Finweek UK 06 March 2014

Finweek UK 06 March 2014

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HOW A TRILLIONAIRE MIGHT

MANAGE THEIR MONEY

4 Feedback From our readers

6 Rewind & Trending News review and preview

10 Cover How a trillionaire might manage their money

18 Insight Mauritius: the offshore property favourite

22 Embracing the e-commerce opportunity

24 The renaissance of the tattoo

32 The Gab Why traditional market research is a waste of time

36 Investment Why WhatsApp is good for Facebook’s

38 business; A risky business

40 Killer Trade: Trencor’s fate tied to the rand

43 Invest DIY A spotlight on the banking sector

44 Pro Pick Is it still time to dance?

45 House View Punts

47 Simon Says Curro, Adcock Ingram, Calgro M3, MTN

48 Small Cap Visual International:: Middle-income accommodation

49 Fund Focus PSG Equity Fund

50 Entrepreneur What’s an entrepreneur, really?

52 Start-ups: Connecting with Johann Jenson

56 Technology Road Test: Telegram; Simple billions

58 Life The week that was in SA sport

60 Directors & Dividends Dealings and payouts

62 In Brief Crossword; Sudoku

P38

A risky business

P22 SafeTrade:

Embracing the e-commerce opportuniy

Cover story: Marc Ashton and Kristis van Heerden Cover concept: Zandri van Zyl

Cover story layout: Zandri van Zyl Photographer: ER Lombard Model: Liz Bruchhausen

P57

Simple billions

P50 What’s an entrepreneur,

really?

Feedback

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EDITORIAL EDITOR MARC ASHTON DEPUTY EDITOR TANDISIZWE MAHLUTSHANA MANAGING

EDITOR NICOLE BOUCKAERT JOURNALISTS AND CONTRIBUTORS SIMON BROWN, SIMON

DINGLE, GLENDA WILLIAMS, JESSICA HUBBARD, DAVID MCKAY, BRUCE WHITFIELD, KRISTIA

VAN HEERDEN, GLENDA WILLIAMS, DANIELLE GARRETT, BLAIR BURMEISTER, WARREN DICK

SUB-EDITORS WILLEM KEMPEN, STEFANIE MULLER, JUSTINE OLIVIER OFFICE MANAGER

THATO MAROLEN LAYOUT ARTISTS BEKU MBOTOLI, TSHEBETSO DITABO, ZANDRI VAN ZYL

GENERAL MANAGER CHARLENE BEUKES PUBLISHER LEE-ANNE COOSNER PROJECT MANAGER

DEIRDRE MCDONALD CEO: MEDIA24 MAGAZINES JOHN RELIHAN CFO: MEDIA24 MAGAZINES

RAJ LALBAHADUR ADVERTISING SALES AND SOLUTIONS SALES DIRECTOR CRAIG NICHOLSON

011-322-0731 BUSINESS MANAGER (KZN) EUGENE MARAIS 031-566-4178 BUSINESS MANAGER

QUESTIONING

ETFS

In The changing face of asset management (27

February issue), covering the PwC Asset

Management survey, you included a pie

chart on the top of page 29 The

percent-age growth in passive investment as

indi-cated in that chart is extremely interesting

Active assets under management (AuM)

is expected to grow only 31.5% over the

period; whereas passive AuM will grow

an amazing 211% (from $7.3tr (2012) to

$22.7tr (2020)) Passive investments will

also double its market share (from 11% to

22%) over the period

The PwC survey accredits reduced

fees, a core-satellite approach to

invest-ment, reduced fees and the minimal

dif-ferential between alpha and beta as being

primary drivers for this The survey also

made it clear that the vehicle of choice will

be exchange-traded funds (ETFs) PwC

indicates that by 2020 most global fund

managers will also have an ‘active’ ETF

offering

First, money invested in ETFs is more

fickle than many alternative actively

man-aged instruments and this arguably

con-tributes to volatility, which will be

espe-cially magnified if the volume in ETFs

doubles in size  

There is an argument that both the

market maker and arbitrage traders will ensure the gap between the trading price of

an ETF and instruments it represents will always be minimal ETFs trade through-out the day on the premise that there will always be a bidder to pick up any offers

I distrust the notion that ‘willing buyers’

will not run shy when a flood of desperate retail sellers rush to unwind their market exposure  

Craig MartinCLARIFICATION

In our 20 February issue, we featured South African-born entrepreneur Sarah Robinson and the activism work she is doing in Palestine We touched on Rob-inson’s work with coffee business Bean There, where she cut her teeth as an entre-preneur Robinson has requested that we clarify that her activism work in Palestine

is not linked to Bean There

THIS WEEK’S

CONTRIBUTORSMarc Ashton

marca@finweek.co.za Kelly Berold kellyberold@gmail.com Simon Brown simon@justonelap.com

Simon Brown heads justonelap.com, a free resource of financial information and investment education.

Blair Burmeister blairb@finweek.co.za Warren Dick warrendick7@gmail.com Simon Dingle

simond@finweek.co.za Moxima Gama moxima@themoneyhub.co.za Professor Evan Gilbert

Head of MitonOptimal Asset Consulting.

Jessica Hubbard jessicah@finweek.co.za Graeme Joffe graeme@butterbean.co.za

Tandisizwe Mahlutshana tandisizwem@finweek.co.za David McKay

david@miningmx.com Gareth Ochse garethochse@gmail.com

Gareth Ochse is the founder of ValuationUp.com

Gavin Symanowitz gavin@blockbusterinnovation.com

Dr Gavin Symanowitz is an actuary and founder of BlockbusterInnovation.com

Kristia van Heerden kristiav@finweek.co.za Bruce Whitfield brucew@finweek.co.za Glenda Williams glendaw@finweek.co.za

For more information, visit finweek.com

18 FINWEEK 20 FEBRUARY 2014 FINWEEK 20 FEBRUARY 2014 19

LIFE IN THE PALESTINIAN WEST BANK

pres-Insight

Franklin Resources, Inc is a global investment management organization operating as Franklin Templeton Investments This material does not constitute investment advice or an invitation to apply for securities Investors should seek professional financial advice and obtain a full explanation of any proposed investment before making a decision to invest Investments involve risks The values of investments can go down as well as up, and investors may not get back the full amount invested.

© 2014 Franklin Templeton Investments All rights reserved

GLOBAL PERSPECTIVE

LOCAL EXPERTISE.

In today’s complex and interconnected world, successful investing

requires true global expertise With over six decades of experience

and more than 600 investment professionals on the ground across

the globe, we are uniquely positioned to spot smart investments

that others might miss.

