China’s High-Tech Industry: Opportunities & Challenges (Part 3)

Outline • Past 30 years & next 30 years • Case studies: Silicon Valley, MIT, Israel, Taiwan & personal experience • Shenzhen-Hong Kong Bay Area: Next Silicon Valley, new opportunities • An emerging industry • A few cases: Dreams, studies & startups

3.2 Googoltech Googoltech The first hi-tech company in China and Asia Pacific that specializes in the design and production of motor controllers The largest motor controller supplier in China and Asia Pacific A R&D team of around 100 members, most of which hold master degree or above Googoltech Research Institute (Dec. 2011) Googoltech HK (July 1999) 公司使命 th Googoltech Shenzhen (August 18 , 1999) Googoltech Dongguan (2014 Mission: To provide world-class motor control products and services, and to help to turn the region into a manufacturing center of cutting-edge equipments  To focus on the R&D, production and services of motor control technologies and products;  To offer core control technical platform to equipment manufacturing industry;  To develop professionals in the application of motor control technologies and prepare them for equipment manufacturing industry; GOOGOL TECHNOLOGY LIMITED All Rights Reserved 2  To help Googoltechn customers to achieve success.

3.2 Googoltech Googoltech: Portfolio Expansion & Market Share Growth Curve, 2002-2012 Year 2007 Year 2011 Leadshine Leetro Fanuc Galil 5% 8% 3% 9% Delta Tau 14% Others 48% GoogolTech 13%

DJI— The Future of Possible 4

MEDIA PARTNERS

12333% DJI VS Fastest Growing Hi-Tec companies in the U.S.（2013） 7900% 5876% 536 4813% 356.5 196.7 233.5 248.1 984% 237.7 214.7 605% 534% 160.4 150 112.6 127.7 479% 385% 384% 324% Living Silver GSC Workday Tableau Gogo Burrow Scrap Metal Ruckus Audubon DJI Social Spring Packaging Software Global Services Wireless Engineering Networks Company 3-year Growth Revenue（millions）

QKM • Founded in 2011 • Company Mission: Provide robotic automation solutions for the global manufacturing industry of 3C products. • Main Products: • high-performance and extremely competitive industrial robot • 3C automation solutions • fixture, tool, vision 8

Industry Application Cases automatic assembly of mobile phones automatic assembly line of electrical machines food packaging 9

Common Challenges in Startups Technological Talents:  A serious shortage, hard to find and retain talents  Robocon Competition, Innovator Summer Camp  Harbin Institute of Technology Graduate School, HKUST Automation Research Center, HKUST Robotics Research Institute, Industrial Technology Research Institute in Songshan Lake Management  Teamwork/ leadership  Corporate management  Finance: especially when company cannot make a profit in a short period Ownership Structure, Corporate Governance:  Innovation team  Incentive mechanism: retain talents through equity and option incentive  Mentor to student Infrastructure  Shortage of office venue

Outline • Research and thinking on hi-tech clusters • Past 30 years & next 30 years • Cast studies: Silicon Valley, MIT, Israel, Taiwan • Shenzhen-Hong Kong Bay Area: Next Silicon Valley, new opportunities • The only road that leads Chinese manufacturing to success – Technological Innovation + Industry 3.0/4.0 • Status quo of the manufacturing industry – a corporate survey with the largest samples • A rising industry • A few cases: Dreams, studies & startups • New advantages for China’s technological innovation

US High Tech Companies（3-year Average） APPLE INC MICROSOFT INTEL ADOBE Siemens Philips Millions (USD) (USD) (USD) (USD) (USD) (USD) Net Sales or Revenues 110,057.7 73,840.7 50,321.0 4,132.0 99,340.6 31,395.2 Cost of Goods Sold 61,767.3 14,768.7 12,698.3 218.2 70,293.2 19,151.1 Gross Profit 46,251.0 56,055.3 31,548.0 3,635.7 29,047.3 12,244.1 % Gross Margin 42.02% 75.91% 62.69% 87.99% 29.24% 39.00% Research & Development 2,530.7 9,755.0 8,358.0 720.4 5,266.3 2,214.4 % of Sales 2.30% 13.21% 16.61% 17.43% 5.30% 7.05% % of Gross Profit 5.47% 17.40% 26.49% 19.81% 18.13% 18.09% 甘洁教授 SGA Expenses 7,718.7 19,004.3 7,345.3 1,793.1 13,987.5 8,056.8 % of Sales 7.01% 25.74% 14.60% 43.40% 14.08% 25.66% Net Income 27,222.7 20,663.7 11,803.7 813.4 6,536.5 168.1 %Net Margin 24.73% 27.98% 23.46% 19.69% 6.58% 0.54% 12 12 甘洁教授

China: From Industry 1.0 to 2.0 • Industrial 1.0 – Integrating low-end, cheap labors • Industrial 2.0 – Integrating cheap medium-and- high-end labors

New Advantages for China’s Industry 2.0 • Cheap labors at both medium and high end Cost of R&D Marketing cost • A fine industrial chain • A vast hinterland Hardware with some technology components: Cost down by 50%-60%! An age of technological breakthroughs A process greatly facilitated by Apple smart phones Many new possibilities A great opportunity for industry development in China!

Eco-System – Songshan Lake Robotic Industry Base & Startup Inccubator  Startup training ： Advisors, training, team building  Angel fund： DJI fund, Googol fund, WKT, Walden, Sequoia, Advisor’s fund  Support system： Protypes, Engeneering, QC, Marketing, Management o Incubators