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Quest Means Business
Biden Sharply Raises Tariffs On $18 Billion Of Chinese Imports; Defense Begins Cross-Examination Of Michael Cohen; Russian Forces Advance In Kharkiv Border Region; Michael Cohen Faces Cross-Examination In Trump's Hush Money Trial; On Running Brand Beats Earnings Estimates, Stock Jumps. Aired 4-4:45p ET
Aired May 14, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:05]
RICHARD QUEST, CNN INTERNATIONAL HOST: There is your bell ringing on Wall Street. They are ready for the gavel. Nice strong gavel as we have a late
rally and the market is up, best part of 120-odd points. The market is now closed for the day.
Well, that wasn't a strong -- that was a wimpy gavel. A wimpy gavel, but a strong market. The markets and the main events of the day, Michael Cohen
says he was knee-deep into the cult of Donald Trump when he worked as a fixer the former president.
The White House is raising tariffs on Chinese electric vehicles to 100 percent.
And US Secretary of State says, the US will seize Russian assets that will fund Ukraine's reconstruction.
We are live in New York on Tuesday, May the 14th. I'm Richard Quest. I mean business.
A very good day to you.
Two stories, major stories that we are following for you. In Washington President Biden has announced a quadrupling of US tariffs on Chinese
electric vehicles.
The new rate, 100 percent, and up the road in New York, Donald Trump's defense team is now laying into the prosecution's star witness, Michael
Cohen. It is a fiery cross-examination and that is where we will start our coverage tonight with the trial.
Donald Trump's lawyers are hammering Michael Cohen in an effort to hurt his credibility. They've trotted out some of his past statements about the
former president and asked them about one TikTok video where he called Donald Trump "a dictator," and said he belongs in a cage.
Cohen stood by his comments. He responded at one point saying that sounds like something I would say.
Jessica Schneider is in Washington, DC.
Jessica, there is only so many ways you can say you're a liar, you're a cheat, you're a dishonest no good and far worse, and Michael Cohen
basically says, yep, but I am still telling the truth here.
JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Yes, he is owning up to his mistakes, but despite that, Richard, the defense team is looking to attack
Michael Cohen from every single possible angle.
So they've asked about everything from his social media posts against Trump. They're talking about but the fact that Cohen made money off of his
podcast where he talks mostly about Trump. They are harping on this fact that Michael Cohen, they believe just has an ax to grind since he was
essentially cut off from the former president once Trump entered the White House.
Even just a few minutes ago, the defense team talked to Michael Cohen about, hey, you know, while you were in prison, you started talking to the
DA's office and there was a chance that you would get a reduced sentence, sort of giving that as the motivation why Michael Cohen has been
cooperating and helping out prosecutors.
But despite this, Michael Cohen, he hasn't been staying relatively calm in what has been at this point about two hours of cross-examination.
The defense's aim here is to really try to knock Michael Cohen from every angle and do all they can to erode his credibility and that is especially
because we saw the prosecution. They spent about eight hours questioning Cohen on direct. And in it, Richard, I mean, they elicited several examples
from Michael Cohen of Donald Trump being very involved in this hush money deal.
He promised Michael Cohen he would get repaid and he seemed to also be very involved in the repayment scheme, and that is where those 34 criminal
counts stem from, you know, the falsification of business records.
QUEST: Right.
SCHNEIDER: So the defense has to pounce now. This is where they're doing it at the cross.
QUEST: But Jessica, I get what they are doing, but does it undermine -- I mean, it undermines Cohen, but there is such a wealth of other evidence
that has been put forward about this payment and allegedly what Donald Trump knew about it.
Have they actually managed to discredit that side of it, that Donald Trump didn't know.
SCHNEIDER: I think you're hitting on it exactly, Richard. The defense team from what I've seen in the two hours of cross-examination, they have been
going after Michael Cohen personally, they've been going after his character, what he said about Donald Trump.
I haven't seen them hit at the core issue here, which is did Donald Trump know? Was he involved? They seem to be really just -- their strategy, at
least at this point, seems to be just attacking Michael Cohen.
