Alibaba Group Holding Limited (HKG:9988)

Investor Day 2018

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Sep 18, 2018

Hey, welcome back, everyone. Again, I'll let everyone kind of get settled down. Now some housekeeping items before we start. Just a reminder for everyone, the next afternoon sessions will be live broadcast there. So if you can, please exit from the back two doors, if possible. So without further ado, may I introduce our Chief Executive Officer, Daniel Zhang, on stage. Thank you. Good afternoon, everyone. So it will be 2 long days, and we are going to the next the final half day. I hope you enjoy the whole time in Alibaba Campers. So in the past, I mean, one and a half days, our business leaders share with you the pictures of their individual business. Now I think it's my turn to share with you how we incorporate all this business together to form a big picture of Alibaba and how we look at today's business and future opportunity. So when we talk about Alibaba's strategy, Alibaba big picture, we always start with our mission. Our mission from day 1 in 1999 actually never changed. The vision is make it easy to do business anywhere. But at that time, in 1999, actually when we found Alibaba, the world is like Internet just came into the world. And everybody recognize the power of Internet actually will change the future. And one of the big advantage of Internet is that we can bring the whole world actually we can make the whole world transparent and flat and no boundary. But now actually we move to a new era, which is not only by leveraging the power of Internet for transparency for a flat world, but also we can empower our business, our world by digital power. So today, we are going to a digital era. So that's why 3 years ago, when I took over CEO role of Alibaba, I said to all my team, I said, today, when we look at Alibaba's vision, no change, make it easy to do this anywhere. But we have to think about the current situation, which is in a digital era. Every company, every business, every government actually think about the opportunity and the challenge of being in a digital era. So that's why we put together, I think, to it's not like to redefine, it's to evolve our mission in a new I mean, environment, in a new era. If we look at the big picture of Alibaba, we start our business, as I said, 19 years ago with our first B2B business. In this business, we said we want to help Chinese SMEs to find training opportunity via alibaba.com, our first website. All over the world. Buyers, traders all over the world, they can come into our site, alibaba.com, to find leads and find buying opportunity. So we call this as a midtown Alibaba. And over time, in 2003, we transformed to serve the customer, to build another interface, not only for enterprises, but also for consumers, which is Taobao. Everybody understand the history of Taobao. So by Taobao, while the involvement Taobao, while the evolvement of Taobao Business, we build a B2C Tmall business, we have the Chihuahua and the Fresh Sales business, so on and so forth. But if we put it as a whole, actually, it's more like we're evolving from Meet to TransX to trade at Alibaba. But now, actually, if you look at Alibaba's business as a whole, I said I always divide Alibaba Businesses into 2 types. 1 is consumer interface, consumer relevant business. The other is enterprise relevant enterprise interface and enterprise relevant business. But the key thing is these two types business are not separate 2 groups. Actually, they are one integrated piece, which is why we can serve 100 of millions of consumers in China and even around the world is because we as a platform not serve them only by ourselves. Instead, we enable, we empower the enterprises, no matter it's a multinational company, as a local young brands or SMEs or resellers, we empower them to do business on our platform to serve their serve our mutual customers. So by this method, we built an ecosystem. And in recent years, we move forward from only meat, trade to live and work, respectively. In recent years, we moved into digital contents industries. So we don't view this digital content as a separate business. Instead, we view this as expansion of our categories because all these 100 of millions of consumers, they not only need physical goods. With the change, with the upgrade of their lifestyle, they need more digital contents. They need more services. So that's the evolving of our consumer consumption category. And on the other side, we want our clients, our business partners, not only on our platform to do the trading, to do the transaction, but also they can leverage the infrastructure Alibaba build up to transform their business. So we are saying that we are going to help our clients, our partners to work on to work at Alibaba. So now this is the big picture of Alibaba Digital Economy. You can see many, many individual business in Alibaba Big Family. But if we put it into one big picture, this is it. I always use this I mean big picture to share Alibaba's strategy. We can do it within 5 minutes and we can also do it in 5 hours. But the core of this is like we start with our core commerce, and then we expand it to digital entertainment and to local services. But the fundamental infrastructure is improving and never changed, which is we start with our payment and our logistic. Then going forward, I build up our marketing platform. And all this infrastructure are powered by the physical infrastructure, the IaaS, which is the cloud. So cloud, payment and financial services, logistics, marketing platform, actually they play a very important role in integrate and connected all these different businesses. Because all these business, we don't want them to build a standalone infrastructure. Instead, they can share infrastructure with all the others. Most importantly, it's not only about the infrastructure share. Most importantly, it's about the data technology. When we view this big picture, we see this is an integrated one picture. This is integrated one business, one economy. But the core of this economy is data and data technology. As I said before, I remember I said in last year's Investor Day, today I repeat this, no change. For Alibaba, for each of these businesses showing in this big picture, commerce, service and entertainment, we don't view this as a standalone business. We viewed all these businesses as the use cases to generate data. We generate data by providing the common infra to support the business to grow. But when we get the data, we create value from the data by cloud computing, by analytics and we by AI or MI, machine intelligence, so on and so forth. And we refill the value we create from the data to the ecosystem, to this use case, make our individual business, make our partners in this individual business be stronger, so which is always tied back to our mission. So I always ask my teams, when we talk about mission, the mission is not only riding on the wall, right? Say, make it easy to do business anywhere. Why we can make people to do business easier? The answer is about data and the data technology. So that's why Alibaba is not only a vision driven company, we always tie our vision back to everyday business, back to what we do and what we not to do. So after we look at the big picture, let's move to the consumption sector. I'm sure everybody are interested in how is the future? Today, Alibaba already so big. Last year, on our core commerce platform, we generated over USD 760,000,000,000 GMV. Can you grow in the future? Can you grow even faster? So today, when we look at this pie, actually, we show you the big pie of China consumption, of China retail sales. Yes, in the past, I mean, 15 years of Taiwan Tmall history, our retail business history, for most of the time, we spend on online retail. But now, since 2 years ago, we initiated our new retail strategy. And we said to all the world clearly that we don't view online retail as a separate new world. This is an integral part of the total consumption, total retail world. So if you look at the addressable market of total consumption in China, it's about US5.3 trillion dollars And today, online retail only about $1,000,000,000,000 and over this Alibaba contributed $760,000,000,000 But if we look at the future, I think online retail continue to grow. I will share with you more metrics, I mean, in later stage. But I would say my view is that online retail continue to grow. But at the same time, all the offline retail is moving to digital. So in my world, in the future, there was no difference between online and offline. But there is some difference. There is a key difference between the digital business, digitalized business and the non digitalized business. If a business in a brake motor, their orders, their customers profile, their payment, their product settlement, they are marketing information, they are supply chain, I mean, information. All this stuff are digitalized. Actually, if you see all these brick motors, they are result of generating data, actually no different compared to a web store generated. So today, I think all of the business, all the retail business in China and in the world, no matter we call this new retail or not, we are doing the same thing. We are trying first to digitalize the brake motors so that we can generate data from customers, from product solvent, from logistics, from payment, from supply chain and the data. And then we can get a chance to understand better our business and get a chance to operate to optimize our business. So when Alibaba pursue this onlineoffline or new retail opportunities, we do it by categories. We start with our core commerce platform because this is a very, very strong user interface and customer interface, which can help our partners, our retail partners to engage with customers, to get new to acquire new customers and to manage the existing customers. And we also leverage the infrastructure of logistics. We believe if we want to move, I mean, the Finnecom Goods more efficiently, we need a more data driven logistics network to be an infrastructure. But in between, we have to pursue the opportunity by consumption categories. So here we listed, I mean, 8 vertical categories and 8 vertical opportunities we are pursuing. And for each of these opportunities, actually, we try new retail initiatives by some of the vehicle by our vehicles. Some vehicles are self incubated, self developed in house in Alibaba core business, some via our investment. Tmall actually serve as a flagship in new retail initiatives. Actually today, we position Tmall not only as an online marketplace for brands and retailers. Instead, we position Tmall as an engine to help our brand partner and retail partner to win a big success in their digital transformation. So today, when we talk about Tmall, we not only talk about their web stores, we are talking about can we provide value not only to their web stores but also to their brick motor stores, not only to their sales but also even to their product innovation as Jack, I mean, shared with you yesterday. And on top of Tmall, so for Tmall, if we accomplish this, this will become a more of more and to integrate all the brake motors on the street and online operation to be one big operation. For other categories like consumer electronics, like fashion, FMCG, home decorations on and so forth, we use different vehicles to pursue these opportunities like Sun Art, which is a very important investment for Alibaba. After our investment, we worked closely with Sun and our team to help our partner, our retail partner, first to digitalize their store operation. If then we help them to extend their reach of the store service. So after this innovation, the physical store not only can serve the villagers in store, but also can extend their reach to the people living in near around the store within 3 kilometers. So we saw this is a 3 kilometers ideal life circle, life community. So for each of these categories, we are doing these new retail initiatives. And but key thing is like we share a big user interface, which is our Taobao today is mobile, maybe tomorrow is a different interface. But today is mobile, is a mobile Taobao mobile co commerce platform. And then this year, we have actually, we had a very important change in our logistics infrastructure. Last year, if we talk about this, I mean, topic, we only talk about Cainiao. But now actually we evolve. We think with the acquisition of Ele. Me, which give us a very good opportunity to integrate not only the service category into our consumption sector, but also all of our providers are very good base to build an on demand instant delivery network, which is very essential in our new retail initiatives for all the new retail initiatives. Today, these riders, I mean, they deliver a lunchbox. Tomorrow, actually they can deliver a lot of products, I mean fulfilled by stores within 30 minutes, even or 1 hour. So that's the new retail big picture. And in this, we are trying to incentivize our retail partners and the brand partners by data. Again, this is not only the change of the model of the digitalization. I always said digitalization cannot resolve all the issues. But digitalization give us a new opportunity to understand better what our customer need and what our supply chain, what our supply forces can