To put our wealth of global investment expertise to work for you, visit

franklintempleton.co.za or contact your financial advisor.

navigating

global markets

Scrambling for skilled CEOs

Very few of us harbour any

gen-uine ambition to be CEO of a

listed company – never mind

three of them Even fewer will

take on the challenge of running a R35bn

logistics and motor dealership owner at 63

years of age Mark Lamberti, however, is

not a regular guy – which is precisely why

Imperial wants him

He replaced Hubert Brody on 1 March

and is yet to speak publicly about his

appointment His corporate history,

how-ever, is nothing short of astounding He

founded Massmart in 1990 and listed it

on the JSE 10 years later, was

instrumen-tal as chairman in driving the Walmart

takeover of the business while at the same

time bringing together a disparate group

of non-banking financial services

compa-nies and listing them under the

Transac-tion Capital banner In among all of that

he was also a director of Primedia and

served on the boards of Wooltru, Datatec

and Altron

It’s unlikely that he is doing the

Impe-rial job for the money, and for the

com-pany the appointment of Lamberti is

indicative of a number of things:

primar-ily that it succeeded in convincing him

of the merits of the job but the other is

decidedly more ominous The fact that

the board followed what it described as

a thorough internal and extensive search

and still chose a new CEO at an age

where most of his contemporaries are

happy to take cushier non-executive roles,

highlights some very serious issues around

KOOS BEKKER

The new boss at Naspers*, Bob van Dijk, only joined the group six months ago Netherlands-based Van Dijk was previ-ously head of eBay in Germany and joined the media and ecommerce group in August

2013 as CEO of online classifieds business Allegro Koos Bekker, easily one of the longest-serving CEOs on the JSE, having started in 1997, is taking another year off

to explore the world of technology before

he returns to chair the business when journalist and previous CEO Ton Vosloo steps down a year from now

ex-He previously took a year off in 2007 and when he returned in 2008, Naspers was trading at around 16 000c It is now eight times that level Can shareholders expect the same? Bekker as chairman will

be at HQ in Cape Town and Van Dijk after a year to settle in will be based out-side the traditional centre of power It’s not

a problem, says Bekker: “We’re a nomadic lot really It doesn’t matter where you send your emails from, as long as you turn up for the meetings wherever they are being held

in the world.” ■

*Finweek is a Media24 publication, which

is a subsidiary of Naspers

That’s no criticism of Lamberti – he

is obsessed with value creation, is ciously ethical in his dealings, and has

fero-an unwavering commitment to SA as demonstrated through his tireless cam-paigning against rampant crime rates

Imperial is lucky to have him He will be just the third CEO in the his-tory of the company, which started out

of a single motor dealership by founder Bill Lynch, who first bought 10% of the company in 1973 and set about creat-ing a diversified conglomerate Hubert Brody took over when Lynch became ill and died of cancer five years ago and has set about consolidating the diverse business and giving the multiple brands owned by the group a single Imperial identity

Lamberti will be looking to put his stamp on a business at a difficult point

in the cycle

THE FRUSTRATION OF BEING bom-

barded with unsolicited calls from call

centres offering products that you have

absolutely no need or want for is an

all-too-familiar feeling for most Banks,

in-surers, cellphone service providers and

gyms are common culprits and when this

plays out, it often leads us to believe that

our information is being handed out to

anybody who wants it This is about to

change

The advent of the Protection of

Person-al Information Act (POPI) is going to make

it very difficult for direct marketers to get

their hands on your personal information

But before you let out a sigh of relief,

bear in mind that the bill is also going to

have a major impact on the way that

com-panies do business – especially if that

busi-ness holds a lot of personal information

about customers

“Since the POPI Act was

signed into law last year by

President Jacob Zuma,

com-panies of all shapes and sizes

are trying to come to terms

with what this means for them

and the personal data they

hold,” says Daniella

Kaf-ouris, senior manager

for data privacy and

Law Advisory

Prac-tice, every person

who collects, stores and

otherwise modifies or uses

information is responsible

under POPI and must comply with the conditions required for the lawful process- ing of personal information

Organisations have started waking up

to the fact that they have been sleeping

on veritable gold mines of value in the form of consumer data Personal data

is a valuable commodity in today’s era

And now, the protection of that data has become equally important.

The analysis of big data has become a key basis of competition, innovation and consumer surplus for companies, which is why the legalities of POPI have to be care- fully considered

Saint-Francis Tohlang of trends lysis company Fluxtrends comments: “It forces organisations to use personal data responsibly and safeguard it At the heart

ana-of this is our privacy in the face ana-of more surveillance, privacy threats and growing distrust.”

THE BURDEN OF COMPLIANCE

As POPI is possibly among the most comprehensive pieces of privacy legislation in the world, the provisions make it difficult

to fully understand the implications.

Tohlang says that ethical data man- agement will be the result “Investing

in the ture, technology and governance to manage data in a professional and ethical manner will be a future trend that gains more traction.

infrastruc-“Perhaps the true effects of POPI will most affect those in the business of direct marketing Currently, direct marketers may collect, contact, retain and continue to share that personal information until such

a point as a consumer ‘opts out’ This is the present situation under the Consumer Pro- tection Act Under POPI legislation, direct marketers will have to obtain permission.”

FROM DIRECT MARKETING TO SOCIAL MEDIA MARKETING

Tohlang says that we will see a significant investment and drive from organisations

to engage consumers in social media marketing as a means to overcome the significant constraints POPI imposes on other channels of direct marketing such

as emails, SMS and phone calls

“Marketers and companies alike will now look to further the trend of speaking

to their consumers through narratives that appeal to their lifestyles and needs.”

He says that creating conversations within communities is what will ultimate-

ly become the way in which marketing takes shape Marketers would also need

to invest in total rewards schemes and value propositions to continually engage consumers and convince them to want to stay in touch.

To effectively manage personal mation and comply with POPI, Kafouris says that organisations must invest in establishing the required data manage- ment capabilities “While the require- ments of POPI seem onerous, they also represent good business practice If implemented correctly, complying with POPI has the potential to generate tre- mendous business value.” ■

of Personal Information Bill

Context

MARKET CAP RELATIVE TO LOCAL PLAYERS

BRITISH AMERICAN TOBACCO

KUMBA IRON ORE

ANGLO AMERICAN PLATINUM

R398bnR365bnR352bn

R192bnR181bnR178bnR163bnR148bn

R121bnR118bn

R113bnR109bn

SOURCE: Techland

ON THE INTERNATIONAL SCENE

INSIGHT

HOW WHATSAPP MEASURES UP

With Facebook’s announcement last week that it was acquiring the

rapid-ly growing, cross-platform, mobile messaging company WhatsApp, the

Finweek team thought it would be interesting to compare WhatsApp’s

market cap relative to the biggest JSE listed companies and global peers.

