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UK Economic Recovery; Eurozone Recovery; US GDP Growth Higher Than Expected; US Stock Markets Down; European Markets Fall; US Fast Food Workers' Strike; Ford Unveils New Mustang; Make, Create, Innovate: Texlon; Apple and China Mobile Deal

Aired December 5, 2013 - 16:00   ET



MAX FOSTER, HOST: Growth goes up, stocks come down. The Wall Street slump continues on fears of Fed tapering. It's Thursday, December the 5th.

Onward with austerity. The British government vows to keep on cutting.

A Mustang Mulally. Ford's CEO tells us about his brand-new model.

And Beijing bashes bitcoin. Chinese banks are banned from using the digital currency.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Hello to you. In a moment, we'll hear from the CEO of Ford on the new Ford Mustang and his views on the US economy. We begin, though, tonight with a triple-header of major economic news. We're seeing encouraging signs of growth on the road to recovery.

In the UK, ahead only, the government announced a big jump in growth forecast today and vowed to stay the course on austerity. The eurozone appears to be at a crossroads. The economy is still contracting this year, but the ECB has raised growth forecasts for 2014.

And the United States seems to have turned the corner. GDP growth for the last quarter was revised upwards to an annul rate of 3.6 percent, much higher than expected.

UK chancellor George Osbourne touted Britain's sharp upturn today as justification that his austerity measures are working.


GEORGE OSBOURNE, UK CHANCELLOR OF THE EXCHEQUER: It's still not as strong as we'd like it to be, but this is the largest improvement to come in economic forecasts at any budget or autumn statement for 14 years.


OSBOURNE: I can report --


OSBOURNE: Mr. Speaker, I can also report that Britain is currently growing faster than any other major advanced economy.


OSBOURNE: Faster than France, which is contracting. Faster than Germany. Faster, even, than America.


FOSTER: But it's not all good news for UK workers. The government has unveiled plans for an introduction of the highest retirement age in the developed world. By 2040, the pensionable age in the UK will be raised to 69 years. This will affect most workers who are currently under the age of 50.

In the US, the retirement age is expected to be 67 by 2050, and workers in Japan can plan to relax even earlier. By 2050, the retirement age will be 65.

With more being expected to -- more being expected, rather, from UK workers, union leaders say the recovery is not all it seems.


KAREN JENNINGS, ASSISTANT SECRETARY GENERAL, UNISON UNION: Let's think about where the wealth of this country is going. It's going to the top 1 percent of people. They're all experiencing growth, while everybody else is experiencing a downturn. If we shared the cake out fairly, we could afford these things.


FOSTER: The UK government says the only way for everyone to feel the positive effect is to keep bringing down the deficit. Sajid Javid is a conservative politician and the financial secretary to the British treasury. He told Nina Dos Santos that the commitment to austerity would pay off in the future.


SAJID JAVID, FIANNCIAL SECRETARY TO THE UK TREASURY: I think what we heard from the chancellor today is that the hard work of the British people is paying off, and that this government will not squander their efforts.

We heard more about the deficit, which is already down by more than a third, but the projections are that it will fall even faster. This is clearly generating confidence in Britain and investment.

And so I think that's one of the key reasons that we saw a big upgrade in the growth forecast for the country. In fact, you heard the chancellor say that the UK is currently growing faster than any other Western economy.

And also, we heard good news on jobs. Not only that today in Britain, more people are employed than at any other time in our history, but the job forecasts are a positive -- a really significant upgrade.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: The one thing that this statement doesn't address is the rising cost of living here that has been eroding living standards for a number of years. Even if we are, as your government is predicting, going to see a return to growth, doubling those expectations, it isn't really filtering through to the average person's pocket.

JAVID: Well, the -- what you heard from the chancellor today was that you need to have an economic policy that works, that brings around recovery, if you're going to help people with living standards challenges. And that's what we're seeing, growth and jobs.

You cannot just have a menu of potential living costs, measures you can take, because you've got to be able to fund them, you've got to put them on a sustainable footing.

So you heard further measures today from the chancellor, for example, because of the growing economy, we can take such as the freeze on the fuel duty, which will mean that by next year that the average British motorist, every time they fill up their car, they're going to pay 11 pounds less than they would have had we continued with the policies of the previous government.

