 Hello and welcome to Understanding China. I'm Michael North and I've just returned from several weeks in Beijing where I have some interesting friends and ideas and people to bring to you all about understanding the way that the largest country in the world by population and the second largest country in the world by economy is developing. Here's a little economics lesson for us, pretty much reviewing what we already know but perhaps in a slightly different light. If you see China from China's point of view, the economic development of the country, the development of the country has taken place in light speed. Beginning in the middle 1970s, China went from being a third-world country with very old or limited infrastructure to now being a 21st century first-world country and the pace of that development in the last 40 years has been just incredible. We all know that. But how has that been financed? And the answer is a lot of that has been financed by debt, internally held debt that the banks of China have loaned to the government in order to create the bridges and roads and tunnels and stadiums and bullet trains and all the big ports and so on, the tremendous wireless and optical fiber infrastructure, the satellites that have been launched, and bring a country of 1.4 billion people largely into the 21st century. Well that means that there is a lot of debt in China and it generally gets handled well and they're growing quickly enough to be able to handle making the payments. But they can see, as the rest of the world does, they can see around a corner and they know that there's a limit to the debt formula. So they're looking for ways of kind of shifting the obligations for the future, the next waves of development for China, more into the private sector. And they're doing something called public-private partnership, which have been around in the United States and Europe and so on for close to a hundred years. A lot of our roads and stadiums and so on are financed by a combination of government land and resources and sort of guarantees and private sector funds that come in as investment. So they're a public-private partnership or as they call it in China, a PPP. And China is looking for ways to finance PPPs that don't use debt, that use different types of instruments. So we, Asia Pacific Group, decided to bring our colleague Arthur Lipper, who's an expert on revenue royalties, which is an advanced, very fascinating way of financing companies and large projects that doesn't involve debt, doesn't involve equity dilution. And a little bit of that story later, but I want to bring you into a press conference that took place a few days ago in Tianjing, which is a satellite city of Beijing, a short bullet train right away. And we were brought into the headquarters of the Tianjing Financial Assets Exchange and introduced to a group of bankers, financial managers, investment people, government people and so on to begin a process of education that took, well, we got the first steps taken in three days between Tianjing and Beijing. So let's have a look at the first video clip that we have and then we'll come back and talk a little bit more about what we're looking for. Ladies and gentlemen, I think we're the leaders, dear guests and colleagues, welcome to Tianjing Financial Assets Exchange. My name is Yume Ya, I come from the city trust and I'm also the operation chief promotion officer of the PPP platform, because city trust is also a shareholder of this exchange. And I met with Ms. Joe and Michael North five years ago from the Pacific Group and it is also a good honor for me to meet Arthur Leeper later on and I gradually understood what royalty is. So today here in China we would love to introduce the concept and model of royalty here in China in order to promote the PPP projects here in China and in order to promote the organization, the financing of small and medium sized enterprises as well as to make China's capital market more vibrant to make our contributions in all these regards. I'm very honored to have all these people and all these guests today present here and it is the strength of our effort and of the organization. Today we are very honored to invite all the guests to participate in this China PPP Voluntary Financial Innovation Forum as well as the announcement conference of the China PPP Royalties Research Center and the fund committee. We are very happy to have all of you here. In this morning's Financial Innovation Forum, Mr. Leeper will briefly introduce to you regarding the design concept and the application approach of royalties in different projects and investment sectors and in this afternoon we will still have another two hours for the round table discussion to have further discussion regarding royalties together with Mr. Arthur Leeper and then for tomorrow and Friday we will have another training session in Beijing to give you a more detailed introduction regarding the royalties. In July 2017 at the National Financial Work Meeting, President Xi Jinping emphasized that efforts need to be made to vigorously improve the modern financial service system in order to improve the ability of the finance to serve the real economy. In particular we need to make more efforts to increase the proportion or ratio of the direct financing in order to provide low cost and highly efficient financing service for the real economy. We believe that we need to study the technical and economic characteristics of the PPP projects as well as their requirements for financing and vigorously explore the direct financing goals or channels for the PPP projects which can be conducive to make the capital market more vibrant and enrich more financing channels and it can also help promote the direct financing for the PPP projects with very high efficiency and it can also help attract more international investors to participate in China's new organization development. This study of royalty is based on the above mentioned consideration. Royalty is a direct financing tool with very low cost and long periods which can ensure the immediate return and the revenue sharing. Royalty's are based on the projected revenues of the invested companies or projects in the period of royalty and