WEBVTT
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This is a City AM Studios production.
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Hello and welcome to Business as Usual brought to you by Workday.
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I'm Matt Kenyon and today we're going to be talking all about the Conservative Party.
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They've got their conference this week, but are they really the new face of fiscal responsibility or the same old party that the UK booted out just two years ago?
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Well, in the hot seat to discuss all about this and many other things, including talk talk and uh Chinese EVs.
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Simon Hunt, our city editor.
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I'm here to talk the talk.
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Talk the talk.
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And we've also got Saskia Koopman, our tech reporter, on quite a techie day.
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Lots of teas, Tories, talk talk.
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I can't think of another one.
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Can you think of another one?
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Tariffs.
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Tariffs, tariffs, that's it.
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Tariffs, that's the stuff.
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That's good.
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There we go.
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It's a yes and game of improv, this podcast, isn't it?
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Simon, let's talk about the Conservatives first.
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We've got a raft of economic policy announcements from Kemi Badnock and her new Shadow Chancellor, Andrew Griffith, who I think you were one of the first journalists to talk to back just a few weeks ago when he was appointed.
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What's the impression you get of their strategy?
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Are they really playing for a majority government at the next election here, or are they competing for seconds?
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Yeah, it's a good question.
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You know, Kemi Badnock has installed this uh fake version of the Bayotapestry at the uh party conference this year, but can she weave together the political coalition that she needs?
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A sidebar on that.
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So yeah, she's made this like novelty Bayotapestry thing.
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It's 80 foot long.
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I think, and I you you you will know this, I mean I I hate all this sort of like Larry the Cat um lobby journalist humour.
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I think this is genuinely quite funny in quite a rare way, and I'd recommend anyone checks it out.
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Yeah, yeah.
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But and and yeah, uh I it does seem quite entertaining.
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Is it the kind of thing someone does just before they're about to prepare for government?
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I don't know.
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It is sort of a bit it still feels a bit slapstick somehow.
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Um Yeah, I mean we've seen a few policy announcements um the past few weeks from the Tories, which I think to a large extent we should welcome because there was uh you know it was it was deadly silence last year.
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Um Kemi Badnott ref refused to be drawn on virtually anything.
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Um I I did uh an interview with her last year, and I struggled to find any newsline to write.
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So was that before the conference?
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Yeah, yeah.
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And there was just so little that she would she kept saying, Well, we're thinking about it, we're looking at it.
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It was an interesting first year she had, because I suppose at that point she'd been in the post for just under a year.
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And before that conference, she was being absolutely written off.
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There were very few people attending.
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I think one of those probably the lowest attended ever in the Conservative Party's history.
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That conference speech she gave her keynote address uh at it turned it all around.
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And she's she seemed suddenly like she was a contender.
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What what does she need to do now, I suppose?
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Well, I think she she's realized that you can't have a protracted period of sort of regulatory tumbleweed.
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You need to say, I want to do this or I don't want to do that, and and actually, you know, stand for something.
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And they have stars to stand for things.
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Um they have talked about uh extending uh free childcare uh beyond earners above 100k, the so-called um 60% tax trap that people who whose salary just goes above uh 100k face.
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And that is, by the way, I think an entirely sensible policy.
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Because at the moment you end up in a quite bizarre situation where if you have a couple, uh one of whom is earning 101k and the other one's earning minimum wage, uh, they would not be entitled to any childcare allowance.
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But a couple, both of whom on 90k, would.
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Which is ridiculous.
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Yeah, which is nuts.
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So you've got people turning down promotions and pay writers.
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Yeah.
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Um so entirely sensible.
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But does it broaden uh sort of political coalition?
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Uh I'm not sure it does because bluntly there aren't that many people earning that that much that that would campaign for this.
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Um the other thing which I think is uh a matter of uh huge frustration, at least in this office, is that they appear to have recommitted to the triple lock.
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Uh despite the fact that uh, as we've discussed before, it's a hugely expensive policy.
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And normally the Tories are the party to try and bear down on welfare spending, not increase it more than Labour would.
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And and Labour did give them opportunity to form a consensus on this.
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We've always said that's one of those issues where when one party goes, there is an opportunity to build a consensus, not just use it as a electoral stick.
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But Saskia, what what do you make of some of the atmosphere and announcements going on around um?
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I think the 50k house claim was quite an interesting one.
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Um claiming that they could wipe that they could wipe off 50k off your first home.
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I mean, obviously that would be welcomed with open arms, but it's kind of like their theory was stripping away any form of regulation together.
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So actually, would that happen and would that actually be a bit positive in the long run?
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Also, quite a funny bit, I thought, when Bain Knock did a quick fire round and she got asked Robert Jenrick or Suella Braveman, and she said, Why do you keep offering me these?
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It's like asking me if I'd rather be shot or drowned, which I thought was so good.
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And that I mean that that is, I suppose, one point that I think probably doesn't get enough coverage, which we're now in a position where the three main parties, so Labour, Conservatives, and Reform, all have quite effective communicators who can do interviews properly.
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Yeah.
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I think the last time quite reminiscent of her um her speech at the budget last year, in which she literally teared Rachel Reese on the bottom.
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I remember I remember being in the office there and everyone's been quite taken aback.
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That's that is that is quite striking.
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Yeah.
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Um another thing, so one issue which uh got quite a lot of coverage uh uh during Labour conference last week, uh Andy Burnham refused to be drawn on was Heathrow.
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Uh it looks like uh and uh Kemi Badenok is taking a much firmer line on this.
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Simon, what what's going on there?
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I I mean I this this infuriates me as well.
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I mean, uh every year there seems to be a story about whether or not the government will approve Heathrow, and this has been true for basically all of my entire adult lifetime.
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In fact, there's been discussion about it since the Second World War, would you believe?
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Um and yet it still seems like there's there's some uncertainty over it.
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It's I mean it's not that um Andy Burnham is is trying to argue, as he has in a recent interview, that there's more capacity in Manchester and therefore Manchester Airport should be uh expanded from the 100-pound train ticket up.
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Yeah, yeah.
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I mean, Heathrow is not just London's biggest um uh hub, it is Europe's biggest, it's the country's biggest.
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Um it's far more nationally significant than just being an airport that happens to be near London.
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Yeah.
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It's also one of those great examples of how you can devolve power too much.
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And frankly, if left down to local government only, big infrastructure pro uh projects, big national ones, don't get built because the national interest is not necessarily in the local interests, and actually often those interests run contrary.
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And that is all Yeah, and this is the biggest issue with Andy Burnham's uh devolution agenda um is that there isn't uh infrastructure that we need as a nation, but that no one needs in their backyard, as it were.
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And so the more sort of voting power you give to people to make those decisions locally, the less likely they are to uh to approve it.
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Let's uh let's pick up the phone and dial up Talk Talk because uh they were on the verge of collapse.
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So that's going to it looks like BT has swooped in at the 11th hour.
