3. Contents
Page 3
Executive Summary
Page 6
Managing Risks
Page 8
Drivers of New Global Growth
Page 12
Technology and Innovation: The Next Wave
Page 14
China as a Global Player
Page 16
The WorkSpace
Page 18
Acknowledgements
Page 19
Mentors of the Annual Meeting of the New Champions 2008
5. Executive Summary
“This is probably the first
transformational crisis of our globalized
age. Many things will change.”
Klaus Schwab, Founder and Executive Chairman,
World Economic Forum
Managing Director and Chief Business Officer, World
The second Annual Meeting of the New Champions was
Economic Forum: “A very important part of this forum is
the first major global gathering after the financial markets
bringing together the present and the future.”
worldwide were roiled following the collapse of Lehman
Brothers, the largest bankruptcy in US history, and the US
Just how critical it is to look forward and seek new
government’s rescue of AIG, the world’s biggest insurance
opportunities was underscored by the presence of three
company.
other World Economic Forum communities in Tianjin:
Technology Pioneers, Young Global Leaders and Young
Nearly 1,200 business, government and civil society
Scientists. These groups underscored the fact that the
leaders from more than 80 countries convened to discuss
next wave of growth will come from innovations in
the near and longer term impact of the unfolding crisis as
technology and science, as well as the emergence of
well as the next wave of growth that would be necessary
China and other fast-growing, large emerging economies
for the recovery of the global economy. China was the
such as India and Brazil to take a leading role in various
appropriate setting in this context. The Binhai New Area of
areas, from green business to global governance.
Tianjin offered participants a glimpse into China’s great
promise despite the economic turbulence taking place
The discussions did not dwell on the dramas playing out
overseas. The message was clear: in times of extreme
on Wall Street and the world’s financial markets. Instead,
pressure, a long-term perspective is critical.
participants reflected on the wider implications of the
crisis. “We are too tied together in a globalized world,”
This has after all been a year of great difficulties and great
remarked William R. Rhodes, Senior Vice-Chairman,
successes for the Chinese – devastating winter weather
Citigroup, and Chairman, President and Chief Executive
was followed by a major earthquake in Sichuan Province
Officer, Citibank NA, Citi, USA. Significantly, there was
just weeks before the nation hosted the Olympic Games in
consensus that the expected economic slowdown must
Beijing. “We have overcome difficulties one after another
not lead to friction and protectionism, but rather should
and maintained the momentum of steady and fast
pull the international community together to collaborate on
economic growth,” said Chinese Premier Wen Jiabao in an
global solutions such as the adoption of international
address that struck a chord with participants. Wen
accounting standards and regulatory norms. “What we
underscored China’s determination to maintain sustained
must have is international cooperation,” stressed Liu
high growth as its contribution to global stability.
Mingkang, Chairman of the China Banking Regulatory
Commission.
The strong presence and lively engagement in the
discussions of CEOs from over 200 Global Growth
This report on the Annual Meeting of the New Champions
Companies, enterprises that are emerging as powerful
2008 is centred on four essays linked to the programme’s
drivers of global growth and value, was also inspiring, a
themes: Managing Risks; Technology and Innovation: The
source of welcome optimism that belied the newspaper
Next Wave; China as a Global Player; and Drivers of New
headlines. “Listening to the voices of these New
Global Growth.
Champions is to see a path to the future,” remarked
Mayor Huang Xingguo of Tianjin. Added Robert Greenhill,
3 | Annual Meeting of the New Champions 2008
6. “I “Listening
hope to see some light at the end of to the voices of these New
the tunnel at the end of next year.” Champions is to see a path to the future.
Their views have been profound and
Yoshihiko Miyauchi, Chairman and Chief Executive Officer, Orix
imaginative.”
Corporation, Japan
Huang Xingguo, Mayor of Tianjin, People’s Republic of China
Managing Risks
Globalization has made the assessment and
Drivers of New Global Growth
management of risks difficult.
The ranks of the New Champions – the dynamic Global
• The proliferation of risks ranging from contagion in
Growth Companies and the nimble emerging economies
financial markets to looming environmental
– will continue to grow and are in a good position to take
degradation has made it difficult for business and
advantage of opportunities created by the adverse
government leaders to plan for the long term and to
economic conditions.
coordinate their responses, even though cooperative
global approaches have become necessary.
• The unfolding financial crisis has shown that the • The retreat in liquidity will reduce the availability of
popular assumption that fast-growing emerging capital at a time when governments and businesses
markets such as China have somehow “decoupled” are looking to finance major infrastructure projects.
• Emerging economies that have large foreign exchange
from the US economy was premature. In fact, the
international liquidity crisis and the collapse in financial reserves are set to become major sources of liquidity
market confidence from Iceland to Indonesia have and investment capital, particularly for the developing
revealed the deeper and broader interconnectedness world.