provide. Is there any mismatch? Or is there any opportunities we can pursue to create a new demand of the customers? So when we talk about the consumption business in Alibaba, consumer business Alibaba, we have to look at the future scoring engine. I think for consumer business in Alibaba Ecosystem, the growth engine are from 2 sides. First one is the user base. Today, with our core commerce platform, we serve over 550,000,000 active consumers last year, which means these 550,000,000 people, they bought at least once all platforms, but many Taobao fans, many fans, they bought far more than that. I'm sure here we have a lot of ladies. I'm sure you are our loyal customers. And but we still believe that if you look at the user growth in the past 2 years, you can see a very interesting phenomenon, which is the user growth reaccelerated. And especially in recent quarter, we shared with you that 70% of the net new net adds came from the less developed areas from rural areas. And we believe this trend will continue. And today, mobile Internet make the Internet access as actually the lowest forever. So we give them we get a very good chance to penetrate more user base. We always said that today if people use a phone, then they could be our user. If people with a phone, they could be our user. We have the potential to recruit them as our customers. And of course, we are not only trying to acquire new customers in China, but also we are trying to expand our services globally. So when we go to the new market, we get the new opportunity to acquire new customers. So today, if we combine our Lazada and AliExpress services, now we are serving more than 100,000,000 active consumers, active buyers a year. I think that's a good start for the globalization. I think the second engine of our of the growth of our consumer business is about the category expansion. We have such a long, I mean, track record of consumer business. When we look at the cohort in the past years, it's a very, very clear trend. The more time people spend with us, the longer people stay with us, the more categories people will shopping categories people will cover. So from traditional, I mean, core commerce platform, In this platform, we start with some virtual products like a game card, top of card in early years of Taobao. And in recent years, we moved to all of the physical products, start from fashion to consumer electronics to furniture, home decoration, household products, even cars. And by expansion to the digital entertainment sectors, we are now seeing a new world. We do believe our customers, our younger customer base, they need far more than physical goods. So that's why today we work very hard to provide them the long term video, short form video. And we even provide them the ticketing business to buy ticket for movie online. And we're even running a Chinese sort of ticket master in China to provide ticketing business, ticketing services to our customers for them to buy the ticket of variety shows, so on and so forth. So all this with all these efforts, we are trying to expand the category of consumption. We are trying to improve the ARPU of every single customers. If we continue to grow the user base and continue to grow the ARPU, the ASP, I think this is a real opportunity for our future consumption growth, the size of the consumer market. One big advantage we see in the growth of this not only the user base but also the consumer category is the synergies in Alibaba Ecosystem. Here you can see the big number of every single business. For all these, we just list out the business with I mean the users over 100,000,000. But you can see we still have a big gap via our different businesses. Very interesting thing is that today, if you look at Alibaba Ecosystem, maybe 10 years ago, online shopping result in online payment. But today, with the development of the digital wallet, our early pay is I mean, in recent years, require more recruit more and more new customers via payment because like people want to use digital wallet to take subway, to take the shuttle bus, to pay the utility. They use this wallet first for these things. But over time, we get a chance to recruit them, migrate them into our consumer platform, which is we encourage them to consume and buy I mean, starting from dry groceries to food to more categories on our platform. So yesterday, some analysts asked me some investor asked me, Daniel, how do you look at your, I mean, local service business? How can we measure the development of local service business? My initial response is very simple. I think today you see, for example, all of our business, our AAC of Olimar, annual active consumers, only 168,000,000. All of our today's payment I mean users, our Taobao Tmall users could be future Elemer users because they are same group of people. And today, our Ele. Me still have very low penetration in our Taobao and Tmall and Alipay Big family. If we can penetrate not only I mean, we are not talking about and continue to acquire new customers. If we can penetrate our local services, our digital content businesses with our existing user base, we can generate a huge growth. We can create a huge growth opportunities. So that's what we see. So that's why last month, for the first time, we launched our Alibaba Group Ecosystems, I mean, membership program, loyalty membership program, which is AVP. The purpose of AVP is trying to consolidate all our Alibaba services in Alibaba Big family and to provide these services as a privilege to our loyalty customers. And for those customers who spend, I mean, tens of 1,000 of dollars a year on Alibaba Ecosystem, we want to give them some privilege. So this is I think these are the most important, I mean, most valuable user segments we have in China and in the future in the world. After we talk about the consumer business, let's talk about our enterprise side. I remember very clearly 10 years ago for the first time Alibaba announced that we strongly believe e commerce is not only about the C2C or B2C, which will win in the future. We believe at the end of the day, every single business will transform from B2C or C2C to C2B. Today, what we see where our enterprise, I mean, service with our service, with our on our different business platforms, we see this as a very clear trend. When we look at what happened in the past 10 years, I think for all these brand companies, for all these consumer goods businesses, how they do their business. It's almost like for every single brand, every single business, they are they were building a I call this a pyramid. They are they were sitting at the top. And they design the products and they manufacture, they have the stock, then they either have their retail store, their own retail store or they are doing distribution. So they supply first, then via their partners, they find a real demand. But while we have in the past 10, 20 years, we see so many, I mean, apparel companies, sportswear companies in China, even in the world, they suffer big problem because of the low stock turnover, because of the low slow moving inventories is because they cannot get the real time insight from the market, what the market need. I always share my view with my business partner. I say, in this, I mean, pyramid of business, yes, from a financial perspective, all the inventory are not on your balance sheet maybe in your or in your distribution partners. You have very clean balance sheet. But as long as all the goods are not received or not purchased by the end customers, no matter how clean your balance sheet is, at the end of the day, all the goods in your distribution network, in your distributing channel is your problem. You have to help them to clean up all these assets. But the key things, the pain points, the pain they have to suffer during the whole process. But now, after the digitalization of the whole retail business, What will happen? After we digitalize not only our online operation but all the brick motors, we can get the insight from the customers about their real demands. We can know what customer want, what they are lack of. We can customize the design and we can do a very flexible smart production to meet these demands. So quick reaction, flexible supply chain is very, very important in the future C2B model. And if we can do so, we can help the client not only to sell more, I think the key thing is make the whole operation more efficiently. So that's why we say C2B should be ended by targeted distribution, targeted sales, sales to the right group of customers, distribute to the right group of the resellers. And we can understand the end to end, no matter how is it a retail business or distribution business, we can help our brand partners, our retail partners to understand the end to end data flow of the products, end to end data flow of the customer wants. So that's what we believe will happen today and in the future. So I think this, I think, is the core of my presentation. It's about Alibaba operating system. So when we look at the whole Alibaba ecosystem, we are actually, we are doing today is not only to build a consumer business and build a enterprise business platform. Instead, we integrate all of this. We start with new retail with a consumer interface, but we evolve and not only to help people to sell more, but also to help people to change their way they sell. We're not only to help people to market their brand, market their products, but also help people to change the way they are doing marketing. So that's why we shared with you, I mean, last year about unit marketing. We are still working on it, and we have many, many, I mean, cases to validate the model of unit marketing of this data driven marketing methodology. And today, we even go further to the supply side. I think from customer interface, we have done a lot. People understand this very well. But now we are moving to the supply side. We believe that to make a business successful is not only about creating more sales opportunity, but also to improve the whole operating cycle and to make it more efficient. And at the end of the day, I think the key thing will be products. So for the consumption sector, I think the key thing is that can we provide the relevant, the right product assortment to the right customers at the right time with the right stock, with the right stock level. So this is the whole thing we are doing. And but to match this supply with the demand, to create a new demand from efficient supply, we have to upgrade all these consumer operation, all of the product operation and also the physical space and virtual economy of virtual commodity. Here I want to stop and add few words about the virtual community. So when we talk about new retail, then everybody talk about brick motors. I said, no, no, no, that's not right. In Alibaba, when we transform to new retail, we still start from online. That's why Jiang Fanx, our President of Taobao, share with you the innovation we do on Taobao. We want to change the way people shop online. Taobao is not only a sales marketplace, instead Taobao is a consumer community. We want to give people more information, give people more fun when they shop on Taobao. Even when people don't intend to buy anything, they still want to come back to Taobao. That's our operating metrics. This is all about how long we can engage with the customers. If we if customers are with us, we think we have enough opportunity to help them not only to meet their existing demand, but also create their new demand. And but today, when we on one side, we help our online marketplace to be to transform to the digital, I mean, community. In the brick motors, we are also working very hard with our partners either self incubator or via investment to upgrade their existing physical space, physical retail spaces into a digital environment. So that on a real time basis, we can understand what people do and what people want, what people don't want in the real environment. But all the data are on the cloud and could be accessed on a real time basis. And then the key thing is that all these data online and offline, sales data, product data, marketing data, logistic data, all these data need to be flow back to the databank. We strongly believe that for all our customers, all our clients in Alibaba ecosystem, every business need a data bank for themselves in Alibaba system. Via this data bank, they can not only can consolidate the data from different channels, But also for the first time, they can integrate the data to understand better of a particular customer, understand the performance of a particular SKU, understand the movement of a particular batch of goods. So that's the whole picture of Alibaba new retail dream. And we are trying to provide our we call this as a operating system. We are trying to empower our clients to win the success in the digital transformation via our Alibaba operating system. And when we talk about this digital transformation, logistics is very, very important element in the whole transformation. Let's look at what it looks like today. And today, the logistics is about we grow the point to point logistic model in China and China is a very unique market and we have a couple of, I mean, logistic partners. They occupy over together occupy over 90% of the logistics market delivery market in China. But overall speaking, half of their