ALI ECO SYSTEM CROSSBORDER SOLTUION Daniel Yiu International

AGENDA • ALIBABA ECO SYSTEM INTRODUCATION • HEALTH & E-COMMERCE MARKET in CHINA • ALI CROSS-BORDER SOLUTION 2

ALIBABA MILESTONES Alibaba Group Founded in Jack Ma’s apartment; Alibaba. com and 1688. com launched 1999 Aliwang (instant messenger) launched; Alipay launched Brand/Retail B 2 C platform Tmall launched; a complement to c 2 c platform taobao 2004 2003 Online shopping c 2 c website Taobao Marketplace Launched Online group buy Juhuasuan launched Global consumer marketplace Ali. Express launched Mobile Taobao App introduced 2008 2007 Digital marketing Alimama launched; Marketplace started to monetize 11. 11 Global Shopping Festival 2010 2009 Recoreded GMV settled through Alipay of RMB 93. 2 billion (US $14. 55 billion) 2015 2014 Alibaba Cloud Computing Aliyun Alibaba Group acquired Citic 21 CN and renamed the company to founded in conjunction th With Alibaba Group’s 10 Ali Health, a healthcare and Wellness arm Anniversary celebration 3

Ali ECOSYSTEM of E/M/S COMMERCE B 2 C/B 2 B Domestic/Cross-Border B 2 C Cross-Border Import B 2 C Cross-Border Export B 2 B C 2 C Bonded warehouse Direct Shipping Marketers ¥ ¥ Consumers Customer Experience MAP/LBS Video P 4 P Display DMP DSP Group Buy Channel Social Media DATA & TECHNOLOGY Product Service 4

C 2 C and B 2 C PLATFORMS to FULFILL INDIVIDUAL/BRAND MARKETER and CONSUMER NEEDS B 2 C C 2 C 5

CROSS PLATFORM AND CATEGORY VERTICAL CREATE MORE DEMANDS AND OPPORTUNITIES Taobao Mobile Tmall Mobile Ali Health Mobile 6

ALI HEALTH MISSION BETTER HEALTH-BETTER LIFE Pharmacy Fitness Health Management Nutrition Healthcare Health Record Evaluation Involvement Goal Achieved Improvement 7

ALI HEALTH, AN ONE STOP ALIBABA SOLUTION FOR HEALTH & WELLNESS As part of the Alibaba Group, Ali Health is an innovative product/service provider covering health and wellness concept. E-COMMERCE Member CRM Data Driven Marketing S-COMMERCE VMS Dietary Supplement OTC Medical Device Sexual Wellness Health Service Medical Service Doctor-Patient Network Health Insurance 8

SELECTED GLOBAL BRANDS CURRENTLY JOIN ALIBABA MARKETPLACES 9

SELECTED GLOBAL HEALTH & WELLNESS BRANDS …. 10

SOME OTHER ALIBABA FACTS……. 630 mil User Data China’s Largest Data Company 20 bn+ 1 mil+ Advertisers China’s Largest Advertisers’ Partner Daily Imp. China’s Largest Media Platform 98% Internet User Reach Build Largest Internet users reach network in China 11

DIETARY SUPPLEMENT E-MARKET TREND © 2014 Ali. Health. All rights reserved.

ONLINE DIETARY SUPPLEMENT MARKET LANDSCAPE: ALI E-MARKETPLACE The size of dietary supplement market remains steady and continues to grow : a year over year 3. 3% increase in Ali marketplace (c 2 c+b 2 c). +3. 3% Source: 13

CHINESE MARKET PULSE : OPPORTUNITIES E-shopping growth is in a rapid scale outside of 1 st tier cities Smartphone transaction is tripling Quality of life has become a major trend in e-commerce Nearly 50% of the dietary supplement purchased online are from 2 nd and 3 rd tier cities. 1 st tier cities contribute only 20% of the total consumption. While PC penetration is relatively low (specifically in rural area), nearly 75% of the online transactions are made by smartphone Dietary supplements have become a daily necessity: the top 15% shoppers spend at least 1, 000 USD annually 55% of the shoppers are new comers*, and 30% of the shoppers repeat their purchase every six months *within 12 months purchase cycle Source: Alibaba 14

CROSS BORDER E-COMMERCE LANDSCAPE ALI E-MARKETPLACE The cross border e-commerce in China has been mature in recent years. On Ali-marketplaces (c 2 c/b 2 c), the market size doubled since 2014 Q 4. In 2015, the size has exceeded 10 billion RMB. Cross Border E-Commerce Transaction Trend (RMB) +94% *includes both C 2 C and B 2 C 15

