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shiraz i also took some chardonnay i took some pinot noir i took some sparkling wine and would you believe they were the hits and if you've got a lubu doll clip to your handbag how you've helped to create a 40 billion dollar giant First, though, another day, another trade deal from President Trump, this time with Indonesia.
US firms will enjoy tariff -free access to the Southeast Asian economy.
In return, tariffs on Indonesian goods will be set at 19 % rather than the 32 % that was originally planned.
Indonesia then joining Britain, China and Vietnam on the list of countries which have signed trade deals with the US.
The Indonesian president, Prabowo Subianto, spoke to reporters during a quick media stop at the airport after returning from France.
We have calculated and discussed everything.
The most important thing is that I have to protect all of our workers.
Although we stand with our offers and we couldn't offer more than this, the most important thing is our workers are safe.
I am very optimistic that our economy is strong and in good condition.
Let's hear now from BBC's Indonesia's Hannah Samosia in Jakarta who's been telling us more about what we actually know about the deal Until now we're still waiting for the complete official statement from the government The Indonesian president has only confirmed about the deal but it was just a brief remark to local media at the airport shortly after he landed from a state visit in Paris When he talked about it, he seemed pretty happy about the deal Why Indonesia is so happy when they're about to be subjected to 19 % tariffs, which are still pretty high?
Yes, the president only said that he was happy, but the analysts in Indonesia said that it is not a good deal for Indonesia.
Some analysts said that the agreement made Indonesia buy more U .S. products just to get a tariff that was still considered high, which is 19%.
for these Indonesian products entering the U .S. were subject to tariffs of only 0 % to 5%.
So now the U .S. gains a double advantage.
They reduce their trade deficit while still imposing a 90 % import tariff on Indonesian products.
So all we can say is it could have been worse for Indonesia.
Yeah, for the president, yes.
And also one of my colleagues in BBC Indonesia Indonesia have spoken with a representative from the Indonesian Business Association and he said that the agreement is the best deal we can get.
So firstly, the tariff reduction actually opens up an opportunity for us to be more competitive in America.
So our exporters should take full advantage of this opportunity, how we can expand our market there.
But in my opinion, overall, overall, it's the best deal we can get.
So it's just a matter of how we utilize it.
For example, buying Boeing jets takes time, but exporting clothes, food, or agricultural products can be done quickly.
We can immediately boost our market there.
So if we are smart about capitalizing on opportunities and momentum, it's more profitable for us.
Well, that was Harryali Sukumandhi from from the Indonesian Employers Association, Donald Trump's talked about Indonesia buying Boeing planes from the US.
What can you tell us about that?
The Indonesian president has confirmed about the deal, but in his remarks, the problem will only confirm that Indonesia will purchase Boeing jets without even mentioning the number of jets that Indonesia will buy.
So the president said that Indonesia needed the jets to strengthen the Indonesian national carrier.
But, yeah, as I said before, he didn't even mention the number of jets that Indonesia will buy.
Do you get the sense the conversation is still underway?
There was a joke about the Indonesian president going off to play golf with Donald Trump and worrying he won't be good enough.
Yeah, so, yeah, I mean, we don't even know if the government has signed the deal or not because until now there's no complete official statement from the government.
So we're still waiting for that official statement from the government to know the further impact of the deal.
And meanwhile, what calculations are being made about the damage that this might do to the Indonesian economy, even though it could have been worse?
Some analysts said that the deal could weaken Indonesia's position in global trade.
They said that it might even set a precedent of how other countries deal with Indonesia going forward. So, for example, if a country wants to pressure Indonesia, they can follow Trump's approach to demand Indonesia that Indonesia import more foreign products, even at zero tariffs.
They worry that other countries might follow in a translate to pressure Indonesia to import more foreign goods while Indonesian exports still face barrier abroad.
That was Hannah Samasir from BBC Indonesia with me from Jakarta.