business are from Alibaba platform. We do it because why we have this point to point service network is because we have so many sellers. We have so many bad buyers. All the sellers and buyers are in different cities, in different locations. So you need a network, a point to point network to do this delivery. Then in the past few years, our Tainiao in our Tainiao, not only for this point to point network, we also built a new network, which is a hub and spoke network, especially for structured products. And for this model, I think most of our friends here are quite familiar. I think most of you when we talk about the logistic model, you are talking about Hub and Spok. From my strong view, Alibaba's view is that Hub and Spok is the is one of the logistic model in the digital economy. And point to point still very, very important in the digital economy. And in the future, when the online and offline business are highly integrated, you will see more and more orders from online could be fulfilled by store, use the stock in store rather than send from a central warehouse from a forward DC. All the brick motor stores, if they are repositioned, they could be a forward DC or forward kitchen for all the online orders and could be the service center for the online orders. So that's why we believe in the future, all the logistic elements will be reshaped. But before we reshape all the elements, in the past few years, our Cainiao team did one important job, which is try to digitalize the elements in the whole logistics network. We have some advantage. All of our merchants, if they have web operation online, their store operation are digitalized. Our customers, if they buy online, their behavior are digitalized. If the order is generated, then in recent years, we create a e way bill and we give the code for our system for every single parcels generated on our platform. By this way, we digitalize every single parcel generated on Alibaba platform. Now what we are doing is the next step. We are not only trying to digitalize the merchants, the package, the consumers, but also we are trying to digitalize the warehouses, the storage. But this warehouse should be with a big question mark. It's not necessarily mean a DC, a fulfillment center. It could be a store. And we are also trying to digitalize the vehicles, the riders, the delivery men. And by this way, we can digitalize the whole process of logistic network. Most important thing is that for Alibaba, when we do this logistics, this is not an end picture. The end picture, we strongly believe, is like this. We believe in the new world, in the new digital economy, there will be a hybrid logistic network to support the integrated online and offline business. The delivery solutions, the delivery personnels, they are not only divided by today's type of network like point to point or hub and spoke or on demand services. They are they initiated that service by a hybrid data driven network. So in the future, like I said before, all our riders from Ele. Me, they may deliver a jacket for a brand store nearby. All of our hubba spoke warehouses, they are not only trying to deliver, fulfill the goods and deliver directly to the customers. Instead, they may be a very good location to serve to do the to initiate the fulfillment and start the milk run to serve the stores in the local city. So by this way, we strongly believe that in China and in the world, there are enough logistic resources. The key thing is how can we digitalize all these logistic resources and to reposition each of them to be a real network, rather than we just leave the existing logistic resources aside and build a new logistic network. I think and so that's why in logistic world, we strongly believe in partnership. We believe the transformation of the logistic model from today's model to future's hybrid model. That's what we are working on today. So here you see that in the future, we show the storage like we have our time. We have a lot of fulfillment partners. But we have very important 3 dots here, which represent all of these brick motor stores, our brand partners, our retail partners could be the storage, could be the fulfillment center. Now let's spend some time on our cloud. This morning, Simon shared with you the big picture of Alibaba Cloud. But when we look at Alibaba economy, we don't view our Cloud business as a separate business. We view our Cloud business as an infra for all of our digital economy. So today, all of our Alibaba self incubated and developer business are powered by our own cloud. And we in each of these sector, we for each of our business team, actually, we have a very clear, I mean, segregation of duties. Our Cloud team today, they are focusing on build this infra I mean in IaaS and build some PaaS parts. But all of our individual business, starting from Taobao, Tmall, Hema and to all other business, they are more like a SaaS service provider in each of the categories. So in the future, we will see a big picture, which is we believe is not about the SaaS, it's about the bus, it's a BAAS. We believe for Alibaba operating system, Alibaba economy, we are trying to provide business as a service to all of our partners, all our clients. And all these bars are powered by Alibaba Cloud. In this way, we are trying to build up the retail cloud, the marketing cloud, the finance cloud, the logistic cloud, so on and so forth. Today, Vardis, I mean, we are not only trying to be an infra provider, but it's more like all in one. We try to give people a whole stack of solution in particular industries. So this is about Alibaba Cloud. So that's why in Alibaba, we always said Alibaba Cloud is a cloud of Alibaba Economy. It's not like we incubate an interesting business, a new business, which is Alibaba Cloud. So that's the whole picture. I mean, that's the relationship between Alibaba Cloud and Alibaba Big Picture. Now let's move to a new chapter, which is IoT. I think in these past 2 days' presentation, we did not cover too much about IoT. But today, when we talk about IoT, we believe we are already in an IoT era. But when we talk about opportunity IoT, we still have to start with our cloud, still start with our infra and start with our past platform we provide to all the partners in the IoT India today and the future's IoT community. What Alibaba want to do is that we still want don't want to build separate businesses, a new business called IoT. Actually, for each of Alibaba's existing business, they have huge opportunity in IoT. So that's why we just show 3 major categories where we will pursue the opportunity. Why we start with Smart Living? Because we have so close we have such a close connection with 100 and 1000000 of families in China. We know where they live because they are buying from us every day. We know their address. We know where they live. We know their home situation, how many people living in this family. And we know why we trying to pursue the opportunity of automobile because we have over 50,000,000 I mean record of people's cars information because they buy a lot of cars, car accessories, car insurance on our platform. So by this way, we've already established very, very close connection with our target customers in IoT. And we are not only trying to serve consumers again in IoT, but instead we are also trying to serve our business partners. So that's why we talk about smart business. We are working with our partners not only to sell more, to marketing more and to optimize their supply chain, but also we are trying to help them to transform to a small manufacturing, to a smart workshop. And smart city is another very interesting opportunity. If you go to the street in China, in Hangzhou, in any other major city in China, you will today you can see the camera everywhere. And today we see the huge opportunity which is the public service, the city service actually are moved to digital because the government actually is the one party who own huge amount of data. But the key thing is how can we empower them to generate value from the data and help them to manage the public services more efficiently. So we have a separate sector called smart city. But all these three sectors are powered by Alibaba Cloud and powered by Alibaba IoT PaaS infrastructure. So that's our initiatives for IoT. Okay. In my last section, I will spend a few minutes on globalization. As we always said, globalization is Alibaba's long term strategy. Where are we now? In the past few years, we've already built a very interesting business, which is AliExpress. Today, AliExpress cover many countries, but their top three countries are Russia, Spain and Brazil. And we also cover many countries in other countries in Europe and other continents. And when we build this AliExpress business, we our model is cross border, it's China to the world. But in recent years, with our efforts in Southeast Asia, in Southern Asia and even in Turkey, we are moving from China to the world to local to local. We believe these are not 2 different business models. We strongly believe that in the future, in a local market, if we want to win the sustainable growth and win the long term success in a local market, the business model should be again, should be hybrid. We need a local to local, both C2C and the B2C or small B2C to big B2C. We also need cross border. We have the advantage, which is we are in China. We are in one of the biggest manufacturing base in the world. We have a lot of if you look at the supply in a lot of consumer market, a lot of goods from China. So how can we start our first quarter from China? But our end is not only about the China to the world, but also work to the world. We want to help the merchant in Russia to sell to Brazil. We want to help the merchant in Brazil to sell into China. What we want to build up is a global trade platform for our global business. So here actually we are in the early stage in Southeast Asia and in Southern Asia, but we strongly believe that the opportunity is huge. You may ask me a question, how Daniel or your team decide which market to go? I think our thinking philosophy is quite straightforward. 1st, we're looking at of course, we're looking at the population of the market. Is there enough people there? 2nd, we look at the mobilization. Is the market with enough mobilization with a good penetration of mobile of smartphones? 3rd one is about how about the retail landscape. So why we move ahead to Southeast Asia even to Southern Asia is because the retail landscape in a lot of market there is quite similar to what it was in China 10 years, even 15 years ago. So we saw huge opportunity there in the future. But China to the world or go to a local market is not enough. When we do the global business, we have very important leverage, which is World to China. We are very lucky to be in China in a largest consumer market in the world. So today, what we want to do is that we want to buy from all over the world to meet the growing demand of Chinese citizens, to meet the growing demand of the Chinese middle class families. So that's why we build a lot of business ambassadors office all over the world. And we are trying to work with a lot of retail partners, suppliers, brand partners to help them to sell to China. So today, our top selling, top 3 countries in terms of import to China is Japan, USA and Australia. But I think compared to the size of the consumption, today, cross border import still in the very early stage. And today, China also indicate a very strong message that China welcome more imports. China will open the door to have more imports to China. So that's our real opportunity. And when we do this global do this world to China, we are not trying to do by individual business. Again, we are trying to leverage all our consumer basis power. And as a whole, we are trying to sourcing from the global. Like for the famous King Crab, there are not people need it, not only in pharma, but also maybe in RT Mart. Right now, we buy from Origin and by a big I mean, more like Alibaba Group Buy in, Alibaba Big Family Group Buy in and the sourcing from the origin and delivered to China and via our individual business and sale to the end customers. So that's our global buy. And when we talk about globalization, delivery, logistics is so important. And today, the logistic model is more like the parcels, the packets are flying everywhere. So every day we have millions of parcels flying out of China and we have millions of parcels flying to China. But in the future, we strongly believe that if we want to support a global trading platform, we need a couple of hubs, very important logistic hubs in the critical area of the world. So far, we already identified 6 hubs in the world. And by in the future, with the initiative of EWTP, we will try to build more hubs to support the global trading platform. And we believe all the products, all the parcels will be aggregated, will be consolidated in the location of origin, in the e hub, then by batch and deliver to the destination and then via destination hub then to the last mile to the end customers. So that's the global if we want to build a global trading platform, I think a global logistic platform is a necessity. We are on the way. The last one about globalization is global fund. To be honest, we used to call this global travel, but very quickly we changed our