There are not many events where you might find Alibaba’s Jack Ma, Apple’s Tim Cook, Tencent’s Pony Ma and Foxconn’s Terry Gou all speaking. The Fortune Global Forum in Guangzhou last week was one such occasion. The three-day conference – lead sponsored by HSBC and held in the Shangri La hotel – featured all four on its first day.
Held under fairly high security, the forum’s theme was innovation and openness. The keynote speaker on the opening day last Wednesday was Wang Yang – former Party secretary of Guangdong and now vice-premier and a member of the powerful seven-man Politburo Standing Committee – who emphasised both themes. He noted that he’d lived in Guangzhou for five years and said it was the only major port that had never been closed in China’s navigation history.
In a nod to the Trump era – and quoting President Xi Jinping’s remark that pursuing protectionism is “like locking yourself in a dark room” – the grey-templed politician said China remained committed to globalisation and declared that innovation was the most important factor driving growth. In the case of the latter, he pointed out that China had 170 million skilled workers – i.e. those with a higher education – and they would be at the vanguard of the nation’s R&D efforts. But perhaps his most significant policy statement was to play down China’s old GDP-focused growth model. He said that China’s new development focus would be on quality and efficiency versus speed and scale – observing that the nation’s earlier approach had proven costly to the environment.
Next on the podium was Canada’s Prime Minister Justin Trudeau, sporting a pair of red socks in ‘red’ China. He shared Wang’s view on globalisation, noting “Canada and China are aligned in making a choice for openness. Our futures are rooted in collaboration”. Trudeau would also be the first of many speakers over the course of the forum to bring up the topic of artificial intelligence (AI) – which has clearly become the buzz term of the moment (hardly a week goes by without WiC mentioning it too).
Indeed, HSBC’s CEO Stuart Gulliver – speaking later in the afternoon – also picked up on the AI theme, stating that robo-advice could help bring down charges for financial products, making them more affordable for a broader universe of retail clients. He also noted that one of the bank’s R&D hubs was in Shenzhen, in large part because fintech developments and adoption in China was increasingly more advanced than in Europe or the US.
The morning was capped by a conversation with Jack Ma, held in the main ballroom and attended by almost 1,000 delegates. He also spoke about AI, though said he preferred the term ‘machine learning’, as it seemed less threatening. Unlike Elon Musk – who has raised concerns that humanity might be threatened by ‘Skynet-esque’ intelligent machines – Ma said he was optimistic about the technology. “People should not be scared by tech. Lives will be improved by tech,” said Ma.
Asked about China’s future growth, Ma was also upbeat. “I am so confident in China,” he said, listing off five reasons for why the economy’s potential was still huge. First, he cited the “stability of the Chinese political system”, contrasting it to the West where the “policies of democracies are always changing”. Next he noted how safe China was relative to other countries and third how it had a deep and wide market of 300 million middle class consumers (and likely 500 million, he predicted, in the next 10 years). Then he reiterated the point Vice Premier Wang made earlier in the day about higher education – pointing out that China’s degree holders equated to about half the US population. Finally, he said, “at least in this country we are still talking about globalization”.
However, probably, the toughest question Ma had to field was on his major competitor Tencent. Here he took a diplomatic line: “We compete. It doesn’t mean I have to hate them. I respect Tencent. They are so innovative and creative.”
Ma’s closing message – having admitted earlier in the conversation that he’d spent about 1,000 hours on planes in 2017 – was an anti-workaholic one. Having admitted to being “very lucky” he said “I want to die on a beach not in the office.”
Shortly after lunch a different perspective was offered by Apple boss Tim Cook. He noted that he’d first visited China 25 years ago and said it was like a different country to the place he’d seen then – “If you slept for those 25 years and were then parachuted back in, it would be unrecognisable.” He also noted that China had become one of the most innovative places in the world, citing a less known statistic that the country has two million app developers.
