The 16th China PE Investment Annual Forum, co-hosted by Zero2IPO Group and PE Daily, opened in Beijing from December 6th to 8th in 2016. Over 3000 professionals participated in this Forum. The Forum was ended by the highly expected “Zero2IPO 2016 China PE Investment Annual Lists”: CoStone ranked the 8th on the 2016 Zero2IPO Top 100 China PEVC Institutional Investors; Zhang Wei, the CEO of CoStone was among the “2016 Top 10 Chinese PEVC Investors”.
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“We blazed a trail in TMT industries. We brought in professionals of telecom, chemical engineering, electronics and other emerging industries since 2012. Our effort finally paid off. CoStone was able to penetrate into the whole industrial chain and make arrangement for every stage within four years, instead of only touching upon the late-phased projects. The projects we invested in the last couple years fully embodied our style in TMT industry. These arrangements are different from what we do in the racing tracks. We have our own way. We will invest those projects that are promising and are related to capital markets and our core capabilities.”
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As Howard Marks stated in The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor, "first-level thinking is coming to a simple obvious conclusion and making a bet on it, while second-level thinking is deep, complex and convoluted and involves many factors." To obtain excellent investment results, one has to take an extraordinary but correct view towards value.
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TMT has become the latest darling of investors over the past five years. It is helped by the fast-developed smartphone and mobile internet industries and the inclusion of O2O. The digitalization of traditional Chinese manufacturers and their new business models are also part of the reason.
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In the 2016 Chinese Venture Culture & Industry Capital Conference, two investment portfolios of CoStone won big prizes. MeWe Media was awarded as the best portfolio and acquisition of China’s M&E industry of the year 2015 to 2016 and Joyme was awarded as one of the ten most valuable new OTC market listed companies.
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CoStone Qomolangma Fund, an excellent PE investment fund since August 2011, has gained a complete victory in 19 projects across 3 fields with 1.4bn investment. Over 50% of its projects will go public, earning CoStone 5 times more than 75% of its original capital of investment.
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Lin Ling indicates that IP, originally referring to intellectual property, is now entitled to a sort of glory. IP may be another universe with another set of values. People in that universe live a different life which has well-designed plots. These plots incentivize the demands of consumers and fans. The loyalty of fans and consumers to IP makes it go viral. This mania can reduce the risk of investing similar projects.
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Long-term and continuous contacts will tell you the story about entrepreneurship which is featured by workaholism, persistence, and extraordinary business sense.
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“We will stay away from those who go against the trend. Never hold a piece of ice on your hands in a hot summer.” said Chen Yanli.
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The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
