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CNBC TRANSCRIPT: CNBC'S MICHELLE CARUSO-CABRERA INTERVIEWS MEXICAN BILLIONAIRE RICARDO SALINAS PLEIGO TODAY THROUGHOUT CNBC'S BUSINESS DAY PROGRAMMING

WHEN: Today, Wednesday, February 4th

WHERE: CNBC's Business Day Programming

Following is the unofficial transcript of a CNBC interview with Mexican Billionaire Ricardo Salinas Pleigo. Excerpts of the interview will air today throughout CNBC's Business Day programming.

All references must be sourced to CNBC.

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MICHELLE CARUSO-CABRERA: So we're here-- today because you're very interested in Circuit City.

RICARDO SALINAS: Yes. I was. Well, I thought it was a great opportunity to turn around the company. I mean, that company has been around for 60 years. And it's such a pity, you know, 35,000 people left out-- without a job. We thought that we could turn it around. But, unfortunately-- the bankers who had the-- the first security on all the assets were not willing to-- to refinance and to give the company another shot. So it was really sad.

MICHELLE CARUSO-CABRERA: You have a lot of experience in selling electronics, right?

RICARDO SALINAS: Yeah.

MICHELLE CARUSO-CABRERA: Is that why you thought you could make a difference?

RICARDO SALINAS: Well, I-- family has been in this business for over 100 years now. And we've been able to grow when all the others have been pulling back. You know, I thought there was lots of thing to do to change Circuit City. But, you know, the basic problem with that company-- as with many others-- it's the problem of a public company. You know. It needs an owner. It needs an owner.

MICHELLE CARUSO-CABRERA: The shareholder can't be an owner?

RICARDO SALINAS: Who is the shareholder? Nobody has more than two percent. They'd come in and out. They trade their shares every day. It's a huge problem-- for a structure of the economy in the United States. There's a good joke. What's a stray dog, an abandoned car, and a public company have in company? They all need an owner. That's the-- the truth, you know. This-- this entrenched-- these companies, they look more like agencies of the government than private companies. Think about that.

MICHELLE CARUSO-CABRERA: Are-- aren't you publicly traded here? You have three stocks listed here.

RICARDO SALINAS: I have three stocks, and that's why--

MICHELLE CARUSO-CABRERA: That sounds contradictory.

RICARDO SALINAS: --no. I'm all for a public company with a big owner, who has huge amount-- of stakes in the game. This is what I call alignment. Like, we have 80 percent of-- of Electra, we have-- 65 percent of TV Azteca, 80 percent of-- of Iusacell. So what this means is whatever is good for me, is good for the rest of the guys. We align ourselves perfectly. And the-- the minority shareholders can rest assured that I'm looking out o-- for their shares, huh? It's not like I'm an agent here. I'm the principal guy. There's no way I can make money unless the minorities also make money.

MICHELLE CARUSO-CABRERA: Why'd you buy the stock, as opposed to the debt?

RICARDO SALINAS: Well, the debt was not for sale, and the stock was. But in retrospect, it was a mistake. And we took our hit on that.

MICHELLE CARUSO-CABRERA: Did you realize what a gamble it was? I mean, I know you're a billionaire, but $41 million is still a lot of money.

RICARDO SALINAS: Well, unlike another-- I have friends from-- Buffet, you know, you don't have to make it back the way you lost it.

MICHELLE CARUSO-CABRERA: Electra has done so well because it's gone after what we in the United States would call the sub prime market, right?

RICARDO SALINAS: Well, I think the-- the United States has a certain terminology for sub prime. And I don't think that this is the equivalent. What are doing here is more like the middle class in the United States. It's not sub prime. It's just that it looks sub prime because people don't understand it.

MICHELLE CARUSO-CABRERA: But it's about giving credit to people who didn't have credit before, right?

RICARDO SALINAS: That's right. But in the sub prime in the States, it's about giving credit to people who had credit and then screwed up.

MICHELLE CARUSO-CABRERA: Right. No, no-- I-- I guess what I'm trying to get at is-- my next question was we've talked so much about sub prime and the-- and the failure of it in the United States. You seeing anything equivalent here in Mexico?

RICARDO SALINAS: Yes. Not in our system, because we don't believe in these generalities, you know. In generalizing. We believe in very specific-- situations. We have over ten million customers today. And we have less than six percent past due. And we have the best delinquency ratio of the whole industry.

MICHELLE CARUSO-CABRERA: Why?

RICARDO SALINAS: Because we know how to operate. You know, we have a very close relationship with customers that implies visiting in their home, getting to know each other, and then helping them out when they get into problem. And we do this through very advanced technology that our competitors cannot-- not been able to replicate and put in the field.

MICHELLE CARUSO-CABRERA: For example?

RICARDO SALINAS: Well, for example-- we have over 7,000 people in the field who are doing investigation-- credit analysis. And if they approve a credit, they are supposed to follow through to the end. So when they have approved credit and then it gets into problems-- they go visit. They talk to the person. They have these computers-- wireless computers-- that have them-- totally online to the latest sys-- systems and data. So they can work out solutions with the customer right there in their homes.

MICHELLE CARUSO-CABRERA: Now, I understand the person who goes visits-- the person who verifies income and home is the same person who collects the money. I mean, he's-- that person's really incentivized not to write a stinky loan.

