Good evening everyone and welcome. As a courtesy if you please shut off you're pagers and cell phones that would be terrific. Well, we are pleased to have with us tonight Robyn Meredith who is here to discuss her book, "The Elephant And The Dragon: The Rise of India and China and What It Means to All of Us". This book examines the economies of China and India and their relationships with United States and what the future is going to have for all of us. And without further adieu here is Miss Meredith. Good evening. Can everyone hear me in the back? Is that right. Thank you so much for coming tonight, I really appreciate it. This is my first book, "The Elephant And The Dragon" so I am particularly pleased to see all of you. What I thought I would do is to give you a brief overview of the book itself and then yeah. I think the problem is I am too tall. Let's see. We are going to have to improvise. Oh there you go. Good idea. Perfect, Thank you. So, I am Robyn Meredith. I am based in Hong Kong for Forbes Magazine. I am a Foreign Correspondent for Forbes, and I've been there for five years. Before that I was with the New York Times in Detroit, before that, USA Today and some other news papers. I've written a book about India and China called the "The Elephant and the Dragon". And I am going to read from it tonight. First I'll give you an overview of the book, then I'll read several passages from the book and then I'll take questions from the audience. And by then, I hope you'll have lots. So, with out further adieu let me tell you about my book. "The Elephant and the Dragon" is the story of how the Indian and China are changing their destinies, and with that, changing the world's. Today I am going to tell you a little about India and China. But what I really want you to remember is that we must understand what's going on in India and China or we risk being left behind. To me India is like an elephant, its trudging along slowly into the future. China is flying along, fast like a dragon, but sometimes it scares us. As India and China move from the ranks of developing world countries towards super power status, India's slow but steady approach contrast with China rocket like rise. India and China in so many other ways are as opposite as Gandhi and Mao. India is democratic, China is authoritarian. India is capitalist, but often anti-business; while China, Communist, is often pro-business. India looks chaotic, but it has unseen strengths. India's invisible human infrastructure is the nation's mighty resource now that it's reconnected to the global economy. India is a riot of bright colors, a cacophonous nation with 30 different languages, including English. At the same time its airports and its roads are unbelievably shabby. Its time zone mystifies. It's a half hour off from everyplace else in the world, so if its noon in San Francisco its 12:30 at night in Bombay. China is straight forward. The national language is Mandarin; clocks line up with the rest of the world and not doubt about it, the Communist Party runs the country. China looks very strong on the outside. It has new highways and new airports and they certainly contrast with India's shoddy infrastructure. But China is not as strong as it appears. You know when China closed its colleges during the Cultural Revolution, India was nurturing its universities and a generation of professors and engineers and doctors and scientists. While China persecuted capitalists, Indian managers gained experience by battling it out in local markets. And today you see the effects of those historic differences because Indian businesses by and large are better run than Chinese today. What India and China have in common though is that their transformations are as stunning as any thing the world has seen since America itself first walked on the world economic stage. This is tectonic economics. What we are seeing is a geo-political and economic shift of seismic proportions. The new found strength of India and China is dramatically altering geo-politics. Both nations are now able to modernize their militaries and the economic successes of India and China are straining environmental resources that have already been stretched thin by developed countries like the United States. And the increased demand for natural resources, from oil to copper. to iron ore, even now to food has lead to higher prices around the world, not just at your local gas station and grocery store. The rise of India and China has of course created many changes. But I would like to focus tonight on just one aspect of the changes. The book goes into much more detail about all of them. We didn't use to have a global job market and now we do. The good news about that is that in the just in the 1990's alone 200 million people have been lifted out of abject poverty in India and China. This is a huge accomplishment. We've tried all kinds of aid programs for decades and haven't got anywhere near as far. This is a vast vast achievement and I want you to remember it when we talk about job loses later on. But that new global job market is worrying the West and it should. Because with both India and China open for business, a billion new workers have been added to the global labor market. One of every four in the world, most of whom earn dramatically less than westerners. The Chairman of Intel, Craig Barrett puts it best. He says, "I don't think most people appreciate the magnitude of the change in the world's work force. This is a tsunami coming our way." he says. "Over the next 10 years, you are going to see major, major dislocation", Barrett says. And he is not just talking about blue collar jobs moving to China. He is talking about white collar jobs moving both to China and to