simple steps to protect your information. number one do, not use the same pass words for multiple accounts. number two, when shopping online, use a credit card. don't use a debit card because
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that's directly linked to your own bank account. three, ask yourself before typing what would i use if a hacker got access to this information. security experts considering these three steps. that say considering these three steps will go a long way toward prodeathing your online identity. up next on "world business today," d-day in greece. it's time for lawmakers to make a decision on deep spending cuts, and it's always one which should cause a domino effect around the world. we'll be right back in just a moment. [ doctor ] here's some health information for people over 50. maybe you don't think you're at risk for heart attack or stroke but if you've been diagnosed with p.a.d.,
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back. you're watching "world business today." greece parliament plans to vote in just a few hours from now. thousands of greeks voiced their anger over the austerity measures on tuesday that erupted into violence on the streets in athens and now face the choice of billions of dollars of cuts and tax hikes. greece has come to a crossroads that threatens europe's own financial stability. about 90 minutes into the trading day and they're already thinking of the idea that greece can avoid a default. some of these markets pushing past the 1% mark. ftse 100 up over 1%. cac 40 and also the dax also up by 1.25%. most markets responded positively on wall street.
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a weakened yen boosted the market in japan. shanghai, on the other hand, as you can see, bucking the trend down less than 1%. we also saw the hang seng virtually flat on the day. hang shy reporting its first negative close in about seven sessions. the s&p asx 200 in australia as we were showing you earlier on the show closing down. looking ahead to the start of trading in the united states, right now the futures market pointing to just a slightly higher oerng but that may change vertically when, of course, we do get the outcome of the greek vote later on today. and some modest gains for the futures, but still up in the right direction, up slightly more than they were about 20 minutes ago. well, economists say if greece does default it's likely to have a ripple effect throughout western europe and
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certain economies and beyond and it could understood mine the confidence in the europe itself, sending its own value plummeting. those fears run deep like in germany where people aren't so sure how much they're willing to fork out to keep the c nncn germany and the netherlands and of course the more profitable nations from the south. are the germansing are losing patience as the vote approaches sort of this peak point? >> reporter: well, they certainly are. there are more and more germans who feel that their countries should not be part of this bailout, also that they will most certainly have to take on the lion's share of the burden if, in fact, the greeks do vote on these austerity measures and the bailout does come through. certainly there are some germans losing their patience. there are others, though, who
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will tell you, yes, they don't think this bailout is a great idea but they feel there's no other way to do anything about this. i spoke to some people yesterday who said they don't believe they'll ever see any of their money back. some believe greece will default anyway. let's listen to some of what the part-time on the street had to say about this possible bailout. >> i think greece must change a lot, and their policy in the whole country, the way they act, taxes have to be paid in greece. if they change a lot, maybe we see some money, maybe not. >> they're certainly going to go into default. i don't think it makes any sense. thank should let it go back. i thinking -- and then economy can recuperate by itself. >> translator: from what i hear, there's no alternative to baling
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greece out. otherwise, things could get even worse. anywaying it's their own fault they got into this situation. they probably should have never been let into the euro-zone. >> reporter: now, one of the things that's interesting about the situation here in germany, nina, is that, yes, a lot of people are complaining. a lot of people feel that their taxpayer money is not going into a good place. but also, if you have to have a bailout of another country, this is probably the best time to do it if you're germany because the economic situation here in the country is quite good. people have a very good personal economic outlook at this point in time. it doesn't seem to be hitting them as close to home as it does in some other countries, nina. >> frederick pleitgen joining us from germany. many thanks. well, greece's lawmakers are about to make that momentous decision about whether to plow ahead with further austerity measures or risk almost certainly with the default. when the vote gets under ways,
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the eyes will be firmly fixed on greece as well as those of the united states. we spoke with a banking analyst to get a sense of how great this decision could play out for the u.s. markets. >> the u.s. banking system here has about $36 billion to greece of which $29 billion is derivatives. so they're in there too. it's not missing. that's not a pleasant amount of money, but it's quite, quite manageable. it's clearly partly reserved for already. so it's a direct issue for the u.s. banks. >> reporter: there seems to be a lot of fear that we're going to have another lehman-type situation. if the numbers are out there, why is there so much discussion about this? >> because we did have a lehman. it was shocking. we're still trying to piece it all together and argue whether it should have happened or argue it or what not. the fact is this is not comparable in that sense.
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it's, a, much smaller, b, more transparent, c, far less interconnected by eons than the lehman financial system. that's not the diminished problem. it's in a box. we know what the box is. we just don't like what's happening in the box. greece, sadly, is becoming more of a solvency issue, not a liquidity issue. liquidity is attached to keep them solvent. lehman, i would have argued, was solvent, but there was a panic on the liquidity side, which may or may not have been kpexacerbad by government interference and the free markets being scare and uncerta uncertain. no sense going into that now. >> reporter: we receive bank shares just really taking a beating in the last few weeks. it would take a tough stomach, but is this the time to be thinking about buying bank stocks orks do you have to wait for some of this to clear? >> well, you usually make most
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money when there's the greatest amount of uncertainty and you happen to be right. we've had fairly strong equity markets for a year and a half, haven't we? particularly after qe, which we all know was somewhat artificial. were there sectors that didn't go crazy? yeah. the banks. they never bought the stuff. the investors in banks are are kind of like baek basic, clean, if i can see it, fine, if i can't, no. so they're not overvalued. i don't want to give them praise but they look to be reasonable investments, particularly american banks because, as i've told you, they have a depression-era reserve and charge-off record now on the existing risks they had. it's not out there anymore. in the banks. in the lending banks. and the money all got moved over to fannie, freddie, and the fed.