All this costs money, and that money can only be generated if you have a growing economy that is creating jobs.

DOS SANTOS: It's a frustrating message for the young people out there, because pensioners are sitting on decent pots of money, they're going to be able to retire much, much earlier than people who were born in the 1990s or 1980s.

This is a difficult message for young people to swallow today. They can't get on the job market, they can't get on the housing market, and now they're going to have to work until they're at least 70.

JAVID: Well, I think young people, clearly they can see the times ahead, and they see many, many challenges, not just in Britain, but I think that's true the world over. And they are a lot smarter than I think some people give them credit for.

They realize that to have those opportunities that they want, the opportunities that perhaps you had and I had, that they need a growing economy. They need an economy that is competitive, and they also need politicians that will take difficult decisions on behalf of not just this generation, but their generation.


FOSTER: Well, predictions for the eurozone aren't quite so rosy. The ECB has raised its growth forecast for next year but still warn that inflation is likely to stay below targets for at least the next two years. The ECB president, Mario Draghi, said the single market's future depended on putting its problems in the past.


MARIO DRAGHI, PRESDIENT, EUROPEAN CENTRAL BANK: The fundamentals of the euro area are strong, in a sense, because the major policy mistakes of the previous years are on the way to be corrected. The euro area can afford doing the structural reforms it needs. In this sense, the fundamentals are strong.


FOSTER: Well, Nina Dos Santos spoke with global economist Bronwyn Curtis and asked what she expects for rates going forward.


BRONWYN CURTIS, GLOBAL ECONOMIST: In the UK, inflation is not their major concern right now. They want to get the economy going at the Bank of England, and so they're looking at unemployment. And they say they'll make some more decisions when it gets down to 7 percent, which is expected in 2015.

The European Central Bank, on the other hand, is worried about deflation, because even now, they're only forecasting inflation to be between 1 and 1.5 percent over the next couple of years, and their target's 2 percent.

DOS SANTOS: And remind us again, how scared should we be about deflation in the eurozone area? And what exactly can Mario Draghi do about it?

CURTIS: Well, they can -- they are concerned about it. Mario Draghi made it clear today at his press conference that they were still concerned. And they are looking at other measures. They did discuss perhaps having negative interest rates.

DOS SANTOS: Yes, to stop banks parking their money with the European Central Bank. But --

CURTIS: And hopefully, they'll lend it. That's the idea. They're also talking about other measures that they have in their toolkit. So, they were very clear that they are more looking at buoying up the economy with further rate cuts, whereas the Bank of England is doing just the opposite. We're not expecting any rate cuts at all now.

DOS SANTOS: So, we've got this interesting dynamic, perhaps ironically so, after all the concerted central bank efforts that we've seen since the credit crunch and crisis, that they're all going in different directions and, indeed, the European Central Bank could cut even further. We don't have anywhere else to go, do we, for the ECB? Zero?

CURTIS: Well, they could go below zero, of course, but it's -- and they can do things. And I think Mario Draghi has been trying to make sure that you don't lose confidence, because growth is very sluggish in Europe. And we have unemployment up around the 12 percent level. So, it's really, really tough.

And what he's worried about is that people will stop spending, and if that happens, then you do get deflation, and then people put off spending, and you go back into recession.


FOSTER: Well, as we've mentioned, the very positive piece of economic data in the US out today. Third quarter GDP growth -- grew, rather, as an annualized rate of 3.6 percent, much higher than expected. Zain Asher is at the New York Stock Exchange with details on that. So, were you expecting it?

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hi, Max. Well, not exactly. It's certainly a lot stronger than anyone had expected, as you mentioned, third quarter GDP coming in at 3.6 percent. The best reading we've gotten, Max, by the way, since the first quarter of 2012.

What's interesting, though, is that part of the reason the GDP was so strong is because of a buildup in inventories. So businesses really did expect consumer demand to be there, and so they stocked their shelves with more product.

However, when you actually look at the GDP report, you sort of peel back the layers, you look at it under a microscope, you'll see that consumer spending actually not coming in that strong. So even though inventories showed sign of improvement, consumer spending still relatively weak.

