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Watch A Conversation Baidu CEO Robin Li - Bloomberg

Live on Bloomberg TV

00:00It has the makings of one of the tech world's greatest comebacks. Chinese Internet old timer by Doo has pulled itself back from the brink of near obscurity and it's now on the cusp of reemerging as one of the country's most influential companies. After losing its lead to a string of hard driving competitors bold bets on autonomous vehicles and A.I. chips are starting to come good. It's smart. Speakers and cloud businesses are posting double digit growth but a government crackdown on China's tech champions is casting a long shadow over the sector. And that competition. Well it's only getting more heated now. After more than three years the US educated founder and CEO of Buy Two Robin Lee has agreed to speak exclusively to Bloomberg TV about his company's transformation and about his future. This is a conversation with Biters CEO Robin Lee. You're looking at almost record highs now for buyers share price. Do you see that as a validation from investors for their strategy. Change this focus on a buy on autonomous vehicles on semiconductors. I think our strategy has not changed much over the past two or three years except that the market takes time to realize that. You know I'm striving for a I has big potential. And by the way it's having a lead on that. So what. Two years ago or even one year ago when we spent a lot of money II ing in homes driving it was a negative impact to to our stock price because you lose money by doing that. It hurts your or he asked. Nowadays it seems that investor sentiment has changed. The offset then realized that all this thing has a big future and the buy to see investment in a I and an intelligent driving will someday pay off. And I'm happy that the market start to pick up this kind of message. But for us we've been investing not for one year not for three years not for five years. We've been investing for more than 10 years. We probably lost a lot of money by doing this but I think eventually we will be rewarded. But by doing this what is the rationale then for this secondary listing in Hong Kong. I think it's quite straightforward. By displacing Beijing and we want investors seeing Asia those who are in the same time zone can easily investing buy to the they can have a better opportunity to grow with us. And you know there were U.S. China tensions for the past few years. I think he may stress that also have this kind of concerns although we're not that concerned about de-listing. But I think having another exchange for four by two stock is less overall good for us for the investors and also good for people around the China area to really share our gross. And you're really talking about going out on a limb as the business eight years ago 10 years ago to invest in these areas when many others weren't. How much of an advantage then do you think that GIBBS by do going forward that give us a lot of at the mountain. Because you know this kind of far technical problems are very hard. It takes time and it takes a lot of money to really get that done or that I would even say today we're not done yet. We're far from done. We will continue to invest for the next 10 20 years and are our pace of investment will not slow down. We will continue to to add more to our auntie's budget so that we will maintain this kind of lead. I as a very broad market and I can apply can be applied to many many industries. And there are lots of innovation that can be done when you get into those specific industries. I'm very confident and also am very determined. What are the growth prospects for the broader business looking like heading into the rest of the year. This year we have a yearly comp. Last year because of Colgate our business was not affected. So this year that the Corbin's will have a pretty good growth suite. But more important entity the new businesses that the new A.I. enable the business to be at a cloud or intelligent driving. It's been growing very fast. What. You're right you saw a double digit growth is what we've seen in terms of your a high powered smart devices and the cloud unit of the business. Does that growth continue to accelerate. Yes. Not especially for a cloud. We separately disclosed to the cloud revenue each quarter. You can see that it's growing very quickly and that that growth rate for Q4 was higher than Q3. And the growth rate for Q3 was hired in Q2. So it's quite obvious. I believe advertising revenue accounts for about 70 percent of overall revenues not advertising revenue is clearly increasing as we just touched on. At what point do you see non advertising revenue overtaking advertising revenue. And if so what timeframe. Yeah it will happen. I cannot see you know accurately which year by the. I think the trend is quite clear. This is not Baidu is not alone. If you look at other large Indian companies most of the. For most of them advertising is a bar. It's a minority of the ad revenue. What kind of acquisitions might you be looking at at this stage. We think technology is at the core competence. By doing we would look for technologies that could complement this. Our own strategy and technology portfolio. But in the meantime if we are short of let's say operating experiences or talents those are all possibilities. And would you be looking domestically for those acquisitions primarily or overseas as well. I would say primarily domestic. And we we were more optimistic about international before. But because of that the tweet tension it's increasingly difficult for us to for us hooking blasting the US. You studied in the US of course you built that incredibly successful business here in China. Where do you think the U.S. China relationship is going. Ultimately my preference is believe that both countries can work together. And I think by working together a lot of thing can be done faster and the world will be better off. Like you mentioned I spent quite a few years seeing the US. I know the US well and I love my country. I love China. I stick up for by dose success. We obviously I wrote it here in China. We would benefit from a large very large market and the current policy to encourage innovation. But we also benefit from it from our U.S. partners. They supply parts of it. They help us to grow faster. I would very