The 2019 Fortune Global Forum was held 18-19 November in Paris

Fortune Global Forum 2019

Good afternoon, everyone and welcome Ken. I thank you. Good afternoon everyone. It's great to be here .>> We particularly appreciate you being here. It's such a busy time for Huawei at a time when Huawei is very much in the news. We're glad you're here. We want to understand what 5G means because it's going to mean a big change in all of our lives. You Huawei uses the expression the smarter future. When talking about 5G. What do you mean by smarter here? Yeah, lemme. I think we're already in a smarter world. And from my point of view, the smarter world featured by three key mega trans. Everything will be sensing, everything will be connected and everything will be intelligent. And driven by those three key mega trends we've already seen a lot of exciting changes as individual consumers and in business now globally there are around 19 million Children with eye problems is quite hard for the doctors to detect that this disease at early age. Now we can use a smartphone and artificial intelligence to let the children look at the screen to follow the objects on the screen that are in the eye functionality. Can help to detect the problem then to help the doctors to provide the early diagnosis and the early treatment so this is quite meaningful. And here in France, the French people produce lots of wine every year and they're quite busy in the peak season. And now we can help them to use the artificial intelligence and the satellite image To identify which groups should be ready for harvesting so in the peak season that greatly help them to save the time and produce better wine which is really good for us. So all those exciting changes of basically enabled by a set of Emerging technologies, including the 5G. The 5G Internet of Things, artificial intelligence, cloud computing and probably the blockchain. And among those set of technologies, 5G is a key enabler to Support or other technologies to maximize their their potential so we can see 5G as a farmland and they will help all the all the other vertical or the other digital technologies to realize the big potential for the for various applications So I think our work is actually done here, because you've explained why this is important for wine [ LAUGH ]. Yeah. Right, thank you. So Huawei is in an interesting position now. For decades it was an equipment Manufacture now it's also a consumer company itself. You're the largest cell phone company in China. What are the consumer? How will consumers lives change from 5G? Yeah, the 5G has great potential for both consumers and business. I have been using my latest 5G smartphone in China for a couple of weeks cuz the service was announced at the end of October, and I found that is super fast. Now I can download the high definition video to the smartphone in just one minute. That with the 4G network, it takes 10 minutes, so it's super fast. But for the consumer, 5G is not just a faster 4G. Actually, 5G can help us to create some brand new user experience. I visited South Korea at the beginning of this month. And in South Korea, there is a brand new broadcasting service called the 5G supported Broadcasting Service, which is a little bit boring, but the experience is amazing. Now in South Korea, yeah, I tried that. I use my smartphone. I can look at the sports game from any angle. I want three and the 60 degrees. So that's cool. Yeah, that's a brand new experience. That's a totally immersive experience. So it means a lot to the consumers fastest speed and Brett new user experience .>> Can you give us a rough sense of when the whole world will experience 5g? What a small percentage of the world is experiencing is experiencing it today? Is that right ?>> Yeah. How many years will it be before it's the dominant technology? So far there are 20 countries loan on their 5G commercial service already. So the progress of the 5G deployment is much faster than we expected. Let me share with you some figures. With 4G, it took four years to achieve 700 million subscribers in whole world. But with 5G we believe that will be able to achieve that in just a two years so it's it's much faster and Let me share with you a map. So where is, yeah, let me share with you a map. From back you can tell that South Korea is the first country launched the 5G service and after South Korea, China, United States countries in the Europe and in the Middle East are all the early adopters. You don't see China on this map because China announced the service at October 30 cities and this map of finishing the middle of October, but China is obviously one of the you know fast mover in in 5g And for the short term. We expected that to the end of next year in just one year, we're going to see 60 countries launch their 5G services. And for your country, for the longer term we expected that. To the end of 2025 58 % of the world's population will be covered by 5G services 58 % by the end of 2025. Yeah, good. Now, Weiwei believes that 5G will help Advance the cause of digital inclusion. What does this mean? How is 5G different from previous cellular technology in that regard? Yeah 5G can help a lot on individual consumers experience and on the, business operation. And far we we identify that you know, there are three key gaps we need to deal with in terms of the Digital Inclusion because while we are trying to introduce, you know the emerging the the emerging digital technology to make our lives easier, we still have lots of people left behind in We think that 's not right. We have to deal with some gaps. The connectivity. Now there are around half of the world population has no access to the internet. This is a big challenge and we believe that can help us on that in a certain way. And. The second gap is the application. Yap, I visit a friend of mine a couple of weeks ago, and I talked with his parents to show them my latest smartphone. And they said, okay, this is fantastic, but I don't like it at all. Why? Because we don't know how to use it. It's too complicated for us. Mm. Yeah, we couldn't get around the city, because now, taxis were always booked by the mobile applications. So, we all parents, grandparents, that remind me that, while we're trying to move so fast into the digital world. Some people are left behind. So we need to make some change. So to fill the gap of connectivity to help the other half of the people to get access to the Internet and to develop more applications not just for us, but also for special group of people like our parents and our grandparents Particularly to enhance the digital skill. You are the finger we observe these that in European Union 90 % of the job by the year of 2025 90 % of the job will require digital skills. However, the fact is today There are around 47 % of the year residents has very limited skill, digital skills like searching on the website. So we need to do a lot to fill the gap and to improve that digital inclusion. Yeah, 5g can help us a lot on that connectivity. Enhanced skills to give us more, technology, stronger types of technology to promote the skills and to develop the applications. Now, I was going to save this for the end. But Ken has been teasing you by holding this phone up a couple of times. It's not what you think it is. Would you please tell everyone what it is Ken, and show it to them? Yeah so thank you very much. Yeah I'm not going to make an advertisement but yeah I do want to show you something really exciting. Yeah this is a normal phone. Yeah everybody has that but We launched this photo screen smartphone last Friday in China. Now you can open it like a mini tablet but it's not a tablet, it's a phone cuz when you fold it, it's so portable And from my perspective, is not just a you know normal form because with a bigger screen and with the 5g network now I just mentioned that in just in one minute you can download the high definition video into the phone. And then you can enjoy high definition video on the goal with this bigger screen. And beyond that for many different industries like the education, like manufacturing. Yeah, I believe that the developers will develop some very interesting applications on this bigger screen. Now right now, this is the Mate X and it retails for the equivalent of $ 2, 600 and it's very expensive- Yeah it is, it is. To your other phones. Do you anticipate that this will become the dominant foreign factor or will it remain an interesting niche product that it is today? Varsity on the consumer is quete diversify would say that [ INAUDIBLE ] eventuall we will have A pretty diversified portfolio for the smartphone. But I do believe that after using it for a couple of months, I do believe that the phone is so the foldable smartphone with a larger screen itself is a killer application because when we launched the. New mobile service as we always talk about was gonna be killer applications. But I think the phone itself is a killer application because it's multitasking, you can use it to develop lots of brand new New applications for different [ UNKNOWN ] agency, not just for gaming for consumers but for different [ UNKNOWN ] Industries. And it's obviously an engineering marvel. I've held one and if you see Ken later you should try to get him to let you hold it for a moment because it's pretty neat. Now, Ken this is the Fortune global forum so we have a Wallway has a very small infrastructure business in the United States but almost no consumer business. [ UNKNOWN ] is zero. In the United States. So how is the company impacted from a business perspective from the US China trade tensions? Yeah, as, as suggested mentioned, you know, business in United States is quite limited, and we never gain any significant sales revenue from the US. So from the sales perspective, US is just a very, very small market for us and globally now our business is, is running well in the first. In the past three quarters in this year, we achieved more than 20 % in the revenue growth a year over year and our shipment of the smartphone and the 5G equipment is also in a pretty good shape. However, the ongoing conflict. I mean, the trade conflict between the China and the US, do you have an impact on our business, particularly on the supply chain because, you know, we have to shift our supply chain from the US to the rest of the world. And we as a company, we've been working with our US suppliers for so many, many years. And we are purchased 11 billion US dollars goods and services from the US suppliers and now we have to ship the supply chain over minuses. So in the past couple of months we spent a great effort on that, and we spent extra cost on that. Let me share with you some of the figure. We anticipate that in the next three years the supply from our European suppliers will increase by 60 % and I assume that the gain of the European is a lose of the US, obviously. So yeah. So as I just mentioned, you know 11 billion in a year from the US. So that's a real impact on our US suppliers as well. So it seems that some of them will, most of them will lose their business from Huawei. And unfortunately, what I learned is that most of the suppliers are the small and medium sized company. So I think, the shift Will not just a, cause the extra costs for hallway but also put risk for the for so many jobs in the US and is quite unfortunate and unfair to the employees of all those US companies and their family members. So there's this really unfortunate Do you have any reason to be optimistic that that situation will turn around? Yeah, I don't see. Yeah. At this moment, I don't see anything optimistic because we've been doing a lot of things in the past couple of years. So many years. And we try where we can, however, it seems that, yeah, the problem didn't, happened just now but in I believe that you won't, finish was this, administration, so. Is there a question in the room for Ken [ BLANK_AUDIO ] So yes please, we'll get a mic to you right away. Please stand up and identify yourself. [ BLANK_AUDIO ] Here it comes. [ BLANK_AUDIO ] I'm Shu Ni from CSOM International. I have a question. I know there's the trade tension between US and China, there being a lot of talk even this lunchtime talk about dealing the [ UNKNOWN ] But are there area business and political leader could focus on principle engagement Would they be possibility to looking at a certain area, for example, for hallway, still continue the dialogue and looking for improvement. There's something that government can do to help the situation Yeah, before I talk about, what the government and the business community can do, I'd like to share with you some figures in our industry. Now we're talking about the 5g in our industry, we evolved from 1234. And then and now to 5g Five G is for the first time in human history that we achieve a single global standard. The innovation on the technology is so expensive nowadays, so we don't want to get back to the past generations. Now we're talking about the 6 G. Yeah, we want to maintain a single global standard That will greatly help us reduce the cost of innovation and speed up the adoption of the new technologies to the world. So we hope that the politicians, the government can understand the fact of technological innovation because here we talk a lot about how to leverage the innovation To grow the economy, to develop our society. So we should fundamentally understand the fact of innovation and to figure out you know, how to support the global innovation. Ken very last question from me. Your founder of Huawei, Chairman Ren made a proposal to the Western technology world that Huawei would license its technology if anyone wanted to take a license. No one has taken Huawei up on the offer. No company has taken Huawei up on the offer, yet. Do you have a further suggestion? His idea was meant to defuse the tension does while we have another idea if this one isn't going to work yeah, to be honest, it's quite hard for us to, you know, deal with this situation with the US because we've been trying a lot And it doesn't work. So now a strategy set is just, to focus on to the rest of the route. And, yeah, we take seriously, the security is is a key consideration of business and to work with the different governments like the European countries For a, you know, accepted solution to seriously address these, you know, concerns before our business pros, we do have idea that, you know, yeah, we have a broader view on the future on the next, you know, decades and we believe that we will catch up Where's the, you know, digital transformation as the, you know, huge opportunity and that's our long term plan. You have for US, to be honest we are not able to develop a long term plan. But I do have a question to ask because without strong innovation, without open Competition. What's the long term plan for the US? Well with that, [ UNKNOWN ] of Huawei, thank you very much. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Huawei Technologies Deputy Chairman Discusses All Things 5G Technology 

Leadership

Ken Hu, Huawei Technologies Deputy Chairman, discusses everything to know about 5G technology and how to fuel the gap of connectivity. 

Estonia: Becoming One Of The Most Digitally Advanced Countries

A conversation with President Kersti Kaljulaid on how a nation of 1.3 million is working to combat climate change, address global cyber terrorism threats and build greater security.

How Humans And Machines Can Work Together To Maximize Productivity

A.I., automation, and analytics are transforming the business landscape, enhancing products and services, and enabling new forms of competition.

Mr. Tewolde, that's how you want to be known? Yes. That's right. Not the whole thing? [ LAUGH ] Thank you, welcome. Thank you. First, Tewolde, I want to express our condolences for this very painful year. A 157 passengers, March 10th As somebody pointed out a lot of these passengers on their way to do good things in the world, you just had a memorial service. Tell us about that. Well, Good afternoon, everybody. Glad to be here with you. It's a very tragic accident and It has consumed all our energy, mind, heart and almost everybody it to penalize. We just had the closure last week and we have now been discussing with boiling To build a memorial monument in the class site and also have agreed to do some things for the community like hospital and access org and the soul. So you've watched Boeing, obviously, and worked with them and been with them through this process. Obviously Boeing's separate on a lot of levels, but its leadership, the CEO, is now been stripped of one of his titles. Do you think Boeing has handled this the right way? Well, it's very difficult to comment for me, for on behalf of boy mode. It's a very long relationship between us more than as long as the airline itself, because we started with McDonnell Douglas. This is three So McDonald [ UNKNOWN ] was bought by Boeing later, so it's a very long relationship and this accident is a very tragic accident in the middle of our relationship. Boeing of late is doing the right thing. What could they have done better? I think you suggested me in the past, possibly Moving quickly. Yeah. I think they could have moved faster than they did. So it's very late, but now, they have understood the problem, they have recognized the problem, so they are working with us and visiting the victim's family now. They had met at CEO level couple of visitors to this. And last week they had the executive vice president of government relations and his lead and lead delegation to the class side. So they have also talked to the victims families. I think it's late but better than before. It's late but better than. Yeah. You have a outspending delivery of max 37s. How many of? 30. Well, the total amount of debt is 30. So. And so you know, one of the questions that's being asked is are you going to go forward on that and? What is your decision making going to entail? We're going to decide in the future in the near future maybe in a couple of months but we want to see the airplane first we want to see the modifications. We want to make sure that the the problems in the airplane are Fully addressed. As I have always said, we'll not be the first one. We'll be the last one to fly the airplane because we have to make sure 110 % that the airplane is safe back to the air. So this is a more rigorous process than you went through before? Yes, it is. Yes, because- Is it the most rigorous process you've ever? Yes, because you know, since the accident there are more than eight hundred airplanes grounded for the last eight, nine months now. And we have to see that all the problems are addressed and other airlines flight. And we have to convince our pilots. We have to convince our customers because the accident happened to us. So an interesting question particularly for this group is we're talking about AI and innovation. So Ralph Nader and not everybody knows who Ralph Nader is. Unless you're American but in he was an activist to lead auto safety and his grand nice died in the Ethiopian air crash and he said the software monster called AI took control of the plane for the pilots. He used very forceful language. Nevertheless, it does raise interesting and difficult questions about AI when it comes into contact with human decision making what have you learned out of this process? I've been following the the discussions throughout the day and I think AI and other technologies have to be managed properly meaning they serve us when as long as they are serving as a tool. As long as we use them as a tool, our food control and comment, but when these things unfortunately are empowered more than human beings and when they control human beings or when they. Manage people or override people's actions and reactions then it's a disaster. So, I think- Humans need to maintain control and humans need to be able to override- Yes. AI is a lesson from this. Yes, yes, yes. If we think If we think of stretching the technology beyond its limits, and we are talking about replacing human beings, I think this is uncharted waters and it will be very, very risky and disastrous. So questions from the audience, please go ahead and hold up your hands and I'll come to you What leadership lessons did you learn from this? This plane went down quickly. You had to act quickly. What were the decisions that you make and what did you learn? This accident came to us as a matter of bad luck. We were in the middle of our vision 2025, at 15 years strategic road map. And the airline has grown in the last one decade by five- fold, from less than 48 planes to 125 destinations. And from $ 1 billion annual revenue to $ 5 billion annual revenue. And destinations more than 125 all over the world in five continents. So it was a big surprise for us, and it is a shock But as I said it could have happened to any other airline. It's a bad luck that it happened to us. So from the feedback that we get from all over the world we have the You had to ground airlines quickly and airplanes [ INAUDIBLE ] Yeah. So First- Tell us how that happened, six minutes. Right, I was in the church when someonecalled me from the air traffic controllers that 8302 was lost from the radar. So that was around 9 AM, so the accident was around 9 AM, so I was in the accident place at 11AM. Just two hours after the accident. And then I came back to the office at midday 12PM I have decided to contemplate nobody has called us to ground, no requirement, no regulatory enforcement But it was our own decision to grow and how many airplanes were granted five airplanes for airplanes. Sorry one was in the accident. So around in the evening, China followed suit. And then the next day, Singapore, Indonesia. And then as on Tuesday, Wednesday, Canada, then the United States was the last one on Thursday. So, doing the right thing at the right time is very important. We learn from the process and then the human factor is the most important thing. So we have to attend to the victim's family to our own crew. And that was our immediate priority and we have dedicated our hotel we have a hotel, five star hotel 373 rooms, European airlines owned hotel, and we have dedicated the entire hotel for all the victims families coming from all over the world, and they stay there as long as they wanted because they were grieving And they were shuffling to the accident side we have to arrange shuttles and everything. So that was a big, big choice. Were you surprised that the United States took it was the last country to ground? those planes? Were you surprised? Yes, to be honest yes we were surprised because it should have been done much quicker than before the other countries. Any thoughts of why? Well, according to the information we are given, they were looking for data the right information and they want to understand what went wrong with airplay. So switching gears, since we're running out of time and please raise your hands if you have any questions. You have mentioned to me that the economy despite a the economy doing pretty well, that there's been there's been a slow growth and In the U. S. People fly. Yes. We have people you say, [ UNKNOWN ] there is a fear of [ UNKNOWN ] ->> Yes. It's not a safety issue, something else, tell us. No I just, in the U. S. we were surprised to see that we fly to Washington daily, to New York daily and Chicago and now Hauston. We fly also almost daily to Toronto. It's a big market North America, but it has been a growth market for us. But flying to Africa has somehow stagnated although the economy's doing well. So we thought that it's not. We don't have concrete evidence, but we thought that people are oppressive flying out especially The foreigners- They're apprehensive about their immigration status basically is what you're saying. There's concern- They are concern that immigration laws could change after they go out when they come back so A lot of operation. So this administration, the Trump administration's handling of immigration has made more people nervous about flying. Because of the changes you know, too many changes introduced. That's interesting, any questions? [ BLANK_AUDIO ] Yes. [ BLANK_AUDIO ] So quickly fortunate, a lot of CEOs have to deal with missing earnings and getting beaten up by analyst you had to deal with something Profoundly personal and tragic. How did that affect you? Personally, I know you did this extraordinary outreach to the victims families, but personally, just as a human being what was it like to wake up one morning and realize that you were at the center of this tragedy Well, the first thing is shock, shock beyond imaginable level, and then sort of denial and try to reason out why and how and so on, but quickly I had to return. Back to reality and handle the situation. It was extremely difficult. Tthe entire aeroplane was, when I went to the accident site, you can't see any scrap of an aeroplane. Everything went down. So, it is a very, very unique accident. So, it has taken a lot of energy. But at the same time, we have to also operate the flights and to your surprise, We have not canceled a single flight on the same day. We have operated 340 flights on the same Sunday. So it was on this side we have to handle the crisis. The crew families of the crew of victims families and All kinds of process. But on the other side, we also have to make sure that schedules are maintained, flights are operated right on time and didn't have any delays or any cancellations on the same day. So Mr. [ UNKNOWN ], thank you so much and again our condolences as you go through this difficult time. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Ethiopian Airlines Thrives Despite Fatal Crash And Rising Fuel Costs

