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CNBC Transcript: Interview with Frans van Houten, CEO of Philips


Following are excerpts from the transcript of a CNBC interview by Julia Chatterley at Davos with Frans van Houten, CEO of Philips.

JC: Joining us now is the Philips CEO, Frans van Houten, and Frans, thank you so much for joining us. When we spoke to you last quarter, you were concerned about the global macro backdrop, China, Russia, Brazil. Can you just calibrate those concerns for me as we stand today, given some of the volatility and the concerns that we see in the market?

FH: Well, you have a good memory, and those concerns were, I think, well placed, and they're all happening as we speak. The world is an uncertain place, and that is concerning, I think it's also the big topic here at Davos, but that doesn't mean that we then should get paralysed. I think there are so many things that the private sector can contribute to to make, for example, the world healthier, more inclusive. We are a tech company, tech can help population health, make healthcare more accessible, more affordable. Tech can also get people to be more included in the economy and contribute, and, I think, drive growth, and growth and wealth are great contributors to a safer world.

JC: I want to come back to your focus of the business in terms of healthcare and connectivity, because it's super interesting and very relevant for the debate that we're having here, and also the transition of your business. But I want to ask you specifically about China, because I think this is one of the real issues for people at this moment, and what the macro, the growth outlook is there. I mean, there are specific issues for you here. You've got competition in the local markets, you've got healthcare reforms, but you were warning us about concerns about future orders in the last quarter. What are you seeing, and can you give us any sort of difference in terms of the idiosyncratic risk that you see there, versus the concerns that everyone else seems to have about growth?

FH: Well, the many years of great growth are stalling now, but it doesn't change the picture that China is a huge market with a huge population and still many unmet needs. So I get inspired by the fact that 1.2 billion people have healthcare needs, and even though investments today have slowed down, that's a temporary matter, so we stay very focused on China, we will collaborate with the government and with customers in order to develop the market. I think near term we need to be very cautious and probably tighten the belt and be accepting that growth is at a lower pace. Instabilities will cause disruptions and make people, even, scared about doing business in China, but it's a huge market and we've got to be there.

JC: And you believe in reform? You believe in their views, as far as further reform is concerned? Because I think that's another question for investors here, is, as you see the issues in the stock market and with the currency, they worry that actually the progress on reform, or the intention as far as reform, isn't there. Do you believe it is?

FH: Well, I think those worries are justified, but as you heard, I take a longer term view. I think there will be issues along the way, bumps on the road, if you like, and we will have to collaborate with China to overcome those hurdles.