Transcript: Fortune Global Forum, New rules for business

June 6, 2013: 2:40 PM ET

Jamie Dimon, Muhtar Kent and Yuanqing Yang talk with Fortune's Geoff Colvin

130606143208-global-forum-dimon-kent-614xaFortune Global Forum

New Rules for Business:  Global 500 Leaders Look Ahead

Panelists:

Jamie Dimon, Chairman and CEO, JP Morgan Chase & Co.

Muhtar Kent, Chairman and CEO, The Coca-Cola Company

Yuanqing Yang, Chairman and CEO, Lenovo Group Ltd.

Moderator: Geoff Colvin, Senior Editor-at-Large, Fortune

Chengdu, China

June 6, 2013

ANDY SERWER:  Here to moderate our first panel, please welcome my colleague at Fortune, and a man who will never turn down an opportunity to have a Mao-tai toast, Senior Editor-at-Large Geoffrey Colvin.  (Applause.)

GEOFF COLVIN:  Thank you, Andy.  Thank you very much.

So our first session is called New Rules of Business.  And we start with that topic New Rules of Business for a reason.  The rules all seem to have changed, and they continue to change so fast.  Think about it, for decades the engine of global growth was the Western European and U.S. and Japanese consumer.  No more.  Our business models used to last years, many years, maybe 100 years.  And now all of them are changing.

For 500 years the scarce resource in business was financial capital.  It no longer is, even for capital-intensive companies, for all of us the scarce resource is human capital.  The old rules are gone.  We don't know what the new rules are.  We need to know.  We need help from the best leaders of the biggest and most successful companies.  We are fortunate to have three of the most eminent leaders from the Fortune 500 with us today to help us with that task.  So Jamie Dimon here next to me, Chairman and CEO of JP Morgan Chase, which came through the financial crisis with a stronger market position, even stronger, than it had going in.  It has earned record profits for the past three years, and in the 21 minutes since Andy Serwer called this forum to order, the bank has extended $70 million in credit to clients around the world.

Muhtar Kent is Chairman and CEO of the Coca-Cola Company, owner of the world's strongest brand, doing business in more than 200 countries.  In the past 21 minutes, over 26 million Coca-Cola beverages have been consumed around the world.

MORE: Fortune Global Forum: China's new future

Yuanqing Yang is Chairman and CEO of Lenovo Group, which was founded in a guard shack at the Chinese Academy of Sciences in Beijing just 29 years ago, and this year will in all likelihood become the world's number one maker of personal computers, plus a major force in tablets and smart phones.  In the past 21 minutes, Lenovo has shipped over 2,300 computers, and probably more than that because the rate keeps increasing.

YUANQING YANG:  Much less than.

GEOFF COLVIN:  Less than Coke.

So these are very successful businesses, very successful business leaders.  I'll talk with them for a bit and then I will invite questions from all of you.  So please don't be bashful when the time comes.

Muhtar you have arguably the best Window into the consumer economy of anyone.  What are you seeing in the way of new and important trends in consumers globally?

MUHTAR KENT:  Thank you.  I think probably the important thing that we see that is changing, shifting at a very dynamic rate is that consumers no longer want to be talked to by companies that make products, that they actually want to have a dialogue with consumers.  Of course, connectivity is very important in this respect.  The number of households that have Internet, number of phones in the world, smart phones in the world, so the consumers actually want to have a robust dialogue with companies.  They want to also have those companies that make those products for them, even though they're the greatest products in the world, they can be the best products in the world, they actually want the character of the companies to get closer to what they expect the character to be of those companies that manufacture those products.

In the past, 15 years ago, you used to make a quality product, put it on the ‑‑ get it onto the shelf, get it onto retail points of sale, and have good advertising, in other words create positive consumer impressions of those products and essentially that was how business worked.  Today positive consumer impressions are no longer important.  You actually have to create positive consumer expressions and have consumers talk about your products in a positive manner with each other.

