 I'm Aaron Kramer and I am delighted to be moderating this session on New Frontiers in Consumption. I think the video that we saw, the brief video we just saw, was an excellent way to set things up and visually very, very appealing. We've heard a lot about consumption here in Daliang this week. Wenjia Bao opened up by talking about the need to increase consumption in China. We've had throughout many different sessions discussions about the waning confidence of American and European consumers. Throughout many discussions we've talked of course about the challenge, the environmental challenge to existing models of consumption that we have and the view that if we extend those to all seven billion people that the long boom that we've experienced would turn into a big crash, an environmental crash and possibly also an economic crash. And yet we want to have an economy that delivers prosperous and dignified lives for all the world's people. When we talk about consumption we know that today's consumers are very different than they've been over the past several decades. With the archetypal consumer in post-World War II was a suburban dweller in the United States in the post-Cold War world, the archetypal consumer is a resident of a mega city likely in Asia or Latin America. Today's consumers have access to information unlike anything before. Today's consumers define quality differently, increasingly thinking about the social and environmental attributes of a product and today's consumers in fact increasingly have the ability to be producers using 3D printers and things like that to make their own products or customize products rather than receiving produced items that come from large companies. So the landscape is shifting and we've got five people this morning who will give us further insight into how the world is changing, what some of the risks are out there with existing models and hopefully how the new frontiers of consumption will lead to new and more sustainable forms of prosperity. So we're going to go right to them, we'll hear from them, we'll have some dialogue up here and then I'm going to turn it over to you. We're talking about democratizing consumption, we want to democratize the session as well and hear from all of you and get into a good discussion. So I think you know who everyone is here, I'm not going to introduce them, let's get right into it and let me invite Mr. Ma Wei-Wa from China Merchants Bank to open it up. Thank you Mr. Chair. Consumption certainly is an issue that is of common interest. Consumption has become an issue that we face in our daily lives. Consumption is also an issue for a country's economy and a region's economy, therefore I'm keenly interested in the issue of consumption. As Mr. Chair has rightly mentioned, consumption moves along with a region's economic, social and technological development. In different development stages, there are different requirements for consumption. For instance, when per capita GDP was below 3,000 US dollars, consumption is largely to feed oneself, so it's a consumption to feed oneself. Most of the emerging economies, including China, used to be that. But of course, when per capita GDP amounts to 6,000 US dollars, consumption model begins to change. It's not just about self-feeding, perhaps people will be more focused on their own health. When per capita GDP amounts to over 10,000 US dollars, then consumption will be more focused on spiritual consumption. Rather than simply material consumption, entertainment, etc., people will be more focused on spiritual level. So in different stages, consumption differs. In China, per capita income has already amounted to 4,000 US dollars. Angle coefficient in the past 10 years was reduced by 3 percentage points. In other words, China has gradually become a country away from basic self-feeding into basic or moderate prosperity. So that's the change taking place in China's consumption model. But of course, China is still some way behind the spiritual level of consumption. At this stage, looking at the demand in China's consumption market, there have been great changes taking place. I mean the banking industry, China Merchant Bank is a young bank with only 24 years of history. Looking at our employees, or have 50,000 employees with an average age of 28, more than 85 percent of them are college graduates, our clients are young generations as well, a large amount of them are educated in the colleges. So in terms of researching the consumption model of my clients, I came to notice that the young people have their own way of consumption. To start with, they like fashionable things, they like to follow trends. That's very unique and very evident. Let me just give you one example. iPhone. iPhone has become very popular among the young Chinese, whether their witches are. An iPhone is perhaps one of their girls, so most of the people on the street have iPhones. I'm talking about the young generation. Perhaps the same to elsewhere in the world. When I was in New York, early April, I noticed that many people were lining up in a queue outside the Apple shop, quoting the words of Jacobs, it's not a demand that leads a product, it's the demand that, and it's a product that creates the demand. In China, people, young people like to watch movies. The most popular movie is Avenda and Inception. Mr. Cameron is really very great. He invested hugely in a big movie, a box office movie. This movie earned 2.7 billion US dollars in revenue because it enjoys the popularity of the young people. Almost all the young people went to the cinema and watched it. China also has a good movie, which is a love story about Hawthorne trees, the love story under the Hawthorne trees. It was a very touching story. I think that was a good story, but the movie wasn't enjoying a good box office because young people do not appreciate tragic stories. And they're more interested in the future stories, the high tech stuff. So this perhaps is something unique to the young