WEBVTT 1 00:00:01.110 --> 00:00:03.663 China is rather unique in the world. 2 00:00:05.110 --> 00:00:07.173 First, everyone got a mobile phone. 3 00:00:08.090 --> 00:00:10.490 Then, the internet came. 4 00:00:10.490 --> 00:00:12.040 And then the middle class emerged. 5 00:00:12.040 --> 00:00:13.053 In that sequence. 6 00:00:15.150 --> 00:00:18.720 So, you have a middle class who never had a habit 7 00:00:18.720 --> 00:00:20.600 of how they shop, how they make friends, 8 00:00:20.600 --> 00:00:22.710 how they get information that you could argue 9 00:00:22.710 --> 00:00:25.032 was formed in the offline world. 10 00:00:25.032 --> 00:00:26.226 It was birthed in the online world. 11 00:00:26.226 --> 00:00:28.809 (mellow music) 12 00:00:31.790 --> 00:00:35.220 line:15% Really for the past decade we've seen incomes in China 13 00:00:35.220 --> 00:00:36.973 grow about 10%. 14 00:00:38.871 --> 00:00:42.400 That is a radical change in what a household can buy. 15 00:00:42.400 --> 00:00:45.800 We've seen the rise of an enormous middle class in China. 16 00:00:45.800 --> 00:00:50.130 We've seen China go from low cost to high income 17 00:00:50.130 --> 00:00:53.860 and we've seen China become one of the most innovative 18 00:00:53.860 --> 00:00:55.473 digital markets in the world. 19 00:00:57.590 --> 00:00:59.460 That's why you could really see, 20 00:00:59.460 --> 00:01:02.540 you would say consumer behaviors, company business models, 21 00:01:02.540 --> 00:01:04.730 many ecosystems that are unique in China 22 00:01:04.730 --> 00:01:06.130 and just somewhat different than you've seen 23 00:01:06.130 --> 00:01:08.202 in other parts of the world. 24 00:01:08.202 --> 00:01:10.619 (calm music) 25 00:01:12.579 --> 00:01:15.350 When you think about this transition to the digital world, 26 00:01:15.350 --> 00:01:17.330 one thing actually holds true in China that we've seen 27 00:01:17.330 --> 00:01:20.640 throughout the world, which is your omnichannel customer, 28 00:01:20.640 --> 00:01:23.750 that consumer that interacts and buys from your brand 29 00:01:23.750 --> 00:01:25.640 or your retailer in multiple channels, 30 00:01:25.640 --> 00:01:28.880 albeit online or offline, generally spends more 31 00:01:28.880 --> 00:01:31.613 than the consumer who just shops on one channel. 32 00:01:31.613 --> 00:01:34.623 One of the things that's quite unique in China, 33 00:01:34.623 --> 00:01:36.130 and particularly the digital space in China, 34 00:01:36.130 --> 00:01:39.003 is the very large ecosystems that we have. 35 00:01:40.470 --> 00:01:44.100 Tencent, owner of WeChat and many other things. 36 00:01:44.100 --> 00:01:45.120 Alibaba. 37 00:01:45.120 --> 00:01:48.870 These are companies which have underneath them 38 00:01:48.870 --> 00:01:51.250 many, many digital businesses, much broader than we see 39 00:01:51.250 --> 00:01:53.740 in most Western internet companies. 40 00:01:53.740 --> 00:01:56.800 If you look at e-commerce, you know what percent 41 00:01:56.800 --> 00:02:00.860 of total sales goes through the platforms owned by Alibaba, 42 00:02:00.860 --> 00:02:02.983 it's still close to 80%. 43 00:02:04.170 --> 00:02:06.140 So, one must work with them, 44 00:02:06.140 --> 00:02:08.900 but one must also think about how do I make sure 45 00:02:08.900 --> 00:02:10.550 I maintain competitive advantage. 46 00:02:12.960 --> 00:02:15.170 In the technology space in particular, 47 00:02:15.170 --> 00:02:18.580 China is really driving innovation in hardware. 48 00:02:18.580 --> 00:02:23.350 And also has an enormous talent base and set of innovative 49 00:02:23.350 --> 00:02:24.863 companies at applying AI. 50 00:02:26.930 --> 00:02:30.520 Companies must absolutely find the new organizational 51 00:02:30.520 --> 00:02:32.630 approaches that will allow them to harness China's 52 00:02:32.630 --> 00:02:33.910 leadership in AI. 53 00:02:33.910 --> 00:02:37.130 This means breaking down silos, thinking about how humans 54 00:02:37.130 --> 00:02:39.090 and computers work together, 55 00:02:39.090 --> 00:02:42.217 not against one another, to actually drive business impact. 56 00:02:45.085 --> 00:02:47.510 The need for resilience, and likely the need for resilience 57 00:02:47.510 --> 00:02:51.310 in the face of not always sunny economic times, 58 00:02:51.310 --> 00:02:54.530 is going to be a core part of what makes the winning 59 00:02:54.530 --> 00:02:55.653 companies in China. 60 00:02:58.974 --> 00:03:00.260 30, 40 years from now when we think about what's the 61 00:03:00.260 --> 00:03:02.390 blueprint of a fast moving consumer goods company, 62 00:03:02.390 --> 00:03:05.670 we're going to look at this decade or the '20s in China 63 00:03:05.670 --> 00:03:08.220 as a period when those concepts were really formed.