[双语字幕] Tencent SY Lau in P&G Signal 2017: Digital China, what's now and next

A very good afternoon, ladies and gentlemen. It is very, very challenging for any speaker to be given the slot to speak right after a heavy lunch. No, no such predicament has got nothing to do with the subject matter that we're going to be deliberating upon. It's just simply by logic, not intelligence. Now it's even more challenging, I suspect, for a company with 18 years of age trying to share a thing or two with a company that is 188 years of age, that is about to celebrate your birthday right after lunch. Well, I think that goes beyond biology and intelligence. It is artificial intelligence. Well, honestly, guys, no puns intended. It is an amazing accomplishment. You don't have many companies around the world that have been around for that many years, 188 years. Birthday, if I could have more time, I would sing you a happy birthday myself right now from the laser. Now let me begin by saying that it's such a great honor for me, my team, and of course our partners, Procter & Gamble from China, to be present over here to share a thing or two about a story of Tencent now. In comparison to Procter & Gamble, Tencent is still a young child. I mean, 18 years old. In your country, in the U.S., I guess you're not even allowed to buy beer again, you know, 18 years of ridicule, right? So we are kind of actually stepping into a phase of life, if you like, that we call the coming-of-age event. Last year we had our own ceremony of the 18 years of birthday. Now a bit of myself: I have been privileged to be given the opportunity to be part of this crusading team of Tencent for 18 years, and I have had the chance to be part of the management team for the last 11 years. Now, throughout the entire crusade with Tencent on a rail, the very focal point of what drove our ability to grow and sort of became a resistance to disruptions of your life was nothing more than undivided focus on user experience. Whoa, that sounds very familiar, because that's exactly what you guys are trying to achieve in your world. So that basically means that I think we have a lot in common, and there's so much exploration going forward, and there's so much inspiration that we are looking from one another to move forward. Okay, now I'm going to quickly do a brief introduction of how we came into being, Tencent, and where we are today. Public records would suggest that today we are the tenth largest company in the world with regards to market cap, and I believe that history would one day judge us, or rather recognize us, that the Tencent phenomenon rise in the ranking through the years is actually a direct correlation of that rapid digitalization of Chinese people's life within the industry. Now, just like anything in life, I suspect there's really no direct causal relationship one way or another within such numbers. It was more like a perfect storm given the kind of network effect that was slowly taking place over the past 10 or 18 years, two decades. It might seem a long time, but you guys have been 180 years old, and what we have done over the last two decades, I guess with many other entrepreneurs in China, in fact later on three speakers after me, you would have a young chap who actually works with Tencent and some founder of his own company, and think about a product that commands a monthly active users of 35 million people. Just working like, you gotta listen to him later, right? So it was the entrepreneurship that there have been many, many of us who have been diligently working our days in an era of shaping and redefining that digital lifestyle of our audience in China. Now, to joke a little bit, we used to, you know, our HP per hour, we use a signal song. I'm sure you know about this song which we talked about, you know, "We Built This City." My god, you are all, I haven't started, right? So come on, "We Built This City, We Built This City." We see this is where you're wrong, because in China we didn't build the city of rock and rolls, we built this city with ones and zeros. Well, the word today, in fact, every single one of all our audience in China, hundreds of millions of them, is literally walking around with ones and zeros, a mobile in the head. And the world today probably knows our company Tencent more as a WeChat company, if you like, but that's not surprising because if you want to look at the combined monthly active users user base of ours, we have WeChat and Weixin combined together, that's hitting 938 million of monthly active users. The total number of the entire internet population in China is just about 731 million. You can see on a board. But Tencent, I would really love you to understand that Tencent actually goes beyond just being a WeChat company. And according to Mary Meeker, one of our greatest legends that we have true respect upon within our industry, Mary Meeker's Internet Report of 2016 clearly stated that Tencent represents more than 50% of the entire mobile internet traffic or usage in China, and larger than the entire market share of all the competitors combined. Now you see, this is where things get really interesting. We move on from "We Built This City" from rock and roll, now we talk about Star Wars, right? Now this is where, when we talk about Star Wars to a newcomer who has got no prior knowledge about the entire franchise, I mean, how do you explain the of widows and Skywalkers, you know, and what happened prior to reach here, and how did WeChat become like 938 million monthly active users in just under six years, and what happened prior to that, the sequence in the prequels in order? Well, I guess this chart will probably explain that in a much easier manner. Recorded Genesis of Tencent. To cut a very long story short, far, far away from the galaxy now, our very first product in the marketplace was what we call QQ, and that was back in 1999. And before that, we have rejected. Tencent has been proactively, continuously reshaping the lifestyles of the Chinese people. And today, Tencent as a company, we focus on two key words that matter most to us: one, connector, becoming a connector of a society, and second, the content. As a connector, Tencent now provides a wide range of services to almost every aspect of our Chinese digital lifestyle. And as a content provider, it's important that having built that sort of an infrastructure digitally by connecting people, there was just a beginning. And by the way, today nobody just thought about connecting with the people, people about connecting people with machines, with web services, and so on. So what's more crucial for us then was to help create and instill a sort of a macro environment, if you like, where great talent or great content for those various tangible, emotional, and spiritual needs of the Chinese