Innovation Forum 2024

Neil Beveridge, Managing Director, Ab Bernstein Nicole Chen, Market Head, China & North Asia, London Stock Exchange Group Christine Loh, Chief Development Strategist, The Hong Kong University OF Science AND Technology Cherry Zhu, President, Dow Greater China Moderated BY Wang Fang, Executive Editor, Shanghai, Fortune China  


Innovation Forum 2024: Accelerating The Global Energy Transition

Conferences


Neil Beveridge, Managing Director, Ab Bernstein Nicole Chen, Market Head, China & North Asia, London Stock Exchange Group Christine Loh, Chief Development Strategist, The Hong Kong University OF Science AND Technology Cherry Zhu, President, Dow Greater China Moderated BY Wang Fang, Executive Editor, Shanghai, Fortune China  


Neil Beveridge, Ab Bernstein, Nicole Chen, China & North Asia, London Stock Exchange Group, Christine Loh, The Hong Kong University OF Science AND Technology, Cherry Zhu, Dow Greater China

Evan Auyang, Group President, Animoca Brands Rob Chu, Corporate Vice President, Amazon; President, Aws Greater China Leo Grepin, Regional Ceo, Chief Strategy Officer, Aia Fang Ruan, Managing Director, Senior Partner, Hong Kong, Bcg He Zhengyu, Chief Technology Officer, Ant Group Moderated By Yvonne Xie, New Media Executive Editor, Fortune China

Innovation Forum 2024: Redefining Business In A Digital Age

Evan Auyang, Animoca Brands, Rob Chu, Amazon; Aws Greater China, Leo Grepin, Aia Fang Ruan, He Zhengyu, Chief Technology Officer, Ant Group

King Leung, Head Of Financial Services And Fintech, Invest Hk Lucy Liu, Co-Founder & President, Airwallex Makoto Shibata, Head Of Finolab & Chief Community Officer, Finolab Inc. Edith Yeung, General Partner, Race Capital Moderated By Jeff John Roberts, Finance & Crypto Editor, Fortune

Innovation Forum 2024: Are We Moving Beyond Banks

Innovation Forum 2024: Are We Moving Beyond Banks?

King Leung, Head Of Financial Services And Fintech, Invest Hk Lucy Liu, Co-Founder & President, Airwallex Makoto Shibata, Head Of Finolab & Chief Community Officer, Finolab Inc. Edith Yeung, General Partner, Race Capital

King Leung, Invest, Hk Lucy Liu,  Airwallex, Makoto Shibata, Finolab Inc., Edith Yeung, Race Capital

Bonnie Y CHAN, Chief Executive Ofcer, Hong Kong Exchanges and Clearing Limited
Kathryn MCLAY, President and CEO, Walmart International
Jane SUN, Chief Executive Ofcer,  Trip.com Group
Joey WAT, Chief Executive Ofcer, Yum China Holdings
Moderated by Claire ZILLMAN, Senior Editor, FORTUNE

Innovation Forum 2024: Closing the Gender Gap

Bonnie Y Chan, Hong Kong Exchanges And Clearing Limited, Kathryn Mclay, Walmart International Jane Sun, Trip.Com Group, Joey Wat, Yum China Holdings 

Angela Wei Dong, Global Vice President China, Nike
Pontus Erntell, President And Chief Sustainability Officer, Ikea China
Shen Jianguang, Chief Economist, Jd.Com
Doreen Wang, Ceo, Kantar China And Global Head Of Brandz
Moderated By Nicholas Gordon, Fortune

Innovation Forum 2024: China’s Gen Z Consumers

Angela Wei Dong, Global Vice President China, Nike
Pontus Erntell, President And Chief Sustainability Officer, Ikea China
Shen Jianguang, Chief Economist, Jd.Com
Doreen Wang, Ceo, Kantar China And Global Head Of Brandz

Angela Wei Dong, Nike
Pontus Erntell, Ikea China
Shen Jianguang, Jd.Com
Doreen Wang, Kantar China And Global Head Of Brandz

Sharon CHU, Managing Director, Hong Kong Talent and Organisation Practice Lead, Accenture Alexis CROWELL, CTO, Vice President Asia Pacific, Japan, Intel
Alan MAY, Executive Vice President &amp; Chief People Officer, Hewlett Packard Enterprise Stephen ZHANG, Partner, Heidrick &amp; Struggles
Moderated by Diane BRADY, FORTUNE

Innovation Forum 2024: Empowering The Workforce Of Tomorrow

Sharon Chu, Managing Director, Hong Kong Talent And Organization Practice Lead, Accenture, Alexis Crowell, Cto, Vice President Asia Pacific, Japan, Intel,
Alan May, Executive Vice President & Chief People Officer, Hewlett Packard Enterprise Stephen, Zhang, Partner, Heidrick & Struggles,
Moderated By Diane Brady, Fortune


Sharon Chu, Accenture, Alexis Crowell, Intel,
Alan May, Hewlett Packard Enterprise, Stephen, Zhang, Heidrick & Struggles

Rajiv Sharma, Chief Executive Officer, Coats Marjorie Yang, Chairman, Esquel Group Moderated By Claire Zillman, Fortune 

Innovation Forum 2024: Sustainable Supply Chains

So we're here to talk about sustainability in the textile industry. Um And the industry itself, apparel and footwear are responsible for between eight and 10% of global emissions. So that's, that's more than aviation, more than shipping. So if I I want to start by identifying a few of the culprits here, so we have energy use, water use and the materials that go into these goods, a lot of which are oil based. So I'm wondering Raje if you could start by sort of picking one of those and talking about some of the solutions that coats has come up with to address, you know, the emissions and waste involved in, in those components of the industry. All right, I guess before we get to the solution, I just want to quantify the problem that we have. Right. So uh um there are about 100 to 150 billion garments manufactured in the world. There are about 8 billion people on this planet and the West consumes far more garments than the East. Alright, even though the majority of the garments are manufactured in the East, but the West uh produces a lot, the other thing that's happening is uh in the last 20 years, the advent of online retailers and the growth of fast fashion brands has generated a lot of consumerism and a lot of sales at the retail level. This cheap garments pro and you sort of culture uh became very prevalent in, in the early 20 you know, two thousands and uh and the last decade and this is an industry where one garbage truck of garments is dumped into the ground or burnt every second, every second. So you can imagine the extent. The other thing is one third of the microplastic waste in the oceans is generated from textiles. So all the fish and the and the, and the sea life eats a lot of the plastics and that ends up on, on your dinner table, which is not really good because you're eating sort of microplastics along with that. So we have a big problem that needs to be solved and um the solution will have to come through multiple stakeholders. I think it starts with consumers. Consumers need to figure out a way to reduce consumption. And me coming from the industry, it's counterintuitive for me to say, buy less, right? But if I put my sustainability hat on. Absolutely. You've got to start with responsible consumption. The second thing is reuse or extend the life of garments. It can be done by repair, it can be, you know, you know, sort of resale, et cetera and the third thing is recycle. So that's on the consumer side, the industry has a role to play, especially around material transition, chemical transition. This is an industry that is heavily dependent on oil based materials, whether it's chemicals, dyes, et cetera, et cetera. Even if you look at cotton, actually, I got an interesting data. A simple T shirt, a regular cotton t-shirt consumes about 2200 L of water to manufacture. And that's roughly about the water consumption of one individual for 2.5 years and that's just one t-shirt. So, you know, this is a very resource intensive industry. We have to find new materials, new manufacturing processes. And I think we are, we are at a stage where incrementalism is not going to work. You need breakthroughs, you know, technological breakthroughs, regulatory breakthroughs. I think governments have have a role to play here and Europe is taking a leading role in terms of finding ways to uh you know, either tax consumers or tax the industry. There is, you know, there are talks of carbon tax, et cetera. But overall, I would say that between governments, consumers and the industry, each one has a role to play. And um it's, it's gonna be a long hard road, it will take time, but we have to start. And so what are some of the solutions that, that you've come up with at coast? Can you just talk about one specifically? So we consume a lot of water, uh we are investing in water that dying. So, essentially disrupting our own manufacturing processes and using technology to help us um you know, apply color on threads without the use of water. That's one, the second thing is we are working with suppliers, especially the upstream suppliers at the polymer level, the fiber and filament polymer. So in basic chemistry, if you can make changes, then you use less chemicals. And I think the whole purpose is to use less chemicals, less water, less time. Uh And that's going to be important. The other thing is then around, you know, you know, material transition, what we are looking at is how do you use post consumer uh industrial waste. So all the garments that everyone's wearing, what happens at the end of life, if you can just recycle that bring it back into the supply chain, that will be great today, only 1% of the apparel comes back into the supply chain. So there's a huge opportunity in terms of recycling and Margie, you've um SCL has innovated with waterless dying too. Am I right about that? But um first I wanted to correct one statement. Sure. Um Thank you so much for saying that we are the um the world's number one largest shirtmaker. Actually, we no longer number two or after, you know, having one of our subsidiaries put on the entity list. Um Most of our customers, us customers ran for the hill. So we are only half our original size. So that's one way to make a company cut carbon emission and order water utilization. However, we checked. So our water consumption or energy consumption doesn't go to half per unit. Energy and water consumption has actually gone up really because when your capacity is at a certain stage and then you abruptly cut it your unit because you're no longer efficiently using your asset. This is actually very dangerous with so much geopolitics happening. But this is collateral damage in a way geopolitics is hurting our fight to uh against climate change. Just wanted to bring that up. But let's go back to water. I think we both agree that in our industry, water is the most challenging. So as K started by um reducing, reducing the use of water through better management, so we manage better, we can reduce wastage and then reducing wastage means that you can, you've actually reduced water consumption. So we were able to reduce it to about 65% of our original unit consumption. Um Then we use the water. So now we have a big water treatment plant and we are able to reuse some of the water. Our water treatment plant is about 38,000 tons capacity and we can reuse some of that water finally is, as you are saying, replace the use of water. Now, um they're working a lot on synthetics. We because we are a Cotton House. We couldn't use the technology that was developed for synthetics. So we had to um uh we spent 10 years coming up with a way to replace water, which is only a carrier. Remember, water is only a carrier in a dying process. But that takes up about 95% of the total water consumption. And then we replaced it with solvents that can be reused. We can collect about 99.8% of the solvent that is used. So essentially um reducing the use of water in the whole supply chain production and at least in the industrial supply chain to about uh reduce cut out 95%. And then going to recycling, which is a very challenging but a great opportunity. So what we did is we started with our uniform and we used to have 58,000 people. We now only have 28,000 people, but still 28,000 people. Uniform is still quite a good exercise and we use it as an exercise because then we learn from that. It's not so easy to recycle just any garment. Um It has to be designed initially, for example, the label, the the thread because they are all different materials. And then how do you um design with the intention of recycling? We learned even with the uniform where we can have complete control, you have to learn to do that. And then um we have a, a project called loopy where we have 30% reuse uh yarn recycled yarn, but the yarn is a lot weaker. So you're trying to um knit or knit knit shirt, for example, with 30% yarn that is of a different strength than the 70 70% virgin yarn. So these are a lot of interesting challenges. But I, I think as we, you know, as we are in the industry, we are all um moving ahead with innovations to resolve these problems, right? It's interesting what you say about the recycling process actually starting at the design process. Yeah, that's, that's really interesting. Another component of this is transportation that a lot of these garments are shipped from one side of the world to another for the different stages of the production process. I mean, how do you start to, to cut down on that? Do you, I think, I think uh going forward, there'll be shorter supply supply chain. So it's not going to be the long supply chains. Uh speed to market is becoming important. So you need to be within a four or five hour or either uh either flight or truck route to your to your end market. You can't be six weeks away or 10 weeks away from your, from your point of consumption. So short of supply chains, uh improvements in manufacturing technologies, better forecasting accuracy by the brands. The brands are investing a lot of money in terms of trying to understand consumer demand and what, you know, what kind of products they want, et cetera. And I think Sheen is a good example. So Sheen considers themselves to be a big tech, big data company rather than apparel company. And they use consumer insights from that, you know, from tiktok to actually design new products. And they have a two week, two week cycle from, from design to actually the garment being shipped to the consumer. Um So that speed to market is becoming important. And what's happening is this is an industry for the last 3040 years was built for two things and two things. Only maximum production at the lowest unit cost. That was the only thing that mattered in our industry. How much more can you produce? And what's the lowest price you can give me going forward? It's more about how fast can you deliver. What is your compliance? How are you doing on innovation? What's your sustainability track record? How can you help me differentiate my product in the eyes of consumers? So I can charge 5% more. So things like that. So I think we, we are at a very interesting crossroad, but the industry has this legacy model which will take time to unwind and, and one of the, the topics that often comes up in the conversation about sustainably is cost and that if you're going to go green, someone has to pay for it. Um Margie, what's been your experience with that? Do you find your, are you, you know who's paying for this? In your case? Is it the end consumer, consumers never pay more for sustainability? This is just a fact that we've learned over the years. But um there are ways to save money. So I was just teaching, you know, a class in ESG and I was explaining to them that I come, I come from uh the, I shouldn't call the dark school of business management. I was taught that unless you can make money from it, you can't, it can't be sustained. So there is always you have to find cleverer ways of doing things. So sustainability, we saved money. I'll give you an example. I I agree, completely agree with having better use of data, which is, you know, the whole idea of A I is to have better data and then reduce the wastage in the market. Here are some very simple things if you can get the whole company to focus on sustainability, on transportation. So in the industry, the standard is that everybody ships fabric to garment factory in lengths. So the same length, let's say 1000 yards one day, one of our teams said, ah as scout ships fabric from to our own garment factories, why do we make it into the same diameter instead of the same length turns out, you save a lot of transportation costs, you save a lot of packaging cost. Now you say that this is small money, but this is where I think sustainability when you can try get everyone in the company excited about doing it. So you get the benefit of the um the dollars, but you also get the excitement and the sense of pride from the entire workforce and that's worth a lot of money. And Margie, you mean, you brought this up earlier about um being on the, the US entities list and this is something that the company has denied. Um This is over claims of forced labor. Um But you know, in the denial you, you talk about, you know, so being vertically integrated, can you just talk about, you know why that's key to disapproving those claims and sort of how that benefits the business. Otherwise, I don't know how many people know about. Um that is a spinning mill. I don't know if you ever looked into our case, but it's not a garment factory. In fact, it is the most automated spinning bill in our group. Recently. We had a bunch of V CS go, go to Xinjiang because we had to close one of our other mills because of we don't have enough orders. And so we have an innovation village there now and then they went to see visit the mill that was put on the entity list. This is a highly automated air conditioned spinning milk. Why would anybody want to use forced labor? People are dying to come and work there. In fact that the accusation was that we went to a job fair. Well, what is wrong with the government inviting some of your best employers to come and provide opportunities for ethnic minority? So it's, it's really nothing to do with, um, the supply chain. It's, it's more to do with, sometimes if you get caught in a situation, suck it up and move on and that's what we decided to do. We have to eat. And so after that, um as we mentioned, half our um business is gone. But the good thing is for many years as Carol has been talking about climbing the Smiley curve and moving away from being just an OEM all of a sudden this happened. Well, on the one hand, we're still appealing trying to get and in fact, we got a conditional removal because when, when we, the reason we had to file a lawsuit was because our appeal was just pending and it was pending for such a long time, we had to give, give them hello a wake up call. So we filed a legal suit. But in the meantime, we lost a lot of business. We had to, we start to make um change the market change, our market start to sell. Look at um climbing the learning curve. I mean climbing this learning curve. Interesting thing. We've been talking about that for 10 years, how we're gonna transform and we keep talking about it until we get hit with the ent dealers. All of a sudden everybody could do things lead time. As cal I think, you know, we're one of their customers is famous for being very rigid in lead time. Now, the lead time is all of a sudden cut to like a third. Now, I asked my colleagues, how come you, how can you do this? Are you forcing people to do this? They say no boss. This is because we have to eat. So we're gonna, we're innovating all of a sudden, the whole people became a lot more agile rather than being very successful uh in whatever you're doing for a long time. Now that you're under stress, um, you innovate. So it's very interesting. It's, it's been a very, um interesting, I mean, it's very painful. I wouldn't recommend for anybody here. Um But um when you do go through that experience, my recommendation is don't cry over spilled milk. Go and find something else to eat. Wow. And innovating the whole time. Yes. Yes. Well, thank you to, to both of you for joining us. A lot of um solutions that we talked about here and it makes me optimistic that, that this industry can really uh cut its carbon footprint. Yeah. Thank you so much. Thank you very much.

Ronald Lam, Chief Executive Officer, Cathay Pacific In Conversation With Alyson Shontell, Fortune 