And that is the thing that really is changing, and of course how you create communication with consumers today even we're in China today, roughly around 10 percent of consumer product advertising goes through essentially social media means in China, and that number is going ‑‑ that percentage is going to go all the way up to about a third of the total advertising pie by 2015, 2016.  So here in China a great market and it's evolving at an incredible pace.

GEOFF COLVIN:  In other words, this trend you're talking about is true in developing markets.  Is it true?  I mean China is a developed market really at this point, but it is true globally?

MUHTAR KENT:  It is true globally.  It's happening everywhere around the world, character of companies need to get much closer to what the consumers expect, and therefore of course everything that you do, the way you operate, your social values, everything needs to get closer to what is expected of you by consumers.  Positive consumer expressions are key.  How you create them and how you sustain them is the key to success.

GEOFF COLVIN:  Right.  I think we'll be coming back to this issue.  Yuanqing you have a window into the technology economy.  I mean as the world's number one, or soon to be number one PC maker, among other things.  You see the demand by companies and by consumers for all kinds of technology.  This is often seen as a sign of the overall economy.  What do you see as new and important trends?

YUANQING YANG:  So definitely our industry is in transition.  So if you are analyzing the traditional PC, last quarter it dropped by 14 percent.  So this is the worst quarter in the 30 years history of the PC.  But if you combine PC together with smart phone, with the tablet, it's a growing industry.  So that's wild.  So we set a strategy to become not just a PC player, but also a PC-plus player.  So we must win in the tablet area, in the smart phone area, just like Muhtar said.  So now everything goes mobile.

GEOFF COLVIN:  Everything goes mobile and what's the difference that you see in the most developed economies, Western Europe, the United States, versus the developing economies?

YUANQING YANG:  From a growth point of view, so definitely now Europe is the worst scenario.  So there is a lot of uncertainty in that geography.  So the U.S. is okay.  But I'm worried about the current loose monetary policy, whether it can last a longer time.  So China is definitely not growing as fast as before, as the past 30 years.  So even in our industry, so it used to grow at twice of the GDP.  But the first half of this year it dropped, as well, by double digits.  So from a long-term point of view I'm still optimistic, because in the past 30 years the key driver engines are export and the government investment.  So we still haven't completely initiated the domestic consumption.  So I think if we strengthen our domestic consumption so that we still can keep a very decent growth, that's my view.  Definitely the emerging market will be the hope, will be the potential.

GEOFF COLVIN:  Yes, Jamie, demand for credit from businesses, demand by businesses has been a big topic for the past few years.  What we keep hearing and reading is that, in fact, banks would love to be lending more, but the demand sometimes isn't there.  What trends are you seeing in that now?

JAMIE DIMON:  Let me just give a little bigger picture first, things that aren't changing.  Technology is just driving change everywhere.  It has been for centuries and it will continue.  It's faster.  Talent, there's always a fight for talent.  The market, if you actually look at the growth in the market that drives banking services it's growing like this.  I mean if you took the number of multinationals, the amount of trade, GDPs of the world, high net worth of the world, so forget the ‑‑ people over react to the vicissitudes of the market.  The real growth is like this.  And then the hard thing for us is to manage through the vicissitudes of the market.  And you look at credit; you've got to look at everything, public and private.  It's wide open, particularly in the United States.  I think there's some pressure in Europe, but the United States is wide open.  I think people can get credit in China, et cetera.

MORE: Jamie Dimon: Prepare for more volatility

So the main thing, the real difference to me, and I'm going to say it's a broad issue and then it's very narrow, government's role has changed dramatically since the crisis kind of globally.  In governments the best example is Europe, where to me it remains to be seen how this is all going to sort out, what's the role of government, what promises can it make, what can they accomplish, what can't they accomplish.  What do they over promise, which is becoming common, and then specifically for banks it's both I would say regulation, but also how the world is managing interest rates in a way that hasn't really happened since ‑‑ there's an example, by the way, it's World War II.  But, that was the last time it happened like this.

GEOFF COLVIN:  The last time what happened?