• These fast-growing economies must quickly develop
of the world.
• China has pledged to contribute to global stability by capital markets to distribute efficiently the needed
maintaining strong growth which reflects the Chinese investment capital to budding enterprises or promising
perception that the key to mitigating risk is to take a projects.
• While the US may offer buying opportunities for those
long-term view, continue pursuing necessary reforms
and focus on achieving sustainable growth. with large amounts of capital, investor interest will be
• Companies should not reduce their corporate thematic rather than geographic. The focus will be on
engagement in society as they build the capacity sectors linked to the global drive towards urbanization.
within organizations to approach the future in a more The growth of cities and the migration of people to
strategic, holistic and systematic manner. urban areas will continue to fuel feverish growth in
transportation, financial services, education, green
business, infrastructure development and the supply
of raw materials.
4 | Annual Meeting of the New Champions 2008
7. “The most important thing for China is
human intellectual capital. In the
coming 10 to 20 years, we will have to
transform to an innovation-driven
growth model.”
Guo Shuqing, Chairman, China Construction Bank, People’s
Republic of China
Technology and Innovation: The Next China as a Global Player
Wave
China now stands as a haven of economic stability at a
time when the US and other industrialized economies are
Two critical drivers of future growth in the global economy
engulfed in financial turmoil and threatened by prolonged
will be the development of technology and the promotion
recession. The long-term economic prospects of China
of scientific innovation.
appear strong, underpinned by an expanding middle
class and growing investment in technology.
• Old competitive models of knowledge protection will
• China must manage outside expectations about the
increasingly yield to cooperative models of sharing
research across borders and even between rival extent of the help it will be able to provide the rest of
corporations because of the critical need to deliver the world as the global financial crisis unfolds.
•
results faster and cost effectively. While many in the international community have called
• National governments will have to allow their best and for China to take a more active position in global
brightest researchers to collaborate more freely, given governance institutions, the Chinese leadership
that international cooperation is essential to the remains reluctant to do so, given the major challenges
success of large-scale research projects. it faces at home, including the income gap between
• The private sector can be a major driver of basic urban and rural areas and the need for strong social
scientific advances that may prove commercially security safety nets. Still, China’s monetary authorities
lucrative. are playing their part, often unnoticed, in monitoring
• Where business cannot or is unable to take the lead, and addressing the volatility in the financial markets.
•
partnerships with government and civil society can be China is considered a global player by the rest of the
effective, particularly in areas such as the development world but the question remains as to how eagerly it
of clean energy technologies. will embrace this role in coming years.
• China is beginning to take steps to wean its economy
off its reliance on exports and encourage the growth
“Decoupling is not a reality. What is
of domestic consumption.
happening in the markets in the US is • The Chinese government aims to boost China’s
affecting the credit markets worldwide. capacity to innovate and the country has emerged as
There is just no confidence in financial a preferred destination for global R&D investment.
institutions in the market.”
William R. Rhodes, Senior Vice-Chairman, Citigroup; Chairman,
President and Chief Executive Officer, Citibank NA, Citi, USA
5 | Annual Meeting of the New Champions 2008
8. Managing Risks
When confidence in markets crumbles and trust in “If a CEO is just about numbers and profits,
institutions once thought to be indomitable disappears,
the business will not be sustainable. It’s
what is left is fear – the dread of dangers that could
about building sustainable businesses in
multiply beyond control. And if they do: panic. During a
debate on the risks to global growth in the World sustainable communities. What you do
Economic Brainstorming session at the close of the
should be part of your core business
Annual Meeting of the New Champions 2008, some
strategy. You do it because it’s good for
participants went so far as to raise the prospect that a
panicky world could be thrown into utter disarray if the your business not just because it makes
unfolding liquidity crisis spreads and deepens.
you feel good.”
Comparisons to the Great Depression were not taken as
hyperbole. This crisis is different from recent ones, many
Samuel A. DiPiazza Jr, Chief Executive Officer,
argued.
