Samsung sacrificed Galaxy 7 for company survival - TIME

Samsung Sacrificed the Note 7 to Save the Company

Posted: 14 Oct 2016 07:58 AM PDT

Samsung has killed the Galaxy Note 7. It is writing off $2.3 billion in the third quarter due to the cancellation of the highly touted phone. From my perspective, it was a smart, wise and cost-effective decision. Samsung sacrificed the Note 7 to save the company. The decision was not about the Note 7 itself, but about the brand and the company’s relationship with its customers. It is bigger than one product.

A company’s brand is the promise it makes to the customer. The depth and resilience of the brand is how it keeps that promise. We know that every brand makes mistakes. It’s how a company chooses to deal with those mistakes that can maintain — or demolish — its credibility.

Samsung is a huge, multinational company with products, programs, and services across many market segments. It rolled out the Galaxy Note 7 with much hype and fanfare, only to quickly find out it had a problem. Some of the phones caught fire or exploded. That was not the sizzling type of launch it was seeking. Early on it thought it was a simple issue of a battery vendors which delivered an inferior product. Simple fix, right? Not so, because the replacement phones with the new battery had the same problem. It was then made clear that Samsung didn’t know the root of the problem.

With consumers, airlines and regulators all engaged, Samsung had a choice: Continue to try to find out what’s wrong, perhaps by troubleshooting and risk issuing recall after recall? Or, does it step up and decide that the cost of trying to save the Note 7 is not worth risking the entire Samsung brand? It took the second road.

Clearly, Samsung had a lot of investment in this product. The timing couldn’t have been better for its rival, Google, (not Apple in my opinion) which was fresh off the launch of its new Pixel phones. Since the Pixel phones and Samsung’s Note 7 run the same operating system, some believe that the Pixel is the biggest beneficiary of the Note 7’s demise. This was not an easy decision for Samsung, but I think it made it fairly quickly, based on how these things go.

Looking down the road, Samsung hopes consumers will have gotten over the Note 7 debacle, and it will be a footnote in the overall history of the company. A single, short-lived, bad product that was pulled quickly and everyone moved on. Samsung needed to sacrifice the Note 7 to save the overall brand. That’s what it has done. It will cost them hundreds of millions of dollars, if not a few billion dollars, but it’s the right thing to do.

Moving forward, Samsung will undoubtedly focus on quality control throughout its supply chain and at every step of the product development cycle. These steps will make up key message points in its branding and public statements in the future. It will stay away from the safety issue and focus on the process improvement and quality control issue.

There’s no question Samsung will lose some smartphone customers. Will it lose customers of its other products, like televisions or computers? Perhaps in the short term, but this move is all about the long term.

Samsung’s timing of the recall announcement — in the middle of the second U.S. Presidential debate — could be seen as either a way to “bury” the headline or as a way to ensure that a larger audience would see the news (though it’s a South Korean company, so the time difference may have played a role). Either way, the story made headlines. You can’t hide news anymore in our 24/7 news cycle culture.

Often, the public doesn’t realize the complexity of crisis management. It is difficult, and requires having a good team in place. The companies that do it best prepare for it. They know it’s going to happen.

The Samsung situation reminds me of the Firestone tire recall of the early 2000s. At first, Firestone was trying to figure out what was wrong. It quickly pulled all tires off the market, and gave everyone new tires. It cost the brand greatly, but it’s still here nearly 20 years later.

When we look at Samsung, there might be some people who are upset with the decision to pull the phone. But, if you can’t fix it and be confident, you need to take it out of the marketplace and move forward. Samsung is going to continue to innovate. It wants to make sure that people aren’t afraid of Samsung phones or any other Samsung product and see this for what it is: A one-product failure in a large and diverse company.

