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First Move with Julia Chatterley
G7 Leaders will Provide One Million Vaccine Doses to Poorer Nations, Talks Continue in Cornwall; DiDi, China's Ride Hailing Giant Eyeing a Potential $70 Billion New York IPO; Hackers Steal Source Code from Electronic Arts. Aired 9-10a ET
Aired June 11, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:01:01]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
G Force. G7 leaders will provide one million vaccine doses to poorer nations, talks continue in Cornwall.
Big DiDi. China's ride hailing giant eyeing a potential $70 billion New York IPO.
And game on or game over? Hackers steal source code from Electronic Arts.
It's Friday. Let's make a move.
Welcome once again to FIRST MOVE. Great to have you with us this Friday as leaders of the G7 nations unite in the first in-person meeting since the
pandemic began face-to-face again, and most importantly, I think seeing eye-to-eye on important issues like vaccine inequality, the global
corporate tax rate and other key issues.
Former U.S. Under Secretary of State and former Goldman Sachs Vice Chair, Bob Hormats joins us later on the show to help define success at the
Summit, in well, the cloudy Cornwall.
And from G7 tries to canine supplies, the CEO of online pet supply retailer and internet powerhouse, Chewy will be here to discuss their latest
results, too.
Chewy on a short leash however, warning that the labor supply and shortages dogging other companies and driving up prices are prowling around the pet
world, too. In the meantime, a doggedly higher premarket session after a fetching day of gains yesterday. The S&P closed at record highs.
The Dow and NASDAQ also closed to record highs, too. Stock and bond investors not sweating the hotter than expected inflation data yesterday,
believing that spikes in things like airline tickets and car prices are a short-term demand issue and that the supply will catch up in the medium
term.
European stocks also near records. The E.C.B., European Central Bank saying one again, it believes inflation will be transitory, too. It is a common
message. Great news for the U.K. recovery as well, as with growth rising 2.3 percent month over month in the month of April. That's almost 30
percent higher compared with the same time last year when the G7 big spenders, perhaps, set to give a further boost to the British bottom line
this week as well and that's where we begin the drivers.
As we speak, the leaders of the world's seven most advanced economies are arriving for a historic G7 Summit on the Cornish Coast, standing by to
welcome them, are British Prime Minister Boris Johnson and his wife, Carrie Johnson. It's the first time in almost two years that leaders of the
world's richest democracies have talked face-to-face as I mentioned and it is also President Biden's first overseas trip since taking office.
Vaccines, COVID aid and the climate crisis top of the agenda. Nic Robertson joins us from Cornwall. Nic, great to have you with us, and it is a
successful meeting already by normal standards, I think with leaders pledging to make donations of a billion vaccine doses by the end of 2022,
economic recovery, whether it is more environmentally friendly or more equitable also among the talks today.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, I think it also depends a little bit on who you ask about whether or not a billion vaccine
doses is sufficient. I mean, it sounds like a big number, doesn't it? And you think that would go a long way to contributing the aims that Boris
Johnson laid out which is let's have everyone on the planet vaccinated by the end of 2022.
But Gordon Brown, who knows a thing or two about finance being U.K.'s ex- Finance Minister and a former Prime Minister and a number of other former world leaders have said, hold on, G7. What you really need to achieve that
goal of everyone vaccinated by the end of 2022 is -- properly vaccinated -- is 11 billion vaccines, and the only way to achieve that is by pledging --
the governments here pledging sufficient funds to encourage the production, encourage the manufacturers to scale up their production, produce more of
the vaccine but absent, you know, a massive commitment like that, a massive financial commitment, the giving away of a billion vaccines is going to
miss the target.
[09:05:26]
ROBERTSON: So, it sounds good. Now, are these leaders going to come up with a formula that sounds like what the former British Prime Minister
Gordon Brown wants? Or are they going to fall short of that sort of lofty goal of really working together to come up with a financial package that
would incentivize all those pharmaceutical manufacturers?
CHATTERLEY: It's such a great point, Nic, and to your point, it's only a step in the right direction, it's nowhere near what we need, and there are
other nations out there. And this is part of the sort of geopolitical consequences in conversations that will happen as well.
Russia is also a manufacturer of these vaccines, China; and it's that balance of vaccine diplomacy, I think that everybody has to talk about and
find here, not the only thing on the agenda. And I do want to talk about some form of equity on the business side as well, which is what we're
coming into with this meeting and that is some kind of an agreement over a minimum corporate tax rate of 15 percent for these nations, and that's no
small feat either, if we can get it agreed.
ROBERTSON: And it's certainly something that President Biden has been pushing for, and he will feel that he got something positive out of this G7
Summit and it's being spun or played by the White House, if you like, as, you know, not just filling the coffers of the United States with these sort
of massive multinational tech companies who are able to sort of previously take advantage of paying virtually no taxes.