Yahoo! – Broadcast.com AOL – Netscape

THE NUMBERS BEHIND THE DEAL

WhatsApp’s $19bn price tag left much

of the tech world in shock and awe Here are other noteworthy figures that have emerged in light of the acquisition:

The number of times that Amazon CEO Jeff Bezos could have bought

The Washington Post with $19bn.

The number of Nkandla homesteads Jacob Zuma could build (if you believe Thuli Madonsela’s December report).

The amount that Facebook paid per WhatsApp employee (the company employs only 55 people).

BY MARC ASHTON AND KRISTIA VAN HEERDEN

COVER

eading US financial planner

John Mauldin’s newsletter

Thoughts from the Frontline

has to be one of the most

enjoyable moments for the

Finweek team on a Sunday night Every

week we learn something new, and this

week’s lesson was that it is no longer

desirable simply to be ‘super rich’, we’re

now interested in the ‘uber rich’

An interesting stat is that 85

indi-viduals have as much money as the

collective poorest 3.5bn in the world

The top 1% have almost half the

liq-uid wealth that has been accumulated

in the world There are 1 426 known

billionaires and, in all likelihood, we

will see the first US dollar trillionaire

in our lifetime

Fuelled by a surging stock market

driven by excess liquidity courtesy of

loose fiscal and monetary policy across

the globe, it has never been easier to

become wealthy in a short period of

time The trick now is how one would

keep it all together

One of the major themes for 2014

is likely to be around emerging market

risk As we’ve witnessed almost $3tr

being wiped off equity markets in a

matter of days in January – and

sub-sequently being recovered over the last

three weeks – the question of emerging

market (EM) risk is one that can’t be

ignored

Arguably some of the best research

comes from the BlackRock Investment

Institute, which has done an extensive

investigation into capital flows around

emerging versus developed markets

In a report released at the end of

January 2014, the institute noted:

“Gone are investor illusions the

emer-ging world had miraculously grown

into an all-weather source of returns

Gone is the easy money, exposing market complacency about emerging market risks.”

It reached eight main conclusions regarding the state of emerging markets and the risks they pose

to the global economy:

■ Growth in the emerging world is set

to slow further as China rebalances its economy Differentiation between countries, asset classes and sectors is key

Divergences are set to widen in 2014 and asset prices will likely reflect this

■ Currency movements come first, second and third in EM investing

They often make up the brunt of asset returns; they are the trigger for central bank actions; and they are the main mechanism for economic adjustment

■ EM borrowing was often un-hedged and under-reported (via offshore sub-sidiaries) Currency volatility has cut off this channel, and created an unpleasant feedback loop This can turn into a virtuous circle only when investors feel they are adequately com-pensated for risk and/or when evidence

of EM growth and reform momentum re-emerges

■ Signposts for change in EM asset prices are a stabilisation or collapse in currencies; (market anticipation of) a turnaround or deterioration in eco-nomic momentum and corporate earn-ings; and China’s economic trajectory

■ Quantitative easing (QE) helped dampen market volatility As the liquidity tide ebbs, volatility could rebound like a coiled spring This return to ‘normal’ means more risk – and greater dispersion of returns EM

contagion into the developed world

appears unlikely – unless China’s

economy screeches to a halt and

paraly-ses pan-Asian trade (which we do not

expect to happen)

■Have we seen the worst of currency

slides? Depreciations have gone pretty

far Yet real interest rates are still

wor-risomely low, and more rate hikes risk

killing off growth There is no

stabilis-ing EM central bank Policy

coordi-nation is often discussed – but rarely

implemented

■The good news? Unlike Europe, EM

countries can use currency depreciation

to improve competitiveness and trade balances And sizable EM local debt markets these days do much of the economic adjustment (via rising yields)

■EM countries are in much better shape than in the late Nineties, we believe Stronger safety nets include higher reserves, cooperation to build flood defences, floating currencies and deeper pools of domestic savings

With so much volatility in the world and emerging market risk a key theme for South African invest ors, leading

financial planners have their work cut out for them in 2014 as they attempt to find pockets of value

We, at Finweek, were fascinated by

what is worrying the wealthy in SA at the moment and how they are allocat-ing their capital With that in mind, we’ve approached some of the leading asset managers and planners and asked what their major concerns are and how they are protecting their clients

We have compiled a series of views and ideas that make for fascinating reading

Finweek chatted to Guy Allan, portfolio manager at Nedbank Private Wealth about the discussion

that he is having with his clients:

What are your clients’ main

concerns at the moment?

Predominantly, the reflation of asset classes has been

the order of the day around the globe with yields along

most curves being below their long-term averages

Therefore, clients have found it hard to earn income;

however, their asset base has reflated via capital

appre-ciation over the last five or so years With the Federal

Reserve slowing down its quantitative easing

pro-gramme, yield curves around the globe have started to

normalise, resulting in some of the cheap money flowing

back to its origin and putting pressure not only on

emerging market currencies but capital too Our clients

have been positioned correctly for this reflation trade

and we are now advising our clients that, on a three-year

view, the rand will strengthen across the majors

Are you positioning them for a

pullback or market collapse?

We follow a bottom-up valuation-driven approach and

this guided us to position our clients to benefit from the

reflation trade, however in the second quarter of the

2013 financial year, the margin of safety in fixed-income

asset classes (property and bonds) had been reduced and we trimmed our overweight exposure to this side

of the market In quarter four of financial year 2013 our analysis indicated that the margin of safety in equities too had reduced and we started to lighten our exposure

We therefore were correctly positioned for the yield curve moving higher, have reduced our equity exposure for our clients and are waiting patiently for high-quality investment opportunities

What strategies are you employing?

The strategy that we follow is a bottom-up analysis with

a long-term investment approach We value assets and ensure that whichever assets we invest in, an appropriate risk premium applies Our strategy therefore remains to apply a long-term approach and buy assets of a high quality where the level of risk premium is appropriate

What’s your biggest financial concern in 2014?

My biggest concern is that we will not see enough quality South African assets sell off quickly enough for

high-me to be able to buy them for both new and existing clients.

1 2 3 4

Cherry-pick your investments: Emerging markets

are diverging Avoid blanket exposures and select the

most attractive countries, currencies and assets.

Brace yourself: Expect more volatility Years of

cen-tral bank largesse have lulled investors and issuers into

a false sense of security.

Yield to value: Hard-currency emerging market debt

has suffered collateral damage – and may offer juicy

yields Steer clear of higher-risk, volatile markets until

currencies stabilise These include Brazil, Russia,

Indo-nesia and South Africa.

Broaden your horizon in terms of emerging market exposure: Many EM stocks are only bargains versus developed equities Focus on relative value, think long term and avoid market timing.

