“This may be the golden era for start-ups for the sound policies, social, industrial environment compounded with reform and opening up,” said Zhang Wei, the CEO of CoStone, at the 2016 CoStone Annual Meeting. “Even everyone can’t be as successful as Jack Ma and Pony Ma, it is true that all great companies come from small ones.” 2015’s huge fluctuations in the stock market signal an undergoing structural reform in China’s macro-economy.
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Securities companies predict stock index annually, but they usually fail. Even in May, some of them still banged the drum for a rising stock market. Later in a speech, they said, “as we have predicted”. Well, they just skip all the wrong predictions.
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The business scope of China’s media companies is limited by restrictions. In this context, it is uneasy for Huayi Brothers Media to increase its operating revenue from 2006’s 124 million RMB to last year’s 2.39 billion. Huayi has expanded its films and TV series to series of products covering the whole entertainment industry. This expansion in products is contributed by its diversified financing and mergers.
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China’s private sector is gaining momentum and the Chinese public has wakened to entrepreneurship. These are always the true economic drivers of China. We can expect better economic performance in this era.
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The unique governments’ emphasis on GDP, hard-working Chinese people, and materialism over the spiritual pursuit, perhaps, make the Chinese nation stand out in the global economic stage. European countries are welfare states; Indian philosophy teaches the people to look back. It is nearly impossible for these countries to mobilize resources nation-wide because unlike China, their governments are less powerful and their peoples less hard-working.
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The success of a PE investment is highly related to the expertise of the management team and its experience in investment and research. Their competence is crucial to winning the fierce competition in this mixed PE industry.
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CoStone’s investment in biomedicine is increasingly sophisticated. To this point, about 1/3 of investments are in biomedicine companies. In Chen Yanli’s words, a CoStone partner, it is the year-long experience that lends CoStone a big picture in investment, beyond mere opportunities. Today, CoStone’s investment in biomedicine is more systemic and professional, covering the whole industrial chain.
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Zhejiang Conba paid 994.5 million yuan to purchase a 51 percent share of Guizhou Bate after 4 months' stock suspension. It is one of the largest domestic M&A cases in the pharmaceutical industry, and it is also the largest domestic M&A case in the venture capital industry during April.
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Zhejiang Conba paid 994.5 million yuan to purchase a 51 percent share of Guizhou Bate after 4 months' stock suspension. It is one of the largest domestic M&A cases in the pharmaceutical industry, and it is also the largest domestic M&A case in the venture capital industry during April.
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After six years since the establishment of the NEEQ, only six companies succeeded in transferring to the SMEs board and STAR board, because they were fully qualified to go public. “The direct beneficiaries of this expansion are the brokers instead of SMEs, VCs and PEs. Brokers will thus gain enormous extra revenues except for underwriting and recommends.” said Han Zaiwu.
READOver 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