RICARDO SALINAS: That's right. And also, the-- the way that he makes money is very interesting. We don't pay him an origination fee like what-- what was being done in the States. No way. We believe, you know, in the Benjamin Franklin way of earning your money. You don't make the interest until you collect the capital. So when the capital gets collected, and the interest starts coming in, they start making money. Together with us.

RICARDO SALINAS: So, right. So this is like-- like having 7,000 bankers out there in the field, all aligned with us. I'm a big believer in alignment.

MICHELLE CARUSO-CABRERA: What do you say to critics who argue that some of the rates you charge are usurious? Very, very high?

RICARDO SALINAS: Do you know, that is the typical do-gooder. I wish that they could stand in the shoes of one of these people, and then after that, make the comment. I-- re-- it really is offensive and destructive. Lemme explain why. The rates are high, yes. Compared to what? So, it is impossible and stupid to compare rates on different amounts. That's the bottom line. If I'm gonna learn-- earn-- lend you $100, or $100 million, it's a totally different proposition. Because the fixed costs of making the investigation, making the file, are the same for $100 million, for $100. So $100 loan will always have a nominal higher rate than $100 million loan. Unfortunately, you know, these do-gooders-- and many, many times they really don't know what they're talking about. They say, "We're gonna help people by putting a cap in interest rates." What that does, in effect, is push out the small loans from the market. And then they leave the poor people with no option. And we see this time after time in Latin America. It's really a disgrace. For example, it happens in Columbia. And even now, in the States, it's happening, you know. It's a totally misguided approach. Instead of helping these people, they're damaging them.

MICHELLE CARUSO-CABRERA: And even in Brazil, I think they've got it in the Constitution. There's a cap on interest rates.

RICARDO SALINAS: Yeah, it's-- it's such a good and nice target, you know. But I think the basic problem is lack of comparison. Now, if we're talking about the same amount, $100 versus $100, we offer the best rate in Mexico period. Nobody comes even close to us. We're 20 percent below the competition in terms of interest rates.

MICHELLE CARUSO-CABRERA: So you wanted Circuit City. You didn't get it. What now? What are you gonna buy now? How much cash do you have?

RICARDO SALINAS: Well, in the bank, we have about $3 billion available for lending, and about $2 billion-- outstanding on our credit portfolio. So we have a lot of liquidity. And we're ready to expand credit, which is what we're doing. That's why we're leaving the competition behind, you know. We don't think that-- the credit crunch should be for everybody. Out there is always people who are-- valuable customers, and we ought to go get them. But in-- that-- that's in terms of-- of the existing business. But I also see enormous opportunities in undervalued companies all over the world, not only in the States.

MICHELLE CARUSO-CABRERA: Any assets in the United States that you have your eye on right now?

RICARDO SALINAS: Well, we're looking at a couple of mining companies that have been really pounded by the declining commodities. And we think that, you know, mining is a great business. So we might go into a new tack there.

MICHELLE CARUSO-CABRERA: Are they publicly traded?

RICARDO SALINAS: Yes, but I won't say which.

MICHELLE CARUSO-CABRERA: Why are you so combative?

RICARDO SALINAS: Well, this is-- business is like a game, you know. It's a s-- sport. And-- and I think that-- having a, you know, having a competition is so much fun. It's like baseball or football, you know. You have two teams, and there are certain rules, and you get there and you compete.

MICHELLE CARUSO-CABRERA: When it comes to your future endeavors, do you-- do you feel constrained at all by the SEC decision? You not being able to be on the boards, or be an executive in a US based, publicly traded company?

RICARDO SALINAS: Oh, no. I really think-- I think that the-- the American model of the traded company, as I said, is totally obsolete. And it's more like an agency. A government agency as-- as opposed to-- a private enterprise company.

MICHELLE CARUSO-CABRERA: You've made that point, but that is the system in the United States. So if there's something that you want, does that make it more difficult for you to get what you want?

RICARDO SALINAS: No. Like, for example, probably with Circuit City, the deal was you buy it and take it private. So I'm not gonna have anything listed in the United States. For-- for simple reasons. I mean, it has nothing to do with this ruling. It's more to do with economics. First, instead of running the business, you have to spend all this time-- covering your ass, you know? That's-- that's the truth. By having the accountant say it's okay, the board say it's okay. Nobody knows anything. And the best proof is look what happened to-- to Exxon, and, you know, and-- and Madoff and other. They were supposed to be very well-audited firms, right? But what happened? Nothing. So I don't believe that the current model of corporate-- how do you say--

MICHELLE CARUSO-CABRERA: Structure governance?

RICARDO SALINAS: Governance. Of governance is any good at all. It needs to change. So that's one reason why we shouldn't be there, because they have bad corporate governance. And the other reason is very expensive. You spend all your money on lawyers and accountants instead of running a good business for the customer.

MICHELLE CARUSO-CABRERA: I think a lot of American executives would listen to what you say, and turn to you, and say, "Mexico is emblematic of a company with poor corporate governance."