India. Let me give you an example of the potential for shake up. As you know, India and China each have more than a billion people; the United States has less than third of that. Every year, 1.3 million Americans graduate from college. India has more than double that amount every year and China has more than triple that amount graduating each year. So, each of these Asian giants produce more college graduates each year than the U.S. and Europe combined. That is a huge change. Remember during the Cultural Revolution an education could get you killed in China. Because technology connects that well educated workforce to the West, westerners can no longer expect to earn 10 times more than every one else for the same job. American companies are taking advantage of this new development. IBM, GE and Microsoft have each hired tens of thousands of workers in India in the last few years. Accenture is a great example. They had 800 employees in India five years ago. Today there are 35,000, in just five years, and that's more than the 31,000 Accenture employees in the United States. The three biggest Indian Outsourcing Companies have a combined 220,000 workers; most are doing work in India on behalf of US or other foreign companies and most were hired in the last decade. Infosys alone hired 25,000 people last year and is scrambling to hire fast enough. At the same time Indian companies are worrying about how to find enough people to hire, American companies and their workers are worrying about lay-offs. You know in India college graduates are happy to land a job answering 800 number calls, to listen to Americans complain, even though that job pays just $250 a month. In China engineers answers emails asking for tech support. But that's not all. Indians and Chinese are now writing computer codes that powers our computers. Many are preparing our tax returns. They even animate Hollywood movies. And in one of the newest trends Indian product engineers design consumer products for multinational companies. Guess where those products are built, China. That's tectonic economics. What troubles me is this, in the 19th century farmers were displaced by the industrial revolution, in the 20th century sweatshop workers lost their jobs to assembly lines and just a generation ago factories in America closed and moved to Mexico. And that is the terrifying dark side of globalization. History is about to repeat itself. That's an overview of issues that are discussed in the elephant and dragon and I hope it is conveyed to you why it's so important that we understand what's going on there. And by the way for business executives today, an understanding of India and China is as essential as the basic grasp of accounting was just a few years ago. So many companies, American companies, small, medium and large have operations already in India and China that the requirements have really changed. What I would like to do now is read passages from the book, about three different countries and how they are changing, China, India and the United States. First let's go to China. You never know where you find Jesus, I found him in a toy factory in southern China, standing on a shelf of talking toys. This Barbie doll size Jesus spoke in a gently reassuring electronic voice, "no one can see the kingdom of God unless he is born again", said the little Jesus. The Chinese toy factory that made these Jesus dolls was non denominational. Jesus, Mary and Moses mingled with Mickey Mouse, Barney and Winnie the Pooh. And the 2000 Chinese workers in the toy factory turn out millions of toys each year, most of them headed to United States. What struck me so interesting about this particular factory was that when it was built 12 years ago, all of the country side around it was surrounded by fields. Today all the farmland for an hour's drive in every direction is factories. Meanwhile the Chinese province, where they make the Jesus and the Winnie the Pooh dolls has become the center of the global toy industry. It has 5000 other toy factories, one of which by the way makes only eyes, just eyes for toys, all different colors and shapes and sizes, but just eyes. Any way those 5000 other toy factories there, all of them are newly built and they give millions of Chinese peasant's jobs they wouldn't have had, a decade ago. They give millions of Americans lower prices for toys. China's metamorphosis from farmland to factories was fast. In the year 2000, 30 percent of the world's toys came from China. But just 5 years later 75 percent, three out of every four toys where made in China. And as it goes for toys so it goes for shoes and clothing and auto parts, computer components and all kinds of other products. Isn't that alarming? But as I told you before China is not strong as it looks. The majority of those toys and auto parts and shoes and clothing and computers are made by American companies or European companies or on behalf of them for other foreign companies. So for now, the majority of China's exporting muscle belongs to foreigners. Just four out of the top 24 exporters from China are Chinese companies. Nonetheless change from the land of farms to a land of factories was astounding. China now exports in a single day more than it exported in the entire year of 1978. That is huge. 1978 of course is when China began to open its economy. So what we have seen is China has just gone through an industrial revolution. That has returned China to a global power and it has reshaped the life of workers in China and around the world and that's also tectonic economics. Now I would like to turn to India. If you visit the Bangalore headquarters of Infosys, you will drive there on pot-holed, grid-locked streets. You will see barefoot children walking to