 My name is Martin Soong. On behalf of the World Economic Forum and also CNBC, welcome to this debate. Just some housekeeping. First, what's happening today here, two things. We're doing this as a live event, as they're all used to if you've been coming to Web for a long time. But we're also doing it at the same time simultaneously as a television event. This is not live, it's taped. But it will also be a television event. And we're going to do it as live. That's how we describe it. So I'll be saying, hello, welcome to the show, introducing our panelists. I'll be pausing for breaks and welcoming back and saying goodbye the whole bit. So don't be thrown off or surprised by that. I just wanted to let you know. The structure of this is going to be fairly straightforward. We've got roughly about an hour, so call it 60 minutes, to get through this topic. We'll break it into thirds, 2020, 2020, roughly speaking. The first two thirds, we will talk among ourselves. Then the last third, we'll open it up to the floor for our Q&A for questions and answers. And I've been told by the World Economic Forum people, or they have wireless microphones, which will come to you. So all you have to do is raise your hand, stand up, and just for protocol's sake, what I prefer when I do things like this is always if you could tell us who you are, identify yourself, and where you're from or who you represent, and finally, who you're directing the question to. It helps all of us a lot. Just so you're not thrown, there may be times when, during the Q&A, I may end up wandering off onto the floor. Not always, but sometimes it happens. So just so you're not thrown off. All right? By all means, that would make it really interesting, I think. So look, for our purposes for the live event before we get to the TV event, none of these people here need a formal introduction, but I'll do it anyway, for those of you who just flew in or whatever. Sir Martin Sorrell, head of the WPP Group, is to my extreme left. Boston Consulting Group, Hans-Paul Bruckner, is next to him. Ju Min, this is a bit of a homecoming for him, to China, and number two at the IMF now. And then Tiger Tiger Raj, and we've been spending a lot of time together the last two days, I've gen-packed India's number one pure play BPO. And finally, last but not least, to my extreme left, Kis, who is, let me make sure I can get this name right here. What's the name of the law firm now? Excuse me, and this is a good thing we're not live yet. You can get this right, Mark. I do. Indeed, that's a good thing I have your car here. Here we go, Greenberg Trawry, is that right? That is absolutely correct. OK, excellent, good good. So these are our panelists, and we will get the show underway in just a little bit. Before we do the housekeeping again, if you have cell phones, handheld devices, anything like that, our preference is if you could turn it off. It's only for an hour, OK? Or if you really have to have it on, or the economy will stop, or if you really have to have it on, just put it on silent. We'd appreciate that very much. All right, so that's pretty much what you need to know. Just real quickly, any questions? Do you need to know anything? Again, if you need the gents or the ladies, now's the time to do it. Actually, no, five minutes ago is the time to do it. And if I'm not mistaken, I think once we get underway, the doors will be closed, if not locked. So if you haven't gone, it's a little too late, folks. What was that? You moved too much. Stand still. OK, so we're good to go. Hello, and welcome, folks. My name is Martin Soong. On behalf of the World Economic Forum and also CNBC, welcome to this event here today. What we're debating upon your screens, you can see is the backlash to going global. I like to call it or prefer to call it blowback. I think it's no point debating or asking whether or not it actually is there or exists. I think there's a well-documented proof that if you want to quantify it, it does exist, even down to anecdotal evidence that, let's say, it's slower to get a business permit, things are more drawn out, et cetera. This is all as a result of the great financial crisis that started three years ago, the instinct, I guess, for companies and for countries to pull back, to turn inward, protectionist. What I'd like to do today before I introduce our panel is let you know that we want to explore three key questions by the end of this session with you folks. The first thing is, not so much does it exist, but is it or what is the potential for this backlash or blowback to get worse, especially if the conditions we see today become long, drawn out, protracted or, God forbid, worst case scenario, Europe implodes, the US double dips, then what? The second thing I want to explore is if that is the case, what do companies do? How do they navigate through this? How do they survive? And the basis for this is my thinking that it may be too easy to say or to think that, look, companies are going to, as they always do, money is going to find a way. Companies are going to find a way around this. This time around, there are conditions different, and does that require or necessitate a different strategy for companies? And the final thing I want to talk about and get out from our guest, he's out from them, is winners and losers. Who's going to win out of all of this? Describe companies that are going to end up being winners. What are they going to look like? What sorts of attributes are they going to have? So basically, that's the kind of ground we want to cover. Without much ado, let's introduce our panel of guests, starting on my left, Sir Martin Sorrell, head of the WPP group globally, a man who's very familiar with WEF and the proceedings here. Next to him, Hans Paul Bruckner from BCG, Global CEO. Next to him, this is a bit of a homecoming for Jumin, Deputy Manager of Director at the IMF, welcome today. And then to my right, we've got Tiger Tirajan, who's head of Genpact. This is India's number one pure play BPO, Business Process Outsourcing outfit. And last but not least to my far right, we've got Jim Bacchus right now, who you may remember more from his days in Congress, but I guess those are past. Let's get this thing going right now and let me turn to Sir Martin first with the first thing I want to explore. And that is, what is the potential for this blowback or backlash to get worse? Well, there's bags of potential for it to get worse. If we don't sort out what's, when I say we, the governments and leadership, to sort out what's going on in Western Europe, whether it's in Italy or even beyond Italy into France and some people even say in the UK and elsewhere, so that's one issue. And I think an even bigger issue, we talked about it with Zumin this morning at breakfast, is I worry about Western Europe, but I worry even more. I'm reasonably sanguine about the prospects for 2012. What I'm really worried about is what happens beyond 2012, particularly November 2012, when the next US presidential election will take place as to what will happen in America. Because with all due respect to the