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Confidential Property of Schneider Electric |

China Investor CallGrowing in a fast-moving continent

September 25, 2017


All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors

and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed

description of these factors and uncertainties, please refer to the section “Risk Factors” in our Annual Registration Document (which is available on

www.schneider-electric.com). Schneider Electric undertakes no obligation to publicly update or revise any of these forward-looking statements.

This presentation includes information pertaining to our markets and our competitive positions therein. Such information is based on market data

and our actual revenues in those markets for the relevant periods. We obtained this market information from various third party sources (industry

publications, surveys and forecasts) and our own internal estimates. We have not independently verified these third party sources and cannot

guarantee their accuracy or completeness and our internal surveys and estimates have not been verified by independent experts or other

independent sources.

Disclaimer

Agenda


1. China moving to new cycle

2. Healthy China footprint and history

3. SE China growth strategies

4. Key takeaways


China is a continent, not one dimensional

0

5 000

10 000

15 000

19

90

19

95

20

00

20

05

20

10

20

15

20

20

Political stability and continuity in leadership are key

characteristics, despite short-term adjustments

China: A continent by scale and diversity

GDP of Top 3

provinces2

Saudi

Arabia

Nigeria

Belgium

Pakistan

New

Zealand

Portugal

SwedenArgentina

Tanzania Ireland

Jordan

Afghanistan

Qatar

Peru

Egypt

Bangladesh

Finland

Luxembourg

South

Africa

Iran

Colombia

Above $400bn

Between $200bn ~ $400bn

Below $200bn

2016 GDP (Nominal), USD2

GDP of Top 5

provinces2

China provincial GDP vs. world GDP

(2016 GDP Nominal)1

China GDP, Billion USD2

2010: Surpassed

Japan (nominal)

2014:

surpassed US (PPP)

2001:

China joins WTO

North-East:

Heavy Industries

South-East:

Light Industries &

Service Sectors

Middle-West:

Resource focused /

mixture

Japan Germany

≈≈

1. HSBC China Research report, 2016 Provincial Government Report, Top 5 provinces: Guangdong, Jiangsu, Shandong, Zhejiang, Henan

2. National State Statistics Bureau, IMF, World Bank 2016 report


4 growth priorities anchor the new cycle, after 3 years of structural adjustment

Structural changes / new

foundation

Innovation + digitization

Supply side reform

China + global game

Green technologies

Digital + global talent

Energy Agenda 2030

One Belt One RoadSmart Made-in-China 2025

Internet +

4 future growth engines underpinned by

innovation, speed and scale

Traditional key drivers /

cycles

Construction / building

Infrastructure

OEM / light industries

Heavy industries

Agenda





4. Key takeaways

1. MNC: Multi National Corporation


Celebrating our 30-year presence in China

2016 LinkedIn Top

Attractors

The Most Respected

Companies Of China

2016 China Top 100

Green Companies

2016 the Most

Influential Brand

2016 China Best

Employers

Suzhou

Shanghai

Guangzhou

Shenzhen

Beijing

Chengdu

Urumqi

Wuhan

Xi’an

Tianjin

Nationwide business reach and local capability

• ~26,000 Employees (incl.Delixi)

• 1 Headquarter in Beijing,

5 branches, 40 Regional Offices

• 1 Customer Care Center located

in Beijing and Wuhan

• 26 Production Facilities

• 8 Distribution Centers

• 3 R&D Centers

• 1,000+ R&D Engineers

• 1 Energy University

• 1,000+ Local Suppliers

Head Office

Regional Office

Production Facility

R&D Center

Distribution Center

Customer Care Center

Local management team

and empowerment

Customer centricity

Local ecosystem play

Highly recognized

“local” MNC1

Deeply rooted in China

The Standing Member of CAS


We have built solid foundations

3000+ PB2700+ GD1

< 5 cities

2006

100+ cities

2016

~300 cities

Largest partner network Broad & deep geo coverage Tailored supply chain

• 26 plants, 8 distribution

centers

• >90% offers sold

manufactured locally

• EcoStruxure deployment in

our factories, reference of lean

manufacturing

• Solid local ecosystem of

~1,000 suppliers, 89% parts

from local suppliers

~2x

next follower

~3x

next follower

• Low Voltage example

4000+ POS

Significant “share of wallet”

