This document provides an analysis of Trans-Cosmos Inc.'s entry into the China call center and e-commerce markets. It begins with an overview of the growing but evolving China call center market and customer segmentation. It then analyzes demand drivers and recommendations for business models and partnering strategies. The document also reviews Trans-Cosmos' Tianjin operations and recommends restructuring and strategic alliances to improve performance and enable expansion in China.

1. -1-
ENTRY FOR PROFIT
TRANS-COSMOS INC. CHINA ENTRY STRATEGY
PRESENTATION
February 8, 2013
John Gregg,
Principal, Navigate Consulting Pty Ltd

2. -2-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

3. -3-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

4. -4-
CHINA IS BECOMING A HIGHLY DYNAMIC CC MARKET
China’s call center market took off in 1998 with an annual growth rate over 100%
• Non-paging market size reached 364,000 seats in 2012
However past growth was largely driven by demands from administrative driven sector
• In 2011, over 60% CC demand comes from four pillar industries: Banking, Post Services,
Fixed-line Telecom, and Insurance
• Distinctive purchasing behavior identified for these purchases
Future growth will be propelled by service oriented and call centres segments
• call centres market will grow at least 35% a year for the next few years
- However large variance exists for call centres segment growth
Overall, China Call Centres created over 360K seats in 2012
and 430K seats in 2015

5. -5-
AND IS GAINING GROUND ON KEY DECISION CRITERIA
Multiple call centres destinations around the world have sprung up as supplier bases.
• Besides India and China, popular locations include the Philippines, Malaysia, Romania,
Ukraine, Brazil and Mexico.
Multiple surveys point to new location preferences and trends:
• Alternatives to India are being mixed in with greater frequency. Latin America and
China ranked as the most popular alternatives to India in one recent survey.2
• According to a number of rankings, China is gaining ground on criteria such as financial
attractiveness, people and skills, and business environment.
• Of 30 top destinations identified as best for offshore Call Centre operations, ten
countries were from Asia (China, India, Thailand, Vietnam, Australia, New Zealand,
Singapore, Malaysia, Pakistan, and the Philippines). Thailand was a newcomer to the
list, as were a few other emerging markets such as Egypt, Morocco and Panama.

6. -6-
Currently, low-price/standard service vendors remain profitable
• Utilization, and therefore, long-term customers, is the key for profitability
• However, high-priced call centres solutions not widely accepted by the market
But high-end services will reach 65% of share off total market by 2014
• We are encouraged by recent positive news on clients’ long-term commitments to
high-end outsourcers
High-end outsourcers can win the game by aggressively establishing long-term client base,
and targeting various call centres opportunities along the value chain
• Five successful strategies identified for new customer development
• Telemarketing and value-added information service most likely to be outsourced
CC OURSOURCERS ARE STILL EXPLORING

7. -7-
TCI SHOULD PARTNER WITH RIGHT LOCAL CC OUTSOURCERS
A partnering strategy is essential for TCI to capture the great opportunities in China
• TCI lacks a bunch of local capabilities, while time is contingent
TCI should target both money making, and money losing tech advanced outsourcers during
negotiation process, based on two plausible partnership strategies
• Money making ones: share profits and leverage local strength
• Money losing ones: control and negotiate for a bargain deal
Considering the limited number of candidates in China and TCI’s tight schedule, a broader
search can strengthen TCI’s negotiation position
Five promising outsourcers identified during the interview process
• Money making ones: China Motion, 800 Teleservices, and Compaq-Star
• Money losing ones: TCY, ITS Shanghai

8. -8-
TCI-TJ: RSTRUCTURING AND BUILDING STRATEGIC ALLIANCES
TCI-TJ experienced difficulties due to both promotion and management issues
• Though improving, the firm is intrinsically uncompetitive in China market
It should restructure for better performance…
• Redefine corporate missions and strategies
• Restructure project arrangement, reporting, measurement and incentive systems
• Refocus its sales on Japanese companies in China and in Japan
… and find strategic alliance for TCI’s China expansion
• TCI should only partner with prestigious local software company or system integrators
• Wiseway screened all the potential candidates lists and funneled down 5 most
promising companies for TCI’s further contact
- Longshine; Global eForce; eBIS; Modern Computer; Huateng Software