they will not give extra burdens for the enterprises as for the equity dilution or the debt financing and it actually goes beyond the restrictions of the traditional equity and debt financing. So the application of royalties in PPP may become a very good attempt in the innovation and diversity of the direct financing model for PPP and it will give us a few thoughts in PPP financing. One of the people who attended the revenue royalties briefing with Arthur Lipper was Liu Kunfeng, a billionaire investor and developer from Shenzhen in southern China just across from Hong Kong. Shenzhen is a fascinating place. In the mid-70s, Shenzhen was 20,000 people, basically growing rice in a small village, very pleasant. Today it's 8 million people and in the surrounding area another 8 million people, mega city, manufacturing and so on. A lot of what we see, especially in electronics including Apple, iPhones and so on, comes from Shenzhen. So Liu Kunfeng is one of the developers who's taking on the next generation of economic development, real estate development, industrial technology development and very interested in investing in new companies, new world breaking technology. So we had an interview with Mr. Liu Kunfeng after the program of revenue royalties. Let's have a look at that interview. Okay, we are here in Beijing at the close of a day-long financial education session in a beautiful place and I wanted to talk to one of the participants here, Mr. Liu Kunfeng, who is a Chinese investor. He's investing strongly in China's domestic economy and he's also investing worldwide in many interesting enterprises. So his philosophy as a Chinese investor is of great interest to people around the world. And this is Ranran. She is our translator. She'll help us make sense of it all. So Kunfeng, I know you have some very interesting activities in southern China, Shenzhen. Can you describe those activities and what their real purpose is? What is their mission? Can you describe those activities and what their real purpose is? What is their mission? Thank you very much, Michael, for giving me this opportunity. Yes, we do a lot of business in Shenzhen in southern China. We do a lot of investment projects in oil, in different kind of fuels and maybe in some other high-tech industries. And for our company, we have a corporate culture, which is a Chinese philosophy. To translate that into English, it means that we want to do business in the world and we want to help all the people in the world. So how are you helping people in the world through your business investment? This is an area that's of great interest to many Americans. We want to do sustainable positive investment that benefits people and the environment. And I know this is part of your philosophy, explain a little bit. Thank you very much. 企业里面就是一个就是要讲这个就是比较严格的制度 帮助一个是企业内部的这个员工还有团队客户 能够有足够的精气神就是精气神知道这个 能够把身体以身体好为条件来做企业 再一个就是说能够帮助企业里面的这个 团队还有其他的就是相关的公司去主要是 转变观念关键是在观念理念上的变化 因为上了现在中国的企业已经是到了一个 实质路口,首先是就是自由转练才能 才能救济企业. There are several parts of it to benefit the people and benefit the world. First of all in our company every month we will have some free training courses provided to our employees regarding the Chinese traditional classic philosophies as to do the business and the second we want to promote our traditional culture in this from this approach and the second part is that we want to have one of our business where investment philosophy is to help those people who are in need or who are in urgent need so invest in those projects which really need our help and need our assistance and maybe our capital and the third part is that we want to build a very good a very good a very good how to say that we want to have a very good energy in our company we want to have we want all of our employees to have very good health both mentally and physically and based on that we want them to have very high energy and want them to have the passion for the investment and we another thing is that we also want them to change their mind they need to know the essence or know the value of what we are doing. I know Confang one area you're interested in is energy and transitioning away from hydrocarbons like oil and gas and coal into new renewable sources can you talk to us a little bit about your company's investments in that field in China and beyond in addition to traditional oil and natural gas, new energy sources are mainly these non-traditional oil and coal these are mainly dynamic electricity this is a very important one including Smoxi and Li-Tian-Chi and Xitu-Tian-Chi these are one of the directions we are investing but regardless of whether it is energy or new energy the most important thing is to be able to make it able to produce new growth points to make Smoxi fall into every project apart from the traditional fossil fuel like oil or gas we are also investing in some battery projects such as the rare earth battery or the lithium battery or other new types of the batteries to use them as a type of energy and also we want no matter it is the traditional fossil fuel or the new energy we want them to really benefit the people and to really have new growth point we want them to have this sustainable development all the time I heard that you were very interested in medical technologies healthcare technologies can you speak a little bit about one specific investment that you are interested in in that field As for medical technology, what we are doing is to try to be a platform for the people to get easier access to the doctors and hospitals because now in China sometimes it is quite hard for the people to really go to see the doctor because there are a lot of people there so we want to build such a platform with maybe home doctors and also some certain kind of communications and some new technologies in this case the patients can just stay at home and can have the prescription or have the treatment from the doctors that will resolve this problem and also one very important thing is that we want all the people to have a very loving heart as long as they care I think the disease will be fewer and fewer in the future So like a DD doctor? DD is the name of the service here in China that is a lot like Uber and Lyft So a final question, you