idea. We say this is not enough. If only talk about global travel, we are talking more like talk about ticketing business, hotel room reservation. That's not enough. Today, so many Chinese people flying out of China to enjoy their vacation. They are not only enjoying vacation, they are shoppers. They are consumers. They want to enjoy the local food. They want to enjoy the local show. So how can we provide them enough fun during their holidays? So that's why we create IDEA Global Fund. So you can see in 2018, there were about 150,000,000 tourists from China to the world. And I saw a statistic which is in 5 years, there will be 700,000,000 travelers from China to the world. I think that is a huge opportunity for Alibaba and for China. So if we look at the big picture of this globalization, actually is quite straightforward. We start with global sale together with global buy and we're supported by global delivery, global network and also very important global pay, global finance. Finance system, payment system, logistic is always an infra to building a trade platform globally. And also, we are not only interested in moving goods around the world. Instead, we will do one thing more. We are not only moving goods, but also we are moving people. So we're moving people around the world to find more fun and moving goods to their home, I mean, in the new use cases. So that's the big picture of globalization. Finally, I want to end my presentation by looking at our near term goal and long term vision. In 2015, we share with you our near term goal, a 5 year goal, which is by fiscal year 2020, we want to achieve GMV of US1 $1,000,000,000,000 As I said, last year, in our co commerce platform, we generated about US768 billion dollars And we are very confident that in the next 2 years, we can achieve our near term goal, 1,000,000,000,000. But 1,000,000,000,000 to us is just a new milestone and a new beginning. And we already set our long term vision, which is for the next 20 years, we want to achieve our long term dream, long term vision to serve 2,000,000,000 consumers over the world to help 10,000,000 profitable small business and create 100,000,000 job opportunities. That's our vision. By doing so, we are trying to grow, build and grow and unique digital economy in China and in over the world. So that's our long term vision. Thank you. Thank you, Daniel. I will welcome you off stage. Next, we have our Chief Financial Officer, Maggie Wu. Good afternoon. I heard these 2 days that you were expecting my presentation. I guess he wants to know guidance. Some of you probably have forgotten, we provided guidance on our March earnings call. And I don't have any updates on that guidance. So today, I'm going to cover 3 areas. Number 1, as we did last year, I'll give you report cards since last Investor Day. And secondly, I'll talk about our strong core business, talk about the healthiness and the potential for the future. And I'll also discuss how we look at the investment, the Invest for Future. And the third one is valuation framework. Okay. So last year, during Investor Day, I gave our revenue guidance, 45% to 49% year on year growth. We delivered 48%. And if you exclude China, which was consolidated since October last year, we still have 54% year on year growth, very strong revenue growth. And we are we have outperformed all of our global technology peers. And I think we'll continuously to take lead in that run. So we have had accelerated annual active consumer growth. If you see during the last year, we added 98,000,000 net adds. That's pretty much 30% of the total U. S. Population. And not only we added the users, but also these users are highly engaged with our platform. So we see, averagely, a top up user opened 8 times top up apps 8 times a day. And this average spending level has already gone up to 8.7 1,000 considering that such a large new user base. And we have developed so much content, and Xiaofeng talked about what we have done on the mobile Taobao. So take one example of the short form video. We have had average daily number of short video viewership of 1,900,000,000. I said last year that we're going to invest into expanding the B2C market leadership. So clearly, we delivered. Our T Mobile fiscal GMV growth was 40 5% compared to the national overall growth, 39%. We outperformed all of our peers in a big time. And new retail has grown really fast. It's not only the growth in the revenue, but also the proven in the business model. I'll talk more about that. And cloud computing is still showing 3 digits growth in the top line. And Xiaoming talked about this, this morning, that 40% of the China's top 500 companies are on our cloud. And closely half of the Chinese listed companies are paying for our cloud service. Digital Media daily paying subscriber number has shown a CAGR of 180% over the past 3 years. And this summarizes all of these key metrics we've delivered in the past fiscal year, you can tell that we have generated a USD 15,800,000,000 free cash flow, where Joe is going to talk about how he spend the money later on. So I think it's very important to talk about the strong core. You've seen our financial results. But what we are proud of and very happy about is this fundamental healthiness and growth within our business. You've seen the user growth. I wouldn't spend more time on that. And when you look at the spending among our users, spending clearly is growing, and then the fastest growth in spending is with the 19 to 25 age group. And for the age group of 31 to 35, they represent highest spending among all of these active buyers. Okay. This is a cohort. We still have a very strong cohort. Longer consumers stay with us, more orders they placed across more categories, which results in the high spending. So for year 1 consumer, for example, you see this RMB3000 ARPU level. This is pretty much at the same level as in previous years. So does the 5 year consumer. So I've talked about this last year. You can do the comparison. So for like a 2 year old consumers on Taobao, they were 1 year old last year. When you compare their spending level, it's pretty much doubled this year. So our high sticky spending consumers is showing here. I picked up the 100,000,000 consumers who are our top consumers that with annual spending over RMB 10000. When you look at the retention rate for this group of consumers, it's 98%. So many colleagues talked about this new membership program. This is still in early stage. We launched this on August 8. But I think we're probably the only one here in China can do this or even in the world that can provide such a comprehensive products and service benefits to our members. We have so many apps and services that contains 100 of millions of users. It's not only Taobao and Tmall, but also the others. We've showed you some of these 2 days. And together, we are very confident that we're moving towards that $2,000,000,000 goal. You can tell Daniel talked about the goal. And each year, we have been moving closely, very serious about our longer term goal. Besides talking about consumer, the healthiness of this business is also being demonstrated at the merchant side. So when you look at this data, like 50% of the China listed consumer retail companies on Tmall and also the top 20 global brands on Tmall. The blue bar shows their overall growth, right, 24%, 11%. The orange bar shows their growth at their Tmall store. This is the obvious return. You can see we give back to the merchants. And over the years, we have continuously been delivering and providing new services tools to enable our merchants to work at Alibaba. And you might be familiar with some of these. Some of these are behind the scene. Alibaba, you know about Taobao and Chenyo platform, etcetera. Here, we show how these tools and products helping merchants to across all of their functions, from the procurement to logistics to distribution to marketing. And if you still remember the merchants P and L I showed you 2 years ago, these are how these tools and services and products being helping from the merchants P and L angle that help them to grow their business revenue and reduce the cost, increase the efficiency. And how many of these products been monetized? A few of them. So are we going to monetize the rest of those? Not necessarily. I think we could be monetizing some of those and then leave the others to serve as entry barriers. Talk about monetization, I want to share with you this advances in data technology, how that unleash new value for consumer and merchants because that closely related with this monetization topic. You Xiaopeng talked about this talked about new version, new interface. Some of you see the PPD, some of you see the potentials. Let me give you a little bit more elaboration on this one. So if for those ones who don't use Taobao, right, it's not easy for you to tell the difference. But the easiest thing is that when you compare these 2, the 1 new version, the new version product photo is bigger, right? That's a very obvious difference. And then if you think about this, our land, if you see this on mobile Taobao webpages as land, a very precious land. It contains high value. Why are we putting less inventory there compared to the previous? That's because of the confidence of our technology. Because we could provide more relevant and personalized products and service in front of our consumers, which could lead to higher conversion. People, when you talk about personalization, you think Alibaba has already done the personalization, customization, right? You're talking about the 1,000 people, 1,000 faces, but you might not be aware of that. The machine learning, the technology involvement is continuous process. We have had passed through the 1.0, 2.0. At the beginning of the personalization, we do very simple personalization. I still remember that by the age that the personalization, the data could only be used on those very simple attributes like gender, your age, you what do you have bought. So when I bought a scooter for daughter and then it kept showing in front of me the scooters. Nowadays, the personalization and recommendation gone up to next level. So Jeff talked about our knowledge graphs, give you example that for those people who have, for example, bought a round trip ticket to Europe. And we figured out this is a 10 day trip, and these people has family and kids. So the whole travel theme products could be put into place, of course, considering his personal attributes, etcetera. So nowadays, people start to see things that they haven't searched before, haven't bought before, haven't seen before or even they haven't thought before. And then we are very happy to see that the conversion on these recommendation fees are increasing, keep improving. Currently, our technology team has created all of these themes through this knowledge graphs. We have over 100,000 themes that backed up by more than 300,000,000 products and services. Just think about the power of that. And then technology is keep evolving. At the same time, our traffic mix has shown fundamental shift. So this chart, you can see 3 years ago, our search traffic definitely demonstrated the mainstream, right? Recommendation is still very small. But nowadays, the recommendation traffic already surpassed the search. But our monetization mechanism, P4P, Alibaba, where the consumer management revenue come from, it's only on search. So we're kind of behind on the monetization mechanism. Of course, we're working on it. So this represents a potential. People will ask, would while you keep growing the recommendation fees, etcetera, would that impact your near term? We are thinking it's not surprise if there is a little bit impact on the near term, but this is the right thing to do for the consumer experience, for the merchants benefit. And if you further think about this, when other peers has news fees, right, in the social platform, etcetera, we're talking about recommendation fees. And recommendation fees is not end at the fees, but we can see all of these follow-up actions of the consumers, right? They view, they click, they bookmark, they add to the cart, they purchase. And then they make payment and logistics start working and then they give feedbacks, they share with friends, and they will stay and repurchase. So this is such a closed loop of the database make our data technology even more stronger, which eventually going to show on the relevancy level of the products we recommended. Okay. So the core is very strong and solid. We have always been saying that this is the company always thinking about invest for future. So our free cash flow, dollars 15,800,000,000, about 28% of that cash flow being spent in investing in our organic business. So in the past year actually, this is the past quarter's number that we have generated RMB 37,000,000,000 of adjusted EBITDA on our marketplace based on core commerce, which is the core, core, right? Here it shows where we spent that profit, where we invest. So the orange bar shows the major investment areas within our core commerce business. These are international Lazada, local service, like Ele. Me, new retail, logistics. And then we also have the other segments business to invest in, digital media entertainment, innovation initiatives and cloud computing. I want to share with you not only how much we spend on those