China Money Podcast - Video Episodes

In this episode of China Money Podcast, guest William Shen, senior partner and head of Greater China at Headland Capital Partners, talks with our host Nina Xiang, about why he sees 4S automotive dealerships in China as the next great opportunity, how Chinese consumers are changing, and what the impact of the economic slowdown has on Headland's investments. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Be sure to subscribe to the podcast in the iTunes store. Q: Can you give us a brief introduction of Headland Capital? A: Headland Capital was established in 1988. For the past 25 years, we have invested an aggregate of $2.7 billion into around 150 companies based in Greater China, South Korea and Southeast Asia. Our main focus is either providing growth capital for high growth companies or helping companies perform buyouts. We were part of the HSBC Group and did a spin out in 2010. Q: Headland has invested heavily in the Chinese consumer sector. How has the economic slowdown impacted the companies you've invested in? A: The Chinese consumers are still consuming. We are still talking about double-digit annual growth in retail sales. But there are far more choices today than five years ago. If someone's total budget for clothing, for example, has increased 40% or 50% than five years ago, the amount of choices may have doubled or tripled during the same time. Therefore, as a brand, maintaining their market share becomes more challenging. For example, in the apparel industry, the old model of operation is to use a good brand sponsor, advertise on TV and sell your products via a wholesale model. You, as the brand owner, do not operate the retail outlets. You rely on a few thousand wholesale distributors across China to sell your products. In the old days, when choices were few, this model worked for well-managed brands. But with the influx of fast fashion and foreign brands, consumers are becoming far more discerning. So without decent control at the retail level, you wouldn't know which design is selling faster or slower, and inevitably there will be inventory buildup. So in order to do well in the apparel industry, you need to operate your own stores or work very closely with selected distributors today. .......

In this episode of China Money Network, guest William Shen, senior partner and head of Greater China at Headland Capital Partners, talks with our host Nina Xiang, about why he sees 4S automotive dealerships in China as the next great opportunity, how Chinese consumers are changing, and what the impact of the economic slowdown has on Headland's investments. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Be sure to subscribe to the podcast in the iTunes store. Q: Can you give us a brief introduction of Headland Capital? A: Headland Capital was established in 1988. For the past 25 years, we have invested an aggregate of $2.7 billion into around 150 companies based in Greater China, South Korea and Southeast Asia. Our main focus is either providing growth capital for high growth companies or helping companies perform buyouts. We were part of the HSBC Group and did a spin out in 2010. Q: Headland has invested heavily in the Chinese consumer sector. How has the economic slowdown impacted the companies you've invested in? A: The Chinese consumers are still consuming. We are still talking about double-digit annual growth in retail sales. But there are far more choices today than five years ago. If someone's total budget for clothing, for example, has increased 40% or 50% than five years ago, the amount of choices may have doubled or tripled during the same time. Therefore, as a brand, maintaining their market share becomes more challenging. For example, in the apparel industry, the old model of operation is to use a good brand sponsor, advertise on TV and sell your products via a wholesale model. You, as the brand owner, do not operate the retail outlets. You rely on a few thousand wholesale distributors across China to sell your products. In the old days, when choices were few, this model worked for well-managed brands. But with the influx of fast fashion and foreign brands, consumers are becoming far more discerning. So without decent control at the retail level, you wouldn't know which design is selling faster or slower, and inevitably there will be inventory buildup. So in order to do well in the apparel industry, you need to operate your own stores or work very closely with selected distributors today. .......

