Quality Growth - Insights & Perspectives From WEF

“Quality Growth” – My Insights and Perspectives from the World Economic Forum, Dalian, 2011 Johan Björkstén

Chairman, Eastwei MSL, Beijing

Executive Report September 2011

I attended the WEF Annual Meeting of the New Champions 2011 in Dalian for the first time this year, representing MSLGROUP. It was an interesting and rewarding experience, and since several clients have asked me if it would be worthwhile for their China executives to attend future sessions, I have summarized some immediate impressions. To me, this meeting was worthwhile because it: » Focused my thinking: The Forum is content-rich, with many parallel presentations, seminars and workshops.

I don’t necessarily feel I learned many “new” things, but I felt the news flow of the last year or so crystallize into a few key themes. It gave clarity amidst the daily clutter. » Provided perspective: I have never attended a conference of such diversity – disciplines, nationalities and age groups mixed freely through formal and informal activities. It’s been a long time since I had so many truly stimulating and interesting conversations in such a short time.

» Offered networking opportunities: Getting to know other people is as important as taking part in scheduled activities; in any case, even with a backto-back agenda, it is only possible to attend perhaps a fifth of the available formal sessions. For the open, curious business person, the Forum is a great opportunity to make new business connections, and also to interact with leading scientists, senior politicians, seasoned journalists and up-andcoming young entrepreneurs.

Don’t come here expecting new insights about China; the forum is about global issues. But because it is held in China, there are of course quite a few interesting Chinese participants. Similarly, if you take an overly transactional approach to networking, you could be disappointed. I found listening to a Chinese 20-something ask a Fortune-100 CEO questions about management to be equally rewarding.

“Mastering Quality Growth” – a timely theme

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Photo credit: © World Economic Forum (www.weforum.org)/Adam Dean

The Forum discussed growth, because this is the only thing that can save us from current economic challenges and help new generations find employment, but also quality – because this is what will help us deal with environmental challenges, resource constraints, and rising inequality. In this context, entrepreneurship was frequently discussed, and sometimes from a fresh perspective: how entrepreneurship in sustainability and social causes can spur both quality and growth, and thus help us meet the challenges ahead. There seems to be an emerging consensus, among business leaders as well as politicians, that there is a renewed role for the state to play in setting the framework and conditions for entrepreneurship in every sphere, rather than the old libertarian mantra of “getting out of the way” of business.

For global leaders, one obvious takeaway from the forum must have been how dynamic, aggressive and sophisticated developing market players are

becoming, and how close local companies are competing on the world scene. Dozens of young entrepreneurs from China and India plied visiting CEO’s with questions on how to succeed in more developed markets, and how one could go about disrupting inefficient established industries and cozy market reserves. Venture capitalists gave big organizations short shrift: “they are useful as a source of financing and access to markets, but not for much else”. Given the composition of the audience, one somehow had the unnerving impression that the same thing would soon be said of developed countries.

Everyone, from Premier Wen Jiabao, who opened the Forum, to economists and business leaders, debunked the concept of “decoupling”: China, India and other developing economies are still dependent on the world economy; indeed, this dependence is growing as globalization continues.

Wen Jiabao’s opening speech

Photo credit: © World Economic Forum (www.weforum.org)/Adam Dean 4

My impression of Wen Jiabao’s opening address was somewhat different from what I read in the subsequent media reports. Of course, he more or less had to say that China would come to the rescue of European countries in trouble – but he used the expression of “extending a helping hand”, which sounded if not condescending then at least quite self-assured, and also emphasized that in return, he would hope to see Europe recognizing China’s market economy status ahead of the planned 2015/6 date, suggesting that this would be a fine gesture: “This is how a good friend would treat another good friend”.

Political reform was mentioned once, but as usual, without any specific references to what this might entail. More interestingly, Wen mentioned the need for dealing with “monopolies”, something most Chinese listeners would interpret as “state monopolies”, in order to create a more “orderly and transparent” investment climate.

In his comments on China itself, he reiterated his long-standing themes of building a harmonious society and allowing all Chinese to “enjoy the fruits of development”. He talked about the need for

China to educate truly innovative people – going from a “large country in education” to a “strong country in education”. Sustainable development and more inclusive social security systems were other themes.

Perhaps the most impressive part was the Q&A session. Wen answered every question in a structured, logical and eloquent way. When asked how China could more specifically “support developed countries” in times of financial crisis, he put local problems in context by differentiating between the US, which needs to “control debt, reduce deficits and foster economic development and growth”; Europe, which has to “control sovereign debt and prevent contagion”; and developing countries, who are suffering from “inflation and currency fluctuations due to the dollar”. He expressed confidence in the US being able to overcome its problems, and suggested that Chinese investment in the real economy, in factories and companies rather than just treasury bonds, could be a strong support for economic growth, thus pushing a Chinese investment agenda in a persuasive and non-confrontational way.

