This is a presentation I delivered in Europe to highlight the growing importance of Asia in tech investment. The purpose was to rebalance certain views about the position of Asia in the tech investment world. I followed a theme of reality checks and myths - though some myths are true. The presentation was ably supported by input and insight from my good friends and colleagues, Conor O'Mara (Jefferies), Robert Agnew (Marlin LLC), and Ted Chwu (Bird & Bird, IP team). The presentation sets out personal observations, and the responsibility for errors remain mine.

1. Padraig Walsh
Partner, Hong Kong
28 May 2013
Tech Trends & Asia

2. © Bird & Bird 2013
2
Reality check #1: Asia is one of the fastest growing
IT markets
3,545 3,588
3,737
640 689 743
2011 2012E 2013F
Global Asia
US$Billion
Growth in the overall technology spending in Asia-Pacific will continue to
outpace global growth in 2013 (7.9% vs. 4.2%)
Source: Gartner

3. © Bird & Bird 2013
Myth #1: Global tech innovation leadership is
in Silicon Valley
• True, but Silicon Valley is at its tipping
point
• 44% of the tech sector believe the global
tech centre will move from Silicon Valley
within four years
• And move to?
● China (44%)
● Or India
● Or Japan
• Fact: Technology
innovation will soon be
rooted in Asia.
Source: KPMG Technology Innovation Survey 2012

4. © Bird & Bird 2013
Global tech innovation leadership
China’s innovation investment has fostered
a growing environment for the development
of disruptive technologies. The Chinese
government is encouraging significant
investment in three key areas:
Shared services and outsourcing
Payments
Cloud computing

5. © Bird & Bird 2013
5
Reality check #2: Asia is poised to dominate the IT
industry
Peter Sondergaard,
Senior VP and Global Head
of Research, Gartner Inc.
As global markets improve in
2013 and resume growth, Asia
Pacific remains one of the bright
spots of the global IT
market, allowing organizations
in this region to accelerate
competitiveness
$30 billion
$8 billion
$8 billion
Source: Gartner
By 2014, most IT and software related jobs in the western countries are expected to be
created by Asian IT companies, which are enjoying double digit growth rates in recent
years

6. © Bird & Bird 2013
Myth #2: Asia does not have brands in tech
• Computing, communications and
consumer electronics represent 2/3 of
global technology demand.
• Asian brands such as Samsung, LG, HTC
and Sony already dominate.
• Lenovo is the second top brand globally for
desktop computers.
• ZTE is the third largest selling phone
marker in the world.
• China has overtaken the United States to
become the world’s largest LCD TV
market, and the average Chinese consumer
buys a larger TV than the average
American.
The global PC landscape is being reshaped. Emerging
markets now represent two of the top three consumption
PC markets in the world. China is now the number one PC
consumption market in the world, while Brazil has become
number three
Paul Otellini, Intel CEO, Oct 2011
Key message:
Brands develop where markets
grow. The Asian market is
the growth region in the world
economy. This is driving
innovation, sales, and
brand development.

7. © Bird & Bird 2013
Myth #3: US companies are leaders in internet
• More than half of the world’s internet users will be
in Asia by 2015
• China and India have only 40% and 11%
population penetration
• By virtue of market dynamics, China and India
will dominate the internet industry within ten
years
Top 21 Global Internet Companies October 2011
Rank Company Country Market cap (US$ bn)
1 Google US 177
2 Amazon US 108
3 Facebook US 77
4 Baidu China 46
5 eBay US 42
6 Tencent China 41
7 Priceline US 24
8 Yahoo US 20
9 Yahoo Japan Japan 20
10 Rajuten Japan 15
11 NHN Korea 10
12 Expedia US 8
13 Yandex Russia 8
14 LinkedIn US 8
15 GroupOn US 7.5
16 Netflix US 6
17 Netease US 6
18 Mail.ru Russia 6
19 Alibaba China 5
20 Ctrip China 5
21 Sina China 5
Top 10 Internet Users 2012
Rank Country 2008-12 User
Adds (mm)
Users
(mm)
Y/Y
Growth
Population
Penetration
1 China 282 538 10% 40%
2 India 88 137 25% 11%
3 Indonesia 39 55 58% 23%
4 Iran 35 42 205% 55%
5 Russia 33 70 6% 49%
6 Nigeria 31 48 15% 30%
7 Philippines 28 34 32% 35%
8 Brazil 27 88 6% 45%
9 Mexico 19 42 9% 37%
10 United States 18 244 3% 78%