Innovation Forum 2024: Innovation In Aviation

Good morning. Great to see all of you and great to see you. Uh Ronald. Thank you so much for being here with us today. Thank you. Good to see everyone here. So I'm not sure that many CEO S have had a better first year than you. I just want to run through some steps, but um you generated a net profit of $1.3 billion breaking a three year streak of losses, the highest operating profit for your company since 2010. Um In your first year as CEO it's not, not too bad. So I'm curious um and by the way, you were the hardest airline hit during the pandemic. Um So that kind of bounced back is pretty unprecedented. Um um One more stat you carried 20 million passengers across the cafe group last year up from 2 million the year before. Um So quite a comeback, I'm curious uh is that sustainable? And how did you do it? I must mention that I think before the record result uh last year, we had really tough three years of the pandemic. Uh As you mentioned, we were the hardest airline of the world we had the domestic border closed uh with Chinese mainland and we had the international border closed. So for a long time, during the three years, we had less than 5% of passenger flights running and we lost 34 billion Hong Kong dollar uh during those three years. So the fact that we have managed to survive was indeed a miracle. And it's against that backdrop. We bounced back last year in our first year of the rebuilt. But even though I want to take a lot of the credit, but I wouldn't because we were um just in a good situation because the first year after Hong Kong opened up, the there was a lot of pan of travel demand and then the supply side wasn't catching up fast enough. So we had some tailwind helping us last year. So it's not sustainable. And our focus is that to make sure that we create a successful two years, 2024 2025 to make it consistent. Uh Last year was circumstantial, I would say. And this year and next year, we will be more back to our fundamentals which been we've been working hard, really hard on. So hopefully we can generate more consistent uh financial success uh in these two years as well. And so what were some of the things you did during the pandemic that set you up to sort of pop this year? I mean, yes, the travel demand came back that helps. Um Although it's not fully back, it's only tourism is only, I think about 47% to what it was. Um And your planes, I know you were aiming to get them at 100% capacity. They're not quite there yet, but still, like, what were the things that you did while things were kind of stark to set yourself up to rebuild now? Well, three years of the pandemic, uh it was tough as I mentioned, but apart from firefighting trying to survive, uh I asked my team, right, let's take the opportunity. So the whole leadership team, we also spend the other half of our time and energy to look at how we can transform our business. So that after the pandemic, we can come out stronger. So there's a thing that never was a crisis, right? So we didn't waste the crisis. We have done a lot of step changes in our business. For example, we have, we organize our cafe group into four lines of business, premium, travel, low cost, travel, cargo and lifestyle. We've also done a lot with our uh cost efficiency, productivity measures. So that one day when we come out from the pandemic, uh it will be a stronger and better cafe than before. So you um being that this is your core hub, I mean, I think cafe has always been sort of this global superconductor much like all of Hong Kong is and it's known to the world, you have the benefit of mainland China and that market. Um but you're also available to international markets. Um So it seems that your vibrancy is quite tied to Hong Kong and Hong Kong is quite tied to yours. Uh You recently joined the Tourism Strategy Committee of Hong Kong. And as I mentioned before, the daily visitor arrivals are only at about 47 47% of pre pandemic levels. So what do you think is needed to make the full recovery, not just for your company, but for Hong Kong? Sure, sure. Uh I think firstly, uh cafe and Hong Kong are closely tied and uh cafe's unique position. Actually, it's also Hong Kong's unique position. Uh which is uh we are deep roots in Hong Kong. Cafe has been more than 77 years uh rooted in Hong Kong and we are proudly part of China, which is very unique and then we connect the world, right? So how we play that strength just like Hong Kong does is really important. So Hong Kong mainland and then international, I think that's our secret source for success in the future. As to Hong Kong uh currently as the home carry of Hong Kong, our passenger capacity is roughly at 80% of preem level which is pretty good already because we only started early last year. And within uh a little bit more than a year, we are already at 80%. So we are no slower than any major hub of the world. And part of that drive is to make sure that we allow Hong Kong people to go out to travel internationally. Uh But very important to Hong Kong's economy is to allow visitors, whether it's for business or leisure to come into Hong Kong. Um So with 80% flights actually, uh we have prioritized Hong Kong people going out and then visitors coming in and all on our flights. Actually, these two types of traffic are already 100% of the prepa level. What is lagging behind is the transit traffic via Hong Kong, which we will continue to rebuild in the coming months. But in terms of visitors coming in like this event, many of you are from overseas and many of you flew in on Cathay Pacific. So I think that's really our priority to make sure that business visitors, leisure visitors can come in smoothly into Hong Kong. Yeah, I was one of those who flew in on cafe. Um I was like, oh I'm interviewing Ronald, I must fly his airline and it was a great experience and I have to say I was really happy to see it was an Airbus. Um I know that you just ordered a bunch of new Airbus planes even before Boeing really started having the the hard times it's been having. It's actually our new cover story is on how Boeing has broken down of late. Um I'm curious, how concerned are you with what's happening at Boeing? You have both Boeing and Airbus planes. Um, you know, we're seeing in the United States. United is under FAA investigation for having 10 safety incidents in the last two weeks, including tires coming off and all sorts of things. How do you view safety in general in the industry? And how concerned are you about Boeing situations? I would say in general, uh the aviation industry is the safest ever uh as we improve on our practices, uh policies, processes and technology, we are safer than ever, I would say in general. Uh And I can't comment in detail about other airlines or the OEM uh safety issues. But as to Boeing, right, we have been uh in close partnership with them for so many years and yes, they have some uh immediate issues they need to tackle, but I do have faith, right? They will come out strong in time. And traditionally we have both Airbus and Boeing and we really want to keep that uh competition uh intact and then up and coming is uh in our country, Comac um is up and coming. So we are also very hopeful that we can create another source of competition. Uh what we call the ABC, Airbus Boeing and Comac, right? I think that's the the Triangle Triangular competition hopefully for the future when it comes to the aircraft manufacturing market and your new reimagined Business Suite, um Reo launches later this year. Um So if you're flying in the fall, sounds like a great option. Uh But it's on Boeing. Correct. Yes. Uh It will be on our triple 7 300 is a retrofit program. Uh In fact, after the pandemic, uh apart from busy rebuilding uh in different dimensions, uh another thing we've been working really hard on with the board is catching up on our investment because uh during the pandemic, we couldn't do a lot of investment. But for Hong Kong, uh the three runway system is going to be operational by end of this year. So these two years, we need to prepare ourselves well for that huge expansion in Hong Kong. So we'll be making a lot of investment on our fleet as you mentioned as well as our product. So the A suite, the new business class on triple 7 300 is just one for this year, new product. And then next year we will have our new first class on triple 7-9 which is a new fleet uh joining us next year and then the year after we will retrofit our ac 30 uh regional aircraft and they will all be equipped with uh flat bed business class even for regional flying as well. So as you're thinking about the reimagined flying experience, how are you thinking about innovation and where um technology is appropriate and can make things so much better and where the human touch is important too too. You were actually the former uh chief customer officer. Right. Yeah. Sure. Um, well, Cathy is a pretty old airline, I would say. Uh we, we are turning 78 years this year. But during the pandemic, part of our transformation is to re invent ourselves. And we have defined a, one of our picture of success is to become a digital leader and we've been doing a lot uh to, to make that happen. And um one model we use to innovate digitally is what we call cafe, innovate. We have a systematic way of innovating where we have a process consisting of uh uh idea, right? We collect ideas internally externally through signature event like cafe, hackathon, disrupt cafe workshop, etcetera. And then we have funding and resources for incubating um to do proof of concept of selected ideas. Um and then we fail fast if necessary. And then we implement right in the way we have a cafe agile methodology to make sure that we implement in a timely manner. So that model is maturing and we've been therefore unleashing a lot of our digital capability, for example, right? Uh We are very big on machine learning. So over the past 18 months, we have created more than 60 machine learning models across our business, whether it's on the customer front, commercial front operational front, we are using those models already. And, and recently, we've been doing a lot of proof of concept on generative A I as well. Uh, applying it in our chatbot, uh, in our predictive maintenance and content generation, et cetera. Um, so one thing also is, uh, you know, maybe someday we'll have a, an area where planes can fly themselves completely without pilots. I don't think we're there yet. Um, right now very, uh, so many companies are tied to just labor shortages in general and I think the airline industry and for cafe as well. We're experiencing that um pilots themselves are down to about 35%. I think of what uh you would hope for. Um How are you thinking about retention, recruiting this pilot and building a workforce of the future as well to fly your cafe flight? Uh Well, coming up from the pandemic, we have a uh short term short uh resources including pilot cabin crew, ground employees, but that's only temporary. We don't have any structural issue and we are there to grow back our workforce. So currently we have around 24,000 employees across the group. And this year we will grow the total workforce by 5000. So we will be back to 29,000 and we are very confident um to, to achieve that uh a our attrition rate across all employee groups since Hong Kong opened up has normalized. So we don't have an issue in terms of attrition and we're turning on the recruitment and training machine uh to grow by 5000 in one year is unprecedented in our history. Um So we have a gigantic task to do. Um But I think now we are three months into the year, we have been making good progress. Uh And apart from recruiting from Hong Kong, we also recruit in Chinese mainland. Both our cadet pilot program, we've opened up to Chinese mainland residents as well as for the first time last year, we started to recruit cabin crew from Chinese mainland and have been making good progress. Of course, we also continue to recruit internationally and going back to our unique position. The same with our organization, we have a lot of Hong Kong employees, increasingly more Chinese Mainland employees and we'll keep a good portion of our international background employees and this is our unique position and secret souls for success, I believe. And I think you just gave them all a fairly large bonus like equivalent to seven weeks worth of pay. And Delta is also employed that I recently interviewed Ed Bastian turning like 2008 right after their bankruptcy and all sorts of stuff. They started this profit sharing program which has done wonders for their morale. It sounds like you're starting to do something similar. Yes. Uh well as we would bill, I put our people as the first priority uh because when our people are happy, they will make our customers happy and when the customers are happy, uh we should generate good business and the shareholders will be happy. So I'm working in that sequence. So uh when we come, came out from the pandemic, uh the first thing we thought about is how to reward our people. And uh thanks to the board, I think we get their support. And actually, in the last one year, we have uh give out, given out uh up to four months worth of uh additional pay to our people to both reward them for their loyalty and support during the pandemic um as well as to reward their effort in the first year of the rebuilt. And I can see right, it's been well received and the morale has been going up. So which is good and which has had an impact on our customer service as well. Because when I look at all the latest customer insights is also on the upward trend. So I'm really pleased with that. Well, Ronald, congratulations on your first year as CEO a lot has been achieved. It sounds like more to go, but you've got a plan and thank you for sharing some of your insights with us here today. Thank you, my pleasure.

Emily Chiu, Co-Founder, Chief Operating Officer, Tbd Joy Lam, Legal Head For Apac, Binance
Edith Yeung, General Partner, Race Capital Moderated By Jeff John Roberts, Fortune 

Innovation Forum 2024: Cryptocurrencies At A Crossroad

Geoff Martha, Chairman And Ceo, Medtronic In Conversation With Jo Ling Kent, Cbs News

Innovation Forum 2024: How Ai Will Supercharge Medical Devices

Geoff MARTHA, Chairman and CEO, Medtronic In conversation with Jo Ling KENT, CBS News


Jeff, thank you for being here. Really appreciate it. Yeah, it's good to be here. Well, you're here on a big Asia Swing Whirlwind tour. Whirlwind tour. But I have to say, first and foremost, I am from the great state of Minnesota. You are running a Minnesota company and it takes us Hong Kong to get together. I love it. Um So you're on this Asia Swing, you just came from Beijing. You were at the China Development Forum. How was it? Well, I'd say it was very, uh I'd say very insightful. Uh you know, uh Premier Lee has addressed uh uh a cross section of multinational CEO S about the economy, about the business environment, about where they're going. And you know, a couple takeaways that I had was one, they have a lot of confidence in, in where they're going with the economy. I know the the growth has been low, lower historically than historical growth in China. But they're, they're, the Chinese government is very clear uh that they're what they call new productive forces that are driving the economy in a healthier way. So they don't want to do a big stimulus like you saw in the western world in Europe and us. Uh they don't wanna overly rely on commercial real estate, which they've done in the past and they really want to transition to more of a tech economy. And then they're investing in tech ev life sciences, which medical technology is a part of that. Uh And they were very clear that the um you know, that it's an open environment for multi multinational companies. So it was, it was good to hear that you were encouraged by it. I was encouraged. Well, that's exciting because, you know, Medtronic has had a challenging few years in, in terms of China, but a lot of companies have and I know that there are plans to expand, you already have a major presence in China. And so I want for the audience's purposes like paint the picture of what Medtronic is in China and your, you know, your five year goal for sure. Uh Yeah, so we have a big presence in China. We, we've been there 35 years since our 35th, the company is 75 years old. We've been in China for 35 years. We really helped pioneer the medical technology market in China. And don't just think we always, we take our latest and greatest technology in China. Um but we also uh and, and sell that and help, you know, help a lot of patients, but we also train a lot of physicians. Uh We do the Chinese health care system is a bit different. They don't have uh residencies and fellowships that you see in Europe and the US and other parts of the world. Um After the Chinese doctors graduate medical school, many of them rely on the Metronic to train them on the latest and greatest. So we've trained hundreds of thousands of, of doctors. We have two big training centers, one in Shanghai, one in Chengdu, a little further west. We have um R and D there for the world R and D for products that are designed for China. We have manufacturing there mostly for China. We don't, we don't have a big reliance on supply chain there. It's more in China for China. So it's a, it's a big presence and we've, you know, helped the Chinese government evolve the ecosystem, the healthcare ecosystem. We also have two venture funds there that we invest in local uh start up companies as you think about, you know, you're back to double digit growth in China as of your last quarterly earnings. That was good to see. And you're also aggressively investing and deploying A I products. And I was wondering, you know, you've got Medronic has what you said 7775 years of medical data and you're using that to inform A I models for surgery, endoscopies. Am I saying that right? Endoscopies? Yeah, thank you. Um You know, all kinds of really essential technology for people's health and So we have something we wanna share with everyone. And if your gig and it's a video that we wanna run to show how Metronic is using A I to detect polyps in colonoscopies. And I don't know if we can pull that up. Now, please to show the audience, you know what, how this Metronic technology works. Do you guys have the video? OK. Well, there it is. OK, everyone. We're going into a colonoscopy. So this is, this is a colonoscopy. That's what when a physician is doing a colonoscopy, they're doing it through a camera, right? And the camera goes, you know where and on the left, you see the, the colonoscopy without G I genius. And on the right, you see it with G I genius. That green box is really highlighting for the physician, a polyp and these polyps have a high propensity to turn into cancer. And as you can see from the difference from the left to the right, it's hard to see that polyp, I mean, and these G I docs, these gastrointestinal, they're doing 8 to 10 of these colonoscopies a day. And even if they're fully alert and fresh, they still miss these, but as the day goes on, they get their eyes get tired, they miss even more. And so we found in our clinical research that 26% of polyps are missed in a colonoscopy 26 26%. And that drives a lot of uh cancer. And so with this technology, you know, we're, we're picking those up. It's about 99.9% sens sensitive and 99.9% specific meeting. We see it almost all the time, virtually all the time. And we, we don't have false alarms, false alerts like uh and so we've to get to this, we, we trained our a deep learning algorithm with 13 million colonoscopy videos uh to train that algorithm in order to get this technology and it weaves right into the surgeon workflow. It's just a great example of how A I is improving health care. And this is a big cancer, cancer prevention play. And uh we're really excited about this. Well, what's really remarkable about this technology is that colorectal cancer is the third most common cancer worldwide. And so I don't know if you know the answer to this question, but how many lives do you think this technology has saved or will save? Oh, it'll be hundreds of thousands and it's quickly becoming the standard of care in the US right now. It's still under 10% because it's brand new, but it's growing quickly. Uh And uh you know what we, and we've done consumer research on this patient research and we're finding that, you know, you know, as you know, there's some mixed views on A I people are nervous about it, probably this that but when it comes to their health, they would much rather have an A I colonoscopy than a non A I colonoscopy. They would, much patients would much rather do, uh, an A I guided surgical, you know, um, a procedure than non A I guided. Now, what they're not comfortable with is the surgeon or the physician going away. But they do want the, the idea of A I making that surgeon better. And so it's basically giving the surgeon even more capability and strength and accuracy. It's doing a couple of things. Yeah, it, it's, it's helping them sort through complex data faster. Uh And I can give you other applications but it's also helping them identify patterns. Um And it's, it's um tho those are big ones and it's, it's in surgical and surgeries. It's, it's almost like a driver assist technology in the or so that's better outcomes and you're actually personalizing some therapies over time as well. So knowing the success of G I genius, what comes next for you? Like, how are you using this innovation to power other types of medical A I technology? So look this, we have five FDA approved, we're doing most of this right now in the US and Europe, we're not doing this in China yet. We have to set a separate A I platform in China. We'll work on that. But um you know, we're using this in cardiology, we're using this in, in neuroscience. Uh we're using it in diabetes. So a couple of examples, we have A uh for type one diabetics, we have an A I algorithm that, you know, predicts where the sugar is going to go and helps and helps the, the our technology, the insulin pump uh determine when, when the dose insulin and how much and and is really improving diabetics time and range uh kind of an acceptable blood sugar range that, that has meaningful long term outcomes for patients. We're using it, like I said, in surgeries to, to like take spine surgery, very complicated surgery. We have a I guided surgical plans because surgeons were doing all this math in their head. Your spine is a complicated kind of load bearing part of your body and you change one part of it. It has big implications. The A I is helping them determine what to do and then it guides them throughout the surgery. We're using A I to detect arrhythmias, uh heart arrhythmias. So for a that, you know, heart arrhythmias can cause a FB that causes stroke. Uh And so these are some areas that we have already FDA approved uh A I driven uh technology. So it's very exciting and, and we want to scale this to, to all of our areas and and beyond. And as you scale and you have these big hopes to bring this technology here to Asia to China. How do you address the concerns about data security and these sort of concrete but sometimes nebulous worries about the dark side of A I in our health. Well, it's, it's a great question and like, look what I see. I'm an optimist. I see all the upside here, but I get the point you're making. So we've set up uh what we call our own A I compass, which are basically guiding principles uh around things. Like you're talking about data, privacy and security and transparency and what we call beneficial use. You're using it for the good of humankind. And we, but we put that together based on our interactions, we're continually engaging with the, with the ecosystem. So physicians, health care systems, governments regulators because there's no one overarching regulation yet for A I, it will get regulated at some point. But, but we can't wait for that. We've got to do it ourselves. We definitely can't wait on the US. Government to regulate. You know, we've got to do it ourselves. And you know, I, you know, I heard Sarah Malton say the other day, he's, he was inviting regulation in the space. Um Yeah, but we're, we're not waiting for that. We're working with stakeholders, anybody that will uh engage with us on this and, and continue evolving our, what we call our A I companies. So then talking about regulation, you know, you have this Senate A I forum happening in the US. Uh We were on this very same stage yesterday talking about A I regulation in Asia as a multinational company that is working so heavily in China and obviously in the US, what's your hope for A I regulation? Where should, what should the first step be? Well, if you're talking about uh you know, the security concerns, um I look, we're, we're, we're planning for that, we're planning for because these, this is A I is developed on, on local like patient data. Uh And I think when it comes to China specifically, as we expand all what I just showed, talked about to China, we're going to have to use do that on China patients data in conjunction with the government. And it's something I talked about with the Chinese government this past week. I mean, they're very keen to do it, but we're gonna have to do it on a separate platform in China and keep them separate. But the learnings that we got from what, what we're doing in the US and Europe, we can apply those learnings. But the data, the models will have to be customized for Chinese patients and Chinese healthcare systems and kept in China as we sit here and look at the next five or 10 years for medtronic in China. What's your 10 year horizon and your ambitions for what medtronic is able to accomplish in China? And I know you do business also in Japan and elsewhere. We anyway, there's people, we, we're there, we're there. Uh And uh but China is a big market for us and we're very proud of what we've accomplished over the last 35 years. And like I said, you hear it in the Chinese government officials, uh even the, the health care officials, but even just like the Ministry of Commerce, they're very appreciative of what we've helped them with. And um but, but I think the next 35 years we're going to have to, to remain competitive in China, we're going to have to localize, we're gonna have to look, we import China relies on the US uh for its advanced medical technology by and large. And um but they're, they have a burgeoning uh MedTech ecosystem and these companies are going to make products customized for c higher volume local supply chain, lower cost. Uh We're gonna have to, to do that. And, and so I think localization is gonna be a big piece. How do you localize that? You have to set up uh that infrastructure on the ground R and D? So what we call marketing people that work with the physicians and the hospitals? What do you really want? What features are you prioritizing? You have to have your R and D team to, to work with them to develop these technologies and, and, and manufacturing uh to, to, to make it also a local supply supply chain. Uh So all of that has to be localized. We have done it for parts of the company, but it's still a vast minority. We've got to do it for a much broader swath of our, of our products or technology. We have two minutes left and I was wondering if anyone had a question. If you wanted to raise your hand, we'll get a mic over to you. Any questions from the audience, I'll let you guys think on it for a second. I think going when you look at how artificial intelligence is impacting your overall strategy, you've been now in a CEO CEO role for three years. Draw me the contrast when you started, what were you thinking about when it came to A I strategy versus now as you look forward, you know, when I, when I started, when did the switch flip or maybe you already flipped before you got the job, you know, right out of the gate. I had the opportunity to meet with the heads of the big tech companies, you know, Google Apple, et cetera, one on one, they came and spoke to our employees and, and that having that kind of direct interaction uh really stuck with me in terms of the opportunity and that they basically were saying in different words, but you have an opportunity because you have that 75 years of data to shift the company from strictly a product company to more of a data company. We're not getting out of products. I mean, we make devices, surgical tools, robotic, surgical, yeah, we're not gonna get out of that business, but the the value creation for the company was, is all there today. Mainly it's going to shift to balance between value creation from the devices and the equipment to also the data. So we're going to become more, we're becoming, we are becoming more of a data company. Uh and that swings to hit me pretty early in, in, in my tenure and we've been working towards that not understanding how to basically turn that data into better health care outcomes and, and business models as well. We have a lot of executives and CEO S in the audience and I wonder from your position of great influence in A I and, and health care technology. What's your advice to other executives across industries when it comes to embracing but also managing how A I affects your business and your customers. I think you, I think you need to lean into it hard, first of all and personally, you know, you know, personally and play with them, uh you know, chat G BT and these things, you know, it, it was in conjunction with your it team. They'll tell you we have our own Metronic chat GP T but, but also engage with the different stakeholders. I've learned so much like I said, talking to the tech companies, talking to other companies in different industries in terms of how they're A I in their offerings to their, to their customers, but also internally to drive efficiencies. So that for me has been the biggest thing is actually playing around with it myself a little bit and seeing the power but but engaging with others as many people as will talk to me about this and I learned so much from talking to other companies and, and the tech companies as well. Jeff Martha, thank you for bringing insights from Beijing and CD F here to Hong Kong and I really appreciate all your time. Maybe next time we'll be together in Minnesota. Yeah, that sounds good. I'll see you, see you on Lake Min. That would be great. Thank you so much. Appreciate it.