PricewaterhouseCoopers International, PricewaterhouseCoopers,
USA
“This is probably the first transformational crisis of our
globalized age,” reckoned Klaus Schwab, Founder and
have significant and sudden negative effects on another
Executive Chairman of the World Economic Forum.
part of the world. Yet globalization clearly brings with it
“Many things will change.” In Tianjin, the sense that the
benefits to offset its costs. It is a catalyst for increased
global economy is drifting in uncharted and choppy
trade, which in turn results in lower food prices that
waters was widespread. The complex interconnections in
ultimately benefit the poor.
this world are not unlike the structured financial
instruments that are now much maligned. The multiplicity
The uncertain way ahead prompted nervous speculation
and opacity of all the links make it difficult to assess what
among participants that somehow the world has tripped
is going on – or what could go wrong. “It’s not easy to
into an inflection point. “Uncle Sam will save Wall Street
see the risks, not easy to manage them,” said Fu
today but who will save Uncle Sam tomorrow?” asked
Chengyu, Chairman, Chief Executive Officer and
Zhu Min, Group Executive Vice-President of the Bank of
Executive Director of the China National Offshore Oil
China, referring to the US$ 700 billion financial rescue
Corporation (CNOOC). While the price of oil is closely
package that the US Congress was putting together at
related to the value of the dollar, who can predict where
the time of the meeting. The downturn in the US and
the greenback will be in six months, he asked plaintively.
developed economies, some feared, could lead to a rise
in trade friction and protectionism. Others, however, were
Risk management therefore has never been trickier.
not ready to accept the notion that the United States was
Companies are hampered from taking long-term
on the wane, given the prospect of fresh leadership in
perspectives because of volatility in the markets, making
Washington in 2009, the size of the US economy and the
it harder to pinpoint trends and predict the prices of
considerable military and financial power that it still
commodities, components, or the value of currencies,
possesses. “People understand that the US will come out
and more importantly to plan ahead. The food crisis at
of this,” said Sayanta Basu, Chief Executive Officer of the
the start of the year stirred unrest in many countries and
Dubai Financial Group. “In hindsight, people will look
sparked fears of inflation, catching many governments off
back and say it was a great buying opportunity.”
guard. This revealed how quickly food security might be
compromised. Increased interconnectedness may mean
A major lesson of the crisis is likely to be that those who
that changing consumption patterns in one region could
argued that dynamic emerging markets had decoupled
6 | Annual Meeting of the New Champions 2008
9. “It’s not easy to see the risks, not easy to
manage them.”
Fu Chengyu, Chairman, Chief Executive Officer and Executive
Director, China National Offshore Oil Corporation (CNOOC),
People’s Republic of China
“Frontiermarkets mean something between the known and
unknown, and compared with emerging markets, there are
more risks and uncertainty but also more opportunities.”
Wang Jianzhou, Chairman and Chief Executive, China Mobile Communications Corporation,
People’s Republic of China
from the US economy were wrong. “Decoupling is not a China can make at this time is to “maintain the
reality,” declared William R. Rhodes, Senior Vice-Chairman momentum of sustained growth and avoid ups and
of Citigroup and Chairman, President and Chief Executive downs.” This was the same sober approach that the
Officer, Citibank NA, Citi, USA. “What is happening in the Chinese leadership took a decade ago as the Asian
markets in the US is affecting credit markets worldwide. financial crisis spread ruthlessly through neighbouring
We are in a crisis of confidence.” Indeed, the decoupling economies. For its resolve and steadfastness, China
theory now appears incompatible with globalization, which by gained in international stature and earned the gratitude of
its definition implies more, not fewer, linkages that are not once wary South-East Asia.
only more profound but also less fathomable on the surface.
For companies aiming to make their mark by pursuing
the opportunities offered by the crisis, the advice from
Value of the Dollar
veteran executives was to keep a long-term view and
remain committed to social responsibilities. “If a CEO is
Steady erosion in the value of the dollar since 2003, particularly against the euro
just about numbers and profits, the business will not be
120
sustainable,” said Samuel A. DiPiazza Jr, Chief Executive
Currency per US$ (100=1 January 2003)
Officer, PricewaterhouseCoopers International,
Yen per US $
PricewaterhouseCoopers, USA. “It’s about building
100
sustainable businesses in sustainable communities. What
you do [to engage in society] should be part of your core
Euro per US $
business strategy. You do it because it’s good for your
80
business not just because it makes you feel good.” In his
closing remarks, Klaus Schwab, Founder and Executive
Chairman of the World Economic Forum, reminded
60
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08
participants that ”when we face a crisis, corporate social
responsibility and corporate global citizenship should not
Source: Reuters
be put on the back burner.”
Participants typically offered two general prescriptions for
Energy and Metals Commodity Prices
mitigating the risks proliferating in these troubled times.