Americans in the audience and those that are watching, all that has happened in America is to kick the can, as the Americans say, kick the can down the road. As if that's not what the Europeans are doing? Well, yes, and when I referred Martin to the lack of leadership, I mean, you know, in real estate they say location, location, location. If you said to me what's needed now, it's leadership, leadership, leadership. A bit apple pie on motherhood to say that, but if one goes back to when we were in a similar position in the 80s, when Japan was the force that everybody talked about, taking over from America, if you look at what happened, we had two leaders, whether we think they were right or wrong, one was President Reagan, who literally rode to the rescue from his Hollywood origins. And then we have Mrs. Thatcher in the UK. Again, controversial in terms of maybe style and direction, but very firm leadership. And in fact, it's ironic that when we look at the most successful nation on the planet at the moment, which is where we are at the moment, China, it's the success of a planned economy. And we just came from a session where we were talking about the challenges and opportunities facing China. What's interesting is maybe we have a lot to learn from the Chinese market. We'll talk about that. But essentially, just to sort of sum it up in recap, you're saying the potential for this backlash or blowback to get worse is there because there is no political leadership. Yeah, we'll just wait, wait just a minute. There is no blowback or backlash for companies. There is a blowback and backlash for countries. When you refer to protectionism and turning in with, it is a country phenomenon, not a company phenomenon. If you're running a company, you have no choice. Fair enough. Bricks and next 11 is where the growth is, where the relative growth is, and you will pursue that. I mean, that's the answer to your questions too. And three, the companies that succeed will those that go after aggressively those opportunities. All right, we're getting a little bit ahead of ourselves. I think countries can make efforts, but they will not succeed because whether it's companies, whether it's people, capital, they're all on the move and they see enormous opportunities. We'll see two billion more people entering the global economy over the next 20 years in terms of consumers, in terms of workers, in terms of entrepreneurs. There's such a great movement and that's why I think what we've seen over the last four or five decades will continue. Yes, there will be noises from Brazil, from France, from the US, also maybe from some emerging markets, but overall I think because there's so much movement, so much opportunity, I think that will not create the backlash that you have come to. So there's momentum and you sound like you're an optimist, pretty sanguine about this. Basically what we're seeing now is just a blip. We'll get through it. Absolutely. We'll find a way. Let's get back to the leadership question and swing all the way to my extreme right. Jim Bacchus, no leadership is what Sir Martin Sorrell says. You spent a lot of time in government. Is that fair? I think it's true that the Americans are kicking the can down the road and I think it's fair to say that the whole world is kicking the can down the road. The G20, for example, makes ritual statements about the need to conclude a new global trade round but then doesn't do anything about it afterwards. The single biggest thing we could do to jumpstart the global economy would be to continue to lower barriers to trade worldwide through the auspices of the WTO. We haven't done that. We don't have the political will to do it. We have not begun to address all the myriad of issues in trade and investment that we ought to be addressing globally that are not yet on the trade agenda. We can't get to that next 21st century trade agenda until we put the current negotiating round behind us. No one's even talking about this. The President of the United States gives a speech to the Congress, doesn't mention it, does come out for some good things but also a bit of protectionism. The Canadians today are protesting to the United States in Washington because Obama's Jobs Act is going to discriminate against Canada in terms of government procurement. Worldwide, the disciplines of the WTO, and I say this as a former WTO judge, of course, are helping because countries are reluctant to violate obligations. They know they'll pay the price in terms of economic sanctions. But there's a lot of protectionism that's illegal still in the world and is not disciplined by WTO rules. And that's where it comes in sway. We're seeing more and more protectionism in trade that's not covered by WTO rules, such as government procurement. We're seeing protectionism in investment and a whole lot more. Okay, we talked about this earlier on. Government procurement, this is something that the Washington, and Beijing, and Budded heads about or over for some time now. Joomin, from your perspective, I mean, the one word that Martin Sorrell did not come out with a few minutes ago is basically, look, the potential for backlash will blow back to get worse. Yes, because there's no political leadership, but also because of the time or the part we're in in certain political cycles is what you were trying to say, right? November in the U.S. But politicians are in business to be re-elected. The electoral cycle is a four-year cycle, five-year cycle in some cases, and in America's case, it's a two-year cycle because you have midterm Congressionalists. So every two years, a president, unless he goes for his second term, which is interesting, because maybe if President Obama gets re-elected, he'll feel a little bit more philosophical about his legacy, and then we'll bring to bear some more constructive engagement with that probably a Republican-controlled House and Senate. And we'll have the risk of gridlock and deadlock again, but maybe, as I say, he'll be a little bit more philosophical in relation to that. All right, the political cycle also applies to China as well. Next year, huge leadership changes. How confident are you, wearing both hats, as a Chinese, but also as number two at the IMF, that the incoming policymakers will make best efforts not to let blowback or backlash against globalization increase? Well, thank you. First of all, thank you for giving me a title being the number two, in fact, I'm not. I'm just one of the deputy managing directors. We have four working together. I've got to be very careful, otherwise, you will lose your job, I will lose my job. I don't want that to happen. This is the most important issue. Then I owe you. Yes, okay. Well, thank you very much for the new title. You know, everybody wants to have a new title. Me too. Go back to my point. I think that when you talk about the backlash to the going global, you have to divide this country-level or company-level. Absolutely agree. I think this is a key issue. At the country-level, we thought of political leadership shortage issues. We threw the trade, the fraction