Once regarded as cheap and inferior, Chinese brands saw transactions grow 6% more than that of foreign counterparts in 2020, according to a research report by e-Commerce platform JD.com Inc. One Chinese venture capital business is considering shifting its focus to categories that are most likely to get government support and favourable policies, including local consumer brands and environment friendly enterprises, a person at the company said. On the downside, consumer companies face fierce competition and uncertain growth prospects, the person said.
The consumer sector is a good option for capital to shift to because it faces much lower policy risks than tech and education – which has also faced a crackdown – said a market analyst. LinkDoc Technology Ltd, which provides health care services using artificial intelligence, halted its plans for a US initial public offering (IPO), Bloomberg reported on Thursday (8 July). That is denting fundraising plans of tech startups. “In contrast, consumer sectors from food, fashion, to fitness and leisure are seeing increased interest from investors with more policy support,” he said.Ĭhina’s decision to curb business of ride hailing giant Didi Global Inc days after its US listing is the latest bombshell for tech investors, who have seen a months-long clampdown hurt shares of companies from Alibaba Group Holding Ltd to Tencent Holdings Ltd. Investors may see such companies as a viable alternative to tech startups because the government, rather than clamping down, is pushing to foster domestic champions that can fuel spending and compete with the likes of Coca-Cola Co Ltd and Nike Inc.īeijing’s tightening regulation is increasing barriers to invest in traditionally popular areas such as tech, said Mark Tanner, managing director of Shanghai-based marketing and branding firm China Skinny.
China’s intensifying crackdown on technology companies is proving to be a cautionary tale for investors in the nation’s startups, with one notable exception: consumer brands.įrom cosmetics to bubble tea, Chinese ventures making waves among a new generation of shoppers are becoming a magnet for funds hunting for their next big hit.
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