First, if you were doing the right thing, now is not the time Prices for most major extracted commodities have risen
to stop. Second, this is the time to go for quality and more than three-fold in real terms since 2003
600
sustainability over all-out profit. In this new context,
South-East Asia, for example, should continue efforts to 500
Real price index (100=January 2003)
integrate their economies, as they seek to build a Coal
400
common market by 2015. For China, staying the course Copper
means pursuing sustainable growth and economic 300
Iron Ore
reforms designed to de-emphasize exports and boost
200
Oil*
domestic consumption. Liu Mingkang, Chairman of the
China Banking Regulatory Commission said that the crisis Aluminium
100
could lead to China’s economic growth moderating from
0
11% to 9%. “This is good for China,” he concluded. Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08
“China doesn’t need speed first; China needs quality first.” * West Texas Intermediate crude oil
Source: IMF; US Bureau of Labor Statistics; PwC analysis
In the opening plenary, Chinese Premier Wen Jiabao took
pains to stress that “the most important contribution” that 7 | Annual Meeting of the New Champions 2008
10. Drivers of New Global Growth
“We’ve got to get used to living in a
Even though the turmoil in the global financial markets
had broken only weeks earlier, participants in the Annual
slower growth environment where the
Meeting of the New Champions 2008 agreed that the
emphasis is not on the quantity and
downturn offered many opportunities, many of them
Chinese in the making. For it is in China and other
speed but the quality and balance of
emerging markets where current account surpluses, large
economic growth.”
foreign exchange reserves and big populations with
bulging middle classes are fuelling an economic
dynamism that is creating a new cast of agile players able
Stephen Roach, Chairman, Asia, Morgan Stanley, Hong Kong
to capitalize on current conditions to go global.
SAR
Even the most pessimistic forecasts for global growth still
include robust projections for China, India, the Gulf, Brazil Global Growth Companies are typically adept at pursuing
and Russia. Growth companies there, or that invest there, opportunities. According to a study by consulting group
are in a good position to weather the storm. Smaller AT Kearney, companies from developing countries
companies that have avoided relying on debt, moreover, including China, India, Malaysia, Russia, the United Arab
can take advantage of the turmoil to open new markets Emirates and South Africa concluded 19% of the M&A
and seize a bigger slice of existing ones. Concluded Jack transactions – 421 out of 2,168 deals – between
Ma Yun, Chairman and Chief Executive Officer of China’s developed nations and developing countries in 2007.
Alibaba Group: “These days everybody worries about
things, but there are a lot of opportunities.” But in the current climate, even the deal-making zeal of
the New Champions will be severely tested. Much of the
spectacular growth in emerging markets in the past
seven years has been the result of unprecedented
amounts of cheap capital. But the days of easy money
Global Growth Forecast
and conspicuous consumption are over, at least in the
Growth among oil exporters, along with China, India and Russia,
US. “We’ve got to get used to living in a slower growth
expected to dwarf growth in developed markets
10%
environment where the emphasis is not on the quantity
and speed but the quality and balance of economic
8
2008
2009
Forecast GDP growth
growth,” said Stephen Roach, Chairman, Asia, at Morgan
6
Stanley in Hong Kong. The ability of the American
consumer to keep borrowing to buy imported goods has
4
been crippled, perhaps permanently. “There will be great
2
consequences for other nations who like to sell things to
Americans that they don’t need and can’t afford,”
0
United
States
Saudi
Arabia
United Arab
Emirates
India
Iran
Kuwait
Algeria
Norway
Nigeria
China
reckoned Roach.
Japan
Eurozone
Venezuela
Russia
Oil exporters
Source: PwC; IMF
8 | Annual Meeting of the New Champions 2008
11. “These days everybody worries about “We are looking now to the larger,
things, but there are a lot of faster-growing economies to take up
opportunities.” the slack. We need them to be sources
of liquidity, of demand, of investment, of
confidence in the global economy.”
Jack Ma Yun, Chairman and Chief Executive Officer, Alibaba
Group, People’s Republic of China
Peter Mandelson, Commissioner, Trade, European
Commission, Brussels
The retreat in liquidity is also likely to reduce the
availability of capital to the developing world at a time
Helping to fill the financing void represents a big
when governments and businesses are looking to finance
opportunity for those with the capital and expertise. From
hundreds of billions of dollars in infrastructure and other
years of accumulated export revenues, many export-
projects to support growth. As the global economy
driven economies are enjoying enormous surpluses.
slows, moreover, deals financed by projections of cash
Energy-rich Gulf States alone added US$ 215 billion to
flow are likely to be jeopardized. Emerging economies
their stock of foreign assets last year, according to the
that have been supplying much of the world’s new
Institute of International Finance. Their total assets,
investment opportunities will now have to supply a
including those of their central banks, sovereign wealth
greater share of the world’s investment capital as well.
funds and high net-worth individuals, are estimated at
“We need them to be sources of liquidity, of demand, of
US$ 1.8 trillion, with some estimates going as high as
investment, of confidence in the global economy,”
US$ 2.4 trillion. East Asia including China, Japan and
declared Peter Mandelson, Commissioner for Trade at the
Korea has more than US$ 3 trillion at its disposal.
European Commission.