RICARDO SALINAS: Well, we didn't have Madoff. And we certainly have the surprise of Citigroup, which lost all its money, you know, with unrealized-- gains in the books. And, you know, we didn't have Enron, and we didn't have Parmelat. You know, we didn't have anything. As a matter of fact, while the SEC was busy chasing me, they should be looking at Madoff. Because they had that-- whistle-blowing going on, you know, and they didn't do anything. So it's certainly not emblematic in Mexico. There's a mistake in-- current here in Mexico, and we-- which we have-- vigorously opposed. To make the same system of governance as the States. Because that's supposed to be the model. When it's failing every day in the United States.

MICHELLE CARUSO-CABRERA: But wait a minute. Aren't you the guy who is anti-monopoly? I mean, I think a lot of people look at Mexico and say some of the-- six biggest corporations run by people in their 40s who inherited them from their parents, right? You have for a long time, monopoly on telephone. Monopoly for a long time on TV. Monopoly in beverages. Six monopolies, all controlled-- that is not the model of the United States. I mean, you guys need a good an-- Sherman Anti-Trust Act.

RICARDO SALINAS: But you reached the themes.

MICHELLE CARUSO-CABRERA: No, I get it, I get it.

RICARDO SALINAS: One thing is the government's model, and the other thing is the competition model. For competition, I'm all for it. You know, I'm the guy who broke into the television, you know, and made it at-- not a monopoly. We made it competitive. I'm the guy who did it. I'm the guy who broke into the banking industry with a totally new model for the bottom of the pyramid, you know? And now everybody's copying. Now, I'm the guy who-- who's competing in the cellular business against my friend Carlos Leon (PH), with an alternative offering in-- in (UNINTEL), so you don't need to convince me about the benefits of competition. And I'm all for it. Just let's-- the problem here is it's a wrong focus. Most of these monopolies exist because of a government decision. It's the government that protects them, you know?

MICHELLE CARUSO-CABRERA: Mining companies, what else?

RICARDO SALINAS: International expansion. We're very big on growing our business in Brazil where-- we have an excellent relationship with President Lula, and he has been able to understand the importance of this-- popular banking model in terms of what his country needs. Now, Brazil is a very highly banked country. It does well for the middle class. But definitely, bottom of a pyramid, they're way behind like all the other Latin American countries. We're doing very well in-- in Peru. And in-- Central America with-- Guatemala, Panama-- Honduras. We're also doing well. So-- the international expansion is very interesting. And that's why Circuit City was so intriguing for us, because it would have been a way to-- have-- a participation in the largest market in the world. But, there'll be other chances.

MICHELLE CARUSO-CABRERA: Let's go back to that $41 million. I mean, I know you said the Warren Buffet thing, which is a great quote. I don't care how rich you are, it must hurt to lose $41 million.

RICARDO SALINAS: You know-- when you're talking about investments and businesses-- it doesn't pay to be afraid. It doesn't pay, because fear is not a good counselor. Fear makes you do stupid things. So, of course it hurts. But you cannot let the fear of failure take over your decisions. Life is like that, it's uncertain. We might walk out of here and get run over by a truck. There's no guarantee that things will turn out the way you want. So you have to live life, you know, being optimistic and-- and being careful. But not being scared of things. And-- I'm-- I'm accustomed to you know, this is a game. And sometimes you win, and sometimes you lose. I certainly don't like it, you know. But-- that's the way it is. It's like a team, you know. The team goes there and makes the best effort, and sometimes it loses the game. Nobody likes to lose a game, but if you're playing the game, you have to win, and you have to lose sometimes.

MICHELLE CARUSO-CABRERA: I ask all billionaires this. What's it like to be a billionaire?

RICARDO SALINAS: You know, it's overrated I think. Because at the end of the day-- there's so much you can eat and you can drink, and then you can have fun. And then the rest of the thing is, you have to be a normal person. And more than that, you have lots of responsibilities, at least in my case. We have over 40,000 families that depend on this business going-- the right way. And I would not like for them to have the same situation as Circuit City, where they've all lost their jobs and their pensions, you know, and their-- just careers have been made. So, you know-- this-- it's like a coin with two faces. You know, on the one hand you have power on this side. And on the other, has responsibility. So being rich is about being responsible and thinking about what's next. And not just indulging in whatever pleasure you might think.

MICHELLE CARUSO-CABRERA: I said to Carlos Slim (PH) that if I had more money, I would sleep better. He said no, I wouldn't. Do you sleep well?

RICARDO SALINAS: I sleep very well. Very well. I never have any trouble with that. I just have late hours, you know.

MICHELLE CARUSO-CABRERA: Lemme ask you a broader question about you. You know, you are obviously incredibly intelligent, very successful. Built your family's business into something that has turned you into a billionaire. At the same time, I see a guy who frequently infuriates the minority shareholder. Takes on the biggest guys in the room, the Carlos Slims of the world. The situation with NBC.