9. -9-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

10. -10-
CALL CENTRE INDUSTRY WILL REACH 380-400K SEATS IN 2014
Illustration
• Identify major driving factors to CC adoption
- market competition and service awareness
- telecom charges and phone penetration
• Quantify relationships between drivers and CC adoption
- here we used US benchmark
• Project CC development by forecasting development of
drivers
• Project CC penetration in major user’s industries
- banking, telecom, insurance …
• Add up numbers of each industry to give a CC market
overview
• Interview industry experts or knowledgeable industry
practitioners for their opinion of CC market growth
- system integrators and experts
2009 (1)
(’000 seats)
158
132
145
2014 projection(1)
(’000 seats)
390
337
N.A.
Driving
factor
analysis
Bottom-up
analysis
Experts
opinions
(1) Without paging company

11. -11-
TOP-DOWN APPROACH REVEALS A PROMISING END GAME
Phone line per 1000 people
CC agents per 1000 people
US benchmark
Y = 0.00146X + 4.79
Deflated telecom fee index
Phone line per 1000 people
China phone line
10
21
50
74
158
368
Year
Non-paging CC seats
(‘000)
Source: US Telephone Statistics; Datamonitor;
MII data; China Statistics Yearbook
1998 992000 01 04 12
1000
0

12. -12-
TELECOM IS THE MOST SIGNIFICANT CC USER NOW
Bottom-up Analysis
Industry
Telecom
Mobile
Banking
Insurance
Post service
Manufacturing
Computer
Airline
Security
Courier
Home appliance
TV selling
Others
Overall
Projected seats CAGR
2000
25,000
7,667
4,545
2,000
1,600
1,501
800
594
257
240
240
300
6,675
51,419
2004
35,714
22,857
11,100
3,760
6,000
7,519
5,250
4,100
4,158
1,000
2,460
1,000
26,669
131,588
2010
41,667
50,000
47,000
9,850
20,833
25,184
14,000
9,600
32,600
3,333
8,800
2,000
71,965
336,832
2000-04
9%
31 %
25 %
17 %
39 %
50 %
60 %
62 %
101 %
43 %
79 %
35 %
41 %
26 %
2004-10
3%
14 %
27 %
17 %
23 %
22 %
18 %
15 %
41 %
22 %
24 %
12 %
18 %
17 %
Source: interviews; online research; experts opinions; Navigate analysis

13. -13-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

14. -14-
CC MARKET ROUGHLY SEGMENTED INTO FOUR CATEGORIES
According to Area of CC Usage, and Willingness to Outsource
Selected industry examples
Willingness
to
outsource
High
Low
Service-oriented
call centres
Generic service
Admin-driven
Securities
Home appliance
Computer/technology
Courier service
Publication
TV selling
MessagingTravel
Simple order taking
Paging
Telecom
Insurance
Bank
Post service
Community service
Utility
Core area Non-core area
Area of CC usage

15. -15-
THREE CRITERIA TO DISTINGUISH CORE AND NON-CORE AREA
Industry
Core Area
• Securities
• Courier service
• Computer/technology
“Grey Area”
• Home appliance
• Banking
• Insurance
• Publication
• Telecom
• Traveling
Non-core Area (generic)
• Paging service
• Messaging
• TV selling
• Utilities
Functionality • Technical assistance
• Aftersales service
• Customer complaint
settlement
• Sourcing/supplier
coordination
• Customer inquiry settlement
• Telemarketing
• Message delivering
• Simple order taking
Call Center’s impact to overall business
- Core: When CC function is critical to the performance of the industry
Confidentiality requirement
- Core: If the industry/functionality commands strict confidentiality
Call Center operational complexity
- Core: If operating CC in this industry requires great sophistication
Criteria
Many industries have both core and non-core areas

16. -16-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

17. -17-
ADMIN-DRIVEN SEGMENT: MOST IMPORTANT FOR NOW
High % in total new CC demand Driven by “Pillar industries”
Demand surged in a group of China’s important
industries since 2004, aiming to improve service level
•Bank
•Post service
•Fixed-line telecom
•Insurance
Required mostly mid-to-high end call center solutions
(Nortel, Lucent, IBM, Huawei…)
•Big, monopolized, profitable corporations
•High cost of failure
•Budget approval from above
•Often in conjunction with structural reform
1998 1999 2000
4.9
# of new CC
seats (’000)
Year
Admin-driven
11.2
29.5 Total new
demand
Admin-
driven
66%
76%
62%
Source: Navigate Consulting modeling

