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Virgin Looks to Grow Share in Business Travel Market

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

A big hello to our viewers across China, I'm Saijal Patel, and you're watching "Asia Market Daily".

Despite rising costs Anglo-Dutch consumer goods giant Unilever is sticking to its goals of consistent top and bottom-line growth for 2011.

The maker of Dove soaps and Ben & Jerry's ice cream raised prices for the first time in seven quarters, to offset higher commodity costs.

CNBC's Christine Tan caught up with CEO Paul Polman, when he was in Asia for the Singapore Business Leaders Program - and asked if price increases would turn off consumers.

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Paul Polman, CEO, Unilever:
What for us is important is that we accelerate our growth and we're doing that. We had last year the highest growth for about 25 years in our company. We started this year again fairly strongly so for us it is important we reach more consumers with our products in a responsible way and whilst there is input cost we work very hard to ensure that the consumer doesn't get the full brunt of that. So we try to compensate that with savings programs that we talk about with product innovations. Because it's tough enough out there and we need to be sure everyday more we provide better value to these consumers.

Christine Tan, CNBC:
Let's talk about that. Today rising food prices continue to be a big problem with speculators driving these prices even higher. How exactly do you manage all this volatility?

Paul Polman, CEO, Unilever:
Well it is true that food prices now are on the uptrend and that trend is going to continue with the population...

Christine Tan, CNBC:
Have you had to rethink your sourcing strategy as a result?

Paul Polman, CEO, Unilever:
We do, we do so there are many things you have to do to deal with this. In fact I will be leading a task force for the G20 for the business community talking with president Sarkozy on how we can ensure food security because it is becoming a major issue. We think there are some market mechanism that need to change.

Christine Tan, CNBC:
Such as?

Paul Polman, CEO, Unilever:
For example a Doha round would help, the European agriculture subsidies to reduce those would help so that we don't get market distortions. The subsidies given to first generation bio-fuel may not be the best thing. At the same time you need to invest more in agriculture. But many countries are investing less, in fact for the last 20 years we have seen investment in agriculture go down. And then we need to drive sustainability of that. Obviously something very close to our hearts. We've moved our Lipton brand to sustainable tea. We're now converting the world hopefully to sustainable palm oil because we know that sustainability will obviously result in higher yield over time but also guarantee that we have these resources for many years to come.

Christine Tan, CNBC:
How much pressure are your profit margins feeling now from higher food and petrol costs. How much impact are you seeing on margins?

Paul Polman, CEO, Unilever:
Well we don't run the business on a 90 days cycles. Because that is 3 months is 90 days. If you look at last year, it was another year that we improved our overall operating margins. And we are trying to continue that in the future as we move forward.

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Commodities are in focus today - after silver suffered its biggest two-day loss since 1987.

But will the pull back continue?

Erik Wytenus of J.P. Morgan Private Bank say the current moves are "natural" because you can't expect anything to move in a straight line forever.

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Erik Wytenus, Head of Foreign Exchange and Commodities, J.P. Morgan Private Bank:
I think part of what's been occurring with silver is market participants are looking for an alternative away from the U.S. dollar and currencies in general. Most everyone seems to already be long gold and they're saying where else can I turn. They've turned to silver. I would more so like to see people invest in platinum and palladium. The speculative nature of positions in silver, in addition to the recent decline in the amount of margin that's allowed has resulted in this nasty correction. And the volatility of Silver is quite high. two and a half times that of gold.

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Speaking of commodities...

The recent rise in oil prices don't seem to be affecting Virgin Blue's expansion plans.

The Australian carrier is taking aim at rival Qantas - shifting up a gear from its traditional budget offering.

The airline relaunched today as "Virgin Australia" - welcoming new planes, which are fitted with business class seats.

CNBC's Matt Taylor spoke with founder Sir Richard Branson, about the company's plans to double its share of the domestic business traveler market.

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Sir Richard Branson, Founder & Chairman, Virgin:
We decided it was much better to have one brand with Virgin Australia. We also decided that we should go after the business market. Qantas control about 90 percent of all business travelers. Um, and that's a lucrative market. And Virgin Atlantic goes after the business market. Virgin America goes after the business market. And so, we've decided just to upgrade the airline right, you know, from the front to the cabin right to the back of the cabin. And you know if we can get, you know, 10 or 15 percent more market share of the business traveler, we'll then be able to you know, keep our fares low in economy class, and we're putting in you know wonderful new leather seats throughout economy. And we'll just be that much more competitive.

Matthew Taylor, CNBC:
You mention Qantas' dominance already in the business class market here in Australia. We already know that since you announced you'll be operating new aircraft from Sydney to Perth. That they've already put 747s on that sector. More business class seats as well. Are you expecting any dirty games to come out from Qantas to try and push you out of the market?

Sir Richard Branson, Founder & Chairman, Virgin:
Look of course we'll compete. They'll use every method they can to compete. Putting a 747 on Perth is you know, they lost a fortune when they had a 747 on Perth before, so you know I doubt they'll keep it on for that much time. But um, we've just got to be better than them, and we will be better than them and I think we're just talking about getting from 10 percent market share to maybe 20-25 percent market share. There's room for both of us.

Matthew Taylor, CNBC:
In terms of the airline, over the past year it's been a busy one for alliances. Any more you can tell us about?

Sir Richard Branson, Founder & Chairman, Virgin:
We've had some good alliances over the last year, and um, we're waiting on the Delta decision from the Department of Transport in America, that will be a very good alliance for us. And we are obviously in talks to one or two other people that I can't talk about. But, you know, I think with John Borghetti, our new Chief Executive, has done a great job in bringing some fantastic alliances on board.

Matthew Taylor, CNBC:
Obviously the big news story this week. The death of Osama Bin Laden. We know what impact his actions have had on the aviation sector. What does his death mean, if anything, for the airline business and what's your reaction to it?

Sir Richard Branson, Founder & Chairman, Virgin:
Well look, bin Laden not only costs a few thousand lives back in 9/11, but he's cost, I suspect, a million lives with the Iraq war, the Afghanistan war and you know a lot of other conflicts since. So I think the world is better off without him and I think the world is a safer place without him. You know there may in the short term, be some retaliations, but in the long term I'm sure the world is much better off without him.

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Sir Richard Branson there, speaking with CNBC's Matt Taylor. Thanks for watching the latest "Asia Market Daily". I'm Saijal Patel from CNBC

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