Transform or Be Disrupted Follow Us Presentation by Dr. Edward Tse - PowerPoint PPT Presentation

May 10, 2018 Shanghai Transform or Be Disrupted Follow Us Presentation by Dr. Edward Tse Founder & CEO, Gao Feng Advisory Company

A mega meeting point Technology China Source: Gao Feng analysis Gao Feng Advisory Company 2

China’s digital landscape at a glance 772M 753M 980M Total Internet users in Monthly active users* Total mobile Internet users China (Dec 2017) on WeChat (Sep 2017) in China (Dec 2017) USD 200+ 450M 25.3Bn Global cities with Mobike Didi users across operations since April 2016 400+ cities in China (2017) (GMV sales on Alibaba Singles’ Day 2017 ) Note: *Combined MAU of Weixin and WeChat; Numbers are latest published figures Source: CNNIC; Literature research; Gao Feng analysis Gao Feng Advisory Company 3

New shifts Middle Class Technology Communications “New Rural” “New Retail” Globalized Resources Source: Gao Feng analysis Gao Feng Advisory Company 4

In China’s Disruptors, we chronicle power of the Chinese entrepreneurs Key Themes (book released in July 2015)  The real force in Chinese economy is increasingly private companies, not SOEs  Leading private Chinese companies are innovative and ambitious  They are changing not only China but increasingly also the rest of the world “ Five of the best new books on ” innovation – China’s Disruptors’ public recognition by Fortune.com, April 2015 Follow Us Gao Feng Advisory Company 5

Geely: from a vehicle manufacturer to a transportation services provider CASE EXAMPLE 1997 The first privately owned car company in China Passenger Vehicle Feb. 2018 Purchased a 9.7% stake in Daimler, Aug. 2010 Vehicle aiming to strengthen electric and Premium Acquired Volvo Cars Technology Passenger autonomous vehicle technologies Vehicle Dec. 2017 Acquired 8.2% stock Feb. 2013 Commercial shares of AB Volvo, Vehicle Acquired the London Taxi strengthening Geely’s Company (Renamed as London Taxi truck and bus business Electric Vehicle Company, now under Geely’s new energy commercial vehicles division) Nov. 2017 Flying Car Acquired Terrafugia, the first flying car company in the world Nov. 2015 Ride Hailing Launched Caocao, a Oct. 2017 NEV ride hailing platform Electric Launched Polestar, a Vehicle premium EV brand, using subscription model Vehicle Oct. 2016 Financial Connectivity May. 2017 Services Launched Lynk & Co., a connected Invested in Saxo Bank, a pioneer car brand providing personalized in global FinTech innovations mobility services to young buyers Source: Baidu Baike, Sohu Auto, Geely official website, Gao Feng analysis Gao Feng Advisory Company 6

Rise of New Retail CASE EXAMPLES  Mobile APP-powered  Hema Fresh 盒马鲜生 offline experience  “Eat as you shop”  Yonghui model Superstores  30-min guaranteed 永辉超级物种 delivery service  JD.com (within 5km living 7Fresh circle)  24/7 cashier-free  Xingbianli convenience stores 猩便利 and unmanned  BingoBox snack bars 缤果盒子  Sensors to track  inventory and TaoCafe 淘咖啡 customer in-store movement real-time Source: Gao Feng analysis Gao Feng Advisory Company 7

The fundamentals of retail are being reshaped Consumers Products Retail Stores    Limited consumer data B2C mass production Traditional retail Status and insights formats limited by  Product-centric, Quo physical constraints  Data silos transaction-driven    Data-driven dynamic C2M mass Seamless integration of consumer profiling customization online and offline retail New Retail    Personalized products Integrated products and Reimagining new and services services experience shopping scenarios Source: Gao Feng analysis Gao Feng Advisory Company 8

New consumer dynamics and tech enablers are transforming the manufacturing sector  Product and service innovations based on market data analytics  Mass customization  Connectivity B2B?  B2B2C? Predictive demand forecasting  C2B?C2M? Real-time inventory tracking R&D Manufacturing Products Supply Chain Retail Consumers  Precision marketing  Order-based production  Online merging with  Smart factory with high automation offline (OMO)  AI-powered analytics  Human-robots collaboration An end-to-end holistic digital transformation is required for the future era of C2M manufacturing Source: Gao Feng analysis Gao Feng Advisory Company 9