Facebook Wants to Kill Work Email With This New App - Fortune

Facebook Wants to Kill Work Email With This New App Posted: 10 Oct 2016 11:50 AM PDT You can officially add Facebook to the list of software companies seeking to all-but-eliminate corporate email. The social network’s much-anticipated business edition—formally dubbed Workplace by Facebook, rather than the Facebook at Work moniker used during its 18-month beta test—has already been adopted by more than 1,000 companies, according to information that Facebook plans to share Monday evening during the product’s official launch event in London. That includes some accounts Facebook has trumpeted pretty loudly over the past year, like the Royal Bank of Scotland and Club Med, plus several multinational businesses we haven’t heard about before that are rolling out the service among more than 100,000 employees such as French food giant Danone, and U.S. coffee company Starbucks. One of the regions embracing the service most quickly is India. For perspective, that adoption rate is more than double the 450 organizations that were part of Facebook’s not-so-secret beta program just six months ago. But now, the consumer Internet company needs to convince businesses to become paying customers at a cost of $1 to $3 per user—a price that varies depending on the number of workers who are actually “active” on the service within an organization. Facebook will give companies a three-month free trial of the service to convince managers that investment is worthwhile, says Julien Codorniou, director of Workplace by Facebook. What’s more, Facebook has tapped at least a dozen systems integrators and technology consulting companies, including Deloitte, to spread the word about Workplace and help companies get the software up and running. “The one thing that I really think Facebook has going for them is that the feature set is proven to work on mobile devices really well and proven to work for people without training,” says Josh Bersin, principal and founder of Bersin by Deloitte, which advises companies on corporate learning strategies. He adds, “The biggest problem is just connecting people. The paradigm of email is not good at that.” Workplace by Facebook looks very much like the company’s flagship social network, and that’s by design—the company wants it to be super simple for people to use. Just in case it isn’t clear: the business service is not connected in any way to an employee’s personal Facebook identity. “You get an account when you join the company, you lose the account when you leave the company,” Codorniou tells Fortune. There is a News Feed that displays articles, updates or comments relevant to certain teams or, perhaps, to the entire company. The now-familiar Live service can be used to broadcast corporate communications, such as a presentation by the CEO. Workers can communicate in real time using a version of Messenger. They can also create private Groups for brainstorms or discussions—as of this week, groups can include colleagues or business partners that aren’t official employees. That feature wasn’t previously available until today’s launch. “No company is an island, everyone has a partner, vendor, agencies to work with,” Codorniou says. Workplace by Facebook started life as the internal system used by Facebook employees to share information relevant to their projects more efficiently. “Part of the future of work is that people have the expectation that there will be open communication across the organization, and this is a great way to deliver on that,” explains Lori Goler, Facebook’s vice president of global human resources. As of June 2016, Facebook had about 14,500 employees, all of whom use Workplace as the primary method communicating with teams and sharing knowledge. When asked about the other “tools” Facebook uses internally, Goler points to Quip—the document creation and collaboration service created by Facebook’s former chief scientist Bret Taylor and recently acquired by Salesforce.com. (Facebook still relies on email for external communications, such as the exchange of messages that brokered the interviews for this story.) One of Workplace by Facebook’s core differentiators is the fact that it works well on smartphones and other mobile devices. At Danone, for example, the service will reach 30,000 factory workers who don’t have desks or personal computers. In theory, it could enable a two-way conversation between an intern and the CEO—connections that have nothing to do with an org chart, says Nicola Mendelsohn, vice president for Facebook in Europe. “It is a voice for everybody in an organization, which is especially important if you want to make decisions quickly.” So far, Workplace for Facebook’s support for widely distributed teams is proving particularly compelling for big banks and retailers supporting dozens if not hundreds of satellite branches and offices, Codorniou said. The Yoma Bank in Myanmar, for example, will use Workplace by Facebook to replace fax machines and newsletters. The email “problem” is well-documented, and a survey conducted by Deloitte in September underscores just how disillusioned businesses have become: only 15% of the roughly 250 C-suite executives who responded said they were satisfied with their company’s current collaboration and communication options. There are dozens of software companies seeking to capitalize on that. Three that sell full-blown systems like Workpace by Facebook that use employee directories to create enterprise “social networks” are IBM, Jive Software, and Lithium Technologies. A second class of services from the likes of Microsoft, Salesforce.com, and SAP add messaging and conferencing features to existing business management applications. Facebook will also contend with well-funded startups such as Slack, which had more than three million active users on its business messaging system as of mid-July. In late September, Slack announced a partnership with Salesforce intended to boost its credibility with more big companies. This article originally appeared on Fortune.com

China’s Rich List Reveals the Rise of a New Wave of Wealthy Chinese - TIME

China’s Rich List Reveals the Rise of a New Wave of Wealthy Chinese Posted: 12 Oct 2016 08:06 PM PDT (SHANGHAI) – Chinese property magnate Wang Jianlin has defended his crown as the country’s richest man, according to the annual Hurun rich list, fending off Alibaba Group Holding Ltd founder Jack Ma and new players on the block like Baoneng’s Yao Zhenhua. Wang, the chairman of Dalian Wanda Group, took the top spot with a personal fortune of $32.1 billion, the report said, despite Ma, the founder of e-commerce giant Alibaba, seeing his wealth surge 41% from 2015. The annual rich list of China’s movers and shakers gives a temperature check on where money is flowing in China, and underlines the growing financial muscle of the country’s super-rich – a trend that has been fuelling a boom in global deals. Yao Zhenhua, the chairman of Baoneng Group and the biggest riser since 2015, saw his wealth shoot up 820% to $17.2 billion, elevating him to fourth in the overall list. Yao has been at the center of a hostile takeover battle for China’s largest real estate developer China Vanke Co Ltd. Hurun founder Rupert Hoogewerf said Yao represented a new wave of wealthy Chinese, those whose money came from playing the financial markets as opposed to more traditional routes like trade or manufacturing. “There’s a new type of wealth creation coming out,” he told Reuters, adding China was having to adapt as the wider economy was “very materially slowing down”. “Today it is about using the capital markets for financial investment,” he said. Baoneng, a financial conglomerate that had been a relative unknown, rose to prominence over the last year by becoming the largest shareholder in Vanke, though drew criticism from Vanke’s own chairman over where it was getting its funds. The report said there were now 594 dollar billionaires in China, putting China ahead of the United States’ 535. However, none of China’s super-rich make it into the global top 20. Other risers included online gaming tycoon Ding Lei of Netease, appliance maker Midea Group’s He Xiangjian and property magnate Xu Jiayin of Evergrande. However, smartphone maker Xiaomi saw founder Lei Jun fall out of the top 10 as competition in China’s smartphone market rose. Reporting by Jackie Cai and Adam Jourdan; Editing by Stephen Coates