The airline’s CEO discusses plans for expansion and how he’s led the company through crisis and uncertainty.

[ MUSIC ] It's my central banking day, or my two days of central banking, but this is going to be fun, because at some point Boris 2013 is when we first met. We were just joking about this that when Croatia entered the EU was the first time I ever met you and I asked, What do you wanna get out of it and he said the Euro Yeah, well >> it's 2019 you still don't have it. And we were just about entering the process. Now, what took so long? Well, it's a good time now to get in. If you remember 2013 was pretty much almost a peak of the crisis in the eurozone. We were just starting to recovery after the Recession basically during the GFC and now, Euro zone is in much better shape. We're in a very good shape after five years or very strong growth. So it's the time. It's the time but the process has changed a little bit since Bulgaria explain to some of us in the audience about how the process of Entering the convergence with the Euro works because it used to be simple and then we had a few issues and then the ECB changed some of the rules to safeguard. Yes. So tell us the process you're gonna go through now. Yeah. the difference in the process is that now Joining the exchange mechanism individual country has to spend two years before joining the Eurozone. You have to join at the same time the single supervisor mechanism and the single resolution mechanism. These are the two institutions which did not exist before. And that's why no country Join them at the same time as joining the Before, actually the last country that joined the Was Slovakia in mid 2000s. No other country has joined up until now, and we planning of joining in next year. At the same time we will then join the single supervisor mechanism which basically means the Supervision of all banks, within the euro zone and the countries in DRM which is conducted by the ECB, and the single resolution mechanism, which is there to resolve problematic banks of systemic importance in any country of the Euro zone. So basically a lot of hoops to Now jump through For the countries who have to any way join the Euro, you're keen. Some of your other counterparts in Central and Eastern Europe have to sign up for it. Not that keen. They're not doing anything to rush towards the euro. Why is it so important for you other than the GOP politics of it? We think it's very, very useful for the economy in a sense that Croatia is at the moment the smallest country of the EU that has not joined the Eurozone. We also the most Euros the economy that has not yet joined the Eurozone, which means That there are lots of savings in creation banks which are anyway in euros and there is a fair share of the credit which is linked to euro. So joining the eurozone eliminates foreign exchange risk for everyone, which reduce the risk premium interest rates go down. Then we can also make our bank regulation a bit more [ UNKNOWN ] I would say. Because now being out, we have to have a little bit of more buffers which will further bring the interest rates down. It creates lots of certainty for the investors I was just talking over the lunch with some investor into Croatia. I was saying, look, you can with 100 million euros, you invest it in Croatia you have to change it into the local currency. The local currency goes down 10 %, you lost 10 million euros without doing anything, you know, once you're in the eurozone, that risk is gone. Also the risk for the trade is good for the tourism. Tourism is big in Croatia, as you know, most of the tourists come from the eurozone, they will have the same currency. All that adds up to a nice benefit for the economy. But there's some dangerous there because you mentioned leniency and regulation. And that brings up an issue where one of the private sector companies called Agrico / gl two years ago, had a bit of an issue. 15 % of the country's GDP and then was bailed out by Russian banks. Hm. That also then raises the specter that if there's leniency in regulation and there are ways and means around the system, how do you as a supervisor as a central bank and then the ECB, which does not have the mandate to go into the private sectors, just about the banks? How do you balance The safety net that you need to keep the economy stable. Well, our role as the ECB is to look after the banks, not the private companies, non- financial corporate. How do you keep the banks clean and safe? So what we were doing, we were keeping the banks' exposure towards that company limited. So we were telling them you cannot lend more than 25 % of your capital to the aggregate exposure to this company. And by doing that, once the company went bankrupt, they were safe. No bank Increased HSA failed because of the failure of the biggest, it's the biggest regional company. those that, ended up being most exposed were Russian banks, Sparebank and the VTB and, among them, lots of international banks. So most of the risk was actually out of Croatia. And the haircut happened, mostly out of Croatia. So this is what we do we keep the domestic banks safe, and the now the foreign banks I would guess unhappy owners of the company through the debt equity swap. But you can understand why there is concern if the Russian banks had you done that bailout, where But there's potential if there is leniency that there might be another entry into Croatian banks. Does that worry you at all or do you think that's taught them some sort of a lesson considering the head got you just mentioned? I think that it doesn't worry me. I think it was just the bad economic decision. Bet banking where you get exposed to somebody who goes bankrupt and then you have to take a haircut of 50 % or more. This is just a bet, economic decision. Well, I wanna ask if anyone has a question of, because it's a very interesting economy in the way it is structured, and Of course it's going to be following Bulgaria into the euro. So if you have a question do raise your hand as usual we'll get the pedal and the mike to you. In the meantime I wanted to ask you one more question about we've heard about north south in the Eurozone and how that really plays out in terms of policy and the economy and monetary policy specifically. We also have the additional issue of now being east and west. You'll get a vote once you join, but the data points are always going to be skewed towards western Europe and larger economies like France and Germany. How do you see monetary policy playing out once you join the euro? for an economy like Croatia. I think that at the moment if you look at, there are two questions here. One is how the monetary policy of the ECB fits Croatia. At the moment, it fits it very well, actually. If you look at the synchronisation of the Croatia business cycle with the core Eurozone, we are more synchronized with the core Eurozone than the peripheral countries. Of Europe. So the monitory policy should fit as well in that sense. If you talk about the decision making within the board, government board of the ECB, then every country has one vote as you know and the decision should be made on the basis of the data for the whole [ UNKNOWN ] not on the basis of your national View. Now if you look at the difference between the countries, and if you look at, for example, where Croatia right now is, I would say that it looks probably a little bit more like a core Then like periphery in terms of the. For example banking system where the capital adequacy ratio is 23 and a half percent leverage ratio is 12 and half percent. So very high very well capitalized the banking system and the public debt which is coming down by 3 % points per year. In that sense, Croatia is not a country that is getting into the eurozone to get help, but is getting in in very good health and is getting in, in in with lots of momentum because we not only this year growing 3 % but we expect To continue to outgrow the eurozone average by three times next year, and the year after. That's the interesting part about the story of Central and Eastern Europe. This pace of growth is phenomenal and a lot of it comes down to tech and innovation. If anyone has a question, do let me know because I have a whole bunch before we have to start wrapping up the interview because I wanted to come back down to A question about technology and cryptocurrencies and the fact that tech is one of the fastest growing sectors, and another incentive for you to join the Euro. How does it all play out once, in the process going to and after? And how does tat benefit the growth of the technology sector in Croatia? Well, IT is the fastest growing Sector now in Croatia, and it can only be held further by by joining the Eurozone. It has been helped most I would say though, by entering into the into the EU, what we've seen after we got into the EU, the rates of growth of exports Went up to double digits for three years in a row over 10 %. And this was clearly the effect of joining the European Union because nothing else has happened exchange which has not happened price competitive is not really that much This is what i tell my British colleagues i mean, this is just the opposite what is going to happen to your SMEs particularly once you get out . The Euro effect will provide additional benefits for them. But i think for the IT sector at the moment, the two key things are the availability of the of the skillful Labor force, IT engineers and we do have very good schools for IT engineers. And the second thing is the three techs treatment. They are sensitive to the text treatments. Well, you mentioned British colleagues. That's an interesting conversation to have. What What are you discussing when it comes to Brexit? Because at some point we know where the Bank of England stands on the issue. When you have discussions with them and you talk about it, what do you say? What do you hear back as well? Well, we discussed exactly this issue of experience of getting gain or getting gout. What you see is that those that are benefiting most once you get in SMEs, large companies have much less problems with the border than a SMEs. For many SMEs. This is basically do business outside of your country or don't do the business outside of your country, even if the even if the tariffs are Zero. The border formalities makes it very difficult today. Everything you have to do you do deliver in time. So if you have to deliver something in Munich at 5pm tomorrow, you'll have to be there at 5pm. Tomorrow. If you're late, you lose business. And for SMEs this is a big problem if you have a border. And you have a whitepaper of the industry in Britain. You know, which also tells that there'll be a lot of casualties if that happens. Now, Bank of England and us, we agree I will say on that, it is up to the others. So do you think at some point for the clarity of anyone here who is either an investor in creation or about to think about investing in creation the next couple of years? What is your advice to them wait for 2020 till it starts the process starts Or wait till 2023 24 which is when your prime minister's indicated that that will happen when is this the process likely to finish? I think for the foreign investors The key thing here is the exchange rates stability and it is there. It has been there for now. 25 years So I'm absolutely sure that it will stay there for the next three or four years before we get into the Euro zone. And next year basically if we get into DRM, even the exchange rate will know because it will be the exchange rate at which we will join the DRM so the exchange rate uncertainty Will be one way or the other removed. And given that our foreign exchange reserves are now almost 40 % of GDP, one of the highest worldwide, not only in Europe, I don't think we'll run any risk that in the next three or four years the exchange rate risk might materialize. So no reason to wait for that reason. On that note, [ UNKNOWN ] thank you so very, very much for giving us your time and being so categorically honest. [ BLANK_AUDIO ]

Croatia To Replace Their Own Currency With The Euro By 2023

The newest EU member is on the road to its inevitable membership in the Euro Club.