RICARDO SALINAS: Lemme say the minority shareholders is all wrong. I infuriate the analyst. Because they don't know where they have their heads, you know. The problem with analysts is exactly the same as with political commentators talking about an agency. They have this opinion, and that opinion. They don't know anything about what's happening. It's an outside view.And when they talk to me, we have a hard time. Because I'm not the CEO. I'm an owner, you know. And they cannot boss me around. That's a problem. But I know more about this company, and the companies in general, than any of them do. And I normally make better decisions. You know, sometimes we make mistakes, like everybody. But, you know, in terms of minority shareholders, they have had a great ride with us after having a difficult time. They had a good ride. And now, next-- certainly-- in the next few years we'll have some ups and downs, like normal with all the markets. But-- no, I wouldn't--I would separately-- would definitely separate analysts from minority shareholders. That's one point. Now, about-- our conflicts, you know, for example, with NBC. We have a long history of-- of relationship with-- the G.E. companies. When this company started TV Azteca in this same set-- we had a very nice event with Bob Wright, who was, even then, 93. The-- chairman and president of NBC. And we reached an agreement where they helped us, you know, develop some things and so forth. And then later-- they decided not to take a stake in us, which in hindsight was a big mistake, because they would have made much more money. But you know, this goes back, way back. And there's another unit of G.E. which is the major appliance business. We're the biggest customers for them in the world. So we definitely have a relationship and a profitable one. And there's been some problems over a TV channel in Mexico, where basically we were both the victims of misrepresentation and fraud, by the existing-- controlling shareholder. Th-- that was a problem. This-- this guy-- this guy, who's a total fraud-- tricked us, tricked me and then he went and tricked G.E. That got us into problems.

MICHELLE CARUSO-CABRERA: I guess I've been thinking the-- for example, when the quincenera was shut down. And the guys-- you've got police officers showing up, and the TV Azteca vans are-- people hear taking over a station at gunpoint, it sounds extreme.

RICARDO SALINAS: Well, you know, that's just believing the-- opposing propaganda. But what happened was that the judicial force, you know, the-- the judicial police showed up to shut them down. Which is standard procedure in any country. They weren't my guards.

MICHELLE CARUSO-CABRERA: But they were in your trucks, weren't they?

RICARDO SALINAS: I really don't know about that. But it was not-- it was an act of the public-- force.

MICHELLE CARUSO-CABRERA: What should I have asked you, or are you expecting me to ask you?

RICARDO SALINAS: No. I think you made some very questions, but--

MICHELLE CARUSO-CABRERA: Are you worried about Mexico? We read every day about the drug wars here.

RICARDO SALINAS: Yeah, well, if the Americans didn't consume so much drugs, and didn't send so much money and guns down to our country, it would be a better country. You know, we could certainly need some help from the Americans. Why don't they close the border to the traffic of arms coming down, you know? And to the money. This is the only industry in the world, which I know, which is this big, which is dominated by, you know, by street-- guys, you know. And small fry from-- from Mexico. To me, it sounded like-- it's like a (UNINTEL) industry pack, you know. There should be some pretty big guys in the States. And they never catch them. It's really offensive for Mexicans, you know. Where we are forced to do all these dirty jobs for-- for America. We need much more help and this-- the state and government is under huge pressure from all these criminal gangs. But-- you know, finger pointing is the last thing that we need here in this country. This is very difficult, especially for people who live in-- in-- in Tijuana, in Juarez, where the levels of-- of crime and violence are incredibly high. It's a very bad situation. And I'm also believe that our government did not-- doing nearly as much as it has to do. I mean-- this is a very tough situation. However, this is a country with over 100 million people. The vast majority of which are peaceful, are happy. They have families, and they want to progress. And I think that's where our fo-- focus should be. How can we make, and how can we help these people have a better life? Which is all about what we're doing, you know, with the bank offering credit to the bottom of the pyramid. Bringing goods and merchandise to bring hope and, you know, and-- to these-- families which lack a lot.

MICHELLE CARUSO-CABRERA: What struck me, you're talking about the-- the inability to prevent the crossing of drugs-- over the border. At the same time, though, been tremendous success on cracking down on illegal immigration in the United States.

RICARDO SALINAS: Americans, when they want to do something, they can do it.

MICHELLE CARUSO-CABRERA: What impact is that having on your-- your US based TV stations?

RICARDO SALINAS: Well, you know, the whole TV business in the States is-- is down because of the economy. And we're not the exception. However, because we're so small, we still have room to-- to improve in many-- in many ways. It's much more of a problem for big networks. But-- you know, the best thermometer, for that, I think, are remittances. And they're down about six percent. It's not a big deal. I don't think that is the big problem for Mexico. Frankly, the big problem for our country is just the incredible size and growth of the government sector, which is non-productive. 100 percent non-productive. And it's just costing us a lot as-- as-- as-- as a country, as a people to support all these guys, you know? And they take all our oil and spend it unwisely in bad education, in bad health care, in bad security. That's our problem.

MICHELLE CARUSO-CABRERA: The government.

RICARDO SALINAS: Yes. And there's no way that we can fix it, unfortunately. So we'll have to make do. The way that Mexico has always done in the past, bearing the pelo. How do you say (SPANISH NOT TRANSCRIBED). It's-- it's a very strong country.