Jean-Pascal Tricoire, Chairman, Schneider Electric In Conversation With Claire Zillman, Fortune

Innovation Forum 2024: The Green Tech Paradox

Brainstorm Innovation Forum 2024: The Green Tech Paradox

So you're Chair of Schneider Electric now, but I wanna go, you were CEO before um from 22,006 to 2023. And the company under during your tenure just had really extraordinary growth. And I'm wondering if you can kind of just briefly walk through some of the pillars of that growth that really built Schneider into this sort of green, the green giant that it is today. Well, first, it's great to be with you. Uh Good evening to all. Uh it's a late session. We'll try to keep it animated. But when you speak about Schneider, many people don't know us. So as a disclaimer, we don't do elevators because people confuse us with Schindler. Normally Schneider is really a world leader in the field of electrification. Um When you speak about the transformation we drove over the past 20 years, we had the intuition on the strong conviction that the world of energy was in a deadlock. So we had to re invent because on one side, you have to provide energy to many more people in the world. On the other side already 20 years ago, people were starting to speak about carbon emission and climate change. Um personally had lived in China in the nineties and I was in emerging countries of which Africa and you soon realize that energy is your passport to decent life. But at the same time, energy is the first source of pollution, of disruption and everything. So we embarked 20 years ago to be championing sustainability thanks to technologies and we bet on two technologies mainly one is digitization and it seems obvious today. But at that time, nobody was speaking about IOS internet of things. So it was the episode two of digitization, bringing internet to machines so that we would be much more efficient in everything we do. On. The second one was electrification as a factor of decarbonization because the only way to eliminate carbon is to take out combustion and the only way to take out combustion is to refer to or to recur to clean electricity. So electrification digitization that brings we became partner of our customers in the field of sustainability. We are the partner today of 40% of the fortune 500 companies in establishing a goal driving solution. Or um the last bet or the other bet we took is to say that probably the biggest acceleration that would happen on those transitions would come in countries which have no legacy. And therefore we re embarked in new economies today. If you look 20 years after fast forward, we multiply by four, the size of the company, we multiply by 10 in Asia and in new economies, we multiply by five in North America. And the company has seen its market cap being multiplied by 12, but just by having 20 years before on much earlier than probably others, a different view of energy which is efficiency first, decarbonization, first on term to sustainability. And one of the things that, that Schneider does that I think is interesting is, you know, retrofitting buildings to be much more energy efficient through the digitization automation electrification. When we talk about a building like this, the hotel we're in now, can you just give us a sense of what Schneider can do to make this building more efficient? Well, number one, connect everything. So going to so saying, making sure that once everything is connected, the building adapts to what the people do on most of the buildings too, they don't do that. So when the room is empty, making sure that there is no energy or consumption and so on. Number three, apply on a niche software A I for to optimize everything the the life cycle of the building. So optimize every phase from design to build, to operation, to maintenance, making sure that everything is optimizing your building, heating, water, everything and and manage your company, not what we used to do before, which is building by building room by room, but making sure that you can manage your company on a holistic basis and we do that here with number of reputable company. I won't say I won't cite all of them, but we have done a digital repository for Swire from Han Nung and from other, other companies. And you were really an early adopter of this. Um uh So the philosophy that's really popular with CEO S now that you're gonna center your management strategy around the planet and around society. And I'm curious sort of, what about your personal background and experience really led you to sort of take for, for that approach to sort of be on your radar so early. Look, there is first the fact that climate change, right is probably one of the biggest challenges of of our generation and it has different expression. We speak about climate change as a as a big idea, but it can be droughts, it can be water shortages, it can lead to typhoons here in Hong Kong and major disasters. So it has already strong social and economic consequences. Then when you look at what we do, which is energy management, it's not complicated. Climate change is 80% due to carbon emissions and carbon emissions are 80% due to the way we use and produce energy. So when you speak about climate change, normally media and government, they all speak about generation like renewable, nuclear coal gas and things. But when you think about it in the story of humanity, energy transitions to something which is net zero never happens through the through the supply, there won't be more electric cars because there is more electricity. Actually, there is not more electricity. As we speak, there would be more electric cars because California and China have started a movement that goes very strong in the direction of electric cars. And with that in 10 or 20 years, we are going to decarbonize transportation which is 30% of carbon carbon emissions in the world. So we saw that our mission was to enable this transition of the demand, making sure that every building would go to net zero, every industry would go to net zero, every city would go to net zero on making sure so and we are the biggest supplier of energy to data centers that we would put together the digital infrastructure, not only for us to live in the digital age, but to make sure that everything would be connected and everything could be optimized. It took some time to be understood. But then the world keep from turn and then we had a lot of momentum on the route of advance on our competition on V CS. What created the dynamics I was describing before? And what about the buy? I mean, you you undertake this big mission. What was the response like within the company within your board among shareholders? Um When you sort of launched this big push towards sustainability, was there push back? Or I have to say I put from day 1, 2003, I became CEO of the company on Sun CEO. Day one, I put slides about sustainability in each and every of my presentation. I can say that for investors for 15 years, nobody was caring till there was 2015, the cop 21 but more important in 2019, um some of our investors starting with Black Rock Clar started to send letters saying we all view account. We we all do accountable UC OS, not only on the financials, but on the all impact you have on your environment and then it became mainstream, right? So I'm gonna give a few examples for the people who could doubt of that. The first one I from the origin, we belong to the United Global Compact. We are part of the because Global Compact gives you a sort of compass to all the companies who want to work together in that direction. Last year, another 3000 companies joined the Global Compact at the time when people could speak about the backlash against cag. But you see that movement, you've got 3000 companies who've signed to be Net zero on being certified through S BT. Those 3000 companies are tagging along or taking along thousands of other companies who are their suppliers on scope three and we are part, of course, we are company 59 on, on that group of companies. So the movement is taking place and it's a sort of snowboarding because I take Schneider 99% of our footprint is with our ecosystem. So when we took that commitment to be net zero by 2050 then we are taking along our suppliers, 1000 suppliers, we bring 100 million tons of saving to our customers. We help the communities to get access for the first time to green energy. 50 million people who didn't have access to energy, get access to energy. Thanks to what we do and investors react positively to that. So last year we are one of the top three companies in which the ESG fund are investing. So that has driven a lot of rating or positive rating for Schneider. And you've seen the share price going up very fast. So when you do that, number one, you need to align the purpose, the strategy, the mission of your company with EG and to do it very rigorously. Number two, you need to have the right governance. So for us, we have a committee at the board, we have a representative at the executive committee and we have a stakeholder committee which challenges the decision of the board, taking other stakeholders point of view. Number three, you need to embark your own ecosystem, customers, suppliers, employees shareholders, they have to, yeah, they have to be consistent with what you have described. Number four, your culture and therefore the people you choose. But when you live like me a community of 150,000 people in 100 countries. It's not only good to have one very clear purpose which is aligned on something positive because sustainable means that what you do is sustainable by definition. But it's also super important that people know how to do things. Um eeg allows you to define ethical, ecological, social sort of standards that you want to adhere to. So all of this was actually demanding at the beginning needed a lot of explanation. But suddenly the people who join you are people who believe in those things that mean your company in the right tail winds because what's sustainable actually brings a lot of growth. And one thing if you are the CEO is to derisk your company. So making sure that you have strong standards in terms of CG is bringing is decreasing, noticeably all levels of risk in the company. So more opportunities, less risk that brings normally good results. And you mentioned cop and you were there again this year. Um And when you were there, you, you um you shared this sort of remarkable stat or at least I find it remarkable that 70% of carbon emissions today can be eliminated with today's technology. And I I find that very reassuring actually that we don't need some, you know, huge breakthrough. We have some of the tools um to do that to, to really um bring down emissions today. But my question is So, so what's the hold up? You know, why aren't we making more progress or more rapid progress on cutting emissions? I think, because human beings are very, very slow to embrace change. Uh Think about it. I had my first internet connection when I was living in China in 9495. And it took another 10 years to get Facebook and probably another 12 or 15 years to get tuba and all of this could have been possible much earlier, not completely because you needed the smartphone as the as the other innovation to to enable that. Um Let's let's look at at the reality today. If you start by saying that the real transition is starting with a demand. I mean, if your building is net zero, then you put no pressure on the supply or if your plant is not zero, like we help Takida in Singapore to be 15% energy positive in a place which is constrained in terms of energy. Then suddenly your manufacturing is becoming positive in uh in Singapore and you can apply that to uh uh many, many things. But the technologies which allow us now to do that are completely different from the one that we used even 10 years ago. Smart buildings. Everybody is speaking about small buildings, you go to Europe and the US, less than 10% of the buildings are smart and buildings are representing 37% of energy consumption on carbon emissions. So before speaking about moonshots and doing whatever nuclear fusion and those kind of things, let's make sure that all of the buildings are connected and they are very energy efficient and they can load and store energy when energy is cheap and green when the solar panels are working on the, when the windmills are pro producing energy. Um I look at the buildings around me, even here in Hong Kong, there is not much solar panel and there is a lot of sun which is available. So when you speak to the construction industry and you spoke about the building, so I stick here or I stay here. Um When, when you speak about efficiency, many people will speak about windows and roofing and this is very expensive and this takes a lot of money and a lot of time um you apply digital to most of the buildings, you're going to get the same result for 1/10 of the cost and 1/10 of the time. Um And it's exactly the same thing as with the internet. Today. People have not yet integrated the capability. Uh And with that on the top of it, once you have digitized, you can connect to the grid, the smart grid. And we are doing for instance in Hong Kong, the grid smart with C LP and you can make sure that your buildings on your homes are loading energy when it's cheap and green. So all of this has barely started. But this is very exciting for the next years to come. So what I'm saying is that before thinking about the big revolution that just deploy what we have because time time counts, right? Carbon is not, it's it's it's integrated, a ton of carbon that we save today has 10 times more value than a ton of carbon we save in 10 years time. So time is really important. Great. Well, we will leave it there. Thank you so much for being with us and for giving us some actionable steps as we look to cut emissions and hopefully have a greener future, go digital and go electric. Ok. Thank you. Thank you. Thanks so much.

Yin Ye, Chief Executive Officer And Executive Director Of Bgi Group  Alex Zhavoronkov, Founder And Ceo, Insilico Medicine  Moderated By Yvonne Xie, New Media Executive Editor, Fortune China

Innovation Forum 2024: Shaping The Next Era Of Healthcare

I, I'm thrilled to have Alex and Y with me today, the work you're doing is really shaping the future of healthcare. And please note missing, we'll be speaking in Chinese and headphones at your seat for you. Um As my, we just noted the fight against COVID-19 is really a worldwide collaborative effort. And now as we are entering the post Pande era, um which area of collaboration in the healthcare sector are most critical Alex. So I think that it's extremely important to collaborate in drug discovery. Uh That is the most critical area for all of us because we can live without a cell phone even. Well. Nowadays, it's difficult but we can live without a better car, we can live without uh you know, flying business class, but we cannot live without cancer, drugs or drugs targeting Alzheimer's or Parkinson's or infectious diseases as we've just learned from the pandemic. So I think the global collaboration in drug discovery is fundamental and of course biology is so complex that we need to work together to solve it. Um So Mr Ying, what, what's your view? Uh I will continue on that and talking more about data actually, we have mentioned that we are now in the era of artificial intelligence. So we will have a lot of data. If we not, we if we don't share the information from like China American and European, then we will enter the silo effect which will cause waste. Actually, when we first identify the genome of human being, scientists have mentioned that we need to share this kind of information uh when we protect the personal privacy. So I believe that such words are right for the present, whether it is for the anti aging research, we really look forward to that it's really critical and in which area can the results of collaboration can be seen most immediately? Alex. So again, I think that uh we need to collaborate on drug discovery, that's where you would be able to see the results of collaboration most immediately. Uh because patients cannot wait and when it comes to aging, all of us are patients and we should be very impatient patients. Uh So uh we probably will see the result of collaboration uh immediately in personalized medicine because uh that's where we can use already existing drugs to repurpose them towards specific diseases that might have not been targeted by those drugs immediately. Uh So that's one of the areas where we need to collaborate. And by the way, China is the world's largest developed uh uh market with 1.4 billion people. More than 1.4 billion people. So having a very good understanding of how different drugs work and different diseases. And so many people can uncover huge potential for us to live longer and better life and very rapidly because we are looking at already existing drugs. And the second wave of course, of course, innovative novel drug discovery. Uh they are China over the past 20 years, has developed the world's largest and the most efficient infrastructure for chemical synthesis, biological uh manufacturing and very rapid testing. So if you are designing anywhere in the world, you might want to come to China and do the testing and uh synthesis and uh you don't need to rebuild this infrastructure. Of course, it's a good idea to have that infrastructure in every country. But I think that right now we need to focus on efficiency and delivering really fast um uh very effective solutions to patients in need who are dying. Mhm um So Mr Yy, what would be your ideas? I think that's still about the uh data, for example, about those rare disease, it seems rare by the name. But if we um take the humanity, all the human beings as a whole, we have, for example, like we have 8 billion people in uh every year, we will have 90 million newborns every year. And the um the incidence rates of the birth defect about 4 4%. So if we can share all this data altogether, we can have uh like more insights for the precision medicine. So we will be a community of shared future. Alice. You mentioned that before the A I develop, develop drugs can really hit the market in silico. Your company still has a long way to go and you are still facing a lot of obstacles. What are these obstacles you're facing? So sure there are several obstacles that everybody is facing. And one of these obstacles is that biology is very complex. Biology is perhaps the most complex area that humans need to be focusing on collaborating and making a lot of bets that are going to fail. So in drug discovery, currently, if you start with a novel mechanism of disease, so you never touched that target before the protein that is driving the disease and you want to take it to the market. The probability of taking it to the market is less than 1%. So it's not about the time or the cost is just the sheer probability of success is low. That's why I like to call it the molecular casino. Uh And in this molecular casino, the wheel is is spinning for 12 years and you actually, every time it touches some number there is a probability of success of failure. So 90% of the drugs that are in human clinical trials that enter human clinical trials fail. That is why uh people who invest in this field are extremely sophisticated and they understand the risks and benefits and the payouts if you've got the drug approved are gigantic because a lot of people start using the drug and the health care system reimburses uh your research and development expenses. Uh So just complexity of human biology and the probability of failure, that's our greatest threat. The second greatest threat is actually currently that something that I don't understand is geopolitical tensions. So previously, I thought that that would be off limits, right? Because we all agree that life is the fundamental human, right? After that, there are no rights after you're dead. So we need to figure out how to collaborate internationally, at least in this area. Um So uh so for Mr Yin, you have already um led the team to uh to, to serve for those rare diseases like a Os, including th uh he is a famous patient of a Os. So when you are helping these people, what are the biggest obstacles ahead of you? Can you introduction of Mr Tale? Maybe uh today, not many people know him in this event. Uh Actually Tale is really famous and when we and actually Tale is a patient of a Os and you may, when we talk about a Os, you may think of ice bucket challenge or Stephen Hawking. So during the past several cents centuries, we do not have a cure, direct cure for L OS. And at the beginning of this year, Tale had a conversation with Ban Ki Moon and as a patient, he has, he he he really advocates a big um research over this rare disease. So I think for rare diseases, the most important thing is that we need to acknowledge it, we need to know it, we need to under it. So for a rare disease, if there is only for example, like 1000 patients in one country, there are so many countries in the world, the total population of this rare disease will be really big. And also there is a cognitive misunderstanding thinking that there are no rare diseases in their ancestors for eight generations and they will not get them. It's a misunderstanding because no one is perfect on genome. For example, I personally carry seven serious defect genes. The important thing is that my wife cannot carry the same position. Otherwise our offspring will have high probability of getting sick. So the rare disease are actually born by normal people and the normal people is in quotation marks. And currently the cost of treatment is too, is very expensive. And now the gene therapy drugs is really is very, very costly, about 2 million to million. So we have a long way to go to conquer rare diseases. But anyway, we need to start from understanding these rare diseases. Yes, indeed. So the first step is to make all the rare diseases being seen. Thank you, Tyler. Thank you, Stephen. Um There is the first step and always the last mile and what's the last mile in application of A I developed drugs? What what factors influences um its scalability of these drugs. So A I discovered drugs in my opinion, are actually better than the drugs discovered using scientific serendipity. Because intelligence design allows you for multi parameter optimization. Where instead of looking for a needle in a haystack, you create multiple perfect needles and you test those perfect needles in a test setting that is geared towards a very specific disease or a broader spectrum of diseases. So we've demonstrated several times already that we can design molecules with surgical, with nano perfection that are like to become good drugs. So they are yet to be brought to the market. But we sold one for example, for $80 million upfront. So demonstrating that it could become a very solid business model. So it's not just blah, blah, you create a drug using A I uh in like a year, you sell it to a company that is specializing in drug development and you make $80 million upfront. Plus you take milestones and royalties. So we actually think that A I discovered drugs are likely to be better than the drugs that you can find using high throughput screening or from molecular libraries. So and the biggest bottleneck right now for us is actually testing. So very unlike images or that is A I generated where humans can very quickly look at the output and say, oh it's correct. I like it. In drug discovery. You actually need to perform the experiment and first you perform the experiment on animals, then you go humans, you can go more humans, you can go different humans, bigger human population. So that is the bottleneck and that is a very well regulated area. You can, you can basically like Tesla, you can accelerate from 0 to 60 then you move with the speed of traffic because it's very regulated. So we would of course like to figure out ways to go around that. And on that point, if I do have a little bit of time, I'd like to expand on als. So one really cool example that I can bring of our global collaboration. Recently 2022 in March, I go to a conference at Johns Hopkins called Answer A LS Consortium. It's the head of Neuroscience Chair of Neuroscience at Harvard MG eight JH Merit. If Merit is listening, uh the B and Jeffrey Rothstein for counterpart at Hopkins, they created a massive data set of A LS patient data openly available. You can apply for it and take the data. So we applied for that right after the conference, took this data for um cells collected from IPs for LS patient and reprogrammed into human neurons. So it's a very, very good data source. We combine it with many other sources of data, run it on our A I platform identified new targets and possible drugs to repurpose, tested it in Mayo clinic's model of flies, fly neurons in real flies show that some of those targets worked. And then uh we met Dr Lu Bai Bai Lu, very famous Chinese American neuroscientist at Tsinghua University who is pioneering multiple neurodegenerative diseases including A LS. He found one of those targets to be very promising to one of those already existing drugs and started a phase two clinical trials in China. Um Principal investigator in this, the target was to enroll, I think 60 patients in the US. It would take you years to enroll so many in China A S is not a rare disease, they are fully enrolled right now waiting for the outcome. So even if it fails, just the sheer speed of that exercise and global collaboration can take this process of trial and error that fails most of the time anyway to the next level. That's why global collaboration is extremely important and that's what we need to do more and more. So collaboration is definitely our keyword for this discussion and the keyword for this whole summit is A I. So uh Mr Yin has BG I already deployed generative artificial intelligence. What role can I play? Actually, we're doing it. We are actually helping doctors and even public quickly understand the language of life. Uh language like languages including English and Chinese or languages used by human beings. Um And English is a um unilateral, it is actually a one dimensional language. And for Chinese, I think it's a two dimensional language because we have characters. But for DNA, it's a three dimensional language and it has a or it is a four dimensional one because it has a space. So I think we can use N LP or A IGC to do development and we can also use uh and also for A I, there are three pillars uh algorithms commuting power and data. And now I think we still do not have enough data to uh to support the development. And for the, for the first, for the first human genome, we spent $3.8 billion to produce the first human genome. But now it will only cost us $99 and we can have a multi uh we, we can have a multigene, we can combine all of those different materials altogether. And nowadays, um nowadays, we have the evidence based medicine, they only accept inductions. That's so, so even if we can use A I to predict things, we, we should still prove that in the real world. So we need to have a digital twin here. So we will be very time costly. You need to have a lot of time, spend a lot of time to prove that. Um Alex I noticed you recently published a study in nature biotechnology. You called it the most important paper of your life. What's the big deal of this paper? Can you explain. So sure we publish a paper every 10 days in in good journals. But that one was very, very special because it combines uh the story of drug discovery from the very, very early stages where you try to formulate the disease, identify protein targets using A I uh then generate novel chemistry, novel chemical matter using A I. Then we performed many, many, many experiments in vitro in a Petri dish, done many, many, many experiments in multiple different animal models in mice and rats and dog showing that the drug is effective in lung fibrosis and multiple other fibrotic diseases. So we perturbed that type of biology. We also did something really special called hallmarks of aging assessment for the first time. So we looked for protein targets that are implicated on aging and disease at the same time because my philosophy is that if the drug is powerful enough to work in some hallmarks of aging, it's likely to work in multiple age related diseases. And then we took in of phase zero human clinical trials just to see if it's nontoxic for, for humans, did that check mark and then we did two phase one human clinical trials demonstrating the safety. Now, this drug is in phase two. And in this paper, we are outlined this entire journey, the probability of success of that of having this uh go go to phase two is less than 1%. And I bet my life on it so it can still fail. But that milestone now published in Nature Biotic, we also created a resource even for peer reviews. When people were reviewing the paper, we provided a form of charge GP T where you can talk to the paper and ask it questions and many other in silo papers and get the response because it's such a multidisciplinary paper. When medicinal chemists look at it, they ask medicinal chemists questions but they overlook the A I part and the clinical part and the biology part. So it had many, many reviewers with many, many questions. Nowadays, if you go to five papers in silico gpt.com, you can actually talk to this paper and ask it questions today. It was accessed more than 42,000 times in the first two weeks were very popular paper. So do look at it and the gene is called tick that we've targeted. I think it is going to work in many diseases and hopefully aging recently, the University of Copenhagen showed that mice that lack those genes are they when they are put on high fat, high sugar diet. So they basically live their live on cheese cake for their life. They don't get fat and they actually muscle. That's what you want, right? So serendipity since you've mentioned about agent several times, I know that the ultimate goal of your company is to extend human life lifespan. How so sure, I think it should be the goal for everybody here because it's the most altruistic and egoistic goal. At the same time, I think that all of us are going to age and die at some point in time, it would be great to die younger later. And the way we are approaching it is in a very traditional way within the pharmaceutical, traditional paradigm where we discover drugs, put them on the market and sell and then use the proceeds to reinvest and research to understand the fundamental human biology. And actually, I think it's a shared goal even with BG because from what I know one of the founders, Wang Jian, I made a statement that he wants every BG I employee to live to 100 or 100 and 20 right? That he was criticized for making that claim, but it's not a bad claim to make, right? And it's not a bad goal to set for yourself. Because one thing that I want all of you together from this conference, from my talk at least is that the longer you expect live, the younger you are going to behave and by extension, the longer you're going to live. So just psychologically, you should already prepare for a much longer lifespans. And if you think that technology is going to stand still for the next 20 years, you don't understand exponentials because what we have done on the paper is pretty revolutionary. But look at some of our other papers for many other drugs that we are developing. Uh And uh they have like really, really good fundamental understanding of aging um come to our conference in Copenhagen. Uh And um I think that uh you should already set your longevity expectations way beyond what you have planned, what you are planning, what you uh parents live to or what the country average is. It's a very good thing and it's also a very noble goal. So if we can agree on one thing, uh you know, in the US and China is that we need to live longer and healthier. Maybe the next generation of us can be immortal sometimes. Um Anyway, uh so uh my race for Mr Yin is that for extending human life, how uh gene editing can play a role? Actually, back in 1990 the average life is VT is 30 years old. However, today it's already at 73 years old and in 1949 the life expectancy in China is 39 years old and now it's 81 years. So, and I have a good news for the women here. In any era, almost every female will have four or five years longer of life expectancy compared that with men. So I think extending life expectancy is very important and it relies on the nutrition, better medical conditions and the development of some drugs. All of that extend our life expectancy if we can intervene with tumor earlier, if we can treat the new degradation earlier, if we can treat Alzheimer's, I believe that all of you can extend your life expectancy to 90 or 100 years old. Uh However, you need to have saved enough money. Right? Because the last 10 years of human life is quite expensive. And actually we have established a uh we have a, we, we, we think, we think that now we can frozen the gene. Uh We don't talk about the ethics for now. I think we don't see any limits, maybe live for like 200 years old. That's possible. And actually, personally, I, I I'm very clear that I personally oppose personal immortality because if there is no death, every birth is a tragedy, right? It seems that the resources is quite limited. And second, I also talked about the immortality. I think that I also make a joke that the first immortal person might be physical, be killed by the second immortal person. So to some extent, we should pursue a kind of spiritual immortality, a kind of cultural immortality rather than the immortality of individuals. So that we can, we can say that we can save some resources for the next generation. Thank you for your discussion. Thank you. Thank you. Thank you.