business, but also the progress we have made in that business because it takes time for all the investors to see financial returns. But the business progress is essential. So new retail, for example, Luo Cai talked about all of these superior consumer experiences, great business we built and provide best quality products and then 30 minutes delivery, etcetera. But we are more happy about is we believe we figure out the model. If you think about this, China has had TRY 36,000,000,000,000 consumption, and only 18% are penetrated online. So the big majority is still 80% offline. How are we going to attack that market? We're now moving them online, but we are able to enable them. So when we compare with the traditional groceries retail business, Our new retail model clearly showed advantages. If you look at the business model, the traditional grocery retail, they have the primary self operated stores, right, 1st P. In our model, we have a hybrid model. The reason for the self operated create new model is to serve as pathfinder. So to continuously to explore and build the sustainable model, figure out the cost structure and how we could improve the user experience. And then we have transform our model, which is we're now working with Sun Art, later on more partners to enable them to better operate. And then in terms of our revenue model, of course, the direct sales model, we record the gross sales as the revenue. And for the enable the 3rd parties, we just take technology service fee or commission. So the latter one has obviously higher margin. And while the traditional services are closing stores, Hema's kept opening stores and the efficiency level is multiple times. Now Hema could the early stores could even reach higher than RMB 50,000 sales per square meter per annum. Profitability. So people ask me about what's the margin level going to be on this Hema. I think rather than talking about margin, it's more reasonable to talk about profitability because that's absolute return. If you look at traditional retail market right now, right, their margin level is 2% to 4%. If we could enable them to double, right, we could take our fair share. And for the Hama model, if we could figure that out, that's already bring tremendous value because the 80% of the offline market, say, dollars 10,000,000,000,000 of those relates with the FM and CG Groceries. And which means in years' time, if we're doing this right, we should be able to create a business that as large as the Taobao T Mobile we're seeing today. Okay. So local service, we talked a lot about this. I think we have how do we go back to this? Again, obvious advantage backed by the synergy that can be generated among our ecosystem. I can't go back, but Homa I mean, the Ele. Me, Wang Lei discussed about the synergy among the group companies and how we're going to utilize the data technology we have to have the business grow. So it's very interesting that team has their goal of getting the 50% market share. It's actually, it's fun that we haven't been enjoying the process of turning number 2 to number 1 since eBay, I think. Auto Navy, we have done that once, and we're supporting the team to get there. And Cainiao, we see the scale of the business. I think people kind of take for granted of the scale, don't underestimate the scale. If you're thinking about delivering 6,000,000,000, 9,000,000 packages per day, that's the biggest achievement right now. It's not about you just the package level become larger. It's because of the technology and all of these the platform, the network effects we've built, been able to make that happen. And at the same time, delivery speed has been improved. If you look at like 5 years ago, for delivering the first 100,000,000 package in single stay, it took us 9 days. Now it's only 2.8 days. And Global Footpoint, we've already had over 100,000,000 overseas buyers, and revenue growth is 79%. So while you see these businesses on our platform, we have those cash flow generating units over there. And then we do see the traction among all of these business. Is, new retail, Hanyao, Ele. Me, AliExpress, Lazada, we have Youku and Alika, all of them growing really fast. And we also have a lot of seeds planted, right? And some of these people try to bury us, but they don't know their seeds. AMAP and DingTalk and Tmall Global, Ling Shoutong, you've seen the presentation given by Xiaohai. So that's for the future. So in summary, we do have a very strong core, which can continue to grow sustainable and strong growth. And for the others investment areas, we're going to continue to invest because we see the potential. And for most of them, we see that we are probably the only one in the market are able to deliver the best results. And valuation, you are familiar with the 4 segments we've been given in the past. But nowadays, we have several investment even within our core commerce business. So I further break it down for your reference. So you probably see the this business and their core, including the investment we're making, new businesses which are growing really fast, Hanyao, Ele. Me, right, then Lazada, new retail and Cloud Digital Media Innovation Initiatives. Also, the comparable companies, they keep adding up. So besides this, we also have strategic investments, which almost all of them have market value. So this was the valuation we got from Friday's market value. And which may make things even more easier is for our marketplace based core commerce business, this is a profit generating business. For fiscal 'eighteen, our adjusted EBITDA was USD 18,000,000,000 You could apply a multiple to that business. And then if you calculate it by using our last night's stock price, we're around like 22x or 23x of that business only. And by the way, that multiples is well below the average of our global peers. And obviously, people haven't really fully appreciated the potential business we have been building. Some of them are not really small, right, the cloud computing, digital media entertainment, the core, the innovation initiatives. So plus, there is $80,000,000,000 strategic investment. So you could do the math. We think that right now, you're basically current price is buying this business with the others for free. It's We have announced our share buyback plan, and we're implementing that, which demonstrates our confidence in the business. I think that pretty much concludes my presentation. Thank you for all of your support. Thank you, Maggie. We'll welcome you off stage. Okay. We're going to take a short break of 10 minutes. Please be back. There are only about 100 tickets. For those that are coming to our Cloud Conference tomorrow, I think there's about 300 of you, but we only got about 100 of you picked it up. So go back down to the main lobby registration deck to pick up your tickets. Thank you. 10 minutes. Hello. Hi, everyone. These guests seated, we'll start momentarily. Okay. I think there are some folks in the upper deck. Let's get to see if they please. Okay. Welcome back. Let's we need to get started. I know some of you are flying out, so in conscious of time, everyone up there that's our Executive Vice Chairman speaking about investment and M and A. So without further ado, let me welcome Joe Cai. I have the privilege of doing this presentation right before Jack's presentation. So I'm going to try to rush along and get the hat out of here, so we can let Jack talk. I'm going to talk about our strategic acquisitions and M and A. Last year, I gave you guys a little bit of sort of the philosophy of our M and A, the rationale why we do things. This year, what I'd like to show you is a little bit of a report card specifically focused on synergy creation. So I'm going to talk about a few case studies. I think as I mentioned before, an acquisition is not done when you close the deal. An acquisition is an evolving process. How much value you get out of the acquisition really depends on the integration efforts and also the synergy creation efforts between the operating teams of Alibaba and the acquired company. That's really, really key. And I think I've shared some stories with you before in particular scenarios involving 1,000,000,000 and 1,000,000,000 of dollars. The thing that gave me the comfort to move ahead with an acquisition was a conversation I had with Daniel, to where he assured me that there is somebody within the team that he can bring and assign into the acquired business to run the business. And that is absolutely critical because I think I mentioned last year, people, the people that we bring into the beef business or the people that we acquire that comes along with the acquisition are the most important element in an M and A transaction for a company like ours. So last year, I think I showed you this board. The our M and A strategy is like a go board. From the outside, you are not going to be able to tell what it makes sense of it. But I did say a couple of things. Number 1, the rationale for making these investments is to build long term strategic value, build long term strategic value for Alibaba, all right? And the second thing I said is, even though this looks kind of confusing, the assets on the Board, when we make these acquisitions, right, we added more assets. These assets in the end are all networked. When we make the acquisition, we already thought about how they're going to fit into the picture. So this is how it fits. The ones with the shaded yellow dot are in are the businesses that we acquired and the ones that are with a white background are businesses that are organically grown within Alibaba Group. So you can see, we started with core commerce, we added some more acquisitions to extend into the new retail strategy, but then with our entertainment assets as well as services, we have made quite a few acquisitions to put together these businesses under one roof. And today, under a 3 pronged strategy of facing consumers, 3 pronged strategy of commerce, entertainment and services, we've now I could say that we sort of have a complete picture, if you will, of where we want to be or an intermediary point. I wouldn't call it a stopping point, but it's an intermediary resting stop in terms of making in terms of our M and A activity. So we the business, the goals of making our acquisitions, obviously, we want to solidify our core markets. We also want to tap into new addressable markets. So our whole strategy, investment and acquisition in new retail is to tap into the new markets. And then we also want to explore new technology and trends. We have a group within our M and A team that's out there looking at studying new consumer behavior and also look at new technologies that would complement or catch the trend that is in terms of how we would predict how new users or young users will in the future use products. And we will make certain investments in new areas. So with these goals, just a quick historical viewpoint of what we've done in the last, I would say, 2.5 years. Fiscal 2017, that's the year ended March 2017, so most of that is 2016. So we have spent most of our capital allocated to international expansion and also digital media and entertainment. The big businesses that we acquired include Lazada and also Yoku. So that's fiscal 2017. As this thing evolved into fiscal 2018, most of last year, we were very busy looking at new retail. So we allocated quite a bit of capital to the new retail business. And then if you look at the Q1 of 2019, our fiscal quarter, which ended in June of this year, we continue to make heavy investments into new retail, but we also started we did a huge acquisition in consumer services. That's our food delivery business, Ele. Me. Okay. So this is a historic evolution. But I must say, historical performance does not give any indication as to the future. What the future will look like, I think a lot of venture capitalists want to know and because they want to front run us. And I'm not going to give them the pleasure of knowing what the future looks like. But for investors, you could just look at what Daniel said, what Maggie said about the future and what Jack is about to say about the future to kind of get a sense of which direction we're headed towards. Case studies, I'm going to give you 4 case studies on integration. We strongly believe integration is absolutely crucial in value creation. So the first case is the Sunar investment. We made an investment in Sunart, which is a Hong Kong listed company. It remains listed. We own 36% of the company. And the I think today yesterday and today, you have our business people have given you a lot of discussion about how what kind of things we're doing with SunR. But I would like to highlight maybe 3 things. The first thing is on the consumer end, we are implementing a POS system so that we can capture offline data. And we're also trying to map the offline data with our online consumers because these may be the same people. Someone might have bought from Taobao a week ago and then they go into RT Mart store, which is under SunR. And that gives us a richer profile of the consumer. So that's real synergy value because if we have a better a more complete profile of the consumer, we can better target, we can better do merchandising decisions. The next integration is the supply chain and products. So we are using big data to do merchandising. We are