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And in their own words, basically save the day.
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I mean, they put it down to uh yeah, being basically the heroes in this scenario, stepping in and buying Talk Talk, plus its wholesale business as well, um, and also saying it's kind of was the only viable option.
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Um they've also saved, I guess, like 900 rolls and stuff like that.
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Um but talk talk were in trouble for a while.
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I mean, they're they used to be the biggest challenger, obviously, to BT.
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Their customer numbers have been falling for for quite some time.
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BT said, you know, they had about 1.2 billion revenue over the last year, but they were still in loss making.
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So they couldn't let it fail.
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Lisa Nandy also jumped in and said that, you know, if X amount of people who who use Talk Talk would be just cut off from one day to the next, that's obviously a national concern, and that's why there was kind of government to step in as well.
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Virgin Media OT.
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Virgin Media spicy, yeah, spicy um retaliation from Virgin Media, who basically said obviously they're a massive competitor as well, and they said that just brings way too much um power to BT to the BT group, which already has a bit big market shape.
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They've called it a stitch up, and I think that that so that's obviously a strong perspective.
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Yeah, I mean, I love a spicy press release as much as uh the next journalist.
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I suppose it does strike at the heart of something quite interesting when you get these sort of brands which are in the process of falling apart in mid-air, uh, which is how do you balance urgency and fixing the problem and making sure that consumers don't lose access overnight, but with also staying within competition guidelines.
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I suppose how do you think about it?
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Well, if you're only burned, the answer is nationalising, as he does with everything else.
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So I'm surprised they haven't done that yet.
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But yeah.
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But the CMA, I mean, it's gonna have some.
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Well, it I mean it it looks like it's gonna have to in October, probably.
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19th of October is when they're probably fine.
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Really soon.
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Yeah, I know.
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Well, when can we expect a decision?
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Um That's a good question.
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I won't let me.
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So one more thing to talk about.
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It looks like the uh the British government is potentially looking at cracking down on EVs being imported from China.
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What's the story there?
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Yeah, um, so the business secretary Jonathan Reynolds is looking quite closely at putting new tariffs.
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Basically, the amount of Chinese EVs being bought in the UK has skyrocketed, um, which I mean is a good thing because it's made it cheaper and we've got EV mandates to kind of hit and like targets to hit.
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But also they obviously want us to invest more in European car makers and stuff like that.
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So it's a bit of a hard line.
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Um but yeah, the proposal is that we are going to impose tariffs on the and it would be a similar 45% tariff rate to the EU.
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Yeah, which feels quite quite steep.
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I mean, what what would I suppose to both of you what would that mean for the British consumer?
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Because a lot of people are looking to Chinese cars and particularly Chinese electric cars as a way of avoiding skyrocketing prices.
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You see some brands, sort of BYD, uh JQ, MG, who are drastically undercutting um their competition.
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Why what will that mean for people looking for a bargain?
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Yeah, I mean that the I think it's a JQ 7, which sort of looks like a slightly dodgy copy of uh of a Land Rover, but that's like half the price.
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And it's you know, and if you want something with that big that you know has virtually all the same you know amenities and f and and functionality, that's what a lot of sensible consumers would do who who don't care so much about you know the the brand or the image or whatever.
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Um but a 45% tariff, I mean, that would add tens of thousands to the price of some of these cars, and suddenly they they aren't as cheap as they as they were before.
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Um and you know, September was actually nearly a 10-year high for the number of uh cars sold in in a in a month.
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Um and I wonder if that's actually No, just uh overall I think it was um yeah, something like um 350,000 cars in in one month sold in the UK.
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And I and I do wonder if it's actually that overall spend hasn't changed very much.
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It's just that you can get more bang for your buck now, so more EVs.
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I think it was something like 25%, maybe 24% of those new cars um were from Chinese brands.
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It was a huge change.
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I mean, a couple of years ago, you wouldn't even see a Chinese EV on the streets.
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And I suppose the first mover in that market was um MG, sort of the Heritage uh British brand, which was bought by uh, I believe Geely, uh the Chinese automaker about 15 years ago.
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I think it's hilarious that MG, which for those who sort of remember back in the 90s or and 2000s was part of the flagging rover brand, suddenly is back in the upper echelons, you see them all over the place.
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But it's a really big dilemma for the government.
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Do you do you cede a huge amount of the European car market to China or or do you risk just having very expensive cars when there's a cost of living crisis on?
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That's for the government to contend with.
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And that, I'm afraid to say, is all we have time for for the moment.
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But don't go away, don't switch off because Simon has got a really phone to you.
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Who are you interviewing after the break?
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I will be interviewing uh a research analyst at a bank who decided to design their own shoe.
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If that doesn't make you stick around, which you must, after this quite brief break, uh then I can't help you.
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But you just you just don't go anywhere.
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Guessing is for game shows, not your business, especially when your margin for error is zero.
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Workday is the enterprise AI platform for HR, finance, and IT with a deep understanding of your organization's context and guardrails.
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So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right.
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It's a new workday.
00:12:37.440 --> 00:12:50.559
So if you're an analyst at a bank and you want to find out how the shoe market works, you could uh read some research, you could chat with industry experts, you could interview senior industry leaders.
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But that all sounds a bit boring.
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Uh so analysts at Bernstein came up with another idea.
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Why don't we just design and create our own shoe?
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They said.
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And I'm very pleased to announce we can present the results of those findings uh on today's show.
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We're joined by uh Michael Parker, head of uh research at Bernstein.
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Thank you very much for coming in, Michael.
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Simon, thrilled to be here.
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And uh you and your team have put together what you're calling burn to run.
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That's right.
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And and and as you describe it, we're seeing globally a successive cohort of challenger brands in consumer sector after sector really take hold.
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I think that you can see that in the beverages space, you can see it in the footwear space.
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Uh, and what we decided to do was dig into this trend.
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And if you're saying that barriers to entry are falling and that competitive modes are shrinking, um saying it is one thing, but proving it is uh something else.
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And so, yeah, I'm delighted to be here today to present you with your own pair of.
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Well, this is this is a first, I think, for us of uh Bernstein Burn to Run Limited Edition trainers.
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Uh all for you.
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Designed, uh manufactured, uh marketed, and now distributed in roughly four months.
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And uh the proof is in the wearing.
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So uh all yours.
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It looks very sort of premium here.
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You've got this uh premium looking bug, nice sort of paper here.
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Um I suppose we'll while I open this, we'll we'll come on to uh what some of your sort of findings were, but could you um tell us first of all about what the process was from start to finish, what all the different steps were involved within the team?
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Sure, sure.
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So the the first step was first of all deciding that we would do it.
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And uh that the uh the black book that uh uh you've uh you've got there is the Bernstein's signature product, which which uh whilst we've only been in the shoe business for for less than three months, we've been producing black books for about 60 years.
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So we'll we'll come on to that separately.