18. -18-
UNIQUE THREE-TIER DECISION MAKING PROCESS
System Integrators Should Put Efforts to All
Top-down initiatives
Advocate improving service standard
•Make “service facilities” an evaluation
criteria
•May suggest call center as an option
Determine rolling out call centers in the
corporation
Raise a list of recommended system
integrators
•Present the list to branch companies
Set a budget for different branch companies
Decide call center size and sophistication
based on corporate budget
Negotiate and select a system integrator
mostly suitable to the branch’s requirements
SI should pay attention
to Ministry’s recent
service improvement
incentive
Ministry
SI should approach
promising corporate
headquarters in advance
to get the name on the
list
Corporate headquarter
SI should put most
efforts to influence
branch company’s
selection
Provincial/regional
branches
Admin-driven

19. -19-
call centres ALMOST NEVER AN OPTION FOR
ADMIN-DRIVEN COMPANIES
Call centres is not considered an option for CC adoption at corporate level
• Worried about unforeseeable consequences
• Money saving is not a priority for these big, monopolized SOEs
• Unable to distinguish different conditions in different geography
- some areas don’t have satisfactory outsourcers
Politically risky for branch managers to be “creative”
• If using outsourcers, branch managers have to bear all responsibilities
- potential for failure is considerable
• CC construction budget would be in vain if not used up
- while call centres budget needs to be reported for upper approval
Only exception is Guangzhou Mobile Company’s call centres of its “Mobile Secretary” service
• By nature a paging service: Ideal to be done by a paging company
• “Mobile Secretary” service is not planned and budgeted from the corporation (China Mobile)
• Guangzhou’s business practice is more liberal than rest of China
Admin-driven

20. -20-
SERVICE-ORIENTED SEGMENT: A DRIVER FOR LONG-TERM CC
PENETRATION
Rapid growth in the long-term Widespread adoption expected in market-driven industries
Heated competition will stimulate CC usage in mass-
market industries
• WTO not only lifted various local protectionism,
but also introduce global competition
• Current over-capacity situation won’t alleviate for
the next several years
Therefore, service will be more important to create
differentiation
• With better market environment, consumers are
educated to appreciate service
Total non-paging CC
seats (’000)
Service-oriented
2009 2010 2011 2012
10
Year
50
337 Total CC
seats
Service-
oriented
26%
24%
50%
132
42%
Source: Interviews; online research; expert opinions; Navigate Consulting Analysis3

21. -21-
MORE INDUSTRIES ARE LIKELY TO ADOPT CC OVERTIME
CC Adoption
Area
Home appliance
Automotive
Computer
Mobile
Securities
Retailing
Petrochemical
Distribution
FMCG(1)
Taxi
Textile
Machinery
Chemical
Publication
Health care
Government
Entertainment
Broadcasting/TV Aviation
General Technology
High
Moderate
Low
Competition
intensity
High
Horizontal will
extend overtime
Importance of service
(1) Fast-moving consumer goods
Source: Interviews; literature research summaries; Navigate Consulting Analysis
Horizontal will
extend overtime
Service-oriented

22. -22-
COMPANIES QUITE SELECTIVE ON CC USAGE
Not blindly chasing after high-end solutions
Integrating call centers with its core business
practice
Interviews summary
Source: Interviews
%
Investment
per seat
(’000 RMB)
54%
31%
15%
0
0.1
0.2
0.3
0.4
0.5
0.6
Oct-70 70-150 150-250
Interviews summary%
Aftersales
service
44%
31%
19%
6%
Order
taking
Information
service
Telemarketing10-70
Service-oriented

23. -23-
VERY CAUTIONS ON CC call centres
Price
“The price for call centres is too high now,
for example, 95Info charges
15,000RMB/month (180,000RMB/year) per
seat, most companies can not undertake it.”
Sales Manager, SIEMENS
Quality
“Chinese call center outsourcers have
inadequate service mentality, we mostly
worried about their service quality.”
Hot Line Supervisor, EPSON
China
Human resources
“Ordinary outsourcer’s agents can only
handle simple questions. It requires
experienced engineers to deal with complex
problems.”
Hot Line Supervisor,
EPSON China
Confidentiality
“We once wanted to outsource
management to 95Info, but sales data are
secret to the company, so we gave up the call
centres option.”
Call Center Vice -Manager, Founder Computer
Information processing
“Our call center is mainly used to provide
cross-department information for
management, call centres call center might
make the information processing losing
control.”
Executive Officer Beijing,
Guangdong Macro
Major concerns
about call
centres
Their call centres possibility highly depends on outsourcers’ ability to satisfy
their concerns
Source: Interviews
Service-
oriented