But what's interesting is the market reaction. Despite the strong headline number, 3.6 percent, you look at the market reaction, the Dow ended the day down by 70 points.

Part of the reason, Max, I'm sure you've heard it, it's sort of a situation we're in here in the US where good news in terms of economic reports equals bad news for stocks because it sort of signals that the Fed may begin to taper sooner than expected.

Also want to mention the fact that December traditionally a good month for stocks. However, we've seen such a rally this year, the Dow is up 21 percent for the year, so it's a good time for profit-taking.

But also lastly, I just want to mention that the GDP report, even though the headline number, 3.6 percent, is certainly good, certainly strong, when you peel back the layers and you actually look at it, there is some weak spots. Some people are actually saying that if it actually was as strong as you think it is looking at the headline number, you might even have seen the market sell of even more. Max?

FOSTER: OK, Zain, thank you very much, indeed. And on that point, European stock markets died fall on Thursday, with those US GDP growth figures, that fueled worries, really, that the Fed may begin to rein in its bond-buying program.

London had its least-bad day of the bunch, though. The Bank of England's monetary policy committee kept interest rates on hold, so that was good news.

Coming up, a new version of an iconic car. We'll hear from Ford's CEO, Alan Mulally, about the newest Mustang when we come back.


FOSTER: Now, just as workers in the UK complain of not feeling the effects of the economic recovery, fast food workers in the US are protesting today. They're demanding a higher minimum wage. Alison Kosik is in downtown Manhattan, where the rally is about to get underway. Hi, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Hi, Max. So, those walkouts, those protests, they have ended here in lower Manhattan, just blocks away from Wall Street, actually. That rally is set to begin within minutes.

Sort of a culmination of what's been happening all day across the country. In 100 cities, fast food workers have been walking off the job to demand the federal minimum wage to go up from $7.25 to $15 an hour.

These protests have really been getting a lot of traction here in the United States lately because of the recession. Because what happened in the recession was 8 million jobs were lost, many of those jobs haven't come back, and a lot of people desperate for work have been taking these minimum wage jobs.

And a lot of the people taking those jobs are people 25 years of age and older, people with families, and they're realizing they just can't make ends meet. So, thus, you've got these protests that are really building in momentum lately, culminating to today.

And Max, this push is likely to continue, because six out of the ten fastest-growing positions in the US over the next decade are expected to be in low-wage positions. Max?

FOSTER: What do they want? Are they asking for government help or are they asking for help from the employers?

KOSIK: Specifically, they're asking for help from their employers. They want their employers to pay $15 an hour, but their employers don't have to do that because the federal minimum wage is $7.25.

Now, of course -- so, in essence, what they're doing is they're appealing to lawmakers, to Congress, to go ahead and pass a law that makes the federal minimum wage $15. But that is really a ways off, because you think about the lobbying community just for the restaurant association itself, it really is a long ways off.

And that's why you're seeing many states, actually, here in the United States, not waiting for Congress to take action. Many states are passing higher minimum wages themselves before they have to wait on Congress to do so. Max?

FOSTER: And presumably, there's a lot of public support for this, because so many people are on that type of wage.

KOSIK: There's a lot of public support, but there are also many, many critics, and the critics are, as we say, that businesses could have a really hard time making ends meet themselves, that their costs will go up, and they can pass those costs down onto consumers. That could hurt business.

Businesses are also saying that a higher minimum wage of $15 an hour is a job killer, that it would cause employers to lay off employees because they can't afford to pay everybody $15 an hour, so they would move toward automation.

So, there are a lot outspoken critics on this just as well as public sentiment for this idea of having a $15 minimum wage.

FOSTER: Alison, thank you very much, indeed, for joining us from New York. Well, a few blocks uptown, Ford has been unveiling its new Mustang. The iconic car with its signature grill is almost 50 years old.

It has come on in many different shapes and sizes over the past five decades, and Ford says the new Mustang is completely resigned with a better fuel -- exactly, redesigned with better fuel economy and the option of a four-cylinder engine.

This will be the first Mustang to be available globally. Isha Sesay sat down with Ford CEO Alan Mulally and asked what's so special about this new car.


ALAN MULALLY, CEO FORD: Well, I'll tell you what's so special about it is that this is a sports car that is going to be available to everybody around the world.