in top distributors

• Retail example

1. GD = general distributor; PB = panel builder

2. C4C = China for China

Enabled by strong employee morale & customer-centric mindset

5 ≤ cities < 10 10 ≤cities

Agile C4C2 capability

50+Edison Technical Experts

in China

800+Patents over 2011-2016

3,23,7

Transformation over past 10 years delivered a resilient modelA robust machine leveraging global scale and local agility that proved resilient during tough 2-year period


Growth End Market Mix Footprint

We are ready for a new growth phase

Geo mix to adapt to China growth China sales growth (€Bn) Diversified our end market exposure

Central & West

10%

Coast90%

Ship-out

(One Belt One Road)

5%

Central

& West

25%

Coast70%

2006

2016

% of Group 6.3% 13.7% 14.4%

SE China incl. Delixi

2006 2016

Buildings Infrastructure

Industry Data center

2006 20162011

~4x

0.8

Decline in 2015, with strong rebound since H2

2016 and +12% in H1 2017


Leading positions across our markets supported by secular growth drivers

Secure Power

TOP 3

1. Selected product lines based on China business

Market Share1

Low Voltage

NO.1

Medium Voltage

TOP 3

Industry Automation

TOP 3

Opportunity to further consolidate

our leadership in Low Voltage

Well positioned to benefit from automation push

in traditional & new segments

• Broaden geographic coverage (tier 3 and tier 4 cities) to

benefit from further urbanization

• Grow with infrastructure buildup and consumer driven

markets (Made in China 2025)

• Digital application scale-up

• From Capex-driven to Capex + Opex

• China leading the path to a more electric world

• Favorable initiatives: Made in China 2025, OBOR

• Strengthen our business with our strong OEM hold

• Explore opportunity with Digitalization & IIOT

• Capture Opex opportunity in traditional segments

• Focus on growth segments, e.g. Water, Electronic, F&B,

Infrastructure…

Agenda





4. Key takeaways

Energy Agenda 2030 One Belt One RoadSmart Made-in-

China 2025Internet +

3 major strategic directions to drive growth, withLeveraging the country’s future growth engines



Maximize full potential

with more C4C1 and new

business models

Expand into growth

segments

Boost service

businesses

Accelerate digital

transformation

with agility

Strengthen the core (Capex) Capex to Opex Digital

Opportunity

Strength

Strategic

Transformation

Digital mindset TalentLocal agilitySegment

competencies

Winning targeted growth segments with complete offersNew segment competence, full life-cycle management, new business models, strong cross-sell across businesses


Capture One Belt One Road opportunitiesGood penetration in growth segments

1. EPC = Engineering, procurement and construction

Invest in core process knowhow and ensure local agility to grow in our target segments

• Strategic alliance with local

partnership in win-win modelDatacenter

Metro

Healthcare

• Full portfolio play as a

competitive advantage

• The deployment of

EcoStruxure Power in digital

hospital

Leverage Global

Footprint

Strategic Partnership

w/ China Key EPC1

Optimized Segment

Application

Key wins

• Africa: Urban power distribution network in

Senegal

• Middle East: Oil field project in Iraq

• Asia Pacific: Saipan hotel project in

compliance with the US standard

• South America: Cement project in Bolivia

Key segment applications

15+ CountriesEPC1 Key Account coverage

Solid double-digit growth of EPC1 ship-out order

Metro in a major

city in South

China

A nationwide

datacenter builder

and operator

A large hospital in

East China


Business model innovationAgile C4C1 capability


Strengthen the core with more C4C and new business models

OV/UV Protection

Device (LV) • Drive new China standard

Integrated Rack

System (Secure

Power)