issues, right? And the procurements, all those issues happened. But at the company-level, I think it's absolutely what was really globalization continues. Actually, nothing can stop that, because you're very clear. If you're looking for the whole day today, the whole world experienced a very fundamental dramatic structure change. And the last year, the first times, as an emerging market and low-income country accounted 47.8% of global GDP, PPP measure also. So it's the first time the global is re-positioning itself and advancing account for half, and all the companies looking for the market, looking for the future. The second big wave is, we are really in the beginning of a new wave of IND and of a new IT or new technology innovations in terms of mobile ITs in terms, because the cloud computer make a scale, speed, and the costs are low, and in terms of artificial intelligence, and make all this rub become possible, and the costs can be very low today. And in terms of, and also in the medication areas, all those things. And two things put together is really become the pushing force to push forward the globalization. What we observe in the past three years, the multinational become even more multinational. And the global manufacturer particularly is re-positioning itself, advancing economy moving to the high IND, high tech sectors, and actually moving all the heavy capital intensive, chemistry, heavy machinery agreements to the emerging market, and emerging market further move the low-tech manufacturing to the low-income countries. You see the change really happen now. Even five years ago, a lot of Nike shoes made in China, today, Vietnam, Thailand, and others, Indonesia's others. It really happened. That's the means at the company level, the market really works. Everybody re-positioning themselves, looking for where in the global chain. So globalization really continues. I don't think anything can stop that. Okay. That's why I think the countries and governments are much less powerful in this space. Consumers can really, through the internet, buy products from everywhere and companies can do the same. So I think it's very difficult to stop those flows. You can also find it very difficult to stop. Capital view finds very difficult to stop the talent flow. And I think we should not overemphasize there's poor leadership and the governments so that we can blame somebody. I think the movement is there and I think we're not having, by the way, worse governments today than we had 20 or 30 years ago. We just know them at the moment, much better than we know them. Jump in. Sure, thank you. Go ahead. So I think everyone said the right thing. So it's easy for me to say it's all right. But there are two things that I'd like to talk about. One, I think there's a difference between short term and medium term. So clearly the medium term, long term for sure, the secular trend of globalization, the train left the station a long time ago. So we are rocketing away there. But the short term, there are clear issues and the worry that sometimes I have when I talk to a lot of people, companies, including a lot of people in the businesses that we run is, hey, there's no problem. And it's important to recognize that sometimes the problem exists in a specific organization. In fact, we talked about countries within the US. There are problems in specific states where a client of ours is located, the community they're located in. So it's very important to be extremely sensitive and cognizant of that. The second is it's very dependent on the company and the culture of the company. I think Mingyu made a great point. There's a company we work with, global company makes building materials, obviously went through a down cycle. What do they do? Within six months, they decided they needed to enter China and India. Wait, this is an American company, right? American company have never gone global ever in their history and a very old company. Within six months, they decided to enter two countries that they didn't know anything about, partnered with a bunch of people, entered those countries and within 18 months, they're gonna have at least 25% of their revenue coming from these two countries that are obviously hot in construction, hot in infrastructure. And they found a way to do it obviously with through partnership because you can't get speed without that and that's globalization. Because all of a sudden they have changed the complexion of that company. But also without from what you do obviously, yeah. Absolutely, so the business that we are in helps that at the same time, obviously we looked at as a business that sometimes accelerates globalization that may hurt some community. So it's very important to kind of get to the specifics and granularity of the issue because it is actually different. Okay. That reflects also the issue of America, which is America is blessed with what is now a 300 million people market relatively homogeneous or they think it's homogeneous and maybe mistakenly but they think it is and you have that on your back door in your back door. Why expand internationally? The difference I think in our industry for example, between our American competition and let's say our French competition which is where principally it comes from is that the French like the British operate in a market with 60 million people. If you want to go, if you want to build a multinational you have no choice. You can't rely on the UK or France. One other point. And this is in defensive governments. The one government in the West so far that has tried to address the deficit issue is the UK government. And interestingly at the beginning it's not because of my accent I'm saying this Martin. It's because they have a five year run. Now what they've tried to do is they haven't cut spending, as Zoumin knows. What they've done is they've cut the rate of increase in spending. It's just the UK Treasury looks at spending on an inflation-adjusted basis. And nobody on this stage, I don't think even the IMF looks at their spending on an inflation-adjusted basis. We look at it in nominal terms and we wouldn't accept the budget from somebody saying I'm cutting my spending after adjusting for inflation. They've cut the rate of increase. The challenge for the UK government now is to put in a mid-term, long-term economic policy that works based on education, infrastructure, immigration policy, taxation, technology, all the things that we know. Apple pie and motherhood, infrastructure hard and soft, that's the key issue. So the key issue is, again as we were talking about this morning, is putting in mid-term, long-term economic growth policies that complement attempts at deficit reduction. So Martin, hold that thought. We need to go for a quick break. We'll continue our debate about the backlash or as I prefer to call it, blowback to globalization right after this. Don't go away. All right folks, welcome back. Thanks for staying with us for this special debate on the backlash to going global on behalf of the World Economic Forum and also CNBC. The second issue that I wanna get to in this part