24. -24-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

25. -25-
DEMAND PROJECTION DEPENDENT ON A CYCLE OF
FACTORSWide variance in projection... …dependent on a group of factors
# of call centres seats (’000)
3.5
5.2
2004 2009 2014
Virtuous or vicious cycle?
Outsourcer’s
Price
Outsourcer’s
professionalism
Customer
satisfaction
Outsourcer’s
service
sophistication
# of new
customer trial
Education effect
to potential
customers
call centres
industry
reputation
It’s hard to tell whether the industry can establish its reputation or go underdeveloped, at
the very beginning of its emergence
Demand
Outsourcer
51.2
6.6
CAGR = 100%
CAGR =
20%
CAGR = 20%

26. -26-
POSITIVE CUSTOMER EVOLUTION OBSERVED IN
CHINA’S call centres BUSINESS
Positive projections for future
•Historical trends showed increasing penetration into
high-end business
•China’s massive small-to-medium business constitutes
good potential customer base
•Massive un-exploited geography: outside top 3 cities
•Good outsourcer will emerge with increased business,
which will generate more business for the call centres
industry
call centres service
sophistication
TimeLow
High
Before Recent 2 years
We believe in the positive argument and project demand to grow at least 50% a year for the next 4
years
Paging service call centres for Hong
Kong
“Secretary” service
Simple telemarketing
Order taking
After-sales service
Negative projections for future
•Customer’s negative thoughts about outsourcer’s quality
haven’t changed
•Professionalism will continue to be a headache for China
service industry, including call centres
•Low-end entry (paging companies) will ruin call centres
industry’s pricing structure and make good outsourcer’s
unprofitable
Demand
Outsourcer

27. -27-
BALANCE BETWEEN LONG-TERM CLIENTS AND
PERIODIC ASSIGNMENTS IS CRITICAL
Customers
Outsourcer
Long-term
clients
Long-term clients are most important to the profitability of an outsourcer
Job nature
Customer
requirement
Compensation
• “Secretary” service
• Order-taking
• After-sales service
• Value-added information
• Trust between company and customer
• Training to agents
• Good understanding of clients’
business
• Smooth communication and feedback
of important information
• A monthly payment per agent seat
• Telemarketing
• Campaign/activity phone
reception
• Brand name in call centres
industry
• Trained agents and
effective management
• Information feedback
• Reasonable price
• Payment per call
Periodic
assignments

28. -28-
INTERVIEWED OUTSOURCER’S LONG-TERM CUSTOMER LIST
Outsourcer Long-term client Outsourced business type Location Profitable?
TCY Pfizer Pharmacy China After sales Beijing, Shanghai Deficit
CCID Call Center
China InfoWorld
(Newspaper)
Inbound service Beijing Deficit
Guangzhou Mobile
Highway & Bridge Fee collection call out Guangzhou
COMPAQ After sales Shanghai
NEC Mobile China After sales Shanghai
China Motion
China Mobile Management call centres N.A.
Profitable
Beijing Hongfan
Sun Micro Systems Simple question handling N.A.
Channel Beyond Profitable
Compaq Star Profitable
Backup
After sales
“Secretary” service
Fee collection call out
Guangzhou
Vanke Community service Guangzhou
Beijing Telecom Messaging service Beijing Deficit
95 info Nokia After sales (mobile) Beijing Deficit
800 teleservice Motorola After sales (mobile) Shanghai N.A.
ITS Pharmacy companies N.A. Shanghai Deficit

29. -29-
call centres SALES AND SERVICE HELPS MULTINATIONALS TO
FOCUS ON CORE CAPABILITIES
Advanced product design
Technology
Financial muscle
Operational management
Manufacturing
Distribution network
Customer relationships
Local marketing
Facilities (land, house…)
Regulatory knowhow
ServiceSourcing Manufacturing Sales
X
X
X
Multinational’s strengths
Local company’s strengths
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Customers
OutsourcerBackup

30. -30-
HIGH-END OUTSOURCERS ARE STILL LOSING MONEY – CAPEX HIGH AND IRR BELOW
ACCEPTED LEVELS
The key determinant: Utilization
Profitability
Economics
Outsourcer
Hi profits
Low
profits
Breakeven
Low
deficits
Hi deficits
Price/seat
(RMB/month)
0 5000 10000 15000 20000 25000 30000 35000
China
Motion
Shenghua
Cheng Bo
Compaq-
Star
CCID
Hong
Fan
TCY ITS
95Info
Source: Interviews; Navigate Consulting Analysis