While much of that money has been funnelled into
developed markets, more Middle Eastern investors are
Contributions to Global Growth in 2008
looking to seize opportunities in emerging markets like
South-East Asia. China’s investors, meanwhile, are
China to represent one quarter of global GDP growth this year
becoming important players in financing commodity-
related infrastructure projects. Indian companies are
Other countries China
scouring the world for new acquisitions. Despite
spending the past decade recovering from its own
financial crisis, Japanese banks are now in a strong
France
position to step in with billions of dollars of public
savings.
Korea
UK
United States
Japan
Brazil
Russia
Germany India
Source: PwC forecasts
9 | Annual Meeting of the New Champions 2008
12. “You can’t have sustained economic growth
without a well-functioning debt market.”
Ziad Makkawi, Chairman and Chief Executive Officer, Algebra Capital, United
Arab Emirates
“What’s happening in America is
One urgent task facing most export-oriented economies
is to develop capital markets that can rapidly and
spreading to other parts of the world.
efficiently distribute this capital to budding enterprises,
This is turmoil of a tsunami scale and
especially the fast-growing companies aiming to go
global. Emerging financial markets are still
will impact Asia, including China. The
underdeveloped and companies have tended to rely
conventional wisdom is that over the
instead on larger, deeper, more sophisticated markets like
New York and London. In particular, aspiring financial
next few years China’s exports will be
centres such as Dubai, Mumbai and Singapore will need
affected. To increase growth, it needs to
to accelerate the development of bond markets to keep
local companies well financed. “You can’t have sustained refine the export model and growth
economic growth without a well functioning debt market,”
derived from domestic consumption
observed Ziad Makkawi, Chairman and Chief Executive
Officer of Dubai’s Algebra Capital. must be accelerated.”
Victor L. L. Chu, Chairman and Chief Executive Officer, First
Foreign Reserves
Eastern Investment Group, Hong Kong SAR
Chinese and Russian currency reserves each surpass those of the US and Europe combined
$1,000
particularly pro-market economies such as Brazil, Chile
and Colombia that have built strong trade links with
800 China
(standard dollar reserves, billions)
Foreign reserves, excluding gold
China and other economies in East Asia. Even sub-
Saharan Africa appears to be somewhat insulated, having
600
improved governance and used debt relief in recent years
400
to bolster public finances.
Russia
US, UK and Eurozone
200
All of these markets represent growth opportunities to
India
companies and investors that are willing to risk their
Brazil
0
1999 2000 2001 2002 2003 2004 2005 2006 2007
capital. Participants were also quick to note that even the
US will offer bargains once the panic in financial markets
Source: IMF
has abated. Some of the biggest medium- and long-term
opportunities, however, will be thematic rather than
Emerging markets appear to be well positioned to geographic. Urbanization, for example, is a major global
address future financial needs. China, flush with export trend likely to be unaffected by the financial crisis.
revenues, has recapitalized its banks. And India, with a Infrastructure demand related to urbanization will remain
lower reliance on export income, has been bolstered by strong, financed by cash-rich governments, as well as
remittances and investments from overseas Indians. As a demand for investment in securing supplies of raw
result of exports of food and commodities, many Latin materials.
American countries are in a relatively strong position,
10 | Annual Meeting of the New Champions 2008
13. “According to my research, investment contributes 37% to
economic growth, domestic consumption 39%, net export 34%, so
if you want to keep the economic growth rate above 8%, we have
to strengthen these three driving forces.”
Cheng Siwei, President, China Association for Soft Science Studies, People’s Republic of China
Environmental sustainability needs, mainly linked to
climate change, will also drive investment demand in Business Con dence Worldwide
transportation, financial services and education. Green
Con dence in Asia-Paci c remains high
businesses are expected to flourish. All these
developments are opening opportunities to deliver 250
Survey of business con dence, 4-week moving
products and services catering to the poorest segments
average (di usion Index; 100=January 2007)
200
of emerging economies, where incomes are growing
faster than anywhere else. 150 Asia Paci c
100
Excelling in the leaner funding tight-credit environment will North America
50
require changing the status quo in the developing world.
Governments will have to become more serious about Europe
0
economic reform, sustainability and equitable growth.
-50
And companies will have to demonstrate to potential Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08
investors and employees that they are no longer followers
when it comes to good governance, risk management, Source: Moody's Economy.com
corporate social responsibility and sustainable best
practices. As China’s Premier Wen Jiabao told the CEOs
of the Global Growth Companies gathered in Tianjin, “If
you wish to remain or become New Champions, you
must be innovative and take the lead.”