But it will actually -- the money will go into development within the United States into infrastructure, into education, into health, and the
spinoffs from that to the more developing nations around the world. That's how the White House is saying this 15 percent minimum global corporate tax
can work because that is the thrust of this meeting today, recovery, but showing how there can be a fair, sustainable and equitable economic
distribution across the planet.
That's one of the big agenda goals here.
CHATTERLEY: Yes, "equitable" the key word there, and let's hope it doesn't take years and years and years to actually get agreed and then implemented.
Nic Robertson, thank you so much for that.
Now, on the fringes of the G7, Britain's Prince Charles hosting top CEOs, including the Chief Executive of Bank of America to discuss climate change
at a meeting in London.
Anna Stewart was there to see the proceedings. Anna, this is vitally important not just to have governments on board with fostering more
ambitious targets for emissions, but also the business community as well. We saw coming into this meeting, big CEOs saying, we actually need to have
entrenched targets for climate goals.
ANNA STEWART, CNN REPORTER: And it is so interesting that Prince Charles has really been fighting the corner for private sector businesses on
climate change now for many years. In fact, he has been beating the drum of sustainability now for over 50 years. Before really, it was a trendy
boardroom buzzword, and I think yesterday seeing those CEOs representing sectors, from aviation to fashion to pharma, to finance, all so committed
to net zero targets.
And actually Prince Charles's sustainable markets initiative has brought a 300 strong network of CEOs to the fore. Now, some of those will be there
tonight at the G7, and one of them was the CEO of Bank of America who I got a chance to speak to, and he just said to me, you know what, sustainability
and profitability go hand in hand, it is a no brainer.
(BEGIN VIDEO CLIP)
BRIAN MOYNIHAN, CEO, BANK OF AMERICA: We produce profits for our shareholders and we produce the good for society. And sustainability is the
way you express that and we produce very strong profits, and we produce goods for society. And by the way, all the other SMI companies have the
same and similar commitment. So our commitment to capitalism is resolute, it's the way these problems are going to get solved, our commitment to
capitalism done right is also resolute. And that's where the sustainability done right comes in -- a good energy future, human capital, other types of
things are important.
STEWART: The coalition of CEOs here today are absolutely committed to sustainability. But for many businesses all around the world that just
recovering from the pandemic and trying to get back on their feet, sustainability could be more on the backseat.
MOYNIHAN: But we have to help the businesses still struggling across the river and get to the other side. The good news is that pool is shrinking
every day through the great work of the fiscal and monetary stimulus around the world in the vaccine production. So, that's all good.
But if you think about it, everybody is committed to this. We have literally millions of clients in small business. We have hundreds of
thousands of midsize businesses, and they're all asking us, can you help me make that transition, and the reason they have to do it is their clients,
they sell something to somebody they've made a commitment.
They buy something from somebody and they need to make a commitment so they can make the commitment to the seller. So, the supply chains and things
like that, and the financial services industry will help them make that transition, as well, the SMI companies banding together can help provide
roadmaps for smaller companies to follow.
And so one of the things we're doing is providing a roadmap for all banking companies to get to net zero. This is what you can do. Take our expertise,
and apply it. You may do it differently, but here it is.
[09:10:24]
STEWART: Mr. Moynihan has a very important seat at a very important table tonight, he will be at the G7 along with the other CEOs who were there with
Prince Charles yesterday to try and push the agenda to try and work more with governments to see how they can accelerate the push for net zero.
And in addition to that, Julia, there is going to be quite a lot of stuff out tonight. It's not just Prince Charles, also Prince William; Kate, the
Duchess of Cambridge who has just wrapped up a roundtable discussion actually with Dr. Biden, the First Lady and also, Her Majesty the Queen
will also be there. So, the Royal red carpet well and truly rolled out in the name of climate change -- Julia.
CHATTERLEY: Yes, a Royal affair. I'm looking forward to seeing the Queen in action tonight as well. Anna Stewart, great job there. Thank you so
much.
And as I mentioned at the top of the show, we are waiting for the arrivals of the G7 leaders and the moment we start to see them, we will bring that
to you live.
For now, we'll head to China where ride hailing giant, DiDi, is gearing up for a major public debut in the United States. The company which describes
itself as the world's largest mobility platform, filed paperwork for its long anticipated IPO in New York.
Clare Sebastian joins us with more. Clare, such excitement surrounding this, not only because this is a Chinese company at an interesting moment
deciding to come to New York and IPO, but when they make this filing, you really start to get a sense of some of the financials and this is a monster
IPO.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia. This is essentially the Uber of China, a giant sort of mobility platform that
encompasses taxi-hailing, ride-hailing carpooling, bikes, and e-bikes, there's freight, there's some grocery and food delivery as well. So, it is
a huge sort of conglomerate of tech services. A mainstay of China's formidable tech sector.
And the comparison with Uber is useful because they are bigger by many metrics. The revenues they made last year, which by the way, was a down
year because of COVID, $21 billion versus $11 billion for Uber, they have 156 million monthly active users versus 98 million for Uber. So, they are
very much larger.
