 Well, good morning to everybody, I hope you had a good session earlier and just hearing also about Kevin's insights about what the new generation of Chinese media consumers are about. So I'm going to talk more about the business side of things as Kevin mentioned, and essentially I'm going to bring more context around what's going on in China compared to the rest of the world. The title of my presentation is digital naturalism, new and improved species from China. So it will become a bit clearer as I go. I'd say that this presentation was triggered by the research I've done across different digital ecosystems, so I'll tell you very quickly about myself. I've been living in Asia for over 10 years in Japan, in Korea and in China. I've done research on what I call local species of digital creatures, and the consulting business I've built through my company is to identify innovation from Asia, so for many people it's kind of counterintuitive that there's innovation from Asia. And the concept of innovation arbitrage, so finding something that already works somewhere that could be ported to another place. And I was looking at that through the prism first of technology, then I realized well to understand it really have to look at cultures, but you have to look beyond culture to understand what's the fundamental human drive behind all those things that are working, and in some cases appearing in other markets as well. And eventually I came across the idea of digital evolution. And finally I made my way to the Galapagos, so I'm going to share with you ideas around about the Galapagos and how it relates to China and Sweden. So if it doesn't work, you can come to me at the end. All right, so I'll start with a very quick quiz, so you probably know this piece of hardware, so it's a movable type for printing. Any of you has an idea when this thing was invented and where? So you can just raise your hand, tell me if you have an idea, yes. You said 1880s, okay, that's some hardware here too. Any other, yes, over there. 1820s, okay, that's closer, yes. Hundred years before Christ in China, that's an interesting shot. Anybody else? Last one, yes. Okay, I'll tell you what I was told when I was in school was that it was invented in Europe by Gutenberg in 1415. Then I moved to Korea and I heard that they had movable type metal in the 1230s. And then in China they said, well, we had the wooden one in like the 1040s. It was a good 400 years before Gutenberg. So it might sound anecdotical, but I think there's really something to learn there. What I think it tells us is that first things can be invented more than once. I don't think Gutenberg necessarily knew of the Korean or the Chinese ones. Ideas themselves have no nationality. They can be invented by individuals anywhere or come to individuals rather than be invented. What's interesting is that the time gap, those 400 years gap between China and Europe can be bridged. So just imagine how the world would look like if we had had the Chinese movable type in Europe, a good 400 years earlier than we did. The world would be totally different. So of course at the internet speed, you don't have to wait 400 years, but surprisingly in some cases you wait a good decade. So of course if you can find out about those good ideas before other companies or other people find out and adapt that to your market and to your audience, then you can really do something very special. So I'll give you a few ideas about China's internet to start with. So to get the sense of what the West was thinking about Chinese internet, I looked at the top Google news a week ago. And I looked at the keywords that were appearing in just the headlines. So this is what the West says about Chinese internet. So that's the picture, censorship, activists, lots of users, cyber attacks, internet stocks. And it kind of fails to reflect a few things that actually are going on on the ground, especially what is missing is where is innovation, where are startups, where are new concepts, how about users? Talk about numbers and we talk about stocks and what concerns us. But we don't really understand very well what concerns them. So the challenge here is really to go beyond preconceptions around what is China, what defines China, what is innovation and what is success. Very often what we define as innovation and successful innovation is, well, something I would use, not something that may be cheaper, lower tech or for somebody else than me. That doesn't concern me. It's not successful to me. And the fact is that innovation is everywhere. So as you know, being from Sweden, you know the SIPA is a fantastic hardware from Sweden and you know those companies as well as well as this famous music group. It's all innovation and you can call it Swedish, but at the same time it's something global. So no more about digital naturalism. So you have to really go beyond the idea that people invent things and rethink that as ideas come to people. So in the old days, with the Greeks and the Romans the muses were visiting people with ideas. So the same muses can visit like a dozen different people around the same time if the conditions are right. So ideas don't really have, basically they come to people everywhere. So to understand digital species, I have to equip you with a little bit of vocabulary. So to understand species, one group is a native species. So those kind of drifted naturally. They were not brought by man to a location. They just arrived there with the wind or sea or on the back of some other species. Some are endemic, so they can be found only in one location. Some are indigenous. They can be found in more than one location. Introduced species didn't come naturally, so you can think about rabbits in Australia, for example, not necessarily a good success, and they can become invasive, so very widespread in a location. And I think this will help you understand what is going on in China with digital and how that concerns us. So we have to look for that at ecosystems. So first, looking at the US ecosystem, biggest for the internet, large population, high GDP per capita, experienced entrepreneurs, but also high development costs compensated by vast investment resources and regulation. So it's a rather rich ecosystem. Now you look at China, it's a little bit different. So you have very large population, but low GDP per capita, reasonably inexperienced entrepreneurs, internet is very new, software is very new, low development costs, but it's a popular investment spot, and they have kind of in progress regulations. So companies don't have very strong grounding because regulations tend to vary. So it's a rather tough ecosystem. And very often, Chinese companies