World Economic Forum Inaugural Annual Meeting of the New Champions

Wen_jiabao_and_klaus_schwab  More than 1,700 participants from 90 countries, including Premier Wen Jiabao of China, are participating in the World Economic Forum's Inaugural Annual Meeting of the New Champions, in Dalian, China. The meeting runs from 6-8 September and will focus on the role the new generation of fast-emerging multinational companies – the New Champions – are playing in substantially changing the global business landscape.

To read news from the event, watch webcasts of sessions and download photos, visit www.weforum.org/dalian

Watch sessions in English:

Watch sessions in Chinese:

Exclusive India Economic Summit Blog by Mythili Bhusnurmath

The opinions expressed in this blog are those of the writer and do not represent the views of the World Economic Forum.

Mythili Bhusnurmath is Consulting Editor for the Economic Times

Time for a reality check

Seldom has the World Economic Forum's India Economic Summit been held against the backdrop of such raised expectations. Cynics might call it hubris; except that in the corridors of power in India's capital city, Delhi, there aren't too many of them to be found - the country is riding high on the back of an unprecedented 8 % plus GDP growth for the fourth successive year and plays host to more than 600 business, political and civil society leaders from 30 countries at the Forum's 22nd Economic Summit.

Continue reading "Exclusive India Economic Summit Blog by Mythili Bhusnurmath" »

Exclusive India Economic Summit Blog by Steve Hamm

The opinions expressed in this blog are those of the writer and do not represent the views of the World Economic Forum.

Steve Hamm is a senior writer for Business Week

One of the things I’m looking forward to at the India Economic Summit is finding out more about what’s going on in the retail market. India has an incredibly inefficient retail supply chain now that contributes to the poor performance of its agricultural economy, which, I believe, is actually shrinking. Right now, most retailing is handled by small independent shops, and there are as many as eight layers of middlemen between farmer and consumer. That, and poor logistics, contribute the fact that about 40% of India’s fresh produce rots before it can be sold. Plans by a bunch of the Indian industrial conglomerates could bring a revolution to retailing—and to agriculture.

Continue reading "Exclusive India Economic Summit Blog by Steve Hamm" »

Exclusive East Asia blog by Jim Frederick

Jim Frederick is Tokyo Bureau Chief for Time Magazine

Morning Optimism

The first ever World Economic Forum on East Asia to be held in Tokyo kicked off with high optimism this morning.  The first panelists at the first plenary session, answered its title, “Can Asia’s Growth Model Sustain Itself?” with an unequivocal yes. The entire panel was extremely upbeat, there was much talk about, “The new century belongs to Asia,” and “The center of gravity of the global economy is moving East,” and “India and China are the new economic powerhouses.” While I, too, am ultimately an optimist, I fear many are still not addressing the harder questions about Asian growth. I have to admit I found these breezy assurances to be a little rosy. My impression after living in Japan over the past years is that political risks are increasing dramatically, and there are economic concerns that often go unaddressed.  How are China’s energy needs going to be met without conflict? China may be a country that graduates 10 times more college graduates than the US or 10 times more engineers, or whatever statistics are being bandied about to prove that China is the new superpower, but it is also a country that has 800 million peasants, a phenomenon completely unique in human history. What about them?

The Crucial Economic Evolution

The morning sessions have frequently returned to this issue: Asia’s next step of economic development needs to move from export economies reliant on Europe and US to ones with mature, self-sustaining consumer demand. But that is an exceedingly difficult goal. Japan, for all of its success, still struggles with the fact that it’s reliant on its export industries. How will India and China fare any better?

Neat Gadget

The Spot Me gadgets that the World Economic Forum is distributing to participants are incredibly cool. The size of a small PDA, it has the complete schedule and list of participants programmed into them, but the neatest part is its radar function which checks the surrounding area and tells you who is sitting near you. Plug in the people you want to talk to, and the thing will buzz when one of them are in your range. Send messages to them, set up appointments, awesome. I had heard about a similar function that was used unsuccessfully as a dating-match service, but gizmos like this seem infinitely more suited towards business networking.

The Buzzword of the Day

Innovation. Everybody is talking about it, using the word incessantly, saying it is the key to competitiveness. It is all the rage, the way that “Quality” was several years ago. It is now such a cliché, however, and used so unconsciously and reflexively by all businesspeople, I fear that it is losing its meaning.

Afternoon Pessimism

In one of the PM sessions, I hosted a seminar on China, Japan and Korea and why they were having so much trouble getting along. My panelists were a distinguished bunch from Japan, China, Korea and the US. Here, the atmosphere was almost as pessimistic as the morinng was optimistic. Panelists SAID they were optimists, but they also said that they didn’t forsee much chance of things improving politically, perhaps for years. To me that sounded pretty grim. Economies could roll along unhindered all the way up to the countries’ coming to armed conflict, but political disagreements — over Japan’s Prime Ministers’ visits to Yasukuni Shrine, territorial disputes, disputes over energy resources — these were likely to rumble on indefinitely because the world, as one panelist put it, suffers from a “statesman deficit.” Many pointed to the EU as model of economic and political integration and cooperation but the consensus of this panel was that that type of development is a long, long way off. Hot Economics, Cold Politics has become the default way of referring to the state of Asia these days and it looks like that condition will be around for some time to come.

Upcoming Podcasts and Webcasts from Tokyo

You can view all podcasts and webcasts from our World Economic Forum on East Asia summit here as of Thursday 15 June.