11 | Annual Meeting of the New Champions 2008
14. Technology and Innovation: The Next Wave
“Distant water will not put out a fire close at hand,” goes Old competitive models of knowledge protection will
the Chinese proverb – a reminder that the urgent will easily eventually yield to cooperative models of sharing research
overshadow the important in the time of crisis. For companies across borders and even between corporations. This has
grappling with decreased lending and declining consumption, stark implications for the existing intellectual property
the benefits of scientific research and development may rights regime. “The bad news is that intellectual property
seem far too remote. Such an outlook should be rejected. is no longer protectable,” said Neil Gershenfeld, Director
While terraforming Mars or disproving the Higgs mechanism of The Center for Bits and Atoms at the Massachusetts
in particle physics may seem like lofty, far-off goals, science Institute of Technology. “The good news is that intellectual
will drive future growth. Investors and governments property can still exist, but it will not be based on control
abandon or ignore scientific research at their peril. of scarce resources.” Companies will be compensated
based on their abilities to add value rather than on tight
control of intellectual property, Gershenfeld argued.
Science and Engineering Graduates
National governments must also allow the world’s best
Asia produces 43% of the world's science and engineering graduates
and brightest researchers to collaborate more freely.
700
Number of rst university science or engineering
graduates, 2004 or most recent year (thousands)
“There is a genuine worry in the scientific community that
600
we can’t communicate with everyone that we’d like to,”
500
said Brian Cox, Royal Society University Research Fellow
400
at the University of Manchester. Scientific development in
300
the US and United Kingdom have suffered because of
200
more stringent visa requirements, especially since 9-11,
100
that make it difficult for foreign researchers to work in
0
those countries.
China Japan South Rest of EU non-EU North Latin Middle East
Korea Asia Europe America America and Africa
International cooperation is vital to large-scale research
Source: NSF Science and Engineering Indicators 2008
that is not driven by commercial interests. The largest
scientific experiment in history, the Large Hadron Collider
(LHC), aims to recreate the conditions at the beginning of
The United States, Europe and Japan led technological
the universe. This project would not have happened were
innovation throughout the 20th century. The scientific
it not for cooperation among 86 countries and funding of
community has become increasingly decentralized in just
its US$ 9 billion price tag. While the US has reduced its
the early years of this century. To nurture the new global
funding for the space programme, the International
scientific ecosystem, stakeholders should focus on three
Space Station keeps humming thanks to 16 other
goals. First, while national security and intellectual property
countries that contribute to its operation. China may soon
remain legitimate concerns, knowledge and talent must flow
add its expertise and capital to the project. After a
more freely across borders. Second, whenever possible,
successful space walk mission that took place at the
private enterprise should fund new science. Finally, the
beginning of the Annual Meeting in Tianjin, China is likely
private and public sectors should partner to ensure regulatory
to follow the US by landing a spacecraft on the moon.
structures that enable innovation and sufficient financing
for long-lead research. This is particularly true when
While governments and foundations will fund most long-
research addresses collective global concerns like clean
term research, the private sector can reap rewards from
energy and our common stewardship of the environment.
investing in new science, as capitalism is efficient at
deploying capital to create value. If harnessed to scientific
research, it can also be an effective promoter of new
12 | Annual Meeting of the New Champions 2008
15. “There is a genuine worry in the
scientific community that we can’t
communicate with everyone that we’d
like to.”
Brian Cox, Royal Society University Research Fellow, University
of Manchester, United Kingdom
“The bad news is that intellectual
property is no longer protectable. The
good news is that intellectual property
can still exist, but it will not be based
on control of scarce resources.”
Neil Gershenfeld, Director, The Center for Bits and Atoms,
Massachusetts Institute of Technology, USA
technologies. Businesses that invest in biotechnology and success of products like Toyota’s Prius, the private sector
nanotechnology are enjoying superior returns on has been slow to fund clean energy research.
investment. Globalization, after all, has helped expand the
market for life science products. Developing countries Over the long term, nanotechnology will enable greener
with little or no pre-existing medical infrastructure can living, but as the technology develops, “regulation has to
more quickly integrate healthcare advances than take an important role,” conceded Technology Pioneer
countries in the Western world where, too often, Joe Brodd, Chief Executive Officer of Cima Nanotech.
insurance companies impede medical progress. Markets reward transparency, but at the moment
consumers are largely ignorant, and increasingly wary, of the
nanocomponents of the products they buy. Yael McGuire,
Biotechnology Stocks
Co-Founder of ThingMagic, who is also a Technology
Biotech returns outpacing the S&P 500 in 2008
Pioneer, suggested a common database based on the
Wikipedia model where companies and consumers would
120
list all of the nanocomponents in products.