generation. And the young generation have a higher desire to consume than their ability to consume. And their ability to consume exceeds the ability to earn money. And the young people seem to have an influence among each other. This is a big inspiration to us in the banking sector. Let's look at our credit card. I'll be able to find a large number of loyal customers. So there is a change in our user group. People would like to overdraft their credit cards, they're more willing to use bank loans. So starting the emerging markets, we should look at the young generation first. We should look at how they consume and how, and then we should follow up with our own service models and production models. Because in the internet age, the world is simply the same. Mr. Friedman was talking about the world being flat. In the young and emerging markets, the young people are influenced by the fashionable trends coming from New York, Tokyo, and Paris, etc. So that generates production. And then the emerging markets will quickly stand atop the world, following up with the trend of the young people, following up with their mindset to consume ahead. That's a good way to stimulate our technological development and bring the technological advance with our production. This is a huge market. Thank you. And I think you set us up very well talking about a potential transition from material to spiritual desires. And with the image of people lined up outside the Apple Store and talking about spiritual desires, that creates, I think, a very interesting picture that I hope will debate. And Chandran, I trust that you'll get into those very kinds of questions. I'm going to say a few things that I hope, instead of making me an instant pariah, will make me a bit of a celebrity. But that's being hopeful. I'd like to start by saying, in my view, the new frontier for consumption is actually all about restraining consumption and directing it in the right way. More is not better. So I'd like to just say that I think it's great that at the World Economic Forum there is an injection of the issue about resource scarcity, consumption, etc. Having said that, I went and attended quite a few of the discussions and plenary sessions around resource constraints. And all I heard was that somehow we'll all overcome constraints. It was typical biz school speak. I never heard the word limits. And I don't know how many of you are scientists, but if you had a bunch of good scientists here, they would tell you that there are limits. Nitrogen, phosphorus, and then down the periodic table, and then to fisheries, forests, etc. So I think we need to start talking about limits. And that's not a bad word. It's actually a kind of good word. I'd like to frame this issue of consumption by just looking back to the financial crisis in 2008, most of you will remember. In 2008, during the height of the financial crisis, what will be in Asia told? Please consume more. Don't save, please consume, rebalance the global economy. At the same time, about six months later, there was the run up to the climate change conference, and everyone was saying, this is the biggest global challenge of our times. The same people and politicians who on one hand were talking about Asians consume more were telling Chinese, you're all nasty, you're polluting the world. You Indians need to get better. But the Indians didn't get too much of a hard deal because they're good Democrats. But the Chinese were being labeled as nasty commies who were not really understanding what the dilemma was. The problem was no one was connecting the dots. If you're intellectually honest, which I think is the biggest deficit in the world at the moment, you will understand that Asians consuming more and reducing emissions just doesn't work. It doesn't. So I'd like to just suggest to you to think about a couple of things. In 2050, the population of this part of the world will be about 5.56 billion. Give or take a couple of hundred million. Five billion Asians today and aspiring to live and consume like Americans is not a good idea. This will not be good for anyone. So we need to change. This is not to suggest that Americans are leading a life of indulgence, etc. I don't want to go there. I just want to say we cannot do this. We have to have a very different future. And therefore, what does consumption mean? Today the consuming classes in Asia, those who buy luxury bags, etc., are probably about half a billion. There are 3.5 billion, 2.5 billion who are not even in the periphery yet or consumption as we understand, those of us who are more privileged. They, if they consume like the OECD model, the game is over. So we need to redefine what we mean by consumption. In my view, the whole issue of poverty, alleviation, etc., is going to run into and is or probably run into that brick wall of consumption that grows. Because it's essentially disproportionately extracts natural systems to the point that those who need it the most are deprived. So if you look at it in a wider scheme of things, I mean to many forums where people talk about the last 300 years, 30 years of over-leverage, etc., I typically say you want to take 30 and multiply it by 10. It's basically been 300 years of exploitative growth, essentially one in which we under-price everything, we externalize costs. When I'm more cheeky, I suggest that if you want to look at the premises of that economic model, look to slavery. I mean slaves are the first under-pricing of resources. Then we had colonization, which is let's take things for free. And then we had globalization, then globalization of finance, which is essentially let's live beyond our means. Now this is not a left-wing rhetoric, etc. This is about where do we go from here. And I would finish off, Aaron, by just suggesting, we will need to understand in this part of the world. I'm not sure what the West can do at this point, apart from good rhetoric. But in a way it doesn't matter, because the population of the West in 