2011.03.31 CoStone Capital Views:
March 30, 2011
With the theme of "Growth & Reward", CoStone Annual Meeting 2010 & Guangzhou CoStone Investor Conference took place at Sanya Marriott Yalong Bay Resort & Spa., Hainan from March 25 to 27, 2011. Nearly 100 chairmen and senior executives of listed and to-be-listed companies and 200 guests from industry, academia and the sector of financial investment attended the meeting.
Zhang Wei, Managing Partner and Chairman of CoStone Capital, acted as the moderator. In the meeting, Managing Directors Chen Yanli and Wang Qiwen reported on the operation and management of the History Fund and the Guangzhou CoStone Fund respectively, and Managing Director Tao Tao introduced the newly launched funds. The partners expressed their views of the economy and the private equity sector in China. They made detailed analyses of CoStone Capital's investment philosophy, strategies and style, and compared the returns on investment of various investment cases in different sectors. In the Investor Conference, Chairman Zhang Wei made an objective summary of the gain and loss of CoStone Capital in the past year.
Moreover, wonderful keynote speeches were given by Professor Yang Du at the Renmin Business School, Dr. Shi Wei at the Finance and Securities Institute, Renmin University of China (RUC), Professor Wu Chunbo at the School of Public Administration and Policy, RUC, Professor Yu Jianrong at the Rural Development Institute, Chinese Academy of Social Sciences (CASS), Professor Peng Jianfeng, Chairman of China Stone Management Consulting Group, and Professor Zhang Weiying at Peking University.
Speaker
Prof. Peng Jianfeng
Peng Jian Feng is Professor and PhD Supervisor at Renmin University of China, Chairman of China Stone Management Consulting Group, Deputy Director of China Enterprise Confederation Management Consulting Committee, Vice President of Beijing Enterprise Directors Association, and a famous management consulting expert in China. He used to be Vice President of the School of Labor and Human Resources of RUC. Having been working on the consulting and research work of HR management and corporate culture for a long time, he provides consulting services for various enterprises. He has been hired as Senior Management Consultant and the team leader by Huawei and TCL successively. The team led by him has served dozens of famous enterprises, with the results of Huawei Basic Law, OCT Charter, TCL: Defeat Scale with Speed, Samsung (China) Culture and Dongfeng Nissan Programme of Action.
Prof. Wu Chunbo
Wu Chunbo is a leading expert of China Stone Management Consulting Group, Director of Institute of Organization and Human Resources, RUC, and a PhD supervisor. With over 100 authored articles in famous journals at home and abroad, he has published or translated more than 10 books, such as Grasp the Future-The Planning of Modern Business Operation, Design and Operation of Organizations, Cases of Human Resources Management, and Get out of Chaos. He provided services of HR management system designing and consulting for dozens of Chinese enterprises. As one of the drafters of Huawei Basic Law, He has served concurrently as Senior Management Consultant at Huawei since 1995.
Dr. Yang Du
Yang Du is Professor and PhD Supervisor at the Renmin Business School. He received a PhD in Economics from RUC and a PhD in Business Administration from Kobe University, and he did his post-doc at RUC. His research focuses on the theory of the growth of the firm, knowledge management, corporate culture and business ethics.
Shi Wei
Shi Wei is a researcher and Chief Consultant of the Finance and Securities Institute of RUC. He has been engaged in enterprise management consulting since 1995, specializing in marketing and enterprise strategy. He provides management trainings for enterprises in China, including TCL, Midea Group, Giti Tire, Motorola, Liuhe Group, Robust Group, CIMC, Telling Telecom and SPD Bank, which have been well received.
Prof. Zhang Weiying
Zhang Weiying graduated with a bachelor's degree in 1982, and a master's degree in 1984, from Northwest University (China). He received his M. Phil. in Economics in 1992 and D. Phil. in Economics from Oxford University. His D. Phil. supervisors were James Mirrlees (1996 Nobel Laureate) and Donald Hay. Between 1984 and 1990, he was a research fellow of the Economic System Reform Institute of China under the State Commission of Restructuring Economic System. During this period, he was heavily involved in economic reform policy-making in China. He was the first Chinese economist who proposed the "dual-track price system reform" (in 1984). He was also known for his contributions to macro-control policy debating, ownership reform debating, and entrepreneurship studies. After he graduated from Oxford, he co-founded China Center for Economic Research (CCER), Peking University in 1994, and worked with the Center first as an associate professor and then as a professor until August, 1997. He then moved to Peking University's Guanghua School of Management in September, 1997. He is the Sinar Mas Chair Professor of Economics at Peking University's National School of Development.
Prof. Yu Jianrong
Prof. Yu was born in Hengyang, Hunan in 1962. He graduated from the Institute for China Rural Studies, Central China Normal University with a PhD in Law in 2001. Now he is Professor and Director at the Social Issue Research Center, Rural Development Institute, CASS. His representative works including Yuecun Politics: The Changes of China's Rural Political Structure During the Transition Period, The Condition of the Working Class in China, and Contentious Politics: Fundamental Issues in Chinese Political Sociology.
Rewritten by: Jiang Xiaomei, Edited by: Du Zhixin, Wei Yiyi
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026