of the show is we've talked about the potential for protectionism or pulling inwards to increase or get worse if conditions are protracted or gone forbid if things go to hell in a handbasket. Let's talk about now what companies need to do. I think we already started on this with Hans Paul that you're optimistic, you're saying, look, money, companies, business, they will find a way despite what governments do or don't do. I think what we all have to be aware of that if you are a Japanese, a European or a North American company and you're operating internationally and you see your environment being slow-grows two, three percent at most. And if you think, okay, then by growing four, five percent you're doing a good job, I think you would be failing because companies from China, from India, from Latin America, they will grow 20, 30, 40, 50 percent and even more we heard some stories during the course of the day. And if you then just grow by four, five percent you will be marginalized over the next five to 10 years. So I think for all those companies from the developed markets they really have to massively invest to be participate in the global growth especially in the growth stories in the emerging markets and that will further drive the globalization effort. Okay, Tiger, let's bring you in and talk to us about, we've had many sessions over this. Talk to us about this little idea of, in terms of outsourcing, moving not just capital, not just talent, but outsourcing and moving capabilities. No, so we think about our business as actually trade and capabilities. I mean, if we go back to trade and capital, goods, services and of course capabilities. And the reason we think that way is more and more we are finding as we continue to deliver services to the developed world from the emerging economies from 17 different countries across the world into the developed world, we're finding that there are innovative ideas that our teams are developing that actually are gonna add tremendous value to our clients. So to give you an example, thinking about a process end to end and then re-engineering it to drive big value. Now when you do that, you then take some of the capabilities that we've built because it's in our DNA where you re-engineer, redesign process and bringing it to, for example, the US into a center there that hasn't seen it. Retraining those people. Martin talked about the skill gap. And one of the ways to, I think, bridge skill gap is where corporations actually step in to fill the skill gap in developed economies. It's a very different world when you think that way. So in other words, this process can actually lead to creation of jobs in developed economies. We've seen it happen. We've taken over a couple of centers in the US. We've changed the DNA of those centers. And as a result, the team actually does different things and behaves differently and very different from the ecosystem they sit in. The other interesting one is where leadership of companies, I think, have to define where they're gonna sit. So I think for a lot of the developed world, it is I'm gonna sit in the emerging markets in the brick countries because that's where my growth has come from. Well, what is it for us? We've got to sit in the markets where our clients are because we've got to co-innovate with them in order to drive their revenue to help them innovate because otherwise they're gonna struggle. So we are shifting our leadership team pretty dramatically into the markets that we serve, which is the US and Western Europe and Japan and so on. Yeah, Jim. I think it's certainly the case that business is the head of government. For example, in my own country, we have politicians who pretend that climate change is not real, that it's not man-made. I don't know any businesses in my country elsewhere who engage in that pretence. They've all accepted the reality of climate change and are proceeding from that assumption. But I think at the same time, we're kidding ourselves if we think that business can go ahead without getting government right. It's not a question of finding someone to blame. We are ultimately to blame if our governments and democracies at least don't do what we need them to do. We need to get government right. And even if we're trying to penetrate markets overseas, and in my country, we are very insular, a very small percentage of our company's exports and most of those export only to Mexico and Canada, but in trying to penetrate this market, for example, we face intellectual property violations. We face non-terrap areas to trade in the form of technical regulations and standards. We face discrimination in government. We face discrimination in testing procedures and more. And certainly the Chinese companies that try to get access to the U.S. marketplace face the same kinds of discrimination. Governments everywhere in the world are discriminating against companies and traders and investors from other countries. Every country in the world is trying to export its way out of this financial crisis. This implies that somebody somewhere has to import something. Okay, I have to jump in here, though. I mean, despite all the problems you talk about, though, I mean, it is a fact that S&P 500 companies get half, about half of their revenue from outside of the United States. So they're not doing too badly. I think they're doing great. And I think that we can and ought to look to multinational companies for examples of how we can improve supply chains, improve profitability, improve technology development. I think it's a sad state of affairs that so many U.S.-based multinationals are blamed by our domestic politicians for doing what they haven't done. What they're doing is figuring out a way to make the economic pie larger instead of squabbling over the pieces of a relatively shrinking pie. And what we have to understand as a world is that we have to make the whole pie larger for the entire world. And then domestically we can figure out how best to divide it up. Okay. Can I just come back? By the way, I think the companies who are also among the S&P 500, those companies who are really international outperform those who are more domestically oriented significantly, year by year. One question, and they pay more. But that's because of the growth of that market. Can I just come back, Jim's point about electorate? I don't think you can blame the electorate. I mean, look at the choices that currently the American electorate are faced in comparison with President Obama. It's not a very pretty choice for an electorate to have to make on the basis of current information. Coming back to the companies for a minute, I don't think it's rocket science. If I look at our own industry, we have a very simple mantra, WPP, which is it's about new markets, which is bricks in next 11 or the civets. It's about new media. It's about the growth of digital. And in our case, it's the growth of consumer insight, data analytics, and the application to technology. The critical determining factor is not the strategy. I mean, a lot of strategies are very similar. I mean, you don't have