I'm reading the paper the other day and all of a sudden I come across this giant headline. Nestle wants it all virtue and profit. So my first question to you is, do you really want it all to take it all from all of us all the virtue and all the profit Let me throw it back to you [ UNKNOWN ] we all like be profitable and be virtuous at the same time? So yeah, that's the goal. That is the goal. So you know and yet you are enormous company and so there is an enormous target on your back sometimes and part of this article, really Talked about some of the challenges of being the world's largest food and water and beverage company, but just want to give you a sense of the size, you're a 304 billion dollar market cap, just an enormous company that you do business all around the world, everyone knows your products but it's milk and chocolate in. Kite cat candy and bottled waters we said some of the best name brand although not this one actually .>> Not this one yeah .>> So we shelve knowing that .>> Constant trying .>> And food seasonings, and pet foods, and a coffee of course. So it's Haagen does ice cream I forgot that was one of my favorites. But it's it's like the water this issue and I know that we're guilty for having these plastic water bottles. But your water bottles are kind of everywhere. They're they're plastic refuse. They're in the oceans. There was just a study just this week from a group called break free from plastic. They have a lot of volunteers going around and And they've found 4, 846 pieces of Nestle branded plastic in 31 countries. It was the second after Coke. How do you deal with that? Sure. And so, I think water and packaging, I think, is a good topic to start on. So clearly, we're proud of being in the water business. You have to drink something. Hydration is very important. It's part of a good and healthy nutrition regimen. And clearly, having water is better than having carbonated soft drinks. We were betting on this trend very early, starting in the late 80s and then we're riding it all the way til now. I think 2016 was the year when you saw crossover when it comes to the US where the per capita consumption of carbonated soft drinks for the very first time, fell below the one for water and I believe that's a contribution to public health. Okay, and that's something I think we should feel good about and and it's very positive Now you got to do this responsibly, you've got to do responsibly on how you get the water. So being a good steward of the aquifers where we take the water from is very important to us. And the article that you mentioned was also talking about how we do this and how we convince the other people of this aquifer that we share the water work that we do this in a good and equitable manner. And then, of course, the second challenge is packaging. So clearly for water on the go, you need to have some sort of resealable container. What is that container? What's the material it's made from? How does it get recycled? So it's not about the material per se. It's about the responsible use of that material. Investor responsibility was stepping up too. So there's been some criticism though that in several communities, particularly in the United States and Florida and Michigan and California, the criticism is that you're extracting so much water out of the aquifers in some cases a half a million to a million gallons a day So reported anyway, that it's draining those aquifers and how do we and that you pay very little for that privilege in the sense of, one time fees in some cases. How do you Make the chase that you are being pushed towards. Yeah, so when I look at some of the internal policies and guidelines I feel good about stepping up to the responsibility. I do agree that every once a while when public relations situations do get out of hand- Yeah. That we're not doing a good job telling our side of the story. So for example, in Florida, we are paying a rate for the use of that of water that's very similar to what other people pay for taking water of the municipal credit. So this is not something we get for free. And again, in terms of our policies, remember there's lots of things that influence an aquifer and the water quality and the water table in the aquifer. Overall, we are always very small part of that we're not the only people participating in this. I do believe from what I've seen in the situations I investigated that we handle those situations very responsibly. Having said that, most of the time there is a community relations problem behind [ UNKNOWN ] situation that has gone wrong. It is our responsibility to manage that better [ UNKNOWN ] we take on board. So it's interesting, you're a company that gets praise so much because you were earlier on the [ UNKNOWN ] value idea. The idea that there was multiple stakeholders that really need to be served. And yet you were criticized a lot in previous leaders of the company I should say not you particularly but of course Mr Famous infant formula one. We wrote a story that Maggie noodles which was a crazy crisis that happened in India and the water bottle issue. There obviously a lot of your competitors Including this one that are making these products but you are in the spotlight a lot. And you talk about changing the narrative, but it just seems like you keep getting embroiled in these issues. Yeah, and [ UNKNOWN ] as a starting point, I don't make a difference between me and previous leaders of the company. It's team that's led Okay. And this is a company that's present in a 190 countries on this planet. We are in ten different food and beverage categories. And let me say it very openly, we're trying hard but you do not always get it right, okay? And then it's more about when you become aware of a problem. How do you actually rise to that occasion? How do you fix it and and how focused are you on that? And I think that sincerity is something that hopefully does come across. So again, we don't do everything right but when we get alerted to a problem, I think we're seriously Christiana figures was here earlier and she talked about the fact that there's $ 8. 8 trillion of that sit under management, committed to what she called, truly putting pressure on companies they own. To meet the sustainability goals. You talked about your brand new commitment. Just we were talking about this earlier, to the degree and a half to, to really keeping to meeting that 2030 challenge on your sustainability. Can you talk about that? Yeah, and so we also explore that whole topic in more detail during a lunch breakout session with Cristiana and I think between her views and my views. I think we're very much aligned. And, before we talk about the capital, let's talk about the consumer that we serve. And we're clearly seeing that [ INAUDIBLE ] interests and sustainability interests, that used to be sort of a fringe interest 30 or 40 years ago, they're becoming mainstream, okay? Everybody's getting interested in that. As a consumer company, Even if we weren't caring about this at all, but we do, even if we weren't caring about this at all, we cannot afford to lose the consumer and especially not be younger consumer. And hence, as this is turning mainstream, it's in our best interest to really work up to these requirements and do the best we can. Now in our case, this was easy because environmental Responsibility was something that has always been close to the heart of the company. I think very early on, we started to get engaged in this. We were pioneers, for example, on water free manufacturing in some of our agricultural products. Pioneers when it comes to avoiding deforestation Cutting down on greenhouse gas emissions. So I think we tried it early. But before capital think about the consumer. It's no coincidence as you look around the planet, as you look at who's scientist, one and a half degree pledge that you find certain over indexation when it comes to consumer facing companies. Because I think, those are feeling the pressure first. Then you have the capital side and of course investors are getting more and more interested as well, that applies to all industries. So between the consumer side and the people that give you the money. Yeah, I think there's a lot of strong force you have ,>> a lot of major institutional shareholders. Are you actually hearing this is this being discussed with you in terms of Being open about your commitment to the sustainability goals. I know it comes internally but are you also having pressure? It's coming up. But let's also make no mistake. The same people that say that this is very important to them still require top notch financial performance. [ LAUGH ] So it's not that anyone basically says look, we want you to be an ESRI leader and we'll cut your slack on let's say a percentage point on return on invested capital and So in a sense, you got to be a top performer on the financials and yet at the same time have a convincing roadmap towards a better eco footprint. And the same dual challenge is the food issue. So we have to feed a growing planet And this is something you've taken on personally in your role as leading this giant company, but also the pressures of packaging and the pressures of obesity and the pressures of what we put in those products, whether it's sugar, high calorie content You know, you are wrestling with both of those two. Yeah. So all of these elements that you mentioned, are right. I think the one big theme and maybe the one thing that I want you to take away where we can make a lot of progress on health, public health, and a lot of progress on the sustainability front at the same time. Is plant- based nutrition. And I think what happens in the Western world in particular is no one talks about cutting out animal proteins. But we are so over indexed on animal proteins that if you go lower on that, there's an automatic health benefit to it. And if you go lower on that, there's also an automatic Eco benefit to it because it's so intuitive. I mean, think about raising plants first to feed an animal so that that animal then feeds man, as opposed to raising the plants right away and with those plants feeding man. It's so obvious, it doesn't even need explanation. And so over time making progress on that I think is key. But if only you could make say a bacon cheeseburger with a plant based product. And we can, yes. Okay, so this is the transition. And you made this really specifically to speak to my family, correct? Yeah. That's what this was for? And so here again, it's coming out of the specialist corner. So until a few years ago, vegetarians or vegans or what have you were a minority. I think what's happening now is that plant based foods are fast becoming mainstream. You saw all the craze about the plant based hamburgers you know the incredible stock valuations that some of these companies have seen, and also the huge interest in fast food chains to add these items to the menu That's part and parcel of these products becoming mainstream. So, it's true in our modesty, we are the first company to announce what we call the triple play. That's a bacon cheese burger. So there's some companies that do a good patty, some companies that do a good cheese and some companies that can do a good bacon, all planned based. We can do all three of them. Okay, we wanted to show our quick service restaurants partners that if you partner with us, you can get that complete kit from one hand. So you waited for impossible foods like Beyond Meat to pioneer this area, and now you're going to crush them right? With this bacon cheeseburger. Look. This is a big town. I think everyone has seen amazing growth rates. But let me also say because everyone's will see media coverage saying, okay, there were these incredibly virtuous pioneers and now big food is discovering this. This is an overnight success that has taken us 30 years, okay, we've been playing around with plant based proteins and plant based foods since the late 1980s. And I think this is also an interesting case study about established companies versus startups when it comes to know how and thinks that you can take right out of control. So, these new startups are give or take eight or ten years old and this is how long it took them to get the product to market because they were starting from scratch. So we've been playing around with plant based proteins for 30 years, but from the moment we said let's do a hamburger patty. To the moment it was on the shelves there was 18 months and it's right up there when it comes to performance right up there when it comes to nutritional So clearly if you have a lot of accumulated experience, it's easy for you to make that [ UNKNOWN ] happen. So in a minute I wanna go to the audience for questions, so please think about one. We'll have our Mike Wranglers come to you. But part of what we were talking about is a cultural shift here earlier and w you mentioned a stat to me that I found kind of amazing it was the 50 million how do we 50 billion I'm excuse me, hamburgers that that Americans eat.: Yeah. And. You know, I've heard a lot of, you know, different takes on the taste of these vegan plant based products. Can they really satisfied meat eaters? So I mean, this is a number that's really worth remembering 50 billion hamburger patties consumed in the United States every year. So that computes for every Delta American. To about three weeks, okay? In France just to give you a point of reference, every adult French person consumes 14 a year so give or take one a month. So that shows you, this is an American business when it comes to the main business opportunity. So, eating at the McDonalds that I see everywhere and parents. Well but don't go for the salad. Yeah, that's a lot. And so being able to change that culture you feel and how does Nestle play a role in that and that cultural change? Well, I think as you explore these new food trends, there is a new spirit of trial and error because these trends come incredibly fast, you need to execute fast. In the past, it was not unusual for new food and beverage product for us to take two or three or four years to make it from concept to store shelf. These days on a plain vanilla product it takes us about six to nine months on something that's more demanding that the burger was a year and a half. Yeah. Good. Case in point is our latest Starbucks coffee range. We closed that deal with Starbucks last August. We unveiled 24 different Starbucks products in February. We were on the shelf in March. And so this was a nice way for the outside world to see that we were actually doing it in six months. That's amazing. So we have a question here? Do I see any panel? Okay? You're right there. Just just identify yourself, please. Sure. Susan Oliver. Thank you. I haven't found your answer yet to the water bottle. So I think you've said you justify the distribution of water and I get that, but the whole issue of the waste stream is obviously really important. So I just ask you if you've. If you've got an answer or you're working towards an answer. Yeah, Thanks. So look, first and foremost, as a fellow citizen, I would encourage everyone to drink water and more water and events from tap. I mean, this is a healthy thing to do. Okay, so this is just from one person to another, as a business in addition to water bets from a tap or purified source There is a need for water on the go. And as long as you do bed responsibly, I see nothing wrong with satisfying that need. Someone has to do it and think about the last time you took off for a trip. You took it with you, you can do it in an open container it has to be resealable. Again, all of us needs to be done responsibly. But if you do bad it can \ g be good business. It serves a good purpose and compared to other food and beverage categories as nothing worse with that. Again, it has to be done well. It's important to make a distinction between people who sell purified water because then you just take it off the grid. People who really serve you fresh spring water because that's when all of these issues of managing an aquifer and being a responsible partner to the farmers and communities around you comes in. That's a whole different quality level. But then you're not dealing with something that is just taken off the grid, purified remineralize with lots of chemicals. It's a different thing. And that's the league we're playing and it comes with a different responsibility. You and I have talked a little bit about being local for local and the importance of manufacturing your food products, all of your products in local markets and as a something, a tool to reduce your footprint Could you just talk a little bit about that and how committed you are to that? Yeah, so start with the consumer. I think food and beverage is an incredibly local product tastes a very different think about European two neighboring countries that are among our top 10 markets France and Germany, side by side and get so different when it comes to their food preferences. So you got to work from what your local consumer wants if you want to be relevant to all the consumers that you're serving, ideally, because there's also usually farming communities and supply chains involved, even aside from the tastes, you want to make it as close to consumer as possible. So to give you a sense about Nestle we operate more than 400 manufacturing facilities around the world. And very early on when we started in the country market we would typically invest in local manufacturing capacity, would try to become inside us to the largest extent possible. So good example, United States. I get this question all the time from investors, how will the trade wars impact you? Well, not very much. We operate About 70 plants in the United States we make almost everything we sell their locally and to enhance were really local for local company when it comes to that. We're gonna have to leave it up there. Thank you Mark. That was a great conversation. [ APPLAUSE ] Thanks so much. [ BLANK_AUDIO ]

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How the 'Amazon of the East' Is Preparing for the Next Decade

Hepsiburada’s Hanzade Doğan-Boyner joins Fortune’s Global Forum.

so the Turkish online retailer Hep C Burrata has been dubbed the Amazon of the East, selling everything from Elektronik to food and toys and books and other consumer packaged goods. Despite Turkey's economic instability, the company has managed to thrive and its founder and chair a woman who, by the way, has joined us an M P W events. We've always been delighted to have her. She sees a slowing economy as an opportunity as customers moved from offline toe online to share her views of e commerce and entrepreneurship. Please welcome Hans Dada Dyan Boner and fortunes. Claire's Hillman Thank you. Thank you so much for being here. Nina mentioned. You have Well, you have a really interesting personal narrative, and I'm gonna try to sort of briefly cover it. You your father owned, owned and publishes one of Turkey's top newspaper. So big family business. Um, and you briefly work for the family business. But you decided to break off from it. And that was maybe arguably, ah, harder path to take to start barada by buying up a very small electronics seller. Can you talk about that decision? Why did you break free from the past? that was essentially set for you. Sure, I start working at my father's company, who was at the time the largest media conglomerate in our region. I had a vision off hop turned the traditional media company into the 20% communication company. Things didn't go as I planned. There was a little resistance. Culture didn't work with what I wanted to do. It was a difficult decision. I moved away. I moved out and started my own company. I've got lucky. It all turned out good. I'm happy I did what I did. Do you ever feel like you had to prove yourself once you took that path that you were sort of in competition with the family business? To some degree, I have always seen drivel. So my drive did not come after I left the company. It was probably my drive that pushed me up off the company. So you're often helps. Murat is also called often called the Amazon of Turkey or the Amazon of the East. How do you feel? And I have some numbers. So? So in 2018 you had nearly $800 million annual revenue. What do you want? Track for this year. I mean, we're growing a 60 70% a year, so we're obviously passed those numbers in terms of seasonal model. Yes, we are very similar. We have every tale arm or as well as a marketplace arm where the days are driven to start fighting more Chuck A. But I mean, we are fundamentally very different in our soul compared toe the global giants like Amazon. We are like Amazon picks cry in disrupting almost Exterminating retail. Whereas we take pride in helping the digitalization process off potato, we are not destructor. We believe we have grown to skate through cooperation our partnerships with retained in the it is very critical for our platform. So in terms of business model, Yes, off course, we are similar. But in terms of our soul, our culture, the way we do business is different at brother, we always say this is where Silicon Valley made with Graham Bazaar because it once hand, we use machine learning technologies A I to improve our search engines to improve our recommendation engines to enhance our picking algorithms that our operations center On the other hand, we are commercial. We are straight man When we sit with our suppliers with our merchants, we know what they need and reform true, a powerful partnership. So earlier this year, in an interview, you said, You sell everything but groceries. And now, since then you've introduced groceries. So what's what's next? What's the next thing you're gonna sell or business? You're gonna introduce your Let me tell you about the grocery. For many years we looked into grocery, and I've always that foot is a different ball game. The unit economics doesn't add up. How do you deliver a package off? You know, $10 within one hour and make a profit on it. However, we have find a way where unit economics works and we find a partnership with a carport, and we use their stores to deliver. With next are it's a very large selection from fish meat toe oppose to some important non food items that our customers might want it instantly. It's a big move. We are very excited about this. We believe it will enhance the growth off our platform significantly and what is next. When we think about the future off our business, the team that comes up it's about online off lot conversion, and we're talking about a seamless integration off online and offline, not conversion, seamless integration. So, you know, we know by online people flying that's almost a primitive way off What's coming forward for the next generation? The differentiation off, those two words are becoming Blore Er, and we will see that, you know, instant buying Just, you know, stores that you just go with your phone and the product gets delivered to your home within one are. So that's the team that comes up and off course. Aye, aye is also changing. We get to know the customers went anymore. What problem do you see you have now that you think I could help solve Or how do you know what the next implementation of it for you? Sure, when we talk about a I the problems that I will solve the problems that a I Well, I say we need to think Ah, both off them simultaneously and e I mean, a I basically is a better use it off our data. The data is we sit on big data. We you know, our every move is being collected and then have you formulate that data toe to understand exactly what you want and to give you exactly what you need, which is the benefit off a I in terms of equal murder. On the downside, off course there's privacy issues and more regulations that are coming that we need to think about, right. I'm gonna go to questions in a minute. But before I do that, you mentioned regulation. And when you talk about the Amazons of the World and platform like yours, that want to be all things to all people that's coming under more and more scrutiny from regulators, how do you feel about this movement or the idea of breaking up big tech? I mean, I I'm not shy to say that we do have to think about regulations. There is a about confrontation. There is, you know, power, confrontation, and then the usage off public data. A Europe is more advanced than us in terms of introducing some regulate regulations, but and also there is, you know, the rich globalization. We've got the benefits of globalization, but on the other hand, received certain camp it cos everything taxes in certain countries, which I believe needs farther regulations introduced so you know, when we do our business, we do think about the impact off our actions to our nation's thio global economy. And we're not, You know that That is going to come in my way. And I support part regulations. Off course. It needs to be done thinking with the global benefit off the rig regulations. It should be done correctly. But I'm I expect more to come. You have any questions from the audience? One right here in front. If you could wait for the mike and the red suit. Thank you. And if you don't mind introducing yourself standing, my name is Mei and I'm from Washington, D. C. Recently, Nike has known that they are no longer going to be available on Amazon. They would like to go direct to consumer. That is a trend the friends are seeking. In order. Thio get closer access and data. So what do you think? Um, you're poised to do in the competition where in the future, a lot of the sales will come from, um, friends directly to consumers. Yes, it is true. Certain certain brands and wants to go direct to the consumer. And I believe that right strategy for certain brands. On the other hand, we have recently signed a partnership agreement with Apple, which we became. We always fault Apple products, but through this partnership we are the only platform that's works directly with Apple. They do their launches on our platform. They do their strongest promotions on our platform. So if we don't see it as a threat because we don't have toe have every single brand on our platform, the retail market is large enough. It's growing for us two to work with some brands, and some brands are You know, that right strategy. They can go directly, which has a lot off course and complications. It's not easy to create. We have 150 million visits a month to our platform. It's not easy for any single brand to create that kind off. But if that they want to take the challenge, I think they should. We have another question right here. Congratulations. Best Rajendra, chairman of Cal Collect um, in the year nine off Amazon, they been literally about 80% of their total revenues of on the technology in the development of the technology stack. How do you, um, are addressing your technology, road map and hardy developing technology skills for the data and the guy and overall, the warehousing and distribution technology. Sure way. We have three life around these centers in Turkey that we offer it a really tech company at heart technology's. From when you look at our marketing department, you will see the majority off employees having engineers quickly. So we're a technology company. Everything we do is driven by technology, and we do invest heavily in tow technology to build up our platform and to announce a ll the future. You have a really interesting initiative that speaks to the reach of your platform with women entrepreneurs. Tell us, Tell us what you're doing with sure. Two years ago we looked at our platform. I only I think 1% off at the revenues the G m e off the platform was coming from. And the price is that where that are owned by woman and we want to do something real, something that will have a real impact in sport off woman and trainers. And we've launched a program called Technology Power. Toa Woman and Children are, and it's a very solid program, basically as a woman entrepreneur. You come to us, retrain you. We know we show you have to use digital marketing tools were on board your product. Three off charge. We give you three delivery we give you in our algorithms off by Bach. We advanced it. You. So basically, if you're a woman and Turner, you're telling the same kind of product. You will have an advantage off. Coming first versus other products. We promote these entrepreneurs on our home page. And when you reach toe 50,000 tl a river near you graduate from the program and new woman come. And currently 4000 woman and her nerves are in our program. A 9% off jammy comes from woman and trainer. It did have an immense impact. I'm so proud of it. All right. So Happy way will continue to support the great great note to end on. Thank you so much. Thank you. Thank you.