Don’t try to catch falling pianos: If you are planning

to take bets on currency markets then avoid emerging market currencies with weak fundamentals as they may have far further to fall Pick countries with current account surpluses or reform momentum.

Real Interest rates in selected economies

Emerging credit fest

Global Bank Lending by Borrower Region, 2000-2013

Domestic Cross-birder SOURCES: BIS, IMF, and BlackRock Investment Institute, February 2014 Note: The charts show total bank credit to non-bank borrowers (including governments).

What are your clients’ main

concerns at the moment?

At the moment there is greater

uncertainty than usual about the

local economy This is fuelled in

part by the recent depreciation

in the rand and the fact that we

have entered an election year,

which tends to highlight more

sensationalist short-term

consid-erations as opposed to

longer-term investment fundamentals

We tend to go where we

look, and at the moment it

is very hard for all South

Africans – including the

wealthy – to look past

the ‘here and now’ Now,

more than eve r, it is

important to remember

that the best short-term

decisions and the best

long-term decisions are

almost always

Are you positioning them for a pullback or market collapse?

We do not believe that the lar returns markets enjoyed over the last 10 years are sustainable over the next 10 years Taking into account considerations such as the Alsi being fairly

stel-e x p stel-e n s i v stel-e a t t h stel-e moment, the old econ- omies finding their feet and our increas-

i n g i nte re s t r ate cycle, it is likely that

SA will not yield the growth that many have come to

expect over the short to medium term Whether this will happen in the form of a pullback or col- lapse cannot be predicted with any measure of certainty What

we should, however, do is to actively adjust our asset alloca- tion so that our investment strat- egies can absorb the impact when such market adjustments

co m e a l o n g , re g a rd l e s s of whether they happen in one go

or over time

What strategies are you employing?

Aside from adjusting our asset allocation to compensate for the above considerations, we are also helping clients manage their expectations with regard

to the market behaviour One emotional decision at the wrong time can easily destroy a life- time’s work and discipline in building a sustainable invest- ment portfolio At the heart of

it, investors need to decide if they are investing to make as much money as they can, or whether they want to focus on getting the returns they need at the lowest possible level of risk Depending on which of these two approaches you take, you will end up making very differ- ent decisions and having very different expectations from the market In our current environ-

Financial advisory firm acsis is cautioning clients against expectations that recent returns are

unsustainable over the long run Finweek spoke to Henry van Deventer about what his clients

are expecting for 2014.

Henry van Deventer

15

ment it is more important than

ever to understand how much

you stand to make or lose in the

short term, and to change your

mindset away from ‘Did I lose

money?’ to ‘Are these losses

acceptable within the range of

returns necessary for me to

achieve my long term

objec-tives?’

What’s your biggest

concern in 2014?

At times of volatility and

uncer-tainty, investors are more likely

to make emotional investment

decisions Whether this pertains

to the rand or possible

short-term adjustments in our

mar-kets, research has shown that

investors underperform the

market because they react to

their emotional impulses at

times when clear heads should

prevail My greatest concern is

not what the markets might do;

it is what investors might do

There are still plenty of returns

to be had from local and global

asset classes Although these

returns may not be as great as

they once were, investors should

remain firmly on track if they

appropriately manage their

asset allocation and keep their

eye on the horizon Although we

cannot change the direction of

the wind, we can adjust our sails

to reach our destinations.

Francois du Plessis is the managing director of VEGA Asset ment Responsible for local and international share portfolios of high- net-worth individuals, Du Plessis’ main concern is socio-political in nature, with the looming Government elections foremost on his mind.

Manage-“A monumental lack of leadership and expertise on a municipal level and the resulting socio-economic flashpoints – issues like poor ser- vice delivery and unemployment – could cost the ANC dearly come election time Our concern is that the ANC will take a more socialis- tic stance to win back votes, which will place further pressure on Treasury,” he explains.

Du Plessis says that a more socialistic stance could impact South Africa’s debt ratio, which in turn could prompt credit ratings agencies to negatively adjust the country’s credit rating A negative adjustment will further weak-

en the rand, leading to more petrol and food price hikes, adding (very expensive) fuel to the existing socioeco- nomic fire

“In short, our biggest concern is that SA is closer to the moment of truth than most would care to admit,” he says.

Despite these concerns,

Du Plessis says that VEGA isn’t preparing for a pullback

or market collapse “Locally the

10 biggest companies represent 70% of the Top40 Index The

majority of these companies, like BHP Billiton, Richemont, SABMill-

er and Naspers*, are operational outside of South Africa Invest- ments in these companies will hedge investors against local political risks and the weak rand,”

he explains.

Francois

du Plessis

He has a positive outlook for

international markets He says that

the Fed’s decision to taper

eco-nomic stimulus introduced after

the 2008 market crash is an

indi-cation that the American

econo-my is doing well

“The US economy is expected

to grow about 3% and that of the

United Kingdom around 2.4%,” he

says “So far, three quarters of the

80% of companies who declared

profits on the S&P 500 exceeded

their expected profit margins

From a valuation perspective the

world’s biggest stock market isn’t

expensive The price-to-earnings

ratio of 17 times is lower than the

long-term average of 18.7 times

and the profit outlook is positive.”

He has a cautious outlook on

China The main threat to the

Chi-nese economy is the possibility

that its credit market may expand

further beyond the control of the

Chinese authorities

To hedge against local political

concerns and to make the most of

the international recovery, Du

Ples-sis is investing in local and

interna-tional companies that have the

potential to increase dividends at

an above-average rate He advises

investors to favour long-term

investments and not to worry too much about short-term market movements – a familiar refrain.

Chris Botha, senior fund manager

at Imara Asset Management, says that his clients are keeping a close eye on the local interest-rate cycle and the pace of the tapering of quantitative easing in the US

While he is noticing some ousness among his clients around the upcoming elections, he is not alarmed

nerv-“We do not expect a collapse in the market as reported profit growth is good On a forward basis our market seems fairly val- ued We expect volatility to con- tinue in the near term,” he says.

From a strategic point of view, Botha says that stockbrokerage Imara SP Reid is cash flush and therefore in a comfortable position

to use any weakness in the market

as a buying opportunity Although he’s not expecting the rates in the

US or locally to start rising sively, he is concerned about the possible negative impact on emerg- ing economies, should rates increase He is keeping a close eye

aggres-on local politics and related ments in the rand.

move-Debt as percentage of GDP past five years Debt in the

Shadow banks − organisations and markets that fulfil much of the roles that

were traditionally the domain of banks − have helped boost China’s debt level at

a pace that mimics the rise seen by other nations ahead of their financial crises.