31. -31-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

32. -32-
PREVIOUSLY THE LOW-PRICE/STANDARD SERVICE MODEL PROVED
SUCCESSFUL – Period 1998 - 2007
Takeaway from Interviews
Not technically
feasible
Doomed failure
Possible
to be
successful
, too?
Several
successful
examples
observed
Customize/
High-end
Standard/
low-end
Low High
High-end outsourcers CAGR 2007-2012 14%
• Easier to persuade clients to accept a high
price point
• Trust in big names
• Business not fully streamlined
- software and high-end customer
support not available
• Most assignment periodic
Well-positioned, efficient low-end outsourcers
WERE very profitable
• 70% or above business from long-term
clients
• Both equipment and human resources are
easy and cheap to source
Service
Level
Price

33. -33-
SUCCESSFUL HIGH-END MODEL HAS TAKEN 40% som Wiseway’s Belief
Long-term clients are most important for high-end CC outsourcer’s success
• Periodic assignment demand is inherently unstable, and demand fluctuation will
worsen utility rate
- Current high-end CC outsourcers lack long-term clients
• Strong long-term client commitments give outsourcers credibility for other call center
assignments
Prestigious long-term clients are beginning to commit to high-end outsourcers
• 95Info’s deal with Nokia in Beijing
• 800 Teleservices’s deal with Motorola in Shanghai
There are clear directions for high-end outsourcers to be profitable
• Establish long-term client base
- for a medium-sized call center, 1~2 long-term clients can turn it into profits
• Identify potential areas for CC call centres

34. -34-
HIGH-END OUTSOURCERS CAN DEVELOP BUSINESS ALONG
TWO DIMENSIONSCustomerpenetration
Business penetration
Establish long-term client base
1. Build relationship through
periodic assignments
2. Invite client’s equity
investment
3. Provide “one-stop shopping”
4. Serve overseas market
5. Leverage existing relationship
Target various call centres opportunities along the
value chain
Breakdown value chains to find out promising
call centres opportunities

35. -35-
FIVE SUCCESSFUL STRATEGIES TO WIN LONG-TERM CLIENTS...
Building relationship through periodic
assignments
Outsourcers contact clients first for periodic
assignments, such as telemarketing or promotion
call reception, and sell long-term assignments when
trust and relationships are built
• Example: Guangzhou China Motion vs P&G
Provide “one-stop shopping”
Outsourcers also provide, or have alliances to
provide, other services that are compatible to
call center service. So customers can get all
they need from one company
• Example: Guangzhou Channel Beyond
Leverage existing relationship
Outsourcers develop domestic multinationals
clients leveraging overseas relationship
• Example: 800Teleservice v.s. Motorola
Serve overseas market
Outsourcers provide low-cost services to Hong
Kong, Taiwan or other overseas clients by
leveraging low-cost agents and language
ability in China
• Example: Guangzhou Shenghua
Invite client’s equity investment
Outsourcers ask an important client to make
equity investment, in order to lock in the
relationship and establish needed trust
• Example: Compaq-Star
Strategies proved
successful
1
2 3
4 5

36. -36-
… EACH WITH ITS UNIQUE ADVANTAGES AND
DISADVANTAGES
Cons
• Lowered entry barrier into
potential clients
• Easier to build relationship and
mutual trust
• Time consuming
• Periodic assignments might not necessarily turn
to long-term commitment
• Lock-in relationships
• Shared risks
• Controlled by clients
• Limited opportunities for other clients
- restrained growth
• Increased customer satisfaction
• Stronger advantages against all
competitors at “one-stop” area
• Strengths restrained in one particular area
• Difficult to extend business to other areas
• Profitable business
• Stable client relationship once
obtained
• Competition
• Generally low-end services
- clients only pursue “low-cost”
• Difficult to acquire overseas clients
• Monopolized client base
• Familiar service standard
• Leverageable software and
management
• Not a lot
• Bad service in China might deteriorate
corporate’s relationship to the outsourcer
Building relationship
through periodic
assignments
Invite client’s equity
investment
Provide “one-stop
shopping”
Serve overseas market
Leverage existing
relationship
1
2
3
4
5
Pros

