>>reporter: this week on world business... >>lacking the power to progress, china's energy shortages are forcing the country to clean up its act. >>the trend and the direction is certainly from high carbon economic growth to low carbon economic growth. >>reporter: tourism in egypt brings in billions and is a vital part of its economy, but the industryhas taken a serious knock in the wake of the arab spring. >>we started back in february being eighty per cent below the number of tourists of february last year. >>reporter: mp3s revolutionised the music world, but will video on demand do the same for home entertainment >>it enables people to deliver new services and new ways

of watching that suit the modern lifestyle. >>reporter: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. for manufacturers in china, 2011 marks another yearof power cuts. one of the factors behind this is a rebound in the production of polluting and high energy industries. new policies to radically clean up will be unveiled in the autumn, which will have far reaching implications for companies doing business in china. >>reporter: for manufacturers, few things are as frustrating

as a lack of power - no matter what thecause. >>here in china, regional droughts have near dried-up river beds - leaving not enough water to drivehydro turbines. >>and fossil fuel power plants are reluctant to take up the slack....because they'd have to buy morecoal at today's higher prices and the government won't allow them to surcharge consumers. >>so when coal prices go up, power companies actually find less coal that's delivered to them at a lower price and they have to go to the market. so they don't have the incentive to buy coal from the market to produce power. >>reporter: but power rationing this year has been early and acute because of a surge in output fromindustries that the government vows to curtail. the dirty and energy hungry are responsible for much of the 28 percent increase in electricity demand during the first quarter of 2011. >>it doesn't bode well for a promised move to a low carbon economy. by 2020,

the government has pledged to reduce the intensity of china's co2 emissions - per unit of gdp - by at least 40 percent from2005 levels. this isn't actually a cut in emissions - rather, it's a slowing down of emissions growth. >>it is, nonetheless, an ambitious target. but to achieve it, china will need to act tough and fast. >>reporter: zhu binbin is in the business of finding ways for companies and even cities to cut their energy bills - and so reduce their carbon footprints. he believes the government is deadly seriousabout hitting its emissions target - and in doing so, will also create a powerful green technology and service sector. >>we should grab the opportunity to meet international standards - and in alliance with our domesticpartners, push the development of this industry as quickly as possible. i believe the potential fordevelopment is enormous. and the industry will mature over time.

>>reporter: mr zhu's company, bgi, connects high energy users with experts and technology providers.he calls this an energy saving supermarket. once solutions are identified, bgi finances the upgrades through energy performance contracts - which clients finance through savings in their power bills.bgi is a rapidly expanding, multi million dollar enterprise. >>we provide a comprehensive solution - all in one basket. we gather together all the required goods, technology, human resources, funding and services on this single platform. >>reporter: china's energy saving industry is on the move. by 2015, the market for low carbon goods and services is forecast to reach 2.3 trillion dollars - a third of the global total. >>hailin - china's market leader in thermostat controls - is eyeing the potential for heating commercial

buildings more sustainably. at its new headquarters, the company went further than having traditional rooftop solar panels. on the outside of its new building, the narrow lighter coloured rows are heat collectors too. the company's president, li haiqing believes this is the way forward. >>for example, on the roof or on the wall of the building - and even on the glass curtain wall - we installed a great number of heat collecting panels, but you won't see them anywhere. that means those panels don't destroy the appearance of the building - in fact, we installed a great number of panels and at low cost. >>reporter: of course, to hit its emissions reduction target, china - like the rest of the world - has to focus on a multitude of factors - including the way it produces energy. today, 80% of china's electricity power comes from burning fossil fuels.