I will say they said that their cross-examination is going to go all day on Thursday. We have a dark day tomorrow, no court tomorrow, so I mean, they
could be winding up to that, but I think your point is very valid. They haven't struck back at the heart of the issue, and what was the heart of
what we got from the prosecutions questioning.
[16:05:10]
QUEST: We will speak to you later when there will be more cross-examination for you to bring us. I am grateful to you, thank you.
The other big story we are following: The US has just raised the stakes in its trade war with China. Tariffs on $18 billion of goods in key sectors.
President Biden said he made the decision to protect US manufacturing from unfair competition.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: The fact is, American workers are -- can out-work and out-compete anyone, as long as the competition is
fair. But for too long, it hasn't been fair.
For years, the Chinese government has poured state money to Chinese companies across a whole range of industries.
China heavily subsidize all of these products, pushing Chinese companies to produce far more than the rest of the world can absorb, and then dumping
the excess products on the market at unfairly low prices.
(END VIDEO CLIP)
QUEST: Now, so the president doubled tariffs on Chinese semiconductors. It goes to 50 percent and these sort of things and he did the same thing for
solar panels, lithium ion batteries, and certain critical minerals will go up to 25 percent.
And the tariff on Chinese EVs will rise to 100 percent. Those EVs have been mostly cut out of the US market and the White House wants to keep it that
way.
It has seen the EU experience, the tariff is 10 percent and according to one policy group, Chinese brands will account for one in ten -- 10 percent
of EVs sold in Europe this year. It is a market share likely to reach 20 percent by 2027, and the reason of course, Chinese EVs cell for a much
lower price.
Jim Sciutto is in Washington to give us a sense, the political or if you will, the Washington view. Greta Peisch is the -- was the general counsel
at the USTR, US Trade Representative, and joins me as well.
Let's do the economics first.
Greta, these tariffs, are they likely to have an economic effect?
GRETA PEISCH, FORMER GENERAL COUNSEL, US TRADE REPRESENTATIVE: Thank you for having me. It is great to be here.
So I think the economic effect, there are two sides of that, right? There is impact to the consumers and there is impact on industries and their
decisions about what to do here in the United States and elsewhere.
I think the impact on consumers is potentially very speculative. This is a very targeted tariff action on a narrow set of products and you could
really analyze either way when you think about the effect on consumers.
But when you talk about the impact on businesses and in the investments that they're making here in the United States as a part of the Inflation
Reduction Act, for example, I think the impact is meaningful and what it really does is it gives those companies certainty that those investments
that they're making today will not be overrun by imports of Chinese vehicles in the future.
QUEST: Jim Sciutto, me thinks the timing is suspicious. Now, look, Greta knows this, you know this. It takes months to get tariffs sorted. You've
got a 301 case, you've got to build it up. You've then got to put it ledgers, and then you've got to do the regulations. So it is not like this
happened a week class Thursday.
But even so, me thinks it is suspicious.
JIM SCIUTTO CNN ANCHOR: Well, listen, there are politics to this, and if you were looking for one unifying by partisan policy issue in this country,
China would be it, both in terms of standing up to China's military gains, et cetera, military growth. But, but on trade, and when Trump introduced
quite high tariffs during his administration, there were some in Washington, Democrats and Republicans who said he is going too far.
Now, the parties are united on this. Biden renewing Trump tariffs and adding to them, that's one point. Two, when you look at the categories of
these tariffs, semiconductors, EVs, solar panels, steel, aluminum -- there is a national security piece to them which is how the Biden administration
has pushed a lot of their trade restrictions to say high-tech goods, dual- use goods, et cetera. This is a national security issue.
These are clearly trade issues as well. They're worried about competition, about EVs, cheaper Chinese EVs flooding the market, hurting US EV
manufacturers; same on solar panels, steel, and aluminum. So it is clearly not just a national security issue, it is also very much a trade issue and
about protecting US jobs.
QUEST: Now, Greta, trade tariffs have a life of their own. They never die in some shape or form once they are established.
For instance, as Jim rightly says, many of the Trump trade tariffs, except Australian steel and steel to Europe and all of those, but all the Chinese
ones in some shape or form, they are still there.
