Royal Philips Electronics

Patrick Kung, Member Executive Committee Royal Philips Electronics

and CEO Philips Greater China

1

Morgan Stanley China Industrials Summit, Beijing, PR China

June 19th, 2012

A strong diversified industrial group leading

in health and well-being

2

Founded in 1891

Headquartered in Amsterdam, the Netherlands

Sales of EUR 22.6 billion in 2011

Portfolio now 65% business-to-business

Growth geographies

34% of sales generated in growth geographies

Globally recognized brand (world top 50)

Our brand value doubled to $8.7bn since 2004

122,000 employees

Sales and service outlets in over 100 countries

€1.6 billion investment in R&D, 7% of sales in 2011

53,000 patent rights – 39,000 trademark rights –

70,000 design rights

Our portfolio is focused on growing markets

3

Demand for

affordable healthcare

Need for energy

efficient solutions

Desire for increased

personal well-being

% of Sales: 40% 35% 25%

4

Long Philips presence in China

Philips Healthcare

Philips healthcare products was

used in the Forbidden City in the

Qing dynasty

Philips Lighting

Philips Lighting products entered

China in the 1920’s

Philips Consumer Lifestyle

The oldest Philips radio is found in

the Summer Palace in Lhasa

(1940’s)

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• Strong brand equity in China

• Consistently ranked top 3 of consumer brand

equity list during 2009-20111

• 2011 China Top 10 Consumer Brands2

• Extensive presence across China

• Operates in more than 500 cities

• With 26 legal entities

• Provides employment in excess of 18,500

• Strong local-for-local and local-for-global R&D

competence

• With over 2,100 research staff

• For 5 consecutive years, Philips Research

selected as one of the “Best R&D centers” in

China

• Importance of Philips China

• China is the 2nd largest market of Philips globally

Philips is a leading multinational in China

Source: 1.HeartBeat Survey 2.Superbrands

Accelerate! to unlock our full potential

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Changing the way we work at Philips

A new growth and performance culture to become a more

agile and market oriented growth company

Strong customer centricity and entrepreneurship in our

markets supported by granular business growth plans in

China

Locally relevant Innovation with higher speed and excellence

to outpace competition through effective end2end customer

value chains

Simplified operating model empowering growth, acceleration

and reducing local overhead costs

Clear strategies and investment in talent , market

development and local innovation capability which are

resourced to win

Culture

Customer Centricity

End2end

Operating model

Resource to win

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Key milestones of Philips in China

• 1985 Beijing Philips Co. Ltd. established (first Philips joint venture in China)

• 1996 Philips China headquarters relocated from Hong Kong to Shanghai

• 1999 Philips (China) Investment Co., Ltd. established

• 2000 Philips Research East Asia established

• 2008 Acquired Goldway, a leading medical device company, the first ever local acquisition by Philips in China

• 2009 Announced the establishment of an Imaging System Industrial Campus in Suzhou, Jiangsu

• 2010 Acquired Apex, a leading medical device company, and NCW, a leading professional lighting solution company, in China

• 2011 Announced our strategic plan to make China another Global Home. Global headquarters of the Business Group Domestic Appliances relocated to Shanghai. Acquired Povos, a leading kitchen appliance company

• 2011 Announced to set up Philips China Second Headquarters and to build a LED Professional Lighting Solution Industrial Campus in Chengdu, Sichuan

Philips Healthcare in China

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• We are No. 1 in

• Interventional Cardiology

• Premium CT

• Oncology big bore CT

• Digital Radiography

• Premium cardiac / vascular interventional X-ray

• Oncology simulation and planning system

• Cardiac ultrasound

• Resuscitation Defibrillator

• Sleep & Respiratory

• We provide excellent customer services, with

industry recognitions, including Golden Service

Award by China Hospital CEO Summit 2010 and

Best Service Award for Ultrasound, Imaging

Systems and Patient Monitoring China Biomed

Engineering Association.

• We have extensive market reach in China staffed

with hundreds of clinical specialists

…with strong industrial and innovation footprint

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Acquisition of Goldway and Apex

Philips acquired Goldway (China's leading patient monitoring

company) in 2008, and Apex (a Chinese ultrasound transducers

manufacturer) in 2010, aimed at providing high quality value-

segment healthcare products to meet the growing demand in

China and other emerging markets

New imaging industrial campus in Suzhou

In 2009, Philips announced to invest US$54 million to establish a

new industrial campus for imaging system in Suzhou. It further

strengthens Philips’ innovation capabilities to serve both China

and global market.

Philips Healthcare China Academy

In 2010, Philips Healthcare China Academy was put into

operation. With state-of-the-art facilities, the Academy not only

provides technical and application training for Philips service

engineers, but also acts as an experience center for local

customers. We plan to build a second one in West China.

Philips Consumer Lifestyle in China

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Leader in 14 categories* Broad product portfolio

Personal Care

Male

Grooming

Health & Wellness

Mother &

Child Care

Coffee

Garment Care Air Floor Care Kitchen

Appliances

Headphone Home AV Personal AV Home

Communication

Coffee-

maker

Shaver Hair Care

Dry Floor

Care

Garment

Iron

Home

Cinema

Sound

Coffee

Maker (DF)

Female

Depilation

Air Cleaner

Juicer Garment

Steamer

* Source: GfK, ZYK, MAT April 2012

Indexed A&P investment

2010

2011

2012E

100

126

150

Number of retail counters in China

2010

2011

2012E

7,500

9,000

10,000

Market reach

Lifestyle Entertainment

Domestic Appliances

Beauty Oral Healthcare

…with strong local business creation capabilities

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Male Grooming: continue our strong #1 position,

with expansion into middle class and lower tier markets

Kitchen Appliances: leverage Povos expertise in Chinese Cooking,

with complimentary distribution networks

Philips Kitchen Appliances

counter at e-chain

New Philips Chinese

Cooking range

2012 Best KA Range

Award: RC, IC & EPC Hers Magazine

Povos continues promotion

at lower tier market

SensoTouch Shaver

for premium market

Tiger Shaver for

entry level market Local activation with

celebrity endorsement

Extensive

distribution network

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Philips Lighting in China

Local innovation and business creation capabilities

7 Business Units

4 R&D Centers

1,000+ R&D engineers

13 Manufacturing

sites

11,000 Employees

No. 1 position in China lighting market.

Full range of lighting solutions from light sources, lighting electronics, professional luminaires, consumer luminaires to controls.

As the technology and innovation leader, Philips is driving the transformation towards LED applications.

…with extensive channel coverage

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Strong market access and segment focuses

1,200+ Cities / towns with

distribution

coverage

25,000+ Retail outlets

2,100+ Philips shop-in-

shops

300+ Philips branded

stores

36 Regional sales

offices

Strong coverage of all key lighting segments – urban, road, sports, retail, hospitality, office, industry, entertainment and home.

Go-to-market via specialized channels – Professional, Consumer, OEM and other dedicated channels (e.g. Automotive, Entertainment, etc.)

• Philips is a strong diversified industrial

group leading in Health and Wellbeing

• Accelerate! will unlock full potential

• Philips has over years built a solid

foundation in China, with strengths in

brand equity, in industrial capabilities, and

in market reach

• Philips holds strong market leadership in

China across three sectors, aided by

continuous investment in local innovation

and business creation capabilities, in

geographic expansion and in local talent

development

Key Takeaways

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