much like to stay coupled instead of decouple. Coming up why Robin Lee says his autonomous cars could soon be taking on Tesla. I'm quite confident that we we will be able to roll out the most advanced a car in terms of farm economy. You have a partnership with Geely one of China's biggest carmakers four autonomous electric vehicles. What is the aspiration with that partnership. We realized that we have never built cars before and we need help. And Jihye Lee is a natural fit because they are one of the leading carmakers here in China. They have a lot of experience. They shift in some cars every year and a half get a capability of managing the supply chain to ensure the quality and cost of that kind of things that we're not good at. When I talk to Alix Steel for you know find out. We are very much on the same page. He wanted by doing to control this car make our company and we want to get you know the expertise from there. They are car making experience. Experience. What's the production timeframe. How many units are you targeting a car. Is it really typical. It would take about three years to get a car onto the market. We are try to get it to the market sooner rather than later. It's probably too early to announce number of units at this time. It's still early but I'm quite confident that we we will be able to roll out the most advanced a car in terms of FA autonomy before 2024. It sounds like. That's right. That's OK. You talked about the competition. Tesla of course but also Shao Pong Neo. We're also seeing the likes of Foxconn while away ever grand all kind of moving into this space. Very competitive. Yeah. Is there a risk of this being oversaturated this market. There are. But again I think this is a very large market. There will be many players instead of just by doing. But what I think most people don't realize that it requires a lot of investment in RTS technology. And we started backing 2013 in the future. I think anybody that believes that you know an honest future is the most important feature for an electric vehicle. Right. And just to autonomy itself requires a lot of investment in technology. Last year we spent about 20 billion Army R and D. This is more than any other evil company. Has spanned and probably more than all of them combined. The company you mentioned. We are determined to spend a lot of money for the next 10 20 years to make sure we have the best and strongest autonomous platform. Sounds like Robin leave us as Elon Musk can do that. You may have to take on Tesla. I think we are quite different. You know we are an open platform. We want everybody to be successful. We don't just want to build our own cars. So in addition to the venture G2 we also supply technology to other. Oh yes. We want them to use R R ISE Australian capability too. We are probably also wrong feet with. We are wrong. Rob a taxi. We want their consumers to enjoy it too. Self-driving cars sooner rather than later. We want to save their right hailing cost. There are lots of things we can do and we will partner with people to do that. So this is very different from Tesla. OK I want to get more on the chips focus because that's really interesting. You've raised about 230 million U.S. dollars to develop the chips unit of the business. What are you hoping to achieve ultimately. Well it actually start that quite a long time ago probably 10 years ago when we were running a very large server farm and we we need to customize some of the service so that it will run faster or cost us less. And we found that by designing our own a accelerator we would do that job. So what we started this kind of chip design quite a long time ago. It's a very simple reason we want to save money for our servers. So starting from last year we had our first to Quindlen chip on the market. It's not really on the mark because of over 50 percent of the chips was used to buy our our own server farms. But it served that purpose. Right. We didn't have to pay a very high price for far third party you know high end chips. We could use our own. It saves money and runs faster. It fits our needs better. But then all of a sudden I realized this is not just for Baidu is actually a lot of industry. A lot of other companies also want this kind of fun high end A.I. chips and we're set. We're seeing that chips shortage play out globally right now. So it seems like a good move. It couldn't learn. Chip is a 7 9 9 millimeter chip. You've said you're going to start mass production this year. Has that started and where do you see most of the demand coming from. Yeah. The seven men are with me. Their is Quinlan to it's coming up this year and it's being produced by five by the fabs. So we do expect that the performance will be three times better and the internal demand is already there. The extra demand we found that is quite quite strong because as you mentioned there is no shortage of high end chips. Can you specify which sectors you expect to see most demand from across this many industries. Because you know I can help in a lot of scenarios. And a lot of cases. And wherever you need high end chips big data center or edge computing for smart transportation for energy sector for education or for finance they all need this kind of high end chips to do complicated. I have there been any discussions internally about spinning that unit off at some point depending on how you define spinning off. We already raised a certain you know outside money so that operation will be run more independently than before. But by Twist Steel that the controlling shareholder we will still support them wholeheartedly. And this focus on A.I. and on chips dovetails with government policy. The five year plan how much of that is by accident by coincidence by design. How helpful is it. Well on the surface I think it's more like by accident. I said mentioned that we started this like 10 years ago out purely out of our own needs. We just want to save money. But along the way we gradually realize or this is much more important than just internal use that the whole country a lot of companies that also need this kind of high end advanced achieves asks a ISE is being adopted by many industries as people continue to realize that higher computing power can generate better results that the market demand skyrocketed. So we feel lucky from this perspective but it's also kind of far