New Metric: You Reach Adulthood When the Bills Are in Your Name - TIME Business

New Metric: You Reach Adulthood When the Bills Are in Your Name Posted: 13 Oct 2016 01:40 PM PDT You can vote at age 18. You can walk into a bar at age 21. But you aren’t an adult until you move out of the basement and start paying your own mobile phone bill, new research suggests. Parents may have been thinking this way for eons. But now young people are on board too. In a poll of 18-to-26-year-olds, 39% said finally achieving financial independence is what would make them an adult. That was the top answer, ahead of 7% naming graduating from high school or college and 7% naming getting married, according to the Bank of America Better Money Habits poll. A stunning 62% do not feel like adults when they turn 18. Read next: Millennials Say Financial Independence Is Their Top Priority This is what the new life phase called “emerging adulthood” looks like. Young people routinely do not launch until they are 28 to 30 years old. They boomerang home after college, pay down their student loans, and wait for the job they want. They delay things like marriage and a home purchase—and, according to the survey, understand full well that they are not carrying the full weight of adulthood. Fewer than half pay rent or have their own health insurance; only a quarter contribute to a 401(k) plan and just over half pay their own cell phone bill, the survey found. These young millennials are acutely aware that they are unprepared for the financial world. Asked what they wish they had learned more about in school, personal finance was the top answer. Here’s a breakdown: 43% wished they had learned how to invest;  40%, how to do taxes;  26%, how to manage monthly bills;  21%, how to save for retirement In many cases, they intend to send a message in the election: 65% say economic issues are most important in determining who they will vote for, ahead of 34% putting cultural issues at the top. The economic issues that are top of mind include job growth, healthcare costs, and college affordability. These findings are echoed in a report from Fidelity, due out this week. That report is expected to show an increase in the number of millennials living with parents. But there is an upside to that trend: More young people appear to have long-term savings and a near-term emergency fund. Living in the basement has its advantages.