[16:10:10]
PEISCH: Yes, that's right. I think what you saw with the Biden administration is an effort to work with our allies and partners. You
mentioned Australia, the EU. Many of the tariffs that had been placed in the Trump administration fell away in the Biden administration and in this
case yes, it is forwardly looking, I believe.
But I would say another thing that with EVs, not having tariffs can sometimes be sticky, too, right? It is harder to put something on in place
after a product has already flooded the markets.
We saw that in solar. We really already felt the impacts in that industry. Here it is about getting ahead of the curve in what may be coming down the
pike on EVs in the future.
QUEST: So then we end up with this weird thing and to get it into you, Jim. But this weird thing, you've got third parties making cars in China, EVs,
does that affect them or is it only the BYDs of this world? And if it is Greta, affecting the BYDs, which could be sold at a cheaper price, then the
US consumer will pay more.
I mean, yes, they may be more niche, but the most recent research on the Trump tariffs showed it hit consumers.
PEISCH: Right, so I would say two things. I think that the impact on consumers really depends on the product where you are in the supply chain,
whether you can find sourcing from other countries, so it is really a sector by sector question.
This tier of action will impact all EVs produced in China, and for the administration, really the question is, is having cheap EVs worth
undermining US industry? And I think the answer is a resounding no.
QUEST: Jim, I mean, trade tariffs are so difficult to understand. You boil them -- I mean, hats off to Greta who has spent her professional life
working in them and managed to stay sane, but the issue for politics is to boil it down to its most simple.
Trump will say he is protecting, Biden will say the same.
SCIUTTO: For sure and ignoring the cost to consumers which you rightly note are real. The tariffs often get passed on to consumers. I think the other
piece here is we need to look at how China responds to this, right? Because China looks at these as not just economic issues, but they look at the
whole picture as a national security issue because they look at the US with these tariffs as trying to stifle China's growth, to hold it back, to hold
it down. China does not react kindly to these things.
And particularly at a time when the Chinese economy is not particularly hot. It is suffering its own slow down at home.
QUEST: Greta, listening to that, when you're at USTR and the political masters say we want to do this, is it just a case of finding a way to do
it?
PEISCH: Well, no, it is a case of thinking about the legal frameworks we have in place for trade and coming up with a solution that fits within our
framework here in the United States.
I would say that with respect to EVs, this is a place where China has invested in subsidies and a variety of mechanisms for a couple of decades
now. And you can say it isn't the US that is asserting this sort of trade action on EVs, it originated in China, and what we're doing is a response.
It is a holistic response, it isn't just tariffs, its investments. It is policies to encourage our industry to be successful in transitioning to
clean energy in the future.
QUEST: Jim, I'll come back to you. Thank you, Greta. I'm going to come back to Jim.
That survey, the latest polls showing the swing states, you saw, the numbers in "The Times" -- "The New York Times" this morning.
This is the sort of thing that will play well into those swing states -- Pennsylvania and Michigan -- all of those manufacturing states. Difficult,
is it?
SCIUTTO: No question and listen, Biden as he has made campaign stops in these states -- Pennsylvania, Wisconsin -- he has made that very point and
to be fair, he says, not just tariffs, right, but investments at home.
[16:15:00]
CHIPS Act, this new factory in Wisconsin, notably Trump promised one, didn't deliver; Biden says, we are delivering here.
So his argument is that we are not just playing the defensive game, we are playing an offensive game at home.
QUEST: The weather looks absolutely dreadful in Washington behind you.
SCIUTTO: It is. It is, indeed. Fitting the mood, yes.
QUEST: Yes, that is a moment for us, when it starts raining. Thank you very much to both of you.
SCIUTTO: Thank you.
QUEST: I am very grateful. Thank you.
PEISCH: Thank you.
QUEST: As we continue tonight, it is QUEST MEANS BUSINESS and we certainly do, there are multiple gunmen who are attacking a police convoy in France.
It is a deadly attack and you'll hear the details after the break.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Georgia's Parliament has passed the controversial Russian-style foreign agents bill. This is despite widespread opposition, for instance,
into policing.
Riot police moved on protesters after some smashed down the barriers and broke onto Parliament grounds. The law requires organizations to register
as agents of foreign influence if they receive more than 20 percent of their funding from abroad.