How Businesses Are Making Sustainability a Priority

Consumers care about more than just products.


 As the world's leading beauty company, L'Oréal is constantly reinventing itself. We're going to hear a lot about L'Oréal, actually, as a tech company and a company that's very focused on sustainability and leadership on the part of CEO and chairman Jean-Paul Agon. Jean-Paul, welcome. [MUSIC PLAYING] Good to see you. [INAUDIBLE] So this is a bit of a conflict of interest, Jean-Paul-- Why? --in that I'm a Lancome girl. Good. Good. And you suggested that I'm old because it used to be a-- [CHUCKLES] Never. --a label that us older women really love, and loved. But you have found, through digital technology, that young people are loving this product. No, I never said, of course, that Lancome was for old women. On the contrary. You know, I just told you in the discussion before that I remember when I was the chairman and CEO of L'Oréal in the USA in the 2000s, that the average age of the Lancome user was around 38, 40 years old in the US, and that thanks to the digital revolution, to the globalization, for example, to Asia alone, the average age of the local user, for example, in China now is more around 28, 29. Which is very interesting, because it shows that you can rejuvenate, and reinvent, and regenerate a brand thanks to this revolution. And Lancome also has become the number one undisputed global beauty brand in the world. And it's the number one beauty brand, for example, in luxury in China. Let's talk about that. That's fascinating. I want to get to China in a minute. But just technology-- talk about how you're using digital technology to keep this brand at the top, Lancome, and L'Oréal, and other brands. Yeah, I think it's a fascinating subject. I think that technology has changed everything in the past, I would say, five to seven years. In fact, there was a real complete change in a very short period of time. Of course, thanks to digital, thanks to the social media platform, thanks to Google search, thanks to ratings and reviews, thanks to e-commerce, this industry has changed completely. And the way we do business today, the way we interact with consumers is totally different from what it used to be even five years ago. You're personalizing. Yeah, absolutely. And you know, for me, it's fascinating, because I have been 40 years at L'Oréal. And I can really say that the last five years I've seen more change-- more dramatic change-- than the previous 15 years. It's amazing. And so we are really personalizing-- you're right-- personalizing for the relationship, which is very important. So we can really respond to individual needs, desires, dreams, et cetera. We can even now formulate almost for individual needs or also desires. And so this is the long-term, by-the-way, direction. The direction will be that the mission is beauty for all. But the next mission we will have will be beauty for each of all. Because we will be able, probably, in the long term to more or less personalize the beauty products we're going to do for billions of women around the world. And let's drill down a bit on that, on how you're doing that, using AI but augmented reality. Can you explain. Give us an example of that. Yeah. For the moment, it's mostly at the stage of choosing products and trying products. For example, we bought a company in Canada called ModiFace. And these guys are the champion of augmented reality, simulation reality. So what you can do with that is to, online, simulate the effect of a product on yourself. It's a technology that started a few years ago, but now that we have really mastered. And thanks to this product, you can do many things. You can simulate any type of makeup product on yourself, on your phone, for example. You can simulate new hair color, new haircut, new quality of skin. You can even do skin diagnosis, acne diagnosis. You can do all kinds of things. And this is a great help for consumers before they choose and before they buy the products. So it is a complete change in the way they can really buy products. And it's also fascinating-- we were just talking about this-- of course there's dozens of other cosmetic companies that have a smaller name but are super popular. And women are very loyal to a lot of these brands. And yet you've stayed on the top and you haven't been disrupted. How does that happen? It's interesting. It's true. Even more than that, in fact, we accelerated. And it's an interesting information-- a few years ago, people thought that the digital revolution would disrupt the beauty industry, and that big brands would lose their power, and that the smaller brands, there would be an inflation, mushrooming of small brands that would really take the market. In fact, what's happened is that, yes, there are more little brands, because now it's more easy than before to create your little brand. But it's still very difficult to go from a little brand to a bigger brand, because you stay small. But at the same time, the digital world, with the rating and reviews, the social media platforms, and the e-commerce, all this is working with algorithms. And in fact, the algorithms are favoring the top-of-mind brands and the top-of-mind products. So in fact the effect of that is that this is favoring the big brands. And the proof of that is that, in the past two years, we have seen our big brands growing like never before. We had, last year in the first nine months, our best year in 15 years. The market also, by the way. But our big brands have seen extraordinary growth, probably linked to this digital effect. Fascinating. And then we just had, as I was mentioning to you, a panel yesterday on China, and the Chinese economy, and e-commerce, where the growth in cosmetics is-- Huge. --dramatic. Huge. Because why? Because I think that China has been the country in the world that have really embraced e-commerce totally, globally, without any limits. It's fascinating to discuss with the young generation of Chinese. For example, Chinese woman, if you discuss with a young Chinese woman, 18 years, 19 years old, in a way, she doesn't even know that you can buy your product in a store. For her, the normal way to buy your product is to buy online. And maybe you can tell her, do you know you can find it also in the store? Ah, I didn't know. So for most of them now, this new generation is totally embracing e-commerce. And for us, we started very much at the beginning. We were the first partners of Alibaba seven years ago. And now e-commerce, for some of our makeup brands, for example Maybelline, number one makeup brand in the world, it's more than 50% of all sales. And it's also fascinating because it allows any consumer in China, any girl/lady in any city/region of China to order the product. So there is also no more limit to availability of the products in the country. And your size helps with that as well, I'm-- Absolutely. Questions-- go ahead and raise your hands for any questions. I wanted to ask you, while we're waiting for a question, agility-- you've got this massive workforce. How many people work for you? 100 and-- 86,000. 86,000. And yet you've trained your workforce to be agile and to spot trends. Yep. How do you do that? Oh, I think it has been always the culture of L'Oréal. You know, L'Oréal is a-- I would say it's a strange animal. It's not a company like others. It's a company with a very particular culture, always on the left, always curious, always ready to reinvent itself, to look for opportunities, to seize what's starting everywhere. It's also a company that covers all segments of beauty, everywhere in the world. So whatever happens anywhere in the world, we can see it, seize it, grab it, and maximize it. And it's also the organization that we have. Sometimes I call L'Oréal an organized chaos. And some competitors say, my God, what does it mean? But you know, in the world of today, where you have to be agile, and quick, and fast, and reactive, to be a kind of organized chaos is a very good thing. That's a good thing. Questions-- right here. Hi. Kevin Lobo from Stryker. I wondered about the sort of omnichannel approach. So do you have a proactive which has the subscription-based model for skin, for acne in the US? You also have the door-to-door of Amway and Avon. And then you have sort of retail. So how does that break down for you? Are you in all areas, or do you choose to isolate yourself? No, we are not. We are covering 90% of the segments and channels. But I'm sorry to say there are some parts of the business that we've never wanted to enter. And for example, direct sales has always been something that we never wanted to enter. And by the way, I think that we were right. Because as you can see, the evolution of some of these companies have been pretty difficult. So we are choosing pretty well where we want to go or not. But we are also testing and learning. Th subscription models are pretty new. We are doing some experiments. But I have, also, a great respect for my shareholders. So I don't want to go too much in models that have difficulties to become profitable. Questions-- right here. Not easy to get to the mic. It's coming. Yeah, sorry. [CHUCKLES] Thank you. Fields Wicker-Miurin, Board, BNP Paribas. Very nice to see you. Thank you. L'Oréal has a reputation for being very innovative, as we've just heard, especially on the digital side-- beauty for all, very close to customers, very good at listening to what customers are asking for. And I'm a big user of your products. Thank you. One of the things I do notice, however, is that to get to the beautiful pot of wonderful cream, I have to go through three different layers of packaging. Yeah. And obviously L'Oréal is not alone. It's just you're very big, you're very powerful, and you're a leader that people look to. I'm really interested to hear what are some of the innovations that are coming down the line that you're thinking about as you distribute your product to your consumer. That's an excellent question, packaging. I think all of us are feeling a bit of guilt when we-- You're right. --purchase these products. It's an excellent question, also, because for many, many years, packaging was part of the pleasure of a cosmetic product. And we have also to respect the pleasure of consumers. If they by your product, if they by your cream, for example, if you buy a Lancome cream, you would buy it in a beautiful jar, crystal or glass jar that is really a piece of art also. But we realize completely that we have to evolve. And so, for example, what we are doing in this-- some smart and simple moves, is that we are inventing, right now, refillable jars. So for example, you would buy your Absolue Lancome cream, which is a beautiful product. It cost a little bit of money. And it's a beautiful crystal jar. Inside, you have the product. But then, after that, you can keep the jar. And you will be able to just buy the content that you would put into the jar. So we think that there are many simple ideas that can really solve the question of keeping the pleasure for consumers, but at the same time being smart and sustainable for the long term. Recycling. Not only recycling-- because in this case, the good thing is that you don't even recycle. Because recycling is also pretty complicated sometimes. But recycling your own jar, yeah. Yeah, yeah. You keep the jar, but you just change the content with a kind of-- I don't know how to say it-- interchangeable part that you put inside, which is very easy to do. So anyway, we are working very much on that. It's clear that packaging is the number one priority for this industry for the next 20 years. Everyone is working on it. We have taken, already, commitments in terms of plastics. For example, we took the commitment that by 2025, all our plastics will be either refillable, reusable, recyclable, or compostable, that we will use 50% less plastics. So we are really determined to go fast, and to keep our leadership also in this field. Jean-Paul, thank you so much, both on a sustainability front, the technology front, the innovation front. Thank you. [MUSIC PLAYING] 

How L'Oréal Continues to Reinvent Itself

CEO Jean-Paul Agon joins Fortune’s Global Forum.

as the world's leading beauty company, Loreal is constantly reinventing itself. We're going to hear a lot about Loreal, actually, is a tech company and a company that's very focused on sustainability and and leadership on the part of CEO and Chairman John Paul McGann. John Paul. Welcome. So this is a bit of a conflict of interest. John Hall. I'm a link homegirl. Good, Good. And, um, you suggested that I'm old because, uh used to be a label that older women really love and loved. But you have found through digital technology that young people are loving this product. No, I never said, of course that Logan was for over in the country. You know, I just told you in the discussion before that. I remember when I was chairman and CEO of Laura in the USA in the 2000 the average age off the local user was around 38 40 years old in the U. S. On that thanks Thio, the digital revolution to the globalization to affordable to Asia along the average age of the local music, for example, in China now is Maur around 28 29. So which is very interesting because it showed that you can rejuvenate on dhe reinvent and we generate a brand thanks to the revolution on Drunk of also has become the number one on disputed global beauty brand in the world on day number one Beauty brand, for example, in In Luxury in China. And let's talk about that. That's fascinating when you get to China in a minute. But technology talk about how you're using digital technology to keep this brand at the top Blanco Memorial and other brands. Yeah, I think it's a fascinating subject. I think that technology has changed everything in the past. I would say 5 to 7 years. In fact, it was the rial a complete change in a very short period of time off course, thanks to digital, thanks to the social media platform, thanks to Google search thanks to our rating and reviews. Thanks, Thio Seeker murders. Uh, the This industry has changed completely on the way we do business today. The way we interact with consumers is totally different from what it used to be even five years ago. You're personalizing. Yeah, absolutely. You know, for me, it's fascinating because I have been 40 years that long So and I can I can really say that the last five years I've seen more change, more dramatic change than the previous 50 years. It's amazing. So we are really patronizing. You're right, definitely for the relationship, which is very important. We can really respond to individual needs, desires, dreams, it sit around. We can even now formulate uh, almost for individual needs or or so desires on. So this is the long term, by the way direction the direction will be that you know, that mission is beautiful role. But the next mission we will have will be beauty for each off all because we will be able probably in the long term, to more or less personalized beauty products we're gonna do for billions of women around the world. And let's drill down a bit on that on how you're doing that using a I but augmented reality. Can you explain? Give us an example of that's for the women. It's mostly at the stage off choosing products on trying products. For example, we bow to company in Canada called Bloody Face, and that these guys are the champion off augmented reality simulation reality. So what what you can do with that is to online to simulate the effect of a product on yourself. Uh, you know, it's a technology that started a few years ago, but now that we have really mastered, and thanks to this product, you can do many things you can simulate any type off, make a product on yourself on your phone, for example, you can create new heckle. Are you happy? Uh, new quality of skin. You can even do gnosis. You can even actually diagnosis. You can do all kind of things, and this is a great help for consumers before that shoes on before the buy the products. So it is a complete change in the way they can really byproducts, and it's also fascinating. Were just talking about this, of course, is dozens of other cosmetic companies that have a smaller name. It Arthur. Super popular, And women are very loyal to a lot of these brands, and yet you stayed on the top and you haven't been disrupted. You how that happened? It's interesting through even more than that. In fact, we accelerated, you know, and it's, uh, it's an interesting information, you know, a few years ago, people thought that the digital revolution would disrupt the beauty industry and that big brands would lose their power on that. The smaller brands that would be the inflation mushrooming of small brand that would really take the market. In fact, what happened is that, yes, they arm or little brands because now it's more easy than before to create your little brand. But it's still very difficult to go from a little brand to a bigger brand because if you stay, you stay small. But at the same time, the digital world with the rating and reviews the social media platforms and the e commerce know all this is working with algorithms. And in fact, the algorithms are favoring the top of mind brands on the top of my product. So, in fact, the and the the effect of that that this is favoring the big brands on the proof of that is that in the past two years, way have seen our big brands growing like never before. You know, we had the last year on the 1st 9 molder, our best year in 15 years, the market also, by the way, but our big brands have seen extraordinary growth, probably linked to the digital, is fascinating. And we just had a mentioning to you a panel yesterday on China, the Chinese economy and e commerce, where the growth on cosmetics is your dramatic huge. Because why? Because I think that China has been a country in the world that they're really embraced equal mass, totally globally, without any limits. It's fascinating, too, to discuss with the young generation of Chinese. For example, Chinese woman. If you discuss with the Chinese young Chinese woman you know, 18 years, 19 years old. In a way, she doesn't even know that you can buy your product in a store for her. The normal way to buy your product is to buy online on Dhe. Maybe you can tell her, Do you know you can find it all? So I didn't know. So because for most of them now, this new generation is totally embracing e commerce on for us. We started very much of the beginning. We were the first partners of Alibaba seven years ago on Dhe, now e commerce for some of our brands maker Brian's. Maybe Dean number one maker brand in the world. It's more than 50% of ourselves. And it's also fascinating because it allows any consumer in China any girl lady in any city region of China to order the product. So there is also no Maur limits to availability of the product in the country, and your size helps with that as well. Absolutely questions. Go ahead and raise your hands for any questions I wanted to ask you. While we're waiting for a question agility, you've got this massive workforce. How many people work for you? 180. 86. 80,000. And yet you trained your workforce to be agile, um, and to spot trends. How do you do that? I think it has been always in the culture of lawyer in the lorry. I would say it's a strange animal. It's not the company. Like others, it's a company with a very particular culture, always, you know, on a lad always curious, always reading to reinvent itself, to look for opportunities to see what's stopping everywhere. It's also a company that covers all segments of beauty everywhere in the world. So whatever happens anywhere in the world, we can C c z grab it on. Dhe maximize it on. It's also the organization that we have. You know, sometime I call loyal on organized cows on people's. Some competitors say, My God, what does it mean that you know, in the world of today, where you have to be a child on quick and fast and reactive, to be a kind of organized cows is a very good thing. That's a good thing. Questions right here, Kevin Level from Striker. I wondered about the sort of Omni Channel approach so they have, like a proactive, which has the subscription based model for skin for acne in the U. S. You also have the door to door of Amway and Avon, and then you have sort of retail. So how does that break down for you? Are you in all areas or do you choose toe? Isolate yourself. No, we are not. We are covering 19 percent off the segments and channels, but they are I'm sorry to say they are awesome. Some parts of the business that we never wanted to enter Andi, for example, direct sales has always been something that we never wanted to enter. And by the way I think that we were right, Because you could see the evolution of some of these companies have been pretty pretty difficult. So we are choosing pretty well where we want to go on up on. But we're also testing and learning. You know, the subscription models are pretty new. We are We are trying something. We're doing some experiments, but, you know, we are having a great respect for my share. Older. So I don't want to go too much in the models that have difficulties to become profitable questions right here. Not easy to get the mike. It's coming. Thank you. Field worker Muir ing Bored being be very, very nice. Very nice to see you loyal has a reputation for being very innovative, as we just heard on the digital side. Beautiful. All very close to customers. Very good at listening to what customers are asking for. I'm a big user of your products. Thank you. One of the things I do notice, however, is that to get to the beautiful pots of wonderful cream, I have to go through three different layers of packaging. Yeah, so might my and obviously nothing out there not alone. It's just you're very big. You're very powerful, and you're a leader that people look to. I'm really interested to hear. What what are some of the innovations that air coming down the line that you're thinking about as you distribute your product to your computer? That's an excellent question. Packaging. I think all of us were feeling at the guilty one week You're right. Tracks in question. Also, because for many many years, packaging was part of the pleasure of a cosmetic product on, We have to respect the pleasure of consumers the by product value cream. For example, if you buy a long cold cream, you would buy in a beautiful jar, crystal or glass jar, that really piece of art or on. But we realize we realized completely that we have to evolve on. So, for example, what we are doing in this smart and simple moves that we are way are inventing right now. Refillable job. So, for example, you would buy your absolute Lancome cream, which is a beautiful product, cost a little bit of money on. It's a beautiful crystal jar. Inside, you have the product, but then you could After that you can keep the jar and we will you will be able to just buy the content, you know that you would see it, they would put into the into the job. So we think that there are many simple ideas that can really sold the question of keeping the pleasure for consumers but at the same time being smart on sustainable for the long term recycling not only recycling because in this case, with the good things that you don't even recycle because, you know, recycling is also pretty complicated recycling your own jar. Yeah, Yeah, You keep the job, you just change the content with kind of I don't know what to say, You know, interchangeable parts that you put inside, which is very easy to do. So anyway, we're working very much on that. It's clear that packaging is number one, uh, priority for this industry for the next 20 years. Everyone is working on it. We have taken already commitment of plastics. For example. We took the commitment that by 2025 all are plastic would be either refillable, reusable, retractable or compostable that we will use Let's 50% more plastic. So we are really determined to go fast and to keep our leadership in this also in this field. John Paul, Thank you so much. Both on the run

What We Can Learn From Europe When it Comes to Reigning In Big Tech

Officials from Ireland, France, and Germany offer their insights. 