RICARDO SALINAS: What do I think about the stimulus plan? I think the American-- economy's in very deep problems through this over expansion of credit. And there's basically two ways to get out of this. One is, you have to go into a terrible savings mode, and accumulate money to pay down the debt. And that, we know what it's all about. This is the 1930s Depression. But the other way out of it, is exactly what happened to our country, Mexico, in the late '70s and the '80s. We couldn't pay down the debt. We wouldn't go into the savings mode. So we went into the money printing business. So you print a lot of money, and then through inflation, the real value of debts go down and you can pay them down. And that is terrible news for the creditors. Depositors, and creditors of all kinds. I basically think that these are the two ways to go. And for me, it seems that the second easy route has been taken. And also, politically, it's much easier to-- to sell it, because there's just so many more debtors than creditors. So I'm not optimistic about-- the future of the economy. I think we will see-- a huge inflationary pressure in the United States that will overflow to the world. As indeed, it's happening already. But it might take some time here. I'm not saying it's gonna happen next week.

MICHELLE CARUSO-CABRERA: Okay, one more thing. I'm sorry to press this so much, but. Feels a little disingenuous to me when you say you didn't know about the vans. Because we have it on video. Your van. I mean--

RICARDO SALINAS: Well, I don't know. Maybe they-- you know where this place is? It's up in the hill here. It's about five miles from this in upper road. So-- they went in our van, maybe. I don't know. Should I know about that?

MICHELLE CARUSO-CABRERA: Probably.

RICARDO SALINAS: No. I don't think so. We were very concerned that a contract-- that we had with one of the-- anchors was not being-- enforced. So we asked a judge in Mexico, "Please help us enforce this contract, and shut down that production," because this anchor was there. And they did that. You know, and-- and it's very surprising here in this country to have effective judicial action. So, you know, sometimes you have to help them. And maybe we put the trucks at their disposal. But what's the big deal? The deal is, that anchor should not have been doing that job in the first place, because he had a contract with us.

MICHELLE CARUSO-CABRERA: But it's part of the game, that kind of methodology. That's okay.

RICARDO SALINAS: Why not? Absolutely. If we need to have our rights enforced in this country-- it's that's the way it works, that's the way we run it. Definitely. It's judicial action.

MICHELLE CARUSO-CABRERA: Anything else?

RICARDO SALINAS: Well, you know, for Americans, it's-- it's difficult to understand our country. Like the-- the author said, we're distant neighbors. But this country has much more to offer. Not only to Americans, but to the world. It's just a beautiful country with so many things. Because it has culture, and it has-- nature. And it has history, and it has actuality. So it's really like three different countries here. But at the end of the day, it's-- this very Mexican identity that is able to withstand all kinds of adversities that takes us through. You know, we've been subject here to conquest and invasion and domination for ages.

MICHELLE CARUSO-CABRERA: Socialism.

RICARDO SALINAS: Yeah, in a way. Like you'll be doing in the States now with nationalization of the banks. We had that in the '80s.

MICHELLE CARUSO-CABRERA: Right.

RICARDO SALINAS: So we know a little bit about bearing stuff, you know. And I think Americans-- will now need to bear a lot of ugly and disagreeable stuff in the next years. So maybe they can learn something from what happened here.

MICHELLE CARUSO-CABRERA: Great.

RICARDO SALINAS: As you can see, this is 100 percent volcanic land. This is called the Pedregal, because all this lava came from that volcano up there, the small one. There's a big volcano up there that was before. But-- this lava flow is only about-- about 2,000 years old. So it's quite-- young, in terms of lava.

MICHELLE CARUSO-CABRERA: What do you think as you stand here? You started with this small company, and now-- I mean, do you feel like you're on top of the world?

RICARDO SALINAS: No, I think there's lots of customers to serve still. Lots of customers.

MICHELLE CARUSO-CABRERA: All right. Vamano. Let's go see some.

RICARDO SALINAS: I have a bunch of stores. One of them is right there, behind that. And let me go ahead, and then you can--

MICHELLE CARUSO-CABRERA: Sure.

RICARDO SALINAS: Now you can see, this is also part of the deal. Look at the trash can.

MICHELLE CARUSO-CABRERA: What about it?

RICARDO SALINAS: Well, it's right in front of our store.

MICHELLE CARUSO-CABRERA: Right. And that bothers you?

RICARDO SALINAS: That's part of the-- the landscape, you know? You know, we wanna be in front of the market, look at the side of beef.

MICHELLE CARUSO-CABRERA: Because this is-- this is a great location.

RICARDO SALINAS: This is a great location, because this is where our kind of people are. But sometimes, it smells, sometimes it's dirty, and we have to make do with that. And we try to keep our side of the-- of the deal clean, which is not so easy, you know?

MICHELLE CARUSO-CABRERA: It's beautiful. It's clean. It's spotless.

RICARDO SALINAS: Want one? You can take one.

MICHELLE CARUSO-CABRERA: Are you kidding me?

RICARDO SALINAS: Six-- $6,000.

MICHELLE CARUSO-CABRERA: $6,000.

RICARDO SALINAS: Let's see. Now, this is not-- this is the top of the line. This is 125,000 pesos, about $8,000. But where is the-- here is the-- the economy. Three cylinder, very economic. Will get you-- oh, no, it was a huge (UNINTEL), I forget how much it was. But here it is. (SPANISH NOT TRANSCRIBED) into 1.4, about $6,000.

MICHELLE CARUSO-CABRERA: $6,000 for this car, wow. How many are you selling? Are they selling well?