2050 will be about 700, 800 million people, less than 10% of the world's population. What does matter is the decisions taken in this part of the world. And we will need very, very different ideas of what human progress would mean. And I would like to have that honest narrative discussed in the business forums, etc., rather than the sort of, a rather simplistic view that we can grow endlessly and somehow there are no limits, that somehow we can innovate and everything will be all right. There are limits to what we can do. And this part of the world will define the 21st century, not because we're special or we have Asian values, etc., simply because the numbers matter. And I'll end by saying, therefore, I argue that we will need very, very tough rules. And again, one of the things I found sort of always in the discussions of the last three days was every time government was mentioned, it was like, get out of the way. There was a resource discussion about, you know, governments need to lead, but then please get out of the way. I don't know what that means. How do you lead and get out of the way? You wouldn't have a company where someone, the CEO leads and then it's told, get out of the way. Clearly governments need to be less apologetic for how the discussion goes forward. And every time we see government officials, they seem to suggest that they need to play a back seat. Actually, they need to play a very front seat. So I'm arguing for strong states. And I've finished by saying, whenever I talk about strong states, everyone then seems to think I must be some card-carrying member of the Communist Party of China, which I'm not. Like to be, but. Although I suspect that in this room, they'd, you know. You know, I mean, this is the place you can say this kind of stuff. But there's nothing contradictory between the democratic state, which is strong. The problem we have in the more liberal democracies is the assurping of the democratic system by vested interests. And what I mean by strong states, be it the Chinese system, the Indian system, or the American system, is the state needs to be strong and it should not abdicate its responsibilities because it's only the institutions of the state and protect common interests. And in a constrained planet, that is going to be the political challenge of the 21st century. Thank you. Chandra, thanks very much. I think we've been set up beautifully. Honored Mr. Ma, we've heard about the wrong considerations and now we've heard about the importance of limits, whether environmental limits, scientific limits, or regulatory limits. Now, we'll get back to Bethlehem who is trying to send some of these things. The company, Bethlehem, what's your perspective on, on all this? Start by saying thank you. Thank you very much. First of all, I'm gonna answer the question is what I'm doing. First of all, let's start treating people, consumers as a people, not like consumers, but as a people because that's what they are. In our company, we focus treating our customers in the way we treat our friends, like thoughtful people who are full of possibilities and ready to experience the unexpected. This is, there is an over focus on pinging people into customer boxes, doing these limits possibilities in terms of products, making customer services and opportunities for growth, and yet companies continue to do this. I want to offer a different perspective. Treating consumers like a people leads to growth. For example, in my company, we're online because we have an amazing customer services. We talk to customers every day. So we're selling our products all over the wallet, but the thing is we give a guarantee. Whoever gets our product from anywhere, if they have got any problem, they can tell us the problem, what it is, and we will change the product to them. We went to show people in a meaningful way. We stand 100% beyond every product that we produce. So it gives a customer or a consumer a confident to buy our product. The other thing is we are consumers. We're buying more products from different places and we are dissatisfied with customer services. That's why we opened this line for our people who's buying our products. We have also furnished, because people can see that our brand has people in it. What I mean is a lot of brands are saying we're fair trade, we're eco-sensible, but there is no transparency in what they do. So my company is the first fair trade organization and certified by fair trade. So people can see how we transparent and we put our workforce in front. So no matter what it is, we can answer the customer's question. That's my perspective. The other one is it's about nowadays, young people are about green products. So a lot of people saying when they establish the brand, they spend lots of money to tell to the people how they are authentic or green. I say we're green by heritage because it's not in the team, but we are. We are producing in Ethiopia our product in, people were producing before long time by hand eco-sensible products and we do a lot of recycling. So that's the future. Customers need authenticity from their brands. So we should give them that as a people because they care about the environment, they care about the brand. They're asking a lot of questions nowadays. If I'm buying one pair of shoes who's doing these shoes, how people are getting treated behind this product. So we have to fulfill those questions that they're answering. The other thing is we have to stop telling people who they are. They have to tell us who they are and what they want. So I see a lot of things like these people are from this demographic, these are from this, we have to stop telling people who they are. That's my perspective. The other one is I believe that brands from developing nations, they have a great possibility to become standard brands when they present fresh new point of view that these things from brands that are in the market today. We can offer people in a meaningful and last impact on our country