JAMIE DIMON:  That central banks of the world ‑‑ well the United States Central Bank set the 10-year bond rate, and it was 2.5 percent for 8, or 9, or 10 years.  And so that's unique.  I mean we're all struggling with it's a different world when central banks are managing interest rates.  The market still sets rates for a lot of different things, but a lot is being set by central banks, too.

GEOFF COLVIN:  Right and so the question everyone would like to hear your views on is what do you expect to happen there.  I mean they're so close to zero.  Rates are so close to zero almost globally that it is an extraordinary situation.  When is it going to change?

JAMIE DIMON:  Let me start by saying that I think what the Fed did, and some of the other central banks, it worked.  So I give them credit.  You know, they didn't know exactly during the crisis.  We had a crisis.  We needed to make changes.  But America is growing, home prices are up, asset prices are up, the GDP is growing 2 percent plus.  It should be more.  In the world, China has been growing, and you can argue it should be more.  Europe is kind of flat lined, but you could argue it could have been worse.  So it's kind of worked.

Then there's this issue about removing it.  And, first of all, I think we all should hope for a normalization of interest rates.  That's a good thing.  The question is what are the circumstances when it happens.  So to me the bookends are, it's really working, America is growing at 3 or 4 percent.  We're adding jobs all the time.  Everyone is making money.  Prices are up, and the Fed stops buying, maybe even starts selling.  You're not going to care.  It will be okay.  There's huge liquidity out there.  The circumstance where you're in a sustained recession, possibly with inflation like stagflation, that's a disaster.

In any event, I think you should expect as we go back to normal it's going to be scary, and it's going to be kind of volatile.  And everyone is going to be looking at every word the Fed says.  If you tell the markets A, B and C are going to happen, they will happen a lot differently than you expect.  So there will be volatility.

After World War II, which is the only example I know of, it wasn't until like 1950 where they let 10-year bond rates go.  A lot of volatility, the markets were up and down.  GDP was up and down.  But growth took off after World War II.  So I don't think it's right for all these people to say it's going to be a disaster.  I think that's probably excessive.

GEOFF COLVIN:  Well, in fact, your first point was remember the long-term trends.

JAMIE DIMON:  The long-term trend is great.

GEOFF COLVIN:  It's encouraging.

Yuanqing, we've talked about a little business models and so forth.  You are in a very interesting situation at Lenovo because the PC business for decades was a fast growing business.  As you say, it's now arguably in long-term decline.  Yet Lenovo is making a big strategic bet on continuing to be in that business, in fact, to dominate that business.

How are you changing the business model to succeed in a radically different environment?

YUANQING YANG:  The business model is definitely an important successful element.  You must balance the business model.  Actually in our industry, once the direct model was the dominant model, because at that stage the PCs were used mainly by the commercial customers.  So they liked the direct model.  But when the industry shifts from the commercial side to the consumer side, the business model has been changing.

So now it seems retail has become more popular.  So Apple is building themselves a store.  Samsung is building stores as well.  Microsoft is trying to build more and more stores.

GEOFF COLVIN:  And Lenovo has some stores.

YUANQING YANG:  Yes, in China we have a couple, they are in China and India and some emerging markets.  So in mature markets, we rely on the larger format retailers like Best Buy.  But this shouldn't be the only model.  This shouldn't be the only model simply because the business customers are still there.  They still need the different model.  So they would not buy in the retail stores.

In Lenovo we created a very unique dual business model.  We use a relationship model to cover the enterprise requirement.  We use the transaction model to cover the consumer and the SMB demand part.  So this is an end-to-end business model.  It's not just a sales model, direct versus retail.

MORE: Emerging markets: Closing the gap

So actually for different customer categories, from a product requirement, they are different.  For commercial customers, they need the more reliable, durable products.  For consumer customers, they need the more stylish, latest tech knowledge, cheaper products.  So from a manufacturing point of view, business of customers, you should use a build-to-order model.  For consumer customers, you should use a build to plan model from a sales point of view.  A service model is different.  So you must have this kind of balanced consideration.