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Yeah, so we made the decision in the spring that we wanted to produce our own footwear, again, is the example that uh innovator brands or challenger brands were getting a foothold literally in sector after sector globally, and that it has never been easier to design, to manufacture, to market, and to distribute uh consumer package goods and and and items like uh shoes.
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The first thing we needed to do, since none of us had any experience producing shoes, was to find a designer.
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Uh again, never been easier to find uh high-quality talent, certainly in a city like London, uh in the creative and design spheres.
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Um, having found the designer and worked through a couple of dozen iterations of what we wanted the shoe to look like, uh we went on to the manufacturing phase, and then came the marketing phase, which I guess we are still doing today, uh, and finally distribution.
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And the distribution is entirely hand-to-hand.
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Now, we're not selling these shoes.
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Uh, the uh the the it's a it's a friends and family uh and client distribution uh strategy, but the idea was that in a relatively short period of time, as a part-time job with no prior experience, we're able to manufacture a shoe at a low, low cost relative to what you'd pay on the high street.
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Um it suggests that there are real challenges to the notion of these billion-dollar brands and thus the the name of the campaign, the the death of the billion-dollar brand.
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Well, having a look at this, I mean it's it's uh it's I mean it's very nicely designed.
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It's um clearly a premium product.
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I don't think this would look out of place, you know, in Selfridges or, you know, a shop on Bond Street or something like that.
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Um, and I guess one of your findings is that the sort of barriers to entry to compete with the really big uh manufacturers uh are much lower now.
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That's exactly right.
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And in the footwear space uh uh alone, I think you could go back a decade and there was a coherent narrative that you were seeing this emerging global duopoly between Nike and Adidas.
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You know, did Puma have a shot?
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Did Anter and Fila in China have a shot?
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What you've seen subsequently is an absolute balkanization uh in that space.
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Maybe it's the pandemic and uh inflation and uh various other geopolitical disruption and a weak consumer and the K-shaped economy, but maybe there's something else going on here in terms of the um ability of innovators and challenger brands to uh to compete.
00:17:24.160 --> 00:17:33.680
If you look at some of the uh biggest uh brands uh that that people are sort of familiar with, uh, you know, premium brands, luxury brands, uh they're really under pressure at the moment.
00:17:34.000 --> 00:17:41.519
Look at something like Nike, that's lost it shares have lost about half their value since the start of the year, which is a pretty astonishing fall.
00:17:42.000 --> 00:17:47.920
Um whenever you know the premium brands suffer, there's always sort of two separate arguments.
00:17:48.079 --> 00:17:52.640
One is maybe they've lost some of their clout or brand uh power or influence.
00:17:52.960 --> 00:18:01.920
And the other is that you know the consumer is under pressure, they're looking at cheaper options, um, there are sort of wider macroeconomic forces shaping them.
00:18:02.160 --> 00:18:06.079
Um so for how much is do you think each each factor is true here?
00:18:06.160 --> 00:18:07.759
Is it more one or more the other?
00:18:08.079 --> 00:18:16.799
The so from my perspective, I guess this is this is the the Bernstein House rule, uh which we uh which we steal from the uh 1978 John Travolta classic Greece.
00:18:17.039 --> 00:18:18.960
Um the rules are there ain't no rules.
00:18:19.039 --> 00:18:31.359
Uh and so we have analysts at Bernstein that absolutely believe uh the rise of innovative brands and that the barriers to entry are falling, that this is a structural decline.
00:18:31.599 --> 00:18:35.359
Simultaneously, we have analysts at Bernstein that believe the exact opposite.
00:18:35.519 --> 00:18:48.480
Uh and the uh the the Burn to Run limited edition uh trainer is a uh literally a way to put a foot in both camps, uh, because we've got analysts again that uh that are very bullish on the recovery of some of the names that you mentioned.
00:18:48.720 --> 00:18:54.960
We have analysts who are convinced that there is a s a structural uh pressure that these brands are under that is going to persist.
00:18:55.359 --> 00:19:10.480
I wonder if part of the issue facing some of these big brands, and this is purely anecdotal sort of thoughts from me rather than uh any careful research such as the the kind that your your colleagues will do, uh but that historically these big brands uh were successful for two reasons.
00:19:10.640 --> 00:19:19.440
One, because of the sort of clout that that brand had, um but two also because they had a reputation for quality.
00:19:19.599 --> 00:19:26.880
And perhaps some of them more you know lately have sacrificed a bit of the latter in favor of you know betting the house on the former.
00:19:27.119 --> 00:19:34.160
And you know, I even personally I can think of instances recently where I've bought a uh premium piece of clothing.
00:19:34.319 --> 00:19:38.160
Uh I won't name names just in case the the libel lawyers are watching.
00:19:38.319 --> 00:19:43.200
Um, but where you know within a year I've had to throw it away because it it sort of fell apart so quickly.
00:19:43.279 --> 00:19:49.200
And I sort of think so, well, why what what am I paying this premium price for if I could get something better quality that's cheaper?
00:19:49.440 --> 00:19:49.680
Right.
00:19:49.759 --> 00:19:53.279
And and I think that the uh the inverse of that is true as well.
00:19:53.519 --> 00:20:07.599
The the ability to buy really high quality product sourced from high quality manufacturing in uh in uh lower cost parts of the world has never been easier as you walk down uh the high street or as you uh shop online.
00:20:07.920 --> 00:20:09.680
And so there's there's real pressure there.
00:20:09.839 --> 00:20:14.720
And uh Intertex and and uh fast retailing, you know, two great examples, both of which we cover.
00:20:15.119 --> 00:20:20.559
But but these are the sort of broader uh trends that we encourage our analysts to explore.
00:20:20.720 --> 00:20:30.640
Um I think I was showing you before the the the black book uh that uh was produced along with uh along with the burnt around shoe is a a product that we've been producing since 1974.
00:20:30.960 --> 00:20:49.200
And the idea is that we encourage our analysts to look for what are the big shifts, uh the disruptive trends in their industries that you're not necessarily gonna see play out in the print in the next quarter's results, but that quarter after quarter, year after year, you're gonna see these tectonic shifts in the industry.
00:20:49.359 --> 00:21:06.079
And so this is electric vehicle adoption, uh competitor competition from new sources of supply in other parts of the world, shifts in consumer preference, shifts in market access, uh shifts in regulation, uh shifts in compute technology, for example.
00:21:06.480 --> 00:21:08.960
Uh, and that's the basis of research.
00:21:09.200 --> 00:21:16.720
And obviously, the uh it's it's one thing to go into the detail uh and to paint the picture of what the world's gonna look like in five years' time.
00:21:16.960 --> 00:21:26.880
It's another thing entirely to put yourself in the center of the story and think, well, if if we could do X, then my thesis is more likely to be true.
00:21:27.119 --> 00:21:36.799
And so the uh the sneaker from uh from Will, the limited edition burn to run uh trainer, uh is a continuation of a legacy that we started 15 years ago.