So not only does it have just absolutely stunning styling, but also all the technology innovation and the most powerful vehicles in the world, but also it's going to be the most affordable. And so everybody around the world is going to get a chance to drive the Mustang again.

ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: You mentioned everyone around the world. There's a global roll-out for this car. Tell me about it.

MULALLY: Well, it really is exciting because it really starts with our One Ford plan, and we decided seven years ago that we were going to serve all the markets around the world with a complete family of best-in- class vehicles.

So, all of the roll-outs that you've seen from Ford over the last seven years have absolutely delivered on that promise. So here comes the Mustang, the last one to go global. So the vehicle you see behind us, left-hand drive, right-hand drive, meets all the requirements around the world --


MULALLY: So we're launching it in New York, also in LA, also in Barcelona in Spain, in Shanghai in China, in Sydney in Australia. So, simultaneously in six cities around the world, everybody is going to get a chance to see their new Mustang.

SESAY: It has such a fabled history, 50 years and going strong. How does this new design preserve the tradition of the Mustang?

MULALLY: That was a really important design consideration. And of course, we operate all round the world, so we could collect the knowledge from around the world about what people really want and believe.

And what they really wanted was the heritage of the Mustang to be preserved, and then to continue to enhance it and use enabling technology to make it even better. But what they really wanted was that American icon, but also that would appeal to the global passion that they have for that American icon.

SESAY: Ford is coming off a good November of car sales.


SESAY: And we also so numbers released this week saying they're the best-selling brand in Canada.


SESAY: What's driving US-Canadian car sales? And crucially, as we come to the end of the year, can that continue into 2014?

MULALLY: We think so, and in our November sales, these were our highest sales since 2004 based on the strength of this complete family of Ford vehicles. And we think that our sales will be at -- probably around 12 percent for 2013.

SESAY: You've got to be happy with China. The sales in China year- to-date up over 50 percent.

MULALLY: It's really quite remarkable, because to your point about the size of the market, the market in the US will be about 16 million units this year, around 14 million units in Europe. This year, China alone will be 22 million units.

SESAY: Twenty-two million units --

MULALLY: Twenty-two.

SESAY: -- in China alone.

MULALLY: So, 60 million of the 80 million units sold worldwide will be in the Americas, Europe, and China. So, that's why it's just such an important market for us to serve.

SESAY: I have to ask you, with you talking about there being much to do, still must ask you this question, because it is the question that everyone is talking about. You still have stuff to do at Ford, but are you in the running to replace Steve Ballmer as Microsoft's CEO?

MULALLY: Isha, I love serving Ford.


MULALLY: And we have no change in our plan. And it's so, so fun to be here introducing the new Mustang.

SESAY: Not what I asked you, though, Mr. Mulally. I said are you in the running?

MULALLY: An excellent answer. Love serving Ford.



FOSTER: You're watching QUEST MEANS BUSINESS. She didn't get the answer she was looking for. It may look flimsy, but this material is tough enough to replace bricks and mortar. We'll talk the man who made it when we come back.


FOSTER: Now, imagine being able to visit the rainforest when you're indoors. Well, it's possible, thanks to one engineer and his invention. It's called Texlon, and it's changed the boundaries of architecture. Nick Glass met the man behind the discovery to see just how he did it.


STEFAN LEHNERT, VECTOR FOLITEC: People have been dreaming for many years of covering large, large areas with a transparent material which lets the sun through but keeps the bad weather out.

NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Stefan Lehnert is a mechanical engineer. After graduating from university, his curiosity was piqued by a new kind of building material.

LEHNERT: I saw people being involved in this foil technology trying to build buildings with foils and failing. As an engineer, it's always interesting to solve a problem no one else has dealt with before.

GLASS: Lehnert worked on his own concept and made a breakthrough in 1982.

LEHNERT: The name of the invention is Texlon, transparent roofing system, and it allows architecture completely new ways of shaping buildings. And it's made out of several layers of a very sophisticated plastic foil, which we then put together in a frame. One it's installed, we pump air into the system.

GLASS: In creating this new material, Lehnert was presented with a triple challenge.

LEHNERT: We were at this position where we had to develop a product, we had to develop the technology to make the product, and we had to develop the market. People were actually thinking we were crazy.