audience. Does that make sense? It's very P&G, you know, those days when I use the word "brief," we talk about one-page brief, emotional, you know, all tears, you know, one-page brief, frame-by-frame objectives and all that. You know, those were the days. Well, you haven't moved on. My goodness, I used to give a brief to your agency, one page, whereby you do like point five, seven, six. Maybe today, you know, you know, machine can do that today. You know, well, try this. This is so fun. China today, China today is moving at such a great speed, right, and where things can really change within an instance. And you know about it, for every single success story, there are probably thousands or hundreds of untold failures. And these days, even the most well-established businesses are not immune to disruption. Now, many have spoken about how internet companies such as us have actually disrupted the traditional industries, and I'm not referring to those maybe below 100 years old, you know. Well, and in fact, many people actually label us as a villain that have stolen the cheese from the table. Goodness me, we don't even eat cheese in China, you know. But having said that, even disruptors can be disrupted. Now, we have our very own sets of challenges or nightmares on the iron streets in whatever straits that we have been in in China. And there are many crises or situations for about 11 years I've been in the company. Oh boy, I have a lot. Thanks to this is here in shadow, here in shoulder. My goodness, can rejoice and order. I use a part of my hair now. What are the challenges as a company such as a technological company? What do we face? For example, the rapid technological advancement that were taking place within those individual product categories that we chose to compete upon. And you actually could see from the chart that we have shown with you yourself, we literally present in almost every sort of industry that we are in now. Over the years, trying to tame that demands of the ongoing digital transformations. You know, sometimes consumers, they are just like a huge, got to be very careful. Backwards, consumers like you, persons with great desire. The more you feed, the more they wanted. And then you know that sort of an up-tent demand and breed and so forth, search for higher qualities of life, as I noted. And we just have to keep up. There was once a point in time whereby we were leading the footsteps, but there comes a time whereby when during their footsteps about what desire and command or demand has stepped up to exactly where you are today, then that's where you'll be disrupted. And what about a disappearing demographic division that brought about compounded financial base within the country? Now, all these challenges that I've mentioned just now, they are both clear and present danger, and of course tectonic in scope and nature. Now, that all sounds very, very daunting, doesn't it? Because it is. This is the real facts of how a company became the tenth largest in the world just within 18 years. Now, speaking of the veterans of one of the veterans of Chinese internet company, one of the most important things that our have learned with my team has simply been this: we are living in an era where crisis and disruptions are no longer to be considered as unknown. You know, this crisis is a routine, and disruptions happen to be the normal. Well, we, to use a figure of speech if you like, had to learn to replace the engine while piloting the plane, which requires lots of courage, wisdom, effort, and of course the elements of luck in China does help a lot. So probably maybe spend the next couple of moments in trying to share with you the five key elements or the core, the five key words that have kind of defined who we have been and actually help us weather the various types of stormy sea that we have actually gone through through the years of our existence. Now, such concepts have become so ingrained in our culture today, and it's very important to all success. We just simply refer to them as the actions of Tencent. The very first key word that comes to my mind is actually technology. Voila, isn't that surprising to you? I mean, especially since we're a technology company in that sense, and we are stating the obvious. Well, Tencent's annual staff meeting last year, our beloved founder, Pony Ma, has said it: we would have to transform ourselves from an internet company to one that's actually internet-enabled technology company. He made it clear that the source of our future competitiveness would lie in our ability to create, to capture, and to capitalize on the values of advanced technology. And this is coming from a technological company. Now, the implementation plans often actually cause the leadership team really restless sleepless nights in China, because we saw such changes as critical to the very survival of even us as a tech company. And why is it? Simply because when we are within that tech circle, I'm sure we have friends from Facebook, YouTube, and all that, you probably have the same pain that I'm talking about right now. We realize that technology is so fundamental to everything that is happening and that will happen in the near future. Now, we all heard about technology buzzwords such as artificial intelligence, deep learning, virtual reality, and augmented reality. Now, I heard from my colleagues that there was one of the speakers in the morning they will say that you know when the whole world's talking about certain things, it is so bad and then very likely it will be like a crap. But our opinions are very different in this respect. Let me assure you that all these words that you are seeing right now, they are not buzzwords as if like they are fashion from Milan, because these are the real thing. They are actually making their headways throughout China. China as a country today is the second largest in the world in terms of investment in artificial intelligence. As of last year, there are more than 170 cases of investment in China alone. And of course, the U.S. as a country far exceeds the size of capital investment in AI, but China is actually number two, following very closely to the footsteps of the U.S. Now, we have actually taken many, many baby steps with regards to incorporating some of such advanced technology into our various product offering services. And artificial intelligence for that matter is actually far-reaching in terms of impacts of all the previous types of industry revolution implications that we have seen. And it actually has reshaped the relationships between people and relationship between people and the way they are living today. And today in China, we are actually applying AI in lots of scenarios to create greater value for our users. And some of these scenarios may actually surprise you.