00:21:37.119 --> 00:22:01.359
Our uh European autos analyst at the time, Max Warburton, uh, bought a couple of Chinese manufactured vehicles, shipped them to the UK, uh, test drove them at Silverstone, and then uh tore them apart, effectively to analyze, you know, are the uh manufacturing capabilities and the design capabilities and the engineering of the Chinese auto sector behind Europe, and if so, by how much?
00:22:01.519 --> 00:22:06.079
Uh so it was a uh great hi his forecast was about a decade.
00:22:06.240 --> 00:22:11.680
And again, if you look at what is uh selling on the the streets of the UK today, he was about right.
00:22:11.920 --> 00:22:38.319
Um six years ago, one of our uh analysts in Mumbai, Venugar, um, bought, first of all, he taught himself how to ride a motorbike, uh, then he bought an old motorbike, um, took it apart uh piece by piece, and then rebuilt it with an electric motor and a lithium-ion battery, and did all that for less than it would cost to uh buy a brand new bike off the shelf and or at the showroom.
00:22:38.480 --> 00:22:56.880
And the idea there again being if uh a saleside analyst with no prior experience, even at riding a motorbike, can produce a uh two-wheeler uh e-bike at a competitive price, then you're gonna see an absolute tidal wave of adoption over the next few years, exactly what's played out.
00:22:57.039 --> 00:23:01.359
And that uh that bike today sits literally on a pedestal in our Mumbai office.
00:23:01.440 --> 00:23:11.359
And so the the research theory here is that we're looking for long-term industrial strength, uh differentiated research.
00:23:11.440 --> 00:23:27.839
Um, the way that we achieve that is by the detailed uh analysis, by the uh intellectual confidence, um, to say the anarchic or controversial thing, um, and by putting ourselves in the research, um in the center of the controversy as much as possible.
00:23:28.160 --> 00:23:34.880
Well, that is all we have time for today, but thank you very much as ever for watching or listening to Business As Usual brought to you by Workday.
00:23:35.039 --> 00:23:40.000
And don't forget to subscribe to City AM's daily newsletter and of course to download our free app.
00:23:40.160 --> 00:23:45.599
This podcast was produced by Joey Curate Nader, and we'll be back in your podcast feeds tomorrow at six in the morning.
00:23:45.759 --> 00:23:46.640
But for now, goodbye.
00:23:46.799 --> 00:23:47.599
Goodbye.
00:00:00.000 --> 00:00:02.959
This is a City AM Studios production.
00:00:04.400 --> 00:00:08.400
Hello and welcome to Business as Usual brought to you by Workday.
00:00:08.480 --> 00:00:12.320
I'm Matt Kenyon and today we're going to be talking all about the Conservative Party.
00:00:12.480 --> 00:00:21.199
They've got their conference this week, but are they really the new face of fiscal responsibility or the same old party that the UK booted out just two years ago?
00:00:21.359 --> 00:00:27.839
Well, in the hot seat to discuss all about this and many other things, including talk talk and uh Chinese EVs.
00:00:28.079 --> 00:00:29.280
Simon Hunt, our city editor.
00:00:29.519 --> 00:00:30.399
I'm here to talk the talk.
00:00:30.640 --> 00:00:31.600
Talk the talk.
00:00:31.760 --> 00:00:37.280
And we've also got Saskia Koopman, our tech reporter, on quite a techie day.
00:00:38.000 --> 00:00:40.479
Lots of teas, Tories, talk talk.
00:00:41.520 --> 00:00:42.640
I can't think of another one.
00:00:42.719 --> 00:00:43.439
Can you think of another one?
00:00:43.840 --> 00:00:44.240
Tariffs.
00:00:44.719 --> 00:00:45.840
Tariffs, tariffs, that's it.
00:00:46.079 --> 00:00:46.560
Tariffs, that's the stuff.
00:00:46.640 --> 00:00:46.880
That's good.
00:00:46.960 --> 00:00:47.280
There we go.
00:00:47.920 --> 00:00:51.200
It's a yes and game of improv, this podcast, isn't it?
00:00:51.520 --> 00:00:54.000
Simon, let's talk about the Conservatives first.
00:00:54.240 --> 00:01:05.840
We've got a raft of economic policy announcements from Kemi Badnock and her new Shadow Chancellor, Andrew Griffith, who I think you were one of the first journalists to talk to back just a few weeks ago when he was appointed.
00:01:06.079 --> 00:01:07.840
What's the impression you get of their strategy?
00:01:07.920 --> 00:01:12.560
Are they really playing for a majority government at the next election here, or are they competing for seconds?
00:01:12.799 --> 00:01:13.760
Yeah, it's a good question.
00:01:14.319 --> 00:01:23.760
You know, Kemi Badnock has installed this uh fake version of the Bayotapestry at the uh party conference this year, but can she weave together the political coalition that she needs?
00:01:24.959 --> 00:01:25.680
A sidebar on that.
00:01:25.760 --> 00:01:28.000
So yeah, she's made this like novelty Bayotapestry thing.
00:01:28.079 --> 00:01:29.280
It's 80 foot long.
00:01:29.439 --> 00:01:35.920
I think, and I you you you will know this, I mean I I hate all this sort of like Larry the Cat um lobby journalist humour.
00:01:36.079 --> 00:01:40.000
I think this is genuinely quite funny in quite a rare way, and I'd recommend anyone checks it out.
00:01:40.319 --> 00:01:40.719
Yeah, yeah.
00:01:40.879 --> 00:01:43.519
But and and yeah, uh I it does seem quite entertaining.
00:01:43.680 --> 00:01:47.200
Is it the kind of thing someone does just before they're about to prepare for government?
00:01:47.359 --> 00:01:47.680
I don't know.
00:01:47.840 --> 00:01:51.439
It is sort of a bit it still feels a bit slapstick somehow.
00:01:51.760 --> 00:02:04.879
Um Yeah, I mean we've seen a few policy announcements um the past few weeks from the Tories, which I think to a large extent we should welcome because there was uh you know it was it was deadly silence last year.
00:02:05.040 --> 00:02:08.719
Um Kemi Badnott ref refused to be drawn on virtually anything.
00:02:08.879 --> 00:02:14.479
Um I I did uh an interview with her last year, and I struggled to find any newsline to write.
00:02:14.879 --> 00:02:16.400
So was that before the conference?
00:02:16.879 --> 00:02:17.360
Yeah, yeah.
00:02:17.520 --> 00:02:21.759
And there was just so little that she would she kept saying, Well, we're thinking about it, we're looking at it.
00:02:23.680 --> 00:02:28.560
It was an interesting first year she had, because I suppose at that point she'd been in the post for just under a year.
00:02:28.719 --> 00:02:30.960
And before that conference, she was being absolutely written off.
00:02:31.039 --> 00:02:32.560
There were very few people attending.
00:02:32.639 --> 00:02:35.919
I think one of those probably the lowest attended ever in the Conservative Party's history.