CNN's Clare Sebastian has been following the day's developments.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN CORRESPONDENT (voice over): Storming the barricades, protesters in the Georgian capital, refusing to accept their weeks-long
battle could be lost.
UNIDENTIFIED FEMALE: They can scare us, they can do anything to make us go away. We are going to stay here and fight.
UNIDENTIFIED FEMALE: We are not Russia. We are not Belarus. We will not allow anyone to brand us as foreign agents. We will resist.
SEBASTIAN (voice over): Protesters faced down a wall of riot police pushing them back just hours after opposition in government faced off in
Parliament.
ANA TSITLIDZE, GEORGIAN MEMBER OF PARLIAMENT, UNITED NATIONAL MOVEMENT (through translator): You are the Russian regime. You are the illegitimate
Russian regime.
EKA SEPASHVILI, GEORGIAN MEMBER OF PARLIAMENT, GEORGIAN DREAM (through translator): It's double standards and the hypocrisy of the opposition.
SEBASTIAN (voice over): Georgia's pro-European majority has tasted success. Scenes like this last year, forced the government to scrap the same so-
called Foreign Agent Bill, seen here as a replica of a repressive Russian law and a sign of Moscow's growing influence in this small post-Soviet
state.
Then in March, barely three months after gaining EU candidate status, the Georgian government revived the law. In a rare appearance in late April,
the ruling party's honorary leader, the most powerful driving force lashing out the West.
[16:20:07]
BIDZINA IVANISHVILI, RULING PARTY CHAIRMAN, GEORGIAN DREAM (through translator): Despite the promises of the 2008 Bucharest Summit, Georgia and
Ukraine have not been accepted into NATO and have been left out to dry.
All those decisions are made by the global party of war.
SEBASTIAN: As protesters grew more determined, the police response escalated. Violence widely condemned by the European Union.
In this shocking attack on May 1st, opposition leader, Levan Khabeishvili says he was deliberately targeted. His bruises still visible.
LEVAN KHABEISHVILI, GEORGIAN OPPOSITION LEADER, UNITED NATIONAL MOVEMENT (through translator): They did not get what they wanted from me. They were
filming to upload the video afterwards, and to show the opposition can leader in a state that would discredit me.
SEBASTIAN (voice over): And violence not the only means of intimidation. Transparency International says these posters of its local executive
director appeared a few days ago outside its offices and those of other NGOs.
The text reads: "Traitor" and "Grant guzzler."
EKA GIGAURI, EXECUTIVE DIRECTOR, TRANSPARENCY INTERNATIONAL: You are under the attack all the time, so the governmental officials and even the prime
minister would organize the press conference where they would single you out.
SEBASTIAN (voice over): Still, the drumbeat of opposition in Georgia, of course, louder.
This is a country at a crossroads. The EU making it clear, if this bill becomes law, future membership is at serious risk.
Clare Sebastian, CNN, London.
(END VIDEOTAPE)
QUEST: And now, to Ukraine where Russian offensive on the northeastern front is making gains. Moscow's troops have advanced on villages in Kharkiv
region and then moving towards Ukraine's important defensive lines, advancing across several other areas as well.
At the same time, America's top diplomat, the Secretary of State, you see there, says the US will seize Russian assets to pay for rebuilding Ukraine.
Secretary Blinken made the remarks during an unannounced visit to Kyiv, and he is reassuring Ukraine of US support.
(BEGIN VIDEO CLIP)
ANTONY BLINKEN, US SECRETARY OF STATE: My task is to secure Ukraine's sustained and permanent strategic advantage so that Ukraine can not only
deliver on the battlefield today, but deter and defend against future attacks.
As President Biden said, we want Ukraine to win and we are committed to helping you do it.
(END VIDEO CLIP)
QUEST: Alex Marquardt is monitoring developments. I guess, the question, the core, Alex, if you will: Is the US now concerned that yes, the latest
weapons are reaching the frontline a little late and too little?
ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: I mean, certainly, the message that we are hearing from Secretary Blinken here is
that you're not alone and he didn't quite apologize for the delay in the weapons showing up in Ukraine, but certainly acknowledged that it has had
an effect on Ukraine on the battlefield.