The Evolving Way We Think About Capitalism

Businesses must do more than just make money.


France Minister of Economy on How to Remain a Top Player in European Economy 

 A conversation with Bruno Le Maire, Minister of Economy and Finance, Republic of France. 


A Closer Look at the Future of Globalization

A conversation on navigating global shifts and shaping global polies with Michael Froman, Angel Gurria, Shriti Vaera, and Ngaire Woods. 


Surveillance Capitalism In Today's Digital Age

A look at how the commodification of data can change human behavior, widen the inequality gap, and reshape the future of capitalism with Shoshana Zuboff, Author of The Age of Surveillance Capitalism.

Thank you, Brian. And welcome Shoshana. Thank you, Adam. And hello, everybody. The Guardian called your book a chilling expose of the business model that underpins the digital world. You brought a copy of your book on stage with you. Thank you for doing that paper back. What is, um, Shoshana? What is surveillance, Capitalism? Surveillance? Capitalism is a new market form born digital in many ways, that diverges from everything that we've learned about capitalism for the last few centuries. But in this critical way, it emulates the old pattern. It takes something that lives outside the market dynamic. It brings it into the market dynamic for productions in sales. That's called making a commodity. The thing is, we're all familiar with the idea that industrial capitalism claim nature turned it into a land real estate, things that could be sold in purchase. In the case of surveillance capitalism, it takes a dark and startling twist because what it claims for the market dynamic now is private human experience. Private human experience is re envisioned as a free source of raw materials for new processes of production and sales, specifically translation into behavioral data behavioral data that Phil's new data supply chains on their way to new computational factories that we call a I machine learning. In those factories, products are made their computational product. They predict future human behavior. These prediction products are sold not back to us from whence they came, but to a new group of business customers with a profound interest in understanding what we will do soon and later. These new markets trade exclusively in human futures. Of course, all of this began with the click through rate is the first globally successful prediction product, and the online targeted advertising market is the first globally successful human futures market. Now it's spread beyond Tak beyond the sector into the normal economy. So But you've been researching this before. GDP are before Cambridge Analytica. You've made the case that and you make it very specifically about Google being the first and the best that they took our data and sold it to others without our permission. All right, so let's fine tune that a little bit. May I? Please? Of course. Of course. They took our data obviously without our permission, because most of the taking happens without our knowledge when they write about these I'm getting over a pneumonia. I'm not contagious or sick anymore, but I've got a little cop. So bear water right here, if you need it. Yeah, thank you so much. So when they write about their mechanisms and methods the patent scientist, the data scientists within the company, the researchers, they celebrate this one key factor that they learned how to take our personal information, various aspects of our personal experience while bypassing our awareness. This is celebrated. This is why I called surveillance Cap. This is what puts with surveillance surveillance capitalism. All right, so they're taking our data without our personal information, our experience without our knowing it, translating it into data without our knowing it. They're not selling the data. They're putting it through the factory. They're analyzing it, Their computing it. This was Google's original secret sauce, where they produce the quality score that allowed them to bruise the click through what rates from the so called data exhaust that no one was using. These were the leftover data in their servers that were more than what was needed for profit improvement for service improvements. So it's it's now these these computational products coming out of the factory's Adam. That's what's getting sold. And that's why in hundreds of videos, believe me, I've watched them all. Eric Schmidt can sit on a stage like this and talk to you folks and say, We're not selling your data and no one comes in to arrest him or anything for for, uh, possibly not telling the truth because they're not actually selling our data. They're selling the proprietary meaning that they create from the data about our future behavior. And so let me ask you in all earnestness where the harm is and I'll sort of facetiously, by way of asking the question. I'll say, for example, I love Google Maps. Just love it because it's so helpful to me. You understand why I'm making that statement? Of course I do. Of course, there there are a couple of key things to say about this number one. Nothing that I say or write is an argument against the digital. We are citizens of a democratic society in the digital century we deserve. The service is that had been created that have made our lives better in many, many ways. Our societies does their big data. We should be using big data for the new remedies and treatment for all kinds of cancers that were desperate to South problems were desperate to sell. We should be using big data to solve climate catastrophe and to eliminate the plastic particles that are now even in the Arctic snow. That's not what we're doing. The most powerful companies in this sector with the with the material infrastructure, the corner nearly on the market of data scientists, the ones who really know how to do big data. They are entirely trained on one thing, and that's quick stream science. They are entirely trained on these computational products that move into their market for their revenues and their profit. They are not using big data to solve our knees or our society's needs. You've said that this, that what they're doing is antithetical to democracy. How so? I understand there it from your perspective there. Craven. They're just trying to make money. All right. So, Adam, a minute ago, you said I like those maps and we started to talk about that. You should be ableto have the map without the overhang off the negative externalities that come with this market form So let me talk quite briefly about what the key externalities are. Then I'm referring to number one. We're talking about an economic logic, not about bad people and just rude bad behavior. We're talking about an economic logic that compels certain forms of corporate behavior in order to have great predictions. Remember, that's what they're selling their selling certainty to business customers. They figured out three critical imperative number one. You want to feed a I to get great predictions, you need to feed it a lot of data. Economies of scale, intensification of competition turns out scales not enough. We also need scope varieties of data. Ultimately, in this in this competition, they came to understand that the most predictive data comes from intervening in our behavior to learn how to cope, tune and heard our behavior in the direction of their guaranteed outcome. Good for revenue, good for profit. Good for them. Good for their business customers. This is how the game works. This is called economies of action. These air designed two utilize the digital architecture to work their will through the medium of digital instrumentation to intervene in our behavior in ways that we are not aware of to push our behavior in the directions that serve the bottom line. Economies of action are a new zone of experimentation. We saw it being developed as Facebook's massive scale contagion experiments, where they were successful in getting more people to go vote in the 2000 UH, 10 midterm elections. They were also successful in creating an emotional contagion, making people happier and sadder. These things were published in 2012 in 2014 and when they published these findings, they celebrated. We know we can manipulate cues and social comparison dynamics online to get people to change their behavior and feeling in the real world, and we know they could do it without them ever detecting are present, they never know we're doing it. So that's number one. These experiments continued. Adam under Pokey Mongo. Anybody in this room ever play Pokemon? Go with your friends and family, Okay. Mongo incubated in Google over many years, brought to you by the same gentleman who brought your street view. And Google Earth has spent most of his career filling Google supply chains with surplus behavioral data for these new computations. In the case of Pokemon go. There were businesses from McDonald's, Starbucks to Joe's pizza paying Pokey Mongo for guaranteed footfall. And what Pokemon go. This group, Niantic Labs that came out of Google is what they learned how to do was use the rewards and punishments of Gamification to hurt our behavior through the city to the places that were going to pay them. Fees for our football, football in the real world, being the absolute equivalent of click through in the online world. Now the next zone of experimentation, Adam is set to be the city. This is the war that's going on in Toronto right now. We're sidewalk lab flash. Google Slash alphabet has its sights set on the Toronto waterfront, and only two weeks ago the citizens of Toronto ah group of them in a highly democratic process that they went through good, slow democracy beat back the first really extreme aims of this proposal, and the elected officials stood up to constrain the proposals. Where are we with democracy? Let me answer you very succinctly. Number one surveillance capitalism is on a collision course with democracy eroding from below and completely restructuring democracy from above. From below, it takes aim at human agency human autonomy at what we consider to be individual sovereignty, the things that allow us to have decision rights to be self determinant. This now global means of behavior modification takes aim at human autonomy, without which a democratic society is impossible to imagine from above. We are now entering the third decade of the digital century. Adam. This was supposed to be the apotheosis of democratization this digital century. Instead, what we see is a new kind of society marked by extreme forms of social inequality, a new social inequality. What is this social inequality, concentrations of knowledge in these companies, best expressed in the growing of this between what we know and what can be known about us. This is intolerable for a democratic society. But that's not all. These extreme concentrations of knowledge produce extreme concentrations of power that what we can do is now no match for what can be done to us using these extreme concentrations of knowledge through the medium of the digital. So when I couldn't help thinking and the picture that you've painted of these companies is like in the industrial age, the these factories that dump sludge polluted sludge into the river because nobody was stopping them from doing your analysis. Yes. Then they were The regulations came up to stop them from doing it. You already a philosopher? Now, for about a minute more, I'd like you to be a philosopher king and say exactly what democracy should do about this. First of all, this thing has had 20 years to root and flourish largely unimpeded by law. That's to say that we're the beginning off this not at the end. So we have to understand that the route now moves through politics. Only democracy only law only a new regulatory vision will reign in surveillance capitalism. By the way, In the massive Pew Research Study published just this past week, 81% of the U. S sample says that the risks of corporate surveillance outweigh the benefits. 81%. If you want to see what's coming in the future, pay attention to that number. We need laws that interrupt supply and demand that disassemble the incentives for the surveillance dividend. That means we interrupt supply. Taking our experience without our knowledge and therefore without our consent or the right to combat must be simply illegal. Let's call it what it would be called in any first or second or third grade classroom. It would be called Hey, let's go to the other end that supply. Let's talk about demands. We outlaw markets the trade in human futures because we know that they have predictably destructive consequences to human autonomy and to democracy. We outlawed them the same way we outlaw markets, trade in human organs or babies or slaves because we know that they have destructive consequences and are incompatible with our aspirations as a democratic society. That's where we are today, Shoshana. I cannot imagine you are a very popular in Mountain View or Menlo Park, California but I want to thank you for coming here and giving us your message today.

Thanks club. We're going to have a fun geology lesson that has big implications for the global economy. Talking about 17 different metals with funny names like Syria and scandium and Europium, can you name all 17 don't have to but Syria and lengthen them made me and pricey DMEM gadolinium Europium, Sumerium, Latisium, yes I- [ CROSSTALK ] I'm taking your word for it that you can go all the way- [ LAUGH ] That was pretty good, pretty good, I didn't even prep her for that. So, now that we've heard some of those funny names, tell us what rare Earth metals are and why they're so important. Okay, so This may seem like a somewhat opaque topic for many of you in the audience. However, with all of you, I guarantee that every single one of you has at least one device, either on the table or in your handbag. An electronic device so each of you today is carrying a rare earth around with you. Most of you probably came here in a car or a bus or something else. Every single one of those vehicles actually has rare earths in it. And indeed, you may have used electricity which came from a renewable source which no doubt used rare earths as well. So, just explaining that [ UNKNOWN ] are a series of 17 elements, you find them on the second bottom row of the periodic table. They are valuable because they are reactive metals. In all of the things that I have talked about, they're used in very small quantities. So if you are for example, the CEO, Of an automotive company, you will rarely think about rare earths, because if you're looking at your build of materials and $ 25, 000 for a car, rare earths may only be $ 200 in that. However, you will sit up and take attention Pay attention if you are unable to source those because your production line stops. And in the last decade, they because they won't run without the rare earth metal. Well you cannot even have an internal combustion engine vehicle without rarest because syrium is in a. Autocare system in your vehicle that converts carbon monoxide to carbon dioxide. So twice in the last decade see as sit up and tight notice and that is 2010 China threatened to stop the export of rare earth materials to Japan And again in the trade was a trade tensions between the US and China over the last 18 months. One of the threats from China has been to stop the export of rare materials. That means that one journalist, not this one, not Fortune, I surely said that the trade tensions meant that Linus was the prettiest girl at the dance. I'm very happy to wear that badge. Okay, let's give some context for why You're the prettiest girl to dance other than your lovely green. But so, China has the largest reserves of rare earth metals and they but they produce even beyond, you know the scope of their reserves. They dominate the market, the vast majority of. Production globally is from China. And then there's your company. Essentially, you're the only producer really outside of China. How did it get to be that China dominated production that is not being produced anywhere else in the world until your company came along? And why does your company exist is that lone competitor. So China has a dominant market position because 30 years ago, they decided that they would. And so at that time, there was a flourishing outside China rarest industry. Deng Xiaoping famously said the Middle East has oil, China has rarest. And at that time, and bearing in mind that China thinks generationally. Here in the West, we tend to think in three or four year electoral terms. So China said, we are not only going to be strong in the resource, but we're gonna build the downstream supply capability. Cuz that's where the value to our economy and the jobs are. And so over 30 years, that's what they've done. So they started with the resource. And they've leveraged that, they've attracted firms to actually come in and invest in China. And they've leverage that. And then China 2025 strategy is no rare earth exported except in value added form. So So I'm sorry, the second part of your question is why us Well in 2010, China and Japan were having a bit of a spat over some islands. And so China threatened to stop export. And that caused the rarest crisis. It's called in the industry. There were two firms that came out of that Lynas and molecule up in the US. As alternate suppliers, the Japanese government provided the last tranche of funding for Linus which got us up and going and they have proven to be a wonderful partner. [ UNKNOWN ] started but the Chinese kept the price very low for a very long time and it filed for chapter 11 in 2016 So the Chinese have effectively created an almost monopoly situation by, through market forces by providing by far the lowest cost product over time. And, in fact the US is heavily dependent on their their product. They did cut off supply to Japan. They haven't exactly done that in the trade negotiations that have been going on. How real do you think it's a threat that they might pull what they did with Japan again and play that card in a trade war with the US? I think it's less likely and the reason why is because [ UNKNOWN ] exists today. So whereas processing plan in Malaysia And are mine at Mount world which is recognized as being the richest deposit in the world. A sufficient to supply outside China markets today although as it grows over the next decade with new 21st century technologies that weren't so much be the case. So I think it is less likely. However, your governments particularly the US government, Australian government and the Japanese government are talking about building new rarest supply chains, potentially developing new resources. And I think that we will see about dynamics play out in the market. To ensure that that doesn't happen. I wanna remind everybody, if you have a question get ready we'll open it up in a second. So you mentioned your facility in Malaysia, but your company started in Australia, you're Australian, your mind is in Australia, but you've moved the headquarters to Malaysia. Explain why that is and then where you might be expanding in the future. So we're an ASX listed company. And yes our mine is in mount world in Western Australia. Some people say where's that? It's 865 kilometers North East of Perth. And others will say well what's 865 kilometers North East They'll say not very much. So certainly all of our workforces fly in fly out the processing of rigorous requires significant other inputs. And Malaysia requires foreign direct investment. So we were in before my time with the company invited to Put the processing plant in Malaysia. And typically this has worked very well for us, except for a very small group of activists in Malaysia but it's a Commonwealth country that may mean less to the Americans here, but it means that its laws and its political processes are based upon English laws and processes. So astray, we feel very comfortable with that. We're in a purpose built a heavy industrial environment, we have access to a skilled English speaking workforce and we're close to our markets. So it's a very good place for us to operate. When I came in and as the CEO, we had many offices and we also were broke So I sort of said, Well, what are people will either be where we make things or where we sell things. We couldn't put our head office in that world. Frankly, it's very long way from any way. Too remote. So therefore, we moved our head office to quantum. So if there's any questions, just raise your hand will get you a mic. You have taught you just talked about the circumstances that led us to China dominating the this market for rare metals and you've spoken a lot about how the Chinese government, you know, supported policies that led us to this point and that you'd like to see other governments Take some action you know to make the market more dynamic. What would you like to see happen? If you're speaking to the US Government, the European Governments, CEOs of big potential customers around the world, what are the policies that would make it a more open competitive market? Who do you think would benefit? Everybody. So I think the first thing to recognize is it's a small market. And I think the Chinese- Billion dollars right? Eactly, globally has given us an excellent case study in developing renderers. They did not let 1000 flowers bloom Right and it's heavy capital at business 1. 4 billion in capex to actually stand up the facilities. So they created a hub northern railroads in China is 60 % of the Chinese rarest industry. Is fully integrated from mine to magnet. It's got Industrial Research Institutes, real skill and capability. So I think the idea outside of China, we are very fragmented. Right? And is she having a more strategic approach to what is indeed a strategic mineral, I think is probably the most important thing. So being more aligned and more planned in our approach, I think is gonna give the west a better outcome. Mm. So you're talking about or you have. We explored opening a new facility in Australia but also potentially one in the United States. So we were talking about this backstage explain why you would be opening this new kind of facility in the US and how that would open in the market because What's interesting to me is that right now even though you're the only supplier outside of China, you basically don't sell any of your products to the US. US is still buying almost completely from China. So actually, there's two categories. So the magnetic material switch to the sexy [ UNKNOWN ] sales does. They are the ones who got into electronics in the car and things like that. The US buys virtually all of those from Chinese suppliers. The catalytic materials which are used particularly inside oil and gas refineries and otherwise We have long term contracts with US producers. But they are lower values then than the other. But there is one category when I reeled off all those names for arrows before. They classified into light, medium and heavy reroutes. Now, we primarily our business is based upon libraries, although our deposit also has significant heavy. [ UNKNOWN ] So those that present come out of the separation process is a compound, which is then sold to a separator in China. Heavy. [ UNKNOWN ] I'm sure the US government, the US can not send its military to war without heavy rare earths. And that present only plays in the world that separates heavy rare earths is China. So, the facility that we're talking about establishing in Texas in the US In the first instance will be a heavy rigorous separation plan. And we will then follow that up with further industry development. Right. So we do have a question will try to sneak it in really fast. Time is running short. If you could just Identify yourself real quick with the mic is coming right there. On any channel, it was just a question of understanding. Is this an economics issue or is it a shortage issue globally and can be recycled? Because you talked about running out of demand continues to grow. Do you see what I mean if if we couldn't get rare earths from China, how big a set of trouble are we in. And cannot be solved through recycling. It can't be solved through recycling because we don't have enough end of life products. For the materials which are required so we have as part of our plan for growth, we have a recycling element to that. But we don't have enough end of life products yet to feed that. In terms of running out. We're not running out. Rarest are actually quite plentiful. It's a triumph for branding. It is simply Being able to identify sources that are economic to develop. Rare earths are not rare but they are crucial to the global economy. Thanks so much Amanda for joining us. Thank you. Thanks very much. [ BLANK_AUDIO ]