00:02:36.159 --> 00:02:40.879
That conference speech she gave her keynote address uh at it turned it all around.
00:02:40.960 --> 00:02:43.360
And she's she seemed suddenly like she was a contender.
00:02:43.759 --> 00:02:45.439
What what does she need to do now, I suppose?
00:02:45.759 --> 00:02:51.280
Well, I think she she's realized that you can't have a protracted period of sort of regulatory tumbleweed.
00:02:51.360 --> 00:02:56.319
You need to say, I want to do this or I don't want to do that, and and actually, you know, stand for something.
00:02:56.400 --> 00:02:58.400
And they have stars to stand for things.
00:02:58.639 --> 00:03:13.120
Um they have talked about uh extending uh free childcare uh beyond earners above 100k, the so-called um 60% tax trap that people who whose salary just goes above uh 100k face.
00:03:13.439 --> 00:03:16.400
And that is, by the way, I think an entirely sensible policy.
00:03:16.719 --> 00:03:29.360
Because at the moment you end up in a quite bizarre situation where if you have a couple, uh one of whom is earning 101k and the other one's earning minimum wage, uh, they would not be entitled to any childcare allowance.
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But a couple, both of whom on 90k, would.
00:03:31.919 --> 00:03:32.319
Which is ridiculous.
00:03:32.479 --> 00:03:33.039
Yeah, which is nuts.
00:03:33.439 --> 00:03:35.919
So you've got people turning down promotions and pay writers.
00:03:36.240 --> 00:03:36.319
Yeah.
00:03:36.639 --> 00:03:38.000
Um so entirely sensible.
00:03:38.159 --> 00:03:42.000
But does it broaden uh sort of political coalition?
00:03:42.159 --> 00:03:49.919
Uh I'm not sure it does because bluntly there aren't that many people earning that that much that that would campaign for this.
00:03:50.159 --> 00:03:58.400
Um the other thing which I think is uh a matter of uh huge frustration, at least in this office, is that they appear to have recommitted to the triple lock.
00:03:58.879 --> 00:04:03.520
Uh despite the fact that uh, as we've discussed before, it's a hugely expensive policy.
00:04:03.680 --> 00:04:09.439
And normally the Tories are the party to try and bear down on welfare spending, not increase it more than Labour would.
00:04:09.759 --> 00:04:13.360
And and Labour did give them opportunity to form a consensus on this.
00:04:13.520 --> 00:04:21.360
We've always said that's one of those issues where when one party goes, there is an opportunity to build a consensus, not just use it as a electoral stick.
00:04:21.519 --> 00:04:25.759
But Saskia, what what do you make of some of the atmosphere and announcements going on around um?
00:04:26.560 --> 00:04:28.879
I think the 50k house claim was quite an interesting one.
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Um claiming that they could wipe that they could wipe off 50k off your first home.
00:04:33.600 --> 00:04:39.360
I mean, obviously that would be welcomed with open arms, but it's kind of like their theory was stripping away any form of regulation together.
00:04:39.439 --> 00:04:43.439
So actually, would that happen and would that actually be a bit positive in the long run?
00:04:43.600 --> 00:04:51.759
Also, quite a funny bit, I thought, when Bain Knock did a quick fire round and she got asked Robert Jenrick or Suella Braveman, and she said, Why do you keep offering me these?
00:04:51.839 --> 00:04:55.120
It's like asking me if I'd rather be shot or drowned, which I thought was so good.
00:04:55.360 --> 00:05:07.759
And that I mean that that is, I suppose, one point that I think probably doesn't get enough coverage, which we're now in a position where the three main parties, so Labour, Conservatives, and Reform, all have quite effective communicators who can do interviews properly.
00:05:07.920 --> 00:05:08.000
Yeah.
00:05:08.240 --> 00:05:15.920
I think the last time quite reminiscent of her um her speech at the budget last year, in which she literally teared Rachel Reese on the bottom.
00:05:16.160 --> 00:05:19.199
I remember I remember being in the office there and everyone's been quite taken aback.
00:05:19.680 --> 00:05:21.519
That's that is that is quite striking.
00:05:21.680 --> 00:05:21.759
Yeah.
00:05:22.079 --> 00:05:30.560
Um another thing, so one issue which uh got quite a lot of coverage uh uh during Labour conference last week, uh Andy Burnham refused to be drawn on was Heathrow.
00:05:30.879 --> 00:05:34.800
Uh it looks like uh and uh Kemi Badenok is taking a much firmer line on this.
00:05:34.959 --> 00:05:36.160
Simon, what what's going on there?
00:05:36.560 --> 00:05:39.279
I I mean I this this infuriates me as well.
00:05:39.360 --> 00:05:47.199
I mean, uh every year there seems to be a story about whether or not the government will approve Heathrow, and this has been true for basically all of my entire adult lifetime.
00:05:47.600 --> 00:05:51.279
In fact, there's been discussion about it since the Second World War, would you believe?
00:05:51.600 --> 00:05:54.800
Um and yet it still seems like there's there's some uncertainty over it.
00:05:54.959 --> 00:06:07.199
It's I mean it's not that um Andy Burnham is is trying to argue, as he has in a recent interview, that there's more capacity in Manchester and therefore Manchester Airport should be uh expanded from the 100-pound train ticket up.
00:06:07.600 --> 00:06:08.000
Yeah, yeah.
00:06:08.560 --> 00:06:16.399
I mean, Heathrow is not just London's biggest um uh hub, it is Europe's biggest, it's the country's biggest.
00:06:16.800 --> 00:06:21.360
Um it's far more nationally significant than just being an airport that happens to be near London.
00:06:21.519 --> 00:06:21.600
Yeah.
00:06:22.079 --> 00:06:26.560
It's also one of those great examples of how you can devolve power too much.
00:06:26.720 --> 00:06:38.959
And frankly, if left down to local government only, big infrastructure pro uh projects, big national ones, don't get built because the national interest is not necessarily in the local interests, and actually often those interests run contrary.
00:06:39.439 --> 00:06:51.120
And that is all Yeah, and this is the biggest issue with Andy Burnham's uh devolution agenda um is that there isn't uh infrastructure that we need as a nation, but that no one needs in their backyard, as it were.
00:06:51.199 --> 00:06:57.839
And so the more sort of voting power you give to people to make those decisions locally, the less likely they are to uh to approve it.
00:06:58.639 --> 00:07:06.079
Let's uh let's pick up the phone and dial up Talk Talk because uh they were on the verge of collapse.
00:07:06.319 --> 00:07:09.759
So that's going to it looks like BT has swooped in at the 11th hour.
00:07:10.240 --> 00:07:12.639
And in their own words, basically save the day.
00:07:12.800 --> 00:07:24.240
I mean, they put it down to uh yeah, being basically the heroes in this scenario, stepping in and buying Talk Talk, plus its wholesale business as well, um, and also saying it's kind of was the only viable option.