He said the number one attraction of China to Apple was the quality of its people, who were unrivalled in areas like precision engineering and tooling. Only in China was the level of process engineering so high that Apple could manufacture in the hundreds of millions of units with zero defects. He cited the example of a supplier he’d visited earlier in the week called ICT, which makes Apple’s Airpod earphones. He noted that small though these are they contain several hundred components, meaning they are “really hard to make” and require “a level of skill that is extremely high”. He said the company’s founder Grace Wu was also an example of “the China Dream”, having started out herself as a “factory girl” on a Foxconn assembly line.
Having said he couldn’t be happier with the sales of the newest iPhone X in China, Cook was asked about criticism that his attendance at China’s annual internet conference in Wuzhen the same week was a tacit endorsement of Beijing’s censorship culture. He replied that “he really didn’t care” about such criticisms noting that he’d rather “participate” rather than “yell on the sidelines” – adding that nobody ever changed anything from the sidelines and adding that no country in the world “progresses in a straight line”. However, he also added that China should be applauded for its leadership in environmental issues and had done “an incredible job” lifting people out of poverty in the last four decades.
In the next conversation Tencent’s Pony Ma surprised the audience when he pondered whether high usage of his social media app WeChat was harming peoples’ eyes, including his own. Yet again, most of his session was given over to advances in new techologies like facial recognition and AI. In the case of the latter he cited eight investments his tech conglomerate had made in medical start-ups that incorporated AI – one he described as an imaging company, where the AI software was better at detecting signs of cancer than a human doctor. He also predicted that China’s online education market would grow from a $15 billion a year business to one worth “hundreds of billions”.
However, perhaps the most surprising thing was what Ma did not say. Asked about his views on rival Jack Ma and Alibaba, he gave a reply that avoided paying any compliments to either.
Bill Ford, executive chairman of the US car giant, followed and declared that China was taking the lead in electric vehicles; while Foxconn founder Terry Gou discussed his new US plant in Wisconsin and said he’d met President Donald Trump four times this year alone and described him as “very straightforward”. In something of a reversal of previous business norms Gou said American senior personnel would be brought from Wisconsin to Guangzhou to be trained.
At a Belt and Road discussion on Thursday morning, Tan Sri Francis Yeoh of Malaysian conglomerate YTL described Xi’s vision as eight times bigger in size than America’s post-war Marshall Plan. He noted that China had been transformed by its investments in infrastructure and Belt and Road was a means for other parts of the world to get a similar boost. “How could Alibaba sell $25 billion of goods on Singles’ Day,” asked Yeoh. “It’s thanks to fast trains, ports and all the infrastructure. How else could it all be moved.”
AB InBev CEO Carlos Brito said his firm now had around 60% of the premium beer market in China – a market share most multinationals would struggle to match – and described the country as a “continental sized economy” where averages “hide a lot of things. You really have to go province by province”. Two days earlier Brito had opened one of AB InBev’s biggest breweries globally in Fujian. “Within our company, best practices in China are now being exported elsewhere,” he said.
Brito and private equity legend Henry Kravis both signalled their continued bullishness on China’s growth prospects and cited some of the large numbers that continue to dazzle. For instance, Brito pointed out that a video AB InBev had shot with ex-basketballer Yao Ming to discourage drink driving had been watched online by 240 million. Kravis mentioned a discussion with a food delivery company where he was told it was delivering 16 million meals per day, but whose boss thought “we are just scratching the surface”.
One thing the conference once again underlined is China’s ability to put on a show. At a gala dinner held at the Sun Yat Sen Memorial hundreds of traditionally costumed performers danced and sang – a reminder of the sort of scale Brito and Kravis referred to. The evening was capped by an evocative outdoor performance by the Guangzhou Youth Orchestra which included a rendition of the theme from Crouching Tiger Hidden Dragon. Of course, aside from Tang Dynasty qipao’s and Tan Dun music, the event did not let delegates forget the high-tech ambitions that had been such a feature of the daytime discussions – as it also featured a child flying a drone made in Guangdong province.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.