or our region by changing people's life, by changing communities, by using lots of materials, organic materials, we can furnish that. And the other is equalizing the global playing field commerce when we're littering their creativity being enjoyed by a wider audience. So we have to put together a technology to sell our product to the consumers to be transparent also. Brands at their best are emotional links to people. So fresh dynamic points of view are always something good and something desirable. So we believe wider people today are asking more from their brands. Thank you. Right, thank you very much Bethlehem. And I love the quote that we have to stop telling people who they are. I think a lot of business is indeed based on that. And so I think that's a very, very interesting and different perspective. And of course, you've created what is in essence a closed loop model, which I think gets to some of the issues that Chandran's speaking about. Dara, you've started a company that helps to address some of the green aspirations that Bethlehem spoke about, Mr. Moss spoke about. Tell us what your perspective is as you're trying to help consumers make very different choices. We've been studying consumers for the last five or so years. First, I'm a professor at the University of California, Berkeley. And more recently, as Aaron mentioned, threw a startup called GoodGuide. And what we've seen is very rapid changes in consumption patterns and often sometimes surprising changes, particularly in young consumers, first in the US, then in Europe, and now in Asia that we're studying. I just want to talk about three or four big trends. The first is we're seeing radical changes in transparency in the marketplace that consumers want to know more, can know more, and share more than they ever have before about products, companies, supply chains. So we see a real increased demand for information about the environmental, social health performance of products and companies. Consumers wanting that information, getting it, and then sharing it, tweeting it, Facebooking it, moving it around very quickly. The second is we're seeing consumers are much more social in their shopping. They're bringing their friends with them both literally and electronically, that we're seeing people no longer trust brands and retailers to tell them what to think about a product or a company. They're looking to people they trust. And in the US, at least, trust in companies has plummeted, trust in governments has plummeted, trust in NGOs, in your friends and experts going up. So we're seeing people looking for peer learning and information from their social network in their decisions. Third, much more personalized. They don't want mass products. They want customized products that are tailored to their specific health issues, ethical issues, personal issues. And we're seeing interesting move towards mass personalization, mass customization of products that people are moving from being told what to consume to them and their friends in the crowd actually telling brands what they want in brands. Fourth, a big trend in health and sustainability. We see it starting with the people seeking safe and healthy products. And this is consistent from China where we've seen scandal after scandal in baby formula, in milk powder, in products where consumers are wanting to find safe and healthy products they can trust. To the US and Europe where they're looking for healthier products that are better for them and then more sustainable products that are better for their community, for the planet. And so we've seen a growth in consumers that are really bringing health and sustainability into what quality means, into what they look for in a product, what they care about. So this really is not just in San Francisco, in the Bay Area, but this we're seeing this across the US, in Texas, across Europe, across Asia, more and more consumers that are empowered, they're looking for more information, they're demanding more from companies, they're being more social. We also see, I think quite frankly, dichotomies in the market, where as the New York Times reported yesterday, the Chinese have now leapfrogged the US as being the number two consumers of luxury goods in Paris. So we see Chinese consumers that are consuming luxury items. But also rapid growth in organic sales within China, rapid growth in natural product sales, concern again for finding safe, healthy green products, energy-efficient products, energy-efficient light bulbs, recycled paper. So interesting divergence in the market, but I think more and more consumers that are looking to transform their own consumption to be more empowered in their decision-making and to be able to find products that really match their values and concerns. Great, thank you very much, Dara Ann. I think the notion of social consumption is something maybe we'll come back to. This is the one dimension of things that people were not talking about so much five years ago or so, and it's landed and in a big way. Mr. Shu-Pey-Shin, we look forward to hearing your perspective from... On my personal view, I think in terms of the new frontiers of consumption, we need to identify first with the emergence of Asia market and the dwindling of the European and American markets. We may be able to come to this conclusion. In other words, the focus of the world's consumption market is being shifted to Asia. If we look at the percentage increase, what will be the content increase following afterwards? I think that when the shift changes, there will be changes in the financial market and the banking service market. So I believe in the future, with the shift focus in the consumption market, there will be a shift focus for other industries as well. That's my first observation. Second, we are talking about reducing consumption, increasing demand, and other self-contradictory terms, like people do not have the financial ability to buy things and people need more healthy and more