8. © Bird & Bird 2013
Reality check #3: Asia will pass North America as
the largest market for B2C spending by 2016
27.9% 30.5% 33.4% 36.2% 38.2% 39.7%
35.9% 33.5% 31.5% 29.7% 28.8% 28.2%
28.0% 26.9% 25.7% 24.3% 23.4% 22.6%
8.3% 9.1% 9.5% 9.7% 9.7% 9.5%
2011 2012 2013 2014 2015 2016
Asia-Pacific North America
Western Europe Others
Indonesia
Australia
South
Korea
India
Japan
China
9
12
27
42
79
423
6
11
25
30
77
322
3
10
23
19
73
220
2012 2014 2016
Global Ecommerce Sales by Region (%) Digital Buyers in Asia-Pacific (in Million)
Source: eMarketer.com

9. © Bird & Bird 2013
Reality check #4: The SaaS market in Asia is growing fast
- 24.4% growth in 2012 against global growth of 17.9%
 SaaS financial accounting
applications are most popular in
China and India
 Other ERP functions in demand
include expense management and
employee performance
management followed by office
suites, email and the CRM sales
function
“SaaS demand in Japan will grow for sales force
automation solutions to improve reaction to
customers, while demand for marketing analysis
solutions will also be higher. In addition, it is easy to
adopt SaaS solutions for B2B call center services
because the workflow of this business is standardized
and transaction volume is constant in Japan”
Gartner
Source: Gartner
Experts expect 85% of new software to be delivered by SaaS model by 2015

10. © Bird & Bird 2013
Reality check #5: Social media in Asia is a huge
opportunity
Social media can potentially provide businesses with a line of direct communication with
millions of connected individuals in new markets
 Philippines has the most avid social networkers in Asia -
Facebook is the country's most visited Internet site
 Japanese Internet users are the most active bloggers
globally - posting more than one million blogs per month
 Indonesia has the highest penetration of Twitter users as a
proportion of Internet users worldwide. Philippines and
Singapore are also among top 10 countries
 In China, Japan and South Korea, the growth of social
networking has been driven by strong consumer interest in
online games
 Online product reviews are the third most trusted source of
information when making purchase decisions - 55% Indians
who read online product reviews have purchased products
based on feedback
Nick Ingelbrecht, GartnerSource: Gartner, AC Nielsen
“Building an early critical mass of local users, featuring local
language and content provides a good basis for sustaining a long
term and loyal user base”

11. © Bird & Bird 2013
Myth #4: The US and Europe will lead in new
tech. Asia is not ready.
Alternative energy vehicles
New materials
Renewable energy
High end manufacturing
equipment
Biotech
Next generation IT
Energy saving
& environmental protection
China’s 12th Five
Year Investment
Plan

12. © Bird & Bird 2013
• Asia became the leading regional destination for clean energy
investment for the first time in 2012, with 42% of the global total
• Asia was the only region to record investment growth in clean energy
in 2012
• Solar attracts the largest share of clean energy investment; China’s
investment in solar energy doubled from 2011 to 2012, reaching
$31.2 bn
• Japan has prioritised clean energy investment following the
Fukushima Dai-chi disaster
• China is the leading country in installed renewable energy capacity
Myth #5: The US and Europe will lead in new
tech. Asia is not ready.
China is the world’s clean energy leader.
Culminating a remarkable eight-year rise in
the clean energy sector, the data suggest
that China is the world’s leader and is likely
to remain so for the foreseeable future.

13. © Bird & Bird 2013
Myth #6: Asia is a sweatshop and does not
create IPR
• In 2012, the Chinese patent
office overtook the US PTO as
the busiest patent office in the
world – patent filings run at
1,500 per day
• 80% of China’s patents were
awarded to domestic applicants
in 2012; In the US, 50% of
patents were awarded to US
citizens
• Asian strength shows in the
LTE patent pool, and even more
so in essential LTE patents

