Building a Scalable Business and Investment Opportunities in China: Business Services

1. Building a Scalable Business and Investment Opportunities in China: Business Services MONTE JADE SCIENCE AND TECHNOLOGY ASSOCIATION Rockville, MD August 8, 2007 S. Tien Wong Chairman & CEO Opus8, Inc. twong@opus8.com opus8.com (English) opus8.net (Chinese)

2. About Opus8 • Private Investment Firm, established in 2002 • Based in Washington, DC with Offices in Shanghai • Mid-market Buyouts, Venture Capital • Investment Focus - North America and China • Business Process Outsourcing (BPO) • Call Center, CRM • Marketing Services (DM, DR, Database) • Opus8 Differentiators - Value-adds • People, Customer Acquisition & Marketing, Customer Lifecycle Management/CRM, Business Process Engineering • “Entrepreneurs investing in Entrepreneurs” • Q4, 2007 - Raising Opus, L.P. China Fund - $50 million

3. Unitel/CyberRep • Founded in 1992 • 3 friends and $50,000 in credit card debt • Quality gap in industry (outsourced teleservices & BPO) • Customer Service, Billing, Tech Support, TeleSales • Industries: Telecom, Financial, Consumer Products • Differentiators – Professionalism, College Grads, Dress Codes, Health Insurance, 401(k), Code of Ethics and NDAs • Fortune 500 Clients: Microsoft, ADP, Merck, Nextel • Allied Capital - $21 million mezz and equity for 30% • Sold to Affiliated Computer Services 2003

4. CyberRep Growth • Inc. 500 Winner – 4 consecutive years • “Top 50” Service Agency

5. Elements of Scaling a Business • People • Culture • “Scalable Customers” • Process • Capital

6. Elements - PEOPLE • Hire for the present – with the future in mind • Balance growth against profitability • Balance burnout/stress against hiring too aggressively • Two Critical Character Traits • Flexible and resourceful • Essential in Start-ups – no support staff, no money • Everyone is a “Utility” player • Smaller companies can win with Speed • Must know limitations • Critical errors can be made • TEAM concept supsersedes “Egos”

7. Elements – PEOPLE (2) • The “BIG 4” Musts for hiring A players • Passion – self-motivation, work ethic, infectious • Energy – The fuel for the journey • Execution – delivering accurate and timely reaults • Enthusiasm – ability to energize • Assessment & Rejuvenation • Regular assessments • Identify future leaders and development plans • Rejuvenation of C Players is a win-win for all

8. Elements - CULTURE • Growth • Attitude of Aggressiveness • That’s why you are in Business – to Grow • Morale, winning culture • Opportunistic – WHY? • Results are never as budgeted • Marketing plans always vary • Client requirements change • Flexibility • Client requirements • Market conditions • Competition

9. Elements – “Scalable Customers” • What is a Scalable Customer? • Partner mentality (vs. Vendor-Vendee mentality) • They understand you need to make a profit • They know that nobody is perfect – there will be hiccups • Growing Fast • Examples – telecom, deregulating utilities, financial • If they grow, the rising tide can lift your boat • Requires tremendous discipline • Know when to say “NO”!!! • Balance – grabbing revenue vs. staying focused (one of the hardest things in business)

10. Elements - PROCESS • Do it, implement it, live it – without Process, you cannot scale successfully for the long term • Why do it? • Brings Discipline, focus, analysis • Downsides • Takes time, costs money, people hate change • Which Processes to map and engineer? • All key functions (innovation, managing growth, business acceptance, hiring and retention, internal communication, etc.)

11. Elements - CAPITAL • Growth requires Money – function of your industry and how fast you are growing • Money is a commodity – You have Choices! • Raise money with ‘Partners’, not ‘Investors’ • Deep pockets • Understand your space • Track Record • Operations experience, where can they add value for you? • Raise more than you need but not too much • Better to have No Investor than a Bad Partner

12. Summary - Advice for Scaling • Integrity • Great people • Focus on your customer • Be flexible • Build a culture early • Be persistent • Overcapitalize • Have FUN!

13. Why China? • Tremendous Market Opportunity • Tremendous Economic Growth • #1 FDI • Fastest growing economy • Favorable government policies • World’s Largest Consumer Market • Explosive Growth in Middle Class • Huge Need for Business Services and Information Infrastructure • Timing (We are early in a long-term horizon)

14. China’s development agenda… • Double per capita GDP in 2012 from 2000 • Decrease energy consumption per dollar of GDP by 20% by 2010 • Develop domestic intellectual property and brands • Develop technology industries • Lower poverty level • Establish basic social security system • Further improve fiscal, tax and financial systems • Improve energy efficiency, environmental protection and health-care system • Etc. etc. etc.

15. …combined with social trends… • Rapid Urbanization (300m moving by 2015) • Emergence of Middle Class • Increased Disposable Income • Dire Need for Improved Healthcare Delivery • Increased Automobile & Property Ownership • Unprecedented Usage of Internet and Mobile Phones • Etc. etc. etc.