The future of manufacturing will need to be more customer-driven across the entire value chain Traditional B2C Future C2M Manufacturer-centric Value Chain Customer-centric Value Chain R&D Mass Co-creation customization; with users Order-based Procurement Production R&D production Focus on users Production End- MKT (potential users consumers) not Omni-channel Supply Chain just customers marketing Sales Service Sales and Marketing Focus on customers Targeted sales; experience not CRM Personalized offerings End-users   Closed chain production Users participate in every stage of production   Distant from end users Flexible production and open supply chain  Rapid response to market dynamics enabled by technologies Source: Gao Feng analysis Gao Feng Advisory Company 10

Manufacturing will be AI’s next frontier AI-enabled Manufacturing Technologies EXAMPLES Benefits  Prescriptive insights  Enhance visibility into shop-floor operations  Predictive  Digital Twin Factory  AI-based Visual  Improve quality control Maintenance Quality Inspection and yield  Minimize unplanned downtimes  Automate risky activities  Collaborative  Real-time Supply  Robo-advisors/  Reduce inventory costs Robots Chain Management Virtual Service Agents with better forecast model  Enhance revenue with better sales lead identification  AR/VR Tools  Cognitive Procurement  Advanced Automation Source: Gao Feng analysis Gao Feng Advisory Company 11

Organization structure will also need to be adjusted to cope with disruptions An entrepreneurial and agile organizational structure ILLUSTRATIVE Understand consumer’s needs, identify new opportunities, launch pilot experiments, engage with ecosystem partners, etc.  Frontline Platform: . . . BU 2 BU 3 BU 4 BU X BU 1 Self-operating and Frontline Platform ： nimble frontline Innovative, agile and customer-centric small units/teams operation teams Supply  Middle Platform: Technology Data & Chain Marketing Others Shared services Analytics platform to empower Middle Platform ： Shared capabilities, vertical business supporting functions, open architecture units  Backend Platform : Infrastructure Backend Platform ： Basic infrastructure, development, top- Investment committee, strategic decision making level strategy design Source: Alibaba Group; Gao Feng analysis Gao Feng Advisory Company 12

Does it matter? What’s your response?  Competitors?  Collaborators?  Rules of business?  China only? Or, China for the world?  China as fringe or as core?  How can you be more Chinese than the Chinese? Source: Gao Feng analysis Gao Feng Advisory Company 13

Follow Who is Gao Feng Advisory? Us  A pre-eminent strategy and management consulting firm with roots in China and global vision, capabilities and resources network  We help our clients address and solve their toughest business and THANK management issues  Our behavior is led by our values − We put our clients’ interest first and foremost − We are objective and we view our client engagements as long-term relationships rather than one-off projects YOU − We view our people as strategic assets and not merely “units of capacity” − We believe that every member of our team can contribute to problem solving for our clients, from the most senior to the most junior  Our seniors are former senior consultants at leading management consulting firms and/or senior executives at large corporations Gao Feng Advisory Company 14

Gao Feng’s heritage and our deep roots in China  Our name Gao Feng 高風 is taken from the Song Dynasty Chinese proverb Gao Feng Liang Jie 高風亮節  Gao Feng denotes noble character while Liang Jie refers to a sharp sense of integrity  We believe this principle lies at the core of management consulting – a truly trustworthy partner who will help clients tackle their toughest issues Follow Us Gao Feng Advisory Company 15

Contact us Please find below the contact details for our office locations in Beijing, Hong Kong and Shanghai or contact us at info@gaofengadv.com Beijing: Hong Kong: Shanghai: Gao Feng Advisory Company Gao Feng Advisory Company Gao Feng Advisory Company Suite 707, Guang Ming Hotel Suite 923, Level 9 Suite 502 42 Liangmaqiao Road 119 Ma Dang Road Lee Garden One Chaoyang District 33 Hysan Avenue Huang Pu District Beijing 100016, P.R. China Causeway Bay, Hong Kong Shanghai 200021, P.R. China Tel +86 10 8441 8422 Tel +852 3959 8856 Tel +86 21 6333 9611 Fax +86 10 8441 8423 Fax +852 3959 8800 Fax +86 21 6326 7808 Gao Feng WeChat Official Accounts ： Visit our website: www.gaofengadv.com Gaofengadv Gao Feng Advisory Company 16