I'm Steve Schwarzman, Chairman, CEO and Co-Founder of Blackstone. I'm also the bestselling author of What It Takes: Lessons in the Pursuit of Excellence.
Here is a copy of the book. It's number one in China and a bestseller in the United States and around the rest of the world. It's great to be with you here today.
Question: COVID-19 is putting the global economy into a tailspin. Many countries are heading for very sudden and unprecedented recessions. Do you expect to see major changes in a post-pandemic economy?
The virus and its impact is absolutely unprecedented. In the last hundred years, no one knew anything even vaguely like this will have unemployment levels that will be close to the Great Depression of the 1930s. And it was all done voluntarily.
With the Depression and the other major downturns like the Global Financial Crisis in 2008 and 2009 those were accidents, this was on purpose. And it was done to protect citizens all over the world from the spread of COVID-19. And that was a very important thing to do.
On the other hand, it has left the economies of the world in an exceptionally difficult position – very high unemployment, a lot of businesses closed voluntarily or involuntary, businesses have collapsed. How you restart that economy around the world is an issue that we're just starting to face.
What's happened in almost every economy is – when this downturn was happening because people were staying in their own homes or their own apartments – governments in almost every country have put a lot of money into the economy to keep it going in effect, even if it's not going to supply money to the people in their countries, so that they won't have their savings severely diminished.
These efforts are quite good in the United States but imperfect – they can't reach almost everyone with the right amount of money. So I think what will happen is that consumers will be slow to respond to going back to work. Once you've had your savings repaired, you're less likely to spend and it'll take a while before all of these economies get to where they used to be.
Different consultants have different points of view on each country. China will most likely be the most rapidly returning economy for a lot of different reasons.
First, China was the first to deal with this issue.
Secondly, the nature of the Chinese consumer and Chinese system has people going to work quite quickly. Factory production is up a lot. They just opened traveling so you can see an instant response with airline travel and train travel.
But it's not back instantaneously to where it started and that's normal to expect. Most people would like it to be faster, but it's not going to be as fast as an ideal case. But I think in China, it's going to get back quicker to those kinds of levels and they'll be different things going on in those economies.
There'll be more of an emphasis on computer science and in distance type of communications. Much like I'm being recorded now on something called Zoom. That's normal now. Those of us who are a little older didn't necessarily use all that kind of technology, but now, that's what we do.
There's going to be retraining, jobs are going to shift. They'll still be leisure activities. People will want to go to theme parks. But for a while, they're going to be concerned about whether they'll get the virus from somebody.
Less concerned in China because the numbers have been suppressed in terms of communicable nature and there are very few people who are getting newly infected with the virus. So there's a lot of reason, I think, to be optimistic about China's prospects.
Question: Few industries can avoid being impacted. In your opinion, which industry will suffer most? Who will be the winners in a post-pandemic economy?
I think in terms of suffering the most, the oil and gas business is at the moment. The reason for that is, there's roughly on a global basis about a hundred billion barrels a year consumed and the amount that's produced is very similar. What's happened as a result of people staying at home and factories shutting is that the demand for oil basically is going down at least twenty five million barrels. So there's twenty five million of overproduction, which drives profits down and the consumption of oil just isn't enough.
Now, oil producers have probably reduced through OPEC, which is this group of countries that cut production by 10 million barrels, so it's still wildly out of balance. And now people are reducing even more oil and gas so that price will stay low for quite a while. They're the biggest losers.
In other places like hotels, people haven't been traveling as much and have been much lower in occupancy. People haven't gone to leisure time activities like going to movie theaters because they're scared that the person sitting next to them won't do so well and it could affect them. And so you will have this distance seating, but if you can't see a lot of people in a place, that organization won't make much money. In fact, they might lose money.
And it's the same for restaurants. People like to go to restaurants all over the world, but if you have to only use half of a restaurant because of distance seating, they’ll be hurt.
So there are a variety of businesses that will have difficulty and in particular, retail.
As you know, in China, there's a huge amount of ordering on the Internet and delivery to your homes. What we're finding around the world is this is putting enormous pressure on shopping malls because retailers are going out of business and they can't pay the rent. So there’s a whole complex of industries that will be hurt.