The IPO size, we don't exactly know how much they want to raise. The reports are that it could be between $70 billion and $100 billion that
could put them at a higher market cap to Uber, which is about $92 billion at the moment. So, this is a giant.
They are, by the way, they've had trouble making a profit, just like Uber and Lyft have. They were profitable by just a little bit in the first three
months of the year. So, that is something for investors to look at. But for investors, this would really be a play on China, this highly tech driven
economy and the demand for consumers for these services as the country comes back from COVID-19.
Right now, DiDi makes 93 percent of its sales in China -- Julia.
CHATTERLEY: Yes. And the comparison with Uber is important for another reason as well, of course, because Uber tried in China and was crushed like
a bug. The compensation prize, maybe, was an investment in huge competitor, DiDi Chuxing said, they will benefit another big investor, you probably
don't need to even guess this one, SoftBank, of course, with their vision fund also going to benefit from this.
SEBASTIAN: Yes, SoftBank, a huge investor in DiDi, they're the biggest one at about 21 percent of the holding. Uber has 12.8 percent, so that's no
small matter for them either, and the third one is Tencent, which has 6.8 percent. So, this could mean a major windfall for these companies.
SoftBank has a lot of sort of irons in the fire when it comes to mobility and delivery and all of that. It hit a small hurdle with Grab, the
Indonesian ride-hailing service, which is delayed its SPAC merger, that type of IPO to the fourth quarter of this year, so this could be a good
moment for it to make a windfall from DiDi.
And it could of course mean, as well, Julia, a win for the 38-year-old Chairman and CEO of DiDi, Wei Chang. He owns seven percent of the company.
So, there could be some big money at play here.
CHATTERLEY: Yes. Can't wait to see what happens when that company arrives in New York. Clare Sebastian, thank you for that.
Okay, another day, another hack. This time, the target was Electronic Arts, one of the world's biggest video game publishers, hackers stole source code
-- my apologies -- used in some of EA's most popular games.
Brian Fung has been pouring over the details. Just to be clear, this wasn't, I believe, Brian, a ransomware attack, but they were breached and
source code was stolen. What more do we know?
BRIAN FUNG, CNN TECHNOLOGY REPORTER: That's right, Julia. This was not a ransomware attack, but it was an attack that appears to have led to the
loss of some amount of source code belonging to games that include "FIFA," "Madden," and "Battlefield." This is the game engine known as "Frostbite,"
which is sort of a key property owned by Electronic Arts. It is the software that powers many of these games and that was apparently leaked to
hackers who claimed to have stolen as many as 780 gigabytes worth of data.
[09:15:14]
FUNG: And it wasn't just the "Frostbite" engine, the hackers also claimed to have stolen software development tools, as well as some code for EA's
you know, matchmaking servers, which are used to connect players within games.
Now, EA says, again, no player data was affected, and it doesn't believe that its games will be affected or that its business will be affected
substantially by this. But nevertheless, it's a substantial reminder of the threat that cybersecurity -- that cyber criminals have against, you know,
businesses that aren't protected.
Let me just read you a little bit of the statement that EA put forward following this incident. They said, "After this incident, we've already
made security improvements and do not expect an impact on our games or our business. We're actively working with law enforcement officials and other
experts as part of this ongoing criminal investigation."
Now, cybersecurity experts say even though this doesn't appear to be something that will affect EA in the short term, this theft of source code
can allow hackers to develop, you know, future compromises to games that EA publishes allowing them to create cheats, for example, or find ways to
pirate the software and allow players to play the games without buying it.
So, that could be, you know, one of the longer term effects we see out of this hack -- Julia.
CHATTERLEY: Yes, we'll have to look out for people who suddenly get really good at some of these games, and being facetious. Another day, another
hack, and that's the problem.
Brian Fung, thank you so much for that update there.
Okay, still to come, relationship reset as President Biden begins his first international tour. Can he convince friends and foes alike, that America is
back on the world stage?
From a diplomatic drive to a dog's delight, the CEO of Chewy joins with a tale of soaring growth. That's next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE where we are looking at live pictures on the beach there with the G7 Summit in Cornwall, a waving Mario
Draghi there of Italy striding over to meet Boris Johnson, the U.K. Prime Minister and his wife in a beautiful pink dress, not reflecting the weather
there. But oh, fist bumps there, of course reflecting the pandemic conditions that we're currently in.
[09:20:16]
CHATTERLEY: And of course, all the heads of the G7 nations will be getting into position shortly for the landmark family photo before that Summit
begins.
Just a quick conversation there between the British Prime Minister and Italian Prime Minister Mario Draghi. It is good to see people in person.
It's also going to be a symbolic moment, of course, coming up for Joe Biden who takes his place among them for the first time as President of the
United States.
