2014.07.21 CoStone Capital Views:
On May 31, 2014, the second CoStone Master Forum opened in Yixing, Jiangsu. The Dragon Boat Festival and charming spring added to the lectures. Prof. Bao Zheng at Renmin University of China (RUC) delivered lectures on Organization & Management. Prof. Bao is the first person who interpreted Peter Drucker in China and is a management master. He summarized the theories and practice of management from Adam Smith to Drucker and introduced some of his classic cases of company management consulting over the past 20 years.
June 5, 2014
On May 31, 2014, the second CoStone Master Forum opened in Yixing, Jiangsu. The Dragon Boat Festival and charming spring added to the lectures. Prof. Bao Zheng at Renmin University of China (RUC) delivered lectures on Organization & Management. Prof. Bao is the first person who interpreted Peter Drucker in China and is a management master. He summarized the theories and practice of management from Adam Smith to Drucker and introduced some of his classic cases of company management consulting over the past 20 years.
Prof. Bao Zheng on Organization & Management
Prof. Bao Zheng is good at concluding management philosophies from life. Taking Cai Yuanpei, the first Education Minister of the Republic of China and the President of Peking University, as an example, he compared the president of a university to a CEO, whose duty is also to"raise money and introduce talent". And on this basis, he made a sharp criticism of current higher education system. His speech was full of humour. He made fun of himself, his family, his neighbours, and even Zhang Wei, Chairman of CoStone Capital. With waves of laughter, the audience were totally immersed in the sea of management classics and theories.
Speaker
Prof. Bao Zheng
Prof. Bao Zheng graduated from Renmin Business School(RMBS) in 1982, he then obtained his master's degree and PhD in 1985 and 1992 from RUC. He visited Tokai University under the Sino-Japanese PhD program in 1990 and worked as a visiting scholar in Hitotsubashi University in 1995. In 1996, he was invited by the Japan Society for the Promotion of Science to carry out research on company management practice in Saga University. Prof. Bao is now a top expert of China Stone Management Consulting Group and the Professor and PhD Supervisor at RUC. He has been devoted to research and consultation in strategic management, marketing, organizational change and human resource management. He is also an expert in company consulting in China. His representative works include the Huawei Basic Law and TCL: Defeat Scale with Speed.
Rewritten by Jiang Xiaomei, Edited by Li Yunzhen, Du Zhixin, Wei Yiyi
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