The Battle of Why Rare Earths Are So Important

A conversation with Amanda Lecaze, CEO of Lynas Corporation. 

[ MUSIC ] So, I want to begin with a massive purchase and acquisition you did, but it's really in many ways a change in strategy. You just earlier this year, you bought a company called Metadata, a US company, for $ 5. 8 billion or so, 5. 7 billion, something in that range. It's a lot and your largest purchase by far by a factor of seven or eight or something that you've ever done. Anyway, when you think about your company, it's about 3. 4 billion in sales each year. $ 3. 8 billion. I mean that is a very large commitment. Tell us why you did it. Well, first of all I agree with you. I have no more money. [ LAUGH ] But the point is the following, we have observed the life science sector for years. I think it's a little bit provocative what I'm going to say. But if airplanes were done this way, company will do hundred of plane, put them in the air and look at the one which is flying I said this is the way, this is the one I'm going to produce. So what I'm trying to say is we need to contact to connect clinical trial with modeling and simulation. On media data, it's about clinical trial. They do 50 % of the worldwide clinical trial. So they analyze the data from these trials. Yes. Twenty years worth of trials. They organize the trial- Right. Target them, and then analyze the data, capture the data and create what we call virtual arms. So next time you do it, you can compare one [ UNKNOWN ] with a [ UNKNOWN ] one. So it's very key, especially in your sector which is highly complex as the biosciences, on connecting now, this to the power of modeling on simulation, I believe can be a game changer for the industry, that's why we did this move. So combining imaging or in your cases, 3D imaging or simulation with a new data platform, is this idea of super charging this. And so you'll notice the theme here for those paying close attention, cuz I'm gonna follow up with that same question to you, Karen. This is your holy ground, right? Combining the imaging with a new data, data platforms and figuring out different ways to analyze that data. You just got FDA clearance for a type of lung cancers screen or lung scan. It allows you to identify pneumothorax which is a collapsed lung. Tell us why that's so important. So, first of all, in the world we live in, there is a lot of data, but far too often not enough insight. And so, what we're trying to do at all times Is take data and from that data create insight. And so if I look at that alone, three axes. Your example is perfect for where a radiologist or a physician that's under stress has maybe 200 scans to read 200 scans of various kinds, the X ray, that included that new more thorax, Rihgt. Could be sitting for hours down in his workflow. And the beauty of what e've done is, Life or death. Life or death, Right. So it goes maybe from up to eight hours down to 15 minutes. This is right at the top of the queue. It is flagged that this patient has collapsed lung you need to pay attention now. And so this digitization gives us the chance to be faster Reduce Stress for the physician and obviously much better outcome for patient which is what we're all trying to do. And Bernard, when people talk about bringing AI into the system, and I've heard you say, this is like, we've been doing this for 25 years, I mean, you were doing it secretly as a defense contractor. But you have this extraordinary thing. I wanna show the audience You do this 3D brain virtualization. And in fact, we've got some images and I'm wondering if we could show those images and if you could just talk over them for a second. You can look at them on the screen. Yeah, tell us what this is. Yeah. This is the reconstruction in 3D of a brain with all Older characterization is the follow up to what we did for the Living heart program. Living heart was adopted by the FDA, as a matter of fact, as the best platform to investigate heart surgery. So we are doing exactly the same here. But don't think it's only geometry. It contains all the characteristics, electro characteristics of the brain. So you have the characteristics of the brain you have older conducting elements of the brains. So it's what we call murky physic simulation. Now, so we've been doing this for IO space In multi physics simulation for years. Yeah. I remember the time where people told me you will never simulate an airplane in the Gulf or to the air. We don't do physical prototyping on the first airplane will take off. Right. So we are applying that same discipline of representing complexity on addressing three things. Collaboration between disciplines which don't necessarily understand each other. To memory, meaning you remember the experience. Sense memory too. You actually, you're not reading in a book, you're actually doing it. Absolutely. Yeah. And then everything related to capturing experiences and comparing It to during your life of passion, so it works very well for heart surgery. Right. So we wnat to apply it to brain now. And we have also done it for propagation of cancer in human cells. Right. I'm just interested because effectively That's what we're trying to, we live in an ecosystem. And I think, we were talking about this backstage, our industries are fragmented. And so if you think about what we're trying to do, it's a very similar concept. How can we create a platform for the ecosystem where we can bring different communities? Vas mentioned it earlier In relation to clinical studies if we can integrate what pharma companies know with what's in the medical records with imaging with genetics and metabalomic data, all of a sudden you have This much better 360 degree view of the patient. Is the integration of that data that's really powerful which is kind of similar. Yeah, our intent is to really do the virtual twin. Right. Of an entirehuman. We did it for planes on cars, there is no reason we cannot do it for. For human, and the problem you know is that people are over communicating and they under understand each other in those disciplines. It's siloed as we discussed, it's very siloed, but innovation will come from the cross examination of things. So but you are going through this transformation between The sort of world of steel and aluminum and and you know widgets and hard things like that. You wrote a beautiful essay for the the Nikon Co Yu Shimbun which is the largest Business Standard or one of the leading business dailies in Japan and you wrote about. I'm going to quote from this I believe in the century of living matter, industry will be remodeled by the bio sciences, the material sciences in the Information Sciences. Tell me what you meant by that? Well, if you look at the 20th century industry, it's very siloed. It has been based on a limited number of principles. Physical principles, chemistry principles, even pharmacy, we've small molecule. You know, you see in front of you here 28 molecules. 28 molecules? What do you mean? 28. A human is 28. This is 54. [ BLANK_AUDIO ] I knew we were- 2854. Think about it. I knew my phone was smarter than me. I didn't know it was more complicated than me. It's more complicated and less smarter writing I think. Right. But the point I want to make is when you observe the world of living You discover things that have never been applied to the industry. On to your to your question about your question. I think today we can create materials from the atoms. It's the unknown 50 years anniversary of the Mandela EF table. It's a very important table. the periodic table and there is a limited number of filaments 28 here 54 and 58 in my phone. And when you when you think about blessed, there was 28 It's magic. So the point what would lift Tony MD what's new, what's the new element that you would create and we'll name it after? Well, first of all, we for additive Additive printing whether it's leaving out or games or static, you can start for molecules or form human cells and print. You teach new skills. This is happening as we speak. So there is no reason why this will not change the frontiers of the life science world. And it's happening in biology because biology is quite complex, and it's not a small molecule it's a big molecule, and it's difficult to produce, and it's difficult to Replicating at scale. So I believe modeling and simulation will transform that. And that's what I wanted to communicate. So you're also a scientist by training and by virtue of you being Irish, you're also philosopher as it just like Bernard So you talk about the ways in which you're going to see truly transformative change. I mean, we've been in the age of the gene, we went through the age of the computer. We're now in the age of confluence, where all of these revolutions in technology, 5G, AI, sensors, big data analytics, The new science of bio they're all coming together and you're combining many of them in your business where are we gonna see the benefits of this? So I think ultimately there are three beneficiaries economies because if you look at The cost of healthcare and the waste that occurs today. We can't afford to keep going the way we're going now. And so achieving better productivity, achieving better outcomes is going to help eventually. I know you're going to ask me when and quantify. Yeah. it will happen at some point. And I think if I look at it, as national level of you can, you know, transforming the images in the UK, I'm familiar with. There's something to really start to integrate how they look at first of all, Healthy volunteers now track them over a number of years and see what changes that occur in many different molecules of their body lead to disease. And I think that's going to provide a whole new rich data set that's going to be very interesting. But you know. I said, I know Steve Carr is here in the audience. He's very interested in short term. What's thins gonna mean for hospital productivity? And for hospitals today we can see that using digitalization and combination of data sets means that, and we've proven this with use of things like command center We can reduce waiting time in the emergency department by up to five percent, which is really important for patients. We can speed that patient through the hospital safely and create in one specific hospital, it was 50 extra beds in capacity. In a year You're doing this with And you say well that doesn't matter okay 50 beds doesn't matter, it's a million dollars a bed. So I mean for a hospital, that's a lot Wait till you get your hotel bill for her. A million dollars a bed You know the sole cause of mortality, Yeah. After heart accident or oncology is in practices, think about it. Human error. You wanna know why because there is no way to be actually trained. Right You only practice as a top specialist You will not put a pilot in a plane without virtual training. Right. So, for example in the Children's Hospital in Boston they are using the not living breathing but the living Houghton mansion to plan all children repair On the small heart on reviewing all the characteristics under different options before going to the surgery room. I was discussing with the doctor last week, he was telling me that, he receive children which have been operated Across America where he has to fix the previous errors. So, I think it's not digitalization, it's a virtualization of those practices that will make them pervasive, reliable, auditable, Which is not the case today. And think about the training of neurosurgeon, so I think it's game changer for the entire sector. So I think that it's clear that the technologies that you are both talking about up here, are making us better, smarter. Faster, more reliable, less error prone. What isn't clear is that they're making things cheaper. And for both of you, when you brought out your phone before Bernard, and we know this thing called Moore's law. Where we get more and more productivity for less and less investment, and less and less cost. And yet in health care, for whatever reason seems to be a reverse Moore's Law, right? The cost keep going up and up. When are we going to start to see this? Okay, I think it's going to change quite soon. We're talking about seven gene therapy earlier. I mean, the early days of cell therapy, and the mirror oncology, for that matter have ended up with very expensive treatments. But, you know, we will end up within, I suspect within the next 10 years with more allergenic rather as opposed to specific patient treatment, more allergenic treatments and that will bring cost way down. And fundamentally, you know that the principle of precision Of precisely diagnosing a patient and giving them a [ UNKNOWN ] gene therapy, this is transformational for the whole family and Th healthcare industry. Combined with I think technologies in the hospital, you're putting people into hospital Only when they need to be there. You reduce hospital acquired infections when they're there. You get them out of the hospital as quickly as possible. And through various mechanisms, you monitor them in a social setting when they've been treated. I mean, I think the ecosystem we're working in now. Is everybody incentivize to make this work. And it is an ecosystem. And that's why we're investing in something called the Edison platform. Because effectively, the industry needs a host system to allow algorithms and data to be gathered so that it can be utilized more effectively. I've heard that you both work with ecosystems. You create your 3D experience labs and partner with a lot of startups, many of which you'll invest in later. What is it that is so effective about that model as opposed to just going out and buying the company? Well, innovation, the speed of innovation, the freedom to try many things quickly. And I think that's that's really what under attraction of talents, because you know, so many young generation want to be their own entrepreneur and if we can help them We have a gigantic ecosystem, we have about 40, 000 partners. 40, 000 partners? Yeah, 1. 5 trillion of innovation program are based on [ UNKNOWN ] system in the world, so we are very secret company. Wow. And we don't talk too much about our company but we are there and So many sectors. The point I want to make for the cost because I think it's very important. You know, this industry has also been living as a rich industry. Yeah. As compared to many other industries. We must admit it. The second thing is 20 years of protection. Full patterns. Right. Ten years to develop. Half of it is for clinical trial. So on so many failure that you need to compensate with the successful blockbusters, and then you have the summary of the industry. So it's about success rate It's about speed and it's about better targeting. So I believe that this industry is like the industry of aerospace on space 30 years ago. Document based. Please provide the documents that proves that you have done the right thing. But you never know if the document of a present the reality FA certainly years ago was receiving documents that would not work reason what was flying with modeling and simulation fa EC today. experiences that does represent the plane which is flying Document based versus the distance between reality and virtually is reducing, and that will change the industry. And the loss of flight don't change that often, and yet what we're learning about the body with the immune system's ability to be harnesed now and fight things like cancer Or what we're learning about the brain, the last frontier of humaneness, and this is changing all the time. Our knowledge base is doubling and tripling and changing all the time. What do you look for in terms of a regulatory environment that speeds innovation? And I wanna get a question here too. So if you've got it, yeah, we've got one up in front. I think I can very simply endure, we need the regulatory environment to fully utilise the data that's there. And I think there's a huge challenge in all of the regulators now with the urgency of AI because all of a sudden the speed of which these tools can be developed and deployed has provided them with enormous Challenge and of course, some of these things if they're not properly developed, and curated with really good data can be dangerous. And, again, that's why I got back to the platform. We only put things in our platform that are based on data sets that have sufficient volume and sufficiently well curated. That's what we save. Right, all right. We have a question right here. You just please identify yourself. Yeah, Robert HD, head of bureau United States presidency. Thank you for this very inspiring panel. Your biotech is obviously at the cutting edge and when it comes to the the brain is fascinating Also very touchy, as regard of the mystery, you said that you capture it data and is it only for purpose of surgery and research and development? Or is it also for defense purposes? And the second question, sorry, it's going to be very short one, are you sharing this with The global hospitals are going to be remaining only private. Thanks. Yeah. Capturing the clinical trial is about capturing data. I think the value of clinical trial sharing is very high. On the company called MIDI data, what this is exactly what they do. So when a new player will do clinical trial on a new molecule, lets say. The previous experiences [ UNKNOWN ] will be used to do what we call [ UNKNOWN ] to compare to other possibilities, therefore enrich The level of quality of targeting or risk assessment or efficiency assessment of the clinical trial. Yes, of course the value is about sharing. Right. That's the mechanism. It's not used for anything else, of course. Ken we have 40 seconds left You're an almost $ 20 billion company. If GE healthcare stood by itself, it'd be 160 on the Fortune 500. There was talk about spinning it off, it fell off the table, is it back on the table now? So I was hoping we'd run out of time before you asked me that question. Yes, that's why I had to get it in, yes. [ LAUGH ] Well, so I'd make a couple of comments. First of all, I'm very jealous that borrowed so much money to spend. Yes, yes. So at look at some point and we don't have a timetable, we will probably emerge from under G but. You know as you said Gee healthcare is a $ 20 billion business. We're the top biggest med tech company in the world. And we have global scale and we're big enough to stand on our own two feet at some point Thank you, Karen Murphy. [ UNKNOWN ] Thank you so much. [ APPLAUSE ] [ MUSIC ] [ BLANK_AUDIO ]

How Technology and Digitalization of Data Empowers Doctors and Benefits Patients

An in depth conversation about health care with Dassault Systèmes CEO Bernard Charles and GE Healthcare CEO Kieran Murphy. 