Date
Session Availability Panellists
15 Jun Asia's Growth Model: Can It Continue to Sustain Itself? Live at 09:00 JTST Marican, Hai, Jianqing, Nath, Nikai, Jong-Yong, Hahn
15 Jun Corporate Asia:. Who Is Climbing the Value Added Ladder? Live at 10:30 JTST Boon-Yang, Nakamurra, Nilekani, Xiaoqiang, Takeuchi, Sorrell
16 Jun An East Asian Community: Is There a Design that Can Deliver? Live at 09:00 JTST Razak, Keng-Yong, Pangestu, Bereuter, Chu
16 Jun The Japan that Returned: Does It Look Like the Rest of Asia? Live at 10:30 JTST Miyauchi, Tanigaki, Ujiie, Lake II, Schutte, Gowing
16 Jun The Future of Asia: Regional Integration or Global Rivalry? Live at 17:15 JTST Marican, McKinnell, Nakamura, Nilekani, Sorrell, Ujiie, Graves

Continue reading "Upcoming Podcasts and Webcasts from Tokyo" »

Qin Min's reports on China and India

China and India are no doubt this year's highlight. I went to a workshop today for a scenario-based discussion on business prospects in these two Asian giants for the next 20 years. The views expressed on China interested me a lot.

According to most participants, IPR protection is one of the biggest concerns for western businesses in China. Interestingly, the scenario designer is no optimist either, as a reasonably quick fix of IPR is absent in even the best scenario case for China.

I totally agree on the importance and urgency of the IPR issue. In a sense, you can never overemphasize it. Piracy and counterfeiting are counterproductive not only commercially--as they cost lawful business money, but also strategically--as they may cost China its image and credibility. At the commercial level, those violators do not make distinction between foreign and domestic IPRs, which also harms the interests of China's domestic businesses. In short, IPR abuse is NOT in China's interest.

However, I cannot reconcile myself with the seemingly prevalent gloomy mood in the room. It is precisely out of recognition of the gravity and urgency of this issue that the Chinese government has acted in a very determined and almost ruthless fashion against IPR violation. The political will is there, and there is real improvement on the ground. Check the newspapers and you will be surprised at the large numbers of piracy factories being stormed and IPR pirates prosecuted every day in China. After the compulsory introduction of copyrighted software in the government, now the campaign is extending to the corporate sector.

The IPR issue is a complicated one, as it involves not only enforcement but also education and broader matters such as economic development and social inclusion. Moreover, given China's size, it is no easy job for any government to ensure the same forceful implemention in each and every province or city. But let's have confidence in China. With a right attitude and cooperative approach on the part of western businesses and governments, I believe there will be an even quicker solution of IPR problems in China.

Task for now? Let's do it!

Sergey Brin defends China portal

David Kirkpatrick interviewed Sergey Brin on Google's decision to put up a site in China that accepts censorship. Sergey also had interesting comments on how he deals with specific government requests:

"Fortune: You actually actively block child pornography?

Brin: No, but if we got a specific government request. If a third party makes a DMCA (Digital Millennium Copyright Act) claim that another party is violating copyright, and that party is not able to counter, then we are obligated to block that.

In France and Germany there are Nazi material laws. One thing we do, and which we are implementing in China as well, is that if there's any kind of material blocked by local regulations we put a message to that effect at the bottom of the search engine. "Local regulations prevent us from showing all the results." And we're doing that in China also, and that makes us transparent.

Fortune: Being born in the Soviet Union you know what the issues are."

Welcome Message

Welcome to the World Economic Forum Action Group Blog.  This action group, formed in our Annual Meeting 2006 focuses on The Emergence of China and India.

Please enter any relevant messages regarding this theme so we gather and sift through information as we go through our Annual Meeting and also beyond.

Please ensure you sign your name after each comment so we can attribute good ideas later.

Your sincerely,

Chris Cooper

Yu Liu

Welcome to Regional Struggles Action Group

Welcome to the World Economic Forum Action Group Blog. This action group, formed in our Annual Meeting 2006 focuses on Regional Identities and Struggles. The aim of the Action Group  is to address how the business community can positively impact the regional economic growth and prosperity of Europe, Asia, Latin America, Middle East and Africa. Topics we hope to discuss (and disagree on) are: - Labor movements, regional immigration, economic and social integration - Social reform: combatting poverty and disease - National identity and religious struggles - New regional balance and emerging hotspots - Emergence, or not, of new leadership So, now it's time to introduce ourselves: two Mediterranean inquisitive minds (an Italian and a Lebanese) who usually write and think in less dry terms ( it's really late right now!!!!!) who will try to navigate you through the thousands of different sessions where the best minds will try providing real answers to serious questions! Jokes aside, we will try to be faithful reporters on the discussions we witness in Davos, on the one side, and critical analyzers on the other. We are hoping to keep you informed and entertained- and we promise to report the fashion faux-pas of the day. Hope you do the same! Thea Chiesa and Diana El-Azar (of course, you knew we were women from all our exclamation marks!)

Rising Questions

When Asia was struck by the Tsunami, the whole world offered the healing touch.The world wept for those who were effected and aid collection broke all records.At that time I wrote on the blog about my fear of misutilization of funds.That is exactly what is happening, the BBC has reported that people are getting peanuts as aid.One woman,living on the Andamans island got a cheque of just two rupees (less than five cents).

http://news.bbc.co.uk/1/hi/world/south_asia/4492695.stm

Today Asian economies will have to address the question about corruption.Millions of dollars of aid money gets drowned and there is no respite for the "common man".George Bush is right in raising questions about linking aid to the task accomplished,with no accountability "making poverty history" will just remain a dream.