AmEx Biotechnology Index
Indices (100=3 January 2007)
110
Renewable Energy Investment, by Sector
100
Wind and solar represent two-thirds of clean energy investment
$125
Services
90 S&P 500
E ciency
Investment in clean energy (US$, billions)
Other renewables
100
80
Biofuels
2007 2008
75
Solar
50
Source: Yahoo! Finance
Wind
25
Even space exploration can be made profitable. A World
Economic Forum Young Global Leader, Space Adventures 0
2004 2005 2006 2007
President and Chief Executive Officer Eric C. Anderson
brings private citizens into orbit and sees the cosmos as Note: Includes venture capital, private equity, public markets and asset nance investment only
a fertile vineyard. Mineral companies might one day mine Source: New Energy Finance
asteroids; pharmaceutical companies harvest crystals in
zero-G; and transportation companies use sub-orbital Finally, governments and foundations will play a vital role
flights to slash intercontinental travel times. “It is in our in developing and propagating clean energy technologies.
collective interest to bring the solar system within our Globally, investment in such technologies has trebled in
economic sphere of influence,” said Anderson. the last three years. But much more needs to be done to
reduce reliance on fossil fuels, which still generate over
Where the private sector cannot or will not drive research 80% of the world’s energy. Governments can provide
and development, or where it threatens to use science incentives such as tax breaks and subsidies to jump start
recklessly, government and civil society must take the investment in emerging technologies, but such solutions
lead. While the market for products using nanotechnology require careful consideration as unintended
will exceed US$ 833 billion by 2011, environmental consequences often follow from such decisions.
concerns threaten to keep that science from reaching its Government support for biofuels, for example, has
full potential. And despite the staggering consumer generated concerns about food and water security.
13 | Annual Meeting of the New Champions 2008
16. China as a Global Player
Thirty years ago China launched economic reforms that
“What China can do is maintain the
would transform the country and its place in the world. At
momentum of sustained growth and
a speed no one could have predicted even a decade
ago, the nation has re-emerged as a global player on avoid ups and downs. That would be
multiple fronts.
our most important contribution to
Consider China’s progress in technology. As the Annual global stability.”
Meeting of the New Champions 2008 was getting
underway in Tianjin, a Chinese astronaut was making the
nation's first-ever space walk. On the diplomatic front,
Wen Jiabao, Premier of the People’s Republic of China
Beijing’s hosting of the 29th Olympic Games in August
was regarded as a major success, despite some critical
the domestic market. As Alibaba Chairman and Chief
overseas coverage at the outset.
Executive Officer Jack Ma Yun said, “the future of China
is domestic demand and consumption.”
But it is in the arena of economics that China’s gains are
most apparent. Prior to travelling to Tianjin to deliver the
The government is also seeking to transform China from
opening address at the Annual Meeting of the New
a country best known for its low-cost manufacturing to
Champions, Premier Wen Jiabao spoke before the UN
one respected for its innovative capacity. “The most
General Assembly in New York of China’s ongoing efforts
important thing for China is human intellectual capital,”
to fulfil the Millennium Development Goals. “China has
said Guo Shuqing, Chairman of China Construction
brought down the number of people in absolute poverty
Bank. “In the coming 10 to 20 years, we will have to
from 250 million to 15 million in less than 30 years,” he
transform to an innovation-driven growth model.”
said.
China has already emerged as a preferred destination for
With its economic achievements well certified, China now
R&D investment, both foreign and domestic. Beijing has
stands as a haven of economic stability at a time when
set a goal to increase national spending on R&D from
the US and other developed economies are engulfed in
1.4% of GDP in 2005 to 2.5% by 2020. Domestic
financial turmoil and entering what could be a prolonged
technology leaders predict that in the next decade, China
recession. More important, its longer term economic
will for the first time create globally relevant technology
outlook appears strong, underpinned by an expanding
standards.
middle class and growing investments in technology.
China’s sturdy economic fundamentals and high
China’s export-led economy is certainly not immune to a
ambitions are all the more striking against the current
global slowdown that originates from the US credit
backdrop of financial turbulence in the West. In light of
crunch and liquidity crisis. Liu Mingkang, Chairman of the
the nation’s nearly US$ 2 trillion in foreign reserves and its
China Banking Regulatory Commission, predicted GDP
US$ 200 billion sovereign wealth fund, it is no surprise
growth could slide from 11% to 9%. However, even if
that some foreigners perceive China as a potential
exports fall, Chinese firms can expect to profit from the
economic saviour amid deepening global troubles.
country’s growing consumer market. One of Beijing’s top
priorities in recent years has been to wean the economy
Indeed, one near-term challenge for China will be
off its reliance on exports and encourage the growth of
managing international expectations about just how much
14 | Annual Meeting of the New Champions 2008
17. “Within three to five years, climate
change will become the most important
issue shaping the future of US-China
relations.”