So today in China it seems everyone thinks online sales will become the dominant model, the online model.  But I don't view it in this way.  I think the online and the offline should be balanced.  So particularly for those consumers, they're still likely to look and feel, to see the products and decide which one they want to buy.

GEOFF COLVIN:  It makes sense.

Muhtar, you described a few minutes ago a completely different world of presenting your brand to consumers.  Now, the old way of doing it was a way that Coca-Cola mastered.  In fact, Coca-Cola led the world in developing that from of marketing and that brand building and presenting the product.  What have you learned about changing this big, old, successful organization to doing it in a new way?

MUHTAR KENT:  I think, first, Coca-Cola is really a relationship company.  We have 275 partners around the world, including here in China.  And we operate with those local partners that actually make us really understand the local conditions and consumers much better.  That's number one.  So that is a very big advantage.  That's how we've always operated, and that's how we continue to operate.

In terms of the consumers, consumers' tastes today evolve much faster.  Their needs evolve much faster.  Consumers have much more information than they ever had.  And I think today we are seeing shifts in the retail landscape in terms of how consumers shop.  We see shifts in mobility, shifts in consumer trends, consumption patterns everywhere around the world.  And where they stay, where they go to get entertained, how they want to be entertained, what they want to drink, what they want to eat, all of those things are changing.  The important thing is to understand them, and to be able to actually be ahead of those trends.

And so you mentioned that we have Coca-Cola as a brand.  We actually have 499 other brands, 3,000 other products.  That's all evolving.  You need to continue to innovate, and you need to continue to ensure that you can stay ahead of those trends around the world, whether it be in Africa or Latin America, or right here in China.

GEOFF COLVIN:  And what you're saying is that in your case your partners, the bottlers for the most part, are right there and will help you do it, because they see it before anyone else?

MUHTAR KENT:  Well, that is true, and also they are able to operate much more effectively in local conditions, distribute.  We are a business where we produce locally, invest locally, produce locally, sell locally, hire locally, and pay our taxes locally.  That's the kind of business that we are everywhere.

I've just come from Myanmar where we opened two new plants, and if it wasn't for our local partners we couldn't get operating.  We couldn't be the first company that received the foreign investment permit and have two plants on the ground, and already have on our payroll more than 1,000 people.

GEOFF COLVIN:  This is in a day, right, two days, something like that?

MUHTAR KENT:  We've been working on it for a little longer than a day.

GEOFF COLVIN:  I know.

Jamie, as you said, the role of government in your industry has changed, and it's a global phenomenon.  And you have told the shareholders, you've said publicly that control and regulatory, that agenda, is top priority now for the bank.

You have a big, successful organization, how do you get them focused on a top priority that's not what it used to be?

JAMIE DIMON:  So first of all, banks have always been heavily regulated, so it's not that different.  It's just more intensive.  There's a crisis.  Standards are changing.  I give my kids advice, get adjusted to the new reality quickly, that's what that was.  We've got to fix certain control things.  We had some problems.  We still are growing.  We had record results.  It doesn't take away from all the great things the company has done.  But when you have these demands from your regulators, we're going to meet them.  We fell short in a couple of things they wanted us to do.  And so it's like with the local partners, that's what we have to do to be successful, and we're going to do it.

The whole company gets it.  Organizationally we took some senior people and we made it the job of me, and all the senior people, as opposed to pushing it way down the organization.  We have dedicated staffs.  We've got a group of hundreds that do nothing but stress testing.  We've got a group of 50 that do nothing but resolution.  So we've completely organized around these new challenges, as opposed to making it part of everyone's job.

GEOFF COLVIN:  Then nobody owns it?

JAMIE DIMON:  Then nobody owns it.  It's a little bit more like I think for the most part it's better business to delegate as far as you can, and stuff like that, and to collaborate as much as you can.  But, in certain circumstances it's command and control, like when you do an acquisition.  It's command and control.  You don't have the time and you can't have a vote on which systems you're going to use, or what products or branding.  So this part of the agenda we move to more of a command and control structure.

