Mark Benioff, Chairman and CEO of Salesforce: It's great to be here in the conference. Your speech yesterday was excellent and was very meaningful to me personally. As you know, there have been a lot of transitions and changes in the US since I was here last just a year ago. I was very interested in hearing your comments about these changes if possible. Now, the Chinese government has placed great importance, you spoke about it last year as well, on the development of new companies and entrepreneurs, and on mass innovation and entrepreneurship, which you also articulated many times. So what challenges do you see based on what is happening in the world today facing this effort? Tell me also how can we both from the US and also the international business community participate more meaningfully in your efforts, including your Belt and Road Initiative.
Premier Li: China and the US are the world's largest developing country and largest developed country respectively. Steady growth of China-US relations and expansion of our economic and commercial relations will bring tremendous benefits to people of the two countries and also to world peace, development and cooperation. No matter how the situation in our respective countries may evolve, we are sure about one thing, that is, China-US relations have always kept moving ahead despite ups and downs in the past several decades. Our two-way trade has seen strong growth, in particular, from just about $1 billion before we established diplomatic ties to over $500 billion last year. It would be fair to say that China and the US now have forged a community of inseparable interests.
The Chinese government's initiative of mass entrepreneurship and innovation is first and foremost about employment. The government faces quite a big pressure in terms of employment, as we need to generate as many as 15 million new urban jobs each year to accommodate new entrants into the labor force. As big companies enhance efficiency and introduce more robots and manipulators, it is only natural that the total number of jobs they can offer has been somewhat declining. With government efforts to widen market access, as many as 15,000 small and micro businesses are getting registered on an average day in China, and they have been a large source of new jobs. Now in China, small and micro businesses provide 80 percent of all jobs. They are the backbone of inclusive growth.
Second, this initiative is intended to meet the needs for innovation. The new industrial revolution has brought about a major shift in the marketplace, which is the exponential growth in individualistic customer demands. Meeting these demands requires flexible business models and innovation in management and organizational structures. The SMEs have an edge in adaptability. As a Chinese idiom goes, it is easy for a small boat to shift direction.
Third, the initiative of mass entrepreneurship and innovation is a response to the trend of integrated development among large, medium and small companies. Not just small companies make innovations to accommodate special needs, many big companies have also been engaged in customized production, which requires adjustments in their organizational structures. I visited a local equipment manufacturer in Dalian, which has opened a lot of maker spaces on its production lines. The maker teams are able to remodel products according to customer needs. Although this company produces large equipment, 85 percent of its products are made to order. Not just this company, many large companies are doing the same.
Naturally, we also need to overcome some difficulties in the process of promoting mass entrepreneurship and innovation.
First, the government needs to shed its vested interests, lower the threshold for market access, and spend more energy on compliance oversight. The playing field ought to be level, and we can never allow sales of shoddy or counterfeited products, fraud and violations of intellectual property rights.
Second, the financial sector has come under strain. It may be a global challenge for SMEs to get loans as all banks seem to favor big companies. China is no exception. This is why we are encouraging financial inclusion in China by providing incentives to financial institutions to lend to SMEs.
Third, as SMEs make innovation and pursue integrated development with large and medium-sized companies, how to incentivize inventors and innovators to make further innovations by protecting intellectual property rights has become a challenge. Now applications for patents and inventions from SMEs account for 70 percent of the total. But this does involve some disputes. For those big companies that have makers and small businesses at maker spaces on their production lines, the challenge is how to share the profits between them and their smaller partners to promote common development.
I cited the example of the company I visited in Dalian, whose owner is a visionary man. He told me that he has been able to involve a lot of makers on his production lines to improve products, and the value generated through such cooperation were divided at a ratio of 30 percent to 70 percent. I asked him who took 30 percent and who took 70 percent. He said 70 percent of the profits went to makers and he took the smaller share. I praised him for his courageous generosity. He replied that had it not been for those makers, he would not be able to get even 10 percent of newly generated revenue. The story of the company shows that it is necessary to protect intellectual property rights and at the same time incentivize innovations. This requires further efforts on our part to explore an effective approach. Although the makers make use of the equipment of the company for their innovations, the owner of the company recognizes the superior value of the makers' ideas. That said, it won't be easy for everyone to recognize this.
Patrice Motsepe, Founder and CEO of African Rainbow Minerals: I am a businessman from South Africa. I was the first Chairman of the BRICS Business Council. I saw how the BRICS countries, but Africa in particular, benefited immensely from the growth of the Chinese economy as well as from trade with China. I have no doubt that the rest of the world has benefited immensely from trading with China. My question is: The WTO's Trade Facilitation Agreement (TFA) entered into force earlier this year. China has been an active supporter in this area. What will be the major challenges in enforcing the agreement? And what further steps will China adopt to advance global trade facilitation?