Asia is a hub of activity

I'm in Singapore attending the World Economic Forum's annual meeting of Asian business, political and civil society leaders - and the buzz is tangible.

Participants seem to agree that the centre of the world's economic gravity has shifted to Asia. This region is the emerging hub of global economic activity.

This Asia Roundtable has drawn an impressive list of participants including Heizo Takenaka, Minister of State for Economic and Fiscal Policy and Privatization of the Postal Services of Japan, His Majesty King Abdullah of Jordan and Peter Mandelson, the European Commission's Trade Commissioner.

Whilst India and China are the two words on everybody's lips,  participants are also addressing how the rest of Asia's economies can avoid being squeezed out by the emerging giants and benefit from the region's rapid growth. I was particularly interested to hear political and business leaders talk about the need to develop alternative sources of energy to fuel the region's growth. Pressure on natural resources is too big-of-a-problem to ignore for much longer...

Read our website to get more indepth coverage of the Asia Roundtable.

Wrestling or wildlife?

In media shorthand the World Economic Forum is oft referred to as the "WEF". In-house (that's Forum jargon for "internally"), we use the word "Forum" but China Economic Net has gone one better. It uses "WWF" as shorthand for the World Economic Forum in an article published on Sunday.  While associations with the World Wrestling Federation or World Wildlife Fund may not appeal to everybody here in Geneva, it does have a certain je ne sais quoi.

Weapons of mass distraction: From Baghdad to Pyongyang

I finally got around to reading my free copy of Foreign Affairs magazine, courtesy of Fluor. (Incidentally, I noticed yesterday that a former Editor of the magazine, Fareed Zakaria, is one of our Young Global Leaders.)

In the latest Foreign Affairs edition, Selig Harrison writes in Did North Korea Really Cheat? that the Bush administration "distorted its intelligence on North Korea" in a similar fashion to its misrepresentation of intelligence data on Iraq's possession of WMD (weapons of mass destruction).

Why is that? Harrison reckons that the US "strongly resisted the thaw" in relations between North Korea and Japan and South Korea. The Bush administration "saw a real possibility that its options on the [Korean] peninsula would increasingly be driven by the policy agendas of others". Here Harrison quotes Jonathan Pollack, chairman of the Strategic Research Department, US Naval War College.

And so? And so, says Harrison, when the US accused North Korea in 2002 of conducting a secret weapons programme, it was probably mistaken. As a consequence of that accusation, such a programme probably exists today. Indeed, North Korea announced last Friday that it had a nuclear programme.

I took a very quick look on Rebecca MacKinnon's North Korea Zone and elsewhere on the blogosphere but did not find another viewpoint on this story.

Passengers traffic over the next 20 years between Europe and China will have extreme growth

I just discovered Randy's blog, the blog of Boeing's VP of marketing who shares with us his predictions on the evolution of passengers traffic over the next 20 years between Europe and China. Isn't it amazing ?

2003
 Randy Images Europe China 2003

2023
 Randy Images Europe China 2023
The economic consequences of such an increase both in China and Europe are still difficult to understand, but a boom of tourism is already starting to happen.

Where is the money?

The Indian television channels are saying that aid money is going in the pockets of bureaucrats, fears of misutilization of aid funds are being raised in Indonesia, which is regarded as one of the most corrupt countries by international monitoring agencies. Similar voices are being heard in Sri Lanka.

This is also not happening for the first time. As a TV correspondent in India, I have come face to face with these stories many times; the most recent case being aid not reaching the families of farmers in Andhra Pradesh, a state in South India. More than 3,000 farmers committed suicide as crops failed and their harrassment by private money lenders increased. Aid given to the families of the dead got lost somewhere in the maze of bureaucracy.

Sitting in London now, I also fear that if these stories keep coming out people will stop donating. Imagine the shock of the people when they come to know that their hard earned money went into the pocket of a corrupt person. Can we have some control systems before it is too late?

After Aid

Pictures of those affected by the Tsunami disaster have compelled people to log on to their computers and donate. Peer pressure and the spotlight have forced America to increase its initial US$ 15 million aid to more than US$ 300 million. In the times to come global aid will cross several billion dollars. This will mark the start of a herculean task. Aid agencies are already facing difficulties in logistics and distribution. Each one instead of operating under one umbrella is carrying out their own operation. This is turning out to be more of a "fire fighting" measure than a co-ordinated effort. The telephone lines of most aid agencies are busy and their servers have crashed in the wake of the disaster. Most of them are not geared for operations alone. They have to realize that it is not a time for single and short term steps and a more conscientious approach is required. One good example has been www.dec.org.uk which has brought the social sector in the UK together. They were successful in fund collection. Something like that has to be done at the distribution level too.

Forum member companies help in South-East Asia

We have drawn up an initial list detailing which of our member companies are helping the victims of the tidal wave in South-East Asia. We will update the list as we receive more information. These member companies responded to an email sent by André Schneider 24 hours after the tsunami:

- COFRA Holding AG – Willing to support when concrete plans are drawn up

- TPG/TNT – Euro 225,000 of support to the World Food Programme; Direct support for regional activities (in kind) in India, Indonesia, Thailand, Sri Lanka, Cambodia and Dubai

- ING Group – Support via ING Tsunami Support for US$ 1,000,000

- Alcan Inc. – Support via Red Cross

- Deutsche Bank – Support via its own fund

- Siemens – Direct local support through power supply, telecommunications, water supply and medical services

- Hikma Pharmaceuticals – Support via Hash Mite Welfare Association for US$ 300,000

- ALSO Holding AG – CHF 50,000 support for the DRN

- LUPIN Limited – Contribute direct resources

- Unilever – Direct support via fund raising

- Syrian Red Crescent – Support through Syrian Red Crescent

- Shell – Support through own direct actions

- Consolidated Contractors Company – Support to the DRN for Euro 30,000

- Trader Classified Media – Euro 10,000 of support to the DRN

- Citigroup – Support via Citigroup Foundation for US$ 3,000,000

Aid relief gathers pace

Aid agencies it seems are finally getting badly needed relief supplies to the victims of the tsunamis in South-East Asia.

