TT: So what are your growth projections for this year?
Baumann: We are projecting to grow about 15 percent this year in the corporate banking business. Corporate banking is basically about Greater China. Because lots of these companies have moved to China and other Southeast Asian countries, and that is what gives them the real flexibility in terms of their cost structure. As US companies outsource their manufacturing to cheap labor countries, including [China], Taiwan benefits tremendously.
Taiwanese companies have a huge advantage over everybody else in terms of outsourcing -- the same language, the same culture and in lots of places, you are doing business with your cousins and uncles because they are only one generation away. It is going to be a tough year, but some of these companies have positioned themselves so that they are very, very important to the companies that they sell to back in the US and Europe.
Consider Quanta, which is the world's largest manufacturer of laptop computers. If you are one of their buyers back in the US, and your order book is going to be cut by 10 percent and you have five different suppliers, who do you cut from? Do you cut from the best guy or do you cut from number five.
To use another example, if our bonus pool here [at Citibank] got cut by 10 percent, who would I take the 10 percent away from -- from my best person? No, I am going to leave my best person alone -- I am going to cut from my from my worst person, the least important person in the company. Taiwanese companies are therefore too important to be hurt by the global slowdown. And these are truly global companies -- big, important, well-run global companies.
TT: What do you think about the current slowdown?
Baumann: We are in for tougher times, but I don't know anybody who really knows if this is a six month problem or a 12 month or a 24 month problem. Lots of attention has been put on the stock market, but lots of underlying numbers in the US show that it is too early to say if it is a short-little dip or a long downturn before it recovers. If I knew the answer to that, we could both retire.
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