are so generous with your time thank you so much I know that you are constantly on the move you are probably headed for an airport flying away somewhere right now you never stay in one place for more than 10 minutes what is it that drives you? what is it that keeps you going so long so far so fast so focused inside you what is it that makes you move with such great energy? I can't stop for more than 10 seconds but I want to ask you, what is it that keeps you going so fast I have a poem from my company that I can practice with Michael It's called The Heart of the Heavenly Land The Heart of the Heavenly Land The Heart of the Heavenly Land The Heart of the Heavenly Land The Heart of the Heavenly Land Actually, he wants to say a poem Yes, a poem which can really answer your question The first line of the poem is that in our heart we have both heaven and earth and everything on the planet And the second line of the poem is that we need to follow the rules of the earth in order to generate everything The third line is that we need to have love in our heart and to follow those rules and go back to the correct track The last line is that sometimes we need to forget ourselves in order to be a one with the universe And the last sentence is that I think that love can resolve every problem Confang, can you say those lines altogether one time No pause, just with your full heart Give us those five lines again Thank you Saying goodbye from Beijing with Mr. Ducan Fang from Shenzhen Aloha Finally, I wanted you to meet Renren You've seen her and heard her during the other segments She's the translator And normally translators are functionaries at an event But in fact, this young lady translates, interprets for some of the most important events that take place in the capital Beijing And between English and Mandarin And she is typical of a young generation of professionals Highly trained, very idealistic, extremely focused on her future And I wanted you to have a chance to meet her Step inside her shoes for a few moments So let's meet Renren, our translator We're here in Beijing with a young lady who is an expert translator Her name is Renren, is that close enough? And her English name is pronounced Elaine, of course But her real name is Renren And we've been working together the last two days with some very demanding translation of very complicated, high-energy financial terms And she talks very fast So I wanted to get some insight from Renren about who she is, where you come from Why are you doing what you're doing and where is your life, where is your career going? Okay First of all, I'm very happy to have this kind of talk My hometown is in Langfang City, Hebei Province which is very close to Beijing If we take the high-speed railway, it will only take us like 20 minutes So it is very close And so that is also one reason why I'm now working in Beijing And I studied English Actually, I majored in English interpretation and translation for my undergraduate and graduate study And I always wanted to be an interpreter You know, in the past, when I watched the TV I would see someone who is sitting behind or sitting next to our national leaders I would think, wow, that is what I want to do So later on, I went to the China Foreign Affairs University to major in English interpretation and translation And also a lot of the students in our university went to the Ministry of Foreign Affairs to become an interpreter in the national organization But for me, I am a freelance now and I really love what I'm doing now I want to be this kind of freelance I do not want to work in such an organization full-time every day So this life is much more exciting for me So you don't want to work in the foreign ministry? You want to work? Actually, no Because for this kind of freelance job I can know new people I can meet you and I can know a lot of financial stuff which I didn't know before So I can learn a lot, a lot of the new things every time So flexibility, freedom is a very important thing Right, I think so You think that's the Chinese side of you or the American side of you? Maybe the American side Because there are not so many freelancers here in China Although the number is increasing for freelancers Still, for example, in my class at that time we had like 24 students I'm the only freelancer now All of them work in some organizations or companies full-time So final question, this is a bit of a personal question But I know that when you speak Chinese you are fully Chinese and you have a way of thinking, feeling, moving as a Chinese But then you immediately switch over and you can become part American and thinking, feeling, moving, speaking almost a different voice, I notice back and forth Can you talk a little bit about what that feels like to be one person and another person and then the other person and back and forth? Yeah, maybe it is just only natural for people to have different voices when they speak different languages it is maybe just natural But for me, I think I'm always maybe Chinese Yes, sometimes when I speak in English of course I will like speak in this language and I will think also in this language but in my mind I'm still the same me the Chinese girl So what you just said in English say it again in Chinese Okay, in Chinese I think I'm just a Chinese girl and sometimes when I speak in English I will think in English but in my mind I'm still a Chinese girl Thank you, you can see what I meant Yeah Thank you, very good to work with you Thank you Aloha from Beijing So Renran who came to us from one of our close affiliates in Beijing the Beijing Moza translation company he was able to keep up with Arthur Lipper for three days solid which is hard enough for people who are just doing it in English but doing it in English and Mandarin at the same time he did an outstanding job and it's in the hands of young women like Renran that the future of China rests and to some extent the future of the world rests So I think that we're in good hands with young leaders like this lady and we'll leave you with that thought and there's a lot of more material that came from this recent trip to China and we'll be bringing it to you in future episodes of Understanding China Thank you from Honolulu