The World Economic Forum's Disaster Resource Network says its own airport emergency teams working in Sri Lanka and Banda Aceh, Indonesia, are successfully coordinating aid distribution at their main airports.

"Nine DRN volunteers from DHL Worldwide, Aramex, DNATA, TNT are directing the unloading of aircraft, sorting and temporary storage of supplies, and the onward transport of those supplies to responsible humanitarian agencies in Sri Lanka," reports DRN Executive Director, Bob Bellhouse.

Some 4,000,000 pounds of supplies have been moved through the airport by 150 local volunteers working under the direction of the DRN team.

Read more about the DRN's operations in Banda Aceh and Sri Lanka as well as elsewhere in South-East Asia.

If you'd like to contribute to the relief operation, wire donations to: Disaster Resource Network, Number: 0240-446640.01D, UBS SA, Rue du Rhône 8, 1204 Genève Switzerland. Swift code: UBSW CHZH 12A.

After the devastation in Asia...

The world is scrambling to send aid to the victims of the earthquake that struck South-East Asia. The force of the undersea quake or tsunami and the havoc it has wreaked from Asia to Africa is mind-boggling and all too tragic.

This is what the Disaster Resource Network (DRN), an initiative of the World Economic Forum, is doing to help survivors.

India Economic Summit

Chidambaram_blog The India Economic Summit is in full swing here in New Delhi. It's got to be the most colourful Summit I've been to this year - red, pink, green, gold saris worn by the women and safari suits worn by some of the male delegates punctuate the sessions.

The Summit is a fantastic fusion of Asian, Arab, African and Western leaders in the fields of business, politics and society. There's also a Latin American presence here.

Over three days (5-7 December) 700 people from 33 countries are discussing how to push India's growth and prosperity. The remarkable rate at which this country is flourishing is filling the conference halls. Outsourcing, offshoring, competitiveness, reform, health, effective governance, water - pretty much no topic is off limits.

The Indian finance minister, Palaniappan Chidambaram, appealed to foreign investors in his address to participants (pictured above).

Anything you would like to know? I'll try to blog more often... but to get a full update of what's being said here, check out http://www.weforum.org

China to become the #1 Tourism destination very soon

chinatourismgrowthLast week at the China Summit I attended a very interesting session on Tourism and China. We learnt that incoming tourism is growing at a fast pace with more than 100 million tourists visiting China every year. At this pace, it will very fast become the #1 tourism destination in the World and a very large market both for Chinese and foreign companies in the tourism sector.

Mr Haji-Ioannou, head of Easy Jet shown his interest in China tourism sector by participating at several Summit sessions. He said he qualified to speak about China tourism as a current tourist and noted that there were many opportunities not only in the airlines sector but in any products and services to be provided to this new flow of tourist. Mr Haji-Ioannou mentioned China starting to welcome international companies such as Starbucks, already present in the Forbidden City.

I learnt that China Airlines is growing at 50% a year and after a slow down in growth with the 2003 SARS effects, its number of passengers is very high again.

hajiioannou

Another business opportunity to consider is the number of Chinese starting to have the means to travel abroad. The participants noted though that it was still difficult to get a visa for Chinese to leave their Country: it requires a one hour face-to-face interview that can be taken in very few places and costs about $100, the fee being not reimbursed in case of failure to obtain the visa. With such a large population and the per capita income increasing rapidly we can expect the Chinese to visit our cities very soon in large numbers, when China eases its Visa process.

Somebody's out there

TJ has found our Global Competitiveness Report and our European Competitiveness Report. His archive is long so you will have to use the search tool to find his posts.

This year's Global Competitiveness Report is around the corner. The media team here is very busy preparing for the launch in New York on 13 October. You can't actually get the report yet but you can order online directly from the publisher.

After all the buzz about China during the China Business Summit, we are now turning our attention to the India Economic Summit. TJ posts a lot of comments on India. He links to this pdf that says that India will be the largest economy by 2050.

"China's growth is a tougher event than anything we faced since World War Two" - Jeffrey E. Garten, Dean, Yale School of Management

China's growth has been very high in the last years, and we can feel it everywhere. China and Russia had a similar politic and economic situation a few years ago and I am trying to understand how the Chinese made possible this growth, compared to Russia. What I learnt today is that one of the reason of China's success is that Russia changed at the same time its politics system and its economy, where China moved to a market economy keeping a very stable political system. I agree, I think that doing both at the same time has created many unexpected issues in Russia.

China has grown at 8% per year for many years, it is the sixth economy in the World. The standard of living has improved dramatically with an average per capita income above $1000, it was only $300 twenty years ago. 400 million Chinese are now above the global poverty line.

What strikes me the most is how unprepared the US and Europe are to China's growth. The impact of China's economic development is now already huge on the Global Economy. The first consequence that is very often seen is of course jobs being transferred to China but the impact of China's internal demand for energy for example is equally important, China is for example now the second largest importer of oil and second largest electricity consumer. This has an impact on global energy prices and it will only increase.

