2018.04.28 CoStone Capital Views:
In fact, CoStone is one of the first PEs to keep a watchful eye on the M&E investment, ever since the newspapers in 2005. CoStone has been paying great attention to the changes in this realm every single day for decades. From newspapers and broadcasting to the Internet and MICT (Mobile Information Connectivity Technology), CoStone lived the influence of these changes.
Lin Ling: Gen-Z and Consumption Divergence
On April 23-25, 2018, the 12th China Investment Conference Annual Summit hosted by Chinaventure.cn and CVSource and co-organized by Chinaventure Capital was held in Shanghai. Centered on “The Power of Value”, Lin Ling of CoStone Capital stressed in his speech that changes in technology would be a positive signal to the M&E industry. More application would emerge as new technology came into being. Investors would thus focus more on the influence of technology on different channels.
The huge population in China generates different demands, result in different consumer goods and consumption behaviors. It posts a grave challenge to the M&E industry. Platforms like Kwai and Tiktok and contents like online dramas and reality shows are in different shapes. The so-called consumption divergence and difference have birthed new consumption tendency, in which people play a more active role. Gen-Z stands out, quite different from millennials. Instead of shopping online like what millennials do, they live a life online, which will influence investment.
Macro policies and supervision will bring changes to the M&E industry. As the industry is highly linked to policies, the M&E industry is not only driven by profits but also social benefits. In spite of people’s obsession with entertainment products, the M&E industry is more than entertainment which may amuse people to death.
In fact, CoStone is one of the first PEs to keep a watchful eye on the M&E investment, ever since the newspapers in 2005. CoStone has been paying great attention to the changes in this realm every single day for decades. From newspapers and broadcasting to the Internet and MICT (Mobile Information Connectivity Technology), CoStone lived the influence of these changes.
CoStone jumped at the chance to invest the best newspapers and websites and then moved to TV dramas, short videos and online reality shows in the past decade. We keep our rhythm for investment and the projects go smoothly like MeWe Media. We are not necessary to amuse ourselves to death in M&E industry. Instead, we turned to this life short videos company. It can generate quality content and has a profound understanding on we media and the industry. Vancools, a M&E company specialized in online dramas that CoStone invested in, produced a representative Chinese drama, Day and Night, which was on Netflix. It is capable of industrializing products, producing excellent dramas and finding new channels, which leaves things clear for the rise of China’s video-streaming websites.
Above: Excerpt of the keynote speech delivered by Lin Ling in the 12th China Venture Investment Conference Annual Summit. Please refer to the link below to view the speech in full: http://stonevc.com/news_view.aspx?TypeId=4&Id=692&Fid=t2:4:2
Rewritten by: Luo Xinying, Edited by: Du Zhixin, 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