In this episode of China Money Network, guest Arthur Kroeber, founding partner of GK Dragonomics, talks with our host Nina Xiang, about why he's less optimistic about China's growth in the next couple of years, how the alarmist headlines about capital outflows from China is overdone, and why the 7% number that everyone believes to be the minimum rate required to provide sufficient employment for China's labor force is total nonsense. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Q: Lately, there have been some media stories on capital outflows, or even capital flight, out of China. How concerned are you about this possibility? A: I'm not terribly concerned for two reasons. One is that the Chinese government still maintains significant capital control measures. There have been some talks that the government will eliminate these controls in the next few years, but I think it's unlikely. The broader point is that China has been used to having one-way capital flows for a long time. Everybody wanted to get their money into China, no one wanted to take it out. Many people thought it's a big problem for the world that China was like a Hotel California for capital: you could check in, but you could never check out. But now we are seeing capital flows in both ways, and with various volumes. Foreign reserve accumulation slowed down dramatically. Lately, we saw some net capital outflows. But this is part of the normal process of the economy adjusting from rapid economic growth on intensive investments to a slower one that's more consumer-driven. Q: What are the specific capital control measures in place right now? A: It's very difficult for Chinese institutions and individuals to move money out of China. Any outflow is regulated under the qualified domestic institutional investor program (QDII) and limited by an annual quota. For individuals, it's close to impossible to move large amounts of money offshore. Chinese companies have been going out to do mergers and acquisitions or greenfield investment overseas. The outward foreign direct investment now runs somewhere between $50 billion to $80 billion a year. These are regular capital outflows for every economy. The only concern is if people lose confidence in the economy and everyone takes his or her money out. But that's a very remote possibility. Q: During the Asian Financial Crisis in 1997, some Southeast Asian countries had foreign debt-to-GDP ratios well above 100%. What are some factors that caused the Asian Financial Crisis but are not existent in China right now? A: I think the similarity between the two is that both had incredibly high investment-led growth for a long time. But the differences are huge. First of all, the Asian economies were mainly running current account deficits in the 1990s. China has been running a very sustained current account surplus. Secondly, the Asian countries did a lot of external borrowings, while China has basically none. Finally, China's domestic financial system has a lot of liquidity across diversified assets. That's not the case back in 1997. Q: What would make you become concerned about capital outflow getting out of control in the future? A: On the domestic front, if you see a continued rapid increase of credit-to-GDP ratio, then I'd be concerned that the foundation of China's growth is unstable. That could lead to economic malaise and make people want to put money elsewhere. The second concern is if the government relaxes capital control measures too early. Historically, some sort of financial turbulence usually follows the freeing of interest rates. China is in the process of liberalizing its interest rates now.

In this episode of China Money Podcast, guest Arthur Kroeber, founding partner of GK Dragonomics, talks with our host Nina Xiang, about why he's less optimistic about China's growth in the next couple of years, how the alarmist headlines about capital outflows from China is overdone, and why the 7% number that everyone believes to be the minimum rate required to provide sufficient employment for China's labor force is total nonsense. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Q: Lately, there have been some media stories on capital outflows, or even capital flight, out of China. How concerned are you about this possibility? A: I'm not terribly concerned for two reasons. One is that the Chinese government still maintains significant capital control measures. There have been some talks that the government will eliminate these controls in the next few years, but I think it's unlikely. The broader point is that China has been used to having one-way capital flows for a long time. Everybody wanted to get their money into China, no one wanted to take it out. Many people thought it's a big problem for the world that China was like a Hotel California for capital: you could check in, but you could never check out. But now we are seeing capital flows in both ways, and with various volumes. Foreign reserve accumulation slowed down dramatically. Lately, we saw some net capital outflows. But this is part of the normal process of the economy adjusting from rapid economic growth on intensive investments to a slower one that's more consumer-driven. Q: What are the specific capital control measures in place right now? A: It's very difficult for Chinese institutions and individuals to move money out of China. Any outflow is regulated under the qualified domestic institutional investor program (QDII) and limited by an annual quota. For individuals, it's close to impossible to move large amounts of money offshore. Chinese companies have been going out to do mergers and acquisitions or greenfield investment overseas. The outward foreign direct investment now runs somewhere between $50 billion to $80 billion a year. These are regular capital outflows for every economy. The only concern is if people lose confidence in the economy and everyone takes his or her money out. But that's a very remote possibility. Q: During the Asian Financial Crisis in 1997, some Southeast Asian countries had foreign debt-to-GDP ratios well above 100%. What are some factors that caused the Asian Financial Crisis but are not existent in China right now? A: I think the similarity between the two is that both had incredibly high investment-led growth for a long time. But the differences are huge. First of all, the Asian economies were mainly running current account deficits in the 1990s. China has been running a very sustained current account surplus. Secondly, the Asian countries did a lot of external borrowings, while China has basically none. Finally, China's domestic financial system has a lot of liquidity across diversified assets. That's not the case back in 1997. Q: What would make you become concerned about capital outflow getting out of control in the future? A: On the domestic front, if you see a continued rapid increase of credit-to-GDP ratio, then I'd be concerned that the foundation of China's growth is unstable. That could lead to economic malaise and make people want to put money elsewhere. The second concern is if the government relaxes capital control measures too early. Historically, some sort of financial turbulence usually follows the freeing of interest rates. China is in the process of liberalizing its interest rates now. Any problem caused by interest rate liberalization can be contained with capital control in place. But if capital control is loosened too early, that could lead to problems.

