Postcards

Greetings from Comgest’s China Investment Team!

When the Chinese government announced that they would finally abolish their strict Covid-zero policy and re-open the country, our Comgest China investment team in Hong Kong immediately hit the road to visit local Chinese companies on our Quality Growth radar. Overall, our team spread out over 9 cities to meet 40 companies.

After three years of lockdowns and mass Covid testing, the team was pleased to find transportation via air, rail and road extremely efficient. Factories were running as per usual. At the same time, while certain tourist hotspots bustled with Chinese tourists and moviegoers filled the cinemas, local shopping malls still seemed to be a bit subpar in terms of customers.

TRANSFORMATIVE EVOLUTION

Transformation best describes the country’s ongoing economic shift towards consumption and innovation. Domestic consumption remains the core secular growth driver. Chinese brands are gaining prominence with young consumers due to effective brand building and omnichannel strategies. Direct-to-consumer (DTC) marketing strategies are common and clearly working: we saw many young teenagers wearing Anta Sports sneakers on our store visits. We also noted that Chow Tai Fook has leveraged traditional Chinese craftmanship to produce handmade gold jewellery and innovative gem set collections, which have gained appeal with the younger generation. Chow Tai Fook is no longer viewed as a traditional “basic gold” brand, but rather a modern one. In the travel sector, we ventured beyond the Marriott and IHG hotel groups to spend the night at Orange, a midscale hotel operated by H World. H World has gained popularity among domestic travellers for their efficiency, contemporary style and culture-rich services. 

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