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China Exclusive: China's economic transition presents investment opportunities: foreign PE fund

Xinhua, September 7, 2016 Adjust font size:

China's economic transition offers many investment opportunities and will drive technology and business model innovation, according to the head of a foreign private equity fund.

Economic restructuring and industrial upgrading will foster renewed demand for innovation in technology, media and telecommunication (TMT), education, health care and higher-quality consumer goods, James Yang, Managing Partner and Chairman of Pagoda Investment, told Xinhua in an exclusive interview.

Since it opened in 2015, Pagoda Investment, whose major investors include Australia's Queensland Investment Corporation and some large European pension funds, has focused on investing in China's new consumption-centered economy. It has invested in several business giants including ride-sharing firm Didi, online-to-offline business platform Meituan & Dazhongdianping and on-demand personalized radio app Ximalaya FM, according to Yang.

"The downward economic pressure might also have some silver linings, as it could squeeze out the hype bubble and push for real innovation in new technology and sustainable business models," Yang said.

He said there are still many investment opportunities in the TMT sector as China is the world's second largest technology innovation market and has been a pioneer in Internet technology and application with strong government support.

"For example, Didi is not an on-demand mobility firm, but essentially a big data platform that matches demand and supply via data analysis," he said.

Yang is also upbeat about business opportunities to cooperate between the domestic and overseas market, such as logistics services for the Belt and Road Initiative and the rising demand of the Chinese middle class for safer food, better health care and consumer products.

China's outbound investment reached more than 102.7 billion U.S. dollars in the first seven months of this year, up 61.8 percent year on year, and Chinese enterprises have been active in overseas mergers and acquisitions (M&A).

"Many Chinese firms are becoming increasingly international with market expansion via M&A. Foreign funds can help bridge overseas technology and products with the Chinese market and help cultural integration and compliance with local laws, which are crucial to M&A success," Yang said. Endi