Doing Business in China: A Framework for Success John Chen, Sybase Chairman, CEO, and President The Berkeley MBA Asia Business Conference February 11, 2006

Agenda  About Sybase  China Today  Lessons Learned  Bumps in the Road  Outlook for the Future 2

About Sybase Creating an Information Edge — Today  Founded in 1984  Headquartered in Dublin, CA  Leading enterprise database and mobile/wireless software company  ~4,000 employees in 60 countries  Profitable and growing Sybase is the largest global enterprise software company exclusively focused on managing and mobilizing information from the data center to the point of action. 3

Strong Local Presence in China Beijing ShanghaiChengdu Guangzhou Xi’an Taipei  Operating in China for over 15 years  ~ 300 employees  6 offices  3 R&D centers  24x7 local support  Over 150 partners  Growing presence throughout Asia-Pac Hong Kong 4

Strategic IT Investments in China  Sybase is working with industry, government and business leaders are on several initiatives to help China drive technology:  Digital cities  High-tech industrial development zones  Support of open, international, and voluntary standards  Partnerships with universities to advance research and help China migrate to a knowledge-based economy  Expansion of m-Government and m-Commerce initiatives  Mobilize data for disaster relief, emergency response services, tourism, and 2008 Olympic Games 5

Sybase’s Success in China  Ranked among top 5 software companies in China  #2 database company in China  #1 in telecom and transportation industries  1 st packaged Internet banking solution adopted by a top bank – Bank of China  Recently signed strategic partner agreement with Xi’an High Tech Zone becoming its preferred software trusted advisor in mobile/wireless space  Working on joint initiatives for Digital Cities and 2008 Olympics 6

Recognized for Excellence  2005 CCID Awards  “Best Value for Users Award” in the Database Products category (Sybase ASE)  “Excellent Product Award” (Sybase ASE)  “Excellent IT Product for Small and Medium Business Award” (Sybase ASE)  “Excellent IT Product in China Award” (Sybase IQ)  2004 “Gold Database” by CCID  2004 Editor’s Choice for Linux database (Open System World) and BI (China Computer World)  2004 Top 10 IT Enterprise awarded by Beijing Communications World Newspaper  2004 Excellence Award by eWeek  2004 Top 10 CTO Award by CCID & China Information Weekly  2004 Top 10 IT Communications Ladies by CCID, China Infoworld & China Women Newspaper  Most Successful Database Software Company in China  2003 CIO Choice Award & Best Database awarded by China Internet Weekly  2003 Top 10 IT Provider awarded by Communication World  2003 Editor’s Choice awarded by China Information World  Best Customer Satisfaction Award from CCID 7

China Today  Step-by-step reform  WTO accession  Migrating from a manufacturing-based economy to a knowledge-based economy  Many signs of vibrancy in China  Olympics in 2008 in Beijing  World Expo in 2010 in Shanghai 8

Lessons Learned  Doing business in China is harder than expected  No amount of due diligence is too much  Lack of enforcement is the rule, not the exception  Adapt and localize - “When in Rome, do as the Romans do”  Understand and participate in the political and policy landscape 9

Due Diligence  Do your homework  Know your friends, and avoid making enemies (“guanxi”)  Legal and ethical considerations 10

Lack of Enforcement is the Rule, Not the Exception  Intellectual property rights protection is a MUST  Licensing and trade secrets  Be careful: enforcement issues  Credit enforcement 11

Localization: “When in Rome, Do as the Romans Do”  Behave like a local company  View China through their eyes, not ours  Learn and respect China’s long history, philosophies culture, and traditions  Success requires adaptation; stay nimble  Proper mix of local and expatriate staff  Show understanding of local needs 12

Understand and Participate in Political and Policy Landscape  Actively engage with China, don’t isolate ourselves  Free trade policies  Open, non-discriminatory, and merit-based markets  Anti-corruption initiatives  Protection of intellectual property rights  Increase US competitiveness  Results of reform may be similar to that of the Marshall Plan for Europe or post-war reforms in Japan 13

Bumps in the Road  International political tensions could rise  Chinese system is still in transition; domestic tensions could be a barrier  Economic tensions between China and the West  Ideological differences  Corruption  Natural disasters  Ultimate competitor 14

Outlook for the Future  Cautiously optimistic about China’s growth; this level of growth does not come without costs  Short-term outlook – many benefits for China and Asia  Long-term outlook – some cautionary flags we need to closely monitor  Success will require collaboration, innovation, new thinking, non-traditional approaches, and risk-taking  We must navigate this historic journey together 15

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