Read the full speech..

Idea labs Perhaps some of the most interesting seminars at the Forum are the so-called “idea labs” where all participants are involved in interactive, small-group sessions and then share outcomes with the bigger seminar audience.

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In one such session, Professor Ian Bogost conducted a session on didactic computer games such as “Fatworld” which addresses obesity in kids, and training games where fast-food managers learn how to optimize their staff and material use through simulations based on real-life business processes and costs. Games can provide context which is difficult through traditional teaching, by directly and simultaneously highlighting how different factors in a simulation are linked to each other. Rather than studying abstract theory, participants develop a “feel” for how things work. The implications for a developing and human-resource-scarce market like China are obvious: one of the most challenging areas is how to train sales reps and promoters, often numbering in the thousands on this continent-sized market.

In another idea lab, senior business leaders such as PepsiCo CMO Salman Amin and Best Buy VP Kuk Yi discussed the implications for companies of connected and aware consumers. Though the

topics were familiar for me as a communications professional, the outcome added an international angle to my Chinese experience: highlighting the importance of transparency in the supply chain (it’s enough that a single guy with a webcam broadcasts abuses from a factory for any abuse to instantly escalate to a media crisis) as well as the importance of authenticity and “leveling” with consumers; there is nothing people hate as much online as “being talked down to”.

Kuk Yi also emphasized how external transparency forces companies to take a harder look at internal and employee communications; this echoes my own experience, where internal stakeholders are often neglected during an external crisis, which leads to serious disruptions in productivity and can in turn influence the company’s ability to deal with the external pressure.

The consensus from business leaders was that this really is a new world of transparency, where honesty and proactivity are the only paths to competitive advantage.

Management Mentor workshop

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Photo credit: © World Economic Forum (www.weforum.org)/Qilai Shen

Klaus Kleinfeld, formerly of Siemens, now CEO of Alcoa, offered a new perspective on organizational trust: whereas I have always felt trust is something personal and time-based (“people do not trust companies, they trust individuals”) his example of the Navy Seals and the fact that any member of the team can trust another member with his life, even if they have never met before, holds lessons for my favorite topic of Corporate Culture (in my opinion, one of the few sustainable competitive advantages in a globalized world).

He also castigated companies for using unpaid interns – “we should be ashamed of ourselves for treating young people in this way; there are limits to what we can do for the bottom line” – something that companies in China should think especially hard about.

There were also some gems on management in other seminars: for example ways of fostering disruptive innovation in organizations through a culture that encourages mistakes but tries to shorten “time to failure”. The litmus test is how the organization rewards mistakes that REALLY COST IT MONEY, rather than just talking about “encouraging people to make mistakes”.

Science

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Some of the most interesting seminars were presentations on popular science, as well as indepth debates about science and its influence on policy and economy. The most important takeaway: in most cases, we already know the answers to the problems. The problem is not more research, but finding the political will and concrete ways of implementing the scientific findings. One example is the concept of “fish banks”: by setting off marine reserves in depleted areas, local fish stocks can rebound by more than 400% in a decade; fishing can resume outside the reserves and provide sustainable incomes for communities whose fish stocks had collapsed. Yet, only 1% of the oceans are protected in this way, while research shows that perhaps 15% would be needed for sustainable fishing in the remaining waters. Communications rather than science becomes key – how can we ensure that research results and best practices are communicated and allowed to spread from community to community and from country to country?

The Forum’s unique mix of participants allowed for some unusual applications of “science”, such as KaBOOM’s crowd sourcing of “play deserts” in American cities. We know that children spend, on average, 7.5 hours a day on electronic media; we

also know that child obesity is on the rise; and there are strong indications that movement and physical activity stimulate brain activity and learning. But here, additional research is necessary to quantify benefits and explore how city environments can contribute to child development, but KaBOOM is taking direct action by creating local communities that lobby for and contribute to playgrounds in every place where they are needed.

And of course the cosmology session, where we learned about the difference between “dark matter” and “dark energy” (each of which makes up a much larger part of the universe than the stuff we can see, feel and touch) was something I wouldn’t have missed. Don’t ask me to summarize it for you… but it was really interesting and entertaining. I guess you had to be there.

They think of everything!

Arrangements and logistics were of exceptionally high quality. The Forum uses technology to provide a better meeting experience: there is a “private area” website and a fabulous iPad app that gives you instant access to CV’s and organizational backgrounders of all participants, provides an internal messaging platform for setting up meetings, and allows you to keep track of the sessions you want to attend. Service is also superb: when I realized that I had forgotten the charger for my iPad, I agonized for a couple of hours before realizing that it wouldn’t hurt to ask a local functionary if they had a charger… and being directed to the IT Support booth where a friendly techie quickly helped me get juiced up. The assortment of chargers reminded me of what must have been available in the Star Wars bar scene.