Dongsheng Li , Chairman And Chief Executive Officer, Tcl In Conservation With Maiwen Zhang, Executive Editor, Fortune China

Innovation Forum 2024: Global Expansion Strategies

Uh Thank you, Mr Lee for uh coming here joining us today. And TCL is actually a company with great stories and you've been through a lot of legends, you've been through good times and bad times. So today, let's look back to the history of TCL. Let's go back to the early nineties of the last century. Um You may still remember some of the details of your company at that time. So my question is my first question is uh when the first time when uh when you first attended the Consumer Electronics Show or Fair, what did you feel? And what do you feel nowadays when you attend that Consumer Electronics Fair again in Las Vegas? I still remember uh I went to uh the show the fair in Las Vegas back in 19 nineties. And at that time TCL was a part of the HK trade development uh HKT DC pavilion. And we only had a nine square meter square meter booth showing our telephone. And this year in the fair, we have uh large booth covering 1700 square square meters and we are adjacent to Samsung. Uh We have similar size of booth. Uh So now the area is 200 times um to compare with the site of the booth for the first uh w when you attended that fair for the, the event for the first time. Yes. So it means that we have already become a leader or a, from a follower. We have grown out. Uh We have grown into a leader from a follower. So I still remember that in 19 nineties, one of your uh Trump product is the color TV. So can you give us a brief introduction about the changes of the sales of display products? So let's talk about the evolution of the product technology first after the invention of television. Um in 2000, it was still the picture two television, uh the black and, and at that time, the black and white televisions were still dominating the Chinese market. But after 2000, we started to use a panel display uh evolving from PDP to L CD to Mini Led and O Led today. Um If we look at the players in the industry at the very beginning when we had, with the uh at the very beginning when we had TV S in China. At that time, the Chinese market was dominated by Japanese brands. At that time. If you can, if you could buy a Japanese TV, it would be really amazing. And later on Chinese companies were developing really fast and now the global market of TV. Color TV were mainly dominated by Korean and Chinese brands. And last year, the sales of TC LTV uh reached 25 million units ranking second globally. And we have other competitors, Chinese competitors like Haen and Xiaomi, they have pretty uh the same sales as we do. So from these statistics, you can see that the global TV quality market is dominated, is mainly dominated by Chinese brands and the brands from ROK. So for TCL, it is uh you have already been expanded for 25 years globally. So if we ask people, do you know TCL, many people will answer that TCL is a television company. Uh But we, but we, we know that TCL is more than selling com uh selling TV S. Can you give us more um insights about that? Actually TCL is still a company selling smart terminals. And for TV S, uh our sales is could reach 25 million and we also have Ooem TV O ems for those international brands, about 10 million units. We also do other uh consumption electronics and home appliances. And last year, our revenue could reach 100 and 20 billion RMB. And we also do semiconductor display. And last year our subsidiary uh doing led has got a revenue of 70 billion RMB. And we also enter into PV industry. We are already the largest PV, MOOC crystalline factory in the world. Uh So for the semiconductor semi uh semiconductor display and the TV why do you choose these two areas? Well, the reason why we enter into the area of semiconductor display is because that we want to support our color TV business. And after we enter into the new era of uh panel display, the Korean brands have surpassed the Japanese brands, led by LG and Samsung. They have the they, they have advanced display panel display products, but Japanese brands did not have the capability to produce those advanced products yet. So that is why we also wanted to um grab a share of this cake. We invested 2025 billion RMB to build a OEM factory. So 2 25 billion is really a large number for us at that time because at that time, we did our net, the net worth of the entire company didn't reach 25 billion. So that's a bold move for us. We were also struggling when we were making the decision. But now when we look back, I'd say that it's a right correct decision. This decision has paid a way for us to develop our competitiveness in color TV. And now let's look at uh another topic which is really a buzzword nowadays. Now we are having a de globalization. So de globalization actually inhibits innovation. So what should we do to counter to counteract that? Well, deg global organization doesn't only inhibit innovation, it will inhibit the global economic growth, you know, as a whole. So for globalization, there are three important factors driving it. One is the free uh free trade, the trade liberalization, we need to relieve the trade barrier. And the second driving force is the sharing of industrial resources and technological resources. That is actually the global flow of capital. And the third driving force of globalization is a set of uniform standards, trade rules. So that is why WTO has set up a forfeit of uh standards for global trade. So now in terms of legalization, we would see many trade barriers going on being established in the world. And WTO has been there already for 30 or 40 years and uh China has been a part of WTO for 30 years. So we would see that globalization has boosted economic growth during the past decades. According to a lot of economists, they believe that globalization could contribute 1% to 2% growth to the global economic development. However, we would admit we should also admit that the globalization, the benefits of globalization is not allocated in a fair way among all the countries for those countries which uh is equipped with strong ca capital, capability or strong technological capability. They will definitely benefit more from globalization. And that is why a lot of people are countering uh are actually um opposing globalization. And now when we are talking about uh when we are talking about de globalization, we mainly talk about the de globalization of technologies represented by the United States. They are restricting the technological development of China. Um Actually, as I recall about eight years ago, we have heard of these terms frequently. Actually, I remember that as you mentioned in the Davos Forum this year, in order to meet up with this kind of challenges, China needs to shift from uh product output to capacity contribution. So for TCL, is it a demand by the environment towards the company or is it because of you develop to a certain stage and then you want to look after these parts? Just um for me, I think that's because of that's driven by the strategy of the enterprise. Because in the past, for many Chinese enterprises, they the internalization process are driven by exports, right? So we export our products with competitiveness to the global market. However, this process as China's industry has developed has established competitiveness in many different types. We found out that if we continue to export this products, the Chinese economy will not be balanced anymore. So we need to shift from that. So for us, we established the global industrial chain in different positions around the globe. Yeah, I noticed that you use a very relaxing tone when you are elaborating these stories. However, as we all know that this is a this is a cutting throat process for for a company like 20 years ago when we are promoting the international mergers and acquisitions, we encounter a lot of setbacks. Then I think uh in the past 20 years, what have you learned or what lessons you think are meaningful for other enterprises to learn from? Um I believe what you have mentioned is that 20 years ago, we our about our merger and acquisition of Thompson's color TV business and the Alcatel's mobile phone business. Back then, we made this decision because we wanted to quickly expand our business into color TV businesses and mobile phone business to the global market. Because back then in China, we are the best in terms of color TV, S and mobile phones. However, in international markets, we don't have any uh presence. So we threw to enter this global market through measures and acquisitions. However, during this process, we did suffer a big setback and the cost was very high. So today, if I were to share the experience and lessons learned with you today, I think you can pay attention to three points. First of all, cross border mergers and acquisitions are very challenging thing. So you must be fully prepared. For example, you should be prepared with the M MA ability and the capital and second for international M MA, ok. We should definitely support the business development of the company because back then we make a harsh decision to conduct an international M MA because before the M MA PC R was basically a Chinese company, but suddenly we became a global company. I have to take care of a lot of Americans, Europeans employees because I don't, I'm not, I'm not capable back then to take care of those European enter employees and American employees. So actually the international MN A post high requirements in terms of organizational capa capabilities. Oh and on the other hand, the timing for M MA is very important because back then the M MA for color TV is quite difficult for us. Uh I have made a decision, I think that for color TV, they can still stand on the market for like five more years. However, it turns out that people turn to uh tabloids, tabloid computers. So it has huge impact on the color TV market. So I think the timing is very important. So what about the timing for the PV business? You have? Um actually we joined the PV, we entered the PV, uh the photovoltaic sector in 2020 because uh PV is a high growth market. We see the global green transition and the energy conservation and carbon reduction is a big trend. So in the past five years or so, the industry develops in a very fast speed. And we believe that in the future 5 to 10 years, the average annual growth should be at 15% even though the competition in the PV market is very fierce. However, China is dominating the market and the market will continue to grow. So the excessive capaci uh capacity will not be digest in a short period of time. I think for the next 10 years, the global market will be even more greater. So the PV industry in China should definitely expand their pre uh presence around the globe and established higher efficiency and higher level of competitiveness. So what you are saying is that even though China has seen over capacities, but in the future, the since the market is growing, so the over capacity can be not just in China. Yes, I think it can achieve a balance date in the fast time uh in a short period. OK. So last few couple of questions, you have mentioned that um c the the world, it's at the beginning of a diversification process. And I remember that in the CEO of General Electric at the time has wrote us a signed article, he has mentioned that true international companies will not worried about protectionism. So do you still think this logic is valid today when a Chinese company is expanding globally? I think it is here theoretically true. If you produce every bit of your product in the America, then the protectionism protection measures from the America will not be effective, right? But in fact, enterprises don't need to go uh be so extreme. We just need a reasonable global layout, we just need to lay our business around the globe. So as to achieve the competitiveness, we can localize the industrial supply chain. If we can develop well developed the whole industrial train, we can better uh better meet the challenge of trade protectionism. So that's the balance between capacity and timing, right? Thank you again, Mr Lee. So before we end this session, I want to quote a sentence mentioned by robot noise, the founder of Intel at the time, he mentioned that history, it's about what people do. They try everything to be not bonded by history so that they can make their way and do something. Great. Thank you again for Mr Lee.

Alicia García-Herrero, Chief Economist Asia Pacific, Natixis Ben Harburg, Managing Partner, Msa Capital Fred Hu, Founder And Chairman, Primavera Capital Group Charles Li, Founder And Chairman, Micro Connect Moderated By Wang Fang, Fortune China

Innovation Forum 2024: What To Expect In The Year Of The Dragon

Alicia García-Herrero, Chief Economist Asia Pacific, Natixis Ben Harburg, Managing Partner, Msa Capital Fred Hu, Founder And Chairman, Primavera Capital Group, Charles Li, Founder And Chairman, Micro Connect Moderated By Wang Fang, Fortune China

Alicia García-Herrero, Natixis Ben Harburg, Msa Capital Fred Hu, Primavera Capital Group Charles Li, Micro Connect

Jesper Koll, Board Director, Okinawa Institute For Science And Technology Tokiko Shimizu, Assistant Governor,  Bank Of Japan Moderated By Clay Chandler, Fortune

Innovation Forum 2024: Is Japan ‘Back’

So uh it's, it's really a thrill and honor to have both of you uh here and uh to go especially you. I know you've got a very uh whirlwind travel section. You've sort of stopped over to speak to us just on the way back from the Boao Forum. But let me just open with a basic question about what's going on right now with the Japanese economy. And what your assessment of how it's doing is as I say, they are, there do seem to be a lot of very mixed signals. So what's your? Thank you very much? Thank you gu and first of all, thank you for having me here today. It's very kind of you and the for Fortune mother Jane. So I'm, it's my great honor to be here to make my speech at this very innovative forum. And I'm a frequent traveler almost 20 times a year. Last month or the beginning of this month, I went to San Paulo to attend the G 20 meeting. And the second week I went to the Basel in Switzerland to attend the Governors Central Bank Governors meeting. And the third week, last week, I went to Italy to attend the G7 meeting. And yesterday I came from the boa and tomorrow I need to go back to Tokyo. So this is too, too busy, but I'm really enjoying what discussions going on in this, those forums. I found that there are two or AA always people discussing at the meeting. Plus A is Asia and the second day is A, I always talking about agent or A I. And I'd like to touch upon the first A in the first round of this panel. So Japan is one of the hotspots in Asia. I would say we went to Japan make, made a decision to change our monetary policy framework. Last week, it is, as we said the first time for the 18 years, it is very exciting and probably the the step itself is very small 10 best points. Probably no one noticed such a very small step, but it is very great step for the Japanese economy. I would say what happened or what. The reason why we decided to change our policy framework is the birth of cycle between the wage and the price is going on. Usually the 720 million colleagues using the visa cycle between the wage and price increase. But in Japan, we are waiting for that cycle with increase and the price increase. So last week, so the last week, I we've got a figure that spring with the negotiations between the labor and management got the figure plus 5.2% increase. That is amazing. The first time in the 20 or 30 years, I would say. So this is the main reason why we changed our monetary policy finally because we are more confident to achieve our price target 2% in the coming year. So then what our new policy framework is, if the we are simply targeting the overnight interest rates in the money market, we almost stop every other tool like purchasing ETF purchasing uh the those kinds of population that we will stop. And also we will continue to purchase the G GB for a while, almost to some same amount. That means we need to be very careful about what happens in the long time in the street. So that that will be our new framework of monetary policy. And I would like to touch upon what the going on for uh look forward. We still uh expect the price movement in coming years well, around 2%. That means we don't see any interest rate hike necessary. So that means we will keep the monetary situation very accommodated for a while. But at the same time, we are predicting that our global GDP growth will uh going around 1.5% for coming years, that's higher than our potential growth rate. So our main focus for the future must be how we can raise the potential growth rate. I will touch upon this theme in the second round. Thank you. Great. Thank you so much. That's really fascinating. And what I hear you saying there is that uh don't imagine that what Japan is doing is kind of chasing the Federal Reserve and boosting interest rates really rapidly to try to get handle on what looks like runaway inflation, that it's going to be a kind of long, slow, gradual, very stable approach to uh to monetary policy. Yeah, let me, let me turn to you, you and I have been talking about the Japanese economy for about three decades together now. Uh And I have learned so much from you. You have been a resident of Japan for all these many years. You've been through many of these cycles as we were joking in the green room um every six years as the Japanese economy seems to kind of stir the life suddenly you're popular and people are calling you and then, and then they're not again. Uh So we're definitely at a cycle where Japan is uh the hot property. Uh certainly in, in Asia, um lots of money that previously went to China is now sloshing into, into Japan. Uh This is a kind of an unusual moment but what's different about this rally from others that you've seen in the past. So what's different this time and it is different. And so I got the data of the best and the brightest in Japan, if you look at the elite bureaucrats, right the young men and women who join the Ministry of Finance. Me, I the Bank of Japan when they're in their early twenties after university. And you look at how many of these young men and women quit while they're in their twenties and thirties. And you see a flat line, nobody quits. But over the last four or five years, this line has shot up very dramatically. So you see that the elite, the young, the next generation of Japan is now taking risk and then it gets better. Where do these young men and women go? No, they do not go to Mitsubishi Corporation. No, they do not go to JP Morgan. Two thirds of them go to start ups. And that tells you that something is different. We had over the last 30 years, a lot of issues that needed to be worked out in the Japanese economy and of course, people were very risk averse. Now people are actually taking risks and the fact that the labor market is actually showing liquidity, you can show show last year that of the leading companies in Japan of the Fortune 500 companies that all of them had more mid career hires than uh graduate intakes. And again, that tells you that the tables have turned, the labor market has now become a buyer market from the individual's perspective. And as this most important asset of the economy, which is labor, that's the key part of capital as that actually becomes more liquid and moves, you know, from low performance to high performance. That's where the excitement comes from. Let me do another thing. The generational change in Japan is enormous over the last year and a half. When you look at the new, the age of the new CEO S that have been appointed by the leading companies in Japan, by listed companies. The age of the CEO has dropped from 69 to 57 which is again creating a mobility. And it is also freeing Japan from this post bubble deflation legacy that they were stuck in. And the result, record metabolism, record amount of M and a activity, record amount of MBO management buyouts, record amount of IP O activity. And most importantly, and this is your point about the potential growth rate. You actually see domestic capital formation, domestic business investment actually at a historic height. So you've got corporate Japan reinvesting in Japan. Yes, you've got TS MC building, you know, a chip factory in record time down in Kyushu. But on top of that, you've got leading companies like Furukawa Electric like Shiso actually building new factories in Japan. With that. Wow, that's fascinating. It's right on our topic of, of innovation. Um You know, I mentioned at the top of our program, uh Joseph Schumpeter and one of the things that makes suppe interesting is that Schumpeter kind of stepped outside the traditional debate between cannes and uh uh you know, monetarism in terms of the sort of things that he looked at to measure the dynamism of an economy and this thing about metabolism, it's a really fascinating point. Um, you know, the, the Bank of Japan looks at monetary policy, it looks at wage pressure, you know, this sort of thing, it looks at, I'm sure demographics. Um I'd love you to comment a little bit about what you see ahead in terms of structural problems for Japan. But also maybe if you could say something about whether uh central bank regulators are also conscious of these uh metabolism factors, these kind of uh less tangible metrics. That, that yes, thank you very much. So, I'd like to start with the what A I and Japan. So because Japan is a country facing the very severe aging population and the number of people are gradually not gradually radically declaring. So if we concur those severe challenges, we need to have large number of robots in the future, I would say I, I'd like to introduce my close friends in my back. So I'm troubling with him all this. So that's why. So because Japanese people love robots compared to the Western people, I would say. So I think that what the labor markets are now we observing in the labor market is female and senior elder people are happily joining the labor market participating in the labor market. It is very different from what happens in the United States and Europe. So no, are they retiring? So that means many robots could support elderly, healthier life and also the females can get support from those robots, cleaning the rooms, carrying the Children. So those kinds of a services will be the most permissive area in Japan. So because we are facing the very severe shortage of labor sources that that might be the one of the reasons why we enjoy that with these days. But at the same time, we could have some large opportunity in Japan. Although the A I business itself is mainly uh profit to the US companies at this current stage. But I would say that in Japan, there are many, many huge opportunities for those new technologies in Japan. And probably this must be the uh labor for the increasing our potential growth. That's really interesting. So Ezra, I want to ask you about specifically about this point about A I and uh Japan. We're going to hear later tonight from Kai Fu Lee who's famous for advancing this thesis in his book A I superpower that the world is kind of headed to this, this era in which you have two giant producers of uh of A I the US and China because they have access to vast pools of data and that data is the new oil uh of the of the future. So Japan is a is a medium sized market 130 million people. It's a different language than English or Chinese. I know you're not an A I expert but how does that impact its ability to generate innovative A I? And how do you see that playing out in terms of productivity? Uh I mean, it should be, I mean, this is all very exciting. There's technological progress 20 years ago, it was the internet and now it's like, you know, it's a new version of the internet and the Japanese are very, very good at adopting this because as was pointed out, you know, the Japanese don't have a problem with technology and you know, now more to the point, um you know, is the reality that Japan is actually becoming an immigration superpower, which is, I mean, look at the reality, just look at the data, you know, now there is 3.2 million non Japanese living in Japan, of which 2.4 million are actually working. When I showed up in Japan. In the mid 19 eighties, there were barely 500,000 last year, 300 on a base of 3 million. 360,000 actually to Japan on a visa, visas have been deregulated very dramatically, right? It took me when I showed up 10 years to um you know, get a permanent residency. Now, if you show up, you can get it within 3.5 years, now you're not allowed to fall foul on the law. So if you had a parking ticket you're back in the queue. The Japanese are very meticulous and, you know, take those things extremely seriously. But again, the reality is that yes, we want to talk about technology, but look at what is actually happening on the ground seven and I 7-Eleven, you know, the greatest convenience store company in the universe. Sorry, Mr Lawson. Um, you know, 7-Eleven last year sold its first franchise to a non Japanese, a woman from Myanmar who up in Japan on a mambu show on a government scholarship, you know, 11 years ago and you go to seven and I they're putting this whole program together that indeed they are targeting that by the year 2030 which is around the corner, they will have half of their employees non Japanse. That's incredible the speed with which actually the internationalization. And this is where for Asia, the great opportunity actually comes in because honing your skills, learning about how to run a business from someone like seven. And I in one of the most, you know, seriously competitive consumer markets in the world, which is what Japan is, right? If you can make it there, you can make it anywhere. And I think Japan as a hub to actually train up human skills, human capital for the rest of Asia. That's going to be a very, very important theme over the next decade going forward. A I sure, but A I is something that happens everywhere in the world. Every nation, every economy has to come to grips with this new technology. What is specific about Japan is the reality that yes, Kai Koku, yes, the country is actually opening up. Um you know, historically, there have been kind of two forces of resistance against embracing technological change and immigration on technology. One of the concerns has always been that and this is something that, you know, was, was recognizable to Schumpeter, that there's any inequality that comes along with technological innovation. I mean, some people are winners and some people are losers in the Japanese have not been very keen about that. But this is where Japan is in this demographic sweet spot because sorry, one in four in Japan is already over 70 years old. I love being in Japan because everybody else gets after you. It it's wonderful. So you you've got the hump is done and yes, the baby boom generation, you know, how do you pardon me? Die gracefully is of course an issue, right? But I mean to system in Japan is perfectly functional, right? So now you've got a clean slate of a younger generation that actually starts out almost like it was during the major restoration when Japan started from a clean slate. This young generation now is leaving the Ministry of Finance to join a start up is not going to Mitsubishi Corporation, but it is setting up a new company. So that's where I think, you know, this fear of Oh my God, technology is going to create greater, you know, gap between rich and poor, right? In Japan, ironically, because of the demographics very, very mitigated. And would you say the same for immigration? The point on immigration that people are more open minded to it now? Because they recognize that, hey, if you have a choice of not having your diapers changed or having your diapers changed, you're going to go for the diapers change. The Japanese are incredibly pragmatic. Let me ask you, we have a choice. It's really fascinating. So you mentioned that the economy looks like it's growing above, you know, its potential. Um What is its its potential and how much longer do you think it can continue to grow above potential? So for two or three decades, our potential growth rate is uh hovering around 0.5% or something that is slightly positive but not over the 1%. But if we can concur the challenge is aging populations, some metabolism kind of things, probably we can reach about 1% or more than that. I don't say we can equally strong with the US or something. This is the key point. I mean, this is not a high gross economy, I'm more bullish than you not than the Bank of Japan, which is supposed to be conservative. I think the potential growth rate is about one and a quarter percent. You know, when I say that in front of economists they always throw me out of the room, but look at the amount of investment and at the amount of labor mobilization, including immigration that actually is going on, right? But the key issue, right? Um you know, from sort of a Japan perspective over the next couple of years, in my personal opinion, I actually think that the risk that the Bank of Japan is behind the curve. Right? That indeed, yes, you're cautious. Yes. After 30 years of feeding on the trough of zero interest rates, you want to be careful. It's like putting somebody out of the emergency ward. But the reality of the structural tightness in the labor market right is probably raising in my opinion, the risk of a wage price spiral and that's actually why the yen continues to be very weak because, you know, real interest rates, right, actually continue right to move against the Japanese Yen, right? Because inflation is running way faster and potential inflation is running way faster than is anticipated. Wow, it will be amazing to watch and see how all this come to Tokyo. It's the greatest place on earth. Thank you both so much for sharing your insights.