This face-to-face meeting with his counterparts is also his first real chance to convince American allies in person that the Trump era is behind
them. Much to discuss, and we are now just seeing Suga, Prime Minister Suga of Japan and his wife striding up to meet Boris Johnson, too.
Joining us now is Bob Hormats, he is Managing Director of Tiedemann Advisors, and he has 50 years of experience in international politics and
business. He served in five presidential administrations, most recently, as President Obama's Undersecretary of State.
Bob, always fantastic to have you on the show. I'm actually smiling as I'm watching the leaders meet. It feels so good to see them all meeting in
person for the first time in what -- 18 months, if not more. Your views on what we've already seen from this G7 meeting and the agreement to provide
vaccine doses. It feels like a small step in a long path, but it is a success nonetheless.
BOB HORMATS, MANAGING DIRECTOR, TIEDEMANN ADVISORS: Well, I do think that is an important thing, first of all, because the world needs it, and a lot
of people are still dying of this pandemic. And second, because it demonstrates that the western democracies are taking bold action to support
the effort to contain this horrible disease.
And I think this effort by the United States, Great Britain and others, is important from a health point of view, but also symbolically important of
their unity and their commitment to a better global world.
CHATTERLEY: Yes, and we're just watching, I'll just mention to our viewers as well, the Canadian Prime Minister, Justin Trudeau there and a symbolic
measure by him as well, putting a mask on in order to fist pump and elbow knock with the British Prime Minister there as well. So, a quick photo for
them.
Bob, part of this, as you were discussing there is the G7 nations stepping up to provide vaccines, it is the vaccine diplomacy that we're already
seeing going on by nations like China, nations like Russia, as well, and the influence that that brings with it, too. Two crucial countries that are
clearly going to be on the forefront of discussions at this meeting as well.
HORMATS: Yes, I do think that the Chinese, with Sinovac and Sinopharm have been making a lot of commitments in the developing world and the Russians,
to a lesser degree, but they're doing it, and I think it's important that the West do that as well. The Western countries still have a lot of new
cases, although the death rate is down and the hospitalization rate is down.
But in many parts of the Western world, there still a need for this vaccine. But it's also clear that unless we are able to wipe this out
internationally, we're all vulnerable because people move across borders, and therefore, we're not really able to stop this until we've stopped it.
And not only in our own countries, which is important, but in other emerging markets as well. And I think that's well understood by most people
these days.
CHATTERLEY: We are just watching President Biden now and his wife, Dr. Jill Biden striding along the beach in Cornwall, heading towards the
British Prime Minister, hand in hand there as well. That's a really lovely image. And, of course, the first time that Joe Biden -- President Joe Biden
has come in this form to the G7 meeting, as well.
Bob, in terms of strategic priorities for the United States, and it sort of touches upon what we were discussing there, international coalition, an
approach as far as relations with China is concerned, what can be achieved, and what does success look like on that front, at least in the early days,
and at this meeting?
HORMATS: Well, it is a good question because Europe has problems with China. For instance, there was this agreement on an investment treaty, but
now that seems to be held up by the European Parliament, because of some sanction measures the Chinese have taken against certain Europeans and the
United States has economic issues, but also issues about their projection of power and influence in the western Pacific, and then in the South China
Sea, the East China Sea issues relative to Taiwan.
[09:25:13]
HORMATS: Those are not necessarily issues on which the Europeans focus on, but the U.S. being a Pacific naval power with still a number of troops in
the region, Japan and South Korea in particular, has a set of strategic issues.
Europe is not going to go ahead with the notion of a military coalition or a strategic coalition against China, and I think the U.S. would like to get
some Europeans on board on that. But I do think there is an opportunity to get together on international rules on trade, intellectual property,
investment, and how foreign companies are treated in China.
So, the rules and the norms of the global economic and trading order are areas where I do think Europe and the U.S. can get together and that's more
likely than to have some broader strategic framework in which they both operate, because they have different points of view. The Europeans still
need to trade and want to trade a lot with China, the Germans in particular.
So, they on one hand, want to put pressure on China to abide by global rules and norms; on the other hand, they don't want an out and out tough
set of measures that could jeopardize their trade relations either. The United States is a little more willing to take tough -- make tough
statements, and also show its naval power in the region, which the Europeans of course, are not really doing.
CHATTERLEY: And speaking of the Europeans, we were just watching there the elbow bumps of the French President Emmanuel Macron and his wife just
walking off, and actually they led the British Prime Minister, and his wife, of course, Carrie Johnson off and I'm assuming they're heading now in
towards the family photo for all the G7 leaders and their spouses, which we'll see in a few moments' time.
Bob, it's a delicate balancing act, all have their own interests, as you were mentioning there, whether it's a sort of collective coalition versus
China or a strategic priorities on the trade front, whether you're the United Kingdom or the Europeans in whichever country that you're dealing
with, everyone to a certain degree is dealing with challenges with Russia, as well.