more like a design because we are a technology company. Our our mission is to make the complicated art simpler through technology. This is one of the most important technology anything that A.I. era if not us who else can do a better job. Coming up China's regulators crack down. Ali Baba being hit 10 cent is in the spotlight. Could buy do be next. Regulators here are now squarely focused on an anti monopoly regulatory change reining in financial technology. How do you think the technological regulatory environment is going to change in China. How is it going to impact a business like I do. The country has never emphasized innovation more than they do today right. Innovation is at the center of China's modernization. According to the official documents. And I think companies like us we invest more than 15 percent of our total revenue ever year to to to do. Ah indeed. I think the governors like that. And in the meanwhile I think and high trust is also good for innovation. You just cannot imagine that the number one and number two guy all of a sudden merge and gaining more than 90 percent on market share in the U.S. But that happened quite a few times in China before. That's not good for innovation. So I think that the antitrust push is kind of justified by who has been fined recently for what the regulators say a monopolistic practices for not flagging deals to the regulators. Is there arresting going to have to unwind some of your deals. That's not very accurate to say because the law probably requires a certain kind of deal or seek for approval. Right for that particular deal. We did not speak for the poor in time. And it doesn't mean that we hand we have monopoly on play practices. The fine was not for that. And I also think it's not right for the government to block MVD or write certain kinds of liquidity. It's also good forum for innovation. You just cannot do monopoly things. Are there steps that you will taking now to adjust to the new regulatory environment. Yeah. If you do a deal at large scale we will seek for approval in advance. The government is also encouraging companies to open up their data. How do you think that is going to play out. Has that started yet that drive. It's very much in line with our belief. We run a lot of open platforms for ISE driving. It's a poll. All right. For a guy in China we have Baidu Brain which is also open. We have pedal pedal. You know that the most popular Chinese deep learning freedom work. Those are also open source. We want a lot of people to use our platform. We are open to everyone. A lot of cases is free for them. It's not only good for the society. It's also good for us. We get a lot of feedbacks. A lot of the focus has been on Alibaba and and and Tencent. Do you feel like by do is better off in some ways that you're slightly sheltered from this. Well I can't speak for them. But like I mentioned we like openness. We want to share data with other partners. And we think that's good for our technology too. Another big topic here that involves technology. A lot of debate online about this is the 9 9 6. The almost more than 70 hour work week that many technology companies and their employees go through. And is the reality for many people. Do you think that push that drive the amount of hours that people have to put into their work in tech companies do you think that has to change. That needs to be rethought. 9 9 6. It depends if the the employees are voluntary. I think that's OK especially for those young people if they want to become more successful. They need to work harder than than their peers. Right. This is just natural. But if from a company perspective if you demand them to do 9 ISE 6 I think that's wrong. I think employers have the right to to to work at and to rest and to enjoy life. It's their choice. And at my door we have this kind of philosophy. Right. It's really up to you if you want to work harder. We welcome that if you want to enjoy life. That's OK too. I want to switch focus really to you and your future. We've seen some changes at the top of some of the big tech companies here in China in terms of leadership. Some big names stepping down making way for others. Is there a succession plan by you. I always wanted to find someone who can replace me as CEO but in the meantime I do enjoy my current work. I like technology. I like to see all the changes happen. I like to see you know our technology can contribute to the society. So whether. I'll be the CEO or not probably. It's not that important. It's just a science. I'm doing things that I like. I will be happy. But having said that I increasingly spend a lot of time distaste to work this up that I do people so that their capability keep improving especially in the innovation front. I think I need to train them. I need to inspire them to learn to become more innovative. That that's over the past year or so. I spent a lot of time on that. Okay. So you've been looking for a CEO who was your number two though Robin. I wouldn't rank are you know executive from a number two to two number 10. These are all very talented hardworking and has has big potential. I want them all to grow and become better. Okay. But you were in no rush to retire anytime soon. It sounds like. Well if I have to stay out of the CEO position I will. Robin Lee's ambitious bets on chips and driverless cars has positioned his company to reap the rewards of the next technological revolution. But competition is intense. U.S. China rivalry could upend the sector. China's regulations well they can change on a dime. Robin Li will need all the skill and luck he can muster to cement Biden's position at the top of China's a table. That was a conversation with Biden's CEO Robin Li on Bloomberg Television. I'm Tom Mackenzie.

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A Conversation Baidu CEO Robin Li

Baidu's listing in Hong Kong marks a comeback for one of China's technology titans that has in recent years been overshadowed by Alibaba and Tencent. In this exclusive interview CEO and Co-founder Robin Li tells Bloomberg's Tom Mackenzie about Baidu's decade-long journey that's transformed it from being a search engine to a company that does everything from cloud computing to producing autonomous vehicles and state-of-the-art chips. (Source: Bloomberg)

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