In this edition of China Money Network, Tian X. Hou, founder and CEO of T.H. Capital, shares her thoughts on why Qihoo's stock is just starting a major bull run, why Sina is undervalued and what Baidu should do to advance forward in a mobile world. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Q: How will China's economic slowdown impact Chinese overseas listed Internet stocks? A: Not that much. The Chinese Internet companies raise money from private funds and public markets. They spend their money buying advertising and traffic online. So the Internet becomes a self-feeding economy. China's credit crunch and liquidity issues have little to do with Chinese Internet companies. Q: In May, Qihoo 360's stocks were trading just above $40, and you had a buy rating with a price target of $52. Today, the stock is trading around $51. Where do you think it will go next? A: Currently, we are using 2014 earning projections. I think if we use forecast numbers further out, we could see the stock trading between $67 and $87 at the end of next year. Qihoo's strength comes from several places. One is its monopoly in PC security software, or its anti-virus software. It's literally used on every single PC in China. When users install the software, they are asked to use Qihoo's browser and set up a Qihoo personal page. This set-up enables Qihoo to gain search market share in a second. Qihoo launched search service last August. Over night, it gained 8% market share. Today, it has 16% of the search market. Another strength is Qihoo's web game hosting business. Because they have a lot of traffic, they are able to sell traffic to web game owners or developers. Even though each web game may be small, but the aggregate of all the games is huge. As the host, Qihoo is growing this business very rapidly. Lastly, Qihoo's Android app store is number one in China with 110,000 apps and billions of downloads. Just two months ago, it was number two. Qihoo can do two things with this platform. It distributes enterprises' mobile apps. Everybody needs a channel to distribute their apps. Qihoo plays that role and charge money. Qihoo also operates a mobile game hosting service. It's similar to web game hosting service but on mobile. There is great revenue potential in this business as well. So Qihoo's potential growth is just starting and the company is in a fast-moving upward trend. Q: What are some major risks you see with the company? A: The company could raise more money in a secondary offering, or they could buy other companies. These could cause the stock to set back temporarily. Also, the strong personality of Qihoo's CEO Zhou Hongyi could potentially create issues for the company. Q: For Sina, you've had a price target of $89 for some time, but the stock seems to suffer from a lack of direction. It's currently around $55. Are you still holding on to your projection? A: Very much. All the Chinese stocks that we recommended "buy" have enjoyed a good run. Sina is the only exception. Sina's Weibo is more than social media. It has a very authentic user base. Sina somehow thought it could monetize Weibo quickly so monetization schedule got pushed back several times. Some investors therefore doubt whether Sina can monetize Weibo. Weibo's traffic, including mobile, is 1 billion times a day. That compares with 800 million for Baidu and 400 million for Alibaba's Taobao. But if you look at advertisers, Baidu has about 400,000, Alibaba has almost 800,000 vendors. Weibo's advertisers are negligible. If we look at Weibo's recent strategic alliance with Alibaba, the potential value creation is being under-estimated. What you see now,

In this edition of China Money Podcast, Tian X. Hou, founder and CEO of T.H. Capital, shares her thoughts on why Qihoo's stock is just starting a major bull run, why Sina is undervalued and what Baidu should do to advance forward in a mobile world. Listen to the full interview in the audio podcast, watch an abbreviated video version or read an excerpt below. Q: How will China's economic slowdown impact Chinese overseas listed Internet stocks? A: Not that much. The Chinese Internet companies raise money from private funds and public markets. They spend their money buying advertising and traffic online. So the Internet becomes a self-feeding economy. China's credit crunch and liquidity issues have little to do with Chinese Internet companies. Q: In May, Qihoo 360's stocks were trading just above $40, and you had a buy rating with a price target of $52. Today, the stock is trading around $51. Where do you think it will go next? A: Currently, we are using 2014 earning projections. I think if we use forecast numbers further out, we could see the stock trading between $67 and $87 at the end of next year. Qihoo's strength comes from several places. One is its monopoly in PC security software, or its anti-virus software. It's literally used on every single PC in China. When users install the software, they are asked to use Qihoo's browser and set up a Qihoo personal page. This set-up enables Qihoo to gain search market share in a second. Qihoo launched search service last August. Over night, it gained 8% market share. Today, it has 16% of the search market. Another strength is Qihoo's web game hosting business. Because they have a lot of traffic, they are able to sell traffic to web game owners or developers. Even though each web game may be small, but the aggregate of all the games is huge. As the host, Qihoo is growing this business very rapidly. Lastly, Qihoo's Android app store is number one in China with 110,000 apps and billions of downloads. Just two months ago, it was number two. Qihoo can do two things with this platform. It distributes enterprises' mobile apps. Everybody needs a channel to distribute their apps. Qihoo plays that role and charge money. Qihoo also operates a mobile game hosting service. It's similar to web game hosting service but on mobile. There is great revenue potential in this business as well. So Qihoo's potential growth is just starting and the company is in a fast-moving upward trend. Q: What are some major risks you see with the company? A: The company could raise more money in a secondary offering, or they could buy other companies. These could cause the stock to set back temporarily. Also, the strong personality of Qihoo's CEO Zhou Hongyi could potentially create issues for the company. Q: For Sina, you've had a price target of $89 for some time, but the stock seems to suffer from a lack of direction. It's currently around $55. Are you still holding on to your projection? A: Very much. All the Chinese stocks that we recommended "buy" have enjoyed a good run. Sina is the only exception. Sina's Weibo is more than social media. It has a very authentic user base. Sina somehow thought it could monetize Weibo quickly so monetization schedule got pushed back several times. Some investors therefore doubt whether Sina can monetize Weibo. Weibo's traffic, including mobile, is 1 billion times a day. That compares with 800 million for Baidu and 400 million for Alibaba's Taobao. But if you look at advertisers, Baidu has about 400,000, Alibaba has almost 800,000 vendors. Weibo's advertisers are negligible. If we look at Weibo's recent strategic alliance with Alibaba, the potential value creation is being under-estimated. What you see now, display of Taobao vendors on Weibo, is just regular traffic direction. There will be another potential revenue source coming from a specially designed product that is likely to be launched in August.

