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China is rather unique in the world.

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First, everyone got a mobile phone.

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Then, the internet came.

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And then the middle class emerged.

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In that sequence.

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So, you have a middle class who never had a habit

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of how they shop, how they make friends,

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how they get information that you could argue

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was formed in the offline world.

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It was birthed in the online world.

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(mellow music)

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Really for the past decade we've seen incomes in China

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grow about 10%.

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That is a radical change in what a household can buy.

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We've seen the rise of an enormous middle class in China.

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We've seen China go from low cost to high income

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and we've seen China become one of the most innovative

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digital markets in the world.

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That's why you could really see,

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you would say consumer behaviors, company business models,

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many ecosystems that are unique in China

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and just somewhat different than you've seen

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in other parts of the world.

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(calm music)

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When you think about this transition to the digital world,

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one thing actually holds true in China that we've seen

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throughout the world, which is your omnichannel customer,

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that consumer that interacts and buys from your brand

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or your retailer in multiple channels,

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albeit online or offline, generally spends more

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than the consumer who just shops on one channel.

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One of the things that's quite unique in China,

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and particularly the digital space in China,

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is the very large ecosystems that we have.

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Tencent, owner of WeChat and many other things.

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Alibaba.

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These are companies which have underneath them

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many, many digital businesses, much broader than we see

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in most Western internet companies.

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If you look at e-commerce, you know what percent

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of total sales goes through the platforms owned by Alibaba,

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it's still close to 80%.

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So, one must work with them,

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but one must also think about how do I make sure

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I maintain competitive advantage.

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In the technology space in particular,

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China is really driving innovation in hardware.

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And also has an enormous talent base and set of innovative

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companies at applying AI.

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Companies must absolutely find the new organizational

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approaches that will allow them to harness China's

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leadership in AI.

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This means breaking down silos, thinking about how humans

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and computers work together,

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not against one another, to actually drive business impact.

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The need for resilience, and likely the need for resilience

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in the face of not always sunny economic times,

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is going to be a core part of what makes the winning

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companies in China.

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30, 40 years from now when we think about what's the

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blueprint of a fast moving consumer goods company,

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we're going to look at this decade or the '20s in China

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as a period when those concepts were really formed.