GLASS: A key part of any sales pitch was to prove that Texlon could match conventional building materials, like steel and concrete.

LEHNERT: Some of the core properties that we always have to -- and repeatedly have to prove is that the material is self-cleansing. Dirty water will run off from the material and will not leave any stains at all.

Another key feature of the product is it's extremely strong. It withstands very high temperatures.

GLASS: It wasn't until 2001 that Texlon appeared on the world stage in an extraordinary new greenhouse built in southern England.

LEHNERT: Here we are in the Eden Project in Cornwall, southern England. It's a 30,000 square meter tropical rainforest, and it's planted in ETFE Texlon because rainforest needs light and UV light. Tropical plants, like any plants, need UV to grow without using pesticides. So, without Texlon, anything like this would not be possible.

The Eden Project was a godsend project because of its wonderful architectural features. Once we had these buildings built, architects saw it is possible.

GLASS: Texlon has now been used all over the world, most notably in the Aquatic Center for the 2008 Beijing Olympics, and more recently for the Olympic Stadium for 2014 Winter Games in Russia.

LEHNERT: We've probably been involved in, now, way over a thousand buildings.

GLASS: And this is where Texlon is manufactured, in a factory in Bremen, Germany. Sheets of plastic are marked, shaped, stitched together, and then measured to size. Lehnert's company dominates the field with an 85 percent market share.

GLASS (on camera): When you talk about at the beginning, do you have any idea how well it would work?

LEHNERT: No, we never dreamt about it. We were sort of starting with our little back door, like a garage organization. So, in a way, you would have it in your dreams, but you wouldn't dare to think it would ever become reality.


FOSTER: Amazing. You're watching QUEST MEANS BUSINESS. Coming up, Apple reportedly signs a new deal which will give it access to even more customers in China.


FOSTER: Welcome back, I'm Max Foster, these are the news headlines we're following this hour.

The United Nations has approved a joint African-French peacekeeping force to deployed in the Central African Republic. The Security Council vote was unanimous. Reports say more than 100 people were killed today in the capital, Bangui, as fighting rages between mainly Muslim rebels and Christian militia.

A two-part attack on Yemen's Defense Minister complex has killed at least 30 people. In the first stage, an assailant rammed a car packed with explosives into the building, then gunmen launched an assault on the complex. Yemen's state news agency says the militants targeted a hospital in the compound.

A severe winter storm is battering parts of Europe, disrupting transportation and power supplies. At least four deaths have reportedly are already blamed on the storm in the UK, where hurricane-force winds and a storm surge are expected along eastern coastal areas after sweeping across Scotland, Wales, and the west. Thousands of residents in northern England have been evacuated.

Pope Francis plans to create a special commission to address the issue of sexual abuse of children by clergy. The group will focus on preventing the abuse of minors and on support for victims. The pontiff has not yet picked the commission's members, and so far, there's no timetable on how soon the panel will be established.

Mexican authorities have set up a 500-meter perimeter around a nuclear waste container that was onboard a stolen truck they were looking for. The truck and its hazardous cargo were found on Wednesday. The protective casing around the radioactive waste had been tampered with, and one official says the missing thieves are likely sick or dead.

Apple and China Mobile are in negotiations to partner up in a deal that will give Apple access to more customers. With a population of 1.3 billion, China is Apple's largest market outside the US.

The iPhone may be popular in most market, but in China, it lags behind Samsung and Nokia. With this deal, things may change. China Mobile is the world's largest carrier, with 700 million mobile subscribers. That's twice the population of the US.

One study says the deal could mean an extra 1.5 million iPhones sold per month. That would be a 17 percent increase on Apple's yearly iPhone sales. Let's go to live to CNN Money's Julianne Pepitone. She's at CNN New York, and these numbers are just incredible, aren't they?

JULIANNE PEPITONE, CNNMONEY.COM: They are, it's unbelievable. As you said, the opportunity here is huge. Now we should say that this report came out of "The Wall Street Journal" and no one has confirmed it yet. Right now Apple and China Mobile are not talking. But we've known for a while that you know these two companies are going to be talking -- as you said, Max, with over 700 million subscribers, the opportunity for China Mobile and in China in general cannot be overstated for Apple.