trying to create a unifying inventory system between online and offline because if you think about it, for an offline retailer, they want to know if they want to be able to track their inventory whether it's someone in a store buying something or they're serving an online order. One of the biggest challenges of offline retailers is that their inventory systems between e commerce and physical retail are separate. And this is what we're trying to change, digitizing their back end inventory. And we also have joint procurement efforts. The other the final aspect of integration is what we're doing what we're bringing to the table in terms of retail space redesign and thinking about the retail space. As you can see from our Hema example, the Hema store is not just a store, It's also a fulfillment operation. There's a dark part of the store. It's also a restaurant. So it's 3 in 1. Same thing with RT Mart, we're doing a lot of things to rethink the retail space. And I'm not going to go through all the examples in detail, but just wanted to focus on the middle one, this Taoxanda idea. We are now if you open up a Taobao app today, you will be able to find the products that are in your nearby store through our geolocation technology. And then you can order on your Taobao app items from an RTMR store, and it will be delivered to you within a very short period of time. We will not be able to do 30 minutes like Hema as efficient as that, but I think we can deliver that within a couple of hours. So same day within hours types of delivery is happening right now, and we're enabling the over 400 RTMR stores that are in China, that is all happening. So I think with all these synergy value creation, we're creating value for Alibaba Group, but also we're creating value for our investee company. The next case is the Yoku case. After the acquisition, we did a few things. Number 1, we improved the technology. So with our technology platform or re platform of the Yoku technology, we're able to reduce the latency rate by 80% and reduce cost by 60%. The next thing we did is we said, all right, Yoku standalone as a standalone business, it's generating its own user traffic and affinity, but what if we brought the entire Alibaba ecosystem because we have the same consumers. The same consumers that are buying from Taobao using Alipay should be able to come to our platform and watch video on Youku. So we've been able to increase the daily average subscribers year on year by 2 fold from the 100% growth to 200% growth. And finally, this is the problem with a video company that is a standalone oops, sorry, that's a standalone business. When you're a standalone business, you are capital constrained, you're worried about the P and L, the standalone P and L. But once we have the Oku business into our fold, we said to the team, don't worry about the standalone P and L because the content generation and the good video that we create could be shared among our ecosystem, among over 500,000,000 annual active consumers. And that cost of making the content can be spread over a larger base. So one of the things that we have told the YOUKU Management is that please go and try to make more investments into original content. I think in the presentation yesterday by Wei Dong, he talked about our original content capability. So you could see that on the right hand side is the chart, we increased our spending on licensed content, 3rd party content by 10%, but we've increased our original content investment by 2.3x. So putting our weight and capital behind original content creation is the value add that we bring brought to the table. The next case study is Alamo. We made this acquisition earlier this year. You've heard a lot about the business. And first thing we did with Ele. Me is, again, bringing the entire user base of the Alibaba ecosystem to these services. I think it's very, very important that when Ele. Me is making investments growing into more 3rd tier, 4th tier cities and investing in logistics, we're able to spread the cost over a larger consumer base. So again, the all the Alibaba apps today are entry points to our food delivery business. We've also are able to integrate the Ele. Me service, food delivery service into our 88 VIP membership system. So imagine for those of you who are familiar with the U. S, imagine you are an Amazon Prime member and you can also enjoy the benefits of Uber Eats. And then we're now on the logistics front, we're able to diversify the various delivery scenarios. So it used to be when you deliver meals, the personnel is busy during lunchtime and dinner time. But now if they are part of the Alibaba ecosystem, they could deliver groceries, they could deliver flowers, fruits from other parts of services that we provide within our ecosystem. So you are spreading that cost of personnel, which is a fixed cost among multiple use cases, among multiple users. So that will bring the delivery cost down. And finally, in the prior session, I talked quite a bit about people and people development and how important that is. That's Alibaba's strength, not just in the development of individuals, but also organizational development. One of the most important things about evaluating a business, one of the first things that we always ask when we go visit an investee company is, we say show us your organizational chart, show us your org structure, because that could tell you a lot about how they're thinking about the business and how they're executing the business. So we changed the business from a very hierarchical structure with 3 separate functions that are divided and they don't talk to each other into a flatter structure with by empowering the local city managers and put all the functions of customer users, logistics and merchant acquisition under one roof within the city. So we changed the org structure that means we're ready for business, we can execute. So these are some of the things that we do to bring value to the table. Finally, the Lazada. So in the case of Lazada, again, you've heard today about our capabilities and technology. And you also heard our CTO talk about in an acquisition, we would want to make sure that the technology platform is centralized and also the data platform is centralized. So we could actually take advantage of the faster product launches and also the consumer insight in an acquired business. So that's exactly what we did. When we acquired Lozada, we re architected their entire technology platform. So what happens is that it increased the product development cadence by 5 fold. It's much in other words, it used to take let's say, it used to take 5 months to develop a new feature. Now it's only 1 month. The other thing is the know how that we can bring to the table about how to help the merchants operate their business, that has actually helped the merchants on Lazada to increase their conversion rate by 30%. We also help Lazada to improve their logistics. One of the actually one of the very attractive features of Lazada is that they actually have a pretty good build out of their logistics network in parts of the markets that they operate in, including Indonesia. And because of the collaboration with Caiyao, we're able to reduce costs by 10%. And also the lead time across border orders has been reduced from 7 days to 72 hours, so 3 days. Finally, we're able to bring sort of the entire manufacturing capability of China into the Lazada marketplace. The thing about Southeast Asia is, it's a developing economy, the manufacturing sector is not as well developed, it's on its way. But today, compared to China, it's not as big. So what we're saying what we said was, look, let us go to our Chinese suppliers and bring their product offerings into your marketplace. We increased the assortment, we improved the user experience. So now what we've done is we brought 200,000 high quality merchants from China into Lazada platform and also increased their product listings by 10,000,000 sorry SKUs, so their distinct SKUs by 10,000,000. So that's what we did with Lazada. So anyway, these are the 4 case studies I wanted to share with you. And finally, So when people say what does synergy mean? At Alibaba, synergy does not mean 1 +1 equals greater than 2. It's 1+1 is greater than 10. We are still in a market because of digitization, because of technology. If we can bring our expertise, know how and technology into an acquired business, we can actually create exponential value. And that's what we've seen historically with our own business and with acquired businesses. So for us, when people ask me what kind of ROI are you calculating, what's your IRR of your investments, I'd say, wait a minute, I'm looking at venture like returns except that our success rate is a lot better than venture like returns because we have people in these businesses to make sure that they work. So digital transformation, the huge user base, the consumer scale and insight that we bring, right, over 500,000,000 right now almost 6 100,000,000 annual active consumers in China, we can bring to the table, plus the technology enablement will make our acquisitions work. That's why 1 plus 1 equals greater than 10. So I want to end just with just a quick review of how we've allocated the capital relative to our free cash flow generation. So as you can see here, 3 over the last 3 fiscal years, we've pretty much our investments pretty much kept pace with free cash flow generation. I think a lot of you will probably be angry at us if we underinvested. Our perspective is since our we're not a dividend paying company, and that's we've communicated that to you very clearly, we should think about using our free cash flow wisely in areas where the value creation could be 1 +1 greater than 10, all right? That's how we think about it. And so on a cumulative basis, we've generated $33,800,000,000 in free cash flow, and we invested so far we invested about $30,000,000,000 So we're still a little underinvested a little bit, gives us a little cushion to make more investments in the future. So that's how we're looking at this. And then finally, you asked me back to the first picture, everything organized in a very organized fashion under commerce, entertainment, services. And the question is, Joe, are you going to make more acquisitions and more investments? Are you done? Well, yes, right? Are you done? We're not done yet because there's other pieces on the board that will require the chess master or the gold master, which is collectively the management team of Alibaba to arrange, to put pieces in place. We still need to do that because we're investing for the future. We're running this business for the future, not for the present. Thanks very much. Thank you, Joe. Next, we welcome our Executive Chairman, Jack Ma. Thank you. Wow. Now I understand you've got a screenshare. Well, good afternoon, and thank you so much for coming, and welcome to Alibaba. I think after 2 days, a lot of numbers. Let's back to vision. I insist we should have the shareholders conference in Hangzhou and on the campus. I don't want you to be in the hotel like any others. When you come here, I want you to spend more time with some colleagues, our people and possibly seeing the customers, how people work. I want to say thank you so much because in Alibaba, we believe customer number 1, being probably number 2, shareholder number 3. And I say anywhere, not only internally but also in the Wall Street when we IPO. And even customer 3, we got so many great investors. I mean, the investor number 3, we got so many great investors. Keep on investing in us. And thank you for the trust because Alibaba, we don't have enough service in America like Amazon, Ebay, the American companies. So you know what they're doing, and a lot of people buy our stocks based on the trust. I think the most valuable thing in this world is about the trust. And you don't have our service in the States and in Europe, but still buy our stocks. So I really want to say thank you so much. But no matter what, we'll keep on customer number 1, employee number 2, and shareholder number 3. I know that next year, I will not be able to speak to you as the chairman. I will speak I will sit there as the investor and listen to the team to speak. And I hope if the investor will be forced September 10, while I'm still chairman, I will be able to speak. After that, I will sit there and listen like you. And today is my last was I would say that today is my last day I speak as the chairman of the company. And I want to answer mainly focus on 4 points: 1st, why I asked Daniel Zhang to take the championship? 2nd question is what's the future of Alibaba look like when Jack Ma leaves? And the third, what's my view on U. S. And China trade war? And last is my personal view on China's short term, middle term, and long term economic situations and Alibaba strategy. These are the questions I want to ask, and I hope this is my personal view. I want to share my ideas, my thought. Why I invite Daniel Zhang? It's not a sudden. I've been thinking this for a long time. My first thought about leaving Alibaba was when in year 2005, when we got Yahoo! China, We got investment in Yahoo! 1 of our investors, the venture capitalist said, Jack, you should retire. And I said, why? He said, you should set an example for Chinese business people that the company grew up as its founder and CEO stepped down giving this job for younger people to take. I agree, but I say not now. In my mind, that the reason he said this are two reasons. 