The first thing that hit me when I arrived in China: everything is cashless.
It blew my mind how fast the world’s second largest economy has evolved. I’ve worked and studied in Shanghai. And the last time I came here was before the COVID-19 pandemic — visiting its massive skyscrapers and towering cranes on a property tour.
This time, even when I first arrived in a third-tier city like Hohhot, in Inner Mongolia…
I didn’t need to carry a single Yuan note.
Enter China’s cashless ecosystem
Hardly anyone uses physical cash anymore. From ordering a Luckin coffee to paying for a DiDi ride – every transaction runs through WeChat or Alipay. I was amazed how even their grandma is so proficient in their use of technology.
It’s scary how China adopts technology at scale.
I mean, even Singapore has yet to reach the kind of efficiency replicating what China has (yup, we’re still debating how to onboard elderly in Singapore to go cashless).
Over the last three weeks in China, it’s as if I’ve stepped into a different world.
SO… Here are my three biggest observations during my China trip:
1. Rise of local brands
First things first, local brands are picking up.
Gone are the days when “Made in China” felt cheap and low-quality. Today, China’s domestic brands – from cosmetics, snacks, bubble tea, technology – are stylish, affordable and clearly aimed at China’s rising middle income class. Their many brands of sour milk and even rice have improved their packaging…
Browsing through Alibaba’s Freshippo supermarket
In fact, even their storefront looks polished…
The Huawei flagship store in Wangfujing, Beijing
It’s as if the Chinese took ideas from all over the world and fused it into their products and services.
And streets still crowded even on a weekday afternoon.
Streets of Wangfujing, Beijing
2. China’s EV Boom is real
During our trip, we wanted to rent a car in China. But quickly realized we had to pass their driving test and it would take months in order to get a driving license. In the end we just DiDi around.
But get this: many of the cars on the roads are already either on EV or hybrid.
Even though one challenge is the charging time, many still use EVs as it’s cheaper. Some of the more popular brands are BYD, Changan, XPeng, NIO, Zeekr and so on. They look fantastic: sleek, modern and powerful.
To be honest, Chinese EVS are giving Tesla a serious run for its money. They cost half as much as a Tesla and do just as well of getting from one point to another. Even Huawei has launched its own line of electric cars.
The Huawei AITO M9
Self driving cars are also rolled out. You need a registered China mobile to book through an App.
3. China is a self-sufficient giant
What I’ve learnt so far is that China is a self-sufficient giant.
What really stood out to me, though, is this: China doesn’t need to rely on the rest of the world.
They own natural resources.
They own labour.
They own factories and supply chains.
And more importantly, its 1.4 billion population has enough purchasing power to sustain demand internally.
Let’s not forget: China is still one of the biggest saving nations in the world.
If the West wants to “decouple,” China can wall itself off and still thrive. That’s the level of self-sufficiency they’ve built.
You’ll know I’ve a soft spot for China
China has built a digital economy from the ground up — and it works. But what matters more is I’m confident people in the world’s second largest economy want to enjoy the same habits and living standards that developed countries like the West have enjoyed for decades.
What’s more, many of them are still at the level of economic development like the US during the 1950s. Yet the Chinese are getting a little richer each year — with growing purchasing power.
They will definitely consume more branded products and services. With China having about four times the population of the US, I believe this will be a strong tailwind for long-term investors like myself.
Which brings me to this point…
After China’s heavy stimulus measures last year, I believe we’ve reached an inflection point on China’s bear market.
China’s CSI 300 index took five years to recover from the global financial crisis.
Credit: investing.com
Today, China’s bear market is well into its fifth year — shares are still in the bargain bin, international investors have lost interest in the market, and nowhere to be found.
And this is why I’m not missing an overlooked bargain.
Sometimes, investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan