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Most presentations and workshops can be summarized as “predictably exhilarating”. Do, however, also expect the unexpected. Because of all the new, interdisciplinary connections, I had a few minor epiphanies over three days of meetings.

For example, I suddenly realized that a couple of distinctly underwhelming presentations had been as important for focusing my thinking as the best ones: a lecture on Confucianism simply highlighted how easy it is for some westerners to wow an audience

by leveraging the exotic mysteries of China and overextending their interpretations into almost anything the author desires; similarly, a presentation by a big-multinational CEO mentor on management practices for global success exemplified how important it is to complement general experience and insights with specific examples if we are to avoid vapid repetitions of hackneyed mantras. The discussion on the emerging consumer, though, was totally disjointed – but what do you expect when you put the Chairman of a Chinese state-owned bank on a panel purporting to provide insight on consumer preferences?

Recipe for success

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Photo credit: © World Economic Forum (www.weforum.org)/Nick Otto

The WEF in Dalian offers the opportunity of new, or at least fresh, perspectives on key issues while hobnobbing with interesting people from academics and politicians to business people and local mayors.

The keys to success are planning – for example, taking the time to leverage the Forum’s excellent attendance lists, programs and community apps in order to set up meetings in advance – an open mind, and lots of energy.

For over 20 years, MSLGROUP Asia has counseled global, regional and local clients, helping them to establish, protect and expand their businesses in Asia.

The largest PR and social media network in both Greater China and India, MSLGROUP Asia is headquartered in China and includes 30 owned offices and 1250 staff across Shanghai, Beijing, Guangzhou, Chengdu, Hong Kong, Taipei, Tokyo, Seoul, Singapore, Kuala Lumpur, Mumbai, Delhi, Ahmedabad, Pune, Bangalore, Chennai, Hyderabad and Kolkata. A satellite network of

Johan Björkstén Eastwei MSL, Founder & Chairman

Born in 1964, Johan has spent more than 20 years in China since his first visit in 1986. He is fluent in Chinese and worked for eight years as a radio and TV host, producing more than 500 of his own weekly Chinese programs on Beijing TV and Beijing Music Radio. He is a frequent guest and commentator on China Central Television and has hosted TV shows and events all over China. In the course of his media career, he has built a strong network with key Chinese broadcast and print media and has deep expertise in how to creatively engage with Chinese audiences.

In 1994, he founded Eastwei Relations, which grew to China’s leading local strategic PR consultancy with over 100 employees in four cities. In 2009, The Holmes Report awarded Eastwei Relations the accolade of China PR Agency of the Year; one year later, in 2010, the agency joined MSLGROUP to become Eastwei MSL. The firm serves a number of Fortune-500 clients including household names such as P&G, IKEA, SONY, Puma, Volvo Cars, ABSOLUT and Singapore Tourism Board.

staff reaches an additional 125 Indian cities and a strong affiliate network of independent agencies across the region adds another 23 Asian cities to our reach. In the past two years, MSLGROUP Asia has been recognized with more than 35 awards, including MSL Japan’s 2009 ‘PR Lion’ in the Travel and Tourism category at the Cannes Lions International Festival of Creativity and ‘PR Consultancy of the Year’ for Hanmer MSL India, 20:20 MSL India, Eastwei MSL China, and ICL MSL Taiwan from both international and local industry groups.

The company’s “knowledge-driven communications” approach has received wide industry attention and has been documented in the local industry bestseller PR, Chinese Style. The book has been printed in three editions and has sold some 13,000 copies in China. Widely regarded as a thought-leader, in addition to PR, Chinese Style, Johan Björkstén has also written several textbooks on China and the Chinese language and writing system, as well as coauthoring Catching Up Fast: PR and Marketing in a Web 2.0 China and the general business handbook How to Manage a Successful Business in China.

Johan is one of the best-known and most respected Swedish businessmen in China. He is one of the founders of the Swedish Chamber of Commerce in China, which in 2010 granted him lifetime honorary membership for his contributions during his 12 years of service on the Chamber Board. Johan is also a Director and Advisory Board Member at East Capital, one of Europe’s largest fund managers focusing on Eastern Europe, Russia and China. In addition, he was Treasurer and Director of the European Chamber of Commerce in China for two years running.

Besides Chinese, Johan is fluent in English and his native Swedish. He freely reads German, French and Russian. He has a Master’s degree in Physical Chemistry from the University of Uppsala, Sweden.

Contact: johan@eastweimsl.com

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