And what we are seeing back here in Washington is in an effort to try to speed up those weapons deliveries, so here you have Blinken visiting Kyiv,
I believe for the fourth time since the war began, not long after the US Congress approved after months of delay because of Republicans holding up
the process, some $60 billion of weaponry, of military aid for Ukraine, billions of which have already been approved in several packages since that
bill was passed.
But really time is of the essence and that was the message from Zelenskyy to Blinken today, but also that they need more systems that have not yet
been approved, and Zelenskyy spoke specifically about patriot battery missile systems, anti-aircraft in order to defend the skies over certain
cities.
Only a couple of those patriot systems have been given to Ukraine. Zelenskyy says that around seven are needed for Kharkiv in particular, the
second biggest city in Ukraine which as you know, Richard has been coming under increased attack by Russian forces in the past few days.
QUEST: And we also saw a different side of the Secretary of State bringing music and his own musical skills to bring home the message. What was he up
to?
MARQUARDT: Secretary Blinken is a pretty accomplished guitarist and he took the stage tonight. It is nighttime in Kyiv, obviously, at a bar called
BarmanDictat, which I believe is a popular underground cocktail bar near the famous Maidan Square in Central Kyiv.
We've got some of his video, let's take a listen.
(VIDEO CLIP PLAYS)
MARQUARDT: So there, Richard, he was playing "Rockin' in the Free World" by Neil Young. He showed up there and sat in the front row as a spectator. He
then took the stage playing with that local band who are quite good. I was just listening to them.
[16:25:04]
And then he later on listened to a band made up of members of Ukraine's military.
I should note, Blinken is so accomplished at the guitar, he actually has a page on Spotify. You can go there and listen to his songs. He goes by the
name, wait for it, 18 ABlinken. Get it, Richard?
QUEST: Alex Marquardt, I'm grateful, sir. Thank you. I am actually going to go there right after I finish. Kind of you.
Now, in France, a manhunt underway after multiple gunmen ambushed a prison convoy in Normandy, and then helped two inmates escape by breaking them
away.
Two guards were killed, three others were wounded. It all happened in broad daylight.
CNN's Saskya Vandoorne with the details from Paris.
(BEGIN VIDEOTAPE)
SASKYA VANDOORNE, CNN SENIOR PRODUCER: This kind of incident is extremely rare in France.
Now, it happened shortly after 11:00 AM. Two gunmen ambushed a police van that was transporting an inmate from court to a nearby prison in Normandy.
Now authorities say the gunmen killed two guards and wounded three others while helping the prisoner escape.
Both the gunmen and prisoner are now at large and there is an ongoing manhunt for them.
Now this happened at a motorway toll booth where many cars had stopped. So there are several videos of the scene. One quite dramatic video shows two
hooded individuals who look like they're carrying long rifles.
Now the justice minister has said that everything will be done to find the perpetrators.
But what do we know about the prisoner? Well, he is 30 years old and he was in prison because he had been convicted of burglary. He is also being
investigated for kidnapping that resulted in a death according to the national prosecutor.
Now there are currently several hundred police officers that have been deployed in the manhunt and authorities on the scene have set up
roadblocks.
President Macron also weighed in saying that every effort is being made to find the perpetrators of this crime so that justice can be done in the name
of the French people.
Saskya Vandoorne, CNN, Paris.
(END VIDEOTAPE)
QUEST: As we continue together tonight, running shoes from the Swiss brand On having something of a moment right now themselves. The company says
surging demand is fueling its soaring earnings.
(COMMERCIAL BREAK)
[16:31:02]
QUEST: Judge Juan Merchan says that his court is breaking up for the day in the Donald Trump hush money trial. The Donald Trump's defense team cross-
examined Michael Cohen where they tried to discredit the prosecution's star witness. They brought up his various disparaging remarks about Mr. Trump
and the anti-Trump merchandise that he's been selling.
The prosecutors tried this morning to get ahead of this line of questioning that they are scurrying to address his history of lying under oath, that he
chose to do sorts of loyalty to Donald Trump.
Anna Cominsky joins me now from New York. She is professor at the New York Law School and supervisor of its Criminal Defense Clinic.
