2015.02.11 CoStone Capital Views:
The sixth CoStone Mater Forum kicked off at Yalong Bay in Hainan on February 11, 2015. The theme of the Forum was "Platform Strategy & Internet Thinking".
February 11, 2015
The sixth CoStone Mater Forum kicked off at Yalong Bay in Hainan on February 11, 2015. The theme of the Forum was "Platform Strategy & Internet Thinking". Chen Weiru, author of the Platform Strategy and Associate Professor at China Europe International Business School (CEIBS), and Tai Hongwei, Executive Education Director at Cheung Kong Graduate School of Business (CKGSB), delivered lectures on the topic.
Prof. Chen on the Platform Strategy
We are in a WeChat era where information sharing is ubiquitous and the human history never lacks innovation. At the outset of the speech, Prof. Tai did a trick of "Mind Reading" and displayed to the audience how amazing it would be if having adopted a new thinking.
Internet Thinking-Upending & Innovation
Both Prof. Chen and Prof. Tai talked about the mobile phone sector and they gave the same reason for Nokia being defeated by Apple: The failure of Symbian led to the fall of Nokia directly; at the same time, Apple upended the industry by developing top mobile phones whose calling role was minimized.
They also made bold forecasts on the economy and society under the impact of the Internet. "Finance will continue to thrive but banks will disappear. Education will develop further but no school will be needed." Finally, Prof. Tai's conclusion of "Five Levels" and "Nine Mindsets" of the Internet Thinking directed the way of transformation for the entrepreneurs present.
Speaker
Prof. Chen Weiru
Chen Weiru is an associate professor at China Europe International Business School (CEIBS), with a Strategic Management PhD received from Purdue University. He focuses on business model innovation and corporate transformation. He is the owner of the CEIBS Teaching Excellence Award and the Best Teaching Award of INSEAD and Purdue University. Prof. Chen has multiple articles published in top journals such as Academy of Management Journal, Organization Science, Strategic Management Journal, Research Policy and Strategic Organization.
Mr. Tai Hongwei
Mr. Tai Hongwei is the Executive Education Director at Cheung Kong Graduate School of Business (CKGSB). His mission is to lead innovative organizations and promote innovation, revolution and internationalization of organizations. He used to be the Chief Talent Officer at IBM. Then he taught at the universities in China and in the United States for 8 years and worked at AT&T for 4 years. During the 12 years at IBM, he was responsible for talent training and development in various countries and regions. He helped IBM achieve double-digit growth through innovation, transformation and globalization. He also put in place many talent development projects, including two patents and two copyrights.
Rewritten by Jiang Xiaomei, Edited by Li Yunzhen, Du Zhixin
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