Let's stay in Jakarta with Bima Yudhistira, Executive Director of CELIOS, the Centre of Economic and Law Studies.
Bima, thank you for being with us.
Let's pick up on that last point.
It might be the best deal Indonesia can get, but it doesn't come risk -free, does it?
Yeah, true, because this is a very, very unbalanced trade deal with the US from the Indonesia perspective, because it's a zero percent tariff from the US.
And then we're flooding the Indonesian market with cereals, with the wheat, with the fruits, and also with the cattle.
But also there is a concern from the local farmers in Indonesia that the 0 % tariff from the U .S. imported products also can damage the income from the local farmers.
And also this is not the drills that the Indonesian government want to see because even though we are 19 % get like a tariff from the U .S. and Vietnam 20%.
But imagine that only 1 % difference and then Vietnam still get many advantage also in term of the tariff coming from the U .S. product to Vietnam.
I think this is the unbalanced trade also sparked a debate in Indonesia because we are right now want to achieve the food and energy security, for instance, with the local source of the food and energy.
But with these deals, with the 0 % tariff from the US imported products, and previously the Indonesian government, Mr. Prabowo, already took deals with Trump to say that we're going to buy a lot of the LNG and also a lot of the fuel, fossil fuel from the US, also agricultural products, even before the deal reached 19 % tariff.
So it's very, very hard for Indonesians right now.
It's a concern and a threat even to Indonesian farmers, producers who will have more competition, I suppose perhaps good news for Indonesian consumers.
Yeah, that's right from Indonesia consumer perspective, but we're talking here about more than 20 million farmers here in Indonesia, and also the 0 % tariff perhaps Perhaps make noodle cheaper, wet products cheaper in Indonesia.
But somehow I think we have a double burden right now.
The import from the US will flood in Indonesia domestic market, but also China.
Because as we speak and the negotiations still continue in some parts, I think the products from China, the dumping, the cheaper products, including the agricultural products, also already floating the indonesian market already so i think what we need is to see that this is the the deals that i think worse happenings in in the history because we never have like a zero percent tariff from from everyone i think including the the us previously then we think that the us if they want to to get more like influence in indonesia they don't do this kind of negotiations.
Bhima, thank you very much indeed for your analysis.
Bhima, you had Hystera with us live on World Business Report.
Now to another trading relationship.
The Chinese President Xi Jinping says relations with Australia have turned around as the two countries seek to stabilise trade amid global tensions.
President Xi made these remarks, hosting the Australian Prime Minister Anthony Albanese at the Great Hall of the People in Beijing.
A Chinese foreign ministry spokesperson said Beijing was open to working with Canberra to advance economic and trade cooperation and provide a fair and open environment for companies from the two countries to invest and operate in each other's markets.
Here is Anthony Albanese speaking on a visit to the Great Wall.
I say the same thing in Beijing as I say in Bankstown, which is that the Australian government supports free and fair trade.
It's in the interests of the world to have free and fair trade and we'll continue to engage that way.
Australia's wine exporters are particularly hopeful this new relationship with the Chinese government will see them able to claw back some of the market that's been lost in recent years.
Nicky Pallon is the owner of Sosoro Wines and she spoke to me from Melbourne.
What it actually does, it provides concrete support for wine.
In the past, I think we've had soft support.
We reopened back in 2024.
But since then, I think we've probably only really got back to about 15 % of what we were.
And in my own personal experience, I was in China just four weeks ago, and there was definite enthusiasm for Australian wine, but there was this slight hesitancy.
And I think what this does now is it's on the agenda at a very high political level, and it gives permission for Chinese importers to actually actually start really re -engaging with Australian wine.
And hopefully, we get back to a point where we're looking at more sustainable growth for Australian wine.
How did things go wrong in this relationship?
Because it's not that the consumer in China has gone off Australian wine.
Yeah, well, without wanting to get too political, our previous government, they had a particular viewpoint on the Australia -China relations.