SOURCES:People’s Bank of China; IMF International

Financial Statistics; Fitch Ratings

*Estimate from The Wall Street Journal

2003 ’07 2003 ’07 1986 ’90 1994 ’98 2009 ’13*

Warren Buffett

17

Each year thousands of investors wait for March to roll around so

that they can glean insights from the legendary investor Warren

Buffett The folks at Fortune magazine were able to get their hands

on a copy of his annual letter to shareholders in advance and

Fin-week found these five insights particularly useful if you’re going to

consider your investment strategy for 2014:

■ You don’t need to be an expert in order to achieve satisfactory

investment returns But if you aren’t, you must recognise your

limi-tations and follow a course certain to work reasonably well Keep

things simple and don’t swing for the fences When promised quick

profits, respond with a quick “no”.

■ Focus on the future productivity of the asset that you are

consid-ering If you don’t feel comfortable making a rough estimate of the

asset’s future earnings, just forget it and move on No-one has the

ability to evaluate every investment possibility But omniscience isn’t

necessary; you only need to understand the actions you undertake.

■ If you instead focus on the prospective price change of a

contem-plated purchase, you are speculating There is nothing improper

about that I know, however, that I am unable to speculate

success-fully, and I am sceptical of those who claim sustained success at

doing so Half of all coin-flippers will win their first toss; none of those

winners has an expectation of profit if they continue to play the

game And the fact that a given asset has appreciated in the recent

past is never a reason to buy it.

■ With my two small investments, I thought only of what the

prop-erties would produce and cared not at all about their daily

valua-tions Games are won by players who focus on the playing field – not

by those whose eyes are glued to the scoreboard If you can enjoy

Saturdays and Sundays without looking at stock prices, give it a try

on weekdays.

■ Forming macro opinions or listening to the macro or market

pre-dictions of others is a waste of time Indeed, it is dangerous because

it may blur your vision of the facts that are truly important (When

I hear TV commentators glibly opine on what the market will do

next, I am reminded of a scathing comment by professional baseball

player Mickey Mantle: “You don’t know how easy this game is until

you get into that broadcasting booth.”) ■

*Finweek is a Media24 publication, which is a subsidiary of Naspers

Insight

FINWEEK 6 MARCH 2014 19

Mauritius: the offshore

The island of Mauritius remains a firm favourite

for affluent South Africans who are in search

of an offshore property investment Tax

benefits, dual residency, political and

econom-ic stability, and a quality of living that is on par with what

you will get in South Africa, are some of the incentives

that go hand in hand with the transaction Until the

beginning of the Seventies, sugar cane accounted for 75%

of the Mauritian GDP It now represents 1% When the

EU announced the phasing out of its 1975 sugar protocol

it was a death sentence for the country’s biggest industry

Thereafter, however, a number of initiatives and

activities were launched to diversify the island’s pool of

income, as well as introducing a range of policies that

attracted business and capital

One of the secrets to the country’s success is the

development of high-end tourism resorts integrated in

the environment The country is currently renowned for

the hospitality that it affords holiday makers but also

welcomes those looking for more permanent residence

Foreigners can purchase property through an

Integrat-ed Resort Scheme (IRS) – an initiative of the Mauritian

government, in collaboration with the Mauritian Board of

Investments (BOI), which is designed to encourage resort

and residential property investments by non-citizens

Foreign investors automatically qualify for permanent

residence for themselves and their immediate family if

they invest a minimum of $500 000 (R5.4m) in the IRS

Added to this, foreign nationals can benefit from

favourable tax conditions There is no inheritance or

capital gains tax in Mauritius – it’s one of the few

coun-tries that hasn’t implemented capital gains tax and also

offers free repatriation of profits, dividends and capital

IRS BUYER PROFILE

Eligibility conditions for acquiring residential units,

defined by the Board of Investment, are:

đ Foreigners with high purchasing power

đ Foreign entities registered under the Companies

Act (of Mauritius) 2001

đ High-net-worth Mauritian citizens

đ Domestic entities incorporated under the

Compa-nies Act 2001

Mauritius has one of the fastest-growing economies in Sub-Saharan Africa and according to the World Bank’s

Doing Business 2013 report; the island is ranked as the

easiest country in which to do business within the region

“It’s an exciting economy,” says Rob Hudson, MD of Hayes, Matkovich & Associates, an SA-based property marketing and sales company “And from a property investment perspective, if that property is underpinned

by a strong economy – an economy that is creating opportunities for everyone – then it’s only going to keep the property market buoyant, which is what we have seen over the past five years.”

With the current political, security and economic risk experienced at home, “diversification of assets is a priority for South Africans now more than ever,” Hud-son explains He notes that potential buyers (from SA) see the opportunity as a form of medium- to long-term insurance and a form of protection against the current economic state in SA The company is marketing two IRS developments – La Balise Marina and Villas Val-riche – on behalf of the Mauritian Stock Exchange-listed ENL Group

Since ENL’s property team came into existence in

2007 it has developed a number of ventures including the Bagatelle Mall of Mauritius in partnership with Atter-bury Properties The mall is located south of Port Louis and offers a taste of home for South Africans with its abundance of shops, including the likes of Woolworths, Food Lovers Market, Mr Price and Pick n Pay

NEW DEVELOPMENTS ON THE IRS MAP

Villas Valriche, a luxury golf estate situated on the south west coast, has attracted a large amount of South African buyers This sugar-cane farm turned property develop-ment targets SA’s ultra-rich who are in their mid-fifties and looking to retire in the near future

La Balise Marina, situated in Black River (also nestled

in the southwest of the country), is, on the other hand, attracting younger, more active owners who enjoy the boating and watersport lifestyle It’s the only residen-tial marina on the island that has been built solely for foreigners

Single-storey and double-storey configurations at

Villas Valriche, offering two-bedroom villas

of 220m2, up to four-bedroom villas in excess

of 400m2 are priced from $650 000 to $3m

and above depending on the buyer’s wants

and specifications And at La Balise, two- to

four-bedroom apartments of 125m2-255m2

are selling for $600 000 to $1.5m

Dominic Dupont, general manager of La

Balise, explains that the majority of La Balise

homeowners are either using the property as

a primary residence or as a holiday home But

as the area becomes more liveable in terms

of infrastructure, and further equipped with

facilities such as schools and shopping malls,

those who have bought holiday homes can

consider relocating permanently

According to Dupont, not all of the buyers

have bought purely for investment purposes

But, he says, everybody does take into

con-sideration the investment opportunity He

explains that throughout the world, potential

capital growth is much higher in a residence

marina compound than in a golf estate

Black River units that sold two years ago at

$600 000 are now going for $820 000

“Buy-ers haven’t doubled their money but 20% is

good growth – particularly in this economic

climate,” Hudson explains

Initially, when the IRS project was first

introduced by the Mauritian government in

2002, buyers were looking for huge villas,

and a large extent of land, but after the credit

crunch hit buyer behaviour changed

Buy-ers then started looking for apartments and

smaller units And La Balise caters more to

this market For those who are looking for a

larger property, with a more laid back lifestyle

that a golf estate affords, Villas Valriche is the

more attractive option

BUSINESS IN MAURITIUS

Gilbert Espitalier-Noël, CEO of ENL’s

prop-erty division, says that a high percentage of

IRS buyers use Mauritius for some form of

business, one way or another “They

either use the country as a domicile

for their offshore companies, or

as a launch-pad into Africa And those who have bought because they wanted to acquire a second or third home have seen the opportunities and have then developed businesses thereafter.”

