TRANSCRIPT Innovation In China BEN REYNOLDS, CFA Vice President Analyst At Alger we search for companies driving positive base, Chinese internet companies have amassed large dynamic change. So, despite concerns about the revenue streams that support experimentation and Chinese economy and trade war with the US, we see innovation. significant long-term opportunity in China for one major And now we see Chinese innovations copied by U.S. reason: Innovation. counterparts. Amazon’s growing advertising business is About a decade ago, Chinese internet companies were largely a copy of Taobao’s Sponsored Product Ads, and copycats of U.S. firms. Baidu was Chinese Google, now eBay, Walmart and Wayfair have all followed suit. Taobao was Chinese eBay and CTrip was Chinese Tencent’s WeChat messaging service has become a Expedia. But over the last 5-10 years, we believe new online ecosystem and provided a template for Chinese internet companies have transformed from messaging app monetization now followed by Facebook copycats into innovators. Messenger and WhatsApp. This rapid development is partially due to government China also has a host of new innovations with no U.S. policies and a lack of offline infrastructure. Google and equivalents. Meituan combines Grubhub, Yelp, Facebook are effectively barred in China. Amazon has Opentable, Expedia, Lyft, Instacart, Fandango and Lime inhibited operations both in retail and cloud. Foreign into one “Super App.” Evolutionary Mobile payment restrictions and other tech friendly government policies platforms Alipay and WeChatPay are each approaching combined with much less established TV and physical 1 billion users and enabling trillions in payment volume. retail interests have enabled the Chinese internet Alibaba has also developed smart supermarkets, companies to grow unfettered. blurring offline and online commerce unlike any existing American retailer. However, the mobile boom in China has been the largest driver of innovation. China had only 15% online As we see increasing innovation in China, we here at penetration in 2007, but smartphones have increased Alger are excited to follow the latest developments and the user base to 800 million, quadrupling in a decade, explore the long-term prospects in the region. and triple that of the U.S. With a massive mobile user TRANSCRIPT DISCLOSURE The following positions represented the noted percentages of ​The distribution of this material in the United Kingdom is restricted Alger’s assets under management as of August 31, 2019: Baidu, no by law. Accordingly, this material is provided only for and is directed holdings; Google (owned by Alphabet Inc.), 2.8%; eBay, no only at persons in the United Kingdom reasonably believed to be of holdings; Ctrip, no holdings; Expedia, short 0.0%; Weibo (owned by a kind to whom such promottions may be communicated by an Sina Corp), no holdings; Twitter, 0.1%; Facebook, 3.4%; Amazon, unauthorized person pursuant to an exemption under the Financial 6.1%; Alibaba Group, 2.3%; Walmart, 0.4%; Wayfair, 0.1%; Services and Markets Act 2000 (Financial Promotion) Order 2005 Meituan, 0.0%; Grubhub, 0.0%; Yelp, no holdings; Opentable (the “FPO”). Such persons include: (a) persons having professional (owned by Booking Holdings), 0.1%; Fandango, no holdings; and experience in matters relating to investments and (b) high net worth WeChat (owned by Tencent), 0.0%. Taobao is owned by Alibaba. bodies corporate, partnerships, unincorporated associations, trusts, WhatsApp is owned by Facebook. Lyft, Lime Instacart and etc. falling within Article 49 of the FPO. Most of the rules made Fandango are private companies. under the FSMA for the protection of retail clients do not apply, and compensation under the United Kingdom Financial Services The views expressed are the views of Fred Alger Management, Inc. Compensation Scheme will not be available. and Alger Management Ltd. (together with their affiliated entities “Alger”) as of April 2019. Alger has used sources of information Important Information for UK and EU Investors: which it believes to be reliable; however, this publication is not ​This material is directed at investment professionals and qualified intended to be and does not constitute investment advice. These investors (as defined by MiFID/FCA regulations). 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