HEALTH AND WELLNESS E-MARKET in CROSS-BORDER ECOMMERCE ALI E-MARKETPLACE The Health and Wellness category accounts for a significant share of the total cross border e-commerce. Furthermore, it continues to increase in a steady basis. Transaction (GMV) 16

TOP CATEGORIES in CROSS-BORDER E-COMMERCE Among all cross-border e-commerce, nutritional/dietary Supplement is one of the leading the cross-border ecommerce. Cross Border E-Commerce Category : Transaction (GMV) *Oct 14’- Sept 15’ 17

CROSS-BORDER DIETARY SUPPLEMENT ALI E-MARKETPLACE In Dietary Supplement category, cross-border transaction has reached 20%, from a single digit in 2014. Share of Cross-Border E-commerce in Dietary Supplement Category : Ali Platform 25, 0% 20, 0% 15, 0% GMV Transaction 10, 0% 5, 0% 0, 0% 201401201402201403201404201405201406201407201408201409201410201411201412201501201502201503201504201505201506201507201508201509201510201511201512 18

TOP BRANDS & PRODUCTS in DIETARY SUPPLEMENT ALI E-MARKETPLACE Currently, North American brands lead the category sales. Top Brand, Country of Origin, Product by Transaction (GMV) Brand Country of Origin Top Selling Product Schiff US Cranberry Herbal Life US Collagen Salus Floradix Germany Soy Protein Isolate Swisse Australia Glucosamine 山本�方 Japan Grape seed extract Amway US Enzyme Puritan‘s Pride US Soy Protein Isolate Nature’s Bounty US Thistle class Nature Made US Fish oil / cod liver oil Muscletech Canada Q 10 *Oct 14’- Sept 15’ 19

CROSS BORDER/SUPPLEMENT CONSUMER PROFILE ALI E-MARKETPLACE As expected, cross-border e-commerce is more female oriented while nutritional supplement demonstrates an older audience target. 100% 90% 80% 70% 60% unknown 50 and above 50% Male Female 40% 20% 10% 0% 0% Gender 30 -34 40% 30% Nutritional Supplement 35 -39 50% 30% Cross-Boarder E-Commerce 40 -49 25 -29 18 -24 18 and below Cross-Boarder E-Commerce Age Nutritional Supplement 21

CROSS BORDER/SUPPLEMENT CONSUMER PROFILE ALI E-MARKETPLACE From Ali marketplace member status perspective, the cross-border e-commerce targets index higher on V 3 and V 4 status, suggesting affluent shopping experience. For nutritional supplement targets, lower member status suggests more new online shoppers. 35% 30% 25% 20% Cross-Boarder E-Commerce Nutritional Supplement 15% 10% 5% 0% V 0 V 1 V 2 V 3 V 4 Ali Member Status V 5 V 6 unknown 22

CROSS BORDER/SUPPLEMENT CONSUMER PROFILE ALI E-MARKETPLACE From the market perspective, cross-border e-commerce and nutritional supplement share similar targets : lower tier cities and costal provinces generate most consumptions. Nutritional Supplement Cross-Boarder E-commerce Top Province Top City GD SH JS BJ ZJ GZ SH SZ SH HZ SD HZ BJ SZ BJ TJ SD CD HB CD SC WH

ALI CROSS-BORDER SOLUTION © 2014 Ali. Health. All rights reserved.

ALI CROSS-BORDER SOLUTION The entire Ali eco system is dedicating to promoting cross-border e-commerce. Storefront Solution Storefront Management* Monetization Optimization Member CRM Targeting Platform/ Category Management 3 rd Party Partners (e-commerce op. ) (media agency) Store Operation/ Go to Market Strategy Payment Escrowed Service Foreign Currency Conversion Payment Logistics Bonded Warehouse Direct Mailing *Due to uniqueness of health related product consumer purchase path, Ali Health will host a storefront in Q 2 2016 25

GENERAL TRADE VS CROSS-BORDER E-COMMERCE Overseas Shipping Overseas Merchants Domestic Shipping Overseas Shipping (Ocean/Air Freight) China Port Customs CIQ General Trade + Duty & Import VAT Product Registration China Warehouse Ali US Warehouse US VMI Air freight + Custom/CIQ + China Courier Direct Shipping Solution Parcel Tax* China Bonded Warehouse *Is scheduled to replace by Duty (>2, 000 RMB item) & Import VAT China Courier + Sales VAT Chinese Consumers Custom/CIQ + China Courier Bonded Solution Parcel Tax* 26