to be Einstein to figure it out. It's implementation that is absolutely critical and first mover advantage. I think it's critical, taining that first mover advantage. So the companies that win are the ones that move very quickly to embrace it. And the American companies, going back to Tiger's point, I think in some cases have not all cases have been slower to do it. I think the critical issue that we face is what I would call balance. As I look at the delta of WPP's growth, we will cross a billion one, 1.1 billion of revenues here in China. We will have 12,000 people here out of a total number of 150,000. In India, we have 9,000 people. In Brazil, 6,000 people. And in Russia, almost 2,000 people. The issue for us is whether an Anglo, essentially an Anglo-American company can shift its thinking to embrace the fact that the delta in sales and profitability is coming from parts of the world that we are not accustomed to. In other words... Include in China? Include in China, well China is in the bricks and next 11 includes China. And you don't choose between them, you do all of them. It's about Vietnam, it's about Indonesia, it's about Turkey, Colombia, about Mexico, Argentina, South Africa, all these countries, Pakistan, it's about all these countries. But the issue is, how can Western European and American companies alter their thinking, their DNA to embrace that management? And that balance issue, I think, is the critical issue as we go forward. What about Asian companies, what about Chinese companies? Juman? Yeah, if we go back getting all the comments together, I think this is two side issues. One side is the market and the copper side. One side is the government side. But both sides are changing. I think this is absolutely important, the whole changing environments. On the copper side, we observe the multinational go further multinational. As you mentioned, I saw some company in Minnesota that had never been in China and India, for example, not a jumping. Because obviously the growth you mentioned, hence Paul mentions, they're moving. But also you observe the company in China and India moving into the advanced economy because they have a big market, they have a more R&D, they have a new technology, they found a new market there. So it's a two way traffic in today is exactly really happening. And back to that whole thing, it's always a really global manufacturing reconstruction. It's a big massive process is running now and every company is looking for new positions, looking for well moved to the high end, well put their positions themselves. I think this is really no force can stop this. I absolutely agree with hence Paul mentioned that. But if I may finish, but the second side of a government side, the government side is also changing. 20 years ago, if you talk about the government role on the globalization, you were asked the government to facilitate and help the company go abroad, open the door for them, for all the advanced economy for the emerging markets as well. But today is very different. But because with globalization, the company do not need the government to help them to open the door, to facilitate them to go abroad because everything is market driven. But there are few issues. The first important issue is how the government to maintain the local market play field in a fair and equal base. I think this is really James mentioned us. This absolutely become important new roles. Now there are second challenges also important for today for the particular government. This is absolutely new phenomenon we never saw about that before is. With globalization, what happened is tradeable sector become more beneficial. And non-tradeable sector has a much, much slower growth and a low productivity. So if you're looking for the tradeable set, productivity growth is very strong, per capita income increase. So in the non-tradeable sector because they are not associated with globalization, the productivity grow very slow and the per capita income in this sector and lower. So that's a great income disparity issues. Now let's go back to the government. The classical theory is if you go trade is fine, you go to the trade sector first, then after few years you accumulate enough wealth, you go back to the non-trade sector. With globalization, the whole thing change because with the scale, with the speed, you wait a few years and you go back to the non-tradeable sector, you have a social problem already. So it is a government role in fact, when you go globalization, you need to pay more social policy into the non-tradeable sector, invest more in the non-tradeable sector, increase productivity in non-tradeable sector to maintain the income level more or less equal across two different sectors. This has become a very important role of a government. That's I think a key issue. I think making globalization a win-win is really key. Now of course on the individual level, that means you could lose your job and finding a new job means you have to have the skill set in order to really also be able to work a different setting. And that's why I think what governments can and should do about all invested education in training, in expanding the skill sets. At all levels, not just scientists and engineers, we also need electricians, we need plumbers, we need people working with that. So the government role to promote globalization is to go to the social policy. It's a complete concept of before you sort of promote the firm abroad and also in terms of classical role in terms of trade negotiations also change. Because previously, there's so many trade issues between the south and the north and now more and more trade between the south and the south. So government role in terms of trade negotiation and protection issues also change as well. Zoom in has continuously used the word government and what it actually means is leadership. And I'm a little less optimistic than my German. Well, coming from Germany, I can understand his optimism because Germany, Poland and Russia is a triumvirate that I think is going to be immensely powerful. The world is shifting not only to the east and the south and the southeast, but Europe is shifting to the east. The locus of power I think in Europe is shifting to the east, but it's about leadership. And I'm a little bit less optimistic about our ability in the west to reverse what is a 200 year cyclical swing. After all, if we went back to the early 19th century, China and India dominated. It was 40% of worldwide GNP then with the bricks or the equivalent of the civets, it would have been 50%. This is back to the future stuff. And I think it's very difficult for us to reverse it in Western Europe and indeed in America. America is still 15 trillion against 5 trillion for GNP in China unless we have strong government by what you mean, Zoom in, is we have strong leadership. Jim, weigh in on this. Well, I agree completely. First of all, I agree with what the two of you have said about the need for the whole world to work together to make globalization a win-win. This is a matter of, in my view, having globally agreed