Roger Atkins, Founder, Electric Vehicles Outlook (Appearing Virtually) Christopher Beddor, Deputy China Research Director, Gaveka Paul Gong,  Executive Director, Autos Research, Ubs

Innovation Forum 2024: Winning The Global Ev Race

Innovation Forum 2024: Who’s Winning The Global Ev Race?

Hey, everyone, very excited about this panel. I think we all kind of woke up to uh the strength of the Chinese ev sector in the past year. Um I want to start by by pointing out two milestones and the first milestone I would like Chris to respond to last year, China became the world's top auto exporter beating out Japan how much of that is due to evs uh it's basically fully an EV story. Um So the story of China's auto sector is basically that prior to about 2021 the entire industry in terms of production was actually on something of a slight down slope. Uh And then the EV transition happened. So I realized that most people have just kind of attuned to it over the past year or so, but it's actually been going on since about uh you can date it at various points. But we, we take about 2021 as really the the key moment and that growth has been almost entirely from EVs. Uh So what you're looking at is every single year, consumers within China have bought about 2 million more evs than the previous year. Give or take. Um at the same time, uh industrial internal combustion engine vehicles have actually been in decline. The transition has been so rapid that many of the legacy automakers are actually left with excess spare capacity. So they've been started exporting that abroad. So the exports start again around 2021 is when you start to see the increase. And that's es which has caught all the news, but it's also just legacy it vehicles as well. So where we are right now is sort of the inevitable discussions about. Ok, well, have we been producing too much? Is there excess capacity? How many price cuts are manufacturers going to have to give? Uh is there going to be market exits? And then of course, abroad, you're seeing the discussions about what do we do with these extremely competitive Chinese evs and I want to bring in Paul now and I want to thank Paul for giving us your time as you're heading to the airport later today. Um But I want to ask you about the other big milestone last year, which was Byd, beating Tesla as the world's largest seller of battery electric vehicles. And that's specifically saying that because I know in terms of all electric vehicles that beat Tesla ages ago, but, but you know, is Byd just built different, what is it about this company that's made it so successful? Yeah, sure. Um Well, at U Bs, we like to tear down ev five years ago, we had the Tesla Model three tear down and we were shocked how much Tesla was ahead in terms of technology leadership. It was several years ahead. But last year when we had the by DC O tear down this time, we find basically there is little gap of the technology but just different priorities. For example, the Tesla will might prioritize the top speed byp has a bigger space. Tesla has better autom driving a function while BYP has five G connection and the infotainment system that is better. But more importantly is when we find this BYD built by BC O which is highly comparable to the model three as a medium size, its cost is about 15% lower even than the Tesla Shanghai factory production. Thanks to the system integration, thanks to the smart design. And so we were shocked how fast Boyd has caught up in terms of this gap. And behind of that at the moment of our TRB ID has 70,000 R and D engineers as a comparative Tesla has 120,000 total number of employees including workers and sales people. And they recruited another 30,000 last year from the fresh grad. And yesterday, the report is fine annual report that was 100,000 R and D engineers that is the biggest team in the world and almost fully dedicated within the EV and the supply chain. Um I want to bring in Roger for this next question because we talk a lot about EV companies, car makers, but there's more into the car than just, you know, the car, there's components and there's the batteries. Um How is the battery making sector being transformed by this big EV boom? Uh Well, good evening everybody. Hello, Nicholas and, and to add to my panel, um my fellow panelists this all began actually in really 2015 or a little bit before it was all part of the made in China 2025 ambition. And at the heart of that indeed is the battery. Uh So if you look at how China has developed the one thing they've done incredibly successfully as have Tesla is vertical integration is the ability to have the ecosystem which is very much centered around the battery. So when you look at the development in China of companies like Byd, like CATL, like a number of other key companies that's at the core of why Asia now in general, because you've seen similar activity, of course in, in South Korea and in Japan, um very much to a lesser extent, but certainly more advanced than, than Europe. So Europe now is playing a frantic game of catch up and the vertical integration isn't just about making a battery. Of course, there's the downstream and upstream sides to both of those things and the critical minerals focus again that China put into that made in China 2025 plan is at the heart is at the core of where this all is. So I would say it's about having long term strategic thinking, it's about having vertical integration. And then the other core part which is only now emerging is joining up the renewable energy revolution, new energy with electric vehicles, with the battery in the middle. So the battery then becomes part of that system if you like it enhances both new mobility and new energy. And I think it's quite, it's quite useful in many ways that the Chinese call their electric vehicles, new energy vehicles, not ev si think that's a very, that's visionary quite frankly. So II I do want to stick on this topic of industrial policy. You know, EVs are now one of it's like solar, it's like wind, it's an area where China made a very big long term bet and it appears to be successful. Um But now you know that they're starting to withdraw support, Robin Zung was to the media talking about how the market to be much more market driven going forward. You know what as Beijing kind of changed its approach to the sector, how is EV is going to change, going to be in the next few years and maybe Chris, you can, you can take that question. Yeah, I think that so where we're at in this movie right now is that you do hear a lot of talk within the government about the potential for, maybe there is excess capacity and maybe we do need to take some steps to, uh, to address that. So, some of the things that the government is doing at this point is, uh, they've already removed cash subsidies. Um, they are capping the, um, the exemption that you get on auto taxes and they're going to lower that. So basically taking away incentives uh that they had put in place and Paul is exactly right. This is essentially a creature of industrial policy at some level. Um But at the end of the day, I mean, what's happening here just like you said, it's happened before with solar. Um and it's happening now with evs, uh China is essentially doubling down on industrial policy. Um EVs are kind of the topic of the moment, there'll be something else, uh you know, after evs um and ultimately how this resolves itself is uh through, you know, prices going down market, clearing and so forth, some manufacturers will probably exit the market. Um So I think that we're, we're sort of like midway through this movie. Um But I think we still got a ways to go. Um I want to go back to you Roger. Um You know, again, the headlines right now, the discussion about companies invest a lot in evs, but now maybe there's some overinvestment of overcapacity, uh dealers in the US are complaining about ev staying on lots. Um And we've seen this cycle before where in the cycle do you think we are in terms of ev demand and, and customer um interest in evs? I really, that's at the heart of this, this whole arena now. I think it's a great question. Um, cycles, you know, we've seen many cycles in human history, you know, in human history, the rise and fall of empire, um economic cycles, the previous panel was talking about where we are, you know, Japan interest rates, the global economic system and yeah, cycles are what they are. And within the automotive industry, I've been in that 40 years, half of that time has been in and around electric vehicles. I've seen a number of cycles but the two big differences, I think now that sit over what happens next are climate change because that hasn't happened at all in human history before. So that cuts right across a number of these cycles, how they work and why they work. And then the other one a bit as the panel were alluding to earlier is demographics, an aging population changes so much. So my personal view, I suppose it's a professional view because that's kind of what I do. Um is I don't think massive option of electric vehicles should or will ever happen. And the reason for saying that is I think the the bigger shift is going to be towards the artificial inspired um uh driverless vehicle technology, uh ride sharing, etcetera, etcetera. Because if you combine an increasingly urbanized city based global population as an aging population with a number of other factors which I won't go through them all. And I think it all leads you down to that. What's that phrase? Uh Necessity is the mother of invention? Um, so I, I don't think we're ever gonna see mass adoption of evs because I don't think that the global car market of 80 million a year is ever gonna be that big again. I think it's gonna come down to 70 60 50 40 million because we'll have, we'll just share more because we have to and I, I want to ask a similar question to you, Paul. Um looking at China specifically, you know, the China Car Association, I believe they're predicting 25% ev growth this year compared to 36% last year and 96% the year before that. So slowing down. Um What does that mean for China's EV sector? You know, a lot of these loss making companies, there's profitability concerns, there's a price war going on as ev growth in China slows, what does that mean for the industry? Well, I mean, from the growth rate point of view because nowadays you have a bigger base. So it seems that the growth rate might slow down a little bit, which might not necessarily be the case because you are going to have another rebalancing of the pricing and the declining of the DC M price as well as the supply chain efficiency. Again, that could bring the UV back into the competitiveness versus the ice car. Again, um What we are seeing is uh the penetration rate continues to raise B to high single DJ or about 10% every single year. And uh the growth slowdown is more like a de or base rather than really a significant slowdown. I think there is a huge difference between China versus the Western market right now. What we are saying is in Europe and in us, the subsidies or the uh is either existing in Germany or tightening in France or us. But in China, the carmakers has really brought down the e cost back on par versus the ice and the introduction and the market competition has made them so competitive that it is indeed going to be fully. Yeah. Uh you know, another, another question for you, Paul that we were talking earlier, you know, there's this, there's this big battery electric vehicle versus hybrid vehicle debate um in the global ev sector, you know, everyone talks about Toyota made this big kept with hybrids, everyone made fun of them and now they have record sales. Um What's the EV versus hybrid discussion like in China? Um It's more or less really leaving to the market to design. Uh Just now. Um Roger has emphasized the made in China 2025 the government policies, but I think what has been underappreciated in this market is really the market for the competition. When you consider that the US is like 1 million a year. Tesla has more than half the market share in Europe. You have Volkswagen and these traditional car makers. But in China, Tesla is just 10% out of this 9 million units, Volkswagen. Less than 5% 85% of them are Chinese, the start up the incumbent transformation, the joining of the tech giant all in this fierce competition. And of course, not everyone is going to make but the excited it is this a market force that has bought the innovation efficiency again. And when you mentioned about this planing hybrid, actually, the government never plan the extended range electric vehicle, never in the plant, but it was the the auto that bought this and it was a market force that brought this into the center stage. Um But Nicholas can I just say in terms of cycles, we've been here before. Um history teaches us a lot in the United States when Henry Ford initiated the internal combustion indus industry uh for a number of decades. In the 19 twenties and thirties, there were hundreds and hundreds of car companies just like there've been lots hundreds of electric vehicle companies in China. And what happened is over time, they all, they all diminish because and then you know, the cream rises to the top that happens. And also what we've seen before was when China uh Japan had its export onslaught into the United States and Europe back in the 19 seventies and eighties. Um the Europeans then the Americans as well uh imposed tariffs. And then the way the Japanese got around that was to embed facilities, production plants in those locations. We're now already seeing that with Byd in Hungary, for example, building batteries. So, so if you like the play, we've seen it before. This story, this movie that my friends have. Uh I like the description, by the way, movie we've in these scenes before different access, same scene. Um It's good, you mentioned be waiting hungry because um there is obviously this like overseas expansion in terms of sales and in terms of manufacturing, that's potentially triggering a protectionist backlash in Europe in the US, potentially even like Brazil, you know, very quickly, Chris, I mean, should China's Ed companies be worried about this backlash or will it just kind of play out? Ok. Oh, they should be, I think they already are. Um So there's protection is upcoming. It's really just a question of how much. Uh so I think the focus right now is of course on the EU um and its anti subsidy probe into Chinese uh Chinese autos. Um Also, you're hearing noises from the Biden administration as you mentioned, Brazil. Um So it's really, I mean, we, we basically agree with consensus that you'll see more tariffs saying in the Eu um that said, I think that, you know how they're responding in terms of locating more production facilities abroad. That's the right way to go. I also think that the key factor is going to be the demand in other emerging markets. And there, you've got a really mixed picture. I mean, you've got a group of countries like uh like South Africa, like Indonesia that maybe don't want to scrutinize Chinese imports too much because they sell other things to China. You've got a group that maybe uh like Russia depends on China for other needs. Um So really, once you go through all that list of emerging markets and think through what are the protectionists like, how likely is that? Is that to be uh you get a very, very mixed picture. Final word Chris, very quick. We talked about China having an industrial policy playbook for solar for wind, for evs. Are we going to see it again in another industry? Yes, that's, that's the easiest question you asked. Uh um So I think uh just, just my two cents would be like uh I think that China is currently doubling down on industrial policy. I think that what you're seeing in EVs is of course a story about Chinese CV S and EVs more broadly. Uh but it's also a story about how China conducts industrial policy. Um as Paul mentioned, there is a lot of market forces in there, but there's also a tremendous amount of, I mean, it's a Leninist system, you know, the, the central leadership will say we want to target a certain industry. Everyone focuses on that it's conducted in a campaign style. They go forward at some point. There's a recognition we've gone too far. They pull it back. I think we're currently sort of in the process of that for evs. But the key is that what you're seeing in evs is just a preview. So they're doubling down, there's gonna be more to come. Um So can I just say, I think this whole thing is about energy, it's about resources. It, it always has been, that's the way the world's always worked. So I think the battery and this marriage between new mobility and energy. That's the key. Yeah. So we're at the end of our journey for evs and we should charge ahead to our next session. But before that, I want everyone to thank Chris Paul and Roger for joining us today.

Jing Guangjun, Chairman, Guangzhou Industrial Investment Holdings Group  Liu Libin, Deputy General Manager, Guangdong Guangxin Holdings Group   Shen Minggao, Chief Global Economist, Dean, Industrial Research Institute, Gf Securities. Wilson Pang, Head Of Kpmg China Gba Strategy & Development Office, Kpmg Moderated By Wang Fang, Fortune China

Innovation Forum 2024: China’s Greater Bay Area As Innovation Catalyst

Jing Guangjun, Guangzhou Industrial Investment Holdings Group, Liu Libin, Guangdong Guangxin Holdings Group  Shen Minggao, Industrial Research Institute, Gf Securities. Wilson Pang, Kpmg