>>the government, however, has earmarked 750 billion dollars to invest in clean energy over the next10 years. china is, already, the world's leading wind and solar power manufacturer and the leading supporter of technology to recycle waste for energy. >>fund manager, jeremy higgs also points out that china attracts more clean energy inward investmentthan any other country. >>this is a progress, not an event. that it will take time, but the trend and the direction is certainly from high carbon economic growth to low carbon economic growth. and this has the full attentionand the full support of the leadership and of the government. >>reporter: new policies, due in the autumn, are expected to set more rigorous carbon standards for new industrial parks - and demand upgrades to old industries by 2020. operators of older facilities

face costly upgrades. but for the green tech industry, this will further expand the market. >>as will the planned introduction of carbon emissions trading - where companies that exceed proposed new emission limits can buy unused allowances from cleaner companies. one sure way to reduce emissions is to make them expensive. >>as an economist, i think, you have to change the incentive. china has to raise energy price; has to raise environmental tax and has to raise resource tax. so that that economic incentive will guide people shifting away from energy intensive industries. >>china's government now faces a difficult stage of its low carbon strategy. it's one thing to plough billions into a new green industry; but it's another to start making the polluter pay.

>>reporter: tourism is one of egypt's main sources of income, with millions of people dependent on it for their livelihood. inevitably the fallout from january's revolution has had a severe impact on business. so how is the country coping? and what is it doing to persuade the tourists to return? >>reporter: if you've ever wanted to see the pyramids, this might just be the right time. normally, even in summer, you'd have to make your way to them through crowds of tourists, tour buses, guides and hawkers. not now. since the revolution there's been a steep decline in the number of tourists - more even than following previous terror attacks. >>this is the worst. we've been through luxor incident, we've been through the gulf war, the first and second, we've been through a lot of accidents that took place between cairo, sharm el shiekh and sinai. this is by far

the worst. >>reporter: cairo has been by far the hardest hit. this time last year the occupancy rate at the ramses hilton was between 90 and 100%. now it's under thirty. in other parts of the country some hotelshave even shut, although that's not the case in cairo - at least so far. here at the hilton they'vebeen trying to lessen the impact on their staff by paying them they would usually have received from the service charges the hotel puts on its bills. >>from the beginning of what we are going through at the moment - after the revolution our company being hilton and the owning company made sure to subsidise the pay of the team members so they did not feel the difference, which i think is an extremely good thing, but this does not stop them from worrying for the future since how long can this continue, how far can we sustain such aid? >>reporter: the country's resorts along the red sea have fared better. yet visitor numbers have still fallen by forty to fifty per cent.

there's no doubt that across the industry people are suffering. >>everybody. everyone, now is cutting costs everywhere, no single exceptions, manager or office boy,everybody is cutting costs, is trying to survive. >>reporter: and, since tourism contributes such a large part to the economy, the downturn is being felt throughout the whole country. almost 11 per cent of the gdp is due to tourism, last year we had more than 12.5 billion dollars as tourism income and we have more than 2.5 million persons working directly or indirectly. >>reporter: the industry has been an important generator of new jobs. the tourism authority claims that two hundred thousand jobs are created for every extra million people who visit egypt. and with the official figure of unemployment

standing at over ten per cent it's vital the tourists are persuaded to return. >>we should concentrate more on the safety, and we concentrate that egypt is a safe area where everybody can travel and to show that there is no fear whatsoever and to promote the beaches, and the funthe families, to be more resort for families. >>reporter: recently things had started to improve. >>we started back in february being eighty per cent below the number of tourists of february last year. right now in june we are down 28% exactly. so there is an obvious improvement. >>reporter: the problem for the industry however is that demonstrators are back on the streets claiming that

the goals of the revolution are being betrayed by both the government and the military. this time the protestors say they're not leaving till they seem some real change. >>this is not the sort of image of cairo that tourist authorities want to present to the world. the thing is though - the protestors here are peaceful - they're non-violent and respectful to a few stray western tourists wandering around. in fact as long as the square doesn't come under attack; there's probably no safer place in cairo at the moment. >>reporter: nevertheless many in the industry would like them to keep a lower profile. yahir talaat has been driving a taxi for 28 years. he supported the revolution but has a message for the protestors >>i want say him i hope everybody go to home, everybody find his work... because if any country seesthis picture over mtv of something like this: two million, one million, ten thousand person stay inone place, people are afraid about this. >>reporter: magdy husseini owns a shop selling papyrus

