2018.03.05 Li Xiaohong Views:
Li Xiaohong believed that tech companies would be the leaders in vertical industries. The early development of the giants in vertical industries benefited from the non-technological factors like innovative business models, unique resources and financial investment. The giants then had to eventually rely on technology to expand scale, increase efficiency and build up strength when the time comes.
CoStone Capital Li Xiaohong: Observations on Future Venture Investment in Hi-Tech Field
As AI was becoming more mature, Li Xiaohong believed, AI, big data and cloud computing represented the cutting-edge technologies of the third industrial revolution in history. AI and big data could bring enormous opportunities to scientific innovation and investment. “AI imitates the way how humans think. Now we are in the age of ANI (artificial narrow intelligence). AI is applied in facial recognition, speech recognition and intelligent search. By developing deep learning and Mapping Knowledge Domains, we will usher into the ASI (artificial super intelligent) era. AI will be applied on virtual personal assistance, smart robots, smart factories and automatic driving.” said Li Xiaohong.
He added, the fast-growing wealth had increased demands for quality products and services. High-end industries were moving fast to China, driving unprecedented structural upgrades in China’s economy. The core industrial chains like electronic information and automobiles were breeding enormous opportunities.
As the new generation of ICT was growing and become more mature, Li Xiaohong indicated that China, the largest manufacturer in world, was in a huge transition. Numerous opportunities were popping out in automation and information technology.
Li Xiaohong believed that tech companies would be the leaders in vertical industries. The early development of the giants in vertical industries benefited from the non-technological factors like innovative business models, unique resources and financial investment. The giants then had to eventually rely on technology to expand scale, increase efficiency and build up strength when the time comes.
Li Xiaohong, partner of CoStone, is in charge of TMT investment. He led the investment in the unicorns like SenseTime and Royole. Prior to joining CoStone Capital, Li Xiaohong has worked in HUAWEI for a decade, seeing HUAWEI grow to an ICT giant. In only a few years, Li Xiaohong succeeded in changing his role as a technician to a competent and professional investor.
Above: Excerpt of the interview with Li Xiaohong from STCN. Please refer to this link to view the interview in full: http://stonevc.com/news_view.aspx?TypeId=5&Id=677&Fid=t2:5:2
Rewritten by: Luo Xinying, Edited by: Du Zhixin, Wei Yiyi
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
