MERCER CHINA 2014 ANNUAL HRCONFERENCEWINNING THE FUTURE THROUGH TODAY’S INNOVATION

September 23, 2014China - Shanghai

Economic OverviewGlobal , AP and China

MERCER 2

World GDP and InflationGDP goes up and Inflation goes down from 2013 to 2015

Source: IMF World Economic Outlook (April, 2014)

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

2008 2009 2010 2011 2012 2013 2014 2015

Emerging market anddeveloping economies Inflation 9.2 5.4 5.9 7.3 6.0 5.8 5.5 5.2

Emerging market anddeveloping economies GDP 5.9 3.1 7.5 6.3 5.1 4.7 4.9 5.3

World Inflation 6.0 2.5 3.6 4.9 3.9 3.6 3.5 3.4

World GDP 2.7 -0.4 5.2 3.9 3.2 3.0 3.6 3.9

MERCER 3

Shift in Global Business LandscapeDriving corporate growth in Asia Pacific

Source: APAC Exec Brief, August, 2014, IMA Asia

Asia Pacific still leading the pack

To cash in where the growth is today, and for the foreseeable future,

Increasing focus on Asia Pacific

4.3% GDP growth

1.1% GDP growth2.0% GDP growth

Asia Pacific vs. Developed markets

MERCER

Regional GDP, Inflation & Salary Increase

0%

1%

2%

3%

4%

5%

6%

7%

8%

422 September 2014

Source: IMA Asia Brief Aug 2014Salary Increase: Mercer Global Compensation Planning Report 2014 July

*Mercer TRS Surveys 2014

AU CN HK ID IN JP KR MY NZ PH SG TH TW VN

GDP 3.0% 7.4% 2.5% 5.0% 4.9% 0.4% 3.6% 6.2% 3.3% 6.2% 3.2% 1.1% 3.8% 5.0%

Inflation 2.6% 2.5% 3.8% 5.7% 7.3% 2.7% 1.5% 3.5% 2.0% 4.6% 2.1% 2.3% 1.7% 4.9%

Salary Increase 3.5% 7.5%* 4.5% 10.0% 11.0% 2.1% 5.0% 5.6% 3.0% 7.0% 4.5% 5.9% 3.8% 10.7%

MERCER 5

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

North America Europe andCentral Asia

Asia and Pacific Latin Americaand the

Caribbean

Middle East andNorth Africa

Sub-SaharanAfrica

1. The overall index is unweighted average of the four pillar scores2. Scores are weighted by population; population data from United Nations Department of Economic and Social Affairs, WorldPopulation Prospects, rev. 2012.

Source: The Human Capital Report, World Economic Forum, 2013The report is published in collaboration with Mercer

Human Capital Index – by Region

Health and Wellness

Education

Workforce andEmployment

EnablingEnvironment

Human Capital Index

MERCER

Human Capital Index - China Rank #43

6

Country Rank ScoreSwitzerland 1 1.455

Finland 2 1.406

Singapore 3 1.232

Netherlands 4 1.161

Sweden 5 1.111

Japan 15 0.948

United States 16 0.920

Malaysia 22 0.644

China 43 0.186

Thailand 44 0.158

Russian Federation 51 0.010

Indonesia 53 0.001

Brazil 57 -0.054

Mexico 58 -0.057

Vietnam 70 -0.202

India 78 -0.270

Source: The Human Capital Report, World Economic Forum, 2013

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6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0%

0-45-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+

Asia

Population Demographics - Gender

7

2010

2030

Source: UN Population Statistics 2012

Male Female

MERCER 8

Population Demographics – Median Age

Source: UN World Population Prospects 2012

0

5

10

15

20

25

30

35

40

45

50

55

India ASEAN USA Australia China South Korea Japan

Median Age of the Total Population (Years)

1990 2010 2030

MERCER

China’s Changing DemographicsGroup by 10 from 20 - 59

9

Unit:thousand

The forecast of the future population adopts medium fertility rate assumption.

