Hello everyone. This is Dr. Zhao. In this video, you'll learn to determine in which industries inventory inventory is important by the key performance indicator of inventory as a percentage of the total asset. We'll look into two countries, US and China as examples. Let's first look at the US. This table shows inventory over total asset for different level 1 industry sectors in year 2018. Circled by the red box, you can see that companies in the industry sectors of materials, industrials, consumer discretionary, consumer staple, healthcare and IT have a sizable asset in inventory. In particular, the median firm in consumer discretionary such as autos, apparel, home appliances and retail has 17 percent of asset in inventory, and the 90th percentile has 47 percent of its asset in inventory. Although the median of IT firms is only four percent. The 90th percentile can go up to 16 percent. So for these industries, inventory simply cannot be ignored. For China, the table looks a bit different. In addition to the industry sectors of materials, industrials, consumer discretionary and so on, it looks like real estate in China has the highest percentage of asset in inventory, with a median of 41 percent. In order to take a closer look at industries with a high percentage of asset in inventory, we'll drill deeper into a finer classification of industries for the US, that is the level 2 industrial groups where we'll pick capital goods, food staple retailing, retailing and food beverage, tobacco and so on. As we can see, retailing, such as department stores, has the highest percentage of asset in inventory with a median of 30 percent. Food staple retailing such as discounted stores like Walmart, Costco and so on, is the second highest with the median of 18 percent. This is followed by consumer durables and apparel, the median is 17 percent, and household and personal products, 10 percent and so on. Let's do the same analysis for China. We found that the number 1 industry in inventory over total asset ratio is real estate. The median is 41 percent and this is followed by consumer durables and apparel with a median of 15 percent and capital goods such as airplanes, heavy machineries, food staple retailing, retailing, food, beverage, tobacco and household and personal products with about 14-13 percent. In summary, the answer to the question of in which industries inventory management may be important is country dependent. Inventory management is important for food staple retailing, consumer durables and apparel for both US and China. What is different is that inventory is critical for real estate in China but not so in the United States, and inventory management for retailing is more important for the US than China.