green products. Aaron Kramer and the Asian... As Aaron Kramer has rightly mentioned, Asian market has been growing like the China market isn't growing by 50% annually. At the same time, we've seen the emergence of new products, new technologies, and new information which generate the diversification of our consumption. It's not within our imagination. But rather, when the young people have the consumption ability, the major players of the consumption will be different. More individualized consumption will also lead to more diversified consumption and structural changes in the consumption model. At the same time, this will break down our old model, where we focus on the manufacturing sectors. This younger, more individualized consumption will lead to more diversified production model and resulting in a total transformation in the manufacturing architecture. If you agree with me, now let's turn to the fact that once the consumption market changes, there will be changes in the service sector. And when the diversified consumption takes place, we need to think about other potential changes. For example, changes in the financial market, the market of financial derivatives, and even the manufacturing sector. All of those will generate a total transformation in the world of architecture. This is not simply a discussion about whether a product, a new product, is green enough or safe enough. Although those are issues that have interest to all of us, but perhaps we should look at broader issues, that is, once the changes in the consumption market take place, what will be the changes in the economic architecture? Thank you. Well, that is just fascinating, and I think, indeed, the future, we hear you all right, let's see. Maybe it's to help with the microphone, for the sound people, just try to be as loud as I can. Thank you. How about this? I think this is a divine way of telling the moderator to stay out of the discussion. So let me pose a question here. Every one of you has spoken in some ways about more autonomy for more people, and in the case of Asia's rise, a different set of people than have had autonomy over the last 50 years. Is more autonomy a good thing in terms of the consumption models that are likely to emerge, or is more autonomy going to mean more consumption of natural resources that are finite? Is this something we celebrate, or is there something that we need to limit or channel? Chandra, do you want to start? I think, I don't remember saying that more autonomy was a good thing. I think I said, perhaps indirectly, something quite different, that we actually needed to have better rules which would not allow for lack of progress, but fundamentally deliver on greater equity in terms of people's livelihoods. In this part of the world, I don't think any of the science suggests that more consumption in terms of material consumption, which frankly, we can talk about all the other sorts of consumption, but it's peripheral. The growth, the economic growth model is based on material consumption, extractive and underpriced and externalized. More autonomy is, I don't know what actually that means, because we do need rules in all societies. I don't think you can drink and drive in any country, most countries, there are rules. You can't smoke in this place, because it was decided it was not in the welfare of everyone. 50 years ago, you could shoot elephants, today you can't, there are rules. So rules are not a bad thing, but I think we have become to believe, in many forums, that rules are a bad thing. Good rules are fundamental to the existence of strong societies, and we all abide by that. So I would think a way of looking at human progress, and I'm deliberately not using the word economic growth, is to look at what are the social contracts, because I think the social contracts have been eroded enormously by the usurping of the institutions of the state, and the institutions of the state need to reclaim their right to mandate what's in the long-term interest. But all of us collectively doing our own thing, individually, sorry, doing our own thing, can result in collective disastrous outcomes. And I'll just give Kaz as an example. You know, I've said quite often that car ownership, if you've been to any Asian city, you will know that we need more cars in Asian cities like I need a hole in my head, yeah? But China and Beijing, at least, have decided, enough is enough, we're gonna do something about it. We are gonna have to do something about it. There is no way out of this, but the individual right expression of the right to own a car, I don't think is any more a right, and only the state can intervene, but mobility will be very important. And that's where the collective welfare before individual right becomes a very different discussion for what I dare say has been a Western narrative that the individual is king. Dara, you wanna jump in? Yeah, just one thing that we see is one of the most exciting trends in this area of sustainable consumption is what's being called collaborative consumption. So not being more autonomous, but actually people sharing products, people switching from products to services. So in cars, in places like San Francisco, there's no reason to own a car. So you use Zipcar, a car sharing service. There's no reason to own a vacation home. You use Airbnb or whatever, where you move from consuming products to consuming services, sharing services, and really interesting eBay to Alibaba and Taobao and Red Baby, we're seeing all sorts of different types of consumption emerging that I think are really interesting. Consumption, with your average age, 28 workforce, what is their view on this question? What is it that you got? I think looking at the force behind consumption, it should be economic development and technological advancement. Previously people think that culture sets one's consumption model and consumption behavior. People tend to think that the Eastern people will look at saving more and will not spend