Obviously, formerly of the G-8; now, it's the G7. How do you handle Russia, whether it's the actors within the nation and the cybersecurity threats
that we've seen, or the broader challenges of Russia, on the surface as a nation and the challenge it represents?
HORMATS: This is an interesting challenge that you've raised. I mean, on one hand, I do think that the G7 wants to find ways of cooperating with
China. On the other hand, they also want to be able to stand up to China, where their issues are concerned and the United States have really not
worked very closely with its allies on either China or Russia or many other things over the last four years. Now, it is working much more closely with
its allies, which strengthens the hands of its allies and the United States in dealing with certain issues related to China and certain issues dealing
with Russia.
On Russia, it is a particularly complicated problem for Europe because the Russians have moved a lot of their troops up to the Ukraine border, they've
pulled some of them back. But Putin was clearly taking advantage of the divisions between the United States and its European allies in the last
administration. And now, that's an opportunity to do two things; one, to demonstrate to Putin that the Western Allies are working together and much
more closely. And our resolve to resist the pressures he is imposing on them, imposing at least on certain countries in the region and NATO members
or countries bordering NATO like Ukraine.
The other issue that they need to deal with is the cyber issue, and that's a threat to all of them. And I do think that while in public, they probably
won't talk about this a lot. We have seen several examples in the United States of cyber action, some of it attributable to Russia, some of it is
not clear in terms of where it came from.
But this is an issue, cyber threats, cyber insecurity, cyber threats to infrastructure is something that we've all got to take much more seriously.
We had our pipeline here that was halted for several days. We had SolarWinds, a number of other things.
So, clearly all of these countries do have an interest in dealing with Russia not only to make sure Putin understands that they're working
together, both in NATO and elsewhere, but also push back on these cyber threats, which have gotten worse and are likely to get worse in the future
unless something very bold is done, and it needs to be done collectively, because you can pick off one country and then go to another and another and
another, and that's very harmful.
I think it's going to be one of the big issues over the next several years and the Western allies have to work together on this.
[09:30:36]
CHATTERLEY: Yes, and I think your point about the idea of a sort of stealth policy of divide and conquer is far less easy with the current U.S.
administration than perhaps it was under the previous.
HORMATS: That's an important distinction with the last one. You're right.
CHATTERLEY: We are now seeing -- it is -- it is. Bear with me for two seconds, Bob, we will come back to that because what we are now looking at
is the leaders of the G7 nations. You can also see Ursula von der Leyen there, the European Commission President also standing with those leaders,
and the Council President there as you can see on the left for the family photo.
You have the Canadian Prime Minister, Justin Trudeau; you have Joe Biden next to him. Boris Johnson, of course, in the center, the host. You've got
Emmanuel Macron there, a nice wave from him; and the German Chancellor, Angela Merkel. Oh, all leaving, I am not sure whether they were, but Boris
Johnson is leading them off with his usual stride.
Bob, we're going to thank you there. Bob Hormats, thank you so much for your input, and I'm going to bring in Isa Soares, who is also in Falmouth
and watching the proceedings, too.
The feel, Isa, I have to say, we were just talking about unity there and coming together and the feel really even just from the family photo and the
introductions and the handshakes, very different from the last G7 meeting, I have to say.
ISA SOARES, CNN CORRESPONDENT: And not just handshakes as you were just seeing, Julia.
CHATTERLEY: Pumps.
SOARES: You're seeing them, a touch on the shoulder between two leaders just now just quickly saw that. That photo was rather quick. I think, if it
would be a normal classroom photo, we would have to do it several times. But you can see there, I think that's Emmanuel Macron right there with
President Joe Biden, Mario Draghi, as you can see. Clearly, that proximity between the U.S. and Europe after obviously, four years of President Trump,
I'm pretty sure that Europe was very much looking forward to seeing Joe Biden face-to-face and to really recommitting and strengthening their ties
and strengthening their alliances.
And what a stunning setting as well in Cornwall, as the leaders arrive to officially kick start G7 Summit, all of them walking in there to start
their meetings. And what they will want to do, of course, is talking -- and will discuss the shared values, which is something that, Julia, I'm sure
you spoken about. The democracy, human rights, the rule of law, and trying to put a stop to any sort of democratic backsliding that we may see in
Europe around the world or any countries that are going more an autocratic way. I think that is very clear, something we have heard from President
Biden from day one, especially in relation to Russia, but it won't be only Russia being discussed today, as you well know, it will also be China.
The question will be: will they be singing from the same hymn sheet when it comes to China? Because as you well know, Julia, some countries within
Europe are less hawkish on China for economic reasons. But, it is clear as we looked at those images, these are unprecedented times. Of course, this
is the first time Joe Biden in his major trip. First time we're seeing leaders together since the pandemic, which will take center stage. Sure, it
is one of the main topics, but it's wonderful to see the strengthening of alliances and that proximity right here in Falmouth -- Julia.