[ MUSIC ] Yes, the ambassador has a convention center named after her in Dallas but we don't have time for chit chat because we have 15 minutes and you have a lot on your plate [ LAUGH ] Yes. [ LAUGH ] And thank you for coming. Thank you. You're in and out. You've got ministers coming in this week. We have our foreign minister this week, all of the NATO foreign ministers come in. And are on Secretary Pompeo will be there. So I've got to go back to Brussels. Tonight ?. So thank you so much. I wanted to just mention one thing that backstage because people think of NATO is Europe of course, but you've told me back fascinating fact about Venezuela. And the NATO partner, Colombia, and why you feel the need to bolster the defense and security of Colombia right now, new actor in there. Well, most certainly, Colombia is taking so much of the refugee group from Venezuela. And very supportive of a guy Ido and the government that he's trying to form that will give human rights to their people. And we asked the foreign minister of Columbia, what? Who was there that was holding up Maduro. He said Cuba, which you would understand Russia, which you would understand. China, also a big player there and also Hezbollah. Hezbollah, that's a man and I said, what the dynamics have shifted there. So we're going to have to start looking more at Creating partnerships and communications in Latin America I think, and Colombia has done a great job of putting their terrorist organization fork down. And so I think we're gonna have to start looking at ways that we can show up democracies and Help them. So speaking of sharing of democracies let's talk about cybersecurity in Europe with NATO, U. S. Secretary of Defense Mark Esper of course is calling for NATO allies not to hire Chinese companies to Install 5G Technologies. He actually said every Chinese company has the potential to be an accomplished in Beijing state sponsored campaign to steal technology. It's also of course has raised national security concerns. What is your thinking on that? Well, of course in NATO, we have to have interoperable communications for our overall security umbrella. And any Chinese company is required to give information to the government, if asked. So, any thing that is going to come into our interoperable communications could be taken by the Chinese government, in any kind of circumstance. So, For our communications and especially our military and government communications, we want to make sure that we have companies that are abiding by the rules based order and can keep contracts and privacy rights. And the Chinese companies cannot ensure that Have you been met personally making that case to [ UNKNOWN ] allies? Yes, definitely. So Secretary Esper was there for the Defence Minister Ariel about a month ago, and now, Secretary Pompeo will come in this week. He has made that position clear as well. And, I think it's just so important when a country has the ability to go into your networks and your communication systems, the laws of intellectual property. Is going to be in jeopardy. So you we've got to realize what the risks are in this. Do we want to have a good relationship with China? Yes, we do. But they need to come into the rules based order and that's where EU and NATO are on the same page to make sure that we have the capability to protect our networks, our intellectual property, and also that we are competing without subsidies that are On level the playing field and you have broader cyber security concerns of course. With the entry of 5G technology, there's a lot of concern about more leakages and more ways in and more ways to attack cyber systems in a In the next generation of warfare, what is NATO doing on that front ?>> NATO is adapting to this new generation of warfare, this, we now have cyber and hybrid as ways for For war. We have seen, we've seen Russia, for instance, trying to change elections in many of our countries by putting false information into the systems, false news stories, false social media. We have seen them also shut down certain Grids or infrastructure and so I think this is, if you shut down someone's ability to communicate. You shut down their ability to guide their missiles or guide their tanks or their airplanes to a different place, like interrupt, Through artificial intelligence, their path that they have been set on. Even now, we are looking at space as an operational domain. This is something that France has been very forward leaning on, so has America. NATO is now looking at ways to also declares space a domain. Because if you can interrupt a communication from a satellite into a missile trajectory, that's war. Right now, we do satellite guided missiles. To put them in specific places, if they can be disrupted and put off path, that's a war. So we've got to be able to adapt and get ahead of those who would use technology against us. So let's talk about Russian aggression, there's a range of versions of it going on right now. Let's talk about both Ukraine and Georgia. We were talking about that behind stage. Well, yes, I think that at one point we thought that Russia might actually become a partner with NATO. We had hoped that would be the case. But starting in 2008 with Georgia, when Russia took over two provinces of Georgia, then we began to look at this in a different way. But 2014 when Russia took over Crimea illegally, which is part of Ukraine Then we knew that we had to reverse course and start building defences and deterrence against Russia. Russia is now in the Donbass which is the eastern part of Ukraine. And they've killed over 10, 000 people in this area that they claim is. Russian citizens in fact, they're giving Russian citizenship to people in the Donbass. And as well to the provinces in Georgia. And so they're beginning to take over where they see their military Yeah, these regions. Yes. I mean when you when they see a window, they jump in and then we are trying to help Ukraine, we're trying to help Georgia to defend against these incursions and. Will take time but we're going to stay on the side of sovereignty of these nations. And what about the Baltic states? We've of course sent some troops in to Lithuania been some reports of Russian aggression in the in the skies? What are your big concerns and what are you doing there? Well, we do have an enhanced forward presence that is a NATO operation in all three of the Baltics, plus Poland and somewhat in Romania as well. Where we have rotating troops and Lithuania, Latvia and Estonia and there are the Russians are constantly overflying no fly zones. They're surveilling what is going on there. But we have a. Enhanced forward presence that is a NATO operation and France, UK, Germany, we are all there doing the rotations so that Russia knows that if they do attack any of those countries that that will would invoke Article five And in Poland we have a build up as well of rotating Troops that has US Troops and also NATO Forces as well. So we're trying to where we see that Russia Is close by and looking as if they would like to provide an incursion on sovereign territory. We're going to stand for the sovereign nation. Get your questions ready, go ahead and raise your hands while I asked what about. That Harvard came out with their report because NATO's turning 70 and you will be having a kind of celebration, a meeting next month. One of the concerns was a couple of member nations of NATO, and particularly Turkey in the invasion of Syria. What's your take on that? Well, of course is a very tense situation. We did not want Turkey to do what they're doing in Syria. And we are, all of us are trying to tell Turkey in every way To not do anything in Syria that is going to violate human rights. They consider the YPG to be a terrorist organization. No one else in the Alliance believes that they are a terrorist organization. They have fought Against ISIS with us, all of us in the D ISIS coalition. Our goal in Syria has been to keep ISIS from being able to regrow after they were pretty much put down in Iraq and in Syria. And so our goal is to keep ISIS down so that they will not come into any of our NATO countries and kill our people as they have done before. So we are working with our Turkish ally to try to keep them from Um, harming this the YPG that is doing a good job of fighting ISIS. Now, Turkey is a good ally in many respects their framework nation in Afghanistan. They have done a good job of keeping control of Cabo and Afghanistan under our NATO mission. They are in it in Iraq fighting against the rebuilding of ISIS. They're in the ISIS coalition. So we're going to keep working with Turkey. They are an ally. We want to keep them as an ally. Versus Russia. I mean versus, [ CROSSTALK ] the arms of Russia. Exactly, we are putting up with all of this to try to keep them in the Alliance so that they do not go into Russian arms. As an ally that would be a very problematic situation for Europe, as well as for the transatlantic bond. Questions. [ BLANK_AUDIO ] Let us know who you are. My name is Yeng Yin from Huawei. So a question to Madame Ambassador. First, I would just like to get the record right. Actually, Huawei has never been asked and never will Provide any, you know, information to any government and second of all, we have never been involved in espionage or security issues. And I'm very pleased that madam ambassador has mentioned about rule. Because we are working with European Union to mitigate your risk, especially to 5G security, but we feel like American administration is actually breaking the rules. The rules actually is about the Europeans core value about the openness and fairness and non discrimination here and so just quick question is actually another things about evidence base. So we heard kind of allegations again again, so when NATO or when the administration can provide evidence, that's proof that words the education is correct. Thank you. I didn't get I'm sorry. A good question is Huawei Why does not provide information that government doesn't have a history of doing that is not going to be spying on citizens or not a national security risk. Well, the problem is that they would have to if asked by the government, that that's the problem. Great. So let's Let's move on, other questions? Right back here. David Meyer, Fortune. Emannuel Macron recently said NATO was becoming brain dead. That's elicited quite a response from people saying that that's not true but diplomats have privately been saying apparently that there's a point to what he's saying. What's your take on this statement? What do you mean by brain dead just for people who haven't heard that? Well, that's it's it's becoming less it's becoming less functional in terms of its aims. Well of course we disagree with that. No argument there. But I think the, I think the French president is trying to build what he's saying is a European defence force, a European army. I think that is a big mistake, because right now. America is the foundation of NATO. We do spend the money. We do identify our risks, and then we take the pains and we put the muscle behind. Assessing the risk and then protecting against the risk. It's hard to see that any one of us in NATO would be able to face the big risks that we have in our future. The big risks are, Russia, and then a potential risk of China militarizing their efforts. I hope China doesn't, but we are seeing signs that they are. In the South China Sea they are militarizing those islands. So we have to be prepared for that. We hope for the best but we prepare for the worst. So I don't see one country, even just the United States doing that alone. We need our 29 allies, we need our democracies that are building up defenses together To be able to face a menace in Russia and a potential competitor of China. That's what we're doing we lead in that respect. We don't see France stepping up and saying this is a risk that we must face. It's America that is saying and we are leaving our NATO alliance to do that. I think we have a good combination with America that is very proactive in defense, America which puts security first and then Europe which is not as aggressive as we are, but is a good ally and partner in our missions. It's a good combination, we need each other, we need all of us to be effective for our security umbrella. Let me ask you, sorry to get you off with the menacing rush of question which we keep coming back to, which of course raises the issue of the Ukraine. Two questions for you Has the impeachment investigation in Washington had any impact on your work there? Secondly, there are some people who argue, a lot of people argue that you Ukraine should be a NATO member. We want Ukraine to be a NATO member at some point. We work with Ukraine, it is one of our major partners and And we want them to be an ally in the future. And I think President Delinski is making a good start at reforms that are necessary to strengthen that democracy. We also meet with Russia on an interim basis from time to time, we NATO ambassadors. And we urge them first and foremost, to leave Donbass to let Ukraine be the sovereign nation that they deserve and also to relieve the Ukrainian part. That is Crimea So we do have Ukraine's back, and we work with them. And we hope in the future that they will eventually be a partner and the MP China already any thoughts on that? The Impeachment Inquiry in Washington. At NATO, we're focusing really on the security umbrella and I have to say that I think I am impressed with the ambassadors at NATO. I've never been in the diplomatic side have always been on the United States Senate side. And we have a joke in my office about whether we're speaking right now in diplo speak or senate speak. Because sometimes the Diplomats are so diplomatic that I can't tell what they're really saying. So I say, give it to me in senate speak so I get it And that is I've had this great experience with all these diplomats, and they never take personally anything that, for instance, a president of a country does, whether it's mine or France or Germany or Hungary. I mean all of our Presidents do things that might be considered not helpful in a bilateral relationship, but nobody ever says anything personal about Not that will matter. It has their democracies, and that's the great thing that all of us understand. Democracies are not efficient, they're not pretty sometimes but it is the best that we will ever have. As long as the people have a voice. How is that for diplomatic? [ LAUGH ] [ APPLAUSE ] All right, that's it. Well, thank you very much. Thank you all. Thank you very much. [ MUSIC ]

US Ambassador to NATO Addresses Cyber Security Concerns Involving China and More 

Kay Bailey Hutchison, U.S. Ambassador to NATO, weighs in on how the digital revolution is changing the very nature of warfare. 