more. That seems to be an oriental virtue and high saving rate in the East and high spending rates, high consumption in the West seems to have already become a balance. But the Western financial crisis broke this balance. I think that the fundamental reason is not about restraint or autonomy. The fundamental reason is economical reason. I've noted the emergence of the emerging economies which will drive forward the world consumption leading to changes in the world's consumption architecture. In the aftermath of the financial crisis, the Americans began to be more conservative, indicated by the increasing in the saving rate, whereas the consumption model in the Eastern markets began to change. There is a figure coming from a consultancy company which forecasted that by 2020, the American consumer's percentage in disposable income will be reduced from 40% to 35% and there will be an increase for the emerging economies, in particular China will increase from 9% to over 20%. That indicates a huge change. The change takes place simply because, as we have noted, middle class has become an emerging force in the emerging economies. In the rise of the emerging economies, there could be a period where the GDP coefficient will rise up, more people will have better income and more people will have lower income as well. However, the main backbone in the consumption force is the middle class. The emerging market are trying to balance the population structure in order to reduce wealth gap and in order to have more middle class because we are being cautious against falling into the middle income gap. In that middle income trap, in that trap there will be no major consumers, but I've noted the strengthening of the middle class in China. Urbanization is another trend. In the expansion of the emerging markets, urbanization is important to impetus. Urbanization means a growing number of people living in the cities. China's urbanization has been growing by 1% every year so more people living in the cities will generate more consumption. I've also noted that in the emerging markets, the consumption model tends to be explorative or experiential, whereas the consumption model in the western countries tends to be more conservative and more fixed. So the emerging markets will generate greater force for product innovation. I've also noted young people in the emerging markets tend to favor online shopping. For instance, the third party transaction market in China has been growing by 100% every year. Online shopping is very advanced in China. We have our first online shopping through the bank platform coming from our bank, but we've never anticipated such a gross pace. So my conclusion is the force behind consumption should be economic reason, technological reason. Technology itself is a force of production. Economy can transform people's culture, people's consumption habits and the structure and even bring about a new direction. So I don't think that autonomy or restraint will change consumption. And Bethlehem and Xu Peixin, I'm curious, given your experience in reliance on e-commerce, does that change people's behavior? From my point of view, yes. You can see a big random change of people's behavior because of internet or social medias because people can interact with each other and talk about the product, especially that they bought. And it's coming like if it's bad product, people are not buying again because of those reasons. If it is good product, people really talk about it and they put it in their Facebook or whatever they're using. So social media is growing and it's really working for my business also. Illustrate for us how social media are influencing the growth of your business. Well, it's not that much far. One month ago, we launched online sales from Ethiopia to all over the world. And it turns out in moments we sell a lot and we get lots of retailers buying online to their small shops because we're after the niche market. We're not that much big market. And also people are coming to us with the color that they want, the style that they want. It's like custom made product that we do. So people who really believe in the brand that we do, they write us in the Facebook or email us, can you do this size sometimes? They ask like huge shoe that they cannot find everywhere. So it's kind of interesting for us how social media working for the business these days and you will be amazed. You're sitting in Ethiopia but you're sailing all over the world. It's amazing. Again, the notion that the consumer is a passive participant in the economy is breaking down. Consumer is creating products that the consumer is indeed a citizen. Consumer is voting with their political views in some ways via good guide and other things. Xu Peixin, what's your perspective on how the very way of thinking and behavioral change is being transformed this way? Well indeed, new technologies have brought about a changing paradigm of consumption including internet. Well, my company is an online sales operation but in the United States, online accounts for only 6% in the UK, 5% in China, less than 2%. I don't think this kind of online model is going to topple the physical sales of a fortune 500 companies like PNG but the information interaction online precisely resolves the information asymmetry we used to suffer from. Everyone is free to choose what you like online, to search what you desire, like your favorite t-shirt, you can search it and find out that it is in Brazil. And also the payment services have grown very much. I'm also a VIP customer of China Merchant's Bank. I have four CMB cards with me. The CMB IT system is state-of-the-art. That's one of its differentiators and the technology has changed a lot and it's going to change our consumption capabilities as well. We're talking about being green and being safe and we can do benchmarking and compare and contrast online and the personalized and the customized demand will be on the rise as a result of the prevalence of