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Hello and welcome to World Business Report from the BBC World Service.
Namaste. I'm Divina Gupta in Delhi, and on this edition, Syria gets a second chance with the EU lifting some sanctions after the US.
Can the war toned country finally reboot it's economy?
The Syrian economy is in absolute shambles.
It's a country that's pretty much on its knees.
More on that in just a bit and also a record -breaking IPO in Hong Kong.
We tell you all about the world's biggest listing of the year.
But first let's start with this.
Well, that's an advertisement for Timu or Timu as many people call it.
Their ads seem to be everywhere on the internet and Chinese online firms like Timu or Xian have become huge global retailers in recent years.
Much of their business involves posting low value packages from China into the US and the EU.
And this allows customers to legally avoid sales taxes.
But the company's businesses' models have been heavily criticised by many retailers in the Europe and North America who claim it's unfair competition.
Items worth more than five billion dollars are imported directly to people's homes in Europe alone.
But now the EU plans to levy a flat fee of two euros that's about two dollars on billions of small packages entering the block each year.
Let's get in Andy Bounds, who is the Brussels correspondent for the Financial Times, for more on this story.
Andy, just tell us a little bit more about this fee.
What is it and how is it likely to be imposed on these packages?
Yeah, hello. They call it a handling fee.
They opens up a lot of thorny issues.
So they'd rather say it's basically a payment for customs, the cost of customs, processing these packages.
If you can imagine 4 .6 billion arriving in the EU every year and 1 .3 billion of those are the Netherlands alone.
So the customs authorities are completely overwhelmed, there's no way they can check all these packages.
And there has been an increase in dangerous products and non -compliant products getting onto the European market.
So they see this as one way of making it harder for these, you know, putting the price up if you're buying something only costs five or six euros, and it's going up by two euros, it might actually dissuade people from you know, buying in the first place.
Hmm. So, but it also is about checking cheap imports from China, and is it also playing into the fears about how the tariff war, which is now on a pause between the US and China, could eventually play out, leading to the EU becoming a new dumping ground for cheap goods from China?
I think there's an element of that to it.
Obviously the US is trying to stop, you know, putting tariffs of its own on small packages.
So therefore more of them might come to the EU, and the companies have been heavily advertising and increasing their presence in the EU.
So that's part of it.
But to be fair, this whole debate started about a year ago.
I wrote the first story that the EU was considering this handling charge, you know, before Trump came to office, because the number of packages has doubled in the last year.
And also, as you pointed out a lot of EU retailers, e -commerce businesses in the block who put things into warehouses and then distribute them, you know, which which means they're costlier for them to do it but more controlled by the authorities.
They've, they've, you know, they've been arguing this is unfair competition, just to put it on a plane from somewhere in China, you know, through an airport in the EU very quickly in someone's house.
Andy, be with us, because you also referred to how there's been investigation, whether some Chinese companies are offering cheap goods that don't always comply with strict EU safety rules.
We've been following that story here as well, but a little earlier.
I caught up with Augustin Rheiner, he's chief executive of the European Consumer Association and says he's broadly supportive of the proposal, but wants more details.
The first question is, who will have to pay for this additional fee?
For what we know, that will be the importer, but at the moment, those consumers buying through platforms like Teemo and Chain.
And they will be considered as importers.
So normally they would apply to them.
But regardless of who will actually end up paying these two extra euros, there is a more fundamental question, whether that is an appropriate measure to reduce significantly the number of unsafe products that are entered in the European Union.
Our understanding is that this will not be necessary sufficient because, at the end of the day, they will put a significant burden on customs to check all the parcels that enter in the EU.
We're talking about 12 million parcels a day, and this is simply humanly impossible to do.
So, what we could expect, reduced in the number of parcels, this would not simply be enough to tackle the volume of products that are entering on a daily basis.
But then it just comes back to the point that consumers are price sensitive, especially in the current economic scenarios where the cost of living crisis is hitting many families in the region, so they want to go for whatever's the cheapest. Can the European companies then fill that gap in any way If companies like Timo and Xian, if they move out of that competitive market space.
It depends on the market and I believe on the markets that Timo and Xian operate, we have a significant level of competition in Europe.
So when you have competitive markets, price can be kept under control.
And again, the question of pricing depends on how competitive our markets are and that is a task that the European authorities and the UK authorities also need to take care of to ensure that the sufficient level of competition across markets, so prices are kept under control.
And I totally agree that consumers have been facing and is struggling because of the cost of living crisis and more than ever we need to ensure that markets can deliver to them, not only on prices but also on safety.
