Live Blog

For a chronological account of the Forum, read the thread of posts here from the bottom up.

11:55
We've shifted to the breakout on technology opportunities.

R. Michael Mori, a general counsel for Seiko Epson Group, is advising the audience to focus on the relationship part of any technology partnership in Asia. Be transparent, be patient, keep your cool in trying situations, and be respectful of the culture.

Raman Chitkara, a global leader of the technology practice for PricewaterhouseCoopers LLP, offered the example of a company that wanted to buy its Asian joint venture partner. A deal that mightve been a snap in many economies took about a year in Asia. Learn the customs and culture and adjust your expectations accordingly, he suggested.

Mori is again stressing the human aspects of working with Asian partners on technology ventures. Have high-level executives engage with your partners, and teach your employees about the culture and processes.

Hes brought up the issue of protecting your intellectual property in Asia. Secure your patents sooner rather than later, and aggressively police your rights. For instance, do a Google search to look for counterfeiters, then lean on the search engines to de-list the pirates.

Chitkara predicted that IP protection will increase in Asia as more technology is developed and patented by locals. With more at stake for the region, enforcement will be stepped up accordingly, to the benefit of all patent and rights holders.

Mori countered that the counterfeiters will likely brainstorm new ways of fostering "a migration of ideas" away from the originator. In other words, the more arduous the enforcement, the craftier the IP thieves will become, the more creative companies will have to become to protect their innovations. 

 11:00
The conference audience has broken into smaller groups to hear presentations on specific industries as they relate to Asia.

We'll jump around and try to attend as many of the breakout sessions as possible, starting with a panel presentation on the energy industry.

Moderator Patricia Tan Openshaw, a Hong Kong-based partner in Paul Hastings, opened the session by noting how demand for energy has steeply climbed in Asia because of the economic boom. Emerging Asian nations didn't have the time afforded other countries to develop their energy strategies.

Dr. Joseph Stanislaw, an independent senior advisor on energy and sustainability for Deloitte LLP, noted that renewable energy is starting to capture the attention of various governments. The Philippines, for instance, should unveil its first solar endeavor this summer, he said.

China has moved "aggressively" into all the renewable sectors as a matter of policy, Stanislaw said.

But, he added, coal and oil will remain the dominant source of power in Asia for some time to come.

Ed Crooks, the FT's U.S. industry and energy editor, posed what he termed the central question for Asian economies: Where will they get the energy needed to meet the newfound demand?

Katherine Spector, a commodities strategist for CIBC Markets, noted how adept Japan and China have been in securing foreign sources of natural gas and traditional fuels.

Brett King, a partner in Paul Hastings, mentioned the considerable stores of gas and oil that are available in Asia. The complication, he said, is politics. For instance, a pipeline from the Russian satellite nations could readily fuel Asia's needs. But, he hinted, that's not going to happen because of longstanding tensions between China and Russia.

Openshaw has asked about the future of what she called indigenous fuels' forms of power that originate in Asia.

King noted that huge liquefied natural gas reserves are being tapped in Australia. Closer to home, he said, are the coal reserves of several nations.

Stanislaw stressed the potential of China's coal reserves. The key, he said, is finding a way to scrub that fuel and make it more acceptable from an environmental standpoint. That alone, he said, is a tremendous investment opportunity. Tapping those resources would have a profound impact around the globe, he said.

Crooks mentioned that the objective isn't to halt or reverse global warming, but merely to "bend the curve down" a bit. Cleaner coal would slow the process, not reverse it.

Stanislaw countered that he thought it would be possible to bend that curve down and reverse global warming. A possible means, he said, may be new technology that harnesses the energy of the coal without taking it out of the ground.

China, he says, has been a leader in exploring new energy technology.

 10:45
Crook is wrapping up the panel with a question about the openness of China to change. Are the new leaders open to the full range of ideas, suggestions and concerns that are aired at a conference like this?

They are aware, said Citi's Rhodes. But only time will tell how much they take those issues to heart. 

10:30
Rhodes was asked about permission by U.S. regulators to permit more involvement by China's banks in the States' capital markets and financial systems.

He gave a firm yes, but predicted that the form of that involvement may be non-traditional. He mentioned the possibility of some sort of collaboration or cooperative.

It will happen, he predicted. The question is when.     

10:15
Crook asked if China is open to the international call for changes in its economic regulation, or will it attempt to preserve what some perceive as an undue advantage on the global market.

Citi's Rhodes said the senior regulator of Chinas banks is a "tough cop" who's done a good job in policing the situation.

He also noted the complaints of companies like GE and Siemens that they're at an unfair advantage in bidding for Chinese products. Leadership has listened and promised change, he said.

9:50
A panel has taken the stage to discuss the regulatory situation in China. But moderator Clive Crook, the FT's Chief Washington Columnist, has thrown the participants a curve by asking them if they thought Pettis is too bearish in his assessment of the world's second-largest economy.

Indeed, said Joyce Chang, head of emerging markets for JP Morgan. She expects the economy of China to grow this year by 9%, not the 3 to 5% that Pettis foresees.

William Rhodes, a senior advisor of Citi, noted that another negative factor that has to be considered is China's 2% savings rate.

9:30
Pettis noted that many of China's senior leaders are not economists. Their self-ascribed credentials are common sense and a familiarity with the economic patterns of the last 30 years. They contend with certainty that if it has worked that way for 30 decades, it will keep working.

But, Pettis said, new leaders are coming to the fore. If there's a consensus among those incomers, there could be quick action to fix the economy.

Much of it depends, he said, on how easy that succession process proves to be.  He said it could begin in October. 

9:25
Pettis recommended raising wages and interest rates in China as a means of boosting household income and thereby stimulating consumer consumption. But it can't be done too quickly because of significant side effects--bankruptcies, stepped-up inflation, and the other textbook ills.

The real key, he says, is reversing what amount to de facto taxes--government controls and outright subsidies to foster investment and growth. When that happens, says Pettis, China will see a rapid decline in growth.

He predicted that the growth rate in China will decline to 3 to 5% annually; the days of 10% growth are over, he concluded.

9:05
Pettis says he believes China will never be able to raise the percentage of GDP that comes from consumption unless it finds a way to raise household income, which accounts for a mere 50% of the gross national product at present.  

9:00
Pettis is explaining that China's phenomenal past economic growth--raising the consumption component of GDP to some 40%--wasn't  the problem per se. What further fueled inflation was its considerable investment, which added more heat to the growth. 

8:55
It's not controversial that China wants to put a rein on inflation. What's controversial, says Michael Pettis, professor of finance at Peking University's Guanghua School of Management, is how China plans to do it. He explained that it plans to cut the consumption share of GDP and rebalance growth. 

 

Greg Nitzkowski, managing partner of Paul Hastings, the FT's partner in the Asian Century Forum, has opened the conference by asking the audience to remember the people of Japan and their families. He noted that the country will be recovering for a long time, but that the resolve of the Japanese people is truly inspiring.