rules that make it possible for all of us to compete fairly. And then internally within every country, we have to make the kinds of investments in our own people so that they can succeed in the new world economy. In terms of the United States and the mother country, I wouldn't write us off just yet. I still would not trade places as an American with any other country in the world. But at the same time, I believe that the United States will sell itself short if we turn inward and away from the world. And I feel the rest of the world will lose as well. I think decoupling is an illusion, my friends in the bricks. You are in this with us and with the Europeans. We're all in it together. We do need more leadership. It bothers me when we talk about, as we do at home, well, that's a second term issue. Why don't we do it in the first term? It bothers me when elected politicians, my former colleagues in the Congress, for example, say, well, I can't vote for that because I might lose the election. I think you need to do what is right if you're a representative of the people and then figure out a way to make it successful politically. And I'm not a naive idealist. I've never lost an election. I think that is what leadership is all about. Sometimes it means saying things that are unpopular, but need to be said. Sometimes it means doing things that are unpopular, but need to be done. It means looking at the broader self-interest, both for all of us and for the long term. And this is very, very hard to do on a short term basis. And one last point on just to add to what Jim said. When you think about a corporation that begins to drive that kind of change and you say, can a government do the same thing? The biggest piece missing, apart from leadership, and if there is leadership, what should they do? They should actually step down, get to the communities, communicate, and get buy-in. It's a long process. It's change management. Get the stakeholders, get them to understand, but it's not easy to understand because they're short term pain. Basically, you need buy-in. That's what you're saying. Lead buy-in, you need to create that. Where is the communication? I mean, that goes back to lack of leadership and that's what is missing. There's no transparency, there's no communication and there's in-fighting and therefore lack of decisions. Okay, true. Modding uses a different term as, actually I can expand to three levels. One is the corporate level, the market level. The second is still called the government level, in the country level. The third is the global level. It's the global cooperation. That's the leadership issues. But the all, I would say globalization continues. No one can stop it. We all live together. That's the basic fact. And I would add the individual level. I think when people have the aspirations to have a better life. And we see this clearly in the emerging markets. Very simple people say, I want to invest in the education of my children. They should have a better life. That makes a huge difference. And they are making investments. They're taking pain. And I think that is of utmost importance, I would say. Okay, Hans-Paul, thank you. We're gonna go for a quick break. We'll continue our debate on the backlash to go in global after these quick words. Don't go away. Well, goodbye. Thanks for staying with us on this special debate on the backlash to going global. We don't have that much time left. Let me get to the last point that I wanted to address and to tease out from all of our experts today. And that is look at the end of the day, winners and losers. Let's talk about the winners first. Describe, Sir Martin, what kind of company is going to not just survive but thrive in this environment? That's an easy, well, that's a very difficult question to answer. If I look at our industry, it will be those companies that focus on a lot of the issues that we've talked about. So obviously it is all about the new markets. It is all about the new technologies. You know, Martin, as well as anybody, the impact the new technologies had on traditional media and legacy companies. And it will be about the application of technology and data analytics, not only in the context of our industry, but that's a reflection of what our clients are doing. It will be a company that is a less pyramidic that is not an Alfred P. Sloan General Motors, obviously of the 1920s and 30s, that is highly networked, that is highly flexible, that is centralized, because I think the pendulum is moving towards more coordination, but at the same time more localized and where the squeeze is on its regional management. I think with the growth of technology and with the impact of networking and transfer and communications and information, that layer in the middle, which has acted as a sort of buffer, it's been a span breaker, will increasingly be undermined, if that's the right way of putting it, by greater centralization and greater localization. But overall flatter is what you're saying. Yeah, but much flatter and much more flexible, much more networked. And then the last point is what I alluded to before. Balance, understanding that these shifts that are political have to be reflected inside corporations is critically important. Unless the people who provide the growth are rewarded effectively and in proportion to what they do, companies will lose out. And all too often now, Anglo, particularly European, American dominated companies, the rewards go to the legacy parts of the companies, not the new parts of the companies. So the delta where the increased growth is coming, for example, I could describe WPP's growth as being China and the internet. China is being iconic for bricks and necks 11, internet being iconic for or emblematic for new media. That's where the growth is. Those parts have to be invested in, rewarded and responded to. Okay, Tiger, what Sir Martin was talking about seems to describe a lot of the companies that are your clients. Yeah, yeah. And in fact, the reflection that, when I look at our client base, the ones that we see winning the battle today versus the ones that are struggling are actually, you know, the picture that one can paint is very similar to what Sir Martin was saying. Couple of other things that I would add. One, they are companies that are searching for innovation across the globe versus searching for innovation in my backyard. And that's a big one. So for example, look at social media. Where do you think the most innovation in social media is happening? It's actually happening in China. It's happening in India. It's happening where it's used a lot by children growing up and that's the only way they communicate because traditional communication channels are actually pretty bad. There's no legacy. So some of the most innovative ideas around analytics around the social media data information that is being traded for consumer product companies or for retailers or pharmaceutical companies is actually happening in Bangalore or in Shanghai. If companies in the Western economy don't find these companies, then these companies will end up finding