Meet the Woman Who Designed Google’s Self-Driving Car - Fortune

Meet the Woman Who Designed Google’s Self-Driving Car Posted: 12 Oct 2016 07:12 AM PDT YooJung Ahn is not a car designer. Until she joined the Google self-driving car project in 2012, Ahn was designing consumer devices that were more likely to fit into a person’s hands, not products a person could actually sit inside—let alone ride around in. It would be this lack of traditional automotive experience that Ahn says gave her—and the small team she has led since 2013—the freedom necessary to develop a Google moonshot that is now within reach: a self-driving car with no steering wheel or pedals that could shuttle a person from point A to B with a touch of a button. In those early brainstorming sessions, the team batted around some wild ideas, like designing a “literal couch with wheels.” But what has made the gumdrop-shaped prototype so revolutionary is its un-wildness. Looking at the simplistic, uncomplicated prototypes, it’s easy to forget that they’re loaded with sensors and artificial intelligence software that has allowed them to navigate thousands of miles of complex urban environments without human intervention. And that’s just how Ahn likes it. It was that integration of technology and innovation that helped the Google self-driving car prototype beat out 4,698 design submissions to win the Red Dot Design award, an international product design prize. Today, Ahn is deep into another automotive project at X, the research lab at Google that pursues moonshot ideas like driverless cars, its Internet balloon called Project Loon, and energy kites. This time, she’s the leading industrial design for self-driving Chrysler Pacifica minivans. In an interview, edited and condensed for clarity, Fortune asked Ahn about the process of designing Google’s self-driving car prototype. Were there any rules you had to adhere to for the design, aside from not having a steering wheel or pedals? Not having a steering wheel or pedals was actually our choice. It was not even a rule. When we actually started the prototype we didn’t start with a traditional car in our mind. I’m actually a product designer, not a car designer. So when we started designing the prototype, the first thing we considered was this broader concept of mobility. What is the very minimum we needed in order to get people from A to B? What is the most optimized design for safety and user experience? That was the starting point. We needed to create something relatable and very intuitive. It’s a very straightforward experience and not confusing. People have never experienced anything like this before, so we didn’t want to create any confusion. The interesting thing about the self-driving car is you’re designing for passengers and pedestrians, not necessarily for drivers. There’s no driver in the car. Of course, we considered other drivers on the road, but this car was not optimized for driving. Since you’re a product designer, was there a product or symbol that you used as inspiration? A physical representation of what you wanted the prototype to become? The first goal we had was for safety. When we started configuring this vehicle we started with “What is the best way to build a vehicle that is the safest?” “How can we make this car see better so it can be safer than the human driver?” Safety was the No. 1 goal. However, for the inspiration you mentioned I tried not to think about styling much. We tried to think about: What is the best outcome when we try to build a new product that can generate maximized visibility, experience and safety? The answer was: Let’s make it as simple as possible and as intuitive as possible so we can minimize the learning curve for using the vehicle. And one thing to remember is the prototype was designed for testing, not for mass production. Since this is the first time we introduced a concept, it couldn’t be too complicated. That’s why we focused on the soft values like increasing awareness, improving the understanding of technology, and inspiring people. What did you do to make the design approachable, simple, or easy for pedestrians to understand? The No. 1 priority to our team is lets make the roads safer and the design of vehicle needs to reflect that. We optimized the shape for our software and sensors so they can perform as well as possible, that’s No. 1. This car can see 360 degrees and up to two football fields in every direction. It’s the reason why the vehicle is a little bit taller, compact, and soft. We wanted to make sure we built in layers of safety. For example, the front bumper of the vehicle is made out of soft foam and the windshield is flexible so we can keep pedestrians safe. The tertiary aspect of safety is important too. Our goal is to help people feel comfortable with the technology and around the vehicle as well. When we designed our car we wanted to make even the outside of the vehicle comfortable for people. It’s especially important while we’re still in this testing phase, where most people experience our vehicle from the outside rather than the inside. For awhile, we will have a lot more tertiary users than primary users. When I look at the front of the car, it’s like a cute face. Was that intentional? When we started to imagine our very first self-driving car, lots of people imagined something super futuristic, something from the sci-fi movies and stuff. However, when we actually tried to design this first car we realized it’s better to make it warm and welcoming rather than super futuristic and rather cold. This is a low-speed vehicle and we didn’t want to make it look super fast either; it’s not honest. The car design looks slow and people can expect that from the vehicle. “Expected” is one of the emotions we thought up. People can expect how this vehicle is to interact with, otherwise it’s going to be very confusing. You don’t want to design a vehicle that goes only 25 miles per hour but it looks like it can drive 200 mph or something. That would cause some confusion. Was there anything you wanted to include but didn’t because it didn’t fit into the final design vision? There are many. One example, was when we first had some brainstorming sessions we asked people “what do you want to do in the car?” A lot of people at the time—this was years ago—said “oh I want to watch a movie on the car display.” However, we noticed that when people got in there they looked at their phones and tablets and they didn’t want to really use the car display for the movie. Others said they wanted to do games. And then they’d get in the car and actually want to relax and not do something with existing equipment in the car. We actually got more confident. Simpler is not a bad thing; we can actually go simpler. Why did you make the prototype white? Why not go with a color like red so it’s more noticeable? For the very first prototype we knew we’d have a lot more tertiary users than primary users; a lot of people would be looking at it, not necessarily using it. So we thought about the emotions they’ll have when they look. We wanted to give them a safe and warm feeling. It’s white and gray. We didn’t want some polarizing color like red, or green, or orange. In psychology, when you use those colors people can have some anxiety as well. We wanted to have it as safe as possible for people to accept the first generation vehicle. You mentioned you’re a product designer, so you never designed a car before? Well, I probably had some classes on it when I was in school, but I never designed manufacturing (production) cars before. Were you intimidated by that? In my mind, it was more of a benefit for me because I could think of more interesting ideas and think outside of the box because I don’t know much about it. A lot of experienced designers have their routine and their style is built over time. It can be really hard for designers to think something completely different if they know too much about one area. I am pretty sure there are a lot of good car designers who think our car looks a little bit different, and maybe not in a good way. The car did receive a Red Dot design award recently. We were surprised, we didn’t really expect it. But it meant so much to me and my team because (it showed that) people understood how the design furthered the mission of self-driving cars. We were able to do something that’s never been done before. We didn’t need to focus on a design that would sell more products; it was much more than the styling. We learned a lot from the process and we could create something from nothing. It’s a rare chance for designers. A lot of time designers have to design something based on what they’re getting, not from scratch. This article originally appeared on Fortune.com

Samsung lost billions of dollars over Galaxy 7 - TIME Business

Samsung’s Smartphone Recall Is Costing It Billions of Dollars

Posted: 12 Oct 2016 06:44 AM PDT

(SEOUL) – Samsung Electronics Co slashed its quarterly profit estimate by a third on Wednesday, soaking up a $2.3 billion hit from ditching its flagship smartphone in what could be one of the costliest product safety failures in tech history.
Quantifying the financial pain of Tuesday’s move to scrap the Galaxy Note 7 smartphone after a global recall and weeks of mounting problems, the world’s top smartphone maker said it expects its July-September operating profit was 5.2 trillion won ($4.7 billion), down from the 7.8 trillion won it estimated five days ago.
Samsung said in a statement the 2.6 trillion won ($2.3 billion) guidance cut reflects the sales and earning impact it currently expects from the decision to permanently halt sales of the $882 Note 7 device. Its third-quarter revenue estimate was also cut to 47 trillion won from 49 trillion won previously.

