Economist 3/11/15

  1. ON MARCH 9th, hot on the heels of largest quarterly earnings on record, Apple launched its next big thing: the Watch. The timepiece goes on sale on April 24th at an entry-level price of $349. Those wanting to splash out can spend as much as $17,000. Around 7m smartwatches were reckoned to have shipped last year, a quarter from Samsung. A survey of 10,500 device-savvy people across seven countries conducted by Morgan Stanley in August 2014 reckons that most are willing to pay between $200 and $300 for their wearable.
  2. Yves Bouvier, a suave Swiss businessman owns and runs Natural Le Coultre, one of the largest shippers and storers of art for super-rich clients. He pioneered the concept of fine-art freeports—fancy storage and private-viewing facilities that are popular with plutocrats who have far more paintings, sculptures and fine wine than they can fit in their palaces. Mr Bouvier has also brokered discreet transactions between collectors, and it is this role of middleman that has landed him in trouble.On February 28th Mr Bouvier was mis en examen (charged) in Monaco with fraud and complicity in money-laundering, and subsequently bailed for €10m ($11m). Dmitry Rybolovlev, an oligarch grew suspicious after a chance meeting with the seller of a work he had bought through Mr Bouvier. He concluded that the broker must have secretly raised his cut by fiddling documents so that the buyer’s paperwork showed a higher price than the seller’s.
  3. Internet shopping accounts for less than 1% of all purchases in South-East Asia—a region twice as populous as America, where the proportion is nearly 10%. But surging smartphone use and a broadening middle class mean the market is set to multiply; perhaps fivefold by 2018, reckons Frost & Sullivan, a consulting firm.Lazada was created by Rocket Internet, a Berlin-based investor and incubator that cranks out startups designed to dominate emerging markets. Rocket still holds a 24% stake, though Lazada has now raised more than $600m from investors including Tesco, a British grocer, and Temasek, a Singaporean sovereign-wealth fund. These deals appear to value it at about $1.3 billion.Messaging services and web portals are turning to e-commerce to boost their profits. In February, Line, a popular messaging app owned by Naver of South Korea, started selling groceries in Thailand. But the most serious threat to Lazada comes from the overseas e-commerce giants. After Lazada was set up, Indonesia passed a law banning further foreign investment in e-commerce firms which hold their own inventory. Amazon has begun offering free delivery to big-spending South-East Asian shoppers who don’t mind waiting for wares shipped from America. Last month Alibaba opened an Indonesian outpost of Aliexpress, which helps shoppers import goods from Chinese manufacturers.
  4. Nature has plenty of examples of hydrophobicity, as water-shedding is known, not least the duck’s idiomatic back. But a superlative degree of it is of particular interest, because superhydrophobic surfaces are also, in effect, self-cleaning. As they shed water, any dust or dirt on them sticks better to the passing water beads than to the surface. Exposed to the elements, such surfaces stay clean, dry and free of rust or ice.Scientists investigating such natural surfaces have found they exhibit patterns and structures on more than one scale—what is known as hierarchical structuring. Chunlei Guo and Anatoliy Vorobyev, physicists at the University of Rochester, in New York, have become experts in using femtosecond lasers to make surfaces with hierarchical structuring.The pair believe it will work on any metal and, with some tweaking, on materials such as plastics, semiconductors and ceramics.So perhaps a self-cleaning toilet that sparkles after every flush is not far in the future.
  5. THE annual letters Warren Buffett sends to shareholders of Berkshire Hathaway are among the most influential documents in business.The letters have also provided an unfailingly intelligent explanation of the broader principles of investing, stripped bare of mumbo-jumbo.Yet Mr Buffett’s 50th letter to shareholders is an exception, serving to muddy rather than clarify, for two reasons. First, because it does not tackle the questions that hang over Berkshire’s conglomerate model and its durability. Second, because of the uncharacteristic coyness with which Mr Buffett and his partner Charlie Munger —respectively aged 84 and 91—discuss how or when they will give up their jobs.Berkshire has gradually shifted from being an investment vehicle that owns traded shares to a collection of wholly- or partly-owned businesses, such as Heinz, a food manufacturer. Listed equities now make up only 22% of Berkshire’s assets, down from 72% in 1994.In his letter Mr Buffett says that “I believe we now have the right person to succeed me,” but declines to specify who that is. Mr Munger’s letter is less vague than that message but not entirely consistent with it. He mentions two individuals, Ajit Jain (who runs the group’s main insurance business) and Greg Abel (who is in charge of its energy business), who he says are “world-class” managers. Berkshire is worth $360 billion and is America’s fourth most valuable firm—so perhaps it has earned the right to do as it pleases.

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