There are countless stories surrounding China’s potential: industries that are likely to grow, its GDP per Capita which is also likely to go up and the list could go on and on. “Potential” is perhaps the most commonly-used word to describe aspects related to emerging economies but when it comes to China at this point and beyond, we can take things not just one step but multiple steps further.
More specifically, there are a lot of industries China is currently dominating. Not projected to be dominating, not on its way to dominating. But rather dominating at this very point in time. In no specific order, here are some of the most surprising ones:
- Online gaming. Needless to say, it’s a booming industry, with over two billion gamers worldwide who have spent almost $140 billion on games in 2018, a YOY increase of over 10%. Of this very generous pie, China’s consumers are claiming over 25% and as far as Chinese game producers are concerned, they are dispelling the myth that video game production has to be a US or Japanese endeavor. While you might have not heard as much about games produced in China as a Western consumer, just think about China’s 1.4 billion population. In light of the fact that one out of five to six people is Chinese, you can generate Earth-shattering revenue numbers by simply catering to the local market as a Chinese game producer
- Tourism. We all know about the jokes surrounding Chinese tourists and their photo-taking habits, but things start getting quite serious once you analyze the numbers behind this phenomenon. According to Ctrip’s 2017 data, 130 million Chinese tourists accounted for over $115 billion in overseas spending in 2017 alone, a 7% increase compared to the previous year when it comes to the number of tourists and a 5% increase for YOY spending
- Clean energy. China’s investments in renewable energy are nothing short of staggering, in line with their Paris Agreement pledge for 2030. By 2020 alone, China is expected to invest roughly 3.2 trillion Yuan (over $350 billion) in renewable power-related projects. As it is, China is investing twice more than the United States in renewable energy at home, actually more than the United States and the European Union combined. It should therefore come as no surprise that China is the worldwide leader in both solar and wind energy production
- Online commerce. While pretty much everyone in the Western media associates online retail with the United States due to Jeff Bezos being the wealthiest man in the world and Amazon being considered an unbeatable juggernaut… the numbers paint a remarkably different picture. As per McKinsey Global Institute data, China went from representing less than 1% of the global e-commerce volume to over 40% at this point. By comparison, the percentage for the United States is not that far away from half that, down from its 2005 high of 35%, so it actually never even reached a 40% dominance rate. Simply put, China handles more transactions than the US, Japan, Germany, France and the United Kingdom combined, through companies such as Alibaba (largest IPO in history) and JD.com. While you personally most don’t use these two and other Chinese companies (although even that is starting to change), over one billion people do
- Electric vehicles. Contrary to what you might have thought was an industry dominated by the European Union or the United States and where China has a lot of catching up to do, China is actually the world’s number one market for electric vehicles. As per Forbes data, China accounts for roughly 50% of global electric vehicle sales, whereas Europe is sitting at 26% and everyone else combined is left fighting for the remaining 35%. While companies such as China’s BYD have considerably less mainstream notoriety than Elon Musk’s Tesla, they’re silently but steadily consolidating the domination of China in this space
When investing in China (or anywhere else, for that matter), the name of the game is looking under the proverbial hood and finding out what the numbers say. Has the average Western investor who is interested in gaining exposure to Chinese assets ever played a Chinese video game? Most likely not. Heard about BYD’s electric vehicles? Not very likely.
Yet despite this lack of notoriety in the West, the numbers make it clear that the days of China playing catch-up as far as these industries are concerned (and many more) are long gone.