RICARDO SALINAS: Not a lot. We need to improve.

RICARDO SALINAS: What happens, it's a new brand. People are not confident that this brand will do what-- what it needs-- what it needs for them. But it's growing. And they've been-- they've been used to American cars all their lives, so they see that is different from an American car. It's very inexpensive. Maybe it's not so good. So we give them a money-back guarantee. You know. Whatever the problem is, you know, like--

RICARDO SALINAS: And somebody should be able to tell us the mileage of this, because it's really extraordinary. It should be there somewhere. I'm gonna find out about that. Because it's a three cylinder car, it doesn't-- it consume half as much as-- as gas as the other ones.

MICHELLE CARUSO-CABRERA: He's looking at it right here.

RICARDO SALINAS: And this is a top of the line (SPANISH NOT TRANSCRIBED)-- this is a top of-- it has ABS systems, and airbags.

MICHELLE CARUSO-CABRERA: For a Chinese car?

RICARDO SALINAS:(LAUGH) Yes. (SPANISH NOT TRANSCRIBED)

MICHELLE CARUSO-CABRERA: That must feel good.

RICARDO SALINAS: Well, that surprised me.

MICHELLE CARUSO-CABRERA: Why?

RICARDO SALINAS: I didn't expect it. (SPANISH NOT TRANSCRIBED)

MICHELLE CARUSO-CABRERA: He says (INAUDIBLE) okay by the highway?

RICARDO SALINAS: No, this one does not. But the competition has. The price points of the competition are not allowed on the highway, they're only for city use. But this one has lower price point, and is allowed on the highway, and has a much-- better mileage. So that's what we're trying to--

MICHELLE CARUSO-CABRERA: Why wouldn't a car be allowed on the highway?

RICARDO SALINAS: Because it's so small and light, it could be blown off by a truck.

MICHELLE CARUSO-CABRERA: I see. Got it. Okay.

RICARDO SALINAS: That's our bank. Exactly. So we hope--

RICARDO SALINAS: This is beautiful. This an innovation (INAUDIBLE). We're giving you a notebook, a nation notebook, plus a phone and the-- the broadband wireless for only-- (SPANISH NOT TRANSCRIBED) which is about $50 a month, you can get the whole thing.

MICHELLE CARUSO-CABRERA: The notebook?

RICARDO SALINAS: The notebook. It's called the (INAUDIBLE) because it's smaller. And you can choose our phone. Phone has a modem. Or the-- the (INAUDIBLE), which is the-- the (INAUDIBLE). It's the broadband (INAUDIBLE). So we come up from anywhere, any time.

MICHELLE CARUSO-CABRERA: $50 a month.

RICARDO SALINAS: Yes.

MICHELLE CARUSO-CABRERA: That's fantastic.

RICARDO SALINAS: It's a great offer. It's even better than the States.

MICHELLE CARUSO-CABRERA: Yes.

RICARDO SALINAS: And this is a mainstream notebook.

MICHELLE CARUSO-CABRERA: Yeah, I-- I've seen them. They've gotten a lot of write ups.

RICARDO SALINAS: So right here, (INAUDIBLE), we're dealing with those giants.

MICHELLE CARUSO-CABRERA: Got it. And you put 'em-- why-- why don't you allow them in here? (SPANISH NOT TRANSCRIBED) Why not--

RICARDO SALINAS: We need competition. It's good for us. (INAUDIBLE). If we convince that our offer is better than theirs.

MICHELLE CARUSO-CABRERA: (SPANISH NOT TRANSCRIBED) Who sells the best here? Which one? (SPANISH NOT TRANSCRIBED) You gotta raise your advertising budget.

RICARDO SALINAS: I've gotta do a lot of things. That's just one part. But yeah, so really--

MICHELLE CARUSO-CABRERA: I'm at a bank. This is instrumental, right? I mean, to me, this is emblematic of your whole vision of-- of how you sell.

RICARDO SALINAS: My whole point was, let's make it easy for the customer. If he meets his financial services right here, why should we put a stand alone bank? There was a huge discussion with the authorities about this. Would it be allowed or not? And so we were forced to invest a big, big amount of money and security, as you can see over there. And now they wanna change the rules, and they want Wal-Mart to have a bank in the (INAUDIBLE). So we're saying, well what-- did the security concerns go? Where did they go? Is it not valid anymore? So now they're accusing me of-- of-- of-- of-- of (SPANISH NOT TRANSCRIBED) of obstructing Wal-Mart. And I'm just saying, well, let's have a level playing field, you know. If it's gonna be a rule, it's gonna have it for everybody. Is bank security important? Yes. So let's have it, right? Anyway. And yes, of course, a hugely successful business. We started this from scratch, from nothing, four years ago. It's our brand. It's called Italica (PH). It's made in China, on our specifications and our design. And because when we first started, we started doing the Chinese motorcycle, it was horrible quality. We had lots of problems. So what we did is, we said to the chains, "No, we're not interested in having such a low price. We'd better have our design and our quality." And that's what we have, so. This is fantastic motorcycles.

MICHELLE CARUSO-CABRERA: Il nombre. The name, Italica. Sounds Italian.

RICARDO SALINAS: Yeah, that's the whole point. (LAUGHTER) But that's our price leader, the DS150.