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>> reporter: greece's vote is expected to take place some time after 1k. cnn will be on the story as it happens. at this time of financial trouble, many expert greeks are actually putting their money back into the motherland. go to cnn.com about the way they're trying to revive their tourism industry. you're watching "world business today." well, even though greece's vote is still to come, one big finance-related decision has already been made this week. we're talking, of course, about the new head of the imf. we'll have more on christine lagarde's balancing acted straight ahead on "world business today."
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her work cut out. as a european she's best placed to resolve the financial crisis in greece. also ensure the rest of the world isn't punished for europe's own problems. in doing so she's won the support of many who had originally criticized the euro senn tristy of the imf. andrew stevens tells us what's changed. >> in the end it was a slam dunk. christine lagarde was appointed by consensus to the top job at the imf. its 24-member executive board didn't even have to call for a vote. china, india, brazil, and russia. they duly lined up to lend their support to the french finance minister. but what a difference a few weeks make. when dominic strauss-kahn was forced to step aside to fight sexual assault charges in may, the emerging member powers made
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it quite clear it was time to break with tradition, the tradition of automatically appointing a european for the top job. the candidates were selected solely on merit. but that's where their campaign ran out of steam. they didn't put forward their own consensus candidate to challenge the euro-zone's favorite, christine lagarde. mexico's governor did throw his hat into the ring but he lacked support. in the end, only australia and canada got behind karstens. in the days leading up to the decision, china, india, and brazil all announced their support. but india has put her on notice. following ms. lagarde's appointment, he advised her that, quote, that emerging economies have a greater voice
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hello and welcome back. you're watching "world business today" from cnn london. being ahead of hong kong's biggest catering company but vying to be china's largest caterer, that takes on a whole new league. that's when they began following michael wu for our series, "the boss." there's one chapter ends where another one begins. take a look. >> this year is a big focus to enter china. >> reporter: from the day our can't rahs started rolling back in september of last year, michael wu had a clear business plan in place. >> china is such a big market itself that probably for the next 20, 30 years that would be our only focus. >> reporter: for the following ten months he made this his growth strategy.
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working with his team from decisions through branding through personnel, he looked for ways to break this major market, aiming not only to enter it, but more importantly to conquer it. >> we see huge potential for our brands all over china, but, of course, it's not as easy as that. >> reporter: as his army prepared the attack, michael turned his attention closer to home, managing and recognizing his staff. as we followed him from his office and into the meeting rooms, we learned what it took to lead a company of 14,000 people. hard work, motivation, and appreciation. >> i think recognition is a key
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element of organization, just a very, very simple recognition, just for those staff to be appreciated, that we know that they've done a good job. just a simple pat on the back. >> reporter: his tactics will be simple. help to retain employees in hong kong. one such strategy, asking his staff to write to him anonymously, a kind of move that gave him a rare insight into his company. >> they are free to say and write what they really feel. >> reporter: he showed us that being at the top required intensity and ruthlessness. after all, he's there to make money. >> what it really aims to achieve is to connect more closely with the customer, get their loyalty, and in return, to increase our sales. >> reporter: helping him to achieve just that, perseverance.
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we saw michael renovate. >> in the restaurant business it's all about details. if you don't do that, you're never going to get the big picture right. >> reporter: innovate. >> we will open slowly. we're not going to rush to build this brand. >> reporter: and create. throughout, he had the final say. >> i'd like this to be a bit more strong sesame taste. >> reporter: his biggest challenge, perhaps his biggest learning curve came from the rapid expansion in china. >> as a foreigner coming to china, we pay the price of learning the steps. >> reporter: and that he did. the sheer size of china made delivering his products a nightmare. >> in hong kong we dope have to worry about logistics because everything is so small. but in guangdong everything is
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spread out, cost is a big concern. >> reporter: he faced a terrible challenge. it was both challenging and costly. >> hiring people is very difficult now. we're having a huge turnover in our staff just because the economy is very active and it's very easy for them to get jobs elsewhere. >> reporter: despite the difficulties of doing business, he's battling off with his expansion with plans to open at least six stores in guangdong in the next six months. regrets, he says, he has none. mistakes, a few to learn from. >> in china, it's a learning process for all of us, and we tell our staff that, first of all, don't assume anything. the biggest mistake we can make is to think that we know about the chinese consumer.
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>> reporter: so ten months on in our first meeting we say good-bye to an older and wiser michael wu, a practical and inspiring boss and a very candid one at that. >> it's always good to reflect on what you've been doing, what you've said, decisions you've made. but in normal life, you don't get that chance because you don't see a replay of what you're doing. seeing yourself on tv is really self-awareness, and i think i've learned a lot from that. >> reporter: next week on "the boss," as one door closes in hong kong, another opens in macau. we welcome francis liu. that's next week on "the boss." let's take one last look at the markets this hour. in europe investors remain, broadly speaking, optimistic that the austerity measures will
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be passing through par lament at some point between now and the next few hours. a number are up by 1%. the dax in germany. must point out that a number of the banks listed on those skparjs have many billions of euros in exposure to the greek sovereign debt. that's the one everybody's worried may default if this vote doesn't go through and it doesn't get the next charge of money from the imf. that's one of the reasons why the markets are up by so much. we should also point out this is how the market stock exchange is doing ahead of the crucial vote, currently up by 2.2% at the moment. before we leave you, don't forget that we want to hear from you on our facebook page so head for facebook.com/cnnwbt, and post your comments, anything you want to comment on this show, we do appreciate your feedback. that's it for this edition of "world business today." i'm nina dos santos. we'll see you again about four
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