And that unfortunately, had a detrimental fallout, not just Australian wine, obviously there was beef, lobster, there was seafood, tritted timber.
And so unfortunately, that meant for all those years, we really couldn't export any wine.
And that was a real low point in terms of Australian -China export relationships.
But I think with this Albanese and Penny Wong, they're really looking at long -term trade, long -term relationships.
What I'm finding is that just the language around President Xi in terms of it being a political reset, set.
Hopefully in the future, it's very, very constructive.
And so I'm really looking forward to the next few years of trade.
What are the big sellers in China?
Is it Shiraz? Is it Capsav?
What do people in China like to drink?
Obviously in the past, it was all about Shiraz.
It was all about Cabernet.
And I think for my own exports, it was about 90 % red wine.
But these days, it's really reset.
It's really changed.
So when I was in China four weeks ago, I took up my typical stable of reds, Cabernet, Shiraz.
I also took some Chardonnay, I took some Pinot Noir, I took some sparkling wine.
And would you believe they were the hits?
We went to several cities.
I went to Shenzhen, to Shanghai, up to Beijing.
During the time that we haven't been in the market, the Chinese consumer has actually matured.
White wine was the biggest surprise to me.
In fact, one of my new trade partners, he started saying, look, I only want premium Chardonnay from the Eurovalley.
So that's a really interesting new change.
And how big a market is it?
is clearly a vast population.
What sort of size of the market for Australian wine is China providing?
Could it potentially provide?
Well, in the past, it was our largest exporting market.
I think it's still really important for all of us to, all the winemakers and wineries to maintain the path of diversification.
But in terms of where it could go and where it could be in the future, it's really all about being smart.
The Chinese market has changed incredibly since I was last there, say back in 2019.
I've been there twice since the reopening.
And each time I realised that it's a lot more sophisticated now, and it's a lot more about e -commerce.
The Chinese consumer has started looking at things like organic wines.
It's looking at things like lo -fi wine, even flavoured wine.
So I think that we need to really rethink what we're doing.
Even no -lo, like non -alcoholic wine, that's becoming quite popular there.
So I I think, you know, we can't go back in with the expectation.
It's all about Shiraz and Cabernet now.
And which countries are your big competitors in terms of being a wine exporter?
I think it depends on the price point.
So, look, China still traditionally would say French wine, European wine, old world wines.
You know, especially the French wine would probably be Italian wine.
They're, from a premium perspective, they're quite popular.
Chilean wine, from a more probably entry -level perspective, is very popular.
But I think Australia still occupies a particular place.
Our wines are quite fruit forward. We also have a huge variety of wines.
So I think from a competitive perspective, we're definitely not the cheapest. We're definitely not the most expensive either.
But we're sort of, I don't want to say things like value for money, but I think that we are, as an exporting differential, we have a very particular place.
And we've also got a really close relationship in terms of our proximity to China as well.
well. So I think it's not even just about comparing wine to wine.
It's also about a relationship.
We have very, very close relationships with China.
Nicky Pallon from Cesaro Wines in Melbourne.
Dan Coatsworth is investment analyst at AJ Bell and with me on the program.
Let's talk about inflation.
First of all, Dan, we had US inflation numbers.
Now we've got UK inflation numbers.
Inflation is a problem many governments are trying to combat?
Yeah, I mean, obviously, the U .S. inflation with some hints that tariffs were starting to have an impact on the cost of living.
With the U .K. inflation figures, we got higher prices for food and clothing, air and rail fares.
So it's coming at 3 .6 % in the year to June.
So that's the highest since January 2024.
So in both these situations you have central banks looking at what's going on of course you know the last few years they've been they've been pushing up interest rates to try and combat inflation so as inflation starts to ease back they then started this rate cut journey of course now inflation is now going higher again so what do they do so they obviously they'll look to the labor markets and see what's going on are they robust enough um so you know particularly with the us you know the labor market it seems to be holding up.
