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CNBC Transcript: Interview with CEO of Havas, Yannick Bolloré

Following are excerpts from a Street Signs interview with Steve Sedgwick and Yannick Bolloré, CEO of Havas.

On Brexit...

YB: You know it is true that Europe is at a tipping point with the Brexit votes coming in two months now. People are asking themselves a lot of questions. You can see what strikes me the most, I would say, is the rise of the populism all across European countries, citizens are blaming euro for the unemployment and or the crisis in the world. And the question today is where Europe is going. I think we all believe that Europe is a necessity. I don't believe that we have an option not to go with Europe. When you see what's going on in the world with globalization and everything we need to have a strong economy and a large economic zone. The question now is not about the strategy, I think it's more about the execution. And you're right to say that leadership matters a lot in terms of execution.

SS: In terms of that populism is it a rise of populism or is it actually that just our political leaders have become more detached from reality. Populism is being seen as a reaction to a lot of the policies but actually have the politicians just moved one way and the people have decided actually no that's not what we want and not what we need.

YB: It's very interesting because even if you look at what's going on in the United States with the election, people wants to move away from, let's say, traditional political parties. My feeling is that people don't trust any more traditional parties to be the solution of their needs. So it's important that we find a way to combine politics, we see the society in that we find new ways of leadership, but I agree with you populism may be one of the consequences of the unhappiness. But if you look at the history, every time in the history where people are suffering, where middle class are suffering because of unemployment, because they don't believe anymore in their destiny, we can see the rise of populism. And you're right to say, and I do believe that, if we find the right leaders to lead the show populism we go down. That's what happened in France 10 years ago when we had Mr. Sarkozy against Mrs. Royal, it was a new proposition for the country. And Mr Le Pen, the father of Marine Le Pen, has never been so low that during these elections, so I do believe that. It will also depend on who's going to, who is going to be presented to be elected.

SS: You don't paint a picture to me which says, well maybe I'm wrong in my interpretation, that says things are going to change any time soon. In fact if anything I think we're going to see ongoing dissatisfaction with the current set of leaders and actually more of a rise of populism, which says to me: more volatility, more concern for the markets, more concern for people as well. And less execution of that strategy which you said doesn't need changing - you said it's the execution that needs to be sorted out properly now.

YB: You know, I know I do believe... I don't necessarily agree, I do believe that we are at the tipping point. When you look what happened this night in Brazil yesterday in Brazil, with the destitution of Dilma Rousseff, things are changing. I was in Brazil many times the last months, and you can't imagine how disappointed or discontented the people were with Dilma Rousseff. Not about the economical crisis there. But really about the corruption scandal led by Petrobras, the state owned company, so I do believe that in France, in Europe, even in the UK with the Brexit vote, things can change quite rapidly so I mean we should not believe that things are here for the eternity. Things can move, things can change. People have the power with the vote to change things.

SS: But over 300, you mention Brazil - over 300 deputies, I understand, are being accused of some form of corruption. This is a majority of delegates as well. I don't see how... Martin Sorrell, one of your rivals we've just been speaking to, says he's very enthusiastic about Brazil over the longer term as well. And yet when you've got most politicians being accused of something at the moment, that doesn't say to me we have the foundation for a recovery. Or for a belief that populism can win and replace Government with something better.

YB: I think in Brazil, like everywhere in Europe and in the US, I would say I have the feeling like history's holding its breath. You know? We can see that in the years to come, things will change a lot. I mean there is so many moving pieces. When you look at the Ukraine crisis and the consequences with Russia, when you look at the war in Iraq and in Libya that is creating these massive refugee crisis in Europe that is changing the demographics that will change the demographics in Europe more than in the last hundred years. When you look at what's going on in Brazil, when you look at the Brexit poll - I'm sorry but it's the big thing here is you should not underestimate the consequences in Europe. I think things are changing a lot, so I mean, I would be more comfortable to answer your question in one year when we have the results of everything that will happen...

***

YB: Can I be fully honest with you? I think that if Britain exits Europe it's a major event in the history of the European construction. I mean, when you look at it, the first reaction is what's going on there? I mean, the euro zone is something super-powerful, creating a union. I mean, when you look at Europe before the eurozone and the European construction, we were all fighting within each other. I mean, I didn't count the numbers of dead people in Europe, but we are barbarians in Europe. So at least I would say that Europe has brought peace to the table. Now we don't think about fighting between French and English, or French and German anymore. I mean, it's a peaceful zone with this, thanks to this peace we have been able to create a sustainable economical zone. What I believe and this is what we said in the beginning of this session, I think Europe is not to blame for this ? economical situation in Europe. We need to change the way we are leading Europe. I think this position from the UK could be a huge opportunity for Europe to rethink its leadership, to be more agile, more dynamic, less bureaucratic.

