When we privatized British Telecom, the union was totally opposed to privatization.
But then, 95 percent of the union members subscribed for shares as the union suddenly realized that the company does not represent the government any more.
They'd have a better chance of making profits, so they were happy to buy shares. That's the way we saw, by giving people a stake in the [privatization] business.
TT: When there is question about investing in China, more often than not a rosy picture is painted, saying that the populous developing country holds a lot of potential for making profit. Is it really all about opportunities, or are there any undercurrents or traps there? In other words, what is the other side of the coin?
Davies: It's obvious that the Chinese financial system is in many respects already a very well-developed and complex system. In fact, it is already bigger in relation to its total economy.
But there are risks, as the banks have a large proportion of non-performing loans (NPL).
That is a legacy of political lending in the past, where a lot of lending in China was driven by political priorities, or used to develop certain areas.
Some of it was not lent based on a proper credit system. A big OECD (Organization for Economic Cooperation and Development) report which has just been published has drawn attention to the corporate governance in China.
We've seen a very unusual picture in China. Over the last five years, the economy has grown by 10 percent a year but the stock market has fallen by 10 percent per year.
I can't think of any previous example in history where an economy has been going up for a long period of time and the stock market going the other way.
You have to be careful about the liability you might be taking on if you want to invest there. But in general, I am optimistic.
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