12. Investing in China 4th July 2014 12
Strong
Growth
Financial
Crisis
Collapse
Post
Crisis
Recovery
Recent
Underperfor
mance
Stock Market Performance
13. Investing in China 4th July 2014 13
I skate to where the
puck is going to be, not
where it has been.
Wayne Gretzky
Opportunities
14. Investing in China 4th July 2014 14
Percentage of Order Adults (Age 65+) in China
• Far less mature industry than developed
countries
• Demographic change and aging population
• Rising income and affordability
• Healthcare reform
• Healthcare awareness
Opportunities
Healthcare
15. Investing in China 4th July 2014 15
• Serious environmental degradation driven by
economic development
• Strong government support
• Clean China over the next 5 years
• Higher desire for clean energy
Opportunities
Environmental Protection
16. Investing in China 4th July 2014 16
• Government Investment: Biotech, energy
saving, environmental protection, high-end
manufacturing
• Internet Penetration
Opportunities
Technology
17. Investing in China 4th July 2014 17
“Internet will change
people’s life”
1999 Jack Ma –
Founder of Alibaba Group
Technological Change
18. Investing in China 4th July 2014 18
E-commerce company,
founded in 1999
Handled 1.1 Trillian Yuan in
sales in 2012
Estimated market value
$120 billion
Instant/mobile messenger,
founded in 1998
850 million monthly active
users
Market value $150 billion
Search engine, founded in
2000
Handling 5 billion search
queries per day
Market value $65 billion
Technological Change
20. Investing in China 4th July 2014 20
“take a human desire, preferably one that has
been around for a really long time. Identify that
desire and use modern technology to take out
steps.”
Evan Williams – Co-Founder of
Twitter
Technological Change
1 – Eliminating steps
21. Investing in China 4th July 2014 21
Technological Change
1 – Eliminating steps
22. Investing in China 4th July 2014 22
Technological Change
1 – Eliminating steps
23. Investing in China 4th July 2014 23
Technological Change
1 – Eliminating steps
24. Investing in China 4th July 2014 24
Who stole my
cheese??
Technological Change
2 – Cross Sector Competition
25. Investing in China 4th July 2014 2525
MACHINERY LABOUR
CAPITALLAND
Intellectual property
Patents
Brand
New Technology
Data
User Platform
Goodwill
Customer Base
Human Capital
I
n
t
a
n
g
i
b
l
e
s
T
a
n
g
i
b
l
e
s
Technological Change
3 – Recognition of Intangible Assets
26. Investing in China 4th July 2014 26
Technological Change
4 – Innovate or Die
27. Investing in China 4th July 2014 27
QQ Online
Game
QQ Blog
Webmail
QQ Mobile
App, Expand
Value Added
Services
Mobile IM
Wechat
Launched
Mobile Social
Media
Apps for
taxi/flight
booking
Mobile
Payment
Platform
Technological Change
4 – Innovate or Die
28. Investing in China 4th July 2014 28
Customer
First
Team Work
Integrity
Embrace
Change
Passion Commitment
Technological Change
5 – Distinction and uniqueness, not just scale
29. Investing in China 4th July 2014 29
Technological Change
5 – Distinction and uniqueness, not just scale
30. Investing in China 4th July 2014 30
Type of
Investment
Domestic/Non-
Domestic
Currency Additional
Information
A Share Domestic RMB QFII license
required
B Share Non-Domestic USD
H Share Non-Domestic HKD
Other share
classes traded on
foreign stock
exchange
Non-Domestic Currencies in
local stock
market
e.g. NYSE, NASDAQ,
Singapore
Indirect
Investment
Non-Domestic Currencies in
local stock
market
Shares of companies in
developed countries
which have significant
business operation in
China
Ways to access Chinese market
31. Investing in China 4th July 2014 31
• Less capacity to access the market for foreign investors
• Lack of transparency
• Lack of using derivatives for hedging and portfolio replication
• Demographic shift
• Political risk
• Increased concerns of credit growth
• Property bubble
• Perceived slowdown in growth
Limitation and Risk
32. Investing in China 4th July 2014 32
• Fast growing market
• More open to the world
• Opportunities include
Health Care
Environmental Protection
Technology
• Technological Change
Positive to technology sector and those which use technology in the right way
Winners
Meet human desire (take out steps)
Innovate
Monetise intangible assets
Unique and distinct market position
Negative Impact
Some traditional sectors, e.g. retailers, sales agents, intermediaries
Business impacted by cross-sector competition
Summary