About 1/3rd of all Smartphone sales globally are in China right now and not having this China Mobile deal, Apple's missing out on a lot right now. So you can believe that they're going to do anything they can to try to get this deal. And assuming that this deal is closed or is close to coming together, there are some things we don't know. We don't know what kind of subsidy people will get. So, it's very common for phones to be subsidized here in the U.S., but in countries like China, it's much less common. So we don't know if, you know, if that price comes in high, that might tamp down excitement a little bit. But with so many people and so many people in China just starting to get Smartphones for the first time, the opportunity just can't be overstated.

FOSTER: But it won't be the same sort of profitability as they have elsewhere presumably because they have to partner, don't they? With this big Chinese operator.

PEPITONE: Yes, absolutely. So you know for them to sign on, you have to know that Apple is going to have to pony up to China Mobile and you know maybe it's not as favorable a deal as they may be able to cut with some other people, but with twice the population of the U.S. just with this one carrier -- they're kind of at their mercy in a way. They really need to get this opportunity and Apple has been behind in China. When you're not signed on with someone like China Mobile, all of these other competitors including you know Chinese companies, they have done much better. Apple's used to being number one or number two in big markets like the U.S., but in China it's almost an (inaudible) at this point.

FOSTER: But also it's -- this talk of its struggling with its new product range in other parts of the world that I presume it needs something. If there's a new product or a big new market like China, it needs something -- Apple -- to keep the shareholders at bay, right?

PEPITONE: Absolutely. Being number one in the U.S. is a great thing and Smartphone use is increasing in some of these -- in some countries like the U.S., but it's just nothing compared to companies -- countries -- like China. There's just so many people, the market isn't as saturated, people are finally starting to ramp up. So if you aren't where the big growth is, shareholders are not going to be happy with that. Of course, China's not the only country that is an emerging market. Brazil, Chile, Peru, a lot of people are looking at those countries as well. But just with the sheer size of China, you -- I mean, you have to figure that out if you're going to be truly a global player and want to have the strong market share in one of the biggest markets.

FOSTER: Julianne, thank you very much indeed. Fascinating and we look forward to it being confirmed if indeed that happens. We'll be back with more "Quest Means Business" after this short break.


FOSTER: FiFa says it'll extend the construction deadline for three of Brazil's World Cup Venues. All 12 stadiums are meant to be ready for test events by the year's end. But football's world governing body now admits that three venues won't meet that deadline. And as Shasta Darlington reports, the stadium delays are just the tip of the iceberg.


SHASTA DARLINGTON, INTERNATIONAL CORRESPONDENT FOR CNN: Thousands of Brazilians marching through the streets in protest. Security challenges underscored when fans mobbed Pope Francis' motorcade in Rio de Janeiro. And now a deadly accident at the construction site of the stadium that will host the opening match. Serious hurdles on the road to the 2014 World Cup that kicked off in June. Two workers were killed at the Sao Paulo site, and a total of four workers have died as Brazil rushes to complete 12 different stadiums for the event. Now FiFa has scrapped its end of December deadline for all stadiums to be ready. The Sao Paulo Arena won't be finished until mid-April.

A bigger problem, however, is security. Activists have vowed to return to the streets to protest spending over $11 billion on a sporting event instead of schools and hospitals. The anarchist group Anonymous promises a World Cup of protests.

"This is the most expensive World Cup in history," she says. People aren't happy and it's time to show the world what's really happening."

Security forces have also prepared for other threats -- from international terrorism to home-grown criminal gangs. The sports minister says Brazil is ready.

ALDO REBELO, BRAZIL SPORTS MINISTER, VIA TRANSLATOR: "We can offer better security and lower risks than previous events in other countries," he says. "Our airports and metros are safer."

But day-to-day violence is a reality. From a rash of robberies on the sand of Rio's elite beaches to soaring crime rates in the Salvador. Police are stepping up operations like this one. They're looking for drugs, they're looking for arms. This is, after all, the murder capital of Brazil although most of the violence happens outside of the touristy areas. Infrastructure -- more trouble. Many of the public transit projects, airport build-outs and hotel expansions are behind schedule. Prices of flights and hotels have skyrocketed. A lot of problems to tackle and just six months left to do it in. Shasta Darlington, CNN Salvador, Brazil.