The new earnings guidance is 30 percent below third-quarter 2015’s operating profit, and left investors and analysts pondering the longer impact on Samsung’s brand and earnings. Rival suppliers of smartphones that use the Android operating system, like Samsung’s, stand to benefit if the Note 7 damage drive consumers elsewhere.
“It’s possible there could be additional profit impact in the fourth quarter but it likely won’t be as large as the third quarter,” said Park Jung-hoon, a fund manager at HDC Asset Management, which owns shares in Samsung. “I think it’s possible for fourth-quarter profits to come in as much as the high 7 trillion won range.”
Samsung shares ended down 0.7 percent on Wednesday, with the Seoul market closing before the earnings guidance cut was announced.
HDC’s Park said the initial guidance issued last week likely already factored in a 1 trillion won profit impact, putting the total third-quarter earnings hit at around 3.6 trillion won. While this was a major blow, he said some investors had feared the profit impact could be as large as 5 trillion won this year.
Billion-dollar buyback?
Samsung shares have already fallen 10 percent this week and are on track for their biggest weekly decline since May 2012, having touched a one-month low of 1.494 million won as investors worried the Note 7 crisis could inflict long-term damage on Samsung’s reputation and earnings.
Some investors said Samsung may need to return more cash to shareholders, either through a dividend or additional buybacks, to calm market jitters. HDC’s Park said the cash-rich firm may need to announce a buyback of between 2 trillion won and 3 trillion won in order to mollify shareholders whose nerves have been jangled.
The tech giant announced the recall of 2.5 million Note 7s in early September following reports of the phones catching fire. The firm appeared to have the situation under control as it issued replacement devices with different batteries, until new phones also began to smoke and combust.
Investors and analysts agreed that the damage to Samsung’s brand and future earnings would deepen the longer the market was left in the dark about the origin of the fault. Some have already predicted lost revenue in the region of $17 billion for Samsung.
“There needs to be explanation from Samsung in order for consumers to understand that problems won’t occur in the next models…Samsung needs to clearly explain and admit what went wrong,” said IBK Asset Management fund manager Kim Hyun-su. The asset manager owns shares in Samsung.
Samsung would likely push ahead to get the latest version of its premium S-series smartphones to market as soon as possible, fund managers said. Typically, the South Korean company unveils a new Galaxy S phone on the sidelines of the Mobile World Congress tech trade show in the first quarter as it battles AppleInc to stay at the top of the smartphone market.
‘Damage control’
Experts are baffled by what could be causing the overheating in the replacement phones, if not the batteries, and Samsung has not commented.
An official at the Korean Agency for Technology and Standards, which is investigating the problem alongside Samsung, said the fault in the replacement devices might not be the same as the problem in the original product. The official asked not to be identified as he was not authorised to speak publicly.
Aviation authorities and airlines around the world are telling passengers to switch off their Note 7s and keep them out of checked baggage, amid fears they could bring down a plane.
“Damage control at Samsung will face an uphill battle to redeem the company’s tarnished image owing to the dangerous and dramatic nature of the phone’s failure,” Vijay Michalik, an analyst at research firm Frost & Sullivan, said.
While the damage to Samsung’s brand, if not its earnings, remains hard to quantify, negative publicity from the botched recall could touch off a turf war among Android smartphone manufacturers, analysts said.
Consumers tend to commit to their choice between Apple’s iOS operating system and Google’s Android, leaving Samsung’s fellow Android manufacturers such as LG Electronics Inc and Alphabet Inc’s Google in prime position to strike.
($1 = 1,114.7500 won)
(Reporting by Se Young Lee; Additional reporting by Joyce Lee and Nataly Pak; Writing by Lincoln Feast; Editing by Stephen Coates and Kenneth Maxwell)

Philippines's President Duterte is planning to break with USA -

Rodrigo Duterte has vowed to expel American troops from the Philippines, accused the C.I.A. of plotting to kill him and insulted President Obama with an obscenity.

But beyond the blasts of hyperbole — he recently compared himself to Hitler — lies a real and potentially historic shift in Philippines foreign policy.

In public statements and interviews during the past week, Mr. Duterte’s top foreign policy advisers said he was seeking to break the Philippines out of the United States’ orbit and signal to China that he is ready to negotiate closer ties after years of wrangling over its military presence in the South China Sea.

The move is a radical departure for a country that has historically been the most dependable American ally in Southeast Asia, and could undermine Mr. Obama’s so-called pivot to Asia, a keystone of his foreign policy. That strategy depends on American allies to counter China’s increasing power in the region.

move has already tilted the balance of power, said Richard Javad Heydarian, a political scientist at De La Salle University in Manila. By declining to press claims against China over disputed territory there, despite a favorable ruling by a United Nations tribunal, Mr. Duterte has made it hard for the United States to galvanize international pressure on China over the issue.

“Almost single-handedly Duterte has reshaped the regional strategic dynamics, with both Beijing and Washington recalibrating their next move in the South China Sea as they try to anticipate the Filipino strongman’s foreign policy trajectory,” Mr. Heydarian said.

Mr. Duterte, who is expected to visit Beijing this month, has made no secret of his worldview.

“I will be reconfiguring my foreign policy,” he said in a speech last week. And at some point, “I will break up with America.”

Often after Mr. Duterte makes an over-the-top pronouncement, an aide emerges to walk it back. But in this case, the retreat was slight.