37. -37-
call centres MOST PROMISING FOR TELEMARKETING AND
VALUE-ADDED INFORMATION SERVICES
Potential Call Center Adoption Areas
After-sales service
Value-added
information
service
Trouble-
shooting
Complaint
handling
Concerns
Service
quality
Industry
knowledge
Information
processing
Confidentiality
Manu-
facturin
g
Sourcing
Ordering Supplier
mgmt.
Sales
Tele-
marketing
Inquiry
handling
Order
taking
Most
promising
Most
promising
Not a concern
Significant concerns

38. -38-
call centres OPPORTUNITIES FOR SELECTED INDUSTRIES (I)
Value Chain Breakdown for Sales and ServicesAftersalesservice
Trouble-
shooting
Complaint
handling
Tele-
marketing
Customer
inquiry
handling
Order
taking
Value-added
information
service
Sales
Industry
Telecom
• Complaint reception
• Customer satisfaction survey
Mobile service
• Complaint reception
• Phone-line problem calling
• General trouble - shooting
• Mobile problem calling
(lost, disconnected)
• Call dialing helpdesk
• Phone number inquiry (“114”)
• Phone bill information, etc.
• “Secretary” service
• Phone bill inquiry
• Fixed-line service application
• Other value-added service application
• Mobile service application
• Value-added service application
• Potential customer call-in reception • Potential customer call-in reception
• Long-distance service promotion
• General information of new
products/services
• New service/products promotion
Likely
Unlikely

39. -39-
call centres OPPORTUNITIES FOR SELECTED INDUSTRIES (II)
Value Chain Breakdown for Sales and ServicesAftersalesservice
Trouble-
shooting
Complaint
handling
Tele-
marketing
Customer
inquiry
handling
Order
taking
Value-added
information
service
Sales
Industry
Banking
• General complaint
handling
Securities
• General complaint
handling
• General trouble-shooting • General trouble-shooting
• Telephone banking
• Personal financial
consulting
• Investment analysis,
suggestion,etc
• General market
information
• Deposit or other orders • Telephone transaction
• General question handling • General question handling
• New service promotion
• Corporate client
relationship building
N.A.
Insurance
• General complaint
handling
• General trouble-shooting
N.A.
• Telephone transaction
• General question
handling
• Promotion of insurance
policies
Likely
Unlikely

40. -40-
call centres OPPORTUNITIES FOR SELECTED INDUSTRIES (III)
Value Chain Breakdown for Sales and Services
Aftersalesservice
Trouble-
shooting
Complaint
handling
Tele-
marketing
Customer
inquiry
handling
Order
taking
Value-added
information
service
Sales
Industry
Technology Home appliance
• Technology guidance
• Consulting
N.A.
Fast-moving consumer
goods
N.A.
Likely
Unlikely

41. -41-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

42. -42-
ONLY A PARTNERSHIP FITS INTO TCI’S SPECIFICATION
Self-construct a
call center
Partner with local
CC outsourcers
Provide CC call
centres training,
management and
consulting
• No China experience in call center
• No enough human resources to commit
• Little local client knowledge
• Time consuming
• Complement TCI’s local capabilities
• Satisfy time stringency concerns
• Commit little TCI resources
• Serve TCI’s potential clients well with
existing capacity
• Fit into TCI’s strengths well
• Demand less TCI’s commitment
However
• Need to establish local facilities and assign
knowledgeable people to China
• Profits will not be big
Maybe an
opportunity



43. -43-
TCI SHOULD ALLY WITH A LOCAL PARTNER TO ENTER INTO THE
MARKET
Now is good to enter...
• Nevertheless, China CC call centres
segment is a fast growing market
• There are few high-profile CC call centres
companies in China
• Competition at high-end is not severe
• And…, TCI is in discussion with two
possible long-term clients
… But should ally with a local outsourcer
TCI lacks a lot of local capacities
• Local market understanding
• Local clients relationship
• Experienced agents
• Language
…
And time is tight
• A decision should be made very soon
A local partner with complementary capabilities is ideal for TCI’s fast
rollout in China

44. -44-
DIFFICULT TO FIND A PARTNER SATISFYING ALL CRITERIA
• Strong local market
understanding
• Good local client
relationship
Provide TCI with
most needed
capabilities
1 Be profitable Demand not too
much TCI’s
involvement
Allow TCI to
develop own brand
and share client
base
2 3 4
Partner’s
profile
• Mature, professional
operations
• Experienced agents
• Sufficient long-term
client base
• Strong, mature
operations already
• Probably not strong
self-brand and
customer base
• Eagerly in need of
TCI’s client, money,
management
What TCI
might
face
• Command very high valuation for its shares
- TCI probably have to pay more under time pressure
• Stick to its right of control
- might agree in appearance, but suffocate in action TCI’s brand
building efforts
• Persist on its own business practice
- TCI might feel difficult to configure to “Japanese standard”
• The outsourcer might
be very bad
- no local client base
- losing money
- low morale
• TCI has to invest a lot
- money
- human resources

