A few weeks ago, I and other executives went on a digital tour to Silicon Valley in the United States and were greatly inspired by many young people challenging themselves to build and reshape the future. I was also surprised at the incredibly fast pace at which digital technologies are changing the world. I thought it would be great to provide you with more tour programs for educational purposes and I will certainly do so.

 Amazon recently took over Whole Foods, the long-loved U.S supermarket chain which offers all-natural and organic foods. Having begun as an online retailer, Amazon is growing big in the offline world with its online-offline blend while Toys R Us, which was once the world's largest toy retailer, recently filed for bankruptcy after failing to keep up in the new digital age. Meanwhile, Best Buy, which is an American electronics retailer similar to Hi-Mart, a Korean retailer of electronic goods, has performed well over the last two years based on O2O business through its continuous effort toward cost reduction and improvement of management constitution both online and offline, though many predicted that large retail chains would eventually fall into the hands of Amazon. As they show us, the world is quickly changing and we must adapt to this change in order to achieve sustainable growth. But it is not easily come by. It requires us to take up the challenge with a certain attitude:

 First, we must be customer-centric at all times. Everything starts with the customer; everything we do we do it for the customer and no matter how the world changes, we must put the customer at the center of what we are doing and how we make decisions.

 Second, let us always keep our three business principles in mind. With blue, red and yellow, we can make colors visible to the human eye. These three colors are primary colors and they can be mixed to an infinite number of color combinations. We set three elements and have worked based on them up to this day – Engine Product, Strengthen Retail Capabilities and TCR (Total Cost Reduction). At that time, the retail market was not as big as it is today. There was no such thing as an online market and traditional channels like TV and newspaper were the main source of communication. So, we made Engine Products, strengthened our retail capabilities at customer touchpoints and managed the total cost. Our sales department have enhanced their retail capabilities to give a boost to development of Engine Products, while the production and logistics departments reduced the total cost for allowing our advertising and sales activities to go on smoothly and therefore we were able to organically create synergies. These three elements jointly built a virtuous cycle, which in turn enabled us to strengthen our customer base and improve our constitution for the better. Customers continued to purchase our products and it led to an increase in profitability and overall bottom line.

 Now the three keys to future success have changed to Innovative Product, Customer Experience and Digital. We must make innovative products that will satisfy the whole world and delight customers across online and offline channels. Strengthening our digital competency will bring enormous opportunities. These may seem to be not connected to each other, but they together form a circle and work in a synergetic way for greater growth.

 As the world is going digital, many more sources of information and products are available to customers. The market is changing fast, the product development cycle is getting shorter and the barrier between the online and offline experience is becoming increasingly blurred. Digital technology and environment present new communication and sales channels. Our innovative products reach customers all around the world through social media channel and ideas collected via digital media are very effectively used for product development.

 Check how products are displayed in offline shops for convenience of customers and look through the design of product pages and payment options available in online shops. New customer management strategy adjusted to the new environment is required. All of these will add up to a better customer experience. Make full use of digital technology to listen to the voice of customers, advertise what's good about our products and boost sales. Handling business and responding promptly to customers through digital channels are also important.

 Amazon, the retail giant mentioned earlier, opened its first brick-and-mortar bookstore Amazon Books in New York City in May. It is a new kind of bookstore blending the online and offline platform of book shopping experience. Here, books are displayed with their cover facing front, not their spine as they have been in the traditional bookstores and instead of alphabetically arranging books by title or author's name, Amazon Books divides books into sections by what's popular nearby and categories based on big data analysis. Furthermore, it will use camera technology to see moves of people – picking up and putting back books – and allow them to make a payment as they walk out of the bookstore.

 Do not be afraid to take up a challenge. In the digital age, we can grow and create innovations only when we keep challenging ourselves. Innovation can never be achieved at a single stroke. As the saying goes, constant dropping wears away a stone. Let us keep trying, start with small things and go slowly but steadily to make great innovation through a Test & Learn approach. If we can make progress every single day no matter how small with three management principles in mind – Innovative Product, Customer Experience and Digital, the result of each will lead to another as going about in a circle and build a strong base for us. Increasing the number of active and new customers will improve our profitability and, by using it to make a better environment, we can grow together.

 In September, there were some good news. Sulwhasoo made a debut in Europe with the opening of its first store in France. Europe is very mature, slowly growing market but there are always opportunities. I am sure that Sulwhasoo will spread our beauty across London, Berlin and other European cities beyond Paris. LANEIGE is growing big in the U.S. market as well. Riding on its success through Sephora online mall, the brand is now in offline stores as well, getting popular ever since. LANEIGE will continue to undertake collaboration projects with multi-brand shops in the U.S. Lastly, innisfree stepped into the U.S. market. It is impressive to see a big crowd of customers willingly waiting in line for 1-2 hours in front of the store. What's more surprising is that it was not only the opening day the store saw such a long line of customers. They continue to come. It seems that innisfree is certainly doing a good job of spreading K-beauty across the United States. Our U.S. market targeting project is called Dream Big. I hope that you all dream big, explore the U.S. market and take our business to a next level.

 Moreover, good news comes from ASEAN countries. This year ETUDE HOUSE and innisfree are doing well. They are making most of their opportunities in the new market targeting middle-class Muslims. I visited their stores in Malaysia and Indonesia and was very impressed by how much local customers like our products. Not to mention the Chinese market. China is quickly turning into a city state. More than half of China's population live in cities and more and more coming. New cities are forming near the existing cities and they are creating much more consumption than expected. With growing health and wellness trends, the shopping behavior of people is changing from soft drinks to water and cosmetics, yogurt rather than sweet desserts and fast food, and air purifiers are selling increasingly well. The number of Chinese people traveling overseas is surging and the market for food delivery is growing. One of three fastest growing markets in China is makeup category. The skincare market is growing well but not as fast as the makeup market.

 The key to success in the Chinese market is having singularity of product. The fast growth of the market leads to more opportunities. I'd like to ask you all to grab the given opportunities and fulfill your role as Asian Beauty Creator. With a full determination to make a more beautiful world, let us make change one after another. Give much thought as to what we should do to make innovative product, improve customer experience and go digital. Improving logistics process and providing kind service to customers would be part of such effort. It is not about the size. If we keep challenging ourselves to make innovation, we will be able to make a great change slowly but steadily.

 Once the long Chuseok holiday is over, we will only have one month left before moving into the new HQ. I would like to thank everyone working hard for the new HQ project and please keep sharing ideas and communicating with each other in the remaining time. A house is merely a structure, but when a family moves in, it becomes a home. Our new HQ is yet a building, but once we move in, we will have to make it our workplace and home from home. Enjoy your holiday.
Thank you.