00:07:24.399 --> 00:07:28.240
Um they've also saved, I guess, like 900 rolls and stuff like that.
00:07:28.480 --> 00:07:31.519
Um but talk talk were in trouble for a while.
00:07:31.600 --> 00:07:35.120
I mean, they're they used to be the biggest challenger, obviously, to BT.
00:07:35.199 --> 00:07:37.439
Their customer numbers have been falling for for quite some time.
00:07:37.759 --> 00:07:43.040
BT said, you know, they had about 1.2 billion revenue over the last year, but they were still in loss making.
00:07:43.199 --> 00:07:44.319
So they couldn't let it fail.
00:07:44.480 --> 00:07:57.600
Lisa Nandy also jumped in and said that, you know, if X amount of people who who use Talk Talk would be just cut off from one day to the next, that's obviously a national concern, and that's why there was kind of government to step in as well.
00:07:58.000 --> 00:07:58.879
Virgin Media OT.
00:07:59.120 --> 00:08:14.480
Virgin Media spicy, yeah, spicy um retaliation from Virgin Media, who basically said obviously they're a massive competitor as well, and they said that just brings way too much um power to BT to the BT group, which already has a bit big market shape.
00:08:14.800 --> 00:08:17.920
They've called it a stitch up, and I think that that so that's obviously a strong perspective.
00:08:19.439 --> 00:08:23.680
Yeah, I mean, I love a spicy press release as much as uh the next journalist.
00:08:23.839 --> 00:08:39.919
I suppose it does strike at the heart of something quite interesting when you get these sort of brands which are in the process of falling apart in mid-air, uh, which is how do you balance urgency and fixing the problem and making sure that consumers don't lose access overnight, but with also staying within competition guidelines.
00:08:40.159 --> 00:08:41.039
I suppose how do you think about it?
00:08:41.200 --> 00:08:44.799
Well, if you're only burned, the answer is nationalising, as he does with everything else.
00:08:44.879 --> 00:08:46.159
So I'm surprised they haven't done that yet.
00:08:46.320 --> 00:08:46.720
But yeah.
00:08:47.200 --> 00:08:49.039
But the CMA, I mean, it's gonna have some.
00:08:49.600 --> 00:08:52.480
Well, it I mean it it looks like it's gonna have to in October, probably.
00:08:52.879 --> 00:08:54.799
19th of October is when they're probably fine.
00:08:55.200 --> 00:08:55.519
Really soon.
00:08:55.679 --> 00:08:56.000
Yeah, I know.
00:08:56.240 --> 00:08:57.679
Well, when can we expect a decision?
00:08:58.000 --> 00:08:59.039
Um That's a good question.
00:08:59.279 --> 00:08:59.840
I won't let me.
00:09:03.120 --> 00:09:04.879
So one more thing to talk about.
00:09:05.039 --> 00:09:12.159
It looks like the uh the British government is potentially looking at cracking down on EVs being imported from China.
00:09:12.240 --> 00:09:13.200
What's the story there?
00:09:13.600 --> 00:09:18.399
Yeah, um, so the business secretary Jonathan Reynolds is looking quite closely at putting new tariffs.
00:09:18.639 --> 00:09:30.639
Basically, the amount of Chinese EVs being bought in the UK has skyrocketed, um, which I mean is a good thing because it's made it cheaper and we've got EV mandates to kind of hit and like targets to hit.
00:09:30.879 --> 00:09:35.039
But also they obviously want us to invest more in European car makers and stuff like that.
00:09:35.279 --> 00:09:36.559
So it's a bit of a hard line.
00:09:36.879 --> 00:09:44.480
Um but yeah, the proposal is that we are going to impose tariffs on the and it would be a similar 45% tariff rate to the EU.
00:09:45.039 --> 00:09:47.039
Yeah, which feels quite quite steep.
00:09:47.200 --> 00:09:51.120
I mean, what what would I suppose to both of you what would that mean for the British consumer?
00:09:51.279 --> 00:09:58.080
Because a lot of people are looking to Chinese cars and particularly Chinese electric cars as a way of avoiding skyrocketing prices.
00:09:58.240 --> 00:10:06.559
You see some brands, sort of BYD, uh JQ, MG, who are drastically undercutting um their competition.
00:10:06.720 --> 00:10:09.039
Why what will that mean for people looking for a bargain?
00:10:09.279 --> 00:10:17.360
Yeah, I mean that the I think it's a JQ 7, which sort of looks like a slightly dodgy copy of uh of a Land Rover, but that's like half the price.
00:10:17.440 --> 00:10:31.440
And it's you know, and if you want something with that big that you know has virtually all the same you know amenities and f and and functionality, that's what a lot of sensible consumers would do who who don't care so much about you know the the brand or the image or whatever.
00:10:31.600 --> 00:10:41.279
Um but a 45% tariff, I mean, that would add tens of thousands to the price of some of these cars, and suddenly they they aren't as cheap as they as they were before.
00:10:41.440 --> 00:10:49.360
Um and you know, September was actually nearly a 10-year high for the number of uh cars sold in in a in a month.
00:10:49.519 --> 00:10:58.480
Um and I wonder if that's actually No, just uh overall I think it was um yeah, something like um 350,000 cars in in one month sold in the UK.
00:10:58.720 --> 00:11:02.960
And I and I do wonder if it's actually that overall spend hasn't changed very much.
00:11:03.120 --> 00:11:06.240
It's just that you can get more bang for your buck now, so more EVs.
00:11:06.559 --> 00:11:11.440
I think it was something like 25%, maybe 24% of those new cars um were from Chinese brands.
00:11:12.080 --> 00:11:12.879
It was a huge change.
00:11:12.960 --> 00:11:16.000
I mean, a couple of years ago, you wouldn't even see a Chinese EV on the streets.
00:11:16.559 --> 00:11:26.799
And I suppose the first mover in that market was um MG, sort of the Heritage uh British brand, which was bought by uh, I believe Geely, uh the Chinese automaker about 15 years ago.
00:11:26.960 --> 00:11:38.559
I think it's hilarious that MG, which for those who sort of remember back in the 90s or and 2000s was part of the flagging rover brand, suddenly is back in the upper echelons, you see them all over the place.
00:11:38.720 --> 00:11:40.639
But it's a really big dilemma for the government.
00:11:40.799 --> 00:11:49.519
Do you do you cede a huge amount of the European car market to China or or do you risk just having very expensive cars when there's a cost of living crisis on?
00:11:50.000 --> 00:11:51.440
That's for the government to contend with.
00:11:51.600 --> 00:11:55.200
And that, I'm afraid to say, is all we have time for for the moment.
00:11:55.279 --> 00:11:59.120
But don't go away, don't switch off because Simon has got a really phone to you.
00:11:59.200 --> 00:12:00.480
Who are you interviewing after the break?
00:12:00.799 --> 00:12:07.679
I will be interviewing uh a research analyst at a bank who decided to design their own shoe.