That's Augustin Reinne, CEO of European Consumer Association and eBounds of the Financial Times still with us.
Andy. So what's your view on this?
Because two euros isn't that much of a fee which is levied on these packages?
Do you think it's enough to actually change consumer behavior to get people to buy more locally or from within Europe?
Well, the other aspect of the proposal is that there will be a fee on packages who go through warehouses of only 50 cents.
So what they're trying to do is drive packages through warehouses, where it's easy to control.
So if you have a big shipment arriving at the same thing then you can sample one or two, you know big load of toys coming in for Christmas, you can sample one or two and see if they're compliant.
What they're trying to avoid is, you know, these, as as your guests said, you know, it's impossible to control even with a two Euro fee, you know every single small package that comes in.
And the other point you made there is that I'm a customer, I'm buying from these platforms, I'm actually the deemed importer, I'm responsible for that product.
If it sets fire to my house, I can't go and complain to anybody because I'm responsible.
And the other change they're going to make is to have what they call a deemed importer in Europe.
So these countries are also, the EU is going to abolish its own regime, which allows packages in tariff -free and that will force them to pay vat and force these companies to register and therefore there'll be a bit more control through that means as well and people who will have to take responsibility of products aren't compliant.
At the moment the platforms are very good at taking them off sale once they're identified what tends to happen is mystery shoppers you know buy them and then complain and then they take them off.
Well we'll have to see how consumers react to it eventually isn't it.
Andy Bounds thank you so much for joining us.
as Brussels correspondent for The Financial Times.
But let's also give a blockbuster welcome to Harry Hartford, who's debuting now on World Business Report, president and co -founder of Causeway Capital Management from Los Angeles.
Harry, thanks for joining us and welcome.
We've been talking about Timu and Xian controversial as well in the United States for similar reasons.
Hello, Davina, and thank you for having me on your show.
I did listen to some of the comment from your two previous participants, and I guess my first question would always be, what are you trying to solve for here?
What's the purpose of levying this fee?
And as best I can gather, it looks like they're trying to attempt to solve quite a number of issues, whether it's non -compliance of product, whether it's a revenue generating exercise, you know, whether it's going to make it easier to control because you get a lot of merchandise into one warehouse.
I would always come back to what's the primary purpose and what's the best solution for that and my suspicion is that as it relates to lots of things in the EU, revenues are probably at the forefront.
And the fact is that these problems then continue even in the US which was earlier trying to to get these products to be paying a little bit more when they enter the US.
But well, we continue to follow this story and we've just been hearing about the crackdown on cheap imports from China, tightening the rules and fast fashion economy there.
But let's go over to Syria now.
The conversation is going in a very different direction there because it's not about closing doors but opening them.
After years of isolation and sanctions, the country is now starting to reemerge on the global stage.
The EU has announced today it's beginning to lift sanctions, just days after the U .S. did the same, in a major boost to stabilize the country by interim President Ahmad al -Shara, whose forces ousted Bashar al -Assad five months ago, who until then was seen as a jihadist contest, with a 10 million dollar bounty on his head.
So what could this all mean for Syrians, trying to rebuild their businesses, and reconnect with the outside world?
Here are some voices of people from Syria's hospitality sector.
It was nice news. When we heard, everybody in Syria was looking to the TV to follow the news.
And when we have seen this, it was really a big fest, and we were very happy to hear that.
Finally, the moment of truth came and the sanctions were lifted.
The feeling was overwhelming for us.
Like, finally we can see a glimpse of hope by the end of the tunnel.
Like, eventually our suffering will come to an end.
We are so happy, we're so optimistic about the future.
And we hope all the nations and all the respectable countries help us.
But there's a caution about all this, including from some inside Syria, who are worried about losing international leverage on those new rulers, given that they were until very recently Islamist militant rebels.
But listen to this.
There is a frank calculation delivered by Marco Rubio earlier in the day, the U .S. Secretary of State giving evidence to the Senate Foreign Affairs Committee in the U .S. The bad news is that the transitional authority figures, they didn't pass their background check with the FBI. OK?
They've got a tough history, and one that we understand.
But on the flip side of it is, if we engage them, it may work out, it may not work out.
If we did not engage them, it was guaranteed to not work out.
In fact, it is our assessment that frankly, the transitional authority given the challenges they're facing are maybe weeks, not many months away from potential collapse and a full -scale civil war of epic proportions, basically the country's splitting up.
So what does this mean for the economy?
I earlier asked Bassel Hamwi, who is the CEO of Hamwi Consultant and who formally served as chairman of Audi Capital Syria, an investment bank.