As business interests grow in other African countries, Hudson says Mauri-tius is a good place to start for those look-ing to tap into the rest of the continent

The Mauritian BOI provides an enabling environment in that sense Starting a busi-ness in Mauritius can take as little as three days and no initial capital is needed for the company to be registered

“We want companies to have more focus, more substance and regional headquarters in Mauritius,” says Sachin Mohabeer, assistant director of the BOI

“We want friends from China, India, Europe and SA to come to Mauritius and use it as a platform for investing in Africa We want these foreign nationals

to use Mauritius as a platform for raising in Africa where both the providers and seekers of mezzanine financing and private equity can meet We encourage global business companies to set up here for Africa.”

a lot of financial muscle and fair amount

of resilience, especially during tough nomic times, to launch an IRS project – those that have been successfully com-pleted were launched by big corporates

eco-So, in other words, there aren’t fears that the market will become overdeveloped with IRS developments and therefore the market flooded Espitalier-Noël expands: “It will

be difficult to have

more IRS developments as buyers want to be by the sea and almost by definition, the whole land around Mauritius is state land and not private land – almost everywhere with a few excep-tions It will be a challenge for developers to find a property of size that is freehold.”

He says that that this will put a limit on development “And if you develop an IRS inland – 2km from the sea – chances of sell-ing are low.”

According to Hudson, the cost to develop villas in an IRS is significant because of eve-rything that goes with it “The infrastructural and added-value costs to build hotels, beach clubs and golf courses are a significant invest-ment To flood the market with that type of product is unlikely.” ■

COMPETITION FROM OTHER ISLAND DESTINATIONS

When the Mauritian government duced the IRS project, very few countries offered similar schemes But others have caught on – there is now competition com- ing from places such as Cyprus and Malta

intro-In the middle of last year, the Maltese ernment introduced the Global Residency Programme (a citizenship-by-investment scheme) and this is making the Mauritian BOI slightly anxious.

gov-Since the introduction of the scheme, the Mediterranean archipelago of Malta, traditionally the preserve of wealthy British retirees, has moved onto the radar for South Africans English is one of the official spo- ken languages and the advantages of an EU citizenship – for South Africans in particular – can’t be argued against

For a minimum investment of $500 000

in Malta, foreign nationals receive dual- residency status But, the catch is that invest ors have to spend six months of the year on the island

First Na

Search FNB Forex or email fnbforextrade@fnb.co.za to find out more about

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Before he started using FNB Forex, a local importer paid

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You can learn a lot by walking

in another’s shoes.

Even if it’s only the left one.

For many South African

busi-nesses, whether they are

fledg-ling start-ups, SMMEs or

established corporate

jugger-nauts, the growing opportunity presented

by e-commerce – in its various forms – is

becoming hard to ignore

E-commerce (electronic commerce),

the term most commonly used to describe

the buying and selling of goods and

ser-vices online, is already firmly entrenched

in developed markets such as the US

where it reportedly accounts for around

8% of total retail sales (and is expected

to outpace sales growth at

bricks-and-mortar stores over the next five years)

In South Africa, the concept is still

fairly new – the total portion of retail sales

is hovering around 2% – and take-up has

been limited mostly due to the relatively

low rate of Internet penetration (when

compared to developed markets) and a

lingering reluctance among consumers

to venture online

However, with the price of

broad-band steadily coming down, and more

South Africans gaining access to

smart-phones (the country is projected to reach

80% smartphone penetration this year),

shopping online is fast becoming more

attractive – and feasible – for many South

Africans

ROCKET-FUELLED GROWTH

According to Arthur Goldstuck, MD

of IT consultancy World Wide Worx, South Africans spent R4.4bn online

in 2013 – excluding air tickets – resenting an estimated 25% growth in the local e-commerce market

rep-“2013 was a powerful year in terms

of growth, with the increasing number

of experienced Internet users being a major factor,” explains Goldstuck “In addition, there are many more innova-tive online retailers making their move

in the SA market.”

He says that fashion retailers are so far proving to be the most innovative and forward thinking in their digital strategies, by “pushing the envelope in terms of business models and market-ing” Goldstuck points to several online fashion retailers such as Zando, Super-balist and Spree, that have “taken up the slack that’s been left by the major clothing retailers such as Edcon and Stuttafords”

Online fashion retailer Zando is undoubtedly one of the local stand-outs, attracting more than 1.5m South Africans to its website every month, according to managing director Sascah Breuss Zando, which launched in January 2012 with funding from Ger-

DIFFERENT PLAYING FIELD

There are key lessons to be learned from Zando’s approach to making the grade online For one, as Breuss emphasised in an interview with

Finweek, businesses have to

under-stand upfront that tar retail is “completely different”

bricks-and-mor-to e-commerce

“Zando’s core competencies are logistics and IT/security…from the very beginning, we made it a priority to be really strong in these areas and to control the supply chain from end to end,” explains Breuss

“This is your only chance to get the customer experience right, and 98.5% of our parcels arrive on

or ahead of time.”

He adds: “Companies tend to underestimate the difference between bricks-and-mortar retail and e-com-merce, and it can be very hard for [traditional retailers] to adapt… there are only one or two core competencies that really overlap.”