those markets. So innovation and finding innovation across the board and the other one that I keep saying is leadership has to reflect the business and the market. That's your business. And again, to Sir Martin's point, if that is changing, then your leadership should reflect it. And that applies actually even to companies like us. Our leadership should reflect the customers we serve more and more. Okay, all right, tell you what. Let's not that much time left. Let's open it up to the floor and start taking questions. We have mics that will come to you. Please stand up, raise your hand. And we only ask that you, A, tell us who you are. Be who you represent or where you're from and also see who you're directing the question to. Any takers? One over there. The gentleman in the back please. Atamutambara, Deputy Prime Minister of Zimbabwe. Now globalization will not benefit everyone unless and until we revisit the role of the nation state, the nature of political leadership. The way we get our leaders, a national leader elected in America cannot be a global leader. A national leader elected in England, France and China cannot provide global governance. So what are we doing to move from the nation state as a unit of analysis to the region, to the globe? Because my problem is that if you are elected nationally, your mandate is national. You can't provide global solutions to the panel. To the panel. Who wants to talk about it? Jim, let me address that. Sir, I went to the WTO after I chose to leave the Congress for two reasons. One because I believe in trade. I believe that trade can benefit everyone, everywhere. But also I believed that we could help establish the international rule of law and trade and thus prove there could be such a thing as the international rule of law in other areas of global concern. I think the only solution ultimately for the nation state is to find ways for nation states to work together on issues of shared global concern. So we need better approaches to global governance. We need more of an architecture for dealing with a lot of global issues such as climate change. And we need ways to make certain that all countries, not just the G7, not just the G20, but smaller countries as well, have their rightful say at the table in making global decisions. And we need to have our nationally elected leaders thinking internationally in that sense. And I'm afraid we don't have that now. Does that satisfy you, sir? Just one point. It was interesting that a few days ago, I think with the encouragement of Brazil, that the Brazilian, Russian, Indian, and Chinese, and I think Indonesian, finance ministers are gonna get together to see what coordinated efforts can be made. It's a bit ironic that it is the bricks coming to the rescue of the world at this particular stage in the cycle. But in any event, it does indicate the sort of things you're saying. I think that's exactly what we need. And I'm someone who is from the United States who does not see the rise of the rest as any threat to the West. That's what we've been working for since World War II to prevent World War III to bring the world together and help us all be able to share in prosperity and fulfill shared human rights. Okay. Any other questions from the floor? Sir, would you like to respond to that? I want to say that no. Last question, the importance of the nation-state. It's a very old-fashioned concept. Globalization requires new values, new systems, and the nation-state is so old-fashioned. We need a new system. We do not yet, sir, have the Parliament of Man and the Federation of the World that we might hope for, those of us who are animal-files, and we need to improve the United Nations and global governance in that way. I agree. No, actually, I think this gentleman, Frangin Barbu, has a good point. I would say in the market level, in the country level, I think they're okay, but in the global level, in terms of global governance, the noble co-coordinations, there are a lot of things that we needed to do, and the leadership issues, and the proper governance structures, and the fair and the equal play field for everyone to have a voice and jointly determine the global key issues. There are still a lot of things that we needed to do. I very much agree with you. Okay. The lady in the center. Yeah. I'm Claudio Trevisão from the Brazilian newspaper Stado de São Paulo. It's a question for Mr. Jumin. Do you expect a specific backlash against Chinese investments overseas for the fact that a great deal of it is made by state-owned enterprises or are backed by the government? Thank you. Thank you. Thank you for the question. Ladies always ask a tough question. I don't think so. As I said, in the copper level and the country level, what is new is we see the two-way capture and the globalization that's happening now, also from advanced economy to the emerging market, and emerging market to the advanced economy as well. And it's not only the capture, but also the technology, the innovation, and the human capital as well. It's more than a capital per se. So in that sense, you will see more and more capture and technology from an advanced economy moving the emerging market as well as emerging market moving into a globalized. This is absolutely two-way traffic. And for this situation, I would say everybody, the really you ask for the winner, I would say three basic important things. Number one, the winner got to have an open market. The openness is the most important thing. You have to take this as a basic trend. The second issue is that you need innovation. The technology obviously is the most important thing. And third issue is understand the trend of currently dramatically changing very fast to change global economic situations. Then you can position yourself. Strategically, position yourself right is always the key issue. Okay, so I think when we talk about winners, it's the people and building what Jumin says. The individuals, companies and countries who invest in the future, in better capabilities for people, having more competitive positions in companies, and those who try to protect the status quo, like keeping companies out from China or from other kinds of, those who try to protect the status quo will lose out because you cannot protect the score. So you need to move forward, you need to invest in the future. Can I come back just to ask Jumin this question? Do you think it's fair or fair to say that there are some Western companies referring to the backlash point, not a backlash against Chinese state-owned enterprises, but there's some companies that feel that it's difficult to do business in China, that it's difficult to make profit in China in the long term. You remember we had that leak from GE in Italy, if I remember rightly, about a year or so ago at a management conference that Geoffrey Melton and his management talked about that issue, that there are strategic industries in China which it is difficult to penetrate. Do you think that's fair or not? Marty, I think we're here both. We have the multinational companies from Advanced Economy complaining that