I think generally in the USA and Europe we do not realize the impact of China's growth and we are totally unprepared because of the speed at which the change happens. It is impossible for Countries and people used to live in comfort to react to this new competition at the same pace.

Vice-premier of the People's Republic of China Zeng Peiyan shared with us today his vision of China becoming a 4 trillion dollar GDP Country by 2020. I was impressed by how many times the word Entrepreneur was quoted. China is definitely committed to creating an open door market environment favorable to Entrepreneurs and private companies. Another reason of China's success has been its shift towards accepting foreign investments. China has been the Country in the World that has received the largest investments last year, ahead of the US and the participation of many international investors and venture capital firms to this Summit shows their interest and their willingness to invest in China. Many new funds are created to invest only in China and I met many investors who where focusing before on the US or Europe that moved here. Robert Yung for example used to work for Intel in the USA and he is now based in Beijing, raising a $75M private equity fund totally dedicated to early stage Chinese startups. In the Technology session, Robert said that five of the ten most successful IPOs at the Nasdaq recently have been Chinese (Robert quoted SINA or SOHU for example), some of them are multi-billion dollar market cap companies and he predicts we will soon see the first ones that are valued above ten billion dollar.

The technology education available in China is according to Robert to World Class Standards. China graduates 2 to 2.5 million students a year and 60% of them are in the technology sector, where India graduates 1 million for 50% in technology and the USA 2 million a year with only 25% in technology.

We mostly think about toys or clothes production when we think about China. China has become the manufacture of the World but with such high standards of education and such a high number of highly qualified technology graduates China is now ready to move to the next step and create World Class leaders and companies. It would be a big mistake to consider China's competition to the US, Europe and Japan as low cost subcontracting capabilities only. The innovation capability I have felt all around these days, the speed at which information circulates in today's information Society and the level of globalization enables China to move from the positioning of the manufacture of the World into the fastest growing innovation center of the World. Microsoft's head of Research in Asia Harry Shum insisted on the contribution of his Chinese team into new Microsoft's worldwide products. I quite agree when the Technology panel said that the question is not if China will be the R&D center of the world, the question is when.

Seen from the US and Europe, the threat is generally understood as loosing jobs subcontracted in China. It should probably be understood more as new fast moving Chinese companies created and not only addressing their local market but becoming new leaders. I had a great dinner with the New Asian Leaders which is a very active community of young entrepreneurs and investors of the World Economic Forum and they are not wondering how they will increase their revenues by getting more business from subcontracting but rather how they can help building new Chinese World leaders.

Of course there are also important challenges ahead and Jeffrey E. Garten, Dean of Yale School of Management said that "the whole movement of globalization is going to slow down. China's growing impact on global manufacturing is going to put enormous pressure to western economies and it turn put enormous pressure to China." Mr Garten does not see China's growth to continue without a major crisis in the next years.

It is absolutely possible, but the energy and the fast pace we can all feel both at a Government and an Entrepreneurial level in China is incomparable with the way Europe for example got used to live in comfort.

The reaction of the USA and Europe could be to protect their markets from this threat for their economies and Kristin Forbes of the Office of the President of the United States insisted on the fact that free trade was the only way to go and that building trade barriers was useless. I agree, but the impact will be so huge on jobs and on the competitiveness of European and US companies that it will become harder and harder for Governments not to react.

How do you feel China's growth impact in your Countries and what do you think should be the reaction of both US and European Governments and businesses to this new situation ?

You can read summaries of most sessions on the World Economic Forum's website.

-Loïc Le Meur

José María speaks on China

José María is CEO of the World Economic Forum.

José María Figueres, CEO, World Economic ForumWhy does the Forum have a summit in China every year?

China may today be at the forefront of discussion due to its huge growth potential, which our members and partners recognize. However, the Forum has long been active in China, and was the first foreign organization to send a business delegation to China, back in 1979. In fact a reciprocal relationship was established the year after, and we’ll celebrate “25 years of China and the Forum” at our Davos Annual Meeting next January. As for our China event, we’ve been active every year since 1981. So it may seem like “opportunism”, but actually our presence is founded on a strong faith from the very beginning.

What achievement do you hope will come out of the China Business Summit 2004?

We’ve been fortunate each year to focus on the issues that will be pivotal for the next 6-18 months of growth. So we highlighted the private sector, AIDS, entrepreneurship, and education in the past 3-4 years. This year we’re taking a special look at three sectors: tourism and travel, natural resources - chemicals, mining and energy; and private investment in China.

In addition, with the presence of Foreign Minister Kawaguchi of Japan, we’re taking a special look at the potential of Northeast Asia. Without a doubt, relations between China, Japan, and Korea will be critical to the overall direction and stability of Asia as a region.

We also hope to make a significant contribution to China in terms of competitiveness. China is at a critical point in its growth, when the decisions it takes will have long term, deep impacts on its future competitiveness. We hope that the discussions at the Summit will contribute to this dialogue.

How do you think China's role in the world will change over the next 20 years?

Although China’s GDP is “only” 4% of the world’s total GDP, its economic weight has already moved beyond this. It’s a two-way phenomenon: China buying up global resources such as oil and steel, and China becoming the “world’s factory”. At the same time, China is reaching out more and beginning to participate more proactively in regional and global affairs, while hosting more and more international events at home. The Olympics and World Expo are just two among many. In a sense, China is becoming a fully fledged member of the international community.