He also played a key role in launching the Damascus security exchange during Syria's economic boom years.
The Syrian economy is in absolute shambles.
It's a country that's pretty much on its knees.
The GDP has declined by over 85 percent.
The country's resources are depleted.
It's an economy that has gone through over 12 years of civil war.
Inflation has ramped.
And the infrastructure of the country is decimated.
Road network, hospitals, primary services.
There is very little electricity and power in most places.
You get power about two hours per day.
Access to water has been heavily curtailed.
So the country really does not look anything like the country that stood before the Civil War in 2011.
and the estimates of how much it would cost to rebuild, it changed anywhere from 100 billion to 600 billion dollars.
You talked about rebuilding of the economy.
Which are the main sectors that could potentially drive the recovery then?
There are so many. I mean, the Syrian people are quite industrious and they're quite entrepreneurial.
Definitely, Syria is a country that has access to oil and gas.
There's also phosphat and potash, and that's a great product for the industry.
And then you have a large agricultural crop from wheat to cotton.
In addition to that, you have tourism.
There's over 6 ,000 historical tourist sites that people can visit.
Well, tourism, for example, would require more confidence building measures, especially for international tourists.
And I believe the same can be said for foreign investors.
With the signs coming from the US like earlier, it announced it will lift sanctions on Syria.
The European Union has announced the same.
Do you believe that foreign investors will be willing to return to Syria?
Would tourist flows then follow them, or is that still a long way off?
I think of it this way, with the previous regime, the country had a zero chance at moving forward. The previous regime had managed to get on sanctions lists since 1979, and was very active politically in supporting organizations all over the world that supported terrorism and all sorts of other things.
And then the credibility of the regime having gone through the Civil War, that's where over 600 ,000 people were killed.
In addition to what you have seen in terms of the jailing and the torture and everything else.
It's just the country had zero chance of moving forward. Now we have a non -zero chance, and that non -zero chance can take on many forms. If you look at the regime fell on December 8th, 2024, we're now in May, so it's been around five months.
And if you could look at the changes that happened since then, definitely on the infrastructure, a lot needs to happen.
but the country has managed to get the sanctions removed from almost everywhere.
Which gives it the fighting chance of moving forward and that's a pretty good deal.
Definitely, the foreign investors will have a hard time coming until the sanctions are fully lifted.
But lifting the sanctions definitely helps the regional investors come in and help rebuild the country.
And there is a lot of interest in doing this.
serious stability is really important for the region and important for the world.
Is this also a fragile chance because the U .S. Secretary of State is now warning that Syria's transnational authority may be weeks away from collapse?
Yeah, yeah, I just heard the whole interview.
And I think it has to be put in context, I think what was meant, and I'm not trying to put any words in Mr. Rubio's mouth, but I think what was meant is that without lifting up the sanctions, the country would be weeks away from a civil war.
Now we're giving them a fighting chance.
Basal Hamwi, the CEO of Hamwi Consult there.
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You're with World Business Report from the BBC World Service.
Now, from a country rejoining the global economy to a company dominating it.
While Syria takes its first steps back onto the world stage, over in Hong Kong, a giant in the clean energy world just made headlines with the biggest stock market listing of the year.
Contemporary Amperex Technology Company Limited, or better known as CATL, is the world's largest maker of EV batteries which raised nearly $4 .6 billion in its listing.
Now CATL also supplies some of the biggest names in the auto industry, think Tesla, Volkswagen and Toyota, and it produces more than a third of all EV batteries sold worldwide.
So, an impressive portfolio, but why is this such a big deal for investors?
I asked Colin Macaraca, who is the head of clean transport at Bloomberg.
Yeah, so CATL is the largest lithium -ion battery manufacturer in the world.
So if you think of the electric vehicle market, they have a little over a third share of that.
So a little over a third of all electric vehicles sold globally have CATL batteries in them, so quite a dominant share there.
And then in stationary storage, so batteries for the home or for grid scale, storing renewables and things like that, they also have a very sizable share.
So they've been primarily based in China up until recently and just in the last few years have started an international expansion push.
So the largest battery maker in the world, very impressive both from a manufacturing point of view but also from a technology development point of view.
What's the secret sauce that CATL has been able to crack to become this dominant global player in the electric vehicle battery space?
So there's a few factors the first one probably starts with experience so going back many years, a lot of the Chinese battery manufacturers were actually working in consumer electronics before, so things like cell phones and laptops.
And so there was a real expertise in the manufacturing base around making lithium -ion batteries.