are pictured as being copying, but as this little Swedish baby will learn on his way to adulthood, you learn everything by initially copying. And once you learn, then you can make it your own, and then you can do things differently. So mutation later on is also something that's critical for survival in a different ecosystem. So to understand how this works and what were the factors pushing for innovation, I came to this model of the five C's of innovation. So hopefully that will help you remember what they are. So first is copy. Second, that's where you start. Second is the constraints. So set of constraints can be the GDP per capita, for example. Combination is also a source of innovation. Combine an idea with another in a new way. And competition is also a very strong source of innovation, and China has plenty of it. And context is more about the culture, the religion, the language, all kind of soft aspects that you cannot say are good or bad, but just part of the context. So competition, just like those iguanas in Galapagos islands, to get your spot in the sun is actually quite competitive. So in US, we talk about Facebook, Twitter, LinkedIn, YouTube, Yahoo, Groupon. In China, there's more than one instance of every service on the competing very fiercely. So I counted about five Facebooks. Twitter, they had the first generation of Twitter copy cards that came around and didn't really work so well. Actually, all of them died. And now you have a second generation of Twitter services that are doing quite well, and there's three of them already. LinkedIn, so again, first generation, there were a couple companies doing that, also doing so-so, and now second generation of LinkedIn variations. So it's very competitive, and competition fosters innovation, because you have to differentiate in a way. It could be technology, but very often it's more around service concepts, marketing, business models. And I would say that China is especially good at finding, because they have no choice, Chinese companies have to find new business models. So I'll talk about first-species, very famous, maybe some of you heard of it. Anybody heard of Tencent before? So I did, I did the slide. Okay, so I compared it to the Galapagos Penguin. So Galapagos Penguin is the only penguin species north of the equator. And so it's kind of special, and kind of wonder what it's doing there, because it's so warm. And it actually happens to be the logo of Tencent, as well, the penguin, not the Galapagos one. This is a piece by Bloomberg Business Week that was made down earlier this month, about Tencent. And it tells about how big the company is, and it's actually a very good piece, if you want to know more about it. But what I'm going to talk about is how they came about. So Tencent's main service, with which they started, was an IM service, instant messaging, kind of Chinese ICQ. They started in 98, and they were not doing so well, because the business model around this service was advertising, and that didn't work in China, because the market was too small for advertising. So for survival, they had to find new models. So they researched Korea, and they saw that in Korea, virtual goods, digital currencies, were doing quite well with avatars and games. So they combine IM with avatars, as you can see here. And after that, they also introduced games. And today Tencent is a giant conglomerate with several social networks, micro-blog servers, e-commerce platforms, search, and they're also going international, buying companies around the world, and investing. Yet, even though it's the third largest internet company by market capitalization in the world, most people never heard of it. So it's right after Google and Amazon, but most people never heard of it. So in terms of usage, to give you a few numbers, because it's kind of nice to have comparables. So instant messaging active accounts, they have about as many as Facebook users. They also have two social networks, one nickname-based, one real-name-based, and they have a micro-blog, so this is the latest figure actually from there. They just published their first half results. So they have 233 million micro-blog users, because they can leverage their instant messaging platform to promote whatever service they have. So this is their headquarters in Shenzhen. It's kind of nice building. And those are the revenue of the first half of this year. So they made $2 billion in the first half of this year, half of it from games, almost nothing from ads. So they make more money than Facebook. The net profit is 42%. So I think even drug dealers don't make that much. They're doing really, really well. And just with about 11% paying users. So it's pretty amazing results for a company. In the market, that's very tough. Another species I'd like to introduce, GIUN, and for this company, I picked the flightless Cormorant, because flightless Cormorant, as the name says, they cannot fly, but they can swim, and basically they adapted to be able to survive when they arrived on the Galapagos Islands. And similarly, GIUN started as a match.com copycat. And the match.com business model, which is advertising and memberships, didn't really work in China, because the market was too competitive. Advertising market was not sophisticated enough, so they had to find other ways. This company just went IPO in the US in May. Another ticker date, pretty good ticker. And the way they survived is that they were starving with ads, so they started to do, okay, let's do some kind of offline events, and they organized lots of matchmaking parties and events. And eventually, they stumbled all the idea that, okay, Tencent is doing so well with those micro transactions. What could we do? And they got the idea of selling digital stamps. So if you want to initiate communication with another user, you have to pay a stamp, or they have to pay, like one of the two. Each stamp is worth 20 cents, and now the company is making 18 million euros. So that's kind of an interesting way to survive and to adapt to the local market. Another company in the same space, actually the second largest matchmaking site. And for this one, I picked Lonsome George, which is this giant turtle here. It's kind of Lonsome, because he's the last one of his species. So it's a little bit lonely, so they're trying to pair him up with some other related species, but it's not working so well. And that's a little bit difficult for him, right? And for Chennai, this company, the way they did it, the way they actually survived, is that they created a super high-level VIP program. So, yes, sorry, it's not 200 million members, it's probably a dot missing, so about 20 million members. They have this VIP