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
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