What could the West learn from China?

China’s pragmatic approach to its development thus far, and of tackling things in a realistic and forthright manner, are already a good basis for understanding how to grow within one’s means.

China’s fantastic growth provides many lessons for sure, as economist and historians will point out. We believe that some of the best lessons are yet to be learned, as China completes her transition into a well off society, as Chinese multinationals begin to globalize and gain presences abroad, as Beijing upgrades for the Olympics in 2008, as China begins to help shape Asia’s future security agenda.

In China, how can you fulfill your mission statement without addressing issues like politics, human rights, and AIDS?

In fact some of the Forum’s most notable breakthroughs came on the most sensitive issues, from apartheid in South Africa, to peace in the Middle East, to AIDS in China. The Forum fulfills its mission statement by remaining independent.

Although we are a private independent organization, it is the Forum's mission to improve the state of the world by bringing business and society in partnership together. So we don’t provide political directions, although we do provide a platform for issues to be discussed by leaders from all walks of life - business, government, civil society.

Is it fair to expect China to be environmentally responsible given the pressure for economic advancement? Isn’t this expectation rather naïve?

No, it is not naïve. In the world of today we already have many examples that evidence the importance of good, sound environmental policies as contributing elements to development which is sustainable from an economic as well as social point of view.

While much has been said of China’s past and present environmental record, we must also recognize that a fundamental shift is already taking place with response to its environmental policies. The direction in which China is beginning to move is certainly a positive one. It would seem that China has come to the conclusion, as a few other developing nations have also done, that increasingly informed consumers are beginning to prefer products produced with high environmental standards in countries with proactive environmental policies.

CEO online

Our CEO José María Figueres has agreed to be interviewed online in the context of the China Business Summit. We haven't finalised the date yet - but it will be first announced on the weblog.

Bloggers in China

Fons Tuinstra links to conversations with Chinese internet users. We're trying to build a community of China-based bloggers for our China Business Summit in September. I hope that Fons will comment on the World Economic Forum weblog from Shanghai.

Beyond the media

Xiao Qiang posts comments on China Digital News. This weblog gives a more intimate view of China than what's available from western media.

Friday night in Geneva

It's Friday night in Geneva, the end of a busy week. The momentum is starting to build before the China Business Summit one month from now. One thing to organise is a group of bloggers. Are there any bloggers in China who want to join?

In the meantime, it's time to log off and take advantage of long summer evenings by the lake.

China preparations

china_map_fullsizeIt may be peak summer here at Forum headquarters in Geneva, but there’s not much time to slack off.

We’ve got two summits – one in China and the other in India – that are fast approaching before the Annual Meeting in Davos next January.

The website is in the thick of all these preparations, now mainly concerned with feature articles on the China Business Summit (12-13 September). A first topic we’ve addressed is China’s competitiveness.

The Global Competitiveness Report team gave us some first clues as to whether China has improved its 44th ranking on last year (read more here). We’ll know the full answer in October when the report is released!

In any case, Chinese authorities are trying to cool their economy which has proven extremely hot to handle – it’s growth rate has not dipped below seven percent since 1990!

I’m interested in learning more about what doing business in China is like: the economy is hot, there’s a large labour force and prices are cheap. So what are the opportunities for investors?

Then again, what are the challenges of operating in a regulated market such as China?

Fighting AIDS in India and China means fighting taboos

Among the world's most populous countries, China and India are facing an AIDS epidemic according to UNAIDS.

If they want to avert a crisis, then they must admit they have a problem and radically increase awareness as well as the number of condoms – and that means talking about sex.

“Most families [in India] simply will not bring the subject up,” Rocky Bhatia, a twenty-something-year-old from Bombay, told BBC Online.

UNAIDS estimates that in India, HIV will emerge as the largest cause of adult mortality this decade if more is not done to fight the disease.

It’s a similar story in China. UNAIDS predicted 10 million AIDS infections by 2010 if the government did not change its attitude and face up to reality – something it is starting to do.

Just this month the Chinese premier, Wen Jiabao, instructed every official to make fighting AIDS a top priority.

With such high-level recognition of HIV/AIDS in China, are people now talking about it? What more is needed to ensure China and India avert an epidemic explosion witnessed in Sub-Saharan Africa?

Asia's most critical issues

heng1 (cartoon by Heng Kim Song)

In the final closing session, participants were presented with a list of 8 questions and were then asked to rank them for urgency. The top three:

1. Is Japan re-inventing itself – can this be sustained?
2. Is China past the tipping point to become a major economy in the world?
3. Is greater regional integration possible without a compelling new vision from political leaders?

The rest of the questions ranked as follows:
4. What will be the consequences of Chinese firms “going out” into global markets?
5. Will China become the new guarantor of security in Asia?
6. How will Asian leaders respond to the needs of rural areas?
7. Will Asia continue to be a dominating factor in world commodity markets?
8. How might outsourcing change over time: from being purely cost-driven to embrace higher value-added activities?

Personally, I would have ranked the issue of responding to rural needs much higher. This is really a question about poverty alleviation. If the region wants to boost stability and minimize the threat of homegrown terrorism, addressing the growing region-wide income gap in a more concerted, coordinated way will be absolutely critical.

A corporate view of China

cartoon_022 (cartoon by Heng Kim Song)

Accenture interviewed 150 CEOs and top executives as part of its research on how senior management of the largest companies in Asia view risk and what strategies they are putting in place to successfully manage risk.