Anna, I guess, look, it's not often you have a defense strategy -- well, a prosecution strategy where you basically say the witnesses are completely
not a liar, is a total fraud, and is a dishonest so and so. And the defense then have to make him look as if it's even worse.
ANNA COMINSKY, PROFESSOR, NEW YORK LAW SCHOOL: Well, you know, it's actually interesting you should say that because it's not that uncommon. In
fact, the government, the state prosecute people all the time based on the word of someone else who is a convicted felon or who has lied to them
before, and time and time and again, jurors will still believe that person and convict. So although it might seem generally like this is something
that's unusual, it does happen quite often.
QUEST: There's only so many times you can say to Cohen, you're a liar. He actually said at one point, you want me to say I lied, I lied, but does
that go to the core issue of whether he's telling the truth on Donald Trump's knowledge, if you will, guilty mind, on the payment?
COMINSKY: So that's a really great question. And what the jurors have to decide is how they want to view credibility in this case. And the judge is
going to instruct them with respect to credibility and part of what the judge is going to tell them is that they don't leave their common sense at
the door, right? They're supposed to bring that in with them.
So the same way that they would evaluate what someone else told them, a story that someone else told them, they're going to do that with Cohen. And
so the question is going to be, do they find him to be believable? Do they find him to be someone who's saying I have lied before, I've lived a lot
before, but I'm being truthful here, or do they just find him to be someone who lies when it works out to help himself?
And perhaps they feel that that's what he's doing again here. And that's really something that's yet to be seen. It's going to be up to those 12
members of the jury.
QUEST: In your view, has the prosecution suitably buttressed Cohen's evidence or corroboration if you will? We were talking about this yesterday
that essentially the prosecutions put so much other stuff on the table that they're saying, well, look, you know, don't necessarily believe everything
Cohen says, but this all backs him up. Do you see sufficient (INAUDIBLE) there?
COMINSKY: Well, listen, they've certainly taken their time going through this case and putting in a lot of other evidence to really create like a
nice, you know, wall around Cohen's testimony and on the one hand, they do, I mean, they have text messages, they have e-mails, they have phone
records, and they have other witnesses who do provide information that corroborates what he said.
However, the big piece, right, that really hinges on him are these conversations that he claims he had directly with Trump and it appears to
be that he is the only witness, so to speak, to all those conversations.
QUEST: Right. Anna, hold on me for a second. Donald Trump is speaking out. I want to show just that we are aware that the former president is speaking
and in accordance with our policy at the moment, we're not going to take it live because essentially he is under a gag order about talking to the --
about the case.
[16:35:02]
So we're guessing it's mainly a campaign speech that he's giving. We are listening very carefully. And if he says something that is relevant to this
case, we will bring it to you even if it's tangential or relevantly irrelevant.
Now, Anna, back to you. And we're having a debate in the office because we sort of like to get involved in these sort of things. And we know that the
prosecution for the purposes of this offense, to get a felony, have to prove that it was the business, that the records were falsified in
furtherance of another crime, which makes it a felony. But we're not sure what that other crime was. Election interference, campaign finance. Do we
know? Have we identified what that other crime was?
COMINSKY: Well, so this has been sort of a sticking point from the beginning, so I'm not surprised that you've been having a debate with your
colleagues about this. And the trick with respect to this, the sort of one of the interesting things with respect to this statute is that the
prosecutors are not required to prove that the underlying crime was actually committed. And so because of that, and in particular in the
beginning, you know, they named a few things.
It seems pretty clear now that they have their sort of sights pointed on New York election law, violation of New York election law, and that that's
what they're going to bring to the jurors.
QUEST: Right.
COMINSKY: Keeping in mind that they don't have to prove that that crime was actually committed or even that, you know, Trump said this is a crime I
want to commit, rather that that was generally the conspiracy was to commit them.
QUEST: Right, but do they not have to say, you know, this act was committed in an attempt or on furtherance of committing a crime under New York state
law, X, Y, Z, A, B, C, D, or can they just use the phrase election interference and off you go to the races?