Both types of retailers need to be

Safe TradeBY JESSICA HUBBARD

equipped to provide a wide variety or

‘assortment’ of goods, for example,

but while a bricks-and-mortar store

will place emphasis on the physical

experience and displays, online

retail-ers need to focus on digital marketing

and online security

DELIVERING THE GOODS

As several studies on the South African

and wider African e-commerce

mar-ket have highlighted, reliable delivery

and safe payment methods are among

the biggest obstacles for

online retailers Many

are still experimenting

with different

busi-ness models, which, particularly when

it comes to African countries, need to be carefully tailored to

market realities

In SA, Zando offers free ery within one to five days through a combination of its own fleet and out-sourced couriers, and also offers free returns within 14 days – a clever ploy

deliv-to gain the confidence and loyalty of nervous first-time users Consumers can pay online using a credit card, debit card or EFT, or they can pay cash

on delivery

In other African markets, ever, which lack comprehensive logis-tics and delivery infrastructure, and where large swathes of the population are still both unbanked and off line, e-commerce players looking to cash

how-in on the growhow-ing spendhow-ing power of African consumers will have to find different solutions

Unsurprisingly, given the tial profits to be made, many already have found workable solutions Jumia

poten-com, also a Rocket Internet venture that started in Nigeria and now also operates in Côte d ’Ivoire, Egypt, Kenya, and Morocco, takes its orders online, via SMS, phone, or via agents

The retailer offers free

deliv-LION’S SHARE

LAST YEAR, the McKinsey Global

Institute investigated the Internet’s transformative potential in Africa, and released the findings in its Lions

Go Digital report The numbers

relat-ing to e-commerce are staggerrelat-ing According to the report, e-com- merce could account for 10% of retail sales in Africa’s largest econ- omies by 2025 This would translate into approximately $75bn in annual online sales and advertising revenue

In addition, McKinsey noted that the “potential technology-related productivity gains in the retail sec- tor could be worth $16bn to $23bn annually by 2025”

ery in major urban areas, where, like Zando, the company employs its own delivery operation and outsources in other areas This strategy is clearly paying dividends – in 2013, Jumia was the first African winner of the World Retail Award for ‘Best Retail Launch

of the Year’

A nother A frican e-commerce pioneer, Konga.com, which has been dubbed ‘Nigeria’s largest online mall’, has shrewdly invested in a sprawling technology and logistics foundation that includes a major fulfilment ware-house

WIDE OPEN SPACES

For local businesses who are eyeing the e-commerce opportunity, it is undoubtedly a tough game to play but

if the predictions are anything to go

by, it is one well worth the investment

As the e-commerce frontrunners have illustrated, investment is the key word – particularly when it comes to delivery and logistics, secure payment methods and online marketing

As a recent McKinsey Global tute report stated, “Despite this wave

Insti-of innovation, no African e-tailer has managed to achieve scale across the entire continent; the space remains wide open.” ■

23

FEATURE

Sascah Breuss

INSIGHT

BY GLENDA WILLIAMS

Tattoos are trending Once the

preserve of gang members,

bikers, boxers or

non-con-formists, today they are

trendy pieces of body art adorning even

the rich and famous Gone, too, are the

days when tattoos were the exclusive

domain of men and particularly those

men who were often perceived as

com-ing from a questionable or blue-collar

background

How times have changed Once

an ‘underground’ trade, the trend has

taken off en masse The days of being

disqualified from a job, social or

religious group for having a

tat-too are also a thing of the past

Today, celebrities, the affluent,

and even the most well-bred

young lady may be sporting a

tat-too or two While this may often

be a small, discreet tattoo, more

and more women are sporting a

multitude of large creative inks

all over their bodies No longer

out of sight and concealed by

clothing, the latest trend is if you

have one, flaunt it There seems

to be no end to how many, how

large or where they adorn the

body Even the private bits have

not escaped the ink fanatics!

HISTORICAL VIEWPOINT

Although only making their

presence felt as a fashionable

trend in the Western world

dur-ing the last few decades, tattoos

have adorned bodies for

centu-ries They can even be traced

back to the Ice Age Cultural,

tribal and religious beliefs have

always played a significant role

in the inking adornments found

within many ancient civilisations,

the Egyptians among them Even the Romans, who believed in the purity of the human form, eventually succumbed

to tattooing as admiration set-in for their fierce, tattoo-adorned opponents, the Britons It was after the Crusades that tattooing largely disappeared from the Western world But it continued

to flourish within certain subcultures, sailors, and circus performers among these, as well as in areas like Japan and the Pacific islands where tattooing – for both men and women – was, and for the most part still is, an element

of cultural practice Tattooing was even

popular with English and Russian

roy-alty in the 18th and 19th centuries, after

which opinion shifted and the practice

was considered trashy

Whether inspired by being a member

of a biker group, or as a show of unity

and symbolic mark as a World War 2

fighter pilot, each tattoo has its roots in

culture, emotion and symbolism

THE LOCAL INDUSTRY

Aside from prostitution, tattooing is one

of the oldest professions in the world

It is a secretive and close-knit

commu-nity, yet paradoxically it is also divided

The division it seems has been caused

by progress, pitting the young

business-minded tattoo artists from the new

school, against the old-school tattooists

whose views and attitudes towards their

craft is not unlike that of freemasonry

There appears to be a distinction

between tattoo artists (new school)

and tattooists (old school), and data

around the tattoo industry is very

dif-to medical waste bylaws, the industry

is not regulated, and not particularly transparent, and because there remains

an element of hard-core culture within the industry as well as shady backroom tattoo artists, disclosure regarding the industry – especially that surrounding money or legalities – is deemed to be harmful to one’s health, literally Take the example of the ‘scratchers’ site that had to be shut down after threats The site was launched to name and shame

‘scratchers’, a tattoo artist who has little,

if any, ability to tattoo It’s one of the reasons that many in the industry tend

to be guarded and tight-lipped It is for this reason that comments from tattoo-

ists and tattoo artists that Finweek spoke

to are, for the main part, not directly attributed to them

THE ISSUE OF REGULATION AND TRAINING

Roy Wyatt, founder of The Council for Piercing and Tattoo Professionals (CPTP), a national association estab-

While there are many styles of too, broadly speaking they appear

tat-to be lumped intat-to three categories:

old-school, new-school and traditional, which is a blend of both.

neo-Old-school tattoos are often ically inspired, most of which are attributed to Norman Collins aka Sailor Jerry, who sailed the world before becoming a tattoo artist

naut-Popular with the late Amy house, old-school tattoo designs have made a comeback as appreci- ation for their vintage appeal gains momentum These tattoos mostly utilise bold, black outlines and clas- sic standard designs such as hearts, anchors, roses, daggers or mer- maids, often seen on sailors or bikers The most commonly tattooed standard images among women are butterflies, hearts and angels.