The first a reminder this session will be conducted in Chinese. Uh So if you need the headphone, uh they're on the table for your use. Um So today we are going to use Chinese to do this panel. And if you're not familiar with Greater Bay Area, I want to use a certain number to tell you what the Greater Bay area is. It includes two SARS Hong Kong and Macao, as well as nine cities in Guangdong province. So um the size is similar to Netherlands and the population is the size of Germany and the GDP is equal equals Korea. OK. And um if we regard it as an economy, it is, it has ranked top within top 10 and it covers 1% of the of China's area, 6% of the population, 11% of GDP. And it is home to the world class factory uh manufacturer Guangzhou and it is also home to Hong Kong. Um Hong Kong, Shenzhen and Macau. So the Greater Bay Area is really big, consisting of unique, different country, uh different cities. So my first question goes to Doctor Shen, you once mentioned that in one area. Uh the Greater Bay area is the only area consisting of three world class cities in a single area. Ah Yes, of course. Our government really wants to make the Greater Bay area the world class Bay area. We have three world class cities in the in this single Greater Bay area that is they are Guangzhou, Shenzhen and Hong Kong Sar. So we have a really vast range of application scenarios in the Pearl River Delta. So Hong Kong is adjacent to one of the largest supply chain in China. And we in Hong Kong itself will provide a large financial market. So we want to build the greater Bay area as a offshore um a offshore market while with uh backed by the economic development in the Chinese mainland. So that means Hong Kong will strengthen its connection with the international capital market while strengthening its affinity to the Chinese mainland. Ah So that's a very good start. Um You've mentioned about the size of the Greater Bay area as well as the role played by Hong Kong in the Greater Bay area. And today we also have two delegates from a real economy, real economic entity. So we can start from Mr Liu Li Bing from Guangdong, Guangdong Guangxi holdings group. Are you actually from a provincial state owned investment group and now in the Greater Bay Area due to different policies, the flow of the capital and the flow of talents are more convenient. So how do you benefit from this kind of flow. How do you benefit from the development of Greater Bay Area as a whole? Oh, thank you, Guangxi. Our company is a provincial ah state owned enterprise in Guangdong Province. We are located in the Greater Bay area and we have been benefited from the development of this area as a whole. We've made several adjustments to our company. So here are two things I want to mention. First, we hope that our company could become the leader in the emerging industries of the Greater Bay area. And secondly, I hope that we need to start from the Greater Bay area and expand our global market. So during the past few years, our investment strategies have been shifted from the traditional me methodologies. There are something new changes going on, for example, um two months ago, we have finished, we have finished the investment over a semi semiconductor material um company in China. We will help this semi conduct conductor company to settle down in the Greater Bay area and we will uh further leverage relative policies. In addition, we also invested in materials for NEVS as well as for uh energy storage. So we, I think through the investment in this new newly emerging industries, we can benefit a lot and there are also a lot of emerging enterprises in the Greater Bay Area as well, proposing much opportunities for us. Secondly, we um hope that we can start from Greater Bay area. The Greater Bay area is just a starting point for us. We hope that uh starting from here, we can have more investments in overseas market like Southeast Asia, Europe and Africa. And we need to um shift our manufacturing capacities overseas. I and also we we need to learn from our international counterparts. For example, there are lots of like advanced international enterprises, they have advanced technologies and in the Greater Bay Area, we have materials so we can com be, be complimentary to each other. We can form a synergy with international counterparts. So as to improve our overall capacity altogether, um and strong enterprises will build a strong Greater Bay area. Uh So Guang Xing is actually a state owned capital and thank you for sharing your insights in the Greater Bay area. So uh there are two folds of perspectives of uh uh things that you need to do. One is that you need to empower other companies like uh in terms of the new productive forces. And second, you want to expand your international market. Now, next question goes to Mr Jing, your company is also backed by the state owned capital and I know that you are also a member to the C PC CC, right? Uh I believe that you have uh put forward many proposals that related to the infrastructure of the Greater Bay area. So I would like to hear from you about the relationship between the Greater Bay area and your company. Um It is a great time for me to join the round table here. Um for today's meeting, I think that Chinese seems to be a uh language, a language that not many people speak of. Um Actually, that's a good question raised by the moderator for our company. We actually share the dividends of the development of the Greater Bay area and we are now focusing on the investments uh of advanced manufacturing, including the new energy, new materials or high end equipment, as well as the industrial intelligence and so on. So during the development of the Greater Bay area, um I the two uh the most prominent benefits that we enjoy is that first of all, in the Greater Bay area, the industry chain is relatively complete. For example, the uh the industrial chain in uh electronic devices, all kinds of three c consumer electronics products. For example, when there is an order 20 within 24 hours, we can complete the design and the proving of the preliminary prototype to the delivery of the product. So the efficiency is very high. Um And in the Greater Bay area, the whole industrial chain is quite complete. Thank you. And I I, as I remember that last year, you have mentioned in an interview about the policies inside the Greater Bay area. So can you further explain on that? For example, from the perspective of industry, how can the Greater Bay area do better in connectivity? So I think that the competitiveness of the Greater Bay area lies in the high end industrial eco ecosystem, actually the competition between different industries, they are not the competition between uh between single enterprises. However, we focus more on the, you know, the synergy, the corporation within the whole ecosystem. And in the future, for example, we have talked about innovation, talk about artificial intelligence, right? So we believe artificial intelligence will be the most valuable factor in the future. So how can we realize the mobility of data? How can we realize the transformation of value in terms of data? That's quite important. So we really need to focus on the new uh driving force, the new business model, the new landscape. How can we find a endogenous driving force? I believe that the next the new generation of artificial intelligence and data with large models as a core will be the embodiment of the of this value process, right? You have mentioned about the mobility of technology, the mobility of data. So I think that is a question of mobility of human resources, capital and materials. And now I would like to raise my question to Doctor Shen. Uh actually I have talked to you offline recently and we can see there are a lot of financial arrangements. So can you further elaborate on your opinion just now because Hong Kong is actually a offshore RMB market for China. However, in terms of the GEO opposition Hong Kong is just next to the Guangdong province. So the geo geo geography position is quite unique for Hong Kong. So what kind of capital or what kind of the role should Hong Kong play in the development of economy? Actually, there are many mechanisms for interconnection between Hong Kong and the mainland. For example, the stock connect um the bond connect the wealth management connects, right? However, this money are quite scattered. I think from the perspective of capital market, we need to connect all these like stock nes or bond connects, we need to put all this money together that will require a innovation or a reform. And from the perspective of the Greater Bay area, what do we need? First of all, we need capital for technology, we need the money but this money is no longer the concept we have mentioned before. This capital should be well aware of the technology should be well aware of the industrial application scenarios and should also be well aware of the pricing risks of new technologies. Meaning that if I invest $1 in this market or in this enterprise, I really want to see the value added here. So I think Hong Kong can provide this kind of money. And on the other hand, because the mainland is on a precision or the process of long term transformation. So I think we need capital with patience to be part of the transformation and development of the mainland. I think Hong Kong has an advantage because there are many different types of investors around the world. Some capital are quite are patient, some others are not. So I think Hong Kong can better serve as the superconductor to connect the industrial application scenarios in Hong Kong as well as in the Greater Bay area. So the capital, the the technology capital you have mentioned that actually you are saying that Hong Kong can serve as an international financial center, but they can also serve a harbor for talent, it can better facilitate the development. So whenever the capital enter from Hong Kong to the mainland, they can have better understanding towards the technology, right? And we have another guest Wilson from Hong Kong. Uh you are also a member to the C PC CC. So can you share with us about the Hong Kong's unique position in the GB A? And what is the role? Uh Thank you for your question. I believe that every one of you have heard of the structure of the Greater Bay area, right? That is nine plus 29 cities from the mainland and two sar namely Hong Kong. I said I'm A CS A R but the Greater Bay area is not a area for the mainland. It's a world class Bay area, right? So the the name world class require Hong Kong and Macau to contribute. We want to contribute to promote the Greater Bay area become a really international one So whether Hong Kong serves as the International Financial Center or uh International Innovation Center, we hope that Hong Kong can better help the Greater Bay area to go global. So can you provide us some specific measures or some use cases? Ok. Uh Actually, you have listened to the talk provided by previous speakers, we have talked about innovation, right? Actually, today's forum is called Innovation Forum. We have touched upon a lot of new technology. Uh however, in a just concluded two sessions, they put forward new concept called new Quality Productive Force. They they talked about three factors namely technology, talent and education and you can find all three factors in in Hong Kong. And we boast the technology, the talent and education here in Hong Kong. So here in Hong Kong, if we have some like technology or technical uh results, we can apply this tech technical results in the industry. And when the industry use money, this money can be put forward for financing so we can get the whole circulation going. So the whole circulation can help Hong Kong to maintain its positioning as a superconductor. Um Actually I have, I have a I have read a report saying that many young people from Hong Kong are going to shop in the Sam's Club in Shenzhen. So that's that's a reverse trend compared with what we see several years ago when people from the mainland come to shop in Hong Kong. So the reason why we saw this kind of changes is that first of all, um it is quite convenient for us to go through the custom clearance. The second uh the second reason is that you can join the uh traveling Group. Whenever you finish the shopping in Shenzhen, this traveling group agency can help us to deliver all the things we buy back to Hong Kong, right? So this is a so called one hour life circle. And inside this one hour life circle, the mobility of people of vehicles, of goods is quite is of high efficiency. So my question is that how can we attract talent for the Greater Bay area? For example, uh we know that because I have, I have been living in Hong Kong and I know how Hong Kong will attract people to work and live and stay here. So my question is that Hong Kong, how can Hong Kong better attract talent and to uh to divert this talent to the mainland so that these talents can both work and live in Hong Kong as well as the mainland. Uh right. Actually, I have talked to a fund manager from Israeli Fund Manager, he staying in Shenzhen and he has mentioned a really important point. Now the innovation process has been changed. So the mindset should also change. We should provide or arrange innovation process according or per upon the demands of the talent and many enterprises tell me that they want to build a innovation center wherever there is a large amount of talent. So I think since Hong Kong boasts a large amount of talent, Hong Kong should better serve these talents. When more and more young innovative talents gather together here in Hong Kong, then they can better they can provide services to the mainland. So for Hong Kong, first of all, they need to attract many people here in Hong Kong and then send these people to the mainland or let them work conveniently let them commute conveniently between Hong Kong and the mainland. Um Actually there are many specific procedure uh process or measures, for example, uh for those enterprises registered in Hong Kong, we can grant them a um a reservation in the mainland or provide them some convenient policies when they are doing business in the mainland. So I think Hong Kong can definitely give full play to its own advantages. And I think the greater Bay area will definitely become a world class area around the world. So I really, I really agree with you on your point that wherever the talents are, we should set up the innovation hubs there. So my question is goes to Mr Liu that can you share with us about a cases that how can the greater Bay area make use of different talent resources? Right? I think the greater Bay area not only boasts the excellent ports and facilities, but we should also lay out uh have the layout in advanced productivity. If we want to pursue advanced productivity, we should definitely relied on talent and innovation. So we are quite delighted to see that in the past few years, we have gather a large amount of talent here in the Greater Bay area with the establishment of like new universities, new uh research in the institutions. So for our company for Guangxi, we are a greater Bay area based enterprises, right? So we have a business sector like in biotechnology and food technology. So we set up an institute in Guangming Street in Shenzhen. The reason why we choose Shenzhen is that because I think Shenzhen is considered as the Silicon Valley in China, right? So under this backdrop, we hope that the setting of our headquarters or our institute in Shenzhen can benefit the gathering of the talent. Um so we can establish a favorable environment so as to uh better attract more talent to come here and to generate more results for the whole industry. In addition to that, we have also participated into the establishment of uh a um bio biological bio manufacturing innovation center. We are one of the shareholder of that and also we have teamed up with NL and thats all you know, it's a globally renowned food company. And several years ago, they reached out to us because our company was doing uh is doing fermentation extraction. So the team of NSO came to us to talk about the co collaboration over a natural food development. So the both sides have strengthened our uh research and development and worked out together to develop some new products. And um this new products have been manufactured in more than 400 factories of nasal. So they are using your technology, right. Yes, they are using our technology. We are actually uh we work together to develop this technology and they use this technology to produce that food. So it's a very good example of collaboration. Um So in the future, we can enhance collaboration like this and to leverage our advantages, uh we need to increase our R and D and attract more talent. Uh Of course, we will always stay in close contact with international companies in terms of uh our research and development, in terms of uh for application of the technologies. So um for the enterprises to go global or to collaborate with other enterprises. So the Greater Bay Area, the enterprises in Greater Bay area is actually backed by the whole bay. Um So due to time limit, I will ask the last round of question just now. A lot of people saying that the Chinese government aims to build the Greater Bay area into the top greater top Bay area in the world. Um And the Chinese government can always fulfill its commitment. So what's your expectation on that or do you have anything that you think the government should do? What? But they haven't done yet for example. Um let me give you an example maybe um in the future, the Chinese government can open the um can allow more of the Philippine maid to come into the Chinese mainland. But that's just an example. You don't need to respond to that. Ah I think the greater Bay area has already become a world class area due to the participation of Hong Kong. But there is one thing that we need to uh there is one challenge that we need to address very urgently because we are the greater Bay area consists of three jurisdictions, three different law systems and three kinds of currencies. So how can we establish, how can we truly integrate these three areas altogether? Um For example, like for the enterprises, go uh go go public in Hong, in Hong Kong or in the Shanghai, they need to have a different regulations to follow. Uh Well, I think high level integration and connectivity have been the buzzword for there for many, many um for many years. So what we need to do is to really practice this connectivity, to have the connectivity of capital and the connectivity of talents. Well, I think in addition to the interconnection of capital and talent, another thing we should do is that we need to have the facilitate the flow of the advanced manufacturing of productive forces. Uh I think we also need to have a first class industrial ecology and the sharing of the global value Uh So that's all for the session. And thank you again for your sharing. Uh Please stay here. I have announcement and when we come back, we will talk about whether Japan is back with a senior official from that nation's central bank and one of the West's most distinguished experts on the Japanese economy. Our program will reconvene at 4 p.m. See you, then we will take a short break. Thank you. See you go.

Dane Cheng, Executive Director, Hong Kong Tourism Board Poman Lo, Vice Chairman And Managing Director, Regal Hotels Group Munekatsu Ota, Chief Executive Officer, Rakuten Travel Xchange Jane Sun, Chief Executive Officer, Trip.Com Group Moderated By Diane Brady, Fortune 

Innovation Forum 2024: Reimagining Tourism And Travel

Dane Cheng, Hong Kong Tourism Board, Poman Lo, Regal Hotels Group, Munekatsu Ota, Rakuten Travel Xchange, Jane Sun, Trip.Com Group

Thank you very much. Again, I feel like any, any panel on travel, travel is such a personal passion. I feel I have to put all of our panelists on the spot on a personal level. First of all, to say, what, what is your and you're not allowed to say Hong Kong, by the way, Dame, what is your favorite type of travel or destination on a personal level for myself? I'm no different from a lot of our Hong Kong. You know, friends that Japan is always my one of my favorite destination because a lot of the things you have to be there to experience and they have all sort of, you know, many different levels and layers and aspects of uh experiences. So Japan and particularly the most important thing we know in the industry. Number one thing for travel is currency, currency. OK. There you go. And we will have a discussion of the Yen. No. Um Paul. And how about you? I don't have a particular place in mind, but I think um it will have to be first of all sustainable. Um And that it can be ideally a leisure trip followed following a business trip. So they're more mission saved. Um That's number one. And secondly, a balance between culture and tradition and innovation, um meaning and innovation. So a place with culture, but with also new attractions in modern architecture. And thirdly a balance between activity and some moments for mindful reflection. OK. That's gonna be hard to talk, by the way. Congratulations on your One Earth Summit. Thank you. So I thought that was very powerful. Oh to Sun. How about you? And again, you are not allowed to say Japan or in Singapore. I know that. But I'm Japanese, of course, Japan is a very good destination of especially so this timing is very, very good for foreign to come to Japan. So Japan is very weak then. So in Japan, so many so attractive point. But now I'm living in Singapore and then I like the beach resort then. So this year I visit Phuket. Yeah, it's a very nice place. And then, yeah, thank you very much. This is the Phuket tourism, big type of dinner with my family. And then we stay in the same. So and then we stay on the base for long time with the family and then watching the TV. And I order the cuisine and the drink and then so everything to the restaurant and the restaurant that brings us for every cuisine going to my house. And I spend much time with my son and wife and then I enjoy the beaches. It's a perfect destination. Of course, Singapore has been nice. Yeah. Ok. Good. That we know exactly how to serve you on your perfect vacation. And that's good. Yeah, I just went to South Paul. If you're into Chinese New Year with my family. It's fascinating. But, uh, I love Africa safari. Yes. I mean, that was my last trip too. Well, I, I love that because I do think it's very personal and I wanted so Jane, let me go to you. One of the things we're talking about reimagining here. I wanna ask you first, what has really changed when you look at travel patterns, you know, people, a lot of people talk about the pandemic being this big pivot point. What are you seeing um for us in doing tourism marketing, that's exactly what you want to sort of um get a, get a grip on, you know, what, what's happening, what's going on, you know, the P reading and so on. And II, I think these, what's going to happen um after post pandemic for travel is something that for the last couple of years people have been, been watching and, but I, I must say what, what we see here in this part of the world may not be the whole picture, but just a couple of things I think number one, it's uh we haven't seen um the night vibes for Hong Kong to for example, to come back yet. I, I think the whole technology uh changes uh matures, you know, the whole development. So people have more choice. So we have to now compete with, you know, the, the Netflix and chilling at home, you can order food and so on. So you have to have very good reason to get people out of the house to actually travel, to see things. I think that's universal. You have heard people in New York complain about the same thing. Exactly. So secondly, is the shopping bit. So the shopping is very different now because everyone can order online from anywhere in the world, from the best in a price and everything, the right delivered in front of your door. So that's why we got a lot of our merchants in Hong Kong businesses complaining about, oh you said our tourists come back by 70% but our business is only back by 30%. So I think that that bit is also an important one. And the third thing is, as I said, people need very good reasons to travel. So events, you know, big events, small events, anything that can hit, you know, your interest. And you say, hey, I really want to go and do this and experience that then they will be willing to do that. That's a very good experience. Yeah, I've not been but I've heard. So what, what do you think? I agree. I think a lot of conferences, meetings have become hybrid. So even for those that used to be completely offline would often offer a live streaming or zoom option. So, what we're seeing is honestly, I think it's the people connection that cannot be replaced. Um So for leisure travel, obviously, you know, there's this carpet die mentality. So, you know, I think especially for the younger generation, as long as they have saved enough, they hop on the trip and in terms of business trips, I think um networking events are still very much appreciated. Uh I've seen that on our summit. I think every everyone is grabbing every chance to meet and connect with people. Um And I I would say for business development, people still would appreciate meeting off hand to first establish that connection. But if it's like purely work, I think a lot of that has been indeed replaced by Zoom. So obviously a complete change in focus. So oi I want to hear from you in terms of what you think, but talk also about racket and travel exchange. And I think that's something people may not be familiar with. And it's quite a different model, exchange, a new type of wholesale services for B to B subsidized for accommodation um in distribution. So we integrate over 700,000 so global hotel inventory into our platform. Then also we have left and travel services in Japan and the and T is the leading number one travel agent in Japan. And there are several hundreds of staff doing the support for the hotel and the new to secure the competitive inventory. Then we connect, then at the same time, we have over 1000. So sales are partners in over 90 countries that we try to connect to LA to Japan inventory to global sales network. And then now we are enhancing Japan inbound table and the same time now we are enhancing outbound travel and then global transactions. So what how does this reflect the different way people are traveling and how they want to have accommodation now? So in terms of the transaction, so nowadays, so people, so they like so wide and so they are to compare with Jane, what are you seeing? You actually, you're like one of the world's largest, you know, I'm not supposed to clarify. We don't, I don't think we need to explain crypto. Sure. So uh the new trend we have seen uh I call it three ss. Uh the first s is much smaller group uh rather than getting on the big bus with 50 strangers. Uh We have seen our customers much prefer to use tailor made tool or small family tour with a couple of friends. Uh The second one is more sustainable driven. Uh young people really pay attention to the product that is uh green driven. So we offer electronic vehicle for rental car. Uh We give them hotels for great hotels to choose. The third one is short booking window. Uh customers try to stay until the last minute to make the booking and in terms of products, uh young people focus a lot on happiness. So events, concerts uh get lots of attention, middle aged white collar customers prefer to choose wellness products. So high end hotels, Yon or Rosewood, which gives very good wellness program get a lot of attention and older generation. This is the first time people who have money who have time can travel. So we have seen uh old people who enjoy historical tools, uh cruise tools get lots of momentum. I love that the middle aged or the wellness and the older people are not. Yeah, you know, it's not so much. That's interesting. Does that resonate with you in terms of when you think about those different demographics? Talk about what you, you talked about some of the ways in which the consumers changed, talk about how Hong Kong has changed and the marketing strategy around how you're trying to meet the new needs of the market. There are a couple of uh um new or surprises or pleasant surprises. It's uh during the lockdown, we uh we have opened our West Kowloon Cultural District uh with the M PLUS Museum which is, you know, regional is one of the newest um um visual arts museum and also the Palace Museum for Hong Kong. Uh that gives us a very pleasant surprise because people come and then tell us the the survey and they say, hey, we got other than your, your, your traditional like dining and theme parks. Uh We really like your art and culture stuff. And the other area that we found it is the green nature and, and, and that's actually something that we notice, but we haven't actually promoting it that more. The millennial, which is Jane suggested, not only JZ but even for businessmen and particularly, I think it's actually been reminded to us by our colleagues in Europe UK and also the US, they said, hey, we come to Hong Kong people telling us that, you know, hustle bustle city, but within 20 minutes, 30 minutes hop onto a cab or a bus, we can go to a beach, go to, he was hiking the other day. Yes, so fantastic. So this is something to us is a pleasant uh you know, discovery. So we want to sort of promote that. So where people are doing like, like Pullman said, leisure business, you know, you can combine so a diversified experience. So one other thing because I want to get this with you when you think about that younger generation or whether it's the Tik Tok generation, as we're talking about reimagining travel, I feel like they engage differently with the environment. They have a different set of what excellence looks like, like, you know, even what types of restaurants they want to go to. Is that something that you're noticing? And, and I'm just curious because I think those are um universal lessons we can draw from how younger people want to consume. May maybe I just want use one example very simply uh not just Hong Kong, but also our friends in Macau were telling me that uh before pandemic, people would go to a Michelin Star restaurant, take a picture of the food they're having and so on and say I'm here with this very luxurious restaurant. But now things have changed. They would take a picture of themselves queuing up in front of a noodle store shop for like two hours to have that bowl of noodle. That's the finance secretary say there's more than 200 Michelin. So that's, well, there you go. Let's, here's some more noodle shops. That's interesting. Pa what are you seeing and also with the sustainability from a generational perspective? Are you seeing differences in the demand? Definitely. I think Gen Z as Dane says, I, I think they, they really appreciate values. So when a brand stands for values that resonate with them, um it really doesn't matter. Uh You know, what, what's the pricing? I think they have gone beyond that. Um It's, it's kind of somewhat even deeper can I ask because on a level, all of us like to have the same values. What's the challenge for you when you think about from a sustainability point of view, we rarely talk about the pain point from a travel perspective. So what would be some of the challenges in sort of implementing, you know, the type of sustainability that you want to have. So, of course, there's sometimes there's a bit of trade off, right, in terms of convenience and sustainability. Um And also during COVID, um it was very difficult to forego the use of one off uh disposable packaging, for example, the mask um you know, your your amenities in the room. But now that COVID is finally over, um we are moving towards completely, you know, plastic free across the industry. And it is possible because of technology, for example, guess how many plastic bottles we used to consume on an annual basis in Hong Kong alone across our 12 hotels. Oh my God, this is a test uh 1 million, no 3 million, 3 million over 3 million. But now that we have just invested in a in a water treatment uh technology company uh actually from Stanford, we can actually forego 3 million everybody there water filtration and there you go. Well, I think let's talk about innovation because I think that's obviously the theme of this um Otis on rocket and stay, which is basically uh not a human free experience but but talk about the technology that goes into that and how it feels different, say than an airbnb or yeah, basically la business model is simple key speaking new type of real estate investment business by using data and A I then I think I mentioned. We have LA and travel business in Japan is the number one travel agency in Japan. And we have a lot of data. Then we already have over 70 services and then we have 100 million membership in Japan. As you can see, total total population is 100 and 20 million, but we already have 100 million. So we have a lot of data. Now we are enhancing A I so utilizing A IG BT and then by using these data as we try to increase user expenses and then our investment, then we try to find the appropriate potential land by ourselves and then we design so property type and by by using data, then we manage uh property. So uh by using or IOT and then yeah, everything, everything is smart. That's well, I want, I want to do some lightning rounds I no time. But let's start with the lightning round on budget travel, you know, because it's, that's obviously been a big driver of travel. It's, it's um give me some sense of where budget travel sit right now and I'm gonna start with Jane and this will just be quick because I want to just do a few. Sure, sure. So budget travel is just like students like budget travel. We call them K being meaning uh special force. Uh the young people, they have backpack every day, they march through one city to another. So what we need to do is really connect them with the transportation vehicle which offers the best value high speed railway train M pr when they come to Hong Kong uh so that they can enjoy as much as possible. Anybody else on the way on budget travel, then what do you think? How important is that it is important? Um You know, we are under a lot of pressure by our businesses and said, hey, why are you promoting this and promoting that? People are not spending money, you know, they just want to come have a look and go back. But what we are trying to support and help the businesses is that um people will spend money if you have um a good uh proposition to them. So we bring in the people, the number you figure out how you want to attract them to spend money with your offers, any advice to you, budget travel? How I don't, is that an important market for you? Oh, totally. Um we actually launched ICL as our kind of limited service brand uh 2010 in 2010. So 13 years ago, it also happened to be the first carbon neutral hotel in Hong Kong since then, we have opened another six and it was a very uh resilient business model. I would say even during COVID, we remained profitable and I see that probably as the fastest growing brand within our portfolio because there's huge demand, people want affordable convenience and world class hospitality. So even I myself, I very seldom choose six star hotels when I travel. So with new rules, you know, implemented in China across the board, I think people get a bed. I'm just kidding beds here, by the way. Ok. Final thoughts, I'm going to go to you first Otis. And um it can be a prediction. It can be just what you're excited about innovation wise. What are some uh thoughts you want to convey to this audience in terms of messages around reimagining travel. So we want to expand the model and then it's like using the IOT and database and A I and two maximum investment and to maximum user satisfaction. There are new type of accommodation that we are enhancing in Japan. But from now we want to expand this business model, not Japan domestic only but global. Then in Hong Kong, Taiwan, other countries. So we want to expand this business. You're investing in Hong Kong we are looking for. Thank you. Yeah, I'm kidding. But that's excellent. So final thought from you. Sure, the most expensive tour trip.com sale cost about 200,000 us D per person per trip, 80 days around the world. Uh Guess how long did it take us to sell these packages? Uh 24 hours, 17 seconds and they bought one of those $200,000. No. Ok. Yeah. In the future, I love to bring our customers to the space. So I would love that I would love to go to space and I, what about you? I'm excited about the role that innovations can play in fostering both personal and planetary well being. So I think technology really helps us to better understand our customers preferences, their needs and take better care of them. So we want to take hospitality to the next level. And from a planetary point of view, I do think that technologies like prop tech, clean tech, um food tech can all really help us take better care of our planet as well. Do you want to go to space? No, I think we only have one of our home to you. I don't have any sort of big questions, but my very small would be actually for our friends or ot A because one of the major travel ot a founder actually been telling me about this. They are quite worried about the future of ot A sorry, because they think the social media is taking over so people can go to the social media, watch something very interesting in terms of the content and they can just book exactly right away. So do they really need to look at the content? They like it, then they go to search it? So I was wondering how it's going to pan out? That's very true. I actually had to open a because it is the most effective if that just intermediation. I think it's about reinvention and reimagining then too I, I do wanna ask one last question since we are here in Hong Kong. What do you think is gonna look different? Five years from now? Anything when you see the trends on the ground? How is the experience of being here gonna change? I I think what we will be seeing is that there'll be more people coming through Hong Kong, not just as a destination itself, but also as a hub going into our Great Bay area into China mainland or going out. I think uh you know, with, with our, you know, our international aviation, everything would be making it more convenient. So convenience hub is still the most key things for travel. Excellent and around the world in 80 days. That sounds very exciting. Please join me in thanking our panelists and happy travel everyone. Thank you. You run.

