1 2 Agenda Logistics industry in Taiwan Taiwan

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2 Agenda • Logistics industry in Taiwan • Taiwan Government Vision and Policies • Key Smart Logistics examples in Taiwan – FEG: In house logistics for mall and large department stores – PX Mart Co : Large in-house logistics operations for convenient store operators – E-commerce Logistics : momo – 3 PL: ID Logistics – Land/Warehouse developer: Logistics Republics • Play Smart for Efficient Customer Response 2

3 Logistics services in Taiwan 　 1970 -1980 1990 2000 2010 -now Factories and export Mainland China developed Electronics boomed, EC booms worldwide Taiwan became manufacturing traditional manufacturing International brand Industry factory of the world Tradition factories moved waned direct marketing in Environment to China Service industry rose in Taiwan Products made in Taiwan exported modules Taiwanese products SME can become Taiwan and import to factories in China sold worldwide directly international brand， goods International supply small quantity with Goods flow worldwide distribution， chain management became Taiwanese cross border EC with company’s strength integrated services Enterprise logistics Outsourced transportation Integrated supply chain Logistics centers with service，Starting of 3 PL management and 3 rd warehouse and international Logistics standards， transportation party transporation Operation services，provides management International M&A in cross region solutions Taiwan market Warehouse space Internal warehouse with factory land Enterprise self built dedicated warehouse Small land developer rent or purchase land for warehouse for rent 資料來源: 研院經資中心、物流技術與戰略雜誌&永聯物流開發 Manufacturing moving outside Taiwan， Industrial land redeveloped into warehouse Institutional developers built dedicated modern warehousing facilities 3

Logistics industry landscape in Taiwan Demand momentum Market size As of end of 2016 Estimated total warehouse 20 M ㎡(66% more than 2014) Warehousing industry revenue NTD 35. 6 B(excluding postal service) Legal warehouse space Low vacancy rate Current situation Illegal spaces 14 M ㎡(farm land, residential) Modern warehousing 15% 4 (excluding postal services) Yearly warehousing needs 12 M ping (1. 2 T/1 M× 10 ping) New Taiwan retail brands 28 (another 19 restaurant brands) 2016 retail revenue NTD 4 T (merchandise 1. 2 T) 2015 EC revenue NTD 216. 7 B (Yo. Y +5. 3%) 600 ping warehouse needed for every 1 B EC revenue growth Changing horizen Global brands use legal warehouses Large logistics operators merge small ones Logistics parks and warehouse parks 資料來源: 經濟部、交通部、物流技術與戰略雜誌、CBRE士邦魏理仕、安泓投資 註：「商品零售業」含：百貨公司、 超級市場、超商、量販店 4

5 物流市場版圖 2014 Large warehouse users in Taiwan Retail storage requirements (Per NTD 1 M revenue) Industry Items ratio Ping Logistics 3 PL 65. 6% Household, Electronics 10 Retail related Retail n restaurants 15. 7% Children merchandise/Toy 7 FMCG 4. 4% High tech electronics 6. 0% Woman bags, shoes 4 Cars and car parts 4. 8% Clothing 3 Machinery 2. 4% Designer products 2 Medical equipment 1. 0% Others 0. 1% Manufacturing 資料來源: 物流技術與戰略雜誌、永聯物流開發 Jewry and accessories 0. 6 Comestics 0. 5 資料來源: 神坊資訊、永聯物流開發 5

Taiwan Government Vision 6 Legistics 4. 0 smart, connected, digital 6

7 Government policies 資料來源: 商業司 2015年物流服務業 4. 0

Government policies 資料來源: 商業司 2015年物流服務業 4. 0 8

9 Taiwan Government Vision Smart Logistics Ø Smart technologies will be deployed in the development of e -commerce logistics, harbour logistics, cold chain logistics and city logistics, in order to enhance the value added of the logistics industry. Smart Logistics Ø This will upgrade and transform the logistics industry in Taiwan and help the industry to develop their niche markets. 9