Wine-New school designs use new positions, designs, colour and pat- terns not seen in traditional old

INSIGHT

standards and streamline tattooing

procedures, says that CPTP members

adhere to international standards But

he says, because the industry is not

reg-ulated, many backroom tattooists do not

adhere to these standards, thus posing

a potential health risk to customers

Wyatt cautions that there are a number

of health issues to be concerned about,

not least of which is hepatitis B but also

the use of certain inks that he says are

harmful to the body Despite numerous

efforts and appeals to Government to

get the industry regulated, Wyatt says

they have made no ground

The industry itself is divided on

whether regulation is required Many

who are self-regulated and adhere to

stringent health standards, are happy

to obtain a health bylaw qualification like blood-borne pathogen training, and even suggest regulation at local council level with the implementation of fines for non-compliance, rather than direct Government involvement

The issue around tattoo training opens up a Pandora’s box The indus-try has no formal tattooing institutions

Wyatt believes that some degree of formalised training is necessary, sug-gesting a minimum six-month theory-based course, progressing to working on banana or pawpaw skins before moving

of days or a week are also frowned upon

by established tattooists Many believe that trying to formalise training would effectively render a ‘scratcher’ with a worthless certificate

“No amount of academy training can provide a non-talented person, especially those that do not have the natural raw talent and mechanical background [it is after all a mechan-ical base art form], with the skills that the tattooing craft requires and which apprenticing over many years provides Apprenticing helps weed out the non-

A correctly operated tattoo studio

will adhere to sterile practices,

always using new sterile needles,

which should be opened in the

pres-ence of the client Fresh supplies and

inks should also be used, as well as

disposable gloves to prevent

cross-contamination After approval of the

artwork stencil and positioning area,

tattooing commences

Depending on the artist, a small

tattoo of one or two words could take under an hour while a large, very detailed full back colour tattoo can sometimes take up to 150 hours, usually split into sessions that can span a year or even two and set you back R30 000 to R50 000!

Costs, depending on tattooist or artist and studio, vary The cost can

be set at R500 for a small, standard tattoo to hourly rates ranging from

between R750 to R1 300 per hour.

If it is cheap, you can almost bet it will be nasty “Bargain hunting for tattoos is looking for trouble,” says

a top tattooist “You get what you pay for and good quality, European standard equipment like a steriliser,

as well as inks at R5 000 per litre, are essential in order for a tattooist to take the best possible care of their clients.”

talented people, which formalised

academies would almost certainly not

do,” says another tattooist

THE LOCAL TATTOO BOOM

Since the industry is not regulated,

establishing the number of tattoo

art-ists and studios is impossible While

the South African Institute of Tattoo

Artists (SAITA) purports to have 201

members and the CPTP 36, the opinion

of most people in the industry is that

there are probably thousands

Establish-ing the worth of the industry is equally

implausible At best, it’s all conjecture

Even if one estimates the local industry

to be 2.5% of the size of the US market

(estimated to be worth around $1.7bn

annually), that translates to around

R80m per annum Certainly not

pea-nuts, but speculation nonetheless

Add to this the perception that much

of this industry is a cash business While

this might be true of backroom tattoo

artists, believed by some to make up as

much as 80% of the industry, many

stu-dios are legitimate, registered businesses

contributing to the local economy A

large, busy tattoo studio in a

high-traffic area or mall has posted figures

of between R1.5m and R2m annually

while a smaller studio has revealed an annual turnover of around R800 000

to R1.4m That the industry is growing exponentially is in no doubt Not only is this is underscored by consumer demand and the number of outlets opening up but also in the number of people seek-ing apprenticeships One tattoo studio

that Finweek spoke to revealed that it

receives an average of 400-500 ticeship requests per annum With not enough studios willing or able to take on apprentices, many young aspiring tat-too artists resort to buying a tattoo kit over the Internet for R1 000, or settle for inadequate and costly short courses

appren-Steve D’Alton, of Salvation Ink in Johannesburg, is of the opinion that while the industry is probably, at best,

a quarter of the size of the US industry,

it is one of the fastest-growing service markets locally It’s not difficult to see why Ink is high on the agenda, with most local celebs in the media, music and sporting sectors sporting a tat or five – DJ Fresh, Graeme Watkins, PJ Powers and Dale Steyn among them

It’s difficult to spot a high-profile sonality who does not sport a tattoo or two, and they set the tone for their ador-ing fans, eager to follow suit Shows like

per-Miami Ink also ensure that the industry

is kept at the forefront of the consumer’s mind

Whether 18 or 72 years of age, male

or female, black or white, white collar

or blue collar, the consumer profile is broad-based While some may vacil-late about having their first tattoo, once done, they are likely to go back for seconds, thirds or even more It would appear that tattoos are addictive.Yes, it’s for life, and this is not that inexpensive an exercise, especially if you have an addictive personality Add

to this the pain and time taken to create your personal masterpiece The bigger

or more complex it is, the more it will cost you, of course You would think that this might be off-putting to anyone contemplating a second tattoo But no,

it transpires that once the bug has ten, the pain and cost has long been for-gotten For instance, Derek Baker, one

bit-of South Africa’s top tattooists, sports R180 000 worth of tattoos on his body!The question is, is a tattoo an invest-ment for an original piece of artwork that will last you a lifetime or is it youthful enthusiasm disregarding middle age, a changing mindset and unsightly wrin-kling body art? The jury is out ■

INSIGHT

■ Research your tattoo artist

Even better, get a referral Make

sure the studio conforms to

sterile practices.

■ The more detail required, the

larger the tattoo is likely to be.

■ Originality requires more time

and costs more than existing

t a t to o d e s i g n s , s o m et i m e s

referred to as ‘flash’

■ Copying a personalised or

cus-tom tattoo design is considered

unethical.

■ Start small and have your tattoo

positioned in a place that can

be easily covered by clothing in

case you suffer the effects of

tattoo remorse

■ Tattoos on bony areas such as

feet, knees, elbows etc., are

prone to fading Bony areas are

also the most painful to tattoo.

■ Immaculate care and hygiene is

imperative after receiving a

tat-too to prevent health problems.

■ Tattoos are permanent Think

about the message you wish it

to convey before you proceed

wit h t h e body a r t Reg ret s

about tattoos are hard and

costly to ‘fix’ and near

impos-sible to ‘remove’, with black

being the easiest colour to

remove through laser surgery.

t

ke o e e.

e

g

e s s- d

is t- s.

ck

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ENOUGH SAID.

BMW X5

When marketer Dietrich

Mateschitz visited Thailand 30 years ago,

he d iscovered t he bene fits of a syrupy tonic drink sold in

pharmacies as an energy booster He

approached Chaleo Yoovidhya, owner of

the tonic drink company, with the idea

of introducing the drink to the West It

main ingredients intact, Mateschitz bonated the drink and packaged it in a slim blue and silver can He also changed the name from the original Krating Daeng (translated from Thai as ‘red water buffalo’) to the more familiar Red Bull

car-He then did some market research to test the concept The results were cata-strophic “People didn’t believe the taste,

Why traditional market

research is a waste of time

INSIGHT

The Gab

aster.” Mateschitz ignored the market research and set up offices in the Aus-trian town of Fuschl

Fast forward three decades and Red Bull has been a spectacular success story Today it sells upwards of 5bn cans annu-ally across 165 countries, and employs over 8 000 people Mateschitz’s wealth

is estimated at $7bn, making him one of

BY DR GAVIN SYMANOWITZ