Vishal Harnal, Global Managing Partner, 500 Global Kathy Matsui, General Partner, Mpower Partners Weisheng Neo, General Partner, Qualgro Wei Zhou, Founding Managing Partner, Ccv Moderated By Jeff John Roberts, Fortune

Innovation Forum 2024: Venture Capitalists Predict Megatrends Of Tomorrow

Vishal Harnal, 500 Global, Kathy Matsui, Mpower Partners, Weisheng Neo, Qualgro Wei Zhou, Founding Managing Partner, Ccv Moderated By Jeff John Roberts, Fortune

Victor Chu, Ceo, First Eastern Investment Group Hong Hao, Partner, Chief Economist, Grow Investment Group Jesper Koll, Global Ambassador, Monex Group Jenny Lee, Managing Partner, Ggv Capital Moderated By Clay Chandler, Fortune

Innovation Forum 2024: Navigating Asia’s Choppy Markets

Victor Chu, First Eastern Investment Group Hong Hao, Chief Economist, Grow Investment Group Jesper Koll, Monex Group Jenny Lee, Managing Partner, Ggv Capital Moderated By Clay Chandler, Fortune

Bonnie Y Chan, Chief Executive Officer, Hong Kong Exchanges And Clearing Limited In Conversation With Clay Chandler, Fortune

Innovation Forum 2024: Hong Kong’s Next Chapter

Well, it is uh a real honor to have uh Bonnie Chen uh with us uh here this morning. Um Really delighted that you agree to make time for us. Bonnie uh Among her many uh distinctions is uh as, as Joe mentioned, the first female CEO uh of the uh Hong Kong uh exchange, I think that's worth applauding. Um And she's really uh extraordinary because she brings both legal knowledge and uh a breadth of knowledge as an operator of the actual exchange itself, the nuts and bolts, the technology, all of that, she's been deeply immersed in it at her role uh at the exchange to date. So um I want to start if I can just picking up on your, you know, being the first woman to run the exchange on this question of gender diversity uh at, at companies that trade on the exchange in Hong Kong. And I know this came up in the breakfast this morning, the most powerful women's breakfast. But since uh for the benefit of the men who weren't in that audience, I'd like to talk about that a little bit more. Now, there are something like 20,600 companies or so on the Hong Kong Exchange, as I understand it, about 500 of them. Tell me if my numbers are wrong are all male boards that the percentage of female directors on those companies is still somewhere around 16 17% compared to uh markets like uh you know, New York and London where it's over 30%. And even in Asia, I was reading that even Malaysia has a higher percentage than, than, than that, which is interesting. Um Can you, and you've been very actively involved in trying to uh bring Hong Kong up to global standards? And I wonder if you could talk a little bit about that, why you think it's important and, and what you're doing to change it? Thank you Clay. Very happy to answer that question. So, first of all, I don't think I need to talk about the benefits of diversity. I think by now it's well understood, you know, by all the men and women in this room. So let's talk about our journey in terms of advocating uh and uh bringing more favorable conditions uh to allow a higher participation by women on the boards of companies listed on our exchange. So like you said, we have 2600 you know, plus companies uh on our exchange at the moment, the journey actually started many years ago uh in 2019. Uh that was the year when we first made it a requirement for all the listed companies on our exchange to have a board diversity policy because it's always about, you know, tone from the top, you need to the board to start thinking about the issue before changes uh can happen. Uh And we looked at it, um, we didn't like the results because it was, you know, to be honest, a little too slow. Uh, in 2020 when we review the number of uh female directors on our uh on, on the boards of all the listed company, the percentage was at 14.6 which is a low number compared to, you know, like you mentioned in a lot of other markets, we are talking already 30% and above. So we discuss internally what can we do right to make a real difference and really uh uh you know, uh turn it out. Uh And we took a very unusual step, I would say uh many markets have their own ways of doing it. Um We became the first international exchange to actually make it a mandatory requirement to end single gender boards. And that was a rule we introduced in 2022. Um and we put together a grace period. Uh which means by the end of this year, 2024 all listed companies on our exchange uh must not have a single gender board. Now, when we introduced that rule, uh the number was standing at around 808 100 companies still with a single gender board that was about a year ago. Um By now, the number is slightly below 500 still still 500 more to go. But we are, we are hopeful because uh the, the A GM season is coming up. So usually that's the time around uh April and May is when um listed companies appoint new directors to their board. So hopefully by the end of this A GMC, we're going to uh see all companies on our exchange uh being compliant with the requirement. Now, we still have to think about how to punish those who remain non compliant by the end of the year. But that's a different topic. So we, we, you know, happy with the progress which has been made. What we really want to accomplish is um I would say this is really just a catalyst. I think once um companies start bringing more diversity into their boards, they will begin to realize the benefits of doing so and once they have done it, uh they, the benefits, that's when regulation actually can take, you know, a step back and, and let you know companies and, and board directors um do their their own journey. You haven't made any decisions yet about whether there will be financial panel or, I mean, you're not thinking of king these companies off the, off the exchange or anything like that. Well, we, no, I I think for a start, there will be some naming and shaming, that's important. I also think investors have a role to play because, you know, we we now uh obviously we are in dialogue with a lot of the stewardship, you know, around the world and investment funds and all that and, and you know, in the investment policy, they are now very focused on uh indicators such as diversity, right, that will dictate how they want to deploy capital. So I think while, you know, we can impose a rule, um companies will very quickly realize that, you know, they, they, they have to get on to the journey. Hm. Um ju just one more question quickly on this. Um I've asked a lot of people who are on the boards of companies to trade on the exchange, you know, why, why are you not in compliance, what's going on? And I hear a variety of different explanations and I, you know, sometimes people say, oh, well, it's a cultural difference. You can't really, you know, compare us to London or, or New York. And then some people say, well, it's because state owned enterprises and that's a different, you know, kind of mode for appointing directors at, at, at state owned enterprises. And then the other one I hear which I find really just incredi incredible and infuriating is, oh, we can't find good talent right? There are not enough uh qualified women to be on boards. Oh, we tried so hard. We couldn't find one. Do you do any of those explanations? Make sense to you? Uh Not really. I think they just need to look harder. Right. In the case of Hkex, we are a listed company. Um, we have 13 members on the board and you know, among the 13 of them, five are women. I don't think there was any difficulty in terms of identifying qualified women uh, to be on the boat. And actually to this comment, I always remind people, it's not, it's not AAA one way, you know, thing, it's a two way thing, right? So while companies may think that, oh, you know, there are no, no qualified women uh to sit on my board, they need to also realize that the women, you know, who are looking for directorships, they also have a choice. I mean, they are doing their own due diligence, they want to only join boards that they think it's worthwhile their time to do it, right? So maybe when these companies express AAA, you know, a thought that they are having difficulty recruiting women, they should really uh maybe do some, some self reflection, well said, well said, um so let's talk about the, the exchange in the markets a little bit if we can. Uh and I wanna be the first to stipulate that uh you know, I recognize that just because you're the boss of the exchange now doesn't mean that you control macroeconomics or geopolitics and you can't really determine whether the markets go up or whether they go down. But you're coming in at a very tough time. What was already a big, big job? I mean, just looking at some of the numbers of the hans and, you know, the end of last year had a 13 year low. The stocks have plunged for four years straight. Hpkex profits down almost 30% last year. The share price down 18% and we can talk a little bit about the IP pipeline and the difficulties there. But it's uh I guess one way of looking at it is saying, you know, you're coming in at the bottom of the market. But is it, I don't know, tell us what you expect for 2024 in terms of market. Well, I won't be able to tell you whether we have or not, but I would say, I think you're absolutely correct. There are a lot of challenges in front of us, but at the same time, I see even more opportunities. Ok. So why do I say that now if we take a very short time horizon? Yes, indeed. The last few years have been very challenging uh capital markets, especially in this interest rate environment, um struggles and it's not, I mean, it's a global phenomena. Uh Hong Kong is no exception. However, if one were to take a longer term view, uh I, I really see a lot of opportunities because at the end of the day, obviously in Hong Kong and for HKX, uh we always take pride in the fact that we are super connector. And when we say being you know, a superconductor, what are we exactly connecting you go to the very basics of an exchange is connecting capital with opportunities. So whoever has the money with the, whoever needs the money, right? You match them. And in the case of Hkex, we are very uniquely positioned because we are also a superconductor between China and the world. And so um if you were to take a longer term horizon uh in assessing this um you know, situation, I personally feel that, you know, we're still seeing a lot of growth coming out of China. Um you know, the latest uh uh forecast from the two sessions is that 5% for this year, you know, for an economy, which is the second largest in the world, that's a huge number, that's a huge number. And what is, you know, if you think about this 5% it's about, I mean, you're talking about a lot of companies which are still, you know, growing, right? I was listening very carefully to the previous few panels, whether they are talking about A I or other types of innovation. You know, there are just so many exciting companies uh still trying to um you know, figure out new products come up with new inventions and this will be a very strong supply of issuers down the road on the investor side. Uh I would say that the world is still very underweight in China. So if you think about foreign investors holding in um the Asia market at the moment, it's only about less than 5% of total market cap. I mean, compare that with Japan, for example, which is the third largest economy in the world, foreign investor holding is above 30%. Ok. So you know, I'll leave you guys with a thought. Um whether you believe the, you know, global investors are going to continue to keep their investment in China and the allocation of capital at a below 5% or they're going to eventually see the potential, see the growth in China and increase the allocation. Let me ask you quickly about what's happening with IP OS again, you know, last year tough for IP OS uh about 70 IP OS in Hong Kong, but the kind of uh net funds raised something like $5.7 billion. That's way down from previous years. Uh You dropped to Hong Kong dropped to about uh I think it's the eighth or ninth in the sixth in the global League table. Uh uh down from, you know, number one as recently as 2019. Um So what's um and uh you know, a little bit discouraging that we saw San uh kind of bail out of its plans for an IP O A lot of companies that would like to go public. Don't feel like they can do it in this market. Uh Are we going to have a better year this year? Do you think in the IP O? OK. To answer that question, you know, let's think about why the IP O market has been um somewhat muted in the last couple of years. Um Obviously, macroeconomic conditions, uh geopolitics have something to do with it. Uh interest rate environment also played a part uh what we have seen and you mentioned the figures of 73 is the total number of IP OS that was completed in Hong Kong last year in 2023 compared to 90 in 2022. Now. So in terms of the number of IP OS, the drop is not not that significant. However, fundraise like you said, has dropped two thirds compared uh if you compare 2023 to 2022. And it's understandable because, you know, we all know that uh valuations have come down quite significantly and this is a global phenomenon. So when you talk to entrepreneurs, I think a lot of them are still very keen to do the IP O and provide that exit venue for the pre IP O investors. However, they just don't want to sell their stock cheaply, right? So what we saw last year was uh in a lot of cases, companies still going ahead with their listing, but you know, they try to do a smaller IP O and uh hope, you know, they, they're just waiting for the right conditions to arrive and then they can do the follow on offering. And in the case of Hong Kong is pretty simple, you just do an overnight block trade. Now, if we sort of look at it in a broader context, and you mentioned the fact that, you know, we have dropped a few notches, you know, in the um uh globalized po league tables, what we have seen in the last couple of years is also a phenomena whereby a lot of companies around the world, they have chosen to live in the domestic market. Now, I don't know whether this is because of nationalism maybe or uh COVID actually had a part to play because, you know, I mean, traveling wasn't that easy. So uh that's why the league table in the last two years, you see a few uh especially Asian exchanges emerging and taking the the top few spots. However, as these companies continue to grow, uh they may reach a point where they, they have a need to tap deeper markets. Um And they may actually find that their domestic markets may not be able to uh support their fundraising needs. And that's when they may look to other global exchanges to do their, their second listing or their dual primary listing. And that's why we're investing a lot of time and energy uh to plant the seeds. Um You've seen that we, over the last year or two, we've signed a lot of mo us with, you know, uh quite a number of exchanges both in Southeast Asia and the Middle East. Um We have open offices in uh London as well as New York. We already have a uh an office in Singapore and, and this is really to set the stage and we are actively talking to a lot of issuers around the world would believe when um market conditions are more favorable, we should be quite well positioned to capture them. You've had some success with that so far, Prada. Um The what for the yacht maker? Um uh to name a few, but you're looking for uh a, a much bigger contingent of, of uh non Chinese for firms to come in the list. Yes, absolutely. And, and uh I think the last wave of international companies which came to Hong Kong, a lot of them are brand name companies, consumer, consumer space. Uh What we're very focused on. Uh it's really attracting the new economy companies we have already over the last few years, uh made significant improvements in our listing regime so that pre revenue, pre profit companies like the biotech space and the specialist technology space can achieve a list listing in Hong Kong. Um We believe that and we have seen a proliferation of these companies around the world, right? And these will all make very, very interesting candidates down the road. Um you know, to, uh you know, as IP O candidates. So we're very, very focused on, um speaking to them. That's really uh fascinating. I we'll have to leave it there. But uh I wanna wish you every success as you begin this new endeavor. I know there are a lot of people in the city who feel that they have a, a vested interest in that success and are wishing you uh very well. So we'll see how the year of the dragon uh continues to unfold. But thank you so much, Bonnie Chan for uh joining us. Thank you.

Scott Beaumont, President, Asia Pacific, Google Curtis Kim, Chief Executive Officer, Kakao Brain Jennifer Zhu Scott, Founding Partner, In.Capital Wen Shuhao, Co-Founder And Chairman, Xtalpi Moderated By Jo Ling Kent, Cbs News 

Innovation Forum 2024: Unlocking Asia's Ai Potential

Scott Beaumont, President, Asia Pacific, Google Curtis Kim, Chief Executive Officer, Kakao Brain Jennifer Zhu Scott, Founding Partner, In.Capital Wen Shuhao, Co-Founder And Chairman, Xtalpi 

Victor Fung, Chairman, Fung Investments Dipali Goenka, Managing Director And Ceo,  Welspun Living Limited Joseph Ngai, Chairman, Greater China, Mckinsey & Company Joey Wat, Chief Executive Officer, Yum China Holding Moderated By Clay Chandler, Fortune

Innovation Forum 2024: Business Strategies For An Age Of Upheaval

Victor Fung, Chairman, Fung Investments Dipali Goenka, Managing Director And Ceo, Welspun Living Limited Joseph Ngai, Chairman, Greater China, Mckinsey & Company Joey Wat, Chief Executive Officer, Yum China Holding Moderated By Clay Chandler, Fortune

Victor Fung, Fung Investments, Dipali Goenka,  Welspun Living Limited, Joseph Ngai, Greater China, Mckinsey & Company Joey Wat, Yum China Holding

Kathryn Mclay, President And Ceo, Walmart International In Conversation With Diane Brady, Ceo Initiative, Fortune

Innovation Forum 2024: Understanding The Global Consumer

Kathryn Mclay, President And Ceo, Walmart International, In Conversation With Diane Brady, Ceo Initiative, Fortune