school, you will see women dressed in bright saris, some of them are carrying heavy loads on their heads and you will see the occasional cow, sacred cow, gracing by the side of the road. But when you are inside the guarded gates of a place like Infosys you will see what looks like a well groomed American college campus. Inside those gates you see the newly emerging India and you will see the entire global economy on the move, because almost all of those young Infosys workers are doing work on behalf of American or European companies. You know back when the Infosys campus was built 13 years ago most workers rode buses or motorcycles to work. Just a decade later they are yuppies who fill an entire parking deck with their cars. They carry the latest cell phones, they own their own homes. Their children are not bare foot, they go to private schools. These 20 and 30 some things' are completely different from their parents. Their parents by and large could not afford cars or houses until they were in their 40s and usually 50s. So for the young and educated India has been reincarnated as land of opportunities. Again tectonic economics. Now let me turn to the United States. Are Indians and Chinese our friends or our foes? Is the rise of India and China good for America or bad? Well for consumers, India and China are good friends; prices in the US are lower as a result of our connections to India and China. China's rise even helps hold down interest rates in the United States. So because of China the average American pays about $100 on their mortgage every month. The lower prices and the lower mortgage rates give Americans more spending money. But for American workers India and China are enemies. Indians and Chinese are now competing with Americans for jobs. Some Americans stand to lose their jobs and for them and their families the threat is grave. What it boils down to is that India and China are both friends and foes. Some individual Americans are feeling the squeeze from the rise of India and China. But collectively we Americans are benefiting. You know if all of us in the room save $100 dollars every month on our mortgage, we are happy. But we may not give the credit to China and it won't change our lives dramatically. But if few of us lose our jobs we feel such pain and I think that's why it's so difficult to debate globalization and explain that there really are collective benefits from it. It's just that the sharp pain of those who are hurt by it is so much stronger than the feeling of gain we all experience, some times not noticing it. My point is that, well collectively we Americans are benefiting. And now that we understand what's happening we must adjust because changes are inevitable. One of the people I spoke to for in writing this book was Robert Rubin, the former US Treasury Secretary. And he says that the rise of India and China is the greatest challenge since the emergence of the United States more than a 100 years ago. To meet these historic challenges the United States cannot afford complacency. So what should Americans do? Should we turn to protectionism, should we just left the free market ride? I don't think so. I think we need to choose a third way, some thing in between. "The Elephant and the Dragon" talks about this in much greater detail, but let me summarize the two most important things that I think America needs to do to turn this threat into a real opportunity. First we must recognize as a nation that more job losses are inevitable. People will need help finding new jobs. We are entering an era of increased job turnover and job turn and governments at the local state and federal level need to focus on creating jobs. We can talk more about that in a few minutes. At the same time governments and companies need to do a better job of weaving a stronger safety net under the increasing number of workers that will inevitably be displaced as globalization continues its pace. We can do that with a job loss insurance plan that is not particularly costly and with better programs for retraining workers. Second, statistic show clearly that when it comes to education Americans are falling behind, particularly in the K through 12 levels. That is not good enough today. We just can't have it any more. Both individuals and governments must be redouble their efforts to improve education in this country. And by the way American Universities are the best in the world, but we have been going the wrong way on affordability. Since that early 1990's for the average American, college has become much less affordable, rather than more affordable just at the very time we need to make an education. We need to put an education with in reach for more of our population. You know we face a big challenge but we shouldn't give up. The United States does not have a billion people. But when it comes to competing in the global economy even when in the midst of enormous changes, America has a lot of advantages. We have the world's largest economy; we have the best trained and best flexible work force. American companies own the leading edge technology in many, many fields. But most importantly Americans have a track record of remarkable innovations and creativity and flexibility. These are the cultural traits that helped America sent a man to the moon when President Kennedy called on us to concentrate on efforts. I think we should let the rise of India and China be the catalyst we need to reestablish America's competitiveness. Let it be this generation's space race, because if inward facing India and Communist China can transform themselves so dramatically and face the world so can the United States of America. Thank you very much.
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