16. …leads to opportunities in Services. (Examples) • Consumer Lending (mortgages, credit card, consumer finance) • Insurance • Banking & Investment Management • Data processing • Healthcare • Value-added telecommunications • Travel & leisure • New media • Environmental Services • Outsourced Information Services

17. Emergence of China’s Middle Class 1. Base Case forecast :Q1 2006 Source: McKinsey Quarterly 2006 Special Edition

18. Urbanite Spending Power On the Rise 1.Some Figures do not sum to 100% due to rounding 2. Base case forecast : Q1 2006 Source: McKinsey Quarterly 2006 Special Edition

19. Middle Class Chinese Consumer Behavior 1. Base case forecast : Q1 2006 2. Some Figures do not sum to 100% due to rounding Source: McKinsey Quarterly 2006 Special Edition

20. Outsourced Information Services • B2B publishing, information aggregation/distribution • Marketing services • Analytics and business intelligence, database mgt • Credit scoring, collections, etc. • Internet-related information distribution • ITO (IT Outsourcing) • BPO • Call center & technical support • Customer Care • Information processing, data entry • Imaging services • Finance & Accounting, HR Outsourcing (HRO) • Claims processing

21. China BPO Market • Excellent Labor Force • Availability • Education system • Work Ethic • Value (cost vs. quality) • Technical Infrastructure • FDI and MNC Attention • Ambition and Attitude of Entrepreneurs and Managers • Lots of Runway • Still very early in the game • Percentage growth vs. mature markets

22. Global BPO Percentage Growth China BPO exponential growth this year Source: 2005 Offshore Services Survey of BPO services

23. BPO Usages • Customer Care: • Customer Order fulfillment services • Business intelligence services • F&A: • General accounting • Operational support services • Procurement: • Sourcing • Category management • HR: • Records management • Payroll and compensation planning Source: IDC U.S. BPO Survey, 2006

24. Call Centers in China 呼叫中心在中国

25. China Call Center Market中国呼叫中心市场 • Continued Potential - Japanese, Korean etc. - 持续潜力 - 日本及韩国 • Huge Potential - Chinese Language services - 巨大潜力 - 中国语言服务 • Example: Call Center ratios in US vs. China - 呼叫中心中美比例 • Today: 2.5-3% in US = 5m; 0.01% in China = 100,000 中国十万美国五百万 • Potential = 250-300x growth, 50% larger than US (spend $) 百倍增长 • Industries - Follow Evolution in West - 行业方向跟随西方 • Telecom - 电信 • Financial Services - 金融服务 • Healthcare - 医疗服务 • Consumer - 消费行业 • Service Offerings – Evolution - 服务行业的进化 • Customer Acquisition - Sales & Marketing, obvious value - 客户获取 • Customer Care - Service & support - 客户服务及支持 • Billing and Collections - 记帐业务 • Customer Lifecycle Management - winback, cross-sell. - 客户生活方式管理

26. Which Industries will use Call Centers?运用呼叫中心的行业预计 • Telecommunications - 电信 • Travel (eLong, Ctrip) - 旅游 • Banking & consumer finance (credit cards, etc.) - 银行及消费者融资 • E-commerce (buying & selling support) - 电子商务 • Computer Hardware (technical support) - 计算机硬件 • Software (tech support) - 软件 • Consumer Products - 消费者产品 • Life insurance - 人身保险 • Automotive (auto clubs, gasoline credit cards, dealer) - 汽车 • Government (database, benefits administration, help desk) - 政府项目 • Healthcare - 医疗保健

27. Which Companies will outsource Call Centers? 公司类型预测 • Companies facing fierce competition - 高竞争型 • Companies who compete on service- 服务型 • Companies who view CRM as a “weapon” and not a “cost” 视客户管理为武器型 • Public companies - measured by customer retention -上市公司 • MNCs initially who have prior experience - 跨国公司 • Clients of cutting-edge consultants and ad agencies - 广告代理 • Government Monopoly and SOEs will be final frontier – 政府企业

28. What kind of work will be Outsourced?外包行业预测 • Revenue Generation - Sales, Cross-selling, Lead Gen, etc. - 收益型 • Easily measured, tangible results - 可评估型 • Easier to “sell” internally - 易销售型 • Can be switched on and off easier - 灵活型 • Winback - discrete campaigns (calling ex-customers) - 重获型 • Direct Response Sales (client more dependent) - 直销 • Customer Service - higher degree of dependency - 客服 • Technical Support - very high degree of dependency - 技术支持 • Billing will be last (more sensitive information, privacy issues) 收帐 • The more “intimate” the service, the slower the client will be in outsourcing - 非主流业务适于外包

29. Opus8 Call Center Strategy浩博呼叫中心策略 • Mandarin Language serving China market - 普通话服务中国市场 • Start with MNC Clients we know - 国际熟悉客户 • Simple initial projects - 简单项目 • Locate in good labor markets – HZ -杭州劳动力优势 • Sales office in SH, closer to client base - 销售办公室设上海 • Seek Government sponsorship - 寻求政府支持 • Seek management team with overseas talent- 寻找归国管理层 • Implement western processes and procedures - 实现西方流程 • Utilize areas where we can add Value -投资增值领域 • Customer Relationships - 客户关系 • US Contacts - 美国人脉 • CRM/BPO expertise - 客户关系管理/商务流程外包经验 • Operations - 运营

30. If you want to Invest in China… • Visit China • Study the Culture and the History • Make the Government your Partner - CHINA, Inc. • Build your network; friends 1st, business 2nd • Be prepared to work long and hard • Where can you add value? (customers, skill, network) • Pick the right vehicle: direct investment, JV, co-invest, Fund • Understanding Time is Key • Long Term Horizon - patience is key • China is a “High Barrier” market - there is real value in longevity • Go Slow

31. Thank You & Good Luck ! twong@opus8.com +1-301/913-9500