So, they've got the economy, perhaps isn't growing very fast. Inflation is going up.
Do they really have a reason to keep cutting rates?
And so, obviously, stock markets, they love it when central banks cut an interest rate.
Now, investors are scratching their head and trying to sort of read the signs and thinking, are these new inflation pressures, are they temporary?
Or is this the sign of things to come?
And so, investors are sort of quite quite confused at the moment about exactly how to perhaps position their portfolios and what might we see for the rest of the year.
Now, Diageo shares jumped up for what seems to me a surprising reason.
Yeah. So there was lots of speculation.
And of course, the company is now following the spike in share prices, come out and confirmed that chief executive Deborah Crew is left with immediate effects.
So she has been running that company for the last two years.
Over that period, the shares pairs and Diageo have fallen by 40%.
Now, lots of problems here with this company.
Initially, it was around perhaps in management took their eye off the ball with inventories held with wholesalers.
It looks like they weren't studying the supply chain enough.
We had signs that big demand for alcohol during the pandemic that was easing off.
Consumers seem to be getting a little little bit less interested in alcohol and drinking.
We've had the rise of weight loss drugs, potentially linked to a reduction in alcohol consumption.
And generally, even the more wealthy individuals, they've really been watching the spending.
So luxury goods across the board have been going through a tough time.
And that does have an impact on Diageo's spirit.
So really, it looked like a company where management weren't quite showing what's going on.
Investors weren't really sure about what the future strategy was.
And it looks like the board of directors has just said, sorry, we've given you enough time, two years into the job.
The share price says you're not doing very well.
You need to get someone else to come in and run the company.
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This is World Business Report with Andrew Peach here on the BBC.
The US credit rating agency Standard & Poor's has downgraded Senegal's credit rating for the second time this year.
from B to B -. This after revelations that its former government concealed billions of dollars of debt.
At this level, it would be considered to have a junk rating because of the high risk of a default.
I've been talking to Dr. Mishek Mutiz, who's the lead expert on credit rating services at the African Peer Review Mechanism, which supports African countries trying to improve their credit ratings.
It's not surprising, given that the issue of underreporting of debt in Senegal, has been in the spotlight since September last year when the new administration was taking ground.
But perhaps what is new now is the magnitude of the actual debt that was underreported because initially there was some estimations around slightly above a billion and now it's a much bigger figure than that.
So there's been lots of talk about it.
We're now Now talking about more like $7 billion, why has the Senegalese government not declared this large debt?
We run the risk of politicising the matter because of the administration that was present in that time.
But the issue speaks a lot about the broader weaknesses in the internal systems on accountability.
Because the issue of audit, if audit structures are well in place, debt should should not be underreported for so long, since 2019.
So it speaks to a broader weakness in how the accountability systems in both the government and specific to the ministry responsible, as well as other agencies that work with the government, including the central banks also, that facilitate the payment of such loans that are not accounted into the system of governance.
Senegal is cooperating with the audit now.
The downgrade happens now.
What message is that sending?
What judgment is being made about Senegal?
Well, it complicates the position of the government, especially the new administration, because it immediately expands the financing need, as well as on the other side, cautioning investors investors, because they are not well aware and sure on the actual metrics of debt as well as what could come up in the future, you know, and the concerns that the IMF has already halted its facility disbursement into Senegal.
So that also cartels a bit of some checks and balances that investors might find a little discomforting.
Not only that, you find that there is a higher risk of possible defaulting from the investors' perception, which might not materialize, but already they start to discount that into their bond holding position.
So it will be very difficult for Senegal to access new lines of financing, which might compound its fiscal challenges at the moment.
How quickly can Senegal turn things around?
Well, it depends on how the new administration comes to agree with the IMF representatives to start or to continue disbasing the funding under the facility.