45. -45-
Partnership Strategy
Partner with strong,
money-making local
outsourcers
Partner with money-
losing, but high-end
equipped local
outsourcers
• Leverage partner’s
capabilities to
expand business
• Demand less TCI
investment
• Create synergy
more easily
• Leverage partner’s
advanced facilities
• Easy to control and
develop TCI’s own
brand
• Might be cheap
TWO POTENTIAL PARTNERSHIP STRATEGY SUGGESTED
Reflecting Different Entry Focus
Advantages Disadvantage Entry Focus
• Expensive
• Hard to control
• Potential conflict
with TCI’s practice
• Profit sharing
• Fast rollout
• Synergy creation
• TCI might not benefit
too much from local
partner
• TCI has to invest a
lot
• High risk is entailed
• Control
• TCI brand and
practice
development
• A bargain deal

46. -46-
FIVE POTENTIAL TARGETS IDENTIFIED
• China Motion
• 800 Teleservice
• Compaq-Star
• Cooperativeness
• Understanding of each other’s
business
• Local outsourcer’s valuation
• % of shares participated
• Profit sharing theme
• TCI brand and practice development
plan
• Shared vision and willingness to
cooperate
• A good price
Money making
• TCY
• ITS Shanghai
• Technology and equipment
advancement
• Controlling shareholding
• Local outsourcer’s valuation
- negotiate for a bargaining price
• TCI’s needed commitment to the new
venture
• A bargaining price
• Total control
Money losing
Names
Negotiation
priorities
When to
decide
TCI should proceed both options simultaneously, and choose a best option in the end

47. -47-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

48. -48-
TCI-TJ EXPERIENCED TREMENDOUS DIFFICULTIES (I)
Most projects not profitable Overhead out of control
Rev.
Profit rate
-200%
-150%
-100%
-50%
0%
50%
100%
16%
-170%
35% 51%
61% 69% 98% 100%
2010
(’000 RMB)
508 997
2575
1758
1990
Gross profit
Salary
Management
fee
Depre.
Misc.
Source: TCI-TJ; Navigate Consulting Analysis

49. -49-
TCI-TJ EXPERIENCED TREMENDOUS DIFFICULTIES (II)
Programmer’s turnover is
worrying
Utilization rate is low
Human resource
• From official statistics, on
average about 1/3 of
programmer’s working hours
were not staffed, real
situation can be worse
Real estate
• The whole second floor was
empty, while a depreciation
of RMB 2.4 million, 60% of
1999 revenue, is counted
each year as cost
Project schedule often out of
control
1996
1997
1998
1999
2000
Total recruited Left
Label
Programmers turnover
(7)
(1)
(20)
(5)
(4)
17
4
28
15
5
A 2011 project
People staffed
(4)
(1)
Time3
months
1 year
2 years
Planned
Actual
Source: TCI-TJ; Navigate Consulting Analysis

50. -50-
FIVE ROOT CAUSES IDENTIFIED FOR THESE PROBLEMS
Overhead out of
control
Over-invested
Project out of
control
Inadequate
programmer’s
training
Most projects not
profitable
Ineffective and not
disciplined sales
efforts
Low resources
utilization
Programmers not
motivated properly
Worrying
programmer’s
turnover
Compensation and
progression not
enough to retain
HR

51. -51-
TCI-TJ IS NOT COMPETITIVE IN DOMESTIC SOFTWARE
MARKET
High fixed cost Ineffective domestic sales force
No sales department
Previous sales activities restrained in Tianjin
• And mainly through Japanese invested
companies
Targeting domestic customers means additional
investment on HR and spending
• With unforeseeable results
Equivalent domestic
company
TCI
Annual cost
(RMB ’000)
945
(1) With same actively-used office space, at a metropolitan location in Tianjin
Office cost example
83%
10%
7%
2926
Depreciation
Tax
Land
(1)

52. -52-
AGENDA
Executive Summary
Call Center Business
• Market Overview
• CC Customer Segmentation
- In-house users
- Outsourcers
• Demand
• Customer
• Economics
• Competition
• Recommendations
- Success business model
- Partnering strategy
E-Commerce Market Overview
TCI Tianjin
• Current Situation Analysis
• Recommendations