And then in the 2010s, as China started to make a bigger push into electric vehicles, a lot of those groups transitioned parts of their business or formed new businesses in order to try and capture that market.
And where CATL had a real advantage there is that it was a homegrown electric vehicle of a battery manufacturer within China.
And what China did when it was trying to push electric vehicles more is it had us what you might call a white list of companies that could supply the batteries to EVs for those EVs to be eligible for subsidies and international automakers like LG Chem or Samsung SDI, who were also quite active in that market and continue to be were initially excluded from that list. So that gave groups like CATL a real chance to grow.
And then of course we shouldn't underestimate the importance of the technology and investments that they've made.
So they've consistently invested a very large share in R &D, developing new battery technologies that have kept them at the forefront of a fast -moving technology race.
So how will the funds raised through this listing help CATL expand globally now?
Yes, so CATL is in the process of building several large -scale battery plants around the world.
Probably the most notable one is in Hungary.
That's a 100 -gigawatt power plants.
A very large battery plant, will be one of the largest in the world, aimed at serving the European market.
So, the European market is the second largest EV market in the world.
They are already supplying batteries into that market but those are batteries imported from China, and now they're going to be producing locally in Europe.
So, a big part of the proceeds are going to be about this international expansion in Hungary, but also some other locations that they've got, or that they've already announced as well.
So, they have a joint venture with Stellantis in Spain.
They have a plant that they're building in Germany and also Another one announced in Indonesia.
So the money is very much about fueling this international expansion and continuing them on the growth trajectory they've been on over this last decade.
But can, then, the rest of the world catch up with this electric vehicle battery maker?
The technology lead looks strong right now, but what I would just say is that if we look at the total number of electric vehicles on the road, there's about 60 million on the road today.
There's about 1 .2 billion cars in the world, so about 4 % of all the vehicles in the world today are electric.
We're at the beginning of this journey and there's still going to be some more twists and turns.
There's lots of technology advancements still to come.
There's things like solid state batteries, sodium ion batteries, next generation technologies.
And I think while it's safe to say with the existing tech, groups like CATL and also BYD have a very, very strong position that will be hard to catch up.
I think with next -generation technologies, there's still a lot to play for.
So I don't think that the story of this is fully written yet, and we'll still see some developments to come.
That's Colin M, head of Clean Transport at Bloomberg, speaking to us earlier.
Harry Hartford is still with us.
Harry, what's your view?
The world's largest listing till now this year, coming from a Chinese EV battery company?
Well I think it's a very interesting development.
Particularly as because the auto industry continues to transition to either electric cars or hybrids.
And obviously, here in the U .S., we have Tesla, which has been at the forefront of the transition to EV cars for quite a number of years.
And I believe your previous commentator mentioned the fact that CATL is a provider of batteries to Tesla.
But also, another point here is that CATL, which listed in Hong Kong, has boosted that particular stock exchange's value, as well, adding to it, and it's already listed in China's domestic stock exchange.
So, one company on two stock exchanges and the benefit, again, going to Hong Kong Stock Exchange there.
Yes. And it's certainly the case that it has boosted the aggregate market cap of the Hong Kong exchange, but I actually think that that's been ongoing for quite a period of time.
If for no other reason that quite a few Chinese domiciled companies have transitioned or have partial listings in Hong Kong.
And in turn, particularly as it relates to the market cap and the indices that underlie the Hong Kong exchange, they have expanded materially in recent years because of this development where you have a dual listing, whether it be a U .S. listing and a Hong Kong listing, or a China mainland listing, and a Hong Kong listing.
So essentially giving them more options for investors, and also giving them more exposure in the global market through this.
But let me talk about the other news that we've been tracking.
And for our listeners, you can even go to bbc .com slash news for this because it talks about Elon Musk planning to cut back political spending.
Can you believe it?
I suspect that his shareholders would hope that that is the case.
My suspicion is that some of them have been a little bit nervous about his participation on the political front.
So I'm sure that development will be welcomed.
And I would also say that when he mentions autonomous driving, it's certainly the case, I think, that autonomous driving will revolutionize the auto industry.
It'll revolutionize our car buying habits and, you know, to the extent that it's appropriate to classify it as a race to be the winner in autonomous vehicles, regardless of who winner is, it is inevitably the case that the industry will face significant changes going forward. All right, you're talking about robotaxis that could be on the streets of Texas if Musk has his way by the end of June.
That's what he's told an American news channel there.
But thank you so much Harry Hattford for joining us from Causeway Capital Management.
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You crave wide open spaces, the chance to connect with nature, maybe chase some elk, fish a private stream.
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It's where the adventure begins.