You realize how much our appearance changes with time. We're often unrecognizable to someone who hasn't seen us in 5, 10, or 20 years. This is particularly relevant in the case of a lost or abducted child, where the years change them into someone totally different in the face from the dated photos whose family use in their desperate search. But QQ Alert is here to help. Equipped with facial recognition technology based on convolutional neural networks and facial feature extraction, we have conducted billions of trials using a 10 million sample database. Trained by deep learning analysis of the patterns of facial changes, its AI system is able to automatically integrate the traces of time and match a child with the adult he or she grows into with a 99.8% accuracy. Now, changes are no longer challenges. No matter how long your child's been missing, simply upload his or her photos to our cloud. QQ Alert is able to process a huge database at a rate of 50 million photos per second, instantly presenting results that can bring the lost child home. So far, QQ Alert has facilitated 286 rescues, reuniting 176 families. Technology is changing the world and helping that which was lost to be found. Though we cannot stop time, with ever-advancing technology we can shorten the time it takes to bring the lost home. QQ Alert: hope never dies.

You've been very kind. You see, when technology has been put in the right place, right time, and of course more importantly for the greater good of humanity, the impact that you create is actually far more exciting than just having a job. Now, the second key phrase that matters to us over the past 18 years is this key word: cross-pollination. Cross-pollination refers to the dissemination of technology and information or knowledge between multiple industries. Now, most of you here, most of us here in fact, are pretty familiar with the kinds of IoT, the Internet of Things. Now, since the internet was introduced as a concept about two decades ago, starting from one single tool within the industry to now unleashing never-seen potential within various types of industries. Now, today it is noted that in China, the digital economy contribution towards the overall GDP is actually 30.61% of the entire GDP. Oh, that's a huge achievement, because if you look at numbers just two or three years back, it was certainly much lower than that. Now, how did China leapfrog into such a digitalized stage? Obviously, the national policy of Internet Plus did help a lot. And why is that? Because with the policy of Internet Plus, some of the traditional industries such as finance, pharmaceutical, education, and you name it, they have actually utilized the internet to rejuvenate their business models, their industries, and the ecosystem, and then stimulate and define an unfound growth from before. Now, such phenomenal growth in GDP was largely attributable to entrepreneurship due to public policy and of course the Internet Plus strategy. That is actually one of the biggest things that have happened in the past five years. Now, Pony Ma says that the opportunity to create something new often actually occurs when two diverse types of business sectors converge with technology, with new technology, and that's where this so-called new blue ocean is taking place. Now, I think this is some of the words that really were taking in, because in the past, the MBA school or the business school that we used to attend talked about horizontal integrations and all that. But today, with internet, there's no lining anymore within any industry divide. Well, if Pony wasn't convincing enough, what about good ol' Adam Smith, 1776? This good old Scottish man, you know, not sure where he was drinking whiskey or not, he was talking about the invisible hand of the market. The invisible hands of the market, the classic publications of Revelation, 1776. What on earth? To me, the invisible hand of the market literally have finally found ways to create real tangible economic values in a society through mobility, through cloud computing, data and analytics, and of course Internet of Things. So those tools that I have just mentioned there, they blur the lines of demarcations of various industry, and therefore they show no hindrance to the space of imagination. You know, the greatest things on earth is actually imagination and determination, because when you have that, everything seems to be possible. You can build the city the way you wanted it to be. Now, as a result of that, that's the reason why we have seen such a high spirit of entrepreneurship in China over the past decades. The implications to many companies, mainly industry, Tencent included, is rather profound. To begin with, you may not realize it, today we are not only hiring engineers, we have to start recruiting talents from multiple types of industries: banking and finance, agriculture, pharmaceutical and