Premier Li: You raised a very important question, particularly in the context of the growing backlash against globalization. There have been as many as 3,000 protectionist measures adopted by various countries in the past ten years since the outbreak of the international financial crisis. The entry into force of the Trade Facilitation Agreement, which was adopted by the WTO in 2013, would be beneficial for global economic recovery and for guiding market expectations.
The TFA is the first multilateral agreement on trade in goods China acceded to after joining the WTO. The Chinese State Council completed domestic procedures for its ratification in less than two years. As things stand, some one third of the WTO members are yet to go through ratification procedures. We hope all parties will work together for the TFA to be fully implemented this year. According to estimates by experts, the TFA, once implemented, will add at least $1 trillion to global trade. That would undoubtedly be good news for a steady global recovery. While observing the TFA, China will advance trade facilitation as much as possible in line with its national conditions. First, we will consolidate the mandate of various agencies to streamline customs clearance procedures for businesses by establishing "single window" service centers. Second, we will make customs clearance faster. We intend to shorten the time needed for customs clearance by another one third this year, and will aim to meet the most advanced international standards regarding customs clearance procedures and speed in the not so distant future. Third, we will enhance cooperation with other countries, particularly in mutual recognition of inspection between regulatory authorities, to avoid repetitive procedures and lower costs for businesses.
These are the technical measures we will take. What is most important, I believe, is that we must recognize the valuable role of free trade in boosting global economic recovery. Trade liberalization and investment facilitation is the hallmark of free trade. When everyone acts to promote free trade with an open-minded approach, this will provide consumers with more choices and compel domestic companies to innovate and upgrade. In the meantime, we should take account of the varying national conditions of different countries, and adopt measures to cushion the impact on certain sectors through consultation among countries on the basis of mutual understanding and mutual accommodation. But overall, we need to keep to the right direction.
Professor Schwab: Mr. Premier, I want to take this opportunity to ask you a question about the development of the internet and digitization. The Internet Plus policy is a very important national strategy. But if we look at digitization, we can no longer make differentiation between digital industries and old-fashioned industries. Today, every industry is digitized. Could you share with us what your experiences and challenges are in this aspect? Particularly, how the international business community could be more meaningfully engaged into China's efforts of overall digitization of its economy?
Premier Li: The introduction of the internet has given rise to a mushrooming of new forms of business. And big data application has become a trend. We must adapt to this trend in order to seize as many opportunities as possible. Traditional industries did come under challenges. I once cited the example of physical stores going through the painful experience of confronting or even conflicting with online shops. Now, many physical stores have also opened their own online stores, which has made them more competitive. As we can see, notwithstanding the numerous challenges, we have more ways and means to overcome them.
The Internet Plus strategy the Chinese government has been advancing is inherently open to the world. We have in China a large number of cloud platforms that are attractive to foreign businesses or individuals. Foreign companies are getting registered on such platforms in large numbers. In sectors of basic telecommunications and value-added services in China, many business areas are now open to foreign investors, which represents the highest level of openness so far among all developing countries. This means tremendous opportunities for foreign firms.
Furthermore, China has over 900 million mobile broadband users and over 730 million Internet users. We are also actively advancing cross-border e-commerce. Foreign companies can sell their products and services on the e-commerce platforms. Nothing is impossible as long as you act on your ideas. In this process, the Chinese government will exercise prudent yet accommodating regulation to make sure that foreign companies can grow together with Chinese companies and join in our efforts to boost the Chinese economy and deliver greater convenience to the Chinese people. For the online economy to attract more consumers, security is the precondition. We must work together to crack down on fraud, sales of fake and shoddy products online, and theft of trade secrets.
To conclude, let me emphasize one point. Just now a few business leaders have asked questions and introduced their businesses. I hope all the delegates here and the media will pay attention not just to the questions they asked and the answers I gave, but also to what their businesses have achieved in the Chinese market and their support for China's modernization. Thank you.
Professor Schwab: We should be very grateful to the Premier for being here at this dialogue and for having shared with us his insights and many specific policies and measures, particularly some vivid examples. We also want to express our appreciation to the participation of such a prominent government delegation which has accompanied you, Mr. Premier. And we wish the Chinese government all the best in the implementation of those strategies. And you can be assured that you have the goodwill of all those here, and you have the strong commitment of the World Economic Forum to contribute to the success of the development of China.