WHAT IS CROSS BORDER E-COMMERCE AND WHAT IT MEANS FOR MARKETERS AND CONSUMERS? Cross-Border Regulation • No need to setup legal entity in China • Notification basis for CIQ and Custom • Negative Watch List • Parcel tax • Each order limitation 1000 RMB Marketers Consumers • • Demands for brands/products not available in China Quality and Authenticity Latest and most advanced health products/services CROSSBORDER • • Time and cost efficient to enter a market (for health and other regulated products with higher average price) Min. risk for new comers, additional channels for current players Tax advantage 27

BONDED WAREHOUSE üSince May 2014, Alibaba started to cooperate with 7 customs in different cities (Hangzhou, Ningbo, Guangzhou, Shanghai, Shenzhen, Zhengzhou, Chongqing)to establish a new logistics model. üThe imported goods are shipped to bonded warehouse and are dispatched after customers places an order. üThe products are not subjected to import tax until they are sold to consumers. • • • Hangzhou Warehouse : 15, 000 sqm Daily handling Capacity over 50 k orders Gateway for East China Shanghai Warehouse Ningbo Warehouse http: //v. youku. com/v_sho w/id_XODE 3 ODQx. Njgw. ht ml • • Guang. Zhou Warehouse: 5, 000 sqm Daily handling Capacity over 10 k orders Gateway for South China 28

GLOBAL WAREHOUSE London Los Angeles Newcastle Hamburg Incheon Osaka HK Taipei Sydney 29

CROSS-BORDER E-COMMERCE SHOPPING PATH By utilizing Alibaba’s online payment escrow service from Alipay, the transaction and purchase flow are completed and guaranteed. 1) Chinese shoppers place orders on Ali Cross-Border B 2 C Chinese shoppers 2) Shopper makes payment via Alipay in RMB 3) Alipay confirms escrowed payment Overseas merchant 4) Order is sent to shopper 5) Shopper confirms order delivery 6) Alipay releases payment from escrow to merchant 30

NEW MERCHANT ENROLLMENT PROCESS Cross Border Service Contract Sign-off/Payment completion Alipay Account Application Finalize product list Product upload/URL Logistics Contract sign-off Book for logistics service Merchant User Training Warehouse Visit Logistics Solution Shop Opening 4 -8 weeks Customs ／CIQ (Merchandise Notification) 2 weeks Merchant Overseas Shipping Bonded transfer & Warehouse Receiving Ocean： 30 -45 days Air： 3 days Trial-Run Go-Live API Integration Time vary 31

APPENDIX © 2014 Ali. Health. All rights reserved.

A VERITY of WITHIN PLATFORM MARKETING OPPORTUNITY Branding Interaction Tmall Super Brand Day Taobao Trip Tmall Cobrandin g Celebri ty Store Ju. Hua. Suan Free Shipment Everyda y Low Price Promotion Red Envelope Lott ery Tao Gold Coin Store Bogo Loyal Point 满就减 Item Tao Doll Aliwan g wang Sign in Micro Tao. Girl Trial Center Marketing Word of Mouth Tactical 33

China Cross-Border B 2 C Policy • Declaration No. 56 on Cross-border E-commerce Goods Supervision by General Administration of Customs of the People's Republic of China (2014) • 7 Pilot cities：Hang. Zhou, Guang. Zhou, Shanghia, Chong. Qing, Ning. Bo, Zheng. Zhou and Shen. Zhen • The State Council has approved the setup of the China (Hangzhou) cross-border e-commerce pilot zone in Hangzhou. The zone will take the lead in setting standards on cross-border e-commerce transactions, payment, logistics, customs clearance, tax refund and exchange settlement, said the statement. • Key Content • Personal items mailed inward are subject to customs import duties according to law. However items with import duty payable less than 50 Yuan (including 50 Yuan) shall be exempted by customs* • Items sent by individuals from overseas with the limit of value is 1, 000 yuan each* • Negative List of CIQ and Customs (i. e. , notification based) *The current duty exemption is scheduled to cancel starting April 8 th, 2016. The Customs is planning to implement: -Per item limit – 2, 000 Yuan (306 USD), duty free. Amount exceeded will be taxed according to general trade -All items are subject to import VAT -Annual purchase limit (per individual) – 20, 000 Yuan (3, 060 USD)