14. © Bird & Bird 2013
Myth #6: Asia is a sweatshop and does not
create IPR
Top 20 Organisations with Patents Granted by USPO 2012
Rank Company Country Number
1 IBM US 6,457
2 Samsung Korea 5,043
3 Canon Japan 3,173
4 Sony Japan 3,017
5 Panasonic Japan 2,748
6 Microsoft US 2,610
7 Toshiba Japan 2,415
8 GE US 1,650
9 LG Korea 1,617
10 Fujitsu Japan 1,527
11 Seiko Epson Japan 1,454
12 Hitachi Japan 1,428
13 Ricoh Japan 1,407
14 HP US 1,393
15 GM Global Tech US 1,374
16 Qualcomm US 1,292
17 Intel US 1,287
18 Toyota Japan 1,173
19 Broadcom US 1,157
20 Google US 1,151
Geographic spread of Patents
Granted by USPO 2012
48%
20%
6%
5%
4%
17%
U.S Japan Germany
Korea Taiwan Others

15. © Bird & Bird 2013
Myth #7: The US is at the forefront of consumer
electronics
• The two largest phone markets in the
world are:
● China
● India
• Asian demand has driven growth in the
handset phone market with 57% of global
demand, mainly to the loss of … Europe
• Asia will drive growth in the smartphone
market going forward with the move to
low cost smartphones
• Twice as many companies in developing
economies than advanced markets plan to
increase digital tech spend by over 20%
• The trend is to develop in emerging
markets and roll out to the developed
world
Source: Oxford Economics, Jefferies, Irish Chamber of Commerce of Hong Kong
If GE’s businesses are to
survive and prosper in the
next decade, they must
become as adept at reverse
innovation as they are at
glocalisation.
Case study: The phone

16. © Bird & Bird 2013
Myth #7: The US is at the forefront of consumer
electronics
Source: IDC, Gartner, Jefferies
Total Handset Market 2008 2009 2010 2011 2012 2013
Asia Pacific 453,100 483,471 757,513 913,066 998,458 1,093,830
Eastern Europe 96,068 79,510 104,448 108,843 113,980 120,486
Latin America 142,323 117,122 155,379 158,828 161,152 168,661
Middle East & Africa 133,471 125,006 155,876 159,383 164,718 173,801
Northern America 182,246 182,569 191,576 188,492 195,983 202,542
Western Europe 174,455 189,775 197,907 185,108 188,406 193,108
Japan 40,588 33,785 34,106 34,401 35,385 35,992
Global 1,222,251 1,211,238 1,596,805 1,748,121 1,858,082 1,988,420
Asia % Of Total Demand 40% 43% 50% 54% 56% 57%
Asian Growth 5% 53% 20% 9% 9%
Global Growth -1% 32% 9% 6% 7%

17. © Bird & Bird 2013
Myth #7: The US is at the forefront of consumer
electronics
Total Smartphone Market 2008 2009 2010 2011 2012 2013
Asia Pacific 28,119 37,579 73,449 134,431 249,615 350,026
Eastern Europe 7,272 6,970 13,107 19,699 32,023 46,891
Latin America 3,734 7,252 17,578 31,610 43,388 56,815
Middle East & Africa 12,363 12,004 18,615 26,796 38,723 54,857
Northern America 35,853 45,602 71,986 95,650 123,198 141,780
Western Europe 32,202 45,541 86,184 115,817 126,232 140,969
Japan 19,748 17,428 17,927 25,602 30,952 34,856
Global 139,292 172,375 298,846 449,604 644,131 826,193
Asia % Of Total Demand 34% 32% 31% 36% 44% 47%
Asian Growth 15% 66% 75% 75% 37%
Global Growth 24% 73% 50% 43% 28%
Source: IDC, Gartner, Jefferies

18. © Bird & Bird 2013
Myth #8: The Chinese will copy my IPR
• US seizure statistics show that China or
Hong Kong was the suspected source of
84% of seizures.
• Tech-related seizures accounted for 14%.
The China reputation for IPR infringement
is from fashion and apparel goods.
• IPR infringement is a global business
issue, for which prevention starts with the
IPR owner.
• The protection of IPR is at the heart of the
business expansion strategy of the new
Chinese tech companies taking the stage.
• The critical issue is IPR enforcement … and
China is improving.
Any Chinese company that
merely copies and does
nothing else will fail. The
successful ones are those
that copy, localise, iterate
and micro-innovate.