and oils just beside tahrir. despite the facthis income has plummeted, he believes the protests should go on. >>what we can do? there's nothing for free. with a revolution you must pay the bill. most of people working with tourism paid the bill... long time since january 25th till today. nothing finished. we need to finish. when they finish the country start. >>reporter: the protestors, naturally, have a different take on that impact >>you have a government and a military council that has been pushing xenophobia on the population like crazy. talk about spies and foreign elements. foreign elements? this is a country of tourists. you want tourism back when you're actively making the population hostile towards them. are you insane? >>reporter: and to the dismay of the industry the government has recently changed the visa law. tourists are now allowed to stay only one month. the new rules will have a serious impact - not least on those who have decided

to retire to egypt or have bought second homes. >>i think that it is our duty as the ministry of tourism to change it - and we'll do our best to change it. effectively i don't know what was behind the decision, such a decision and i think it is feasible to change it another time. >>reporter: people have been visiting egypt for thousands of years. in the long run the recent turmoil thrown up by the revolution will be forgotten. for those working in the tourism industry though that time can't come soon enough. >>reporter: still to come on world business... >>mp3s revolutionised the music world, but will video on demand do the same for home entertainment >>and with more spectators than any other sporting event, the tour de france is a marketing man's dream >>connecting with your customers... and the rest

in just a moment on world business... >>in 2010, box office takings hit a record high. yet the home entertainment market continued its steady decline. dvd sales nearly halved and consumers are looking more to the world of downloads with video on demand services booming. >>reporter: in recent years, movie heavyweights like avatar have generated the biggest box office hauls in history. but while cinemas are riding high, dvd sales are in decline. one report suggested that in 2010, dvd revenues plunged by as much as 44%. >>we are seeing a decline

in the value that people are putting on dvds, they are still selling a similar number, but they are selling at lower prices so we are seeing an adjustment in the overall economics of the film business. >>reporter: those figures don't account for blu-ray sales, which increased in the same period, but the effect is taking a huge toll. the industry is scrambling to come up with new business models thatbring in needed revenue. one such model is video on demand or vod. >>the idea is essentially movies online, instantly. so you have access to over 9000 titles. you can watch on your pc, on your mac, on your tablet computer, on your games console, on your tv. the objective is to give you instant entertainment on any internet connected device. >>somebody's spent 200 million or 10 million or 2 million producing a piece of content, they want toget their money back. and they want to get their money back in as a broad

as possible distribution means, environment as possible. >>reporter: whether it's 'download to own' or streaming a film just for the evening, the idea is that consumers can choose exactly what they want to watch and when. in theory doing away with traditional media like dvd and bluray, all they'd need is an internet connection and something to watch it on. >>at the moment, digital services represent about 13% of the business. but year to date in 2011, digital seems to have grown by about 14%, if the industry estimates are right. so the shift is going tochange... >>people's living room is changing, it's becoming internet connected by various means and streaming is becoming easier; the infrastructure of the internet is improving at the same time so we can shifthuge volumes of data down.

>>reporter: meaning fewer physical discs are sold with serious implications for an already blighted high street. >>it's a very difficult retail environment but not just for video entertainment, it's difficult for everybody. visa recently said in the first quarter that overall spending was down 5.1%. >>reporter: distributors are signing deals with companies that provide the technical know how to show their films, and retailers are following their lead. tesco recently bought an 80% stake in v.o.d platform blinkbox. >>they realised that from the technological side of this, it's quite complex and it wasn't necessarily a skill they had in-house. and really understanding how digital consumers behave and understanding how they work is quite different from necessarily the skill set they had in-house. >>we do a lot of work with itunes at the moment, we obviously have a lot of work with lovefilm. as we see new players come into the market we keen to work with them and to bring our titles out to as many

people as possible and on as many services as we can. >>reporter: it's a big step for the industry, but would be a giant leap for consumers who still seemto be keeping to the shallow end - for now. >>...the number of times a feature film is seen in its entirety on the subscription vod, from first frame to last is quite minimal in terms of a comparable being how you would expect a viewer of a dvdthat they purchased to really watch the entire film from beginning to end. so it's much more like the tv market where people are flicking channels and going in and out of programming. >>reporter: but it's far from plain sailing. one of the biggest threats to the industry comes from illegal content sharing. torrent sites which enable users to download the latest films are a part of the problem costing the industry billions of dollars per year. >>some people do it for kicks, uploading stuff, but some people do it because they're putting two fingers up to the industry. they don't