[ APPLAUSE ] Thank you. There you are. Alex, thank you so much for being with us. I know there was a death in your family that prevented you from being here in person. And we're all very sorry about that but glad you went to the extra effort to join us by video. Well, Alan, thank you very much. First of all for having me there this morning. As you just pointed out, I really wish I could have been there in person. But due to an unexpected death in the family and the services this weekend, combined actually with the recent passing of Bernard Tyson, it just reminds us of the importance of the work that we're doing at Johnson To help people live longer and healthier and happier lives, but I appreciate you allowing me to Skype in like that. So look for the conversation. Yeah, it's great to have you here. There's been some conversation here in Paris today about the Business Round table statement of purpose and I'd like to start there because you really drove that. Process at the Business Roundtable as head of the Governance Committee, and I think the question that someone was asking earlier today is, what were you what was the goal there? What were you trying to accomplish? Well, look, I'm I'm very proud of the work is this roundtable did together to come out with the revised statement of some corporations in the United States. And look at the high level. Alan. I think as we were going the strategic planning process at the Business Roundtable and with the executive committee, one of the notice was that the statement of purpose was utilized by the business, frankly, which we were sometime probably fairly criticized on Had not been [ INAUDIBLE ] Since the late 1990s. And it had a particular focus on ensuring the primacy of the share holder and as we were thinking more broadly about the overall agenda for the BRT We felt that while in many ways in the past, we had thought that there was an implicit statement about other stakeholders on statement that appear on our website, that in fact, words do count and they matter and that it was more important to make it very explicit. And frankly be more representative of how CEOs today think about decision making and running their companies. But were you trying to send a message to business that they really need to step up, act differently, think differently about impact on society in order to meet the pressures from employees, etc .? Well, I think one thing we are trying to, again be more explicit how we fell. Many companies were in fact running their businesses today thinking about other stakeholders, such as employees, about communities about the environment, as well as, ultimately that our shareholders as well. But we also felt that by making this kind of a statement hopefully, it would also inform many others that in fact, that truly was the purpose of business and help raise the bar. So overall we think it's a real move in a positive direction. Alex Johnson and Johnson has a history of caring about customers. It's in your credo there's the famous Tylenol case where the first sign of have a problem you pulled everything off the shelves. But lately you guys have really been getting pummeled with some. Some jury judgments against you both for opioids and also for baby powder. Can you talk about why that happened and what you've learned from it? Sure. What I would say is first of all, we do have over 130 year history of helping people live longer and healthier and happier lives and We've got a strong commitment about safety and quality and everything that we do, you know, guided by our credo which in many ways is one of the first statements of Corporate Social Responsibility done more than 75 years ago by the son of our founder. And what I can tell you is it's as live today is is or as it was 75 years ago. We do love an environment. I believe where large companies in particular, and especially those in healthcare, I think, clearly have got a transparency that's required. And look what we're proud of the track record been able to establish by making sure take care of patients. If they're ever incident, our best to resolve that in a manner that's good for all stakeholders. At the same time, we know that it's important that when frankly some of the headlines aren't consistent with what we feel the underlying data of sciences, some circumstances, but it's important to take a stand. Allen, we ensured that we do on ultimately helping our patients but even last week, while [ UNKNOWN ] some of the issues that you mentioned, we're launching a poll of vaccine into the ERC as well as a trial for an HIV vaccine. Africa as well. So again, I think ultimately those are the most important things we can do to ensure everything we do has high quality. I say the same time innovating, keep bringing about important changes for pace. I think the part of the problem as you well know is the businesses operating in an environment of heightened cynicism. Distrust. And so things like those jury judgments get grabbed onto and used to undercut what you were trying to do in the Business Roundtable statement. I mean, how do you advise your colleagues, many of whom are sitting here in this room to deal with the level of mistrust that business faces? Just today .>> Well, you're right. And I think that's why it's so incumbent upon us as business leaders to first ensure that we are absolutely transparent that to a great extent possible can be. Even in this these situations, Johnson, Johnson, one of the things we tried to do is make sure that we're providing information 24 seven. To the people can get access to and, frankly come to their own conclusions, again versus what, you may experience in India and I think that that's important for all business leaders to be doing. Next. It's important to be engaging. It's important to be make sure you're telling your story and, and by the way, I think that can only be in situations in response. But there's got to be an ongoing dialogue that you have with all of your stakeholders to ensure they're aware of what you're doing, particularly in some of these other areas such as job creation of just the environment, where they may not have like, same understanding Yep. Let's talk a little bit about technology and what it's doing at Johnson and Johnson. We have the CEO of Novartis on the stage a little bit earlier, talking about some of the changes that machine learning AI gene editing, promise for the future. What are you looking at that seems most promising these days? Look, I think technology as we know it today, particularly some of the areas that you just mentioned, Alan, areas such as AI machine learning, cloud sensing, frankly data science. I think it's touching every area of health care. And over the next several years, over the next several decades I think its impact will be equites and significant. So let me give you a few examples. Yeah, I think please some of those you just mentioned that I'm sure we're been talking about earlier at the conference about, you know, how we're understanding fundamental biology, pathophysiology of disease in a very different way. Now, it bringing things like new cell base there We're actually ramming your body cells able to either in some cases up regulate your system down regulate it, to bring about cures, treatment. Other areas for us digital surgery, many of the same technologies just in your car today that help guide you not to stay in your lane versus the one next to you. Help tell you where to go BS system are being used today. And we're certainly building that into the next generation for surgical procedure. In one area that we're really I think excited about the future is how do we get to some of these disease states much earlier in the process we know for example, but Chance or on call, Alzheimer's disease or cardio vascular, that all too often disease is way too late [ INAUDIBLE ] and we note to detect them earlier. Sometimes even a clinical manifestation of a symptom, That our probability of success is much higher than being able to make a significant difference for that patient. So, and I think again that whether there it's amassing the data to bring out these kind of predictive analytics, whether it's robotics or digital are actually giving us capabilities to implement something Those are just so if I think the fundamental change the foot right now in health care that we're only going to see Excel expected. And how quickly should we expect those kinds of changes? I mean, what do you think the speed of change speed of improvement in healthcare over the next decade will be like compared to the last decade. Well, I think some are coming actually, as we speak today, for example, cell based therapies. We're working on our own party, as I know other companies are and will see that going. There are others though, you're going to see more of an incremental approach and I think it's important particularly in healthcare, to make sure that we're learning And we're building those improvements into these systems on an ongoing basis. But again, I think the overall shape of that over the next decade, it's only going to accelerate one. Yeah, let me we've got a lot of people interested in health care here in the audience. Let me just ask if there's anybody who has a question for Mr. Gorski Or a comment I can't see that well, but any other questions? Alex, I thank you for for taking the time here. I wonder if there's one last bit of wisdom you'd like to share with the the your fellow CEOs Here in Paris .>> Sure, Alan, again, thank you for being enabling me to Skype in like this, given the circumstances, but look what I would tell them. I truly believe this is an incredibly exciting time. Regarding all the potential changes that connect technology can bring to our business at the same time. I think is so important for us to always remember and never forget is the human element. Whether it's how we apply AI to privacy, how we apply this kind of AI to healthcare. Let's never forget that ultimately there's some there's a patient in the middle of this, sometimes be our family members. And that we ensure that we build these new capabilities in a way that remembers the human element in everything that we do. Yeah, we were talking about that a little earlier, I mean it is the irony of the current situation that the promise of technology is so great but some of the perils are fairly great as well. And walking that line isn't an easy thing to do. Exactly and I think that look, this next generation will be watching. The expectations will be high and if we truly want to be able to harness this for what's best for you might say, humankind, We've got to do it with a lot of empathy and with people with patients at the center. Yeah. Well, thank you so much for joining us today. We're sorry you couldn't be here in person, but we appreciate the time with you by video. Thank you. Thank you for understanding Alan. Have a great day, everybody. [ APPLAUSE ] [ BLANK_AUDIO ]

Johnson & Johnson CEO Alex Gorsky on Leading Through the Next Decade

What does it take to lead a company as the complex forces of automation, globalization, and climate change upend the traditional business landscape?

A Look at the Fast-Changing Landscape of Work

Kevin Sneader, McKinsey & Company Global Managing Partner, and Stephane Kasriel, Upwork CEO, weigh in on how the global workforce will change in the next ten years.

A Look Inside European Central Bank's Decision-Making

Philip Lane, Chief Economist for European Central Bank, provides insight into ECB’s decision-making and what a deal or no-deal Brexit will mean for the Eurozone.

Alan. This is almost a time of new beginnings in Europe in many, many ways, especially as of the first of November. But it's new beginnings. The U as well. It's being six months since you joined the E C B as it's chief economists and a big role change as going from the governor off the central Bank of Ireland to now looking at the eurozone as a whole. But here's a curiosity question. The E C B had a retreat just a few days ago, Um, and it was in a very grand palace, probably grander than this, to build fences, get to know each other. What's the new leadership off the European Central Bank looking like with fresh blood like yours and Ms Lagarde? So I think the way to think about it is the Governing Council meets all the time. The people in the Governing Council actually meet each other even more frequency through the I'm at eco fin backed international settlement. What is true is the Governing Council has the six of us in fact, first and then the 19 governors at when we spent time together in meetings. We're busy. We have a decision to take. What is true is that these years been quite busy on that in the four years I've been on the Governing Council not being the opportunity to have that kind of retreat. So I'm sure every organization here among your senior leadership you you have every so often, especially when they're the new leadership. Let me emphasize is at this year, it's not just the facts. We have a new president that I've arrived off 25 members of Governing Council. I think by the end of the year a majority will be new. I'm not. The executive board will be two new appointments. We think starting in Gianaris, that would be a panettone. Israel's novel. So it is a time for a new team. Andi, it's important, especially when we have no money at medium term challenges as whether the short term day today, meeting by meeting decisions, there a lot of medium term challenges over the next eight years for all of us. So it's good to have that kind of trees on that time, too, and you have some informant discuss. I know a lot of people are curious about how maybe the structure and the operational side of decision making at the European Central Bank could potentially change. I know there are a lot of waste is especially amongst the fresh blood that is coming in off, wanting to look a little bit more like the Fed or like the Bank of England. Do you see that kind of openness coming into play when decision making is made going forward on? Do you see that playing a rule in the way Europe looks at the European Central Bank? I mean a lot more craftsman. I mean, let me differentiate between the formalities of decision making with tradition. I think it's very strong. Tradition is where we can't make decisions by consensus. I'm actually most of time at much policy, if not that divisive most of time. I think we can achieve that. But what is true when you have Ah, different voices? New voices? Um, how do you have a debate at life as opposed to noise? Because it's not. It's not a good idea to have in any system at signals which are hard to interpret part. It's report for mantra policy that the clear narrative is the care of the founding off that water up to. So I do think collectively, I guess it's fine, too elaborate where you have a different point of view. We also have to know emphasize that we also make decision we've we've got a decision on. I think it's important to say the most fourth elements application, while the chief like consensus where the most important element of the decision in September Woz. We need to add extra accommodation in our March policy. That sensation is too low and we need Thio demonstrate our commitment thio having station Luke back towards its target sooner rather than later. After that, the details which instruments were used I mean, of course, with 25 members on many choices, there are gonna be range of views. But all of that is secondary to the fact that the walls content that a monetary easing off some type of needed Well, let's talk a little bit about where there is no consensus and there is no clarity which would be Brexit, and that would be quite an interesting conversation to have. We've been talking about Brexit the impact on the studying, what is the position when it comes to the European central bank as we get edge closer and closer to the UK elections, with not that much clarity still in place, whether we do a no deal, whether we'd get some sort of a deal, that Mr Johnson's kind of agreed to. What are the red flag for Ireland and for the eurozone at this point and what needs to happen for those red flags to become yellow? Agrees. So let me emphasize from the ear area perspective that in terms of am planning for all with time, all scenarios Well, you know, as of now, because there is a a draft deal at the worst case scenario of a disorderly Brexit is less likely They even if it did come back on the table, thes e C B and the Bank of England have worked very closely together in the last two years. It's not like this is a surprise. No breakfast bean, you know, announce exactly. So it would be unforgivable for the central bank's not be ready as far as we can be ready so that that kind of risk of you know, this continuity at something not working overnight because that is handles, but from the economic part of you that big issues they're going to be. What does this mean for the future? Future trade for the UK? Most importantly, remember, this is a disruption primarily for the K. Of course, As a close neighbor, three year area is important to your area. Percentagewise left UK is, you know, 13% some number like that off your GDP. So something that's a big deal to you. Kay is a big deal for the rest of you. Area was proportionately left. They worried about Ireland. It'll in this back and forth which goes seems to have of course, we are three. Irish economy is going to be the most effective. But this is in the context of an Irish economy is growing quite quickly oven arse economy which now have trade on the investment links with the world, as you know, most famously with the U. S. Economy on one. The big news from the tri field. While the fact that there is now a sustainable approach, I think to handling at Northern Ireland in terms of the economics of reconcile ing no border on the island of all of our items were maintaining the integrity of the single market. I wanted to get open this up to everyone in the audience because it's red to get an opportunity to speak to him directly. So Philip is here. If you have a question, please raise your hand will get the mic to you. Um do let me know otherwise, I have plenty of questions to go on with. Right? We will come back at some point to check in and see the folks here do want to ask you a question. It brings back a question of the number of risk. I know that there are risks within Europe of banks and banking profitability. There are trade wars. Brexit is one of those risks. When you look at the eurozone overall which if this was a pyramid, what are you gonna put at the top off your worry list for 2020 and the next decade that is to come. So I think maybe the way I would think about it. There's a lot of AA meeting term challenges, So there's a medium term at challenge for the world economy, which is, you know, very important parts of the world economy. Most importantly, China is undergoing its own chances, undergoing a transition towards being a focus on the domestic economy. Focus on boosting consumption and service is then that transition has a mirror image at because, of course, you're benefited so much for many years of being able to be the supply of capital goods supplier so much to the Chinese economy, so that kind of ab as obvious structural transformation. Another one is the climate change. Remember how, if the world's going to move along in terms of the carbon transition and on Donna also, and connected to this point is in terms of the mix of activity in the European economy, wanting me to be have beena highlighting is that essentially at this point after a very difficult period of rebuilding public climb Mt. That in terms of support that could be provided by fiscal policy toward more bottom European economy. That requires a big conversation among fiscal policy makers and, by extension among the electorate about the role of fiscal policy in the European economy? Because it has been set quite a bit by a number of central bank governors on with the CB, there's a limitation to what monetary policy can accomplish when you have slowing growth. Um, what would you say all all those limitations? Because at some point, Q E. And is there a plan for that? Because that's not going to go on indefinitely, is it? So let me rephrase that, which is underneath everything. So whether it's about no interest rate, about Lone place and underneath everything is how quickly is the European economy going to grow and indeed, how quickly the world economy going to grow and for us. You know, many people here have studied economics to some degree, and we know that Monty Monty policy does not have longer in effect on a nest. The long run challenges about raising the groceries, better policies by innovation, education making sure did enough physical support for the love of aggregate demands at you know that be multiple ity take care of the cycle to extent, but that that cycle is around. The trend under trance depends on these wider policy for us. What we say is if fiscal policy structural policies delivered a faster growth rate of the economy, then at the multi policy times, a lot left. But I think also were would be emphatic that are much policies will accommodate for as long as necessary. But we think the recovery will be quicker if these other policies kicked in more strongly. If they don't kick in strongly, what tools are left in the chest, let me emphasize that we know what tools to pick out of the toolbox. Well, depends on the particular circumstances we face. Well, we do emphasize is that our assassin is not the case, that we are at some kind of limits, in fact, the concept of monastery policy hitting an absolute limits. And I think there's a lot of that nuance to that. Let me emphasize, we don't think we're at the limit as a yes, and we do think the bigger focus should be rotting to focus on that. What the difference off the central banking world to the limit. But the role of auto parts of Canada unconscious use to make this limits question left rather less interesting because the economy will be growing more quickly. You touched on something that I think resonates with everyone in this room, which is climate change, and that is becoming part of the banking stress test here in Europe. When do you see climate issues being part off monetary policy for the European Central Bank because the agreement is quite narrow at this point, What will it take? When do you see the time frame off becoming part of that? So let me ask a different levels, Krystle. It's already hard mantra policy when I'm trying to forecast a year for the economy for next two years. The future of the car industry is a central issue. And, of course, the seat of the car industry is deeply interconnected to, uh, where we're going to be in terms of, um, recognition policy, carbon taxation, the preferences of consumers. Many factors which essentially driven by the carbon transition, already are essential to Monte policy. I think that's only going in one direction, and it's very difficult to overstate. In the last two years, the speed at which the world gentrifying, bloated monster policymakers on those regulators have invested indeed ing with the carbon transition. So you know, the implications for mantra policy are quite straightforward. If this causes your novels have many opportunities. So in fact, you know, and I was embarrassed meeting last few weeks where the dominant driver of investments for many firms right now is adopting their firm to be with the climate challenge. So one novel, the driver of investments, I know that nothing ever uncertainty about, how quickly will carbon prices go up? What exactly will be the nature of regulating the restrictions to encourage the transition? That uncertainty is that not helpful, said the mortar. A clear, comprehensive and vigorous ex climate change policies. I think the batter for the transition. Does anyone have a question for Philip? We do have one. The front piece for the mike to come to you. Just your name on the company representing a very quick question. It's not working yet. Oh, they will figure it out. If you can stand up, that will help. Uh, working, Mike. Very good. Here we go. And I in fact, I wanted to ask a similar question to question already been asked about interest rates. You will be aware, of course, that with um, the lowering of interest rates even to negative interest rates, it's a real squeeze on interest rate margins for banks, to the point that many Europe, banks and on your banks are charging customers to be able to hold their deposits in euros. Banks are being charged to hold liquidity at the BB. Now, I result, trained as an economist in my lifetime. That was a very unusual experience to have to pay someone to hold money with him. I don't know if there's a nice way of asking, but I'd be really interested to know where you see the trend going over the next 12 18 months. I actually think it's unsustainable at its current trend. I think it's fascinating question, which is very important that we put into contact. So when we set monetary policy, it's for the whole economy, not back are tense, a part of the transformation channel. So we do care about her, are adjusting to this. But let's start at the most basic issues. Underneath our in state policy to taste in is again, Many people here would be familiar with consequent to read into trays the placement of the race, which is turned by the inter faction of savings and invest. And why do you think a global perspective or European perspective? The driver of why strictly solo is a mix of no, uh, investing activity on the high preference for saving because of demographic and also, by the way, at risk aversion to those high preference of a finding. So the challenge for rough is many Estimates of this religious race are zero or negative, either globally or for the European economy. So, um, essentially, what that means is, if we raise rates above the level consistent with that really raised, that would be contractually for the European economy. So we have two paradox of from traffic offenses. But also the case on the inflation numbers tell you it's not particularly a super loose policy. It was super loose. Inflation will be higher. This is a big craft for the financial sector. I was the 1st 1 I would make is our four cops. Do you say you will be recovery? We do say, even though inflation around one now we assessed by 2021 of the one and 1/2 which we close towards the target at the kind of money market do into space still be some reversal in the interest rate path. So I think that's a good baseline under the hand. I do think everything here involved the financial sector on more generally at those involved in government policy for pension insurance. Half have to recognize how can we live in a world where sometimes it's gonna be the case? The Polish straight We said We'll go Nakata So I think there is an adaptation of expectations. We are seeing a very interesting in the banking world right now. By the quarter of that, European deposits to corporate are being Tarsem negative race I want the interesting we see is those corporate were charged negative rates. I got it. You suffer that doing more compact So are our trump mission is supportive So you know it's a new are you? And as you know, we brought in that hearing to compensate Bank for taking on a lot of excessive secrecy. Been turned. The transmission that we all think up to now back benefited from a better macro picture, which means volume up, even though margins down and also at credit risk. Is there that of being that left provisioning as being less concerned about credit? That isn't to say those forces will be forever, so we absolutely accept. This is something we look at all the time. But, you know, it's an ongoing process. I cannot think of a better question to end that interview on a better answer, to give us a snapshot off what's happening in Europe. Thank you very much for that.

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