internet prompting companies and manufacturers to produce in a flexible way. So that is going to topple the monopoly of the market by big businesses or big manufacturers. So that's how the new technologies and new models will change the model in which big companies are dominating everything. Great insight and also a great advertisement for China Merchant's Bank. I think Chandran wanted to get in and then I'm going to come and get questions from all of you. I mean, I just want to make one point. I think it's wonderful that the data about green consumerism, et cetera, we did a session yesterday and let's just get real. Green consumerism is a very, very small element of global consumption. I work with many big companies and they know this. At the session we did yesterday, we acknowledge it. The other problem is that when you do a survey, people say all the right things. The consumer behaves very, very differently. That's why green products have never. I love your example and this is the conundrum. Ethiopian shoes made in a closed loop in Ethiopia but now some rich person in New York is going to buy it, the carbon footprint of that. So when I talk about restrictions, I'm not talking about the heavy hand of government but let's start pricing things properly so that your nice product will be paid for in its full price. So that's the externalities issue and currently the economic model is rooted in underpricing. Carbon is just one example. I can take water, the burger, what's the true price of a burger, maybe 100 bucks if you put in the carbon, the water, and everything else. That's the dilemma we're confronted with and we need to use all the instruments, not just bands. I mean, some things we're gonna have to band like eating tuna but I don't wanna be too extreme. I don't know what's going to be in the buffet at lunch if it's tuna, you can talk to Chandran. We've got a couple of questions right here and if you can, actually a cluster of three right here. If we can get the microphone up here and please introduce yourself, your name and your organization and try to be as concise as possible with your question. I'm from Xinhua News Agency of China. My question is for Mr. Ma. The subprime loan in the United States is to loan the money to an insolvent person but in China a bad loan is loaned to insolvent local government. So in this process, what kind of checks and balances should the bank play? Well, I think it deviates from the theme of our discussion but I still can make a few comments addressing your question. Yeah, we know the local government financing issues in China, it is a historical legacy and according to the National Statistics Bureau, the total debt amounts to over 10 trillion RMB yuan owed by local governments. So, but we need to be specific case by case. Over half of them were entered into prior to 2008 and since 2008 some of the loans were renewed. Some, and there have been some new loans in response to the financial crisis. So we spotted the issue quite early on and we took a host of effective measures and responses to make sure those risks did not materialize, were well prevented and the regulators in China were putting forward one measure after the other in response to the issues. We do not have to panic and the repayment capabilities of Chinese local governments are on the rise because they have so many land resources, fixed assets and some SOEs at their disposal. So it's very different from the Greek bonds and from a commercial banks point of view, 70 to 80% of the local government debts are loans from the banks. And most of those banks have been extended by the several biggest commercial banks in China. But according to the latest statistics in June, those big banks are still having excellent asset quality and the MPL ratio out of those loans much lower than its average MPL ratio. So it's fortunate that we have spotted the risks and we've taken measures against those risks. Thank you. Contagion from the economic crisis is spreading into the session by changing the subject matter. Let's make sure that we stick to the topic of new frontiers in consumption with the next question. Let's go here and then immediately behind. Okay. My name is Yun Anbo. I'm from a technology group in China. I'm very much interested in third party payment services. It has been a new service but the market has been growing dramatically and rapidly. We do a lot of business intelligence, our cloud computing and the vertical applications. We're very much interested in the next stage of mobile payment and its overall impact on consumption. For example, some of the vendors are providing these kinds of capabilities. How can they work together with the banking industry and other players in the value chain? Mobile banking, mobile payments. Mr. Ma, do you wanna start and then does someone else wanna jump in on this? Well, for mobile banking and mobile payment, internet payment or third party payment, it is a very strong kind of technology task for the banks to address those needs. And the CMB started its mobile banking operations 10 years ago but the operations went on and off due to various reasons. But today, the market is ready and the consumption or the consumer behavior is ready for mobile banking. Mobile banking has become an inevitable trend. And so far, over 100 million Apple phones have been sold around the world. And much part of average person's life is spent with an interface with iPhone. So in that connection, if we can bring our portal into one of the icons on the iPhone interface, it will bring about huge opportunities. So at the very beginning, we had started with China Unicom and iPhone to embed ourselves into iPhones. And for commercial banks, we should make full use of the convergence between mobility and internet. And the security is not a problem either. And there are good solutions. So for us, we would desire more customers to embrace online banking and mobile banking because it is a very important market segment for