GEOFF COLVIN:  I want to ask you a general question on something you mentioned, which is the idea of adjusting to your new reality.  You are well known for facing the new reality faster and more completely than most executives in most businesses.  Why do most organizations have such a terribly difficult time doing this obvious thing?

JAMIE DIMON:  I think a lot of people do it really well.  If you look at a lot of businesses, they are exceptional.  Look at these guys.  They're changing around the world all the time and they're adjusting and bobbing and weaving, and adjusting to it.  Look, I think it's important for companies and CEOs, but for the companies, the senior teams to know what's going on, to get out in the field, to listen to it, to hear it directly.  There is this temptation at corporate headquarters, if I write a book it's going to be about the disease of corporate headquarters, if I write a book it's going to be about the disease of corporate headquarters that the staff takes care of everything, don't worry about it, Jamie, we took care of that.  And you're sinking deeper and deeper into a hole you don't even know.

So get out, talk to the people, talk to the regulators, go to Washington.  You may not like what you're hearing, but at least you can respond to it and I always talk about you could be any kind of different good CEOs are all different types.  But one thing I think you have to be is open, sharing information inside the company, transparent.  No one should walk in the office and be afraid to say whatever they think.  If that's the kind of CEO you are you're going to have a problem, it's just a matter of time.  You'll have problems anyway, by the way.

GEOFF COLVIN:  Right.  You'll always have problems there, right.  Another topic, human capital, talent, as you said, the battle is always there.  JP Morgan Chase has a training program for new people that is famous in the industry.  In fact, it's famous outside the industry.  What are you noticing that's different about the people you're bringing in now who are attracted to this program, I presume, but they're not the same people they used to be?

JAMIE DIMON:  So we have hundreds of programs.  As a matter of fact, I think companies do a tremendous amount of training way beyond what people think.  So the one you're talking about has been going on for years before I got there.  We put maybe 1,000 people through the investment banking credit, training things like that.  It's intensive.  We still get the best and brightest out of schools.  You hear that it's changed and that kids are different, total hogwash.  I heard that when I was in high school after the Vietnam era.  I heard that when I went to school.  This generation is lazy and sloppy, and not ambitious, and expects to be handfed, totally untrue.  They, like any younger generation don't exactly know what they're getting into, except their own views of right and wrong, good and bad, and green.  But, that was always true.  My generation got out there, wanted world peace, so I think the generation ‑‑ it's globally now.  The talent is global.

We have a knowledge center where we do a lot of high tech research in India.  When I first got to JP Morgan we had a lot of turnover and one of the reasons was is we hired the best and the brightest and we didn't give them jobs in the rest of JP Morgan.  Now we have hundreds of kids from India who did so well that the top part of those classes, they automatically get moved around the world.  So this thing for talent is global.  It's going to be everywhere and the talent has never been better.

One example that I read about, Stanford University, a teacher in artificial intelligence offered a class, a couple of hundred kids in the class, he offered it online to 30,000 people, or 20,000 people, and if I remember correctly when he gave the test there were 400 people, or something like that, that did better than the number one kid at Stanford.  That shows you about the talent.  And that's technology, which is going to transform mankind.  I mean, in other words, you've got a lot of Steve Jobs.  They're out there.  They're not in Stanford.  They're in other schools.  And when that gets going, god knows how many Albert Einsteins and Thomas Edisons we're going to have.

GEOFF COLVIN:  Yuanqing, this is a topic you are passionate about.  I know you have possibly the most global top team of any large multinational company that I know of.

YUANQING YANG:  Yes.

GEOFF COLVIN:  What has been your philosophy of bringing together that team and developing it?

YUANQING YANG:  Our solution to this topic is very simple, to be true global, to be a diversified company.  So you should attract as many as possible of the local talent.  So if you want to operate in this country you should leverage the local talent, not only to have the local talent, to lead the business, to build the local manufacturing, to support the local business.  So that's why we just opened up the factory in the U.S.  We built the plant in Brazil.  And also we try to build the R&D in some key ‑‑ in most of the key markets, key countries, so that we can develop the customized products for the local requirements.  So that will be our solution.

