Key areas for western investors as China ‘opens for business’
I set up my company, the angel investment, venture capital and strategic consultancy conglomerate, the Global Group, a little over 20 years ago. I am passionate about business, trade and investment opportunities between the East and West, and have devoted myself to encouraging and facilitating positive China-UK relations. My motto, and the motivation behind my business, is ‘Bridging the New Frontiers’, drawing upon my Chinese heritage, British education and offices in Hong Kong and London.
I advise anyone who wants to invest in Chinese markets to make sure they do their research – and this rule applies to any sector. There’s still a bit of a misconception that China is an easy market to enter, not least because it’s home to over 1.3bn people. If in the past, a key flaw in this argument was the lack of disposable income on the part of the vast majority of the population, today it is more likely to be a failure to understand the thinking and expectations of the country’s huge middle class, with its increasingly discerning and demanding attitudes towards quality, brand and good value.
Investors must also take their time to conduct due diligence, learn appropriate business and cultural etiquette and get to know their target audience. Visiting China is essential. In these ways, you can hopefully identify the right business partner to help you navigate the ins and outs of the Chinese market.
Right now, two of the key areas that I feel stand out as excellent opportunities are impact investment and the consumer market.
Impact investment refers above all to new, sustainably conscious fields such as biotech, agricultural technology and green technology. These areas all look to address the challenges posed by a growing global population and its impact on resources, healthcare and the environment. Long gone is the assumption that ethical investments and profits are mutually exclusive; these ventures will not only benefit western investors now, but also safeguard the future for generations to come.
One such fast-growing area is electric vehicles, and China is fast-becoming the world leader here. Tencent and Baidu, two Chinese technology giants, are heavily investing in Chinese EV incubators and western investors should consider following suit. It may not be as glamorous as investing in a classic car, but it is important to think long-term if we are to have a sustainable future.
Looking to the consumer market, there are fantastic opportunities for Western investors to avail of the burgeoning interest in luxury goods, not least including British heritage brands. Globalisation is affecting Chinese tastes quite literally – there is an ever-increasing desire for a range of food from all cultures, particularly if it is considered safe, healthy, green and organic.
For the Western investor, you might consider a potential food niche that can appeal to this expanding middle class sensibility. Italy and Spain have made good inroads with extra virgin olive oil and serrano ham respectively. From Scotland, salmon, along with Scotch whisky, of course, has become a major export item to China. But this can also be a time to think more adventurously. Until fairly recently, China was not considered a market for cheese, due not least to perceived lactose intolerance, but this is changing and not just for brie or camembert. I know of one UK artisanal company whose business profile has been lifted by exports of their goat’s cheese to China.
Food products are just one example of a myriad of potential niches that western business people could consider as a route to enter and thrive in the Chinese market. However, and again this applies to all areas, it must be noted that the regulatory environment is complex and changing. Investors cannot undervalue the importance of partnering with China-business experts, such as the Global Group, or linking up with such networks as the 48 Group Club, the China-Britain Business Council, the Chopsticks Club and Asia House.
Fundamentally, China is open for business and we are entering a fascinating new era of trading and investment opportunities. Global business attitudes are changing, and you need to consider bigger picture possibilities and to cooperate and collaborate to achieve investment success. There’s a wealth of opportunity out there for any investor that conducts thorough research and plays his or her cards right.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.