medicine, entertainment, and automobile industry, just to name a few. So these are the various types of university. It really reminds me of this visit to Star Trek Enterprise, where you have different talents. You know, you know, I have hair, so I'm not coming to Spock's innocence right now. Having to decide what to do, having to decide what to be directly involved in, and what sort of a strategic role we should take as a management or leadership of the company with regards to fresh opportunities that come day in, day out, would be the next challenge of our management wisdom. Now, that then brings us to the third essential key I would love to share with you today, and that word is simply platform. Tencent today is a multiple platform company that exists to connect, and for a platform is meant to maximize user value through connect abilities. Now, our platform is not an economic mode of your life that is defensive in nature. In effect, if one doesn't really truly appreciate the actions and the real meanings of platform wholeheartedly, you will be difficult to talk about co-creating values for any ecosystem. The value of a platform is not to save oneself, rather to be inclusive and to create value for users, your developers, and other partners within that ecosystem. And in a nutshell, a platform really exists to bring benefits to areas beyond the castle that you have just built for yourself. So Tencent back in 2011, we had our open platform strategy. I remember when I was in HP's Professor Hill would have mentioned it when I was doing my ANP then. Back then, I didn't understand the concept of platform, but today, apparently this open platform, open systems platform that we openly share the traffic of Tencent's platform with other bodies of the partners. Understand that for companies such as us, when we share traffic of our users, it basically means we share potential values, we share our clients of potential futures, their values, our revenues, with our competitors and with any developers in the marketplace. And not only that, we even provided financial support for all these partners to build a common well, if you like, that belongs to all of us. This is how we have been working on building a mega platform for a company way before the days of people talking about the concepts of O2O. Now, going forward, we are determined to facilitate the exchange of goods, exchange of services, and more importantly the exchange of social currency, to empower more value creations from our partners. Now, to accomplish that, we therefore launch this thing that we call Tencent Cloud, which we believe that will help our partners and customers and our clients to better develop their very own strengths within the business verticals. Cisco, in a very recent report, has mentioned that within the next five years, the biggest amount of traffic that is going to be happening in the space of internet is going to be from machine to machine, M2M. Because Cisco has never been wrong in their projections in the future, margin areas like less than 1%. Now, let's take a pause here. Just guess how many percentage of those data will be coming from China. I think it's going to be quite a lot, because this country happens to generate the most amount of data that we have seen today. We have like billions of visuals being uploaded, billions of petabytes and all that, big, big, big data uploaded in WeChat and in visuals and in order, happening within the space of China. Now, cloud computing will be the very first step for any organization in China to aspire to unleash their ambition in the areas of ecosystem nurturing or transforming into a knowledge-driven and knowledge-based intellectual company. Now, the next key word that might be interesting to you is actually what we call user experience. If you ask today any of our 40,000 employees in China that which might be the single most important keyword to them, and I bet with my last penny, they will probably say user experience. And maybe the second word would be something else, yes, the options. Now, we believe that this is something that Procter & Gamble and Tencent have in common, because both our companies we talk about the same thing: this philosophy of consumer first, right? You look at it, look at the chart yourself. I think this is where we are very much in tune together. Now, from the days of our inception, user experience has been the fundamental core values of our company. As we evolved, we realized that this devotion to excellent user experience could only be created by unwavering commitment and devotion to craftsmanship. And in order to illustrate this example, I'm going to bring back WeChat as an example, where we should actually cover more than 98% of the total internet market in China today in under six years. Now, let's watch a video to really learn more about how people's lifestyles in China with regards to WeChat.