00:12:08.080 --> 00:12:13.039
If that doesn't make you stick around, which you must, after this quite brief break, uh then I can't help you.
00:12:13.200 --> 00:12:14.639
But you just you just don't go anywhere.
00:12:14.799 --> 00:12:19.360
Guessing is for game shows, not your business, especially when your margin for error is zero.
00:12:19.600 --> 00:12:27.440
Workday is the enterprise AI platform for HR, finance, and IT with a deep understanding of your organization's context and guardrails.
00:12:27.759 --> 00:12:35.759
So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right.
00:12:36.000 --> 00:12:37.200
It's a new workday.
00:12:37.440 --> 00:12:50.559
So if you're an analyst at a bank and you want to find out how the shoe market works, you could uh read some research, you could chat with industry experts, you could interview senior industry leaders.
00:12:50.799 --> 00:12:52.720
But that all sounds a bit boring.
00:12:52.879 --> 00:12:56.480
Uh so analysts at Bernstein came up with another idea.
00:12:56.639 --> 00:13:00.000
Why don't we just design and create our own shoe?
00:13:00.159 --> 00:13:00.879
They said.
00:13:01.200 --> 00:13:06.799
And I'm very pleased to announce we can present the results of those findings uh on today's show.
00:13:06.960 --> 00:13:10.960
We're joined by uh Michael Parker, head of uh research at Bernstein.
00:13:11.039 --> 00:13:12.799
Thank you very much for coming in, Michael.
00:13:13.120 --> 00:13:14.080
Simon, thrilled to be here.
00:13:14.320 --> 00:13:18.480
And uh you and your team have put together what you're calling burn to run.
00:13:18.799 --> 00:13:19.200
That's right.
00:13:19.279 --> 00:13:30.399
And and and as you describe it, we're seeing globally a successive cohort of challenger brands in consumer sector after sector really take hold.
00:13:30.639 --> 00:13:34.960
I think that you can see that in the beverages space, you can see it in the footwear space.
00:13:35.120 --> 00:13:39.519
Uh, and what we decided to do was dig into this trend.
00:13:39.679 --> 00:13:49.679
And if you're saying that barriers to entry are falling and that competitive modes are shrinking, um saying it is one thing, but proving it is uh something else.
00:13:49.759 --> 00:13:54.240
And so, yeah, I'm delighted to be here today to present you with your own pair of.
00:13:54.559 --> 00:14:01.360
Well, this is this is a first, I think, for us of uh Bernstein Burn to Run Limited Edition trainers.
00:14:01.440 --> 00:14:03.120
Uh all for you.
00:14:03.440 --> 00:14:10.480
Designed, uh manufactured, uh marketed, and now distributed in roughly four months.
00:14:10.720 --> 00:14:12.639
And uh the proof is in the wearing.
00:14:12.720 --> 00:14:13.360
So uh all yours.
00:14:13.840 --> 00:14:15.360
It looks very sort of premium here.
00:14:15.440 --> 00:14:19.759
You've got this uh premium looking bug, nice sort of paper here.
00:14:20.080 --> 00:14:34.799
Um I suppose we'll while I open this, we'll we'll come on to uh what some of your sort of findings were, but could you um tell us first of all about what the process was from start to finish, what all the different steps were involved within the team?
00:14:35.200 --> 00:14:35.759
Sure, sure.
00:14:35.919 --> 00:14:39.200
So the the first step was first of all deciding that we would do it.
00:14:39.360 --> 00:14:50.799
And uh that the uh the black book that uh uh you've uh you've got there is the Bernstein's signature product, which which uh whilst we've only been in the shoe business for for less than three months, we've been producing black books for about 60 years.
00:14:50.879 --> 00:14:52.399
So we'll we'll come on to that separately.
00:14:52.720 --> 00:15:16.799
Yeah, so we made the decision in the spring that we wanted to produce our own footwear, again, is the example that uh innovator brands or challenger brands were getting a foothold literally in sector after sector globally, and that it has never been easier to design, to manufacture, to market, and to distribute uh consumer package goods and and and items like uh shoes.
00:15:16.960 --> 00:15:22.480
The first thing we needed to do, since none of us had any experience producing shoes, was to find a designer.
00:15:22.639 --> 00:15:31.600
Uh again, never been easier to find uh high-quality talent, certainly in a city like London, uh in the creative and design spheres.
00:15:31.840 --> 00:15:46.879
Um, having found the designer and worked through a couple of dozen iterations of what we wanted the shoe to look like, uh we went on to the manufacturing phase, and then came the marketing phase, which I guess we are still doing today, uh, and finally distribution.
00:15:46.960 --> 00:15:48.720
And the distribution is entirely hand-to-hand.
00:15:48.799 --> 00:15:50.720
Now, we're not selling these shoes.
00:15:50.879 --> 00:16:09.039
Uh, the uh the the it's a it's a friends and family uh and client distribution uh strategy, but the idea was that in a relatively short period of time, as a part-time job with no prior experience, we're able to manufacture a shoe at a low, low cost relative to what you'd pay on the high street.
00:16:09.200 --> 00:16:20.240
Um it suggests that there are real challenges to the notion of these billion-dollar brands and thus the the name of the campaign, the the death of the billion-dollar brand.
00:16:20.480 --> 00:16:25.039
Well, having a look at this, I mean it's it's uh it's I mean it's very nicely designed.
00:16:25.200 --> 00:16:28.000
It's um clearly a premium product.
00:16:28.080 --> 00:16:32.879
I don't think this would look out of place, you know, in Selfridges or, you know, a shop on Bond Street or something like that.
00:16:33.039 --> 00:16:42.240
Um, and I guess one of your findings is that the sort of barriers to entry to compete with the really big uh manufacturers uh are much lower now.
00:16:42.720 --> 00:16:43.440
That's exactly right.
00:16:43.519 --> 00:16:55.200
And in the footwear space uh uh alone, I think you could go back a decade and there was a coherent narrative that you were seeing this emerging global duopoly between Nike and Adidas.
00:16:55.759 --> 00:16:57.279
You know, did Puma have a shot?
00:16:57.440 --> 00:16:59.919
Did Anter and Fila in China have a shot?
00:17:00.080 --> 00:17:04.720
What you've seen subsequently is an absolute balkanization uh in that space.
00:17:04.960 --> 00:17:23.599
Maybe it's the pandemic and uh inflation and uh various other geopolitical disruption and a weak consumer and the K-shaped economy, but maybe there's something else going on here in terms of the um ability of innovators and challenger brands to uh to compete.
00:17:24.160 --> 00:17:33.680
If you look at some of the uh biggest uh brands uh that that people are sort of familiar with, uh, you know, premium brands, luxury brands, uh they're really under pressure at the moment.
00:17:34.000 --> 00:17:41.519
Look at something like Nike, that's lost it shares have lost about half their value since the start of the year, which is a pretty astonishing fall.