CHATTERLEY: Yes. And I think on the point about unity, because I know you've also been speaking to the British Foreign Secretary, an opportunity
as well for the U.K. to promote a Britain is back, we are in action. We want to be part of the global community and an important part of the
negotiations for creating this more equitable economic recovery, challenging in light of the fact of course that they're talking about
cutting foreign aid.
I know, that's part of the discussions that you've been having in the background of these meetings.
SOARES: That's right. That's right. You hit the nail on the head and look, you have this image of global Britain, Boris Johnson taking center stage as
the leader of the G7. You can see that photo that was taken moments ago, you're seeing live images -- those images of the group photo -- but what
Boris Johnson has decided, what government has decided, Julia, is to cut foreign aid from 0.7 percent to 0.5 percent that has stirred some emotions
here in the U.K., as you can imagine, not just within, you know charities, NGOs, but also within members of his own party who call it morally
devastating. Those are the words from David Davis, who is a senior MP.
[09:35:09]
SOARES: And so the fear, of course, is that this, you know, slashing aid to Yemen, slashing aid to Syria, that it may reduce Britain's clout on the
world stage, and I think that's one of the biggest concerns.
The Foreign Secretary, and I was speaking to him earlier. You know, he kind of wouldn't almost go as far as to admit that, that that is a failure, so
to speak. He said, look, we're still one of the biggest contributors when it comes to foreign aid. But as all the leaders meet here today and all
this weekend, that is in the shadows, and I wonder whether some of the other world leaders Julia will bring that up, the fact that when everyone
else is contributing to the world, you know, playing their part, the U.K., painting this image of global Britain is going the other way -- Julia.
CHATTERLEY: Yes. And this is why as part of this discussion and more broadly, building back in a more equitable manner, focusing on the
environment and the climate targets and everybody we feel singing from the same hymn sheet in that regard and of course, taxes too.
No shortage of important items to discuss. Isa, great to have you with us and great to have you there. Isa Soares in Cornwall, thank you.
SOARES: Thanks.
CHATTERLEY: You're watching FIRST MOVE, more to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE where we are waiting at the beginning of that G7 plenary session where the leaders all begin those all-
important talks as we've been discussing. We will bring you images of that plenary session that the moment it begins, as you've just been watching. It
feels like a historic moment to see these leaders all back together. We will bring you those images once again as soon as we get them.
Now international diplomacy aside, four of the G7 leaders share a common interest. See, if you can guess what it is.
Here is President Biden with Major who is a tasteful Secret Service agents. The British Prime Minister Boris Johnson has Dilyn. Here is the Canadian
Prime Minister Justin Trudeau and Kenzie, it is coming up. And finally, French President Macron has Nemo.
During the pandemic, the number of dog owners soared as we looked for a canine company, myself included. Meet Romeo.
According to the American Pet Products Association, a third of Americans considered adopting a furry Friend, and over 11 million households actually
did it. I know it happened all around the world, too, and that helped deliver growth that got tails wagging at the online pet giant, Chewy.
[09:40:10]
CHATTERLEY: In the first quarter, it recorded sales of over $2 billion, up nearly a third year-on-year. And joining us now, Sumit Singh is the CEO of
Chewy.
Sumit, fantastic to have you on the show. What an incredible 15 months, really, it has been for Chewy. The rise in e-commerce mixed with record
levels of pet buying, you're so confident you raised your guidance this year, just let us know what you're seeing.
SUMIT SINGH IS THE CEO OF CHEWY: Hi, Julia, it's nice to be here. And it was great to see Romeo, by the way. No, we're having, you know -- look,
we've obviously navigated a very challenging year, 2020, and we are proud to service the millions of customers that we did, because business is
booming, right?
Pet adoptions was at a record high. And by the way, it continues to comp at double digit percentages. There's lots of pet parents out there still
looking to adopt and to bring home new puppies and kittens. And, you know, we're here to service those needs. And we're really seeing, you know, a lot
of kind of optimism from that standpoint.
The team is executing well behind it, and that's the result, you know, that it's essentially why we're delivering the results that we deliver.
CHATTERLEY: You know, it's phenomenal. I read recently that the rate of growth of pet buying pre-pandemic versus during the pandemic effectively
packed on was 10 years' worth of pet buying into one year, which to me just doesn't seem sustainable. Are you seeing any kind of slowdown in the amount
of products that people are buying or interactions or repeat buying on the website, too, from those that have already bought pets?
SINGH: Not really, engagement is really high. You know, pet parents continue to, I think, what the pandemic actually provided was it provided
people a lot of time with their pets. And so, you know, generally pets are treated as family and back when we were all going back to work, at least
the pet was at home, and you know, they'd likely, you know, spend their time alone.
Now, over the last, you know, sort of 12 months or 14 months. There's multiple family members that have interacted and I think it's just kind of
renewed this relationship and the sense of companionship and, you know, pets -- pet parents, look at it, it's the only category after kids where
customers refer to themselves as pet parents. And when that happens, you can -- you know, the engagement level remains high. And, you know, that's
why we've always called the industry a bit sort of recession resilient to begin with.
