0 Copyright © 2022 by Boston Consulting Group. All rights reserved. Large proportion of customers use online platforms / ecosystems Ecommerce demand exploded from a strong base post Covid Social commerce platforms driving strong engagement Loyalty is more important than ever on digital platforms ~98% o f population with internet access use a Tencent - owned app, ~ 1.27Bn monthly user 1 >65% of Chinese customers use Ecommerce grocery app more than once per week +60% c ompound annual growth rate in social commerce (e.g., livestream shopping) ~50% 2 of top 100 supermarket member sales contributed by digital loyalty member Note: 1. MAU: Monthly active users 2. For top 100 supermarket, digital loyalty member sales contributes to ~50% of all member sa les Source: BCG CCI Chinese customer survey (2020 Dec ~ 2021 Jan), N ~ 3000; Mintel 2021 report; lit research; BCG analysis 01 02 03 04 Douyin Chinese customers are digitally savvy 1 Copyright © 2022 by Boston Consulting Group. All rights reserved. Initiative: Lifecycle ``````` ` eCommerce exploded in China, continues to outpace most of world Note: Internet penetration % reflects the estimated total population of the country ages 5+ with internet access in 2020; E - Comm erce is share of total retail sales through online channels years 2010, 2015 and 2021 Source: Euromonitor; The International Telecommunication Union (ITU); BCG analysis 60 40 0 20 100 80 0 10 20 30 40 Internet penetration % South Korea China Ecommerce % total retail sales Brazil France India Malaysia Thailand United Kingdom USA 2010 2015 2021 2 Copyright © 2022 by Boston Consulting Group. All rights reserved. E - commerce in China is outpacing the US 2016 2010 2014 211 2011 2012 2015 2017 2018 608 2019 280 2020 2021 12 134 185 2013 712 159 787 67 113 191 660 243 289 354 320 462 370 422 477 858 1,064 34 China United States Retail ecommerce sales ($Bn) Share of total retail sales (%) 1% 2% 3% 5% 7% 11% 13% 16% 20% 22% 27% 29% 6% 6% 7% 8% 9% 10% 11% 12% 13% 15% 19% 21% China US Source: Euromonitor; BCG analysis Copyright © 2022 by Boston Consulting Group. All rights reserved. 3 %total ecom Social commerce quickly grown & taken share of e - com, US has yet to see significant growth in social commerce 186 276 352 416 0 100 200 300 400 500 5 Social commerce s ales (Bn USD) 10% 2019 13% 2021 2020 14% 14% 2022e 19 27 37 46 0 5 10 15 0 100 200 300 400 500 3% 2021 2019 3% 2022e 2020 4% 4% USA China Emerging formats blur line between marketing and commerce, highlighting power of digital - first consumer base In 2020, WeChat reportedly doubled its revenue to $250 billion from transactions through its “Mini Programs” in China, which allow retailers to feature online stores and push messages & promotions directly to WeChat's 1.2 billion users Little Red Book is a fast growing fashion, content and community driven platform; typically generates over 8 billion daily views in China. B rands can livestream and connect to consumers, as well as operate e - commerce on the platform to allow users to shop seamlessly 1Source: eMarketer; Press announcements; BCG analysis Copyright © 2022 by Boston Consulting Group. All rights reserved. 4 APAC leads in mobile wallet adoption with 69% of ecommerce & 44% POS transaction value 13 31 25 21 69 29 27 49 18 40 48 30 APAC North America Global Other Digital/mobile wallet Credit card Europe 19 40 19 24 44 10 8 29 37 50 73 47 North America Digital/mobile wallet Other APAC Europe Global Credit card E - commerce transactions POS payment method Note: Wallets can be funded directly via cash, cards, bank transfer or other methods like cryptocurrencies, or wallets act as pass - through mechanism and are linked to cards or bank accounts; examples include: Alipay, Apple Pay, Google Pay, PayPal, Paytm and WeChat Pay Source: FIS Worldpay Global Payments Report, 2022 %total transaction value by payment method %total transaction value by payment method 5 Copyright © 2022 by Boston Consulting Group. All rights reserved. Social media usage boomed in China, nearing full saturation of internet users, while cooling in the US 2010 2012 2014 2016 2018 2020 2022 90 80 70 0 100 US 95% 69% X Axis 57% 70% 61% 64% 68% 66% 72% 74% 94% 88% 64% 93% 67% 61% China 98% 98% 74% 71% 97% 69% 70% 74% 73% 70% % of internet users using social networks Source: eMarketer, Insider Intelligence Inc.; BCG analysis 6 Copyright © 2022 by Boston Consulting Group. All rights reserved. Alibaba 11.11/Singles' Day GMV has exceeded the U.S.' biggest online shopping days since 2013 0.9 1.5 2.4 4.2 7.2 10.4 11.2 4.3 5.3 6.4 7.5 8.7 14.5 17.8 21.0 24.9 24.7 3.1 5.7 9.3 14.3 17.8 25.3 30.8 38.4 74.1 84.5 2013 2012 2014 2019 2015 2018 2016 2017 2021 2020 Amazon Prime Day Alibaba 11.11 Thanksgiving, Black Friday, and Cyber Monday Note: All values in USD billions Source: Alizila ; Adobe Marketing Cloud; Internet Retailer Gross merchandise volume ($B USD) Copyright © 2022 by Boston Consulting Group. All rights reserved. 7 Chinese firms proactively invest & drive digital transformation 59 57 56 47 43 34 29 29 21 46 50 47 33 29 30 37 34 Edge computing AI/machine learning Internet of things Blockchain Serverless computing Containers 5G AR, VR or mixed reality 3D printing Emerging technologies firms investing in Base: 317 services decision - makers in China; 2,140 services decision - makers in Australia, Canada, France, Germany, India, the UK, and the US Source: Forrester Analytics Global Business Technographics® Business And Technology Services Survey, China Tech Market Outlook, 2021 - 2022 China Rest of the