Mr. Duterte was not seeking a breakup with the United States, the president’s spokesman, Ernesto Abella, explained, so much as “an open relationship.”

On Tuesday, Foreign Secretary Perfecto Yasay Jr. went further, explaining in a statement posted online that the Philippines needed to chart a new, independent foreign policy because “America has failed us.”

independence from the United States, its former colonial master, in 1946, Mr. Yasay wrote, “the United States held on to invisible chains that reined us in towards dependency and submission as little brown brothers not capable of true independence and freedom.”

American officials have sought to deflect and diminish the significance of these statements, and emphasize the benefits to the Philippines of the American presence.

“Our history of cooperation spans 70 years, and our commitment to this country remains unchanged,” the United States ambassador, Philip S. Goldberg, said Wednesday in a speech to the American Chamber of Commerce of the Philippines here. “The Philippines is a key strategic partner of the United States, and our military alliance, development assistance and commercial cooperation continue.”

Although Mr. Duterte declared last month that the annual joint military exercises now underway on the island of Luzon would be the last during his administration, American officials said his government had made no formal requests to halt any programs. Nor has it followed up on Mr. Duterte’s threat to eject American forces from the southern Philippines, where a rotating force of 50 to 100 troops helps combat Abu Sayyaf, an Islamic-themed kidnap-for-ransom gang.

“As it has been for decades, our alliance with the Philippines is ironclad,” the American defense secretary, Ashton B. Carter, said late last month.

• 
  

The United States is giving the Philippines over $90 million in military aid this year and has provided more than $1 billion in nonmilitary support over the last five years, much of it for disaster relief, American officials said.

On Friday, Defense Secretary Delfin Lorenzana said that “we can live without” the military aid.

Some of the tension between the allies has come from international outrage over Mr. Duterte’s bloody campaign against drugs, which has led to the killing of about 1,400 suspects by the police and hundreds of other extrajudicial killings. It was his concern that Western powers would lecture him over the policy that prompted Mr. Duterte’s denunciation of Mr. Obama, as well as similar tirades against the United Nations and the European Union.

Mr. Duterte, 71, identifies himself as a socialist and views the West through the lens of the Cold War and the Philippines as the victim of historic American imperialism.

But the recalibration also provides an opportunity to improve ties with China, the region’s biggest military power and largest economy. China was the Philippines’ second-largest trading partner last year, with total trade of $17.6 billion. (The United States was third and Japan first.)

China has been making inroads in the region with promises of investment and with its military expansion in the South China Sea, where it has occupied islands claimed by the Philippines, Vietnam and other countries, in some cases building forts.

That dispute led to deteriorating relations under the previous Philippines administration, which filed a claim against China with the United Nations maritime tribunal over the Scarborough Shoal, a reef claimed by both nations and occupied by China.

The tribunal ruled in the Philippines’ favor in July. There is no enforcement mechanism for the ruling, and it has been dismissed by China.

But the victory has given Mr. Duterte a stronger hand in negotiations, where he is expected to use the ruling as leverage in reaching his own deal with China in a way that will allow its leaders to save face.

In August, he sent former President Fidel Ramos, 88, to Hong Kong to meet with officials in what Mr. Ramos described as an effort to build trust and find common interests.

Advisers to the president say one potential deal would be to let China maintain control of Scarborough Shoal if it made concessions such as restoring access to Filipino fishermen and investing in infrastructure development in the Philippines.

“He doesn’t want to provoke China any further,” Jesus G. Dureza, a longtime friend of Mr. Duterte’s who holds the cabinet post of peace adviser, said in an interview. “He feels aligning with our allies against China is not going to benefit the country.”

Mr. Dureza said he and other cabinet members favored opening direct talks with China in part because of fear that, despite a 65-year-old mutual defense treaty, the United States would not be willing to defend the Philippines.

“The idea is that our allies are not going to go to war for us, so why should we align with them?” he said.

Relations with Beijing have already grown warmer, he said, with Chinese officials saying that now “we can talk like Asians across the table with Asians.”

At the same time, despite the sometimes harsh words, Philippine officials have made it clear that the new president does not want to abandon the United States.

“While we would like to foster a closer relationship with China, we will certainly not engage in any alliance with China in a military viewpoint because that has never been the intention of the president,” Mr. Yasay, the foreign secretary, said at a Senate hearing on Thursday. “The president, on many occasions, has said categorically that he will only have one military alliance, and our only ally in that respect is the United States.”

That statement may suggest a future in which the Philippines plays the big powers against each other.

Bankers' love for London makes relocation after Brexit difficult - TIME

Bankers’ Love of London Complicates Brexit Relocation Plans

Posted: 11 Oct 2016 12:26 AM PDT

(LONDON) – As Britain heads for the E.U. exit, financial firms intending to move London-based jobs to continental Europe face a costly choice: offer generous relocation and redundancy packages, or expect a flood of lawsuits from disgruntled staff.
Employment lawyers say some worried City workers have already been in touch to clarify their rights if banks, asset managers and other businesses decide they need new homes in the euro zone for operations hit by Brexit uncertainty.
While the terms of Britain’s exit remain unknown, many firms operating in the City of London are intent on protecting their right to sell financial services throughout the European Union under its “passporting” rules. This is likely to mean setting up shop in a center still in the bloc, such as Paris or Frankfurt.