CHATTERLEY: Yes, I'm definitely -- I definitely have a fur baby. So, I call Romeo, you know, I also read that almost 70 percent of the volumes
that you're seeing now come from repeat or subscription purchases. So, you make an order online, you say, yes, I'll have that again, in a month's
time. I mean, that's huge. What part of your revenues is that even if it's sort of 70 percent of your volume?
SINGH: No, it's actually 70 percent of our revenues go through the auto ship product.
CHATTERLEY: Wow. Okay.
SINGH: Yes. It's incredible. So, it is a quasi-subscription program that customers choose to subscribe into. And they -- you know, we deliver
products of their choice predictably, reliably, and in a high quality manner, you know, at the destination of their choice. And, yes, you know,
over half our catalogue is subscribed to the auto ship product. The telehealth, tele-connect service that we launched, we provided
complimentary access to our auto ship customers.
And so we really put a lot of thought and a lot of heart behind serving our auto ship customers, and that's one of the reasons that the program is so
popular.
CHATTERLEY: Yes, this is important as well. Talk to me about this because you do provide telehealth services, but also connecting vets and
prescription purchases. Because, again, I've used your website for this, too, where you take your pet to a hospital, for example. They say, look,
we'll get the prescription. You can actually order that in chewy.com, and you guys coordinate with the vet, too.
I mean, it's also about managing time resources and ease upon which you get prescriptions and not just the more fun stuff involved with having a pet.
You're trying to be all encompassing, it seems.
SINGH: That's exactly right, Julia. Our mission statement is to be the most trusted, convenient destination for pet parents everywhere. Yes. And
as part of being that destination, we take it as our mission to be able to connect not only pets and customers, but also the community that services
pets and customers.
And so in that manner, we believe we are an experience-led company on the back of product and technology. And we use these solutions and bring them
to life so that we can service both our customers, as well as our community partners better and that's exactly what you're seeing.
CHATTERLEY: Talk to me about some of the challenges that we're hearing from other businesses, whether its input price, cost rises or labor
shortages, particularly in the United States. You were sort of hinting because I was listening to the earnings call that you're also facing
similar challenges, particularly on the labor front.
SINGH: Yes, that's exactly right. You know, as we've come out of a really booming year, and we've come into a couple of headwinds into 2021, which
the team is navigating pretty effectively, which we're proud of, and those headwinds are generally demand-supply, you know, offshoots or off balances
driven by either production constraints in wet canned production, or that's driven by labor constraints, which are generally, you know, disrupting the
flow of supply chain and goods right now.
[09:45:11]
SINGH: We expect these to abate in the back half of the year considering that new capacity is getting unlocked, and labor conditions will improve
here in the United States at least. And as far as inflation goes, you know, we believe any inflation that we see, or at least right now, you know, what
our expectation is that the inflation will be picked up, or reflected in higher prices. And given the demand supply offset, we don't actually
believe that it will offset demand in the marketplace too much.
So the back half of the year is very, very optimistic.
CHATTERLEY: Okay, that's a good -- that's a good sign. Talk about expansion plans. Fast forward to two years.
SINGH: Yes.
CHATTERLEY: What are you doing? Yes.
SINGH: Yes. So, in our mission statement, as I suggested, you know, to be the most trusted convenient destination for pet parents and partners
everywhere. And so we believe that our -- one, we believe pet parents are more the same than different anywhere. And two, we believe that our brand
is extensible, and the capabilities that we're building and our ability to serve customers is extensible outside the United States.
That being said, you know, we've been tremendously focused on the U.S. It's a massive market, over $110 billion. We are 20 percent penetrated. And
we've just had a lot of work and ground that we've covered in the last couple of years. When I IPO'ed in 2019, what we said to the Street was
international, somewhere between one and five years for us. And that goal is still very much intact and that's the timeline that we're marching
towards.
CHATTERLEY: And it wasn't delayed by the pandemic. I mean, as we've discussed, the pandemic was challenging in many ways, but also huge for
your business. Does that change that sort of timeframe? Accelerated, perhaps?
SINGH: Yes, not the broader one to five years, you know, it's clearly brought us sort of closer into the five-year mark. But the pandemic, you're
exactly right. We focused very heavily on the U.S. and refocus all our efforts back into the country.
But at the same time, you know, we're managing to that same timeline of one to five years.
CHATTERLEY: Okay, talk to me about what the best-selling product is?
SINGH: Well, we recently launched an exclusive line with Disney, and Baby Groot and Yoda have been the most popular products that are flying off the
shelves. In fact, before it happened -- really, they really are cute, you know, and we're bringing them back into the --
CHATTERLEY: Okay, Sumit, I'm going to have to stop me there because we're actually just listening to Prime Minister Boris Johnson speak and we need
to listen to him. Bear with me.