FOSTER: With the World Cup draw taking place on Friday, fans of the teams that qualified will have some frantic travel arrangements to make. For the sponsors who've already booked their place at the tournament, it's just the start of an extremely lucrative year. Jim Boulden explains.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: As teams from countries the world over were fighting for one of the coveted 32 spots, big global brands were battling it out to be associated with the (inaudible) World Cup. Estimated by some at a cost of $100 million each to be an official sponsor.

THIERRY WEIL, FIFA DIRECTOR OF MARKETING: So when you're talking to companies which are looking to have a global exposure, World Cup is the platform where you have global exposure.

BOULDEN: When it comes to current sponsors for FiFa, it's Visa not Mastercard, Adidas not Nike, McDonald's, not Burger King, Coca-Cola, not Pepsi.

ARNAB ROY, GLOBAL FOOTBALL MARKETING DIRECTOR, COCA-COLA: I think the World Cup is -- it's pinnacle.

BOULDEN: For Coke, the World Cup is key.

ROY: In 2010, the campaign was the biggest ever marketing plan for brand Coke ever, and the ambition is to go higher.

BOULDEN: Coke estimates some two billion people were actively "engaged" with the 2010 World Cup in South Africa, not just watching a match or two. Their goal, says Coke, attracting teenagers. Brand experts say global corporations are often associated with other big sporting events as well.

STEPHEN CHELIOTIS, CHAIRMAN, SUPER BRAND COUNCIL: If you sponsor things like the World Cup, the Olympics, the Champions League, you put a big ad in the Super Bowl, effectively you're saying to people we are a big, great brand -- you should aspire to be associated with us, you should want our product.

BOULDEN: And if you aren't there, your competitor will be.

ROY: This is the number one fashion for Latin America, for Europe. It's more than just a sport, it's about culture -- you have to be there. You have to go and own that space.

BOULDEN: That space also goes totally against the new trend of niche marketing and micro targeting.

CHELIOTIS: No, it's a hell of a lot of money. You've really got to justify it. And if you're honest, there's got to be some wastage there. Not everyone watching World Cup is going to be drinking Coca-Cola or whatever it might be.

BOULDEN: Though for the brands, it's not about selling a specific product. It's about your brand basking in the glow of the Super Bowl or the Olympics or defeat the World Cup. Jim Boulden, CNN, London.


FOSTER: A programming note for you -- join us on Friday for CNN's World Cup draw special. Amanda Davies and Alex Thomas host alongside two former World Cup stars -- Owen Hargreaves and Sunday Oliseh will also have a team CNN correspondents around the globe for the live 90-minute special. That's before, during and after the draw. All begins at 4:30 p.m. in London, 5:30 in Berlin Friday, right here on CNN -- a big day for football fans.

China's Central Bank has forbidden financial institutions from dealing in Bitcoin. People can still own the digital currency but commercial banks won't be able to trade, underwrite or offer insurance in it. The Central Bank says Bitcoin is not to be considered a currency. Bitcoin has rapidly gained popularity worldwide and demand has been particularly strong in China recently after the announcement the price of Bitcoin plummeted 20 percent on China's largest exchange.

But digital currency is often volatile though, and last time we checked one Bitcoin was trading at about $1,000 in China -- that's about 11 and 1//2 percent down on yesterday. Prices have fluctuated a lot in just the past month from around $226 on November the 4th to a peak of more than $1,100 a month later. That's an interesting story. We're going to go live to Seattle and Patrick Mark -- Murck. He is general counsel of the Bitcoin Foundation. Thank you so much for joining us. I mean, how much damage has this -- this news from China to the idea of Bitcoin?

PATRICK MURCK, GENERAL COUNSEL, THE BITCOIN FOUNDATION: Oh, I don't think it's done any real damage to the idea of Bitcoin. I think it's actually a positive development. The fact that you know the Chinese regulators are taking a look at this, and you know taking a cautious approach for sure but -- but not banning it or anything like that and actually we may have steps for -

FOSTER: OK, I'm sorry we've got to interrupt -

MURCK: -- Bitcoin exchanges.

FOSTER: -- you at that point. We're just going to join our sister network at CNN USA for some breaking news.