We also try to acquire some local companies to build the strong base in the local countries.  We acquired NEC PC in Japan.  We acquired Medion PC in Germany.  We acquired CCE PC TV and smart phone in Brazil.  So with that approach, so we've become more local.  So we have a strong base.  We have more capability to expand into the new areas from PC to PC plus, from PC to smart phone, to TV, to tablet.  So as you just said, among our top executives, we have the most diversified team.

GEOFF COLVIN:  How many countries, someone told me this, but I can't remember, how many countries are represented in your top team?

YUANQING YANG:  Yes, so our top 10 executives come from six or seven countries.  And every month we choose one location, different locations to have our top executives meeting.  So this is a pure global company.

GEOFF COLVIN:  And I presume that you can actually identify advantages you get from composing the team in that way, is that right?

YUANQING YANG:  That's 100 percent right.

GEOFF COLVIN:  Yes, okay.  Muhtar, this is a topic close to your heart, as well, I know.  Now, Coca-Cola is another company that's well known for leadership development, on various lists it's ranked very high in leadership development and so forth.  What's changed?  And what are you focusing on most when it comes to that?

MUHTAR KENT:  Well what's changed is that probably typically 20 years ago we had maybe about 10 nationalities represented at our headquarters in Atlanta.  Today that number is over 70, seven zero, nationalities in management, represented in our headquarters in Atlanta.  And I think the mobility is something that's changed.  People are willing to move everywhere.  I think we expect of our leaders to be as comfortable in Munich as in Mumbai, and they need to really be able to understand different cultures, understand different languages, be comfortable everywhere they operate.  And that's really the thing that's changed.

And we have the key is that when we operate in 207 markets we see every one of those markets, because we actually operate factories in those markets.  We don't just ship product with containers.  We hire people locally, train people locally.  We also see every one of those countries as potential talent export countries. And we export talent.  We've exported talent from China.  We have a Coca-Cola leadership academy in China that trains over seven and a half thousand people every year.  We employ 50,000 people directly in China.  And we see China as a great export talent market for exporting talent.  And so it is that itself that has changed.

Secondly, what has changed is that I think psychic income is critical in an organization.  We see that in an organization of 770,000 people around the world that you need to be able to articulate a vision and everyone needs to be connected to that.  So when I travel in Africa, we visit markets, if I can't hear that same language articulated then I know that there's something wrong.  And so it's got to be that is critical in ensuring that an organization understands the whole culture and the direction.

GEOFF COLVIN:  What you're saying sounds like ‑‑ well, what you said about customers at the beginning, and the way they have changed applies in a way to the employees, as well.  They want to understand that the company stands for something, that there is a mission, that there is a purpose here beyond the product.

MUHTAR KENT:  Absolutely right.  And that's why we have embarked upon a task to empower five million women by 2020 across the world.  We call that the 5 by 20 Program.  We have that program working here in China too.  And that is to train, to mentor, and to provide micro credit to prospective women entrepreneurs, and see them flourish in small businesses around the world.  We have by the end of this year, which is the second full year of it being in existence, we will achieve about roughly 500,000, and in the next eight years another 4-1/2 million.  And you can't do that alone.

The critical thing about the world today also is that businesses have to partner effectively with civil society organizations, NGOs, and I know that Lenovo does that.  I know that JP Morgan does that very effectively.  We all have to do that more and more effectively.  I call it the Golden Triangle, government, business and civil society.  We can't solve the world's youth unemployment problem alone.  We can't solve the woman gender equality problem alone.  We can't solve many of the issues in the world alone, and that's what happens more and more in the world.  Partnerships between public and private and semi-private NGOs that are really critical to what we all want to achieve that is business with a purpose.

GEOFF COLVIN:  Yes.  I'm going to invite questions here in just a second.  But, Jamie, it sounds like what Muhtar was saying about purpose and mission is resonating with you?