But lawyers told Reuters this option could expose employers to legal action if workers in love with London life, or who have pressing family reasons to stay in the British capital, don’t want to move or feel under-compensated for their troubles.
“The practical logistics of moving lots of people are complex and the legal side will also be very complex,” said Crowley Woodford, partner at law firm Ashurst. “It will be very hard for banks to avoid constructive dismissal lawsuits. There will be the headache of litigation coming out of this.”
Prime Minister Theresa May said last week she would trigger what is likely to be a two-year process to leave the E.U. by the end of March.
This heightened a sense of urgency among financial services firms to decide which parts of their businesses need to be moved, to where, and when, industry sources said.
Investment banks have already warned they could move thousands of jobs if the City loses access to the E.U.’s single market, while the European Central Bank has signaled it could force euro trading out of London, the world’s largest foreign exchange market.
Many bankers are reluctant to go. One told Reuters that being forced to relocate would make his life very difficult. “I am working for a European bank which might or might not decide to move out. It would be difficult to uproot my family and children to a new country,” he said, speaking on condition of anonymity.
Risky Materials
Bank chiefs acknowledge any shift must be done with great care. Alex Wilmot-Sitwell, who heads the European business of Bank of America Merrill Lynch, likened moving operations – including staff – to handling hazardous materials.
“The materials that are being moved are risky materials, and you don’t move nuclear waste in a race,” he told a parliamentary committee last month. “You do it in a very carefully coordinated and managed process.”
HSBC is already shifting 1,000 jobs from London to a new commercial and retail banking headquarters in the city of Birmingham, about 160 km (100 miles) away. While unrelated to Brexit, this move within the same country and currency zone will take three years to complete.
Before Britons voted on June 23 to leave the E.U., HSBC Chief Executive Stuart Gulliver estimated that around 20 percent of his 5,000 London staff who work in global banking and markets would move to Paris in the event of Brexit, depending on the terms.
The stakes are high. Britain’s financial industry could lose up to 38 billion pounds ($48 billion) in revenue if it ends up with restricted access to the EU single market, according to a report commissioned by an industry group.
Banks have been quick to quash any media reports that they have already decided how many employees to relocate.
But consultancy firm Oliver Wyman estimated that if finance firms lose the right to sell their services freely across Europe, 75,000 jobs in Britain may disappear.
Those jobs wouldn’t necessarily all reappear in other E.U. countries, as banks may decide that the difficulty of relocation makes some parts of their business unviable.
Nevertheless, analysts at JP Morgan have estimated that eight major U.S. and European banks face a combined $7.5 billion bill in the next five years if they need to move capital markets operations out of London.
Under British law, an employer cannot force workers to move abroad without risking a breach of their contracts, giving staff the opportunity to claim constructive or wrongful dismissal.
Even those firms which have negotiated clauses theoretically allowing them to transfer staff to a location of their choice may find it hard to enforce such provisions at tribunals that handle employment disputes.
“Tribunals are very sensitive about whether it is reasonable to enforce these clauses on any employee because of their own circumstances. They may have children in schools, partners who work for other firms who might not be able to relocate,” said Kevin McCavish, who heads the employment team at Shoosmiths law firm.
“Exercising those clauses must be done in a reasonable fashion – giving employees adequate advance notice and consultation, giving relocation packages etc,” McCavish said.
Relocation or redundancy
Many employers must decide whether to move London-based staff or pay them off and hire new workers where any new foreign operation is set up. Neither option will be cheap and both carry significant legal risk.
“For many operations, with the exception of key personnel, (redundancies) might be their preferred choice. It probably would be cheaper and that would give the bank the flexibility to recruit in other jurisdictions,” McCavish said
McCavish has already received inquiries from worried employees. “Their concerns are mainly about the financial packages that the bank is proposing for them. They are concerned the bank isn’t actually considering relocating their jobs – it is more a question of the bank making everyone redundant at their place of work in the U.K.,” he said.
U.K. legislation gives employees the right to keep their jobs if they are willing to follow the business of their team abroad on at least the same terms and conditions as in London.
But Ashurst’s Woodford estimates that nine out of 10 of any potential ‘transfers’ will involve redundancies with packages that are so generous that staff members waive these rights and opt against suing the bank.
For those who do take legal action, compensation for unfair dismissal in Britain is capped at around 79,000 pounds ($101,000), a relatively modest sum when legal costs are factored in.
Some bankers might be persuaded to move but want to keep their big city life, meaning the quieter charms of Germany’s financial capital are less attractive.
“I would consider relocating to Paris but not Frankfurt. Very few people would go to Frankfurt,” said another banker. “Paris is a large metropolitan centre with lots of culture and things to do.”
However, some senior staff might remain based in London and commute to Paris by high-speed train, he said, adding: “If my family weren’t happy, I wouldn’t move.”