I feel like we should start with like a, a Canadian and Australian walk into a ballroom to talk about how an American company is doing in China and the rest of the world. I don't know if the punch line is to that, but you are a global person to begin with. I want to start actually right with the title because you have so much data on customers and the consumers. What difference does the A I make? Can you give us some specificity because we do hear about it so much. You're on the ground, give us some stories and welcome. Well, thank you all for having us here. Um I think Walmart International is in 18 countries. Um We have 500,000 associates, we're serving millions of customers on a daily and weekly basis. And I think what we're seeing is across all of those markets, such different degrees of, I guess maturity. So um if I think about we're in Mexico, um really, we're running an omni channel retail business and the way we engage with customers in Mexico is to put kiosks in our stores because for some people, they don't have digital they don't have the internet. And so that's the best way for them to engage with us digitally. You, you um like, think then about what we're doing in um India, which is a digitally native marketplace, they're very, very different and different degrees of maturity and sophistication. And so I think when I think about the A I journey, um I think there's a lot of talk right now about generative A I, but we have to remember A I has been like in the lifeblood of most organizations for the last, you know, 10 years and um the, the advancements we've made in technology and productivity and engagement with our customers. It's entirely different on the back of really sophisticated A I tools. And so I'm excited about what ja I can bring, but I don't feel like the games just started. I feel like we're actually into kind of the third quarter. Well, it's a good point and you had four years, almost four years at Sam's Club as co before you came to this rule. I think you're what, seven months into this role, by the way, I think one of the most popular tours out of Hong Kong, you may know this is the two day Sam's club tour to Shenzhen. Did you know, have you done that? Well, I have toured the club in Shenzhen and I can understand why it is what it is. I mean, it's a great club. Is it so it's uh the retail Disney, I guess so. But tell me more about what did you learn from that experience that you've brought over to this? Because I, you were talking, we were talking about earlier about how you were deploying A I there. Yeah, I think, uh, I think two things that I learned out of Sam's Club. One was we had a chief technology officer that believed he needed to democratize A I and put it into all of our capabilities, whether it's the um the device that's in an associate's hand when they're working in Sam's Club or whether it's built into the experience a customer has in the app. So I think people just need to, it would be a lot more um conversant with working with A I and we used it typically to be able to work out what are the jobs that people don't like doing and how do you use A I to, to enable them to be um automated. So whether it was inventory management, recording inventory numbers, we put, we put cameras on scrubbers so that we could get a capture of inventory kind of multiple times a day. So I think that we've learned that that really, really works. I think um it doesn't work what doesn't work. Um I think, you know, right now, I think people are um struggling with how to work out what are the best use cases for generative A I and they wanna run at 500 things. So I think what you need to do is work out. What are the, what are the really important use cases that would be useful? How do you make sure you're building trust into engagement with generative A I? And how can you be very deliberate about how you deploy it? But one of the best ways I think to learn how to, to um find the best use cases is to actually ask your associates like it amazes me how many young associates we've got who for them, this is just like, you know, it's like drinking water. It's the, the, the most simplest thing that you could imagine. Um My son is 17 and he actually works at Sam's Club now. And really he comes home, he's at school and he does this like after school and he comes home and he's full of ideas of like mom. I was using it to correlate this data and it came up with this list and it is native for them. And I think we should learn from the younger generation as much as we're doing top down. You know, it's interesting so much of the conversation on A I and I know we're talking about the consumer is a cost, you know, savings to get um employees basically to reduce employee number. I'm curious what you're doing to, you know, first of all, talk about that, but how do you still maintain that intimate experience, you know, how do you make this big company which sometimes can feel like a retail Godzilla, it's so big yet you maintain that local focus and you have to in these different markets. Is that helping? Yeah, look what I would say is I think um we are in this amazing age where we can know our customers in aggregate and we can know them individually. And the only way that you can do that is through data and tech. Um You know, we were talking before about how one of the things that I love about Walmart is it is a large company, but it's just a bunch of people who are trying really hard to help people save money so they can true for all of us, isn't it? We're just a bunch of people working really hard. It's very true companies. Yeah. One of my frustrations often though is companies can feel Impenetrable if I have a problem with a company. And I, I, I'm one consumer amongst many. How do I get them to care about my problem? And so what we wanted to do at Sam's club was reverse that and say actually we work for the customer. And so the customer, how do you do that? You're the CEO of Sam's club, like how do you walk the walk on that? So I think it started like in the first few weeks and just listening to customer feedback and engaging individually with customers and then showcasing that it came to how we use tech. So we use NPS. Um But we also what is MP S net promoter score, net promoter score will give you a customer. Would you recommend us? Yes. But then you can also just synthesize and scrape data across social media and that will tell you real time. What are your customers saying about you? What are they saying about things that delight them? What are they telling you are the things that actually frustrate them and from that you can know them in aggregate. But you also now have the ability to be able to know them individually and personalize their interaction with you. Can you give us some of those insights? Let's start with China. I know you're not here in Hong Kong. What insights have you gleaned about the consumer in China? Because you know, there is this question, how much has the consumer fundamentally changed since the pandemic? And how much is just, you know, circumstantial and you know, on they go if we go back to Walmart started 62 years ago and its purpose is to save people money so that they can live better. And that has been enduring over the 62 years and it's also enduring in every market that we're in. But the how has changed dramatically. And so if I just take China in 2019 96% of our transactions were in person in the store or club, 4% were online. We're now at a point where it's 48% are digitally en engaged and enabled um transactions. That's a vast change in a very short, how you operate, right? How we it change how we structure ourselves. So Sam's Club now have clouds and that enables them to be able to deliver within an hour. So the customer's expectation has changed and we've had to change how we operate in the market to enable us to be able to meet the customer's expectations. And I think that's the fun thing about retail is it's always transforming. And so you've got to always remain curious and you've got to listen to the customer and make their problem, our problem, talk about some of the other markets like, where are you seeing the greatest growth potential in this region or the world? But I mean, I think about Mexico, India and China as being free markets that have great growth potential. Um And, and the way we turn up in each market is quite different. Um And then, you know, we're also, we also glean from what we do in Canada and Chile. And then I look at Africa as being a new frontier for the future. So it's, it's kind of hard to be able to say it's just this one market. Um You know, we've got flip carts in India which is doing a phenomenal job of looking at how they can deliver and, but it's not just how they deliver to consumers, but it's how they also work with small to medium sized sellers and start to kind of help them grow their businesses. Are you deploying A I the same in different markets around the world or are you very much um being strategic in terms of where you're putting your investment? I think actually, India was probably one of the forerunners for us. They had a thing called Flippy, which was generative A I which they did during big billion days, which actually, and they, it was like a, a shop assistant when people were looking for items. So um it enabled people to be able to put in a far more kind of open ended question and get a more customized and tailored result. Now we wanna get behind that, see what they do and then see how do you like bring all that learning to the rest of the world? And I think that's the value of being so many markets you can glean what are the, where are we, where have we got development that's been useful for um the other risk of the market. So there um probably the first time in my career, I think geopolitics has become really important in the life of any ceo how does that impact your decision making in terms of where you invest, where you perhaps, you know, pause et cetera. Yeah, I probably just go back to Walmart's been doing what it does for a long time. And if you think about the last five years, I mean, this year in particular, we've got elections in, in the US, in Mexico, in India, in South Africa. Um, we've just all weathered through a pandemic and worked out how to survive and thrive in that environment. I think geopolitical kind of winds are going to change over time. But what we do is so kind of unifying what we want to do is help people save money so they can live better. And I think that is such a core common need around the world that I think if we just keep our heads down and serve customers well, then we weather the storm. I'd be remiss in our final minutes. I feel like we talk about this as companies, you said companies are people. Let me go to you individually. How do you keep yourself innovative? Um I think one, it just starts with being curious. Um I think I have the best job in the world, like I get to um traverse the globe and see what we're doing from a retail perspective and how some of our partners are transforming. But I also think keeping open minded about like the new generation of leaders that we've got coming in and how they can help us transform. So, so I think that's one aspect. The other thing I would say is um while I like to make Walmart small. I also recognize that our scale gives, gives us reach to amazing leaders around the world. Um I remember having Sam Altman come and talk to Walmart and it must have been in maybe 2000 and A I, no one even knew about open A I then. But you know, he came in and spoke to our, our um global officers is about the work that he was doing. So you get these amazing insights into development around the world. And I think that helps us all continue to elevate our thinking. Can you help us see around the corner that we talk about how transformative A I is for understanding consumers and everything else, give us some sense of what we can expect. I know there's only so much you can tell us. But what are you most excited about in terms of the transformative power of this? I do think that as we like as we kind of transform um generative A I into a more personal relationship with customers, I think customers can expect a more delightful experience in retail and I think we're only on the cusp of that just now. So I think there's more to come there. Excellent. Um And one other question with regard to what you've learned about the consumers, when you look ahead at how now consumers are engaging with this technology? Are you finding, is there anything from the data that you've gleaned any insights you'd like to share in terms of how people are buying, especially in this part of the world and give some nuggets that might be helpful to other businesses or vendors as to how they engage with you. Um I think when you think about what people are buying, um people are fairly consistent across the world. So, you know, as we looked over this last kind of holiday season, people wanted to engage in events because they wanted to share moments with their family. And I think we saw that, you know, come out of COVID, this sense of wanting to gather together and celebrate. So events seasons were really um were um we were really happy with our performance through those. I think people are also trading into private brands because I think, you know, value is extraordinarily important to people as you look at different markets who are weathering multiple years of inflation. They, they're looking at how do they stretch their dollars to go further? So they're looking at private brands, they're looking at great value and where you can be disruptive on price. That's where we're seeing strong engagement. Excellent. Any final thoughts in our 35 seconds that you have left? What would you like people to take away? Um You know, I moved from Australia to the US to join Walmart because it is a company that I think does good things in the world. And I've been there for almost uh just over nine years. And I am continually impressed by in every market that they go into how they look to not find the most they can sell something for, but the least they can sell something for. And I think that's transformative. And so what we do for our customers, I think is just fabulous. And then I also look at what we do with the supplier base and our sellers and how we can bring small to medium suppliers up and give them an opportunity to sell, not just in the country that they're in, but now in a marketplace that can be across the world. And then we have an amazing group of associates that I think we give ladders to a future career that uh I think I've been the beneficiary of and I want more to get to enjoy. Excellent. Well, please join me in. Thanking Kath and uh more to come. Thank you very much.

The Honourable Paul Chan Mo-po, GBM, GBS, MH, JP, Financial Secretary, Government of the Hong Kong Special Administrative Region In conversation with Alyson Shontell, Editor-in-Chief, FORTUNE 

Innovation Forum 2024: The Innovation Imperative

Good morning everyone. Mr Chan, you fill a room. There's so many people here. It's great to see you all. It is very encouraging. Welcome. Good morning to you all. Good morning. Um So we have some questions about the economy and and your view of it. So I'd love to just start with your snapshot of it. You've recently said the economy is registering positive growth but the growth is not even. So I'm curious from your vantage point, the brightest spots and the most challenging spots. Well, you know, the more challenging part would be merchandise exports, which is affected by the higher for longer interest rate environment as well as geopolitics, both causing dampen the external demand, the brightest spot I would say come to Hong Kong, not just as a tourist or business visitor, but invest here over the past 12 months. We have seen tremendous interest in Hong Kong in terms of strategic business coming to Hong Kong in terms of talent coming to Hong Kong. So to spare some time to explore this city and we have tremendous opportunities to offer. So I want to explore a lot of those opportunities, some of the challenges how we can innovate our way to prosperity, um even further. But first, um the pandemic is something that's been difficult for everybody to uh get over. And it has changed habits in a lot of ways, whether it's been spending or tourism. Um What have been some of the biggest surprises and learnings as you've watched the recovery of Hong Kong. Well, you know, during the pandemic period, we have been very bold in terms of utilizing our financial resources to roll our counter cyclical measures to support the economic growth. Now, in terms of the post COVID level, in terms of public finance, we are entering into a what we call a fiscal consolidation process on the one hand, controlling the expenditure growth to make it below our economic growth. And at the same time, increase of our income by growing the economy and increasing in a very moderate and careful way additional revenue to the government so that in 23 years time, we will be able to return to balance. And at the same time, we would have enough resources to put to the areas that we want to develop like the technology and innovation area and build capacity for Hong Kong, for example, investing in the infrastructure in the northern metropolis. So that is one strategy going forward. And secondly, we see it as a very important move that is to leverage on the technology and innovation sector to diversify our economy, Hong Kong is well known as an international financial center. This is important, we will continue to further develop it to make it even more competitive. But at the same time, we want to grow the technology and innovation sector. So as to offer even more job choices for people as well as bringing our economy to the next level. If it sounds like diversifying the economy, beyond the financial hub that you've really established is a top priority. True. Yeah, wonderful. Um So I wanna remind the audience that at the end, we will have time for two questions. So be thinking hard. I will call on you at the end, but we'll leave a little bit of time for that. Um So Mr Chan Hong Kong's economy has always had its skeptics. Um and also it's always proved to be very resilient uh and decides with skeptics given that the recovery from COVID has maybe not been as swift in all areas as desired. Uh The skeptics are getting louder and there was recently uh op ed that caught a lot of attention in the financial times from a long time, Hong Konger who said um it pains me to say but Hong Kong is over, it's over. I'm sure you have opinions on that. And what do you say to those naysayers? Well, not at all. When you look at the tourist arrival last year, tourist arrival, about 34 million this year, we expect to have at least 46 million people and with the resumption in international fight continuing, I think this will be on the increase. And at the same time, let's share some facts. Look at our asset and wealth management, industry, asset under management, about $3 trillion. Look at our private equity, our venture capital sector, very vibrant altogether. They are managing about $220 billion, $220 billion and hedge fund. In terms of we are Asia number one, in terms of private equity, we are next just to the mainland in Asia. So all these sectors and growing when you look at our banking sector, total banking assets at the moment is about $2 trillion. And our banking sector has a lot of buffer, very resilient. Uh The liquidity ratio at the moment is over 100 and 60%. Whereas the international requirement is only 100% the capital adequacy ratio is over 20% while the international standard minimum is only 8%. So when you look at these figures, you will notice our financial market is still very strong and bonus is here. Our chief executive for the stock exchange, uh the total capitalization of the Hong Kong stock market three trillion uh let's see, $4 trillion and it is growing and we are diversifying our sources of new companies coming for this new capital, coming to use our platform. So I'm optimistic. Um you know, one of the challenges are there are some headwinds that could be long lasting and are just not entirely in your control. Um One of which are geopolitical tensions. Um Hong Kong's superpower has always been being a global super connector where you have this great relationship with China and you're also available to the rest of the world to engage with. Um how do geopolitical tensions uh change that I've had all? Well, you know, the geo geopolitical challenge will continue to be there for quite some time. We have to find a way to navigate all these and find new opportunities. I think that given the current situation, the unique status of Hong Kong under the one country two system becomes even more important and more apparent by coming here, you have convenient and even priority access to the mainland market. And at the same time, Hong Kong's unique character as an international city has been there. And we continue to be here like the rule of law, the common law legal system, the FIFA of capital goods, talent data and the separate currency, the Hong Kong dollar pack to the US dollar and it is freely convertible. So all these make Hong Kong very unique. So I think for us on the one hand, we need to communicate with the international community, coming to Hong Kong. You are in China, but we are different from the rest of China in terms of our way of doing things in business, our standards, which is best international standards. This is a natural platform for you to get access to the mainland market and as a springboard for the Asian market. And at the same time, I think we have a lot of attractions for talent and this going forward will be one of our key competitive advantages because whatever business you are in talent is the basis of competition. And I think we have very strong attraction for those of you coming to Hong Kong for this conference to find some time to explore this city. Uh Well, say for example, if you like wine and dine, we don't have any tax on wine. We have over 200 Michelin recommended restaurants. And you can also go to some of the mom and pop shop, which is also very interesting. So a lot to offer uh also in terms of lifestyle. So I'm very confident that if we continue to do the right thing, we will remain relevant and very attractive. Um Just one more point before we move on. Uh you know, one of the questions also in the article was um Hong Kong's ability to have autonomy to distinguish itself from some of these greater headwinds has always been a key part um with the passing of recent legislature, some of that has been called into question. Do you think it needs to be? I think you mean the reason and end of article 23. It is a constitutional responsibility, it is to compete uh one of the remaining work for Hong Kong as part of China to safeguard national security. And in fact, this piece of legislation, when you scrutinize it, it is no different than those in leading jurisdictions like the United Kingdom. So what we have in mind is that, well, we went through the difficulties, social unrest in 2019. Subsequently, we had the national security law enacted. We want to at the one hand ensure political stability and safety in this city and at the same time, so that we can concentrate our efforts to develop our economy. That is the idea and we appeal to you to work with us and to engage with different sectors in our community. And I am sure Hong Kong will remain one of the safest cities in the world and for the business sector, political stability is important. Thank you. Um So I want to talk about innovation, that's why we're here, right? Uh the innovation imperative. Um I'm curious for what do you think are some of the biggest bets? Um Hong Kong should make right now in innovation to set itself up for a path of prosperity. Well, innovation can be in a number of forms not necessary technology innovation. So for example, innovation in business models and the way we see it is that number one, the digital economy would be one of the driving force for innovation because it changed business models, transform businesses. But that assign we also need to focus on technology and innovation. Number one, as a sector to grow. Number two, as a means to transform and modernize the different sectors in our economy. And specifically when it comes to an sector of its own, we choose four areas to concentrate our energy. One is artificial intelligence and big data analytics. The second one is health science and health tech. The third one is fin tech and the final one is new materials, advanced manufacturing. We see these four areas offer tremendous opportunities. Say for example, for A I, we are building the infrastructure, increasing our computing capabilities. And more importantly, we are in a very aggressive mode of attracting companies in the A I space to come to Hong Kong to set up their business. I think A I I mean you you can't have any conversation with anyone in the world that lasts more than 10 minutes without us going into A I. It is so important. Um It has been called even though the Lisa Chat JP T was referred to as the Sputnik moment. Um the whole world is clamoring to create this amazing future. How do you um view Hong Kong's position now that we're on the precipice of this? Great A I change. How can you position this to be a big winner? I think the fundamental advantages began over as a hub for A I sector is the one country two system. Uh It is because here you can have convenient access to mainland data and international data and data is very important for this sector. Number one, number two is talent attracting different talents. Number three is our determination to grow this sector by increasing the computing capabilities. Say for example, in the budget, we talk about building a supercomputing center, here we are also inviting companies to come to grow a sector. And in this area, it may be interesting to note that if we marry A I with some other sector, say for example, the health science, the drug pharmaceutical sector that offers tremendous opportunities for pharmaceutical companies in the US or in Europe. If they want to tap the mainland market, where can they get the bio data of the Chinese? Where can they conduct clinical trial in order to enable their products to be registered and then be able to put on sale on the main market which offers 1.4 billion people. So in this area, I think we have uh we have a unique value proposition to offer. That is why in the budget we mentioned about hey along the border with sen uh not much of loop, let's develop that sector in the into a technology and innovation sector, bringing in those A I companies bring in those health science companies there. So that in in that particular song, we we try to work with the mainland authorities to get the approval to have more convenient or even free, full of data talents and capital. So that with these key factors of key elements, we can grow this sector more vibrant and build an ecosystem. And as you mentioned too, attracting global talent is a top priority for the chief executive for you for the whole team. Um How are you bringing the talents in? Why should entrepreneurs come here to build the start ups of the future, the biotechs of the future A I as a future? Well, you know, we have a dedicated office for this purpose. If I can, I may share with you some figures since December 2020 this office has was set up up till now. We have received over 220,000 applications. We we have approved about 100 and 60,000 of them and about 100 and 10,000 people have already arrived in Hong Kong. And among these people, there is one category we call them top talents, meaning that people earning about more than 2.5 million Hong Kong a year or those who graduate from the global top 100 universities without asking any questions, they can come. They do not need to find a job beforehand. And so far the response has been overwhelming and then we zoom in those who have arrived in Hong Kong. The top talents usually relatively young in the age group of 35 to 50 young family and these people have an average income double than a median income in Hong Kong. So we are very optimistic. I think Hong Kong's attraction is here. On the one hand, you are part of China, but on the other hand, the international character, the lifestyle and when I talk to those people coming, particularly with young families, they said the education here is excellent. Five of our universities are among global 100. And imagine how many international schools we have here? Over 50 offering curriculum in the US UK, German Swiss, Italy, Singapore, Japan, Korea. So this is indeed a an excellent hub for people who is interested to pursue a career. But at the same time, maintain the international character and have pop style lifestyle. Thank you. I want to give the chance to the audience to ask a question. If anyone has one, you can raise your hand. If not, I will continue to happily ask. Don't be shy. We have one right here in the corner, right. Go ahead. Yep. He's, he's coming with the mic right now. Thank you very much. Hi. Uh Lovely to see you here. I'm Brian. I'm an assistant professor at HKU. My question essentially concerns Hong Kong's relationship with the Middle East with ASEAN and also other parts of the world. I mean, historically Hong Kong had benefited off this vibrant Sino Western Sino American engagement and relationship which obviously due to geopolitical headwinds is no longer necessarily the case. But the reason why I'm not necessarily pessimistic is because I do think that as you, we self affirmed previously, we're actively engaging partners in Middle East in Southeast Asia, where Indonesia is now the fourth largest country in the world by population and also Central Asia, West Asia, Latin America and beyond. So, could you perhaps share with us here in the room? You know, what are the plans and initiatives you've got in mind for engaging the world beyond the West and also beyond the conventional partners on Gong had? Thank you very much. Yeah, thank you, Brian. I think for us in Hong Kong, uh us Europe, very important market, very important sources of investment so that we need to reinforce. But at the same time, we need to open up new opportunities. I went to the Middle East in October 2022. And in that particular visit, I made an effort to visit all the key ministries involving in innovation, technology, finance and investment. And I realized they also saw the need of diversification and they are interested in this part of the world. But traditionally the focus of investment uh in the US and Europe. So this part of the world is less familiar to them. That is why we reach out and we invite them to come and we even consider using the Hong Kong investment company to see some of the investments together with them. The idea is to open up new capital sources and new sources of quality issuers coming to Hong Kong for listing the same applies to ASEAN in particular quality issues, quality companies coming to Hong Kong. And we talked about geopolitics. Earlier on we observe because of geopolitics, the industry chain has been changing and manufacturers on the mainland, quite a number of them try to diversify and have certain parts of their operations, moved to Asia. Then Hong Kong can play a very unique role as a supply chain management center and Trade Finance Center. That is why in the budget, we said we are going to develop ourselves as a multinational supply chain center here. And ASEAN for us is good market and sources of quality companies. We also want to attract those talents to come to Hong Kong to work. When I went to the University of Malaya and University of Singapore, talk about the the opportunities here. I can feel the energy and we welcome them by open up. So as you look ahead, what do you think is the most important thing for Hong Kong to get? Right as we head into this new technological era um to come out on top and what is the last advice you would leave to executives in the room or who may be watching this, who are thinking about is now the right time to invest in Hong Kong. Well, for us, the one country two system is very important. We have to preserve that the legal system, the law of law, very important, the free movement of goods, capital, data and talents and the international character and dimension of Hong Kong is something that will continue to communicate with the international business community. We know that there has been some misunderstand misunderstanding about the situation here, even sometimes some uh narrative which is not very fair about us. Uh that is understandable. So we we would reach out but at the same time, invite people to come. And most importantly, if people can come and to make an investment and can make money and for people to come to work here, they have carried development and enjoy the lifestyle, then we will be able to succeed. So we will continue to work hard on that and on different funds. Be it IFC be it International Trading Center, uh be it the innovation and technology. We keep asking ourselves how to in a way how to work better, how to collaborate with different uh different people, different investors and different funds. Yeah, Mr Chen. Thank you so much. Thank you. Thank you. Thank you. I appreciate it.

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