JAMIE DIMON:  Yes.  It is, and I've heard Muhtar talk many times about the things that Coca-Cola does.  Obviously, people want to work at a place they respect, that the place is doing good on this planet.  All our companies, you can't go do business in a country if the country doesn't think that they're going to be better off having JP Morgan there, and that we're not a good citizen there, we're not bringing value there, it's not going to work.  So all the people in the company feel good about it.

So all the good things we do, you know, in the United States we tithed 5,000 veterans, we finance cities that couldn't ‑‑ after Super-storm Sandy, we backstopped $2.6 billion.  No one else would lend money to them.  And so, in addition to all the philanthropy, and you mentioned training, we train hundreds of officials from around the world go through the training programs.

GEOFF COLVIN:  Officials from?

JAMIE DIMON:  Government institutions, sovereign wealth funds, cities, states, you name it, because that's part of what we do to help and provide the advice, and stuff like that.  So I think everyone in the company wants to say I like this place, it does good things, it's a good citizen where we do business.  If it makes a mistake it admits it.  All businesses make mistakes.

GEOFF COLVIN:  Questions?  There are mike handlers out there, so all you have to do is put a hand up and someone with a microphone will come.

The red paddle, please.  Sorry, the green one, please.

QUESTION:  (via translator.)  Thank you very much.  I'm Kevin from the City of Chengdu.  I have a question.  China is undertaking unprecedented urbanization.  The question is for all of you, could you shed some light on what technologies and innovations can help China transform the way of urbanization with better quality, with better outcomes in its urbanization process?  And at the same time, for China, what business opportunities can urbanization offer in China?

GEOFF COLVIN:  The question is about technology, Yuanqing, so if you could start, please.

YUANQING YANG:  So you want me to answer in Chinese or English?

GEOFF COLVIN:  It's up to you, honestly.

YUANQING YANG:  (via translator.)  So urbanization actually is definitely the trend of China.  Urbanization can help us to solve a lot of issues, including the consumption driver of China.  More people from rural areas of China will move to urban areas, and then we will have a higher level of consumption.  Then we can liberalize and free up more consumption power.

The GDP per capita in China now is only one-sixth or one-seventh of the United States of America.  And in contribution of GDP per capita, it's much, much lower than that of the United States of America in terms of contribution of consumption to GDP or GDP per capita.  If we can use urbanization to free up this power, the third driver, then we can extend China's high-speed growth for decades.

Of course, we have many challenges in the process of urbanization.  For instance, how can we jack up the living standards and the salary and the disposable income of the people so that we can have some conflicts be addressed?  Of course, there are some issues.  If we raise wages, the competitive edge of the manufacturing sector will decrease.  That will also translate into some issues.  Of course, this will test the wisdom of the Chinese government.

Another very important issue is the social security.  In the process of rapid urbanization, this mobility of people from the rural areas, how can they be protected by the safety net?  How can they consume at ease without worrying about what will happen when they are 70 or 80, when they're old?

So these are all very important issues, and also another issue is about the price hurdle related to the taxation issue.  If we have 70 percent value added taxing of all products, then it's very difficult for us to have cheaper products in China than the United States of America.  Then that will also be a very important hurdle of consumption.  That is a price hurdle or obstacle.

So in terms of the technology, I have some predictions.  First, computerization will be everywhere in the future.  In the past, we have computers, PCs.  But now your mobile phone is a computer.  Your TV can be a computer.  And all terminal devices can have a capability, a very strong capability of computing.

And the second trend is a mobile trend of all of the devices.  And you will have these devices everywhere, anywhere, and so the PC will be not on the desktop.  It will be everywhere.  It can be used as a TV or any other devices.

And a third trend is humanization.  Human factors will be more important.  It will be much easier to communicate between people and machines, like voice control, touch control, et cetera, will be more intuitive.  You can recognize face, the eyes, and the fingerprint, and all these technologies will be the trend.  So I can wave to the machine of the Coca-Cola, and I get what I want.  I talk to my cell phone, and then I can sell my stocks through JP Morgan's accounts.  Of course, you have to have money in the JP Morgan accounts first.  Maybe these are the trends of the future in terms of technology.