10 Taiwan Government Policies Intelligent Channels and Logistics Ø Promote International and Technological Development in Logistics • Assist logistics operators in supporting cross-border e-commerce and sales through diversified channels. • Promote the development of cold chain logistics. • Increase the added value of Taiwan's free trade port logistics. Ø Promote smart commercial application services • Develop logistics service models for smart channels through technical applications such as big data, the Internet of Things, mobile payment, automation etc. for the channel logistics industry (including retail, logistics, and integrated technology service industry). Integrate online and physical environments and build quality experience environment for smart commercial services in order to enhance Taiwan's productivity and competitiveness in commercial services. 10

11 Taiwan Government Policies Ø Domestic e-commerce logistics providers are encouraged to optimize their workflows, deploy innovative business models, and apply technologies to develop smart logistics solutions in order to improve their operating effectiveness. Ø The industry is encouraged to integrate the distribution capacity of the cold chain logistics and develop the solutions to transfer and dispatch food ingredients from different countries. Ø The purpose is to integrate the retailer system, facilitate high turnovers in the service network and establish Taiwan as a hub for the transfer and dispatch of food ingredients from different countries. Ø The industry is encouraged to promote the last-mile distribution services in the city, deploy autonomous access networks (self-pickup stations) and cold chain delivery services with motorcycles, and build a tracking and management mechanism to trace and monitor the temperatures and the journey of goods. 11

Many Emerging Players Enterprise Logistics 3 PL Cold Chain Airport, Harbour Ø Logistics warehouse moving to Taoyuan 12

Key Smart Logistics examples in Taiwan 13 PX Mart Co. (全聯) u A supermarket chain in Taiwan u Taiwan's largest "hard discounter" chain Up to 1000 stores in 2017, Rev will be over NT$200 B in yr 2020 Logistic Center Status Capital Invest • • Deliver Northern TWN 290 stores total land space 66 K ping，Plant space 12 k ping ≒ NT$ 0. 4 B kaohsiung • • Deliver Southern TWN 200 stores total land space 18 K ping ≒ NT$ 2 B Taichung • • Deliver Southern TWN 140 stores total land space 10 K ping ≒ NT$ 2 B Tao. Yuan 13

Key Smart Logistics examples in Taiwan 14 E-commerce Logistics : momo 14 Source: momo’s IR information

Key Smart Logistics examples in Taiwan 15 3 PL: ID Logistic Taiwan personal invester joint venture with French IDL and served Carrefour originally 15 Source: ID Logistic

16 Key Smart Logistics examples in Taiwan 3 PL: ID Logistic 16 Source: ID Logistic

17 Key Smart Logistics examples in Taiwan 3 PL: ID Logistic 17 Source: ID Logistic

18 Key Smart Logistics examples in Taiwan Land/Warehouse developer: Logistics Republics (LR) • Ally Logistic Property (ALP) is the first logistic property developer in Taiwan and is backed up by the vast financial resources of Linyuan group. • Given its grand scale, economic and excellent common area facilities, gated security, property management services and other shared resources are made. • Standardized all-purpose warehouses and customized specialty warehouses. • Design Thinking” as LR core model of thinking. Putting the customers’ needs as first priority as searching to find the right solutions to the customers’ challenges. Taipei Total leasable area: 250, 000 m 2 Source: LR website Yangmei Total leasable area : 100, 000 m 2 Dayuan Total leasable area: 43, 557 m 2 Wuri Total leasable area: 84, 000 m 2 18

Key Smart Logistics examples in Taiwan 19 Land/Warehouse developer: Logistics Republics (LR) Interior design meeting the needs of logistic operations and people needs in the form of logical layouts and functional spaces provides for an efficient and comfortable working environment for employees and guests alike. 19 Source: LR website

Key Smart Logistics examples in Taiwan 20 Land/Warehouse developer: Logistics Republics (LR) Large span and high ceiling clearance for maximum storage capacity, directional signage, fire extinguishing systems, air-condition systems, lighting systems, loading docks, loading lifts, and turn -about spaces. 20 Source: LR website

Key Smart Logistics examples in Taiwan 21 Land/Warehouse developer: Logistics Republics (LR) Racking systems, pallets and shipping containers all have the ability to form multi-level spaces within a space, carrying new products and possibilities. 21 Source: LR website

22 Smart Logistics is key to ECR Ø ECR is a consumer-driven distribution system in which the production is permanently managed by the consumers’ pointof-sale activities. 22

23 Smart Logistics is key to ECR 23

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