2017.12.12 Wu Shun, Liu Zonggen Views:
On the recent 17th China Venture Capital & Private Equity Annual Forum, CoStone Capital Zhang Wei said that investors on the primary market need to learn from Huawei for its way of consistent investing in R&D over the highs and lows of company’s development, and years of commitment that makes it stand out in its field. In Zhang Wei’s opinion, to succeed in investment is to do what Huawei does: unwavering commitment in key focus areas.
On the recent 17th China Venture Capital & Private Equity Annual Forum, CoStone Capital Zhang Wei said that investors on the primary market need to learn from Huawei for its way of consistent investing in R&D over the highs and lows of company’s development, and years of commitment that makes it stand out in its field. In Zhang Wei’s opinion, to succeed in investment is to do what Huawei does: unwavering commitment in key focus areas.
“In essence, CoStone Capital tends not to regard an investment as a bet. We basically put our energy into areas we focus on,” said Zhang Wei.
In his view, the main takeaway is to make consistent efforts, to stride, to plow, to forge. “A business model is not expected to be changed easily. We don’t back a company by determining their bets based on the racetrack. Instead, we bet on the horse and the jockey. In other words, we place a bet with a company based on what it is doing, and put our money on the rider, the responsible source of direction to lead the horse where and when it needs to go.”
As a matter of fact, VC firms are still used to hopping on the bandwagon when a company is usually overvalued even at its very early stage. A lack of safety margin in investing and premium valuation will be a deal breaker.
“What we value the most are entrepreneurship, corporate management and organizational system. A company like Huawei, with 180,000 intellectuals and 80,000 shareholding-employees, is bound to have a sophisticated system to bring people together,” said Zhang Wei.
This article was originally published on China Securities Journal. Access to the source text: http://www.cs.com.cn/sylm/jsbd/201712/t20171212_5620143.html
Rewritten by Lu Ying, Edited by Li Yunzhen
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