19. © Bird & Bird 2013
Myth #9: Asia does not protect or enforce IPR
• Two Asian countries rank higher than the
US in rankings for property protection
(Hong Kong and Japan), while four
countries in Asia are ranked in the top 25
globally for IPR protection (South Korea
and Taiwan additionally)
• Malaysia has a good track record in IPR
protection and enforcement.
• Thailand has a poor record on copyright
protection. There is occasional political
interference in patent licensing.
• IPR enforcement in India and the
Philippines is problematic due to the
bureaucracy.
• IPR protection and enforcement in
Vietnam and Indonesia is poor, with few
signs of improvement.
• China is improving, but remains the
location that can do the most damage
globally because of the size of its economy.
Country Rating
Malaysia 5.80
Thailand 6.20
India 6.50
Philippines 6.85
China 7.90
Vietnam 8.40
Indonesia 8.50
IPR Rankings for emerging Asia

20. © Bird & Bird 2013
Myth #9: Asia does not protect or enforce IPR
• There has been a dramatic increase in IP
litigation in China with approx. 60,000 IP
cases filed in Chinese courts in 2011.
• It is not only foreign parties who seek to
enforce IPR in China. Increasingly
domestic Chinese companies are asserting
IPR against foreign companies.
• Significant damages awards can be handed
down for IPR infringement – in one case,
US$50 million (Chint –v- Schneider).
• Courts are not biased towards local
companies in the bigger municipalities and
high profile courts like Beijing and
Shanghai.
• The zones targeted to be R&D hubs now
compete on IPR protection and
enforcement policies.

21. © Bird & Bird 2013
Myth #9: Asia does not protect or enforce IPR
• InterDigital filed ITC complaints and a US
district court action against Huawei and
others in 2011 and 2013.
• In 2012, Huawei files an EU Commission
complaint arguing that InterDigital has
abused its position to demand exploitative
fees to use its essential 3G patents.
• In 2011, Huawei brings an anti-monopoly
action against InterDigital in the Shenzhen
Courts.
• Ruling stated that InterDigital royalty
proposals were beyond acceptable FRAND
levels, and found other licensing provisions
abusive but upheld the right to grant a
worldwide licence and to bundle multiple
generation SEP’s.
• Chengdu placed IPR at the heart of its
policy to attract inward tech investment.
• The city government has invested
RMB¥200 million annually to support
software and tech service industries, and
revenue from those services has reached
RMB¥180 billion – 7% of the city’s GDP
• The city issues its own IPR regulations,
particularly for patent and trademark
protection, and has its own IP Court and
four local courts that handle IP cases.
• In 2012, the city reviewed 2,142 cases, and
issued 1,947 decisions – including rulings
in favour of Microsoft and Louis Vuitton.
• In 2012, the city attracted US$8.59 billion
and RMB¥3.19 billion in investment, and
hosts 238 of the Fortune 500

22. © Bird & Bird 2013
An approach to software IPR protection
• Use 'black box' software services:
• licensees don't know what happens
behind the scenes.
• impossible to reverse engineer (e.g.
an algorithm).
• Register what is capable of registration:
• Often, only copyright.
• Register directly in owner’s name.
• Register in the language of the
licensed territory and in English.
• Typically, only the first and last thirty
pages of source code required.
• Use Non-Disclosure Agreements
• As in Europe and the US, patents for
software inventions remains controversial.
• Singapore is pro-software patents; China
is not; and most are undecided or in
between.
• The landscape is changing. The rules now
may not be so in 3-5 years time.
• That time frame is the same as the patent
processing period in China.
• Due diligence your business partners and
licensees.
• Consult with aligned industry bodies and
participants.
• Know and work with IPR regulators and
enforcers.
• Have proper safeguards – legal and
practical – in your licensing
arrangements.
• Don’t back away from enforcement.

23. © Bird & Bird 2013

24. © Bird & Bird 2013
How to approach Asia
• Business establishment should be the last step
of the process.
• Due diligence, market research, and risk
assessment are critical.
• Avoid being a business tourist.
• Set realistic time frames and targets.
• Demonstrate a medium term commitment.
• Be guided by local expertise and professionals.
• Start in Asia-lite – Hong Kong or Singapore.
• Have your people on the ground full-time,
working with local hires.
• Be prepared for a slow start.
• Be opportunistic once the building blocks are
in place
• Asia is not one market.
• Many regions, much diversity.
• Regional diversity in China.
• Many regions by single market
in ASEAN.
• Need to localise offerings to
meet local needs.
• More sophisticated approach is
to develop offerings locally,
rather than adapt from global
model

25. © Bird & Bird 2013 Page 25
Change your mindset
Innovation centre
Clean tech centre
Biggest global tech market
Biggest growth market
China or India or Japan
China
Asia
Asia
The leading global tech companies are basing strategy on Asia.
Shouldn’t you?