7 DEADLY SINS OF THE INTERNET IN BRAZIL

YAN DI President of CEO of Baidu Brasil

THE APP BOOM IS OVER.

WE ARE NOT SELLING MORE SMARTPHONES. YOY smartphone shipment growth dives into less than 1%.

Top 5 smartphone vendors’ shipments & YOY growth, Q2 2016 preliminary data (units in millions)

Vendor 2Q16 shipment volumes

2Q15 shipment volumes

YOY change

Samsung 77.0 73.0 5.5%

Apple 40.4 47.5 -15%

Huawei 32.1 29.6 8.4%

OPPO 22.6 9.6 136.6%

Vivo 16.4 9.1 80.2%

Others 154.8 173.6 -10.8%

Total 343.3 342.4 0.3%

Source: IDC

WE ARE NOT USING MORE APPS. The average American smartphone user downloads <1 app per month.

Average number of smartphone apps used per day: 1-5

YOU DO NOT KNOW THE COST TO DISTRIBUTE No one can survive by organic growth and

it costs USD 0.5-1.2 to distribute.

70% OF THE APPS CAN NOT SURVIVE EVEN THE FIRST DAY

Even you can afford USD 0.5-1.2 to distribute,

WHERE IS THE WAYOUT

WHAT IS YOUR BARRIER

THINK

LOCAL CONTENT

THINK LOCAL SERVICE

THINK

LOCAL MISTAKES

1ST SIN

IGNORE OFFLINE

WORLD’S ECONOMY TODAY IS STILL DOMINANTLY OFFLINE.

Online contributes only 2.4% to Brazil’s GDP.

ONLINE PROVIDES 2X TRAFFIC, BUT OFFLINE 10X BETTER CONVERSION IN SALES.

Wangcai O2O Marketing Platform has being tracking the performance of 1080 offline channels (TV/Mag/Outdoor…)& 2389 online channels (Social/ Landing Pages…), and found out:

2ND SIN

IGNORE HALF OF THE INTERNET

HALF OF THE INTERNET IS IN CHINA.

Among Top10 internet companies by market cap: 6 US-based 4 China-based & none European.

U$60.5B & 4489 Deals

in Total

CHINA IS WHERE MONEY IS. In 2015 venture capital deployed U$60.5B in China vs. U$68B in US

4489 deals invested in China vs. 4893 in US

Source:TechAsia

Last year mobile transactions of $235 billion, pushing China ahead of the U.S. ($231 billion). Emarketer estimates that in 2016 195MM Chinese use mobile payment vs. 37.5MM in US.

CHINA IS LEADING INNOVATION IN A DIFFERENT WAY.

Data by WSJ

26 unicorns in China’s O2O market, only.

CHINA IS LEADING INNOVATION IN A DIFFERENT WAY.

3RD SIN

FAIL TO GO THE EXTRA MILE

USER EXPERIENCE IS EVERYTHING.

Do you have the guts/thought to: • Full cash-back if not satisfied with the

services; • Free manicure/shoe shine to those

waiting in the queue; • Print customers’ photos taken on-spot

for free; • Clean your glasses while you are eating; • Buy you medicine when notice you are

sick; • Place a teddy bear for single & young

client company

A fondue restaurant chain that sells R$1.3B/year

4TH & 5TH SIN

FAKE DEMAND & NO EFFICIENCY/ INCOME BONUS

UBER MODE IS NOT ALWAYS WORKABLE. Do not go against the established user habits.

When there is no • Commercial density • Efficiency improvement • More income 2B & 2C Going against user habits can cost you money and life.

6TH SIN

NO PRICING DIFFENTIAL

FOOD DELIVERY

56

38 40

8

Cost Eficiency User Experience

Other Reason

Reason to Use

FIRST CONCERN

GROUP BUYING

Reason to Use 76.4

36.8 33.9

5.7

Cost Eficiency User Experience

Other Reason

FIRST CONCERN

FOOD DISCOUNT

Reason to Use 56

38 40

8

Cost Eficiency User Experience

Other Reason

FIRST CONCERN

Costco born 20 years later than Walmart, now world’s No.2 retailer U$110 executive-membership retention rate 91%! Average SKU gross margin 7%, >15% report to the Board;

PRICE IS IMPORTANT & USE IT WISELY. Build up your brand and scale up.

7TH SIN

NO CROSS-SECTORAL CO-OP

THE FUTURE IS CROSS-SECTORAL CO-OP Each Brazilian O2O sector is about 1% of that in China

AND ACT LIKE ONE

THANK YOU