they're difficult to do business in emerging markets, China and whatever. And today we're here more, the emerging market companies complaining they're difficult to do business in advanced economies. So that's the reason I go back to the government. It's the new role for government. It's to maintain the playfield equal and fair. I think this is becoming, you should not promote globalization as rather, go home, make sure the competition, the market system is there. What about national interest though? Within the globalization, I think this is overwhelming at the whole issues and we are all living together. I think it's a global interest to overall really become such a role in the civilization. Take a very simple, so you're looking for the individual base, right? The difference today and 20 years ago and before everybody have only choice for job, for career, within the boundaries of a country. But today they have opportunity for the whole world who are benefit for that, the people have education, have a global views. I think of those things that really will go beyond. But obviously when you talk to the other classical definition for securities and all those issues are different. But if you're talking about economically, talk about commercial copy sectors. I think globalizing is a trend, so really you cannot stop it. And I frankly don't understand why the Brazilians are complaining about it because with a strong rail, the Brazilian companies will take over the world anyway. Maybe one day. Okay, let's see here. The lady in the far right at the back. Okay, I'm a journalist from the magazine of China report. I have a question to ask to me. We have just talked a lot about the company, the economy and what do you think about the cultural shock caused by the globalization? Thank you. The cultural shock. Culture. Yeah. Yeah, I will say it is always issue because the cultural difference all make the cooperation, the doing business in global more challenging, more difficult. But I will say after 20 years of globalization, we all globalized, right? And the cultural actually become less, another important but becomes less issue today. So cultures do issue. Obviously you need to respect the local culture. So you need to respect the people's, the pattern for behavior is absolutely important. But I will say, but with the globalization, the information flow and knowledge flow and the people more globalized. So this is actually not as an issue as before. I have a cheeky question for Sir Martin. Are you really so certain that the entire world, even corners which haven't been reached are ready and want a McDonald's world, a Starbucks world? Well, this has been a controversy amongst the academics, certainly business school academics. In 1983, there was the famous article written about the globalization of the world and a Harvard Business School professor said that all things would be consumed everywhere in the same way. I mean, we did an anniversary celebration of the article in 2003 and the author did admit he was exaggerating to make a point. And I think the interesting thing is that we see in our business that consumers are more interesting for their differences rather than their similarities. And if I look at our business, probably about 10, 15, 20% is truly global in the sense of that 1983 article that everything will be consumed in the same way everywhere. And the mistakes, that's why I referred to the global and the local because the mistakes that we see being made with the wholesale application, everything being painted in the same color and everything is not black and white, it's shades of gray. And I think that's why I think in a sort of paradoxical way, local management is becoming more important. Country managers, you won't go back to the fiefdoms and baroners of the old days, the trading companies, which had a trading company in India or in Argentina or Brazil or whatever. I don't mean that. I mean that there will be greater, connections with the government, connections in R&D, recruitment of strong local talent, understanding a local market. So I look at WPP, I can't sit in London or New York and understand what we're doing in 107 countries. Our chief talent guide doesn't know who the best creative people are in Barcelona, Beijing or Bangalore. You have to have local, so I think it's the, I come back to the balance point. The globalization should obviously mean diversification rather than unification. I think it's become ever clear. I don't mean with the globalization where everybody have to consume the same thing, living in the same pattern. It's more choice. It's more choice, exactly, more cultural, so more colorful, more styles. Interesting. I never imagined China would have so many. But, Zuma, there is a really interesting point which gets debated, I think, in China quite a bit, that as China becomes wealthier and wealthier, is money and material things alone sufficient to produce social harmony? Oh, many countries asking that question, though. That as the country becomes more sophisticated and wealthier, there are other issues. There might be religion and other issues become more and more important and more and more. Okay, Zuma, let me just stop you there. I want to squeeze in one last question from the gentleman right in the middle. Go ahead. My name is Alessandro Magnoli, blockchain investment company. We said that the global economic situation, the crisis that we are living, needs strong leadership. Concretely, what would you like to see from the G20 November in France? What are the key steps that you would think would solve this issue and would bring globalization back on track? Who would you like to answer that question? Mardi. We have just a second for a second. How about Jumin, go ahead. I think currently there are a few urgent issues in the agendas. Number one, obviously how the global cooperation from the global solution for the current sovereign debt crisis. Number one. And number two, how do we global cooperation to promote the global growth? Because growth at the end of the day is obviously the most important issue for the day. And also another issue is the global cooperation for the global solution for further enhance the stability of the financial sector. I think there are really a few key issues in the agendas. The last item also including further reform and improve international monetary system as well, which is part of our job. I would add two things to that. I would add trade, as I said at the beginning. We need to get serious and do something more about trade. And is the world forgetting climate change? Are we going to do anything about climate change? When? Who's going to do it? And don't have too high expectations in the short term. It will take time. Exactly. It has to be done incrementally. Fantastic. No pain. Philosophy. No pain, no gain, no pain, no gain. Listen gentlemen, we have to leave it there. Thank you so much for joining us for this debate on the backlash to going global on behalf of World Economic Forum and also CNBC. Thank you to our panelists as well and for you for watching and taking part.