According to Accenture, "China is seen as the most attractive country for investors in Asia in the near and medium-term. More than 70 percent of companies surveyed have investments in China today and for 27 percent of these, China is already the biggest revenue contributor in the region."

Managers, however, listed a number of "risk management challenges":

- consequences of an "economic hard-landing" in China
- tensions between China and Taiwan, especially for Hong Kong and Singaporean companies
- "new" economic and financial risk areas emerging in China, including institutional risks in the legal, financial, social security systems, inadequate or unrealistic corporate governance requirements, and intellectual property challenges
- China's internal diversity, i.e. that it is in fact many regional markets with different economic, political, social and operating conditions
- socio-demographic changes and implications for political and social stability.

Korea's future: How to handle N.Korea

kim_daejung01 Four years ago, former South Korean president Kim Dae-jung was in Pyongyang for historic summit talks with North Korean leader Kim Jong-il. Today, he believes that the legacy of his "Sunshine Policy" of engagement with North Korea continues to bear fruit. At midnight the two countries will halt propaganda broadcasts aimed at discrediting each other, and new measures to prevent naval clashes will start to be implemented. (See an article with more details here.)

On the ongoing standoff over North Korea's nuclear weapons, Kim said "the nuclear issue must be resolved," but it will require greater flexibility on the part of both the United States and North Korea. "Distrust between the two countries" is a major obstacle, he believes.

Richardson01 New Mexico Governor Bill Richardson (who is now widely believed to be on the short list as a possible Democratic Vice Presidential Candidate) expressed concern that the 6-party talks are "stalled," despite plans for a new round of talks in Beijing next week. “These discussions next week in Beijing are critical,” he said. “If they fail I believe we’re at least for a year without any movement, because of the American presidential election and also because of frustration on the part of some of the 6-party players.”

Richardson called for an initial agreement in which North Korea would agree to a verifiable freeze of their nuclear weapons production in exchange for South Korean economic assistance. This would be a small first step, setting the stage for further negotiations in the Fall. The focus of this initial agreement, Richardson believes, should be more on “short term reprocessing and weaponization of plutonium fuel rods rather than broader uranium enrichment issues...I know I'm talking in terms of small steps but I think those small steps should take place right away."

Maurice Strong, Special Adviser to the U.N. Secretary-General, has recently returned from a trip to Pyongyang where he met with North Korean officials. "Both parties will have to show more flexibility" in order to reach an agreement, he said. He believes that the North Koreans "have accepted the fact that they will need to dismantle their capacity", but will not do so without an "acceptable form of security guarrantee."

panel01Whether the U.S. would really be willing to provide a security guarantee that can satisfy North Korea is a major unanswered question, however. Members of the audience also raised the serious question of whether North Korea's word can be trusted in a future agreement, given that it violated the 1994 Agreed Framework.

A final tough question about North Korean human rights was asked by Tim Peters of Helping Hands Korea, an organization that works with North Koren refugees. Mr. Peters has also testified in the U.S. congress on North Korean human rights issues. He asked the panelists to address the issue of human rights of North Korean refugees in China and the plight of prisoners in North Korean prison camps.

Kim Dae-jung responded that the sunshine policy and engagement will ultimately do more to improve human rights in North Korea.

Richardson said that the nuclear issue should be the current number one priority, because it is most urgent. But he said that human rights, along with political integration and poverty alleviation should be part of a comprehensive North Korea policy once the nuclear issue is resolved.
cartoon_001_4
(cartoon by Heng Kim Song)

President Roh on globalization

KoreaPresident

At a special Blue House luncheon given to Asia Strategic Insight Roundtable participants, South Korean President Roh Moo-hyun acknowledged the concerns of anti-globalization protestors who demonstrated outside the meeting on Sunday. "We must seek to overcome the negative fallout of globalization," Roh said.

Asia and Global Threats

At the panel titled Global Threats: The Known Unknowns in Asia participants discussed challenges of terrorism, public health crises like SARS, and the problem of natural disasters.

How to plan for and minimize the impact of unexpected threats? Ideas raised by the panelists included:

- Stronger ANTI-POVERTY measures. 6.1 billion people in Asia live on less than $1/day. This is a serious threat to regional security and addressing it must be a major priority of business as well as government.
- Asia needs a NATO-like organization.
- There must be greater pre-emption and pre-mitigation of the region's ecological problems by both business and government.
- Governments must invest in safety and security in order to create a safe environment for growth to occur.

Some businesspeople in the room expressed the desire for an effective organization that would enable business and government to coordinate on these issues.

Another concern raised (by a journalist) was the importance of the free flow of information about crises in the region. He pointed out that efforts by governments to control information in times of crisis has tended to exacerbate those crises. He used SARS as a prime example.

Cartoonist Heng Kim Song

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Singaporean cartoonist Heng Kim Song is here in Seoul to share his work.

Heng has been an editorial cartoonist for Lianhe Zaobao, the largest Chinese-language daily in Singapore, since 1984. Born in 1964, Heng is a graduate of Ngee Ann Polytechnic Institute. He has won first prize in the National Drawing competition, and prizes in several national painting competitions. His work has been collected by various corporations including AT&T. Heng designs greeting cards and illustrates for publishers and advertising agencies.

cartoon_021

Asia's future: a call for synergy

outlook_for_asia13The core theme of today's Opening Plenary is the need for greater Asian synergy.

After Japanese Financial Services Minister Heizo Takenaka called for accelerated reform regionwide (see previous post), Singapore's Deputy Prime Minister Tony Tan Keng-Yam agreed that "Asia must relentlessly continue its reforms." He said that Asia must "strengthen resilience by building regional cooperation."