service where you have a dates manager. So it's a service where, basically they call you to arrange your dates, and after you go on a date, then they call you back to get the feedback, and they call the other party back to also collect the feedback. And then they call you and tell you what the other said. So it's like you can improve your dating skills, right? So this service actually works quite well on sales for 300 euros for six months. So it's more like for people looking for serious relationships. Another one, I'll go quickly because I see that the time is short. For this one, I picked the swallowtail girl, which is the only nocturnal girl, seabird, actually, in the world. So during the day, it's just sitting there, because it doesn't have predators, and doing the night is fine. And the Van Gogh is a little bit like that, Kevin mentioned Van Gogh earlier. So it's an online apparel store with the original brand, Van Gogh, started selling online shirts, expanded to more apparel. And it's an interesting company because they started purely online, and now they're going offline. So ordinarily, it's a company that's offline trying to do something online and be cool, or actually expand their business or find new channels. This company started online and expanding offline. Their sales last year was $200 million. They just received another round of investment for a $5 billion valuation. What's interesting is that they also involve the users in selling, and they have this program of Van Gogh stars where users can show their styling ideas using their products. And by showing their style, that also encourages other users to buy. And if they buy by coming from the user page, then this user gets a 10% commission. So it's a pretty smart idea. As you can see, those ideas were triggered by the local conditions and competitions between companies, but don't have anything specifically Chinese to them. What they are are just good ideas, triggered, like created by necessity. So I'll go very quickly on this one. Invasive and Indigenous is the online game market, very big in China, mostly because there was no software market due to copies. Inspiration from Korea, and now the market is bigger than the US market. This is the market caps of combined companies. China, about 70 billion dollars. And what's interesting is that in that case, they all used, for almost all their properties, the micro-transaction, virtual goods model. And sometimes you're in the race using the racing metaphor, you see a car on your back and you're like, oh, it's going to overtake me, I have to go faster. But actually in that case, the companies might be actually a full lap ahead of you already. So you see them because they already caught up with you and they're already like one lap ahead. And that's what's happening between Chinese companies and Western companies in the gaming space. To say a quick word about this, because it's actually quite important in the Chinese market is the Shanghai phenomenon. So here I picked the lava cactus, the first vegetation to arrive on a volcanic island. So it's pretty sturdy cactus that survives in tough places. This is the Apple store in Kunming. I don't know if you've heard of it. What's interesting, because it's actually not licensed by Apple, but you see the staff has all the stuff and the equipment and the store looks very Apple-ish. Those are actually real products. And they do real customer service and the staff, some of them think it's an official store when it's not. So they pushed it pretty far. And I'll do a quick awareness test. So this is a Chinese phone. Anything you can notice that's peculiar about this phone? I'll go very quickly. Two, okay, two buttons, yes. So they have two cool buttons. Okay, I'll give you the answer. So yeah, so there's a dual SIM, so you can have two SIM cards, pretty convenient if you travel. But what's interesting is this one. So this one looks a little bit like a gardening patch or something. So this is a link to your farmville, the Chinese farmville by 10 cents. So you don't get the full-fledged thing, but you have the stats and stuff. And actually, by the way, the first farm game on the social network was made in China, in Shanghai, before Zimga did it. To remember what's happening around Shanghai, I'll give you the five Fs of Shanghai's, like fun, flashy, functional, fast and almost free. And I actually brought one with me and that kind of gives you the idea. So this is a phone that actually has a shaver in it. So it's better than the Motorola Razer because it actually shaves. So it's an average phone, a bad shaver, but it's interesting and it's a great conference prop. What's interesting is that companies are now moving beyond Shanghai to create higher quality products thanks to notably Android. And now you have made by a Chinese company, the world's fastest Android CPU phone. You have also this one, HiPad by Hiya. So it sounds kind of funky, but Hiya is actually a very, very legitimate company. It's the world's largest maker of household products like washing machine and stuff like that. And it's a very good product. It was Android 2.2 for 100 euros. The world's first Android 3.2 tablet by Huawei Telecom Maker. I'll have to skip on that very quickly. So basically for foreign companies, most of them didn't do so well in China because they failed to mutate. Recently I've seen that the makers of Angry Birds have actually done quite well localizing, so they even have Angry Birds mooncakes that they're selling. Quickly on Groupon, there's so many players that the margins have gone down dramatically. So it's not even a good business at that point. Funding, some local companies are getting, give them an advantage to survive, but it's still very competitive. And last and one more thing, a company actually involved in it called Simune, and I would call that a new hybrid, in that sense that the company is based in China, but doesn't target China as a market, but takes ideas from China and the West. It's actually a gaming company that made the largest 3D game on Facebook called Uber Strike. So made from China for the world. And what's really interesting is that this is probably the highest tech game, real-time 3D inside the browser, inside Facebook, and made from China by a mix of local and foreign developers. So this is, I think, one example of the new species that are going to spread, hopefully, from any market. Benjamin, I'm sorry, we really have to finalize because we have the next one coming in in a couple of minutes. So that's my last slide. So the future of digital PCs, so I would encourage you to study the ecosystem, discover new species, adapt, survive, and thrive. Thank you. Thank you. Thanks.