MICHELLE CARUSO-CABRERA: This one here

RICARDO SALINAS: Yeah. And-- this-- cost about $1100. Beautiful bike. And this is really economic. Doesn't pollute, it doesn't cause traffic, it doesn't consume energy. It's great thing. So we're doing very well. We started from zero about three years ago, now we're selling-- 200,000 of these bikes a year. Our own brand, we have our own factory, our own design from China. And we have, of course, this-- beautiful-- consumer item, and then we have the hardworking type over there.

MICHELLE CARUSO-CABRERA: For the courier, that kind of thing.

RICARDO SALINAS: Yeah. Beautiful, huh?

MICHELLE CARUSO-CABRERA: Any G.E. appliances?

RICARDO SALINAS: Yeah. All of them. Now we'll go and see. Look, LG, no no no no.

MICHELLE CARUSO-CABRERA: Samsung.

RICARDO SALINAS: They are right here under Mabe name. Oh, here it is. Wait, wait a minute. Where is it? They have Mabe, and also G.E., of course. This, for example, is Mabe. (SPANISH NOT TRANSCRIBED) This is a joint venture, you know. And it's the leading brand, by the way.

MICHELLE CARUSO-CABRERA: Is it? All right.

RICARDO SALINAS: We also have Samsung, as you can see. Which, they do a pretty good job, too. And Whirlpool, you know that. This is very interesting. Lemme show you. This is our catalog, now if we could get this thing going. It's supposed to be our electronic catalog, and it's called (SPANISH NOT TRANSCRIBED). So here you can practically get whatever you want to. You want a sofa, it'll tell you what it is. It'll get you to-- we try to use this to teach people-- now what's happening. Not working.

MICHELLE CARUSO-CABRERA: Computers, always. But don't worry.

RICARDO SALINAS: No. But the idea is to have-- it is working, it's very slow. So we need to improve on that. You know, we were not prepared for them. Never do this in front of the cameras.

MICHELLE CARUSO-CABRERA: That's all right.

MICHELLE CARUSO-CABRERA: --(IN PROGRESS) the internet service, was that-- that slim? Maybe you can yell at 'em

RICARDO SALINAS: No. No. Actually-- no, what we're doing here is we-- we (UNINTEL) service. So we have all the pages here. And that's what needs to be done. Right now, it's going through our Intranet, which is only 500K to take care of the bank and the store. So it's not enough. Now, here you can see our system-- is very friendly. And people need to be behind that because they-- otherwise, they get stuck up. (SPANISH NOT TRANSCRIBED) This is the key to the whole thing. We have fingerprint readers, so whenever you show up, you put your finger here, and your picture will come up with all your account information.

MICHELLE CARUSO-CABRERA: Show me the-- show me that again. Can you do this closer?

RICARDO SALINAS: This is-- this great stuff. We-- we have identified all our customers through their fingerprint. And it's-- identifies the face and the account data, so we have practically no fraud, you know? Every time a customer comes up like he's gonna do something, or she's gonna pay, she'll put her finger there. Identifies the account. And everything goes through. Especially when the-- taking money out.

MICHELLE CARUSO-CABRERA: Which is the key point.

RICARDO SALINAS: Yeah. And as you can see, we have everything on the computer. Everything is online, all the time. Using very simple-- terminals. You know, we have low cost equipment, but very reliable. Because we-- have redundancy for everything. So she came to make a payment, and-- this is the kind of ticket--This is what you get when you give-- if you give me your money, this is how I'll give you a receipt. You know, we don't send an account to your home. Because, typically, you're a woman. You want to keep your money safe and away from the drunk husband. So with what we call (SPANISH NOT TRANSCRIBED), it means your little secret stash, yeah.

MICHELLE CARUSO-CABRERA: Really? No kidding.

RICARDO SALINAS: So women, especially, appreciate this very much, because nobody knows if they have it or not. It's just them and their fingerprint.

MICHELLE CARUSO-CABRERA: And no mailing to the house.

RICARDO SALINAS: No mailing. This is what you get. Now, if you wanna throw it away, you can throw it away or you can keep it. But it doesn't matter, because any time you want, you can come here and find out how much money you-- you have.

MICHELLE CARUSO-CABRERA: Fantastic.

RICARDO SALINAS: So this is-- this is a kind of low cost operation that we have. Enables us to be leader in the cost-- in the cost part. (SPANISH NOT TRANSCRIBED). Now here, this is very interesting, because this is where we-- we set up your accounts, okay? So you see there's a webcam and the fingerprint. So she-- if-- she-- sho-- she's gonna open an account, we'll take her picture right here. And put it into our files. All her files will be digitized through-- a reader. And we try to use as little paper as possible. Just something for the signature, and that's that. Pay for less. All the files will be digital.

MICHELLE CARUSO-CABRERA: Why is it all-- why do you think it's all women?

RICARDO SALINAS: Business through-- Western Union and Dineros (SPANISH NOT TRANSCRIBED) are brands here. This is also very interesting. It's something that I developed to try to promote small business. It's called Empresario Azteca. So the idea is-- we have an electronic catalog where you can pick capital goods. Things that are used to produce. Like, something to set up your-- car repair shop. And, of course--

MICHELLE CARUSO-CABRERA: Well, terrific. This reminds me of a Sears when I was little.