There is still some risk because we don't know what to imagine out of that discussion because I recently read about the concerns from IMF that they might, to some extent, perhaps demand the refunding of the facility that has already been dispersed before they agree on the new facility.
So if that does happen, it will really put Senegal in a much difficult position than it is now.
And Meshack, what message does the underreporting of the Senegalese debt send?
Well, it does really compromise the agenda that the African Union is trying to advance on credibility of institutions in Africa, especially the statistics authorities, as well as the ministries of finance, especially on debt metrics.
Because if one country does that, But we know Mozambique did it also a few years back and it did compromise a lot the credibility of metrics that are reported by African governments.
To the extent that in some cases rating agencies do their own estimations on the basis of not trusting the statistics that are supplied to them by government officials.
shows. That's Dr. Mishek Matiz.
Now, pot marts, laboo -boo dolls, those wide -eyed plush monsters clipped to handbags across the world from Seoul to San Francisco have turned a small Beijing brand into a 40 billion dollar giant.
A single 30 dollar toy can now generate hundreds of millions in revenue.
It has celebrities, influencers, collectors hooked.
But what does the laboo -boo Krays tell us about China's changing consumer economy and its growing cultural footprint elsewhere.
Chris Pereira is president and CEO of Impact, a consultancy that helps Chinese brands expand overseas.
They're in Singapore today.
He's in Berlin. Actually, Chris, thank you very much indeed for being with us.
How did we get here?
How does something like this small doll make such an impact?
No, it's a question I've been asked several times the last few weeks, And it's good to talk with you here today.
And I'm happy to chat about this.
So a bit about my background.
My company, Impact, helps multiple hundreds of companies from China expand overseas, especially on the branding side.
So talking about Labubu specifically, we're seeing in every industry, actually.
I was just hearing from your previous guest on the air there talking about how much China has changed.
and I totally can echo that experience seeing I've lived in China for over 20 years and China's really moving from a product focused business mindset to a brand focused mindset overseas and that's part of what we're seeing with Labubu.
Is this done by design?
Does someone set out to design the doll thinking this is going to be huge or does that happen by chance, by good luck, by what?
Honestly, I think part of it is good luck Some of it is hitting on a cultural nerve in some ways.
Pop Mart itself has worked on overseas branding for many years already.
In some ways, I keep being asked, why La Boubou?
And I think one reason it's popular is it's really hitting a nerve with younger audiences in terms of the blind box culture.
You buy a product, you don't know what type of item you're going to get in the box, and La Boubou came out of that culture to begin with.
But I think the bigger trend that I see is brands from across different industries in China going overseas and building trust and connection with consumers rather than just focusing on price, which traditionally, if you think from the past few decades, low -priced Chinese manufactured goods has been the theme.
But I think in the next few years, we'll see more things like Labubu come to market in movies and games.
And so similar to what we saw in the 70s and 80s with the Japanese culture going overseas, I think we'll see similar trends in China.
And clearly this is huge now.
You'd imagine that at some point people will get fed up, move on to something else.
It'll be a bubble that will burst. Is that necessarily what happens next?
Well, that's a challenge, isn't it?
But I think we're basically at peak labubu in some ways around the world right now.
But what comes next, I think, might be where PopMart will have to spend some time to think about perhaps some brand cooperations with other well -known names overseas.
And I don't think we should call Labubo as having sort of a one -hit wonder yet.
But I do think that they have some strategic thinking to do about where to bring it next.
Because it's very easy at this stage for people to become weary of the brand and move on to the next thing.
So it's got to evolve.
Chris, thank you very much. Chris Pereira, president and CEO of Impact, which helps Chinese brands like Labubu do exactly what this brand has done, expand overseas in a big way.
Thank you very much indeed for listening today.
There's more about today's global business stories online, of course, for you at bbc .com slash news.
From me, Andrew Peach, and the team here on World Business Report, thanks for listening to the programme.
