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Zhang Wei: How to Grasp M&A Opportunities in the Market

2018.01.08 21st Century Business Herald Views:


“Our investment is concentrated on certain fields. Our strategy covers VC and PE growth, and we would like to integrate some companies in certain fields through LBO in the future.”


Zhang Wei, Chairman of CoStone Capital


“Our investment is concentrated on certain fields. Our strategy covers VC and PE growth, and we would like to integrate some companies in certain fields through LBO in the future.” Zhang Wei, Chairman of CoStone Capital, said so when he was interviewed by 21st Century Business Herald in December 2017. “In China, household appliances, beer, and milk have accomplished their industrial consolidation respectively, while the majority of other industries are still randomly dispersed. That is to say, the market shares occupied by the top 5 or top 10 companies are rather small.” In Zhang Wei’s opinion, there are still a large number of opportunities for buyout investment in many Chinese emerging industries.

In terms of CoStone’s investment teams, Zhang Wei said that there was a team responsible for industrial analysis, while the partners would give their insights on the industry. The specific investment business was given to different teams who shared the same understanding of the industry. CoStone had various forms of cooperation with external companies or organizations. For example, it could unit with companies in the same industries to make a buyout investment or make a portfolio with professional teams within the industry. Experiences and lessons learned from the past decades revealed that CoStone was still at the exploration stage.



This is part of the interview on Zhang Wei by 21st Century Business Herald, written by Zhao Na and edited by Lin Kun. For the full transcription of the interview, please refer to


Rewritten by: Xu Xinru, Edited by: Du Zhixin, 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


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