On the other hand, the healthcare business – there's something developing now called telemedicine so instead of going to see a doctor, you can do the doctor on your iPhone or your Xiaomi phone. And you'll just have your medical appointment there. If you need to go to a hospital or a laboratory for tests, then you'll go, but a lot of treatment will be recommended by doctors.
There will be all kinds of opportunities in the greater healthcare space. There'll be continual innovations in computer science and the way that technology generally will be applied. So it's very exciting areas for expansion and for younger entrepreneurs. And then there'll be some that will be tough.
Question: Except for China and Iran, COVID-19 has yet to hit most emerging market economies to the extent it has impacted Europe and the US. Will it trigger new emerging market crisis?
With the emerging markets countries, there are some very interesting things that one would expect to happen.
Those countries sometimes borrow in very hard currency. And if their economies get weak because the world goes into recession, it's going to be really hard for them because a lot of those emerging markets countries, not all but a lot, sell raw materials to countries like China, where China needs those natural resources to power their economy.
If countries around the world are growing much, much slower, then it makes it very difficult for an emerging markets country. And if they own money in hard currency that they borrowed, their own currency will get weaker as a result of weak economies. And so it should be a tough time for emerging markets’ economies.
Interestingly, some of those economies aren't having much problem with COVID-19 and nobody knows why. And others, for example, like Brazil, are having major issues, but countries like Myanmar or Cambodia, they're hardly having any.
And this varies around the world much more than with the more mature countries like China, US and Europe, Singapore, Australia. So I think we have to see whether there's a COVID problem across the board for the emerging markets like there has been for the developed world.
Question: In a post-pandemic economy, do you expect to see more capital flow into the emerging market economies such as China? Or to more mature markets, such as the US and Europe?
China is very interesting because it's not really an emerging market economy. It's emerged. Everybody in the world knows, China has emerged.
For most emerging markets economies, it will be some time before they find a bottom where you'll really want to put money because they become very dependent on their exports to the developing world, including China. And to the extent that the recovery is real fast, then it's doubly hard for these emerging markets economies. So you can make a mistake of being too early in terms of investing in those areas.
Question: You just launched your book in China – What It Takes. What do you hope people will learn from reading it? In what ways is it applicable to the current environment?
Well, in terms of my book, I'm really happy. It's getting a great reception in China because it was written for people who are like the Chinese, written for people all around the world, but they have to be people who are motivated. People who want to improve themselves. People who want to do things. People who want to make things better or more efficient. People with a vision. People who aren't scared to start new things when they’re completely new like entrepreneurs or there are new things within a company, new products, new areas, new geographies, anything where you're trying to make something better would benefit from What It Takes, my book.
It's very good coming out of an unfortunate economic time because people become overly cautious. They become somewhat timid. And it's at a time like that where you have to look around and say objectively, where are things happening? What should I be doing? What will work in this new world? And you have to think carefully, because in the book I describe only so many things you can do.
There are some remarkable and amazing Chinese companies that have just been created, some in the last five years, some in the last 10 years, or an old company in China. Could be 20 years old. So people have created these remarkable companies with a vision and drive. And one of the great things about China is that people work at least as hard as any other place in the world, and they do it for a sustained period of time. So if you have a great idea and you figured out how to do it and you have a certain amount of charm where you can attract capital, you can create something wonderful.
Remember, there are more billionaires in China than any other place in the world. And 40 years ago, the average person had an income of only $300 a year, which I guess now is somewhere around 2,000 yuan a year. To have more billionaires than any other country.
And so this book will help you find your way at a time where a lot of people are uncertain and tentative. So here it is. If I were you, I would buy it. And I would read it. It's actually quite funny, which most people find surprising. It's like a thriller. It reads very quickly. So people tend to recommend it.
If you're somebody my age, you’d recommend it to your children. If you're my children's age, they’d recommend it to their children because everybody learns and somebody has to be a teacher.
I wrote the book so that I could help people avoid the mistakes that I've made in my career. Nobody gets it all right. It doesn't work that way, whether it's me or you. The key is how you learn from those mistakes and relaunch or change what you're doing.
And so I recommend the book to you. It took me a long time to write it. I'm pleased with it and I'm glad it's been so well accepted in China.