Premier Li: The Made-in-China 2025 is a forward-looking strategy developed on the basis of the current industrialization level in China. It is designed to raise the quality of Chinese products and equipment. While made-in-China products have acquired a sound global reputation, those products are still at the low and medium level in terms of quality. Similarly, China's equipment is yet to reach a high level, and we still need to import foreign equipment. The Made-in-China 2025 strategy aims to boost the quality of Chinese equipment with the application of intelligent technologies through cooperation with foreign partners.
First, the Made-in-China 2025 strategy will bring huge opportunities for both Chinese and foreign businesses. To enhance the quality of their products, Chinese companies need to introduce advanced techniques and equipment. This can be achieved through cooperation with developed countries. For example, we are synergizing this strategy with Germany's Industry 4.0, and cooperating with the United States. In the future, more foreign equipment-manufacturing products and technologies will enter the Chinese market.
Second, we expect to see more cooperation between Chinese and foreign companies in equipment technologies. For foreign equipment makers to expand their presence in the Chinese market, they need to localize their products. For example, the US company General Motors has been able to take a big share of the Chinese market through setting up joint ventures with Chinese companies and remodeling its vehicles according to road and climatic conditions in China. This has secured a growing market for the company in China.
I want to stress that such cooperation is voluntary and helps companies expand in the Chinese market and even in third countries. The Chinese government does not allow Chinese companies to impose mandatory technology transfer requirements on their foreign partners, still less will we tolerate infringements on intellectual property rights.
Third, in areas of the Made-in-China 2025 strategy, such as green development, where both the Paris Agreement and WTO encourage governments to provide policy support, foreign-invested companies registered in China will enjoy the same policy incentives offered by the Chinese government as their Chinese counterparts.
Now, let me address a misunderstanding about the Made-in-China 2025 strategy. To those people who seem to believe that the purpose of the relevant policies is to shut the door on imports of foreign equipment, let me say this: First, door-shutting is impossible. We live in a globalized world, where companies make their own choices about the equipment they want to purchase, and they should be given the right to do so in the open market. Second, it is natural for any country to want to make equipment of a higher quality. It is only that in a globalized world, this cannot be done with one's doors closed. Third, given the size of the Chinese market, when China climbs up the quality ladder, this will also boost global demand for manufactured products and equipment.
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 one billion US dollars before we established diplomatic ties to over 500 billion US dollars 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% 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% 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% 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% to 70%. I asked him who took 30% and who took 70%. He said 70% 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% 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? (more)