The last trend to me for businesses, for customers of businesses, consumerization is a trend.  Consumerization will be a very obvious trend.  Now business will buy a computer for employees, but in the future all the computers and devices will be brought by the employees themselves.  They will bring their own devices to the businesses.  But then we're facing new issues of security, et cetera.

So these are my views.  Thank you.

QUESTION:  (via translator.)  My question is directed to the CEO of Coca-Cola.  So we have more than 60 percent of the people online in real-time.  So for Coca-Cola in this kind of a new environment of the Internet world, how can you keep your very strong position as the number one brand in the world?  How can you be more adaptive facing these new generations of consumers?  Thank you.

MUHTAR KENT:  Yes.  I think as I said at the beginning, I think you nee dot establish dialogues, one-to-one dialogue with consumers.  That's why Coca-Cola today would have almost 70 million members on its Facebook page.  That is why we have rewards programs that are directed specially to enable us to have those one-on-one dialogues with consumers understanding their needs.  And as long as you can keep up with the needs of the consumers, as long as you can continue to innovate with your products, innovate with your packaging, innovate with your delivery mechanisms, and ensure, like Mr. Yang said, just to have it available also to work with the latest technology, and also be part of the social story.

And I'll give you an example, and this was not an easy decision.  But the other day we had a vending machine in India and a vending machine of Coca-Cola in Pakistan, and had cameras on the vending machine where a consumer in India shared a Coke with a consumer in Pakistan, and that collapsed all the social media networks because so many people were talking about it.  So just a small technology, a product, a brand creating that kind of buzz between two countries that really have not been able to come together as peoples and as governments, and whereas the consumerism is bringing those two countries together.

So it is those kind of being ahead of trends, ensuring that you can take some risks.  There's no reward where there's no risk.  So you've got to be able to take risks.  And that was a risk we took, and that created that kind of buzz.  And also to be able to talk and listen, most importantly listen to consumers, have dialogue with them.

But one thing I would just like to add to the previous question, if I may, about technology.  There's also, I think, a really important factor, which is that as in a country like China, inevitably, as it happens now, and inevitably it's going to happen where wages are rising ahead of GDP.  I think it is so important to be able to crack the calculus of productivity, and to be sure that you can use technology in an effective manner so that logistics wise, distribution-wise, production-wise, you can be sure that you are achieving productivity, because if you can't, then you can't sustain your business growth model.  And I think it's critical upon all businesses in all emerging markets.

And then comes the following question, through productivity, if you achieve productivity and you are able to cut costs so that you can stay ahead of the game where labor costs are rising ahead of the GDP, then what happens in terms of unemployment or creating job opportunities for those people that now are seeking alternative employment methods because of productivity coming into the game?

I think there's a wider sort of macroeconomic and social policy issue that we all need to be aware about, and also we all need to maybe come together about some new definitions of what work is and how opportunities are being created, also.

GEOFF COLVIN:  For sure.

Here please, this will be the yellow paddle.

QUESTION:  I refer to Mr. Kent's remark on the triangle of government, business and civil society.  I think it's an important remark you are making here in China, because the civil society factor has been a difficulty in the past to register.  This has changed.  I'm Chairman of such a civil society structure, global think tank called the Club of Rome, and I'm just coming from Beijing, where they have informed me that the rules for registrations of civil society structures have been streamlined and improved, so much so that this triangle can also be applied here in China.  Thank you.

GEOFF COLVIN:  Thank you.

Well, it's an uplifting note on which to end.  I'm sorry we have to wrap up, because we've had some tremendously insightful comments from our three panelists.  But we do have to wrap up.  We have to keep to time.

So we're going to be going straight into the next session, but first of all we most heartfeltedly say to Jamie Dimon, Muhtar Kent, Yuanqing Yang, thank you all so much.  (Applause.)

END

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