1, he knew I was not qualified to see you, which I agree. He's saying, no, you're too crazy. You shouldn't leave. And second is that he made a good point. In Chinese culture and Asian culture, not only China but also in Japan, you see a lot of gray haired CEOs and China sitting there all their life. I think faster growing company, the company want to improve the world, they should have a system. So I said, not yet. Someday, I will. Because we know very well if this country really believe that our company will last 102 years, Nobody can work as a CEO for 102 years. If I become the CEO of 102 years, I will be over 150 years old. I want to work. Should have a system, a group of people, the culture, the model that keep on growing. If you really believe it, you should start to prepare. So since then, I start to prepare. Year 2009, Alibaba 10th anniversary, we start to take action. Actually, from 2,005 to 2,009, Joe and I have been talking a lot, discussing a lot. I visited a lot of companies trying to understand how they can last long. I think to be good, to be great is simple, but to be sustainable growth and sustainable good is not easy. And I visited a lot of companies and I even visited the church, monks, temples, all the organization and military and government. And we start to figure out a way. And we start to design our model of partnership. So year 2009, our first action is all the 18 founders resigned from the company. I don't know whether you remember that. I asked my 18 founders, including me, send a letter to me, you will resign tomorrow. From today, you are no longer the founders of Alibaba. The next day, if you after 24 hours, if you want to join Alibaba again, write a letter of application, and we will treat you not as a founder, as a normal employee. We start from year 2009, and every year since then, we start to prepare, training people. I spent a lot of time training the Alibaba young leaders. These days, you see our CTO, all right, Simon and all a lot of the young presidents that actually in the past years are the class in my class called Feng Qing Yang class, I spent time on them. They proved by spending time on young people, it's the best investment in this world in our company. Today, they take the leaderships. They're never scared of the future. They fight for the future. They believe the mission. They believe the value. So and then every year, we do we step I step to think about that. And I remember, I think you remember the year before last, my time spending in the air, 8:40 hours. Last year, 8:40 hours. This year, probably 1,000 hours in the air does not increase the weight to the airport. I believe I'm purposely not working in the company. Let the management make all the decisions, and they operate perfectly. And I told Daniel years ago, those investments below 20,000,000,000 RMB, don't even tell me. You just make decision. Don't even ask me because he has to make decision himself, and he proved. And I purposely leave the company. Don't come. This year, I left the company in May 28. I left the China Council in Europe, Africa for over 60 days without coming back. And I did not got one phone call from the company. I know they're ready. This is something that you're not doing for what you want to do. You have to prepare for a long time. If you love the company, just like if you love your kid, you can teach him in the kindergarten, primary school, no problem. When you go to the middle school, high school, university, let them go. If you let them go, you really love the company. If you control it, you're not loving the kids. So I think it's my responsibility to let the company go. 2nd, we have a great team and great leaderships. If you've got a great team like Daniel Zhang, Eric, Joseph Tai, of course, he's going to retire soon, think. 2 of them, right? When you got a great team like that, you will know that it's our honor. We are so lucky that we got a great people like them. Daniel, he thinks very large, very clear. He knows what he's doing. He believes the vision. He's like he's been in the company for more than 10 years. He got respect from his people. And I he and I have been discussing almost every month, some every week. We sit down, we talk. Such a wonderful relationship. And it's a vision, it's a belief, and I know I'm getting old. I love company, but I love them, and I know they are smart. They can do much better job than I do. And you see, Jack, are you disappointed about, oh, are you sad? I'm not sad at all. I'm I think I'm still young. 54 years old. In Alibaba, I'm old. But my career is still young. I think I will probably next 16 years when I'm 7 before I'm 70 years old, I could do something in the other field, some area like education, not teacher, education, environment, rural areas of development, something I can do better. I can start a new career. But if I start to do when a man, you don't you should never think that company cannot live without you. Actually, a lot of people when they leave the company, you don't know where to go. So you have to continue to stay in the company. I know very well, now I can go out, leave the job for those people who can do better than I am, and I can start a new career. And I'm sure in all the areas I want to do will be something I've found, something I can do better, all the experience, resources, all the things I've got, I can do a much better job. If I start to retire 64, I don't think I will retire because I know 64, when I retire, I have nothing to do. I will stay in the company all the time, torture all the Everybody Everybody will get old, everybody will get sick, everybody will get problems. So we have to prepare this. So every year, we're preparing that. Now it is the time. So thank you, Daniel, and thank you for the I know it's not easy to operate a company like Alibaba, but I'm pretty sure I'm 100% sure that Daniel will do better job than I do. And I had a long, long discussion with him. And I said, Daniel, every mistake you make, I will make. But I'm sure a lot of mistakes I will make, he will not make. Any mistakes the team make, Jack Ma understand and support. That is the trust, right? This is the trust we have, and I'm honored to have that. So this is my first time. People call me these days, Jack, anything wrong? All right. I got government officers call me. Are you crazy? What happened? Are you going to be something painful or some disease or what? I said no. And I got rumors from outside China saying because government want to push you top down. Nobody can. If you don't want to leave, right, otherwise because I know it's not about the political government. And people say, is it because of China U. S. Trade that the situation is bad, so you're scared, you run away? Or something like a minuscule test happening. So, not yet, and we're not. I want to say people have a lot of gas, People will have a lot of gas. But for me, I know this is not today. This has been 10 years' preparation. And I with our team, I told the team a year ago that we should prepare for this day. September 10th, my 54 year birthday, that is the determinant day. We will happen we were to do that. Nothing to do with the U. S. And China Trade Conference because ask anybody in the company, in my life, or you ask my parents, in my life, have I ever got 1 minute scared of the future? Oh, I'm never scared of future. I'm never scared of anything coming back to us. It's opportunity. It's a chance, especially these days. The more I thought about this, the more I think there are so many things we can do. There are so many things we should do. There are so many opportunities there, right? So this is the first question. What's the second? What's the future of Alibaba will look like after Jack Ma leaves? Don't worry. I think I'm 100% assured and confidence for Alibaba future. As I said, this thing has been tested in the past 3 years. The management, great. You see all the young leaders these 2 days, and we got a lot of them, I always have a dream in this company should be. This is all I believe, which a lot of generals, they are great, young, talented, A lot of women employees and women colleagues, women leaders, this is the day we decided to do that in year 1999. So the team ready, the culture. I've seen very few companies like Alibaba in China. We believe mission, we believe value. We believe the future. All the plan we do for 10 years. And I think what you will feel for 20 year plan, we had that. We will be Alibaba Digital Economy. We create 100,000,000 jobs for the world. We will serve 2,000,000,000 consumers. We will support 10,000,000 small business globally to be profitable. This is 20 year vision. And we also have a short term vision that is on Alibaba 20 year anniversary. We will be go across 1,000,000,000,000 U. S. Dollars GMV. This number was not made this year. This number was made 6 years ago when nobody had even think about what $1,000,000,000,000 mean. We said now we are getting closer. We also have a very clear strategy, globalization. Think about it. Today, more than 95% of our revenues, customers, all the things are in China. But Alibaba must be a company of globalization. Otherwise, we will never choose a name Alibaba. We should choose another crazy Chinese names that people don't understand, right? We call Alibaba because this company must be globalized. Globalization is a long way for us. For us to have an international business takes about 3, 5 years. But to be a global company, a global company means create value for the global. Really think about great jobs for global, right? It takes about another 12 years. So this is globalization is the thing that Alibaba is going forward. And next is urbanization. We go to the rural areas to support the farmers. If we can improve the China way, if we can figure out the China model of supporting the rural areas, we can find the best business model supporting the world. There are 90% of the business of the countries, a lot of countries, they are in the developing countries. So we have to figure out the world. And the next, the technology. How can we make our technology more inclusive? So all the things you see a lot of business models, We have actually most of them not for today, but for the future, including Gaode, including satellite data, all the things we invested. We never invested for today. We never invested because we wanted today's revenue or tomorrow's revenue. We believe the future. We believe that China, Alibaba, e commerce, Internet, IoT, so good. And for the middle term, new retail. Then very soon, we have a new in manufacturing IoT, new technology, new financing, and new data. All the things next 10 years in Alibaba will go. When we announced 2 years ago about new retail, nobody believed that. But these 2 years, new retail comes. What's the purpose for new retail? New retail is for new manufacturing and the new manufacturing Alibaba is on the way. A lot of companies just learn new retail. They never think about the next step and the 3rd step after next. This, I don't know how many of you play the black and white gold Joe just showed. A professional gold player, when he plays once, he think about the 14 or 15 steps. People like us, we're just to focus on 1 step. So we think Alibaba is trying to play the goal that fighting for the future. And this is, I would say, I'm confident in Alibaba and the culture, the partnership is so unique and the people are so good. So no problem. Don't worry about that because I would be a shareholder like you and a meaningful shareholder, right? And I would cheer for that. No problem. The 3rd view on USA China trade wars, what it will look like. Well, it's going to last long. It's going to be a mess. Maybe 20 years. Don't think it will stop in 20 months or 20 days. It's not about the trade war, it's about the competition of 2 countries. In American history, there are 2 countries. They're all that they really lost the trade war. Not because they don't like trade, right? The I think Ronald Reagan, he loves free trade. He launched a lot of things to promote trade. But when Japan came, he launched the war to fight against Japan. Japan at that time was the 2nd largest economy of the world. Today, China becomes the 2nd largest economy of the world. This kind of thing happens very natural. In the Western, they believe competition improve. In China, we believe harmonious improve. We are 2 totally 2 different culture. So this thing will last long. If you want to have a short term solution, there's no short term solution. China, U. S. Trade lasts for 30, 40 years, becomes such a big size. If there's no problem, it's impossible. They're a big problem. It is very natural. The one does not like it, but the other guys don't like it, sit, talk. If they cannot talk, they fight and they talk. And I think this thing, even Donald Trump retired, the new president come, it will still continue. There is one big opportunity and there's one thing that for sure the world needs new trade rules. Americans don't like the trade. Europeans do not like the trade rules. China don't like it. We need a new trade rules and laws. We need to upgrade globalizations. We need to upgrade WTO. In the past 30, 40 years, globalization was driven by big companies, by big countries. Next 30, 40 years, the world needed inclusive globalization. The world needs a system that every country, big or small, can be involved. The world needs small business be able to join this trade. So it's not about 2 countries trade war. The world needs a new trade laws. And what is that? That is what Alibaba doing. We need to build up a system. We need to build up a trade, cross border trade for small business, for consumers. We need to making sure everybody can global buy, global sell, global deliver, global pay and global travel. Don't think it's impossible. It is possible. And this is what Alibaba's responsibility. This is Alibaba's opportunity too. 19 years ago, nobody believed e commerce were like that in China. We made it. Today, we have enough resources to make that happen. So we take about another 20 years to build it up. So the trade war between China and USA, will that affect China or affect Alibaba? Yes. For short term, a lot of business in China will be in trouble. A lot of American business will also be in trouble because war if there's a war, nobody will benefit. I'm sorry to see that. We try to stop it. As business people, we know how to do business. We don't want to have a war. Easy to launch a war, difficult to stop a war. And you may win the battle, but you'll lose the war. So short term business community, China, USA, Europe, we're all being troubled. Middle term, a lot of Chinese business will probably move to the other countries. But long term, China will have a new model. China must open its market. China must have the domestic demanding reform. And I think, for sure, there are 2 things that in China will never change. 