53. -53-
TCI-TJ CAN DEVELOP ALONG TWO PATHS
Restructure for better
performance
Questions are:
• What are advantages and potential risks entailed in different path?
• Which one to choose?
New business development
Introduce TCI Japan’s best-of-
breed technology to China through
TCI-TJ
Existing business penetration and
finance operation
Find strategic alliance for TCI-TJ

54. -54-
RESTRUCTURING FOR BETTER PERFORMANCE
• Transplant company’s vision to
each employee’s mind
• Create better culture through
informal interactive channels
• Mentor system
• Company activities
• “General Manager Day”
• Declare what should not
be done
- Policies and rules
• Establish a scientific
system to evaluate,
incentivize, and promote
staff
- Staff, evaluation,
compensation and
promotion
Customer strategy
• Focus on Japanese market and
Japanese companies around Tianjin
HR strategy
• Retain and promote the best people
in the company
• Create a programmer-centric
organization
Production strategy
• Adjust product and programming to
satisfy Japanese client
specifications
• Aspire to efficient production
• Improve HR utilization rate
Mission
• Turn into profitability in the next several years
• Develop TCI-TJ’s capability in software programming and service
• Retain best human resources
Belief system
Interactive
control
system
Boundary
system
Diagnostic
system
Control and
measurement system

55. -55-
ESTABLISH A THREE-TIER HIERARCHY IN PROGRAMMER’S
TEAM
Technology
Director
Project
Manager
Senior programmer
Junior programmer
After 2-4
years
After 1-3
years
College
undergraduate
Out
Out
Responsibilities
Project manager
• Control the quality and time
commitment of a project
• Choose and motivate a
programmer’ team to get the
job done
Technology director
• Provide technical guidance
• Supervise project quality
Senior programmer
• Be in charge of specific
module in a project
• Undertake on-job training
roles to junior programmer
Junior programmer: probation
position
• Program under instruction and
supervision of project
managers
• Learn fast to get promotion
Rights
• Full rights to choose how
many, and which programmer
to get staffed on the team
• Full right to control the project
progress
• Right to choose whether he
would like to be put on a
project
• Right to request mentor on
technical support
• Right to choose whether to be
staffed on a project
Evaluation
• Whether the project is
completed under budget and
time target
• Whether subordinate
programmers are satisfied with
project management and
learning
• Whether clients are satisfied
• Whether he has done an
effective job in handling a
module
• Whether he coached junior
programmers effectively
• Whether he has done an
effective job as a programmer
• Whether he has learned fast

56. -56-
HUGE BENEFITS OF BUILDING A THREE-TIER HIERARCHY
• Project managers are motivated to successfully compete the project as quickly as
possible
- evaluated by customer satisfaction and time/budget consumed
• Project managers won’t abuse human resources
- better-off to select a small but capable programmer’s team
• Good programmers will be the king in the company: Strong incentive to be good
- treasured by every project manager: Enough good project to do
- compensated well and promoted fast
- incapable programmers will feel not well and have to leave the company
• Junior programmers will have enough training and opportunities to perform
• Senior management is disciplined to their sales efforts
- overly sold projects will be objected by project managers
Project management
HR development
Sales efforts

57. -57-
TWO TYPES OF STRATEGIC ALLIANCES PROPOSED
TCI-TJ
Advantages
• Use partner’s human
resources
• Benefit from partner’s
brand name
• Leverage partner’s client
base
• Introduce partner’s
management skills
• Retain huge potential
upside
- IPO process will boost
investment return
• Achieve potential
synergies between a
software company and an
E-commerce company
Disadvantages
• Very difficult to find such
a partner
- good companies
probably will find TCI-
TJ unattractive
• Lost control
• Potential risk of cultural
conflict
• Increasing risk of a
satisfactory IPO
• Partner’s experience of
working with a software
programmer
• Morale at TCI-TJ
Wiseway’s preference
Not
preferred
Preferred
Sell, or partner with
a local esteemed
software
programmer
Partner with a local
system integrator,
or E-commerce
company with IPO
potential
We will discuss partnership list in detail in the next part

58. -58-
Thank You?
Questions
John Gregg,
Principal,
Navigate Consulting Pty Ltd
Ph: +61 402 493 278
Email: johng@navigateconsulting.com.au
Web: www.navigatecoonsulting.com.au