us, very important channel for us. We should go all out to capture this market. Thank you. About five minutes left. So I'd like to take two questions, one here and one right over there. And let's take them both at the same time and then we'll hear from everyone. Seems that they're coming from consumers and citizens or top-down efforts coming from government. But I haven't heard much about the role of that business could take, big business could take. And I would like to know if something in business is trying to manage their reputation. Okay, so first question is, what can business, particularly business do, to I believe to innovate new models to get at some of these sustainability related questions? Yes. My name is Helmut Schütte, professor of international management. I would also like to come back to what Chandran Nair said. We're talking about very different things here. We look at the limits of growth in consumption and then as Chandran said, the rest is rather peripheral. I think we have to be very clear that there is conflict between four view on stage who are trying to supply consumers and what Mr. Nair says, he says this is just not possible because we run out of resources. Now in the example of cars, I think for any of us who lives in China and looks at Beijing, just the idea that over the next years, the car producers want to sell three times as many cars. I just ask anybody in the room, how would three times as many cars fit into the roads of Beijing? Where would the material come from? What would the pollution be? And where would be the space? We cannot continue to go on as we do. And my question is especially geared towards the two Chinese representatives here because I haven't heard any response from your side to this. But just changing consumption by giving more credit or going on to the internet, do you think that this will solve the problems which Chandran has raised? So this is the nub of the dilemma. We've got two minutes to answer it. Xu Peixin, you go first and then we'll come down the line. Thank you for your question. We've always been talking about a dilemma. In other words, we want to constrain consumption. But I'm not sure if we consume, if we reduce consumption, what is the ultimate purpose then for human survival? I think that we should restrain excessive consumption and consumption that damages environment. But if consumption is not there, I'm not sure what is the role is to be played by the companies. The world cycle comes from the desire to consume. We should be able to restrain excessive consumption and abnormal consumption. Internet and technological advancement will lead to new picture in future consumption. While internet develops, it needs faster logistics and faster globalization. Therefore, the need for logistics will drive forward the development of the logistics industry. If there is no consumption, then I don't see any further development in the logistics industry because there will be no incentive coming from the industry to have further integration. Previous speakers were talking about payment. New payment measures in China and other emerging markets have noticed that the development of internet has led to new forms of payment or transaction, including online transaction and mobile transaction, as well as growing efficiency in the banking sector. President Ma talked about many banks' customers are using online bankings rather than outlets. Once that happens, I think that the bank's revenue will decrease. So technological advancement not only increases consumption, but also accelerates logistics industry and other peripheral industries. This precisely is the new age of our industrial development and a new opportunity for the future economy. Let's everyone to be very brief because I'm getting a signal we've got to wrap. So I absolutely agree. Need for new business models that we're gonna talk about sustainable consumption, it's a tough message to say, consume less in the US and the Europe. Even in China, it's a tough message. So I think it is about transforming consumption, moving from mass production, from mass consumption to different types of consumption, moving from products to service systems, delivering utility without products and material, dematerialization and ultimately externalizing externalities, bringing true costs to consumers so they know what they're paying for and what the real impacts of their choices are. Thanks, Bethlehem. Thank you, Chandra. Yeah, I mean, Howard, thank you for bringing that point. I mean, all I want to say, I didn't say all consumption to stop, that would be naive. I said we'd redirect consumption. Consumption that is extractive and doesn't pay the two cross costs for that extraction needs to be redefined. So my point is, the truth is the majority of human beings today don't consume the most basics for human existence. Are there small people with mobile phones today in China and India than having access to toilets? That's a human right, safe water. So those are the things that I'm talking about. That will take a hundred years for us to do properly. To your point about companies, I mean companies in sustainability, it doesn't fit. Simply because of this. At the core of the idea of sustainability is the idea of less. Companies don't do less, they do more. But we do need companies. Mr. Ma. Consumption certainly is an impetus behind economic growth. In particular, consumption in the emerging markets will become new growth point for the next round of world economic growth. However, how to improve the quality of economic growth? To do so, we need to guide consumption in a more correct way. That's why we need to master quality growth, which is the theme of this meeting. Let's up very briefly. It's that we now have new descriptions of consumption and to get where we need to go, we need new purpose for consumption. Let's work towards that goal. I want to thank all of the panelists this morning and all of you for what was a very lively session. Thank you.