In this episode of China Money Podcast, co-founder of Amalfi Capital, Tristen Langley, talks with our host, Nina Xiang, on Alibaba Group's $586 million acquisition of an 18% stake of Sina's Weibo, her investment firm's winning and losing bets, and the future challenges facing China's e-commerce industry. Listen to the full-interview in the audio podcast, watch the shortened video version or read an excerpt below. Q: Alibaba Group just bought 18% of Sina's Weibo for $586 million, valuing the Chinese twitter-like site at $3 billion. Do you think it's a fair valuation? A: Weibo has almost 500 million users, and is still growing. Compared to Twitter and other U.S. comparable, the valuation is probably modest. But this is a very strategic alliance. So a lot of the valuation is driven by Alibaba's motivation to leverage Weibo's audience. It's estimated that 14% of Weibo's traffic is being pushed onto Alibaba's Taobao site. That sort of potential synergy makes the valuation very reasonable for Alibaba. Q: Sina expects that the new strategic alliance will generate $380 million in extra revenue over the next 3 years. Do you think users' habits will be changed? A: Any group who communicates on a free platform and doesn't expect to be marketed to can be disengaged (when there is an effort to sell products to them). But by this alliance, Taobao has an opportunity to innovate around product discovery (among Chinese consumers). I think the ways consumers become aware of products still haven't been fully explored in China. Another thing is, Alibaba has a lot of cash. I did a quick tally of Tencent, Netease, Baidu, Focus Media, Qihu, Sina and Alibaba, there are all together $13 billion of cash sitting on their balance sheet. Q: Where do you see as some good new venues for these companies to invest the cash? A: We've seen (misjudgment) over time. Netease, for example, was putting their cash towards pig farms in 2010. Thank goodness that Netease is now looking to develop their own content and games. So I think the cash should go into their own innovations. It's estimated that about 18% of the options from 2010 to 2012 were given to Weibo's management team as an incentive to create value in essentially a start-up within a big public company. Tencent has proven that this kind of investment (into start-ups within a big company) can have a clear internal rate of return (IRR) and be extremely advantageous. Q: Alibaba is facing competition on all fronts. How do you see China's e-commerce industry's competitive landscape evolving in the next few years? A: The offline and online worlds are going to meet in ways that present unprecedented challenges. For example, Suning Appliance bought Redbaby, an online e-commerce site for baby goods and now expanded to other products. Redbaby started from catalog services, developed into online e-commerce, to telephone ordering. This merger with Suning will present extreme challenges just integrating the back-end systems. But Alibaba and Taobao are still well ahead of the game. It's up for others to catch up, form alliances to take on the gorilla in the room. Q: Tell us some background on Amalfi Capital that you co-founded? A: Amalfi Capital is a global technology investment fund with a long-short equity strategy. Co-founder, Paul Waide, and myself founded the firm in 2010. We interview around 500 entrepreneurs, engineers and CEOs from around the world every year. We build this thematic approach to profile about 50 companies from that group. Then we choose about 20 to 30 companies that we invest in. Our portfolio has a 60% to 80% exposure in China. Q: When you were working at venture capital firm, DFJ (Draper Fisher Jurvetson), you led its investment in Skype. What was the most difficult judgment you had to make at that time? .........

In this episode of China Money Network, co-founder