00:17:42.000 --> 00:17:47.920
Um whenever you know the premium brands suffer, there's always sort of two separate arguments.
00:17:48.079 --> 00:17:52.640
One is maybe they've lost some of their clout or brand uh power or influence.
00:17:52.960 --> 00:18:01.920
And the other is that you know the consumer is under pressure, they're looking at cheaper options, um, there are sort of wider macroeconomic forces shaping them.
00:18:02.160 --> 00:18:06.079
Um so for how much is do you think each each factor is true here?
00:18:06.160 --> 00:18:07.759
Is it more one or more the other?
00:18:08.079 --> 00:18:16.799
The so from my perspective, I guess this is this is the the Bernstein House rule, uh which we uh which we steal from the uh 1978 John Travolta classic Greece.
00:18:17.039 --> 00:18:18.960
Um the rules are there ain't no rules.
00:18:19.039 --> 00:18:31.359
Uh and so we have analysts at Bernstein that absolutely believe uh the rise of innovative brands and that the barriers to entry are falling, that this is a structural decline.
00:18:31.599 --> 00:18:35.359
Simultaneously, we have analysts at Bernstein that believe the exact opposite.
00:18:35.519 --> 00:18:48.480
Uh and the uh the the Burn to Run limited edition uh trainer is a uh literally a way to put a foot in both camps, uh, because we've got analysts again that uh that are very bullish on the recovery of some of the names that you mentioned.
00:18:48.720 --> 00:18:54.960
We have analysts who are convinced that there is a s a structural uh pressure that these brands are under that is going to persist.
00:18:55.359 --> 00:19:10.480
I wonder if part of the issue facing some of these big brands, and this is purely anecdotal sort of thoughts from me rather than uh any careful research such as the the kind that your your colleagues will do, uh but that historically these big brands uh were successful for two reasons.
00:19:10.640 --> 00:19:19.440
One, because of the sort of clout that that brand had, um but two also because they had a reputation for quality.
00:19:19.599 --> 00:19:26.880
And perhaps some of them more you know lately have sacrificed a bit of the latter in favor of you know betting the house on the former.
00:19:27.119 --> 00:19:34.160
And you know, I even personally I can think of instances recently where I've bought a uh premium piece of clothing.
00:19:34.319 --> 00:19:38.160
Uh I won't name names just in case the the libel lawyers are watching.
00:19:38.319 --> 00:19:43.200
Um, but where you know within a year I've had to throw it away because it it sort of fell apart so quickly.
00:19:43.279 --> 00:19:49.200
And I sort of think so, well, why what what am I paying this premium price for if I could get something better quality that's cheaper?
00:19:49.440 --> 00:19:49.680
Right.
00:19:49.759 --> 00:19:53.279
And and I think that the uh the inverse of that is true as well.
00:19:53.519 --> 00:20:07.599
The the ability to buy really high quality product sourced from high quality manufacturing in uh in uh lower cost parts of the world has never been easier as you walk down uh the high street or as you uh shop online.
00:20:07.920 --> 00:20:09.680
And so there's there's real pressure there.
00:20:09.839 --> 00:20:14.720
And uh Intertex and and uh fast retailing, you know, two great examples, both of which we cover.
00:20:15.119 --> 00:20:20.559
But but these are the sort of broader uh trends that we encourage our analysts to explore.
00:20:20.720 --> 00:20:30.640
Um I think I was showing you before the the the black book uh that uh was produced along with uh along with the burnt around shoe is a a product that we've been producing since 1974.
00:20:30.960 --> 00:20:49.200
And the idea is that we encourage our analysts to look for what are the big shifts, uh the disruptive trends in their industries that you're not necessarily gonna see play out in the print in the next quarter's results, but that quarter after quarter, year after year, you're gonna see these tectonic shifts in the industry.
00:20:49.359 --> 00:21:06.079
And so this is electric vehicle adoption, uh competitor competition from new sources of supply in other parts of the world, shifts in consumer preference, shifts in market access, uh shifts in regulation, uh shifts in compute technology, for example.
00:21:06.480 --> 00:21:08.960
Uh, and that's the basis of research.
00:21:09.200 --> 00:21:16.720
And obviously, the uh it's it's one thing to go into the detail uh and to paint the picture of what the world's gonna look like in five years' time.
00:21:16.960 --> 00:21:26.880
It's another thing entirely to put yourself in the center of the story and think, well, if if we could do X, then my thesis is more likely to be true.
00:21:27.119 --> 00:21:36.799
And so the uh the sneaker from uh from Will, the limited edition burn to run uh trainer, uh is a continuation of a legacy that we started 15 years ago.
00:21:37.119 --> 00:22:01.359
Our uh European autos analyst at the time, Max Warburton, uh, bought a couple of Chinese manufactured vehicles, shipped them to the UK, uh, test drove them at Silverstone, and then uh tore them apart, effectively to analyze, you know, are the uh manufacturing capabilities and the design capabilities and the engineering of the Chinese auto sector behind Europe, and if so, by how much?
00:22:01.519 --> 00:22:06.079
Uh so it was a uh great hi his forecast was about a decade.
00:22:06.240 --> 00:22:11.680
And again, if you look at what is uh selling on the the streets of the UK today, he was about right.
00:22:11.920 --> 00:22:38.319
Um six years ago, one of our uh analysts in Mumbai, Venugar, um, bought, first of all, he taught himself how to ride a motorbike, uh, then he bought an old motorbike, um, took it apart uh piece by piece, and then rebuilt it with an electric motor and a lithium-ion battery, and did all that for less than it would cost to uh buy a brand new bike off the shelf and or at the showroom.
00:22:38.480 --> 00:22:56.880
And the idea there again being if uh a saleside analyst with no prior experience, even at riding a motorbike, can produce a uh two-wheeler uh e-bike at a competitive price, then you're gonna see an absolute tidal wave of adoption over the next few years, exactly what's played out.
00:22:57.039 --> 00:23:01.359
And that uh that bike today sits literally on a pedestal in our Mumbai office.
00:23:01.440 --> 00:23:11.359
And so the the research theory here is that we're looking for long-term industrial strength, uh differentiated research.
00:23:11.440 --> 00:23:27.839
Um, the way that we achieve that is by the detailed uh analysis, by the uh intellectual confidence, um, to say the anarchic or controversial thing, um, and by putting ourselves in the research, um in the center of the controversy as much as possible.
00:23:28.160 --> 00:23:34.880
Well, that is all we have time for today, but thank you very much as ever for watching or listening to Business As Usual brought to you by Workday.
00:23:35.039 --> 00:23:40.000
And don't forget to subscribe to City AM's daily newsletter and of course to download our free app.
00:23:40.160 --> 00:23:45.599
This podcast was produced by Joey Curate Nader, and we'll be back in your podcast feeds tomorrow at six in the morning.
00:23:45.759 --> 00:23:46.640
But for now, goodbye.
00:23:46.799 --> 00:23:47.599
Goodbye.