RICARDO SALINAS: Yeah. Look, I show you, this is also interesting. What we're trying to do is wean the people away from the-- cashiers. Now there's more people coming up. And we're trying to get-- okay, but people still sometimes prefer face to face. And let's say, if you want to buy some airtime--

RICARDO SALINAS: So I wanna buy some airtime, more than one. There's your competition. "I wanna buy Iusacell." "How much you wanna buy?" "Ten pesos." "Ten pesos, okay." And now you put in the num-- number of the cell phone, like 55, (SPANISH NOT TRANSCRIBED)-- that's my cell phone.

MICHELLE CARUSO-CABRERA: Did you get that?

RICARDO SALINAS: Done. (SPANISH NOT TRANSCRIBED) Because it's not a prepaid phone.

MICHELLE CARUSO-CABRERA: Oh, I see. I was gonna say, all right. (SPANISH NOT TRANSCRIBED) So, when I-- when I thought of your business, I thought you were somebody dependent on the emerging middle class.

RICARDO SALINAS: No.

MICHELLE CARUSO-CABRERA: But you seem--

MICHELLE CARUSO-CABRERA: But you're more helping to create the emerging middle class.

RICARDO SALINAS: That's exactly our point. We are creating the middle class right here. And this is-- this is it. This is the emerging middle class. That's exactly the point.

MICHELLE CARUSO-CABRERA: This is definitely want. So, you read that your company's dependent on the emerging middle class. But what I get from you is that you are trying to help create the emerging middle class.

RICARDO SALINAS: Yes, you're absolutely right. And that's a key point. We are creating a middle class. And this is the middle class that's coming from Mexico. We're helping them with merchandise, with services, to become part of that world which we're all very familiar with. Credit cards, transfers, insurance-- they gotta know about that. Not even transportation. And it's great to be able to do that. That's what it's all about.

RICARDO SALINAS: And that, of course, is standard resolution.

MICHELLE CARUSO-CABRERA: Right. And you can see, that's-- this is much clearer.

RICARDO SALINAS: Yeah. And now what we're gonna do, is we're gonna move over to a multiplex situation box for this TV. For that TV. Because this has a tuner. You know the transition to digital, okay? Well, those TVs don't have that capability. So we're gonna sell them the box with the antenna, and they'll be able to see all the high definition channels that go with your standard--

RICARDO SALINAS: So, let's see, if you're gonna buy one of those motorcycles, we'll-- we'll say, "Okay, we'll lend it to you. We'll lend you the money for the bike, but you have to give us 20 percent down." So you're partners with us in this bike, you know. Because if you just take it away without paying anything, that would be a non-recourse loan and we don't wanna be in that situation. Now, if we know you and you've been doing business with us, you know, two years, three years? Then that's not a problem. You can take it without paying anything, because we know you pay your bills.

RICARDO SALINAS: IN PROGRESS)-- have one of the-- very first pictures made of the Aztec calendar.

MICHELLE CARUSO-CABRERA:(INAUDIBLE) for your time. I'm very appreciative.

RICARDO SALINAS: Well, I had fun.

MICHELLE CARUSO-CABRERA: I'm glad.

RICARDO SALINAS: Now, I have to go have lunch. This is like-- you know, in Mexico we have lunch at 3:00, which is, I mean, like dinner for you guys.

MICHELLE CARUSO-CABRERA: Yes, I know. Well, I said to Dan, you got a decision yet? He said, "Well, he's not back from lunch yet." "Dan, it's-- it's almost 4:30." "Lunch starts at 3:00." I said, "Oh, okay." I finish lunch by 12:30.

RICARDO SALINAS: The thing is, lunch for us, is a time to meet and get to know people, and establish ties of trust. So that's the way it works. It's a very long, elaborate affair where I get to know people, and they get to know me.

MICHELLE CARUSO-CABRERA: Got it.

RICARDO SALINAS: It's a totally social thing. (SPANISH NOT TRANSCRIBED) But in this case, we have some Americans. So I must be having the starting time.

MICHELLE CARUSO-CABRERA: Who are the Americans? Who are they?

RICARDO SALINAS: She's so funny. Of course, because of her situation, she has become a comic. And-- people like her. I don't think that would be acceptable in the States, you know?

MICHELLE CARUSO-CABRERA: Yeah, it's-- no, it probably would be, in comedy. You know, we have some-- call 'em little people, right?

RICARDO SALINAS: How long will you be in Mexico?

MICHELLE CARUSO-CABRERA: You know, originally I was gonna only be two days, but now I keep reading about the butterflies and the whales, so I'm thinking about flying to either Moralia, or like you said, Cabo.

RICARDO SALINAS: Look, if you need help on that, we have the-- you know, all the inside stuff. Because we've been helping both of those projects, okay? So it would be very useful-- I-- I would recommend, if you can, to go to the butterflies, which is close by to Mexico City. And they really need help.

MICHELLE CARUSO-CABRERA: No, I would go on this trip. Let me call and see if I can get the days off. That's what I was trying to figure out. With so many people in Davos, I might be able to do it. Say, (SPANISH NOT TRANSCRIBED)





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