COMINSKY: Well, what's interesting is the jury instruction actually does not require the judge to say, you know, and you must find that the
prosecutor has alleged X crime. However, logically it makes sense that the prosecutor needs to point the jury in the direction of a particular crime
so that the jury feels confident when they're saying we've found beyond a reasonable doubt that this was the underlying crime.
And so because of that, I would expect at a minimum that during the summation, the prosecution will be more specific about a crime or crimes,
including the statutes that they alleged this was in furtherance of.
QUEST: This is absolutely fascinating. Anna, I'm so glad, Professor. Thank you very much indeed for helping us through the weeds of this. Grateful.
Thank you.
On, the Swiss brand who's running shoes developed a cult following reported record sales last quarter. Its shares soared nearly 20 percent thanks to a
strong start to early revised sales outlook. On has been picking up speed aided by people like the tennis star Roger Federer who became a major
investor in 2019.
Anna Stewart spoke with the company's co-CEOs about where On is headed next.
(BEGIN VIDEOTAPE)
MARTIN HOFFMAN, CO-CEO, ON: We had a great start into the year especially in our D to C channel. So this is our own e-comm platform, but also our own
retail stores that we are building more and more all around the world.
ANNA STEWART, CNN CORRESPONDENT: You seem to be laser-focused on increasing sales direct to the consumer, whether that's online or in lots of your new
brick-and-mortar stores. What's the balance? Where would you like to see the balance of selling directly to the consumer overall?
MARC MAURER, CO-CEO, ON: It's important that we're reaching the right consumer and sort of the right channels. So what we're meaning by that is
we're a pretty much sportswear brand so we want to give you a premium experience when you shop. Now, if you're a runner, you might shop at the On
specialty channel or a Dick's sporting goods. If you're more lifestyle consumer, you might go to JD and, you know, where you find everything is
our own D to C engine and our e-comm and our stores.
And so we're just trying to have the right product in the right channel. And this should overall lead to an increase in the direct-to-consumer share
over time. But we don't have a specific target where we wanted to land because it's all about the consumer and that the experience that you have
when you experience us.
STEWART: Your name has cropped up a lot recently, actually in relation to other company's earnings report. I think when I've been reporting about
Nike and Adidas your name has cropped up. It's one of the challenger brands they're struggling to compete with.
How are you going to continue your success once you too become an established brand that everyone knows?
HOFFMAN: It's about building pillars of growth. So very early on we started to build a global brand. Our goal is really coming from all around the
world.
[16:40:01]
At the same time, we are expanding the kinds of sports that we are in. So we were born in running. We expanded into outdoor. Now we are starting with
tennis, with training, and we stand for performance design and sustainability and all our products always transition over into the
everyday use case. We started with footwear. Now we also do a parallel, so many pillars of growth. And I said, there's a lot of runway for us.
STEWART: It's interesting that your roots were in running and you're very much a sneaker brand. And now one of your big priorities I read is apparel,
tennis training. That's a very crowded market. Why go into apparel?
MAURER: It's important to us to become a head-to-toe brand. And it was important to us that we can provide consumers when you experience On in the
channels very immersive experience, right? And when you're only a footwear brand, I think you're quite limited in how you can express yourself.
Apparel allowed us to become a more complete brand. And it also allowed us to bring the logo up.
So we feel we have a lot of potential in increasing brand awareness in some of the key markets and having the logo on the chest is one of the key
elements to bring brand awareness up.
STEWART: China is the second biggest market for sneakers. Tricky market to penetrate. How are your shops faring there?
HOFFMAN: Yes, so China is for us still a very young market, so we only started in 2018. Our market share is still extremely small, at the same
time our products resonating very strongly with the consumer there. And China is the market that you need to build through own retail and the e-
comm network and this is what we are doing. We are now having around close to 40 stores in China. And the momentum in the stores is incredible.
So we feel that over the two years, China will become 10 percent of our business, an important part, at the same time, we are starting from such a
small position so we can shape our own destiny there.
(END VIDEOTAPE)
QUEST: The current CEOs of On. I have to say, I see their On shoes everywhere.
Now, for those of you who are watching on CNN International worldwide, "CONNECTING AFRICA" is for you. On CNN Max in the United States, I'll be
back on the other side of this break with Donald Trump's hush money trial.
(COMMERCIAL BREAK)
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