Healthcare, energy, technology and consumption, this is how Carmignac bets on China

“To successfully invest in China, you need to look for the ‘winners’ of tomorrow, we don’t have Alibaba or Tencent in our fund. I am sure that there will be more and more Chinese companies that will be global players, as has already happened in telecommunications, from Huawei to Xiaomi: but in 10 years they will not be the same leaders as today “. It is the mirror of an economy that runs and changes rapidly, the one that traces to Adnkronos Haiyan Li-Labbé who follows for Carmignac a series of funds focused on the Chinese market. From her comes the invitation to ‘think different’ with a look to the future rather than the present: “The engines of future growth will be very different from the current ones. Over the next 3-5 years – he explains – I think that the growth of tech giants and large Internet-related groups will slow down, indeed it is already doing it: the golden age is behind us, there will be a period of decent growth but not as fast as before “. In the country, he recalls, “Internet penetration already affects over a billion people and e-commerce services already affect more than 30%” of the inhabitants. It is therefore difficult to expect ‘roaring’ rates as in the recent past. But good opportunities are not lacking: “If I had to make a bet on a sector – adds the analyst – I would focus on healthcare, and not just because the population of China is aging: so far, domestic companies were mainly suppliers” to large foreign groups , “But I think we will see some major Chinese players emerge in this sector” capable of expansion abroad. In addition to the boom in personal care, Haiyan Li-Labbé also focuses attention on the possibilities opened up by industrial innovation which – he explains – “It is a very important trend because China wants to increase its technological independence”, therefore with an acceleration on the front of Artificial Intelligence and electric mobility. This point, he adds, connects to another great area of ​​transformation (and of possibility) and that is the energy transition. Here too, for Li-Labbé the key word is independence: “Today in China, coal accounts for 60% of the energy consumption mix and the country imports 2 thirds of the oil it consumes, which is paid for in dollars. But Beijing wants currency and energy independence, and to achieve it it must increase the use of renewable energy ”. A process favored by the fact that the country “has unlimited resources in terms of soil and water, and major projects have already started, which include high-voltage networks, the creation of large data centers in the western regions powered by renewable sources, and then the development of the photovoltaic industry “. Today, he recalls, “China covers a 90% share in the production of solar panels and builds excellent wind systems, sectors that can still grow.” The search for independence from crude oil will also stimulate the automotive sector where in 2020, recalls the analyst, “only 4-5% of cars sold in China were battery-powered, while already today the ratio has risen to 10%: by 2025 the government is aiming for a 20% share of electric but I think it will get there sooner and in the 2025 we could actually reach 45% “. A boom that will inevitably increase the attractiveness (and also the export capacity) of the most active Chinese houses in the sector. After Healthcare, technology and energy, the latest area of ​​promising growth, he adds, is that of “new consumption models”. If in the West the focus is only on the ‘usual names’, Li-Labbé invites us to look at new companies that are growing dramatically: “Two names for everyone, Shein, which is the second most app written after Tik Tok, an international platform for the sale of B2C online clothing that sells outside China with a production turnover twice as fast as Zara, and Minso, a chain of products inspired by the Japanese lifestyle and which has also opened its first stores in Italy: they have not their own industries but rely on hundreds of designers who every week churn out more than 100 new ‘young’ products of good quality at much lower prices “than usual. The analyst invites us to consider that Chinese companies” are globalizing: look at the European football championships, in 2000 no sponsor was Chinese, today there are 4 ”. The same goes if we consider the main national companies: “In the top ten of Chinese companies in 2010 there were large state-owned companies, such as Petrochina or the Industrial and Commercial Bank of China, today they have dropped to half, and I believe that between 10 years in this ranking there will be only private companies. For this reason, in investments, we focus on a long-term transition to future market leaders ”. “Of course – he admits – in some sectors there is a very strong volatility, but we need to think ‘macro’ and read, study, understand what the government wants, where it wants to lead the economy”. Because it will also be a dynamic and innovative economy, but in China – as the recent misadventures of some large companies show – we must always be careful to understand where politics is going and what it wants.