Well, how were we able to achieve such magnificent success, with 938 million people spending 90 minutes every day on such a big product? You say true craftsmanship, by always putting consumer needs first as your very first priority. In our early days of shipping other products, engineers worked 24 hours a day, seven days a week, and multiple shipments would be sent within a night. And all this is actually in an effort to win the affections of our users. Now, such craftsmanship mindset or efforts finally paid off. Like I said, last year, 900 over million people, or half of them, 50% of these people actually spend more than 90 minutes per day with this product. Now, some might think that actually when you are dead, because you can really innovate and evolve even further, and some 90 days actually not possible. But I don't think Procter & Gamble or Tencent think in such a manner. Just as we thought that there was the best part of what I could be, and year in year 2016, the founding teams of WeChat they announced to the world what they call the grand principle, defining that what we believe it takes to make a product even greater, even better. And according to some, Chef Long Island, as we commonly know the founder of WeChat, a good product is defined as one that's being used and then left. What do we mean by that? It basically means the people connotation of this is that as a responsible company, we shouldn't think of only our self-interest, and which means we should not invent unnecessary ways for people to spend or waste their time on our platform. And I believe that the only benchmark for a great product should be that people that use it really want to use it for what they wanted, just that. There should be the way. Now, in order to achieve such efficiency, there will be a lot of negotiations happening top to bottom. I know that, and you know the underlying philosophy is less is more. And that explains why some of our users are saying actually in the space of WeChat, we don't have a lot of advertising load, because every title does bring us revenue, but that's not the reason why this product exists in the first place. So the bigger the company, the greater the temptation for us to allow executives to incorporate more features under the umbrella, or the worst, under the pretext of diversity of like services. People always coming with keys, four-digit words, but if they really see that what we really needed to do is less is more, that's the most important thing. Now, finally, the last keyword, if there was one more keyword that was important to us, is what we love to call integrity. And personally, I have spent more than half of my career in one single company, largely because of this single word. Now, your character is always far more important than your achievements or even your reputation. What a great word from legendary John Wooden. Now, what's more, the integrity of a company allows us to truly appreciate and understand the word responsibilities, because there are things that thou shalt do and thou shalt not do, and not thou shalt do and thou shalt not get caught, you know, right? Now, moving on, they, you have, you love, my goodness, I hope you are doing something I do want to do now. They are the five key words that we thought that have actually shaped us for the past 18 years, and I believe they will continue to make us who we are into the future. And I hope those are helpful. Now, when I reflect upon the past decades or so of my time within the company, I'm increasingly aware that this was not just a simple journey of how a company came to be. Rather, it was actually about how a digital nation was transformed, a digital society reformed, and more importantly, the birth of a whole new digital infrastructure. Now, that new digital operations reality in China would continue to have a profound impact on every industry, on every company, and every dream maker who wanted to be part of this exciting journey. Now, going forward, what else do we expect from China? Well, that journey just started. It will not be as smooth sailing if companies or industries fail to realize that their China strategy has to be evaluated from the point of view of a digital economy. And if I make the new ABCs of how do we approach China digital, it's not for the A. A for artificial intelligence. You have heard about this many, many times. The AI revolution will create new organization and models, new product formats, new production methods that lead to redefinitions of how people consume food, wash your hair, and etc. Now, it will ultimately disrupt and restructure the entire ecosystem that we are familiar with today. And let's just say that China will definitely not be left behind, because this country under the leadership of a government they aspire to be one of the most leading AI nations in the world. B, you know this before, Big Data. Yes, we say that oil was the last currency of the last century, and today data is a new strategic competitive resource for a digital economy. Now, why is this being raised again? Because I cannot emphasize the importance of this from the point of view of professional and academia, if you like. By default, China would be the single largest market that would produce the largest amount of data going forward. And in the era of Big Data, a key developmental strategy for all companies will be to break the industry barriers, boundaries, to create some sort of across-sector cooperation platforms. How do you operate your property by switching your data in order where big data is actually shared in a very, very win-win scenario? And to do this, you need cloud computing. C. No, Pony has again said that the future of great companies going forward would be one that knows how to master the processing of big data on the cloud with artificial intelligence. That means the cloud would be the most important infrastructure of the digital economy in China. So it suffices to say that in the past, we used to measure the state of the GDP of a company, economy of a country with the consumption of electricity. But now, people are going to look at it from the so-called consumption of the cloud. Now, secondly, it also means that the cloud is also the power source to drive industry-wide changes. Cloud computing facilitates industry-level changes and upgrades, and therefore will further facilitate technological development. And finally, the cloud will be the main platform for new types of social management. Today, we are not just talking about brand building, whether by social engagement, efficient detail, and new types of social management can be utilized through digital upgrades of the cloud, forming a highly connected interconnectivity network that can be managed and even expected to control or empower life. So far from simple, those are the ABCs of navigating the future of doing business in China. Welcome to China, and I believe that they will be keys who are willing formula in the years to come. In closing, let me just say that in the digital economy, the platforms and ecosystems are nothing less than the foundations of a new value creation, and this is where the new playing field would be. And for Tencent, Procter & Gamble is a great strategic partner to us and respectable comrades. There's so much that we could learn together, we could actually execute together, and of course we could accomplish together. And I have no doubt that in the next decades or so, hopefully we don't have to wait that long, Tencent will together with Procter & Gamble connect more consumers, empower more businesses, and finally, more importantly, become the leaders of aspiration and innovation within our respective fields. Great audience, thank you so much.