Victor L.L. Chu, Chairman and Chief Executive Officer of Hong Kong's First Eastern Investment Group agreed that the region needs to develop a new "system of synergy."

Taipei Mayor Ma Ying-jeou believes that the “I.T. sector will continue to serve as the engine for recovery in East Asia.” He says a vital key to Asia's sustained recovery is to deepen regional integration, and also to achieve a smarter regional division of labor. However he warns that regional tensions - such as military tensions over the Taiwan straits - could distrupt Asia's recovery if not properly managed.

Sir Martin Sorrell, the Roundtable's Co-Chair and E. Mervyn Davies, of Standard Chartered Bank gave the perspective of Western multinationals.

Sorrell says we are already seeing the birth of major multinational global corporations around Asia - not just in Korea and Japan, but also in China and India. As a result, he says, the world is witnessing a significant shift in wealth “which the West finds very difficult to comprehend or understand.”

Davies points out that Asia as an entity is less dependent on the West and more self-sufficient than it was in the past. Thus he believes the West will have to work more actively in the future to find a clear strategy and path for successful economic engagement with Asia.

Japan's recovery: where next?

Takenaka09At a press conference before the Roundtable began, Heizo Takenaka, Japan's Minister of State for Financial Services, expressed optimism that Japan's economic recovery can continue. However he also said that further agressive reforms are necessary if Japan is to pull itself fully and completely out of its decade-long economic slump. He said that Prime Minister Junichiro Koizumi is fully committed to such aggressive reform.

Takenaka's message to the forum's opening plenary: the current moment offers a great opportunity not only for Japan but also other Asian countries to accelerate structural economic reforms. The economy is expanding. The world economy is recovering. If we further accelerate our structural reform then we will be able to sustain the economic recovery. Now is a great opportunity to create a virtuous cycle.

Takenaka says Japan is "finally coming back." Last year Japan saw 3.2 percent annual growth and
Japanese stock prices increased by 47%. Non-performing loans are declining. Banking reforms are happening. But this is re-active reform. Japan also needs pro-active reform to enhance productivity and profitability. The important point is that reform is really happening.

Takenaka concludes: "There is no excuse to postpone the reform, or to stop the reform at this moment." He says the greatest fundamental danger to economic expansion is a "kind of complacency." People who say that further reforms are unnecessary because the economy has improved are "totally wrong." Japan, he says, now has an opportunity to create a "virtuous cycle" of reform and growth.

Sir Martin Sorrel observes: greater transparency and greater accountability are the most important from the perspective of the foreign investment community.

At the Annual Meeting in Davos this past January, I moderated a panel titled Making Japan's Recovery Last . Panelists were generally optimistic that the recovery could be sustained, as long as the government continued with structural reforms. However some members of the audience including venture capitalist and WEF GLT Joi Ito expressed concern that the economic upturn would be used as an excuse not to forge ahead with tough reforms. It appears that Takenaka is determined not to let that happen. He says he has the Prime Minister's support. But what about the rest of the Japanese bureaucracy?

cartoon_015
(Cartoon by Heng Kim Song)


UPDATE: The session "Brave New Japan?" has just concluded. Overall, panelists were quite optimistic - at least for the short and medium term - about Japan's recovery.

According to the panelists, positive factors include:
- Past recoveries were driven by government spending. This recovery is driven by the private sector.
- Corporations are now very serious about restructuring, unlike in the past.
- Because the government has tackled the bad debt problem, for the first time in many years corporations are no longer so strapped with loan repayments, and actually have money to invest.
- The government (at least Prime Minister Koizumi, Minister Takenaka and their political allies) insists that it is serious about continuing structural reform despite the economic upturn.
- Japan is in a good position to excel as a leader in Asia for technological innovation. The government is now serious about promoting R&D, unlike in the past.

However, a few rather serious long-term obstacles came up:
- Politics: Japan's parliamentary districts are skewed to over-represent rural constituencies and under-represent urban voters who are more likely to support tough reforms. This needs to change if economic policy is going to become more rational and representative.
- Demographics: The aging population and shrinking workforce is a huge long-term problem.
- Labor flexibility: Japan's labor market is not very flexible, there is a large problem of under-employed youth and under-utilization of women even as the workforce is poised to shrink.
- Education: One of the panelists pointed out that Japan's higher education system is not very competitive, which could throw a spanner in the vision of Japan's future as Asia's advanced R&D center.
- External factors: Is Japan's economic health too dependent on China? Many in the room were concerned that this is the case.

What do you think? Please hit the "Comments" link below to share your thoughts.

Asia Roundtable begins

seoul04

Greetings from Seoul, where the Asia Strategic Insight Roundtable is about to begin its opening Plenary Session.

The Roundtable meeting brings together decision-makers from around Asia to discuss the region's future in these uncertain times. The upcoming day and a half of meetings includes some closed-door off-the-record sessions, some open sessions, and several press conferences with regional leaders. This WEF weblog will bring you updates and summaries of the meeting's highlights. The WEF website will also have regular updates and supplementary information about issues discussed at the conference.

Please feel free to leave your comments and ideas in the "comments" section at the bottom of each post. This is a great way for those of you not here with us in Seoul to share your views with the participants here, and for meeting participants to continue discussing some of the forum issues after the conference ends.

If you are a participant and would like to add information and insights about discussions taking place at this meeting, please feel free to do so in the comments section, or contact us about becoming a weblog contributor.

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