Source: World Population Prospects: The 2012 Revision, United Nations

50,000

100,000

150,000

200,000

250,000

1990 1995 2000 2005 2010 2015 2020 2025 2030

20-29

30-3940-49

50-59

MERCER

China on Track for Moderate GrowthGDP, CPI, salary increase and turnover rate

10.411.6

13

9.69.1

10.49.3

7.8 7.7 7.4

-2

0

2

4

6

8

10

12

14

16

18

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(E) 2015(F)

GDP CPI(Inflation Rate) Salary Increase Staff Voluntary Turnover

2014 1st half year

10

Source : National Bureau of Statistics of ChinaIMA Asia (Aug 2014)

2004-2014 Mercer Total Remuneration Survey

6.7

12.213.5

14.6

11.3

15.716.3

13.6 13.613.4

7.2

8.68.2 8.7

6.9

8.5

9.6 9.4

8.27.9

7.5 7.7

1.8

4.8

1.5

5.9

-0.7

3.3

5.4

2.6 2.82.52.6

MERCER

China on Track for Moderate GrowthGDP per capital

11

1. Source: IMF World Economic Outlook (April, 2014).2. GDP is expressed in current U.S. dollars per person. Data are derived by first converting GDP in national

currency to U.S. dollars and then dividing it by total population.3. For the ranking, there are 186 countries and regions with the data of GDP Per Capital.

China’s Ranking ofGDP per capital

Year Ranking

2011 91

2012 88

2013 84

2014(F) 82

2015(F) 81

5,4346,078

6,7477,333

7,961

2011 2012 2013 2014(F) 2015(F)

MERCER

China GDP Growth Rate Forecast

12

Source: China Forecast Book, IMA Asia， 2014 Q3

0

3

6

9

12

15

2010 2011 2012 2013 2014 2015 2016

Manufacturing Construction Services GDP

CHINA: GDP Growth by Component, %

MERCER

China’s Total Debt vs. GDPRaised rapidly since 2008 economic risk increased

13Source: Financial Times reported on July 22, 2014, citing estimates from Standard Chartered.

MERCER

-20

-10

0

10

20

30

40

Gro

wth

Perc

enta

ge(Y

ear-

on-y

ear)

China FDI Growth

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

14

China Foreign Direct Investment (FDI)

Source : Ministry of Commerce of the People’s Republic of ChinaSource: World Investment Report 2014

United Nations Conference on Trade and Development

2011 2012 2013 2014

100124

2013 FDI Flow

FDI Outflow FDI InflowUSD, Billion

2014

Outflow > Inflow

MERCER

50.2

54.1

45

46

47

48

49

50

51

52

53

54

55 PMI ManufacturingPMI Service

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

China PMI : Manufacturing and Services

15

Source: HSBC September, 2014

2013 2014

Service

Highest

since Mar 2013

Down Again

after 3-month up

Manufacturing

MERCER

Global Innovation Index rankings

16

Innovation – A Path to TransformationChina has improved its innovation from 2013 to 2014

Country/Economy Score(0-100) 2014 Rank 2013 Rank

Switzerland 64.78 1 1

United Kingdom 62.37 2 3

Sweden 62.29 3 2

United States of America 60.09 6 5

Hong Kong (China) 56.82 10 7

Japan 52.41 21 22

China 46.57 29 35

Russian Federation 39.14 49 62

Brazil 36.29 61 64

India 33.70 76 66

Source: The Global Innovation Index 2014Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO)

MERCER

Summary

17

• China still has strong-to-moderate GDP growth rate in next 3 years.

• Economic risk is raising due to stimulation.

• China may become a FDI net outflow country in 2014.

• China is on the way improving its Human capital index andinnovation ranking in the world, while the aging population will be aissue，China has to seek way to offset its negative impact.