SS: Do you think it will? Because I look, as many Brits did at the concessions that Mr. Cameron got from Europe and the Commission and we were a little bit nonplussed perhaps by the big changes that Europe is potentially offering.

YB: I will tell you something which is, I think, very important. If Britain would have had more concessions and more, I would say, flexibility than the other members of Europe, and staying in - I mean it would be insane. It would be like you're playing a poker with friends and you don't have the same rules. I mean when you when you're together in the union you need to play by the same rules. Otherwise it's not sustainable.

SS: You've said yourself we need to change the rules of the game because it's not very flexible at the moment.

YB: But I think you need to change the rules of the game from within. If you stay in Europe with different rules what's going to happen the next day? Both in Germany, in France, in Italy, all the people will call for a referendum to have more flexibility.

SS: Is Europe as it is working for Germany? Is it working for Greece? Is it working for France as well? I mean, there is a concern and you've said yourself with the rise of populism, that it may at one stage have created harmony, a lack of walls, thank goodness there is more security in Western Europe now. But the fact remains that this populism is rising and creating more extreme views. And if you want to look back at history that sometimes orders some pretty bad things.

YB: Sure, but Europe is still a very young institution.

SS: And young institutions don't have that depth very often to fall back on.

YB: You're right about the depth. We're lucky, by the way, to be in such an environment with such low interest rates, but this is another story. But I think what's important is that we all have a new way of reading Europe. I mean, today it's not working obviously. I mean decisions are taking too long, maybe not agile enough, not nimble enough and I do believe that we need to use this moment of time, this moment of history in the European construction to change the way the rules are done. For me it would be crazy to stay as it is. People are not happy at all. But I think it could be changed quite rapidly to be honest.

I don't see any positive impact for a country to leave Europe. I don't see any positive impact. I see negative impact of being left alone so I think that for the UK it won't be a good thing and to be on your own, but I don't want to be so extreme, I don't think it would be such a catastrophe if we can exit Europe. But I think that the worst case scenario for me is written as if Britain stays in Europe with different rules. Because the next day every country we want to do the same and then it would be the end of the Union. So I think we need to be to be smart enough, to be agile enough, in the coming months, because it's not the questions of years it's a question of months, to create an organization that we foster an environment of further growth for Europe.


On China...

SS: I was talking with a gentleman who works in your industry earlier on today and he was saying we still believes that China was doing very well and there are a lot of opportunities there as well. You agree?

YB: I mean it depends what you talk about. I mean, what we are seeing today in China is that the economy is shifting from a manufactory led economy to a service led economy. So for people who have invested in building manufactories it's tough times and I think it's going to be even tougher in the future for people like us in the advertising industry which is basically a service industry, I think we still have a good journey ahead of us.

SS: And it's a balance, not only that pivot - so from industrial to services - but also the consumer as well. And you were saying to me about the middle classes and how pivotal their role is in their growth.

BB: Yeah I mean, if you look at China in the last 20 years, it's by far the most impressive recovery story for a country. And we still have only a few portion of Chinese people that have accessed the middle class and it's already a booming economy. If you imagine that in the future more and more people will join the middle class in China. For me, China will continue to grow in the next, in the next decade very, at a very high rate.

SS: Has China been disappointing so far? So many Europeans, so many Western companies go to China. They spend a lot of money building up a presence and they don't quite get the bang for their buck. Are you disappointed with what you've done in China so far, or are you pretty happy with how it's gone.

YB: I mean China is a very particular country. You have to look at Chinese history. I mean, if you look back at Chinese history, China by far has been the most important power in the world until the beginning of the 19th century. Then there has been some, a tough century and now they are bouncing back like super high. So I mean for me you have to understand that China is very Chinese. So if you go there, it's not like in any other country, but I think you need to invest time, invest money, but on a long term basis it's going to be a fruitful investment.

SS: Are you saying that Western companies have gone in with perhaps even an Anglo-Saxon approach of this is how we do business and this is the way we make money...

YB: With all due respect to Anglo-Saxon people, you know, but I think we need to understand that China is not an economy like the others.

SS: It's come up against cultural buffers, yeah?

YB: I think it's important that we spend time to understand what is China. What they are feeling, what they are fighting for.

SS: What is the one thing that you've learnt, that's made you understand the Chinese and the Chinese way of doing things better than perhaps some others?

YB: I mean just look at my industry. I mean social platforms are very important in our industry. I would say that the best social platform in the world for me in terms of user experience is WeChat. It's much better than the Facebook of the world. So I think, I mean, the Chinese are not only copying. Because we always say that Chinese people are very good at copying. Now Chinese people are very good at creating things that they could roll out eventually one day in the rest of the world. So I mean I would become very, very cautious.