Kenneth Lieberthal, Professor of Business Administration,
University of Michigan, USA
“The current financial crisis allows us to
learn how to regulate the modern
financial system.”
Zhang Xiaoqiang, Vice-Chairman, National Development and
Reform Commission, People’s Republic of China
help it will be able to provide to the rest of the world. Its But, as much as China may prefer to concentrate on
own leaders view China still as a developing country that pressing needs at home, it will undoubtedly face
needs time to mature – a nation hardly prepared to increasing pressure to be more involved in solving
assume the mantle of global leader. They are also wary of international problems. Climate change is a case in point,
the political blowback that can come with any attention- as China’s impressive economic growth has also given
grabbing moves. But those who point to China’s rapid rise to record levels of carbon emissions. Some question
ascent up the global economic rankings are less patient whether their country has a larger responsibility to curb
as they see the country as possessing characteristics of its energy use, while others acknowledge a need for the
both an industrialized and developing economy. country to be much more energy efficient. Its policies on
energy security and climate change continue to shape
There is perhaps no better indicator of China’s growing perceptions about China’s role as a global player. “Within
clout than the recent calls for it to become more active in three to five years, climate change will become the most
global governance institutions. “I think with this flat world important issue shaping the future of US-China relations,”
in which we live, China has a bigger role to play in line said Kenneth Lieberthal, Professor of Business
with its current position as one of the leading countries of Administration at the University of Michigan. He reckoned
the world,” said Publicis Group Chairman and Chief that the issue could become either an example of
Executive Officer Maurice Lévy. Some have gone so far cooperation between the two countries or a source of
as to argue that China risks becoming a “free rider” on friction.
the international stage, reaping the benefits of its growing
international influence without playing as active a role in Given the sheer scale of its population and its increasing
shaping the global financial and geopolitical agenda as it economic might, China’s impact on global issues will only
should. That said, the Group of Seven economies has yet increase. Ready or not, China is now perceived to be a
to expand its roster to include on a permanent basis major global player by the rest of the world. The question is
emerging economies such as Russia, Brazil, India and China how it will choose to act in this role.
in its regular deliberations on global economic governance.
China's Foreign Reserves
Yet there also remains a strong consensus among
China's foreign currency reserves are greater than those
Chinese elites that the nation is not yet ready to take up of Russia, India, Brazil and the Eurozone combined
the responsibilities of the developed world. In their view, $1,000
maintaining stability at home remains top priority.
800
Presiding over the next stage of reforms in this highly
(standard dollar reserves, billions)
Foreign reserves, excluding gold
China
complex and diverse country is task enough for now. 600
“What China can do is maintain the momentum of
sustained growth and avoid ups and downs,” said 400
Russia
Premier Wen Jiabao. “That would be our most important
contribution to global stability.” 200 Eurozone
India
Brazil
0
Chinese policy-makers already have to attend to a 1999 2000 2001 2002 2003 2004 2005 2006 2007
daunting list of challenges that include narrowing the
income gap between urban and rural areas, creating a Source: IMF
stronger social security safety net to prepare for an
ageing population and promoting economic growth in the
nation’s poor central and western areas.
15 | Annual Meeting of the New Champions 2008
18. WorkSpace
The
– the workshop with a difference – draws out the collective intellect and creative capabilities of participants to explore concrete
opportunities for improving the state of the world.
The WorkSpace at the Annual Meeting of the New Two WorkSpace sessions were held in Mandarin Chinese
Champions 2008 gave participants the chance to think and facilitated the exchange of ideas and experiences
outside the box, stretch boundaries and explore “The among Chinese leaders. The sessions explored two of
Next Wave of Growth” in a series of 10 highly interactive the topics that concern them most:
sessions. In a variety of collaborative exercises, leaders
• Ways that organizations can be better prepared to
from business, government, academia and civil society
anticipate and handle risks
were encouraged to think of new ways to approach
• Successful principles of different leadership models
some of the most pressing issues.
For session summaries, photos and graphics go online
Collaboratively, participants discovered insights on critical
to: http://www.weforum.org/newchampions/workspace
topics as they consider going global and planning for
their next stage of growth:
• The infrastructure, investment and policies required to
deliver and support sustainable urban mobility
systems
• Successful strategies for building and sustaining an
inclusive workforce
• The outlook on national and international financial
regulations, sources of funding and financial innovation
• The future of the Web and mobile technology
• Emerging business opportunities linked with the needs
and interests of an ageing population
• Entrepreneurial opportunities targeting base of the
pyramid markets
• Design principles that can be applied to adapt and
strengthen organizations and help turn challenges into
opportunities
• Accelerators and inhibitors of global growth
16 | Annual Meeting of the New Champions 2008