BORIS JOHNSON, BRITISH PRIME MINISTER: We need to make sure that we learn the lessons from the pandemic, we need to make sure that we don't repeat
some of the errors that we doubtless made in the course of the last 18 months or so, and we need to make sure that we now allow our economies to
recover.
And I think that they have the potential to bounce back very strongly, and there are all sorts of reasons for being optimistic. But it is vital that
we don't repeat the mistake of the last great crisis, the last great economic recession in 2008 when the recovery was not uniform across all
parts of society.
And I think what's gone wrong with this pandemic with risks being a lasting scar, is that I think that inequality is maybe entrenched. And we need to
make sure that as we recover, we level up across our societies and we build back better.
And I actually think that we have a huge opportunity to do that, because as G7, we are united in our vision for a cleaner, greener world, a solution to
the problems of climate change. And in those ideas, in those technologies, in which we're all addressing together, I think there are the -- there is
the potential to generate many, many millions of high wage, high skill jobs.
And I think that is what the people of the -- of our countries now want us to focus on. They want to be sure that we're beating the pandemic together,
and discussing how we'll never have a repeat of what we've seen, but also that we're building back better together and building back greener and
building back fairer, and building back more equal and actually more -- in a more gender neutral and perhaps a more feminine way -- how about that --
apart from anything else?
So those are some of the objectives that we have before us at Carbis Bay.
Thank you all very, very much.
I'm now going to ask our friends from the media very, very kindly to leave us to our deliberations which by tradition, this is meant to be a fireside
chat between the great democracies of the world. It's turned into a gigantic media circus in which we have to greet each other several times.
But --
[09:50:22]
CHATTERLEY: Okay, just wrapping up there. That was Boris Johnson just kicking off the beginning of the plenary session there, talking about the
need for these nations to work together to beat the pandemic, to ensure actually that it never happens again, he said, let's build back better,
build back greener, try and ensure higher wage paying jobs, all the things you would expect from all these leaders to be saying at this moment in
time, of course, the question is how?
A very sort of cute moment there when he said building back in a more feminine way. Remember, the Prime Minister Boris Johnson just got married,
of course, too, so that's trying to earn some marital brownie points there. But of course, lots of hard hitting key issues for these leaders to discuss
over the coming hours and we will continue to track those for you.
And that was an abrupt turn, of course, from a Baby Yoda to Boris there ahead of that. So, we should also thank the Chewy CEO for the conversation
there, too.
We're going to take a break, but we will be back right after this. Stay with CNN.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
STEWART (voice over): In the deserts surrounding Dubai, when it rains only 25 days on average per year, water sources are hard to come by. But one
company says it is producing one and a half million liters of drinking water right here every year by making water out of sunlight and air.
VAHID FOTUHI, VICE PRESIDENT, EMEA, SOURCE GLOBAL: Welcome to the SOURCE Water Farm.
STEWART (voice over): SOURCE aims to provide clean drinking water to the more than two billion people living in countries experiencing water
scarcity. Dozens of businesses around the world are working on technologies that use air to make drinking water, but Source says its process is
completely sustainable.
FOTUHI: The big idea behind SOURCE is to perfect drinking water for every person in every place.
STEWART (voice over): To do this, SOURCE developed a technology they call hydro panels. The device uses solar energy to power a fan that draws in
air. This air is then channeled into a sponge like material where water molecules are absorbed to be distilled and collected.
FOTUHI: These hydro panels are effectively producing high quality drinking water day in day out without requiring any infrastructure, any power or any
type of grid.
STEWART (voice over): Currently operating in 48 countries, SOURCE chose Dubai to be their largest water farm. The company established itself here
in 2017 because it says the region is keen to invest in these solutions.
UNIDENTIFIED MALE: What attracted us to devise first of all the fact that it is a hub for the Middle East Africa region. It also is a center for new
innovations for key sectors such as agriculture and water.
[09:55:06]
STEWART (voice over): Experts say one of the biggest challenges facing this tech is the difficulty of wider distribution. But Vahid believes a
bigger hurdle is getting people used to the idea.
UNIDENTIFIED MALE: With most disruptive technologies, it is, initially people are hesitant to change. They are reluctant to try something new, and
the same holds for the water sector people here who are accustomed to a stable solution for water generation, and what we are proposing is a kind
of a diversified menu, effectively.
STEWART (voice over): In Dubai, SOURCE operates in this desert camp, popular with travelers. But the company's ambition stretch far beyond
tourist attractions. They are also present on five continents and say they are working with schools, hospitals, hotels, and communities.
And since SOURCE's starting point is just the sun and air, the sky might be the limit.
Anna Stewart, CNN.
(END VIDEO CLIP)
CHATTERLEY: Okay, that's it for a pretty lively show. Stay safe, snooze lots, like Romeo.
And coverage of the G7 continues on "Connect the World" with Becky Anderson next.
Have a great weekend.
(COMMERCIAL BREAK)
[10:00:00]
END