• Enable digital connectivity for

EcoStruxure Plant

• Realize Open Datacenter for China

web giants

• Reduce time to market and deliver

cost saving

One-stop shopping at Mechanical & Electrical

marketplace for long-tail and diffuse market

• Dedicated offers

• 1-stop shop in 200+ cities, ~2k points of sales

• 2-3 time sales growth since 2014

Leverage local ecosystem play to accelerate growth

• Facilitate technical collaboration with universities and local

technology partners to shorten time to market

• Enhance access to market via go-to-market alliance

• Explore new business models through local partnership

Digital offerCommunication

module

(Industry)

Automatic

Transfer Switch

(LV)

Application focused

China standard driven

Cost advantage


Driven by digital applicationsFull lifecycle coverage

We focus on coverage and digital to drive Opex businesses across portfolio

• Expand Opex opportunities from the perspectives of

customer full lifecycle management

• Provide featured and differentiated service plans to

support customer operational excellence

• Segment focus, to transform opportunity based sales

model to customer based sales model

Shanghai Metro

• Perform cloud-based big data analysis and turn

intelligence into actionable advices to achieve energy

efficiency

• New way of Opex business through EcoStruxure

deployment

• IT + OT approach to build up differentiation

Building Advisor in an Asian international airport


…require new business modelsChina specific rules and ecosystem…

1. PRM = partner relationship management 2. POS = point of sales 3. MRO = maintenance, repair and operations

Accelerate digital transformation in a fast moving environment

New regulations

with Chinese

flavor

New local

standards,

global impact

Demanding

customers

InfluenceEnd to end

capabilitySpeed

• ~100 IIOT1

standards

established since

2015

• Driven by local

institutions and

players

• Cyber Security Law

effective since Jun.

2017

• Certificates required

for IOT and industry

control (PLC, DCS2…)

• "Mobile first"

defines local

innovation

• Optimum quality

and experience but

at highly

competitive price

• Ranked Top 5 electrical brand in key platforms during

on-line festivals

• Consumer2Factory via e-Commerce

• 60%+ growth Sales (2017H1)

• Diversified PRM1 target at

• Specifier, electrician, IT channel, POS2…

• ~50k registered users

• Increased Web traffic and experience

improvement: more satisfaction score

YTD

• Mobile first

• leverage WeChat

• Integrate with IT backend

Partner engagement by partner type / model

B2C e-Commerce with agility and local relevance

B2B - exploring new business model

• Acquired 1st hand end customer insights

(MRO3 end users, small panel builder / small OEM, retailers)

Invest in EcoStruxure scale-up with dedicated resources and C4C1

Application and architecture competence as well as C4C local agility are key success factors


Early winsEcoStruxure deployment in China


Connected Products

Edge Control

Apps, Analytics & Services

End to E

nd C

ybers

ecuri

ty

Clo

ud a

nd/o

r O

n P

rem

ise

GridBuilding Data Center Industry

• Dedicated Architect / Application experts

• Specialized business development teams

• Dedicated EcoStruxure C4C1 R&D

Example 1: Machine Advisor for OEM customers

• Agility and speed: 4 months to go live

• Early involvement of local partners and

end users

• OEM pilot customers from multiple

segments

Example 2: A Beijing landmark building

• Landmark green building: energy

saving >30%, carbon emission reduced

by >40%.

• Best-in-class cloud-based energy

management system with C4C1

competence

Agenda





4. Key takeaways

Key takeawaysLocal agility and relevance by leveraging global capabilities for sustained leadership


Continued growth driver for the Group over the long term

Our key technologies of Energy Management (driven by Low Voltage) and Industrial automation

well positioned for growth in the future

We are repositioning the business to growing sectors in line with focus of economic policies

We have a clear strategy to grow – leadership in core segment applications, acceleration in OPEX

and digital through EcoStruxure – to drive differentiation while acting with agility

China Investor Call - schneider- · PDF file2016 China Top 100 Green Companies 2016 the Most...

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