Brexit may meet hard landing - Wall Street Journal

Oct. 9, 2016 5:30 p.m. ET

3 COMMENTS

Last week’s sterling flash crash was over in minutes. But the perception of instability that hangs over the U.K. after a week of political drama may be harder to dispel. 

Prime Minister Theresa May was successful in her first two months in office in restoring calm following the chaotic aftermath of the June Brexit referendum. By refusing to be rushed into quick decisions on Britain’s future relationship with the European Union, she raised hopes of a relatively smooth Brexit, which was reflected in the swift recovery in the economy and the markets from the initial referendum shock. But her speeches, and those of some of her colleagues, at last week’s Conservative Party conference have fueled anxieties among investors and companies over the direction in which the U.K. is now heading.

Those anxieties only partly relate to Brexit itself. Mrs. May has signaled what was already widely assumed: that the U.K. is heading for a hard form of Brexit in which it likely quits the EU customs union and single market. That is the implication of her pledge to reclaim full control of immigration to Britain and to remove the U.K. from the jurisdiction of the European Court of Justice.

Officially, the U.K. hasn’t made any decisions on what future relationship it wants to pursue with the EU, and there are still some in the government pushing for a softer form of Brexit, if only to avoid any fiscal damage should the U.K.’s financial-services industry lose unfettered access to the EU market. But a “soft Brexit” has never looked like a politically viable option, not least because the U.K. is unlikely to consent to abide by rules over which it has no control.

SEE MORE FROM SIMON NIXON

• Risk of Deglobalization Hangs Over World Economy Oct. 5, 2016 
• Crisis of Globalization Lies Behind Deutsche’s Woes Oct. 3, 2016 
• No Quick Fix to City of London’s Brexit Conundrum Sept. 28, 2016 
• EU Pushes Back Against Protectionist Forces Sept. 25, 2016 
• Free-Movement Question Isn’t U.K’s Only Hurdle to Accessing EU MarketSept. 21, 2016 
• Brexit Revives Debate Over Irish Reunification Sept. 18, 2016 
• Britain’s Post-Brexit Trade Ambitions Run Up Against Protectionist ForcesSept. 14, 2016 
• French Centrist Plots Rebel Run for Presidency Sept. 11, 2016 

Mrs. May’s other Brexit-related announcement also points to a hard deal for the U.K. By committing to invoke Article 50 of the Lisbon Treaty—thereby setting the clock ticking on a two-year exit negotiation with the EU—by the end of March 2017, the U.K. has given up one of its few points of leverage over the Brexit process. That may have been politically unavoidable, given demands from factions of her party and from business not to prolong the uncertainty. But it does mean the U.K. will now go into the negotiations without any commitment from the EU to transitional arrangements or to extend the negotiating period beyond two years that some in the U.K. had wanted.

It also means the EU will now enter the negotiation holding the better cards. The U.K. has the most to lose if the two sides fail to reach a full agreement by the end of the two-year negotiating period and are obliged to trade on World Trade Organization terms. French finance minister Michel Sapin made clear the EU will press this advantage, telling The Wall Street Journal that France will insist on all aspects of the divorce and future trading relationship being agreed in two years.

What appeared to also rattle the markets last week was the vision that Mrs. May and other ministers set out for a post-Brexit Britain. Part of this vision seemed to hinge on reducing the number of foreigners: in schools, in the health system, and in British-based companies. Mrs. May also appeared to take aim at the international business and financial elite who have made their home in the U.K., telling them that “if you are a citizen of the world, you are a citizen of nowhere.”

Mrs. May also set out an economic vision designed to address working-class concerns over perceived failures of globalization that appeared to have been lifted from the opposition Labour Party. This includes a new industrial strategy that would identify and support “strategic industries,” a policy to add workers to corporate boards and controls on energy prices. She also appeared to take aim at the independence of the Bank of England with criticism of its quantitative-easing program. 

At last week’s annual meetings of the International Monetary Fund in Washington DC, there was widespread shock at the direction in which Mrs. May appears to be taking the U.K. To many observers, this apparent policy pivot has raised fears that post-Brexit Britain will turn inward, rather than taking the opportunity to embrace a future as an open, business-friendly economy.

The danger for Mrs. May if this perception takes hold is that she risks alienating three groups vital to her own success.

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The first is international businesses, whose investment is crucial to the long-term economic fortunes of a country that currently runs a near 6% current-account deficit. Many of these companies use the U.K. as a hub to serve European markets and rely on the EU’s current freedom-of-movement rules to ensure they can recruit the necessary foreign talent. 

The second is European governments, whose goodwill is vital to securing a good Brexit deal. Many EU governments, including France and Germany, have already reacted to signs of anti-foreigner sentiment in the U.K. by hardening their own rhetoric toward the British government. 

The third group is Mrs. May’s own parliamentary colleagues, who won a general election only 18 months ago. Many on both sides of the Brexit divide may wonder why they are now being asked to back policies that appear to have been borrowed from their defeated Labour and UK Independence Party opponents. 

With a parliamentary majority of only 17, Mrs. May’s reputation as a stabilizing force may fall victim to her ambitions.

Write to Simon Nixon at simon.nixon@wsj.com