1st, domestic consumption. Today, China have 300,000,000 middle income people. 1.4 1,100,000 people, not middle income. The middle income people will grow to 500,000,000. You like it or don't like it, it will go. But middle income to middle class, there's another huge opportunity. This is the opportunity leave for T Mobile. There are a lot of business a lot of people among 1,000,000,000 people. They are under middle income. These are the consumers for the Taobao. And I think this is the trend is going on. China needs to have consumption upgrade, and China also needs to separate or divide different consumptions called shao fei fengxi and shao fei fengxi. So these are the opportunity. China will never change. They people don't. When problem comes, when economical come, problem comes, people have no money to spend, they go to Taobao. So I see it's an opportunity with help. And when problem comes, small business, they cannot buy expensive products, equipments, they come to Alibaba. So I would say good time have a good business model, bad time have bad business model. I'll also have problems, but how do you fix it? Next thing is about technology driven economy. I think the technology driven, Internet driven, data driven in China next 10, 20 years will never change. So if the consumption, domestic consumption do not change, the technology driven economy not change, we don't feel any problems with us. And I'm sure for China, short term problems, middle term problems, but for long term. What do you mean by long term? I think about 3, 5 years. 3, 5 years later, China will upgrade its economy. China will really rely on not only on one country. If America don't want to do business, $40,000,000,000 $400,000,000,000 not happy. We should separate $400,000,000,000 to 20 countries. Every country has 20,000,000,000. That is called One Road, One Belt. That is called we should work more in Africa, Southeast Asia, Europe. So in the future, if the 2 countries rely on each other just purely, it's not healthy for both countries. So I think opportunity is there. The world has called for new rules and laws. And this thing, China needs to change. If China this trade conflicts or wars is going to push in China to reform. And by the way, I want to say there are three reasons why China will have a short term problems. First, we just had a fantastic past 5 years, anti corruption. President Xi said, You know that? It's so painful. It's a surgery to take all the garbage away, the corruptions. After the big surgery, like Gua Gu, Liaosang, you need to stay alive on the bat for years to recover. We are facing challenges. We need a lot of young leaders. We need more government officers that understand the business, understand the economy. For them, it takes about another 3, 5 years to recover. I think all all people will understand, right? In the past 5 years, China launched the biggest anti corruption wars in the world. When you take all the things away, you need to rest, you need to recover. So we are recovering time. And the next is China is entering into, quote, upper grade economy and shifting the economy, right, from exporting to importing, from outside to domestic, from real estate investment to supply chain, all the things have changed. For all these things, nobody have experienced. Nobody know where to go. Nobody know how to go. So it is the puzzling period. But China, I think I believe the people here, I believe the all the business community, government, it will work in the 3, 5 years, we'll figure it out. And the third, this trade war, if we refuse it, it's a war. It's against the China. It is. But it depends on how China our Chinese people view it. I think it's a challenge to us. It's an opportunity to us. We need to change the business model. We need to upgrade the way we do business. We need to be more open, and we need to reform everywhere most of the things in China. So I take this as an opportunity. And I think if we face this positively, it's a great opportunity. 10 years later, China will be different. And 10 years later, USA will be different. And 10 years later, I think if we can make full use of these 10 years, start to prepare your model, doing a little bit modification, believe the future, nobody can stop globalization, nobody can stop technology, nobody can stop young people, and nobody can stop this innovation. And Alibaba should get ready for that. So I strongly will discuss with Daniel and the team. For Alibaba, we should get our ready the great opportunity of domestic consumption comes up. We should get ready for the new technology not only in retail, but also manufacturing, the IoT. We should not focus on this quarter, next quarter or next year's profit. Which I keep on investing because this is the huge opportunity. Nobody in the history, in your life can get opportunity like this for a year or 2. Don't worry about Alibaba. If Alibaba cannot sustain, cannot grow, no company in China can grow. I'm 100% growth, 100% confidence in that. We should not stupid enough to prove that we are making profit growing or revenue growing every quarter to prove how smart you are. When somebody prove how smart he is, he's getting into trouble. We have to prove how young people are smart, how our small business is smart. We have to prove they can survive. This is the opportunity for Alibaba. When every problem comes, when the first when Alibaba Internet Bubble busted year 2003 or 2004, we started to train our leaders. We started to prepare for the future. And year 2008, when the financial crisis came, we started to train our people. I remember I took the whole team to Silicon Valley, to America, to Seattle. We learn, we listen, we start prepared and coming back with disaster goal, we're ready. Today, the same. We should not focus on next quarter. We should not focus on next half year because no matter if the rainstorm come, no matter how hard you run, you cannot run fast. By closing my talk, I tell you a story. Father had 3 sons and a big rainstorm is coming. He said, you guys go pick up something back home, which is 10 kilometers away. So the elder son had a great equipment, wonderful equipment, all the things, stuff, he said. He started wrong. The second son had a beautiful, very strong umbrella. The younger son, he had nothing. So 3 people went out. Late afternoon, 3 people came back. The elder son broken the leg. The second son broke the leg broke the back. The young son came back with the machine, with the staff. So the son said the father said, what happened? The elder son said, because I have good equipment, I think Stum is okay. So I run out. The second side said, I have an umbrella. I think storm is okay, so he went out. The younger said, I have nothing, so I waited to hide the cave until the rain go up and go up, pick up. When problems come, learn how to hide, how to train. Do not go out like 2 days ago Hong Kong, the big stop. You will be in trouble. So this is the secret sauce of Alibaba. We see the future as a CEO, not only see the opportunity, but also see the disaster. When the disaster comes, you know how to avoid it, how to make use of it and how to benefit. This is what Alibaba is learning. And this is in the past 20 years, we see all these kind of problems every day. And I believe Daniel and his team, they will have this wisdom to fight for the future. Thank you so much. Thank you, Jack. Jack, if you can remain on stage, let's invite Joe, Daniel and Maggie on stage for a Q and A. I know you guys have a lot of questions, so we made it 50 minutes. Enough for everyone to give opportunity to ask questions. So we'll start out with the center region, lower level. Any questions? A gentleman right there. I think, Pia or Shadi, you raised it first. Thank you. A question for Jack, Joe, Daniel, all of you and Maggie. In your mind, does a company ever get too large, too unwieldy? Or do you think the partnership structure can grow and can control that? So the question is, is the company getting too large and unable to unyielding, and so that is the partnership structure able to continue to move this big company along? Yes. I think Alibaba will have 102 partners, and now we're only above 30. And actually, I told Joe for the partnerships will be perfectly wrong after 30 years. So the 1st 5, 10 years is a testing. Even this, I think I told Joe, I think a year ago, I could not imagine if Alibaba become such a complicated business model, such a large scale with Alipay and all the company such a huge business economy without a partnership, I don't know how can this company sustain. And our partnership is only at the early stage. And all the partners working very hard to improve this system. We were in Japan just a few weeks ago. All the partners there were discussing the rules and laws, how to improve the leadership, training and business talents. So I think I'm very, very confident. This is Alibaba Partnership is only in the very early stage. It gives us another 3, 5 years. You will see the huge improvement. Yes. I think companies that don't have a unified mission and also a vision about the future that all the management team can sign on to will get to unwieldy. But I think throughout these 2 days, you've heard us say very clearly what our mission is to make it easy to do business anywhere. So everything we do, we ask ourselves whether that's consistent with our mission. And also, Daniel has clearly laid out the vision of 2,000,000,000 consumers, 10,000,000 profitable businesses and also creating 100,000,000 jobs. So everybody is aligned to that long term goal. So I think with having a very, very clear mission and also a vision that sets kind of the long term target, strategic target for us. Everybody is aligned to that. I think that's kind of the unifying factor to bring everybody together. Okay. For the next question, can the person stand up, mention your name and your institutions and put the speaker closer to your mic? I think there's the lady that really want to ask a question. Thank you, Rob. I'm trying very hard here. So this is my name is Mona Zheng from Mackenzie Investments. We're based out of Toronto, Canada, long only long time shareholder for Alibaba. I have two questions for soon to retire Chairman Jack Ma. Number 1 is, I think Alibaba has grand ambitions in many business segments. But I'm curious, well, given China's legal framework and political system, how do you define the boundaries of corporations like Alibaba? So that's my first question. And second question is, personally, in my opinion, I think Alibaba has been a great enabler for Chinese economy in many aspects. But I also assume you also caused some frictions in other areas. So how do you think about your enabling economy but also sometimes disabling the economy with a lack of better word and its policy implications? Well, she's repeating the question in Chinese. In the Chinese context, companies like Alibaba, to what extent do you think the government can tolerate Alibaba's operations? And secondly, to what extent Alibaba is enabling the Chinese economy? And to what extent you're maybe having some negative impact on some of the sectors? Yes. First, the boundaries, Well, I consider Alibaba as a reform driver engine for China. I don't think that Alibaba today would that I have got a government officer asking me, Jack, what is the boundary of Internet? You're almost everywhere. I say, Internet is just like electricity. There is no boundaries. It's a way of thinking. It's a way of doing things. We're entering into a new period, a new era. So I don't think we should think control ourselves if it is good for the future of society.

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