actually realise it's not their activity by itself that causes a problem, it's millions of people like them who are trying to freeload who cause the damage. >>if you look at a company like netflix in the u.s., netflix is now larger than the largest pirate site, so there is an interesting tipping point there, and you can see that if you deliver consumers value, the vast majority of them won't pirate. >>reporter: any shift from physical to digital film consumption wouldn't be as simple as hitting stop on your bluray player. but the building blocks are being put in place. for the time being at least, consumers look set to be spoiled with choice. >>it enables people to deliver new services and new ways of watching that suit the modern lifestyle which is all about making things more

convenient, quicker, easier and that's the way it's going. >>i think that christmas in the future might be really boring because people love to have dvds as presents. >>reporter: but for fans of film and convenience it might mean that all their christmases' have comeat once.... >>reporter: the tour de france is without a doubt the toughest challenge in cycling. it lasts the best part of a month and covers well over two thousand miles. it also attracts more spectators than any other sporting event; around 15 million people come to watch, making the event a great opportunityfor marketing. >>reporter: this is the small southern french commuter town of cugnaux. and this is what it looked like the day the tour de france came to town. the mayor paid the tour de

france around 80 thousand dollars for the right to have one of the legs of the gruelling cycling competition start in his community. >>towns like his can wait up to 20 years for the right to host the tour de france. >>it's not surprising - the windfall from tourism and media exposure can be huge. cugnaux's population more than tripled to 50,000 overnight >>all these people need to drink, to eat and sometimes spend money in shops and they have to stay. they have to go to restaurants, to pubs bars and they are looking for hotel rooms and many people of cugnaux ask their family all around france to come spend two or three days here. so in terms of economic impact its a very good return. >>reporter: unlike most mass spectator sports, fans of the tour de france will see real action for just a few seconds. in the mountains where the pace is slower it can be longer as the cyclists are spread out, but if fans turned out just for the race

most would be very disappointed. so they need something else to keep them entertained and this is what really brings out the crowds -the tour de france publicity caravan. here are some of its youthful staff warming up for the day ahead... >>reporter: it looks like something between the animated cartoon 'wacky races' and the film cannonball run. the convoy is made up of around 200 vehicles from 40 different sponsors promoting everything from shandy, sweets, jobs and betting. and throughout the tour de france sponsors will hand out around 14 million gifts along the way. >>we always have been trying to put together brands that tell a story of happiness, of informationto the people so that at the end of the day the child and the oldest gets something that is really solid and people cheer about. that

is why the brands are so warm in the eyes of the public. >>reporter: the caravan sets out around 2 hours before the cyclists - and it takes about an hour forall the vehicles to go past. at times the caravan is spread out over 25 kilometers. >>what's in it for the sponsors? well the tantalizing possibility that if the weather's good, over athree week period as many as 15 million people will line the streets of france to watch this caravan goes past. >>reporter: sponsors pay the tour de france organizers around 70 thousand dollars to participate in the event and the running costs per advertiser can reach 700,000 dollars throughout the three weeks. if that's the full cost for reaching 15 million potential clients face to face; that sounds like oneof the best bargains around. and the sponsors agree.

>>we have to understand that when we make stop and handout out sweets to young kids and you see their eyes light up. they then see the sweets are haribo. you are really hitting your target market. fora company like ours this is a fantastic opportunity. >>reporter: in fact its not just traditional advertisers on the road - the french police are also ona recruitment drive - hiring 10,000 extra staff this year. with souped up cars lent by the french car maker renault they believe the caravan can offer another image of what they do. >>we realize that we are in a fun surrounding and it can change the image the public has of the police force. after each tour de france we see a surge in candidates who want to join the police >>reporter: amazingly even on the remotest toughest mountain peaks like the col du tourmalet there was barely any standing room for spectators.

and the simple reason so many turn up - it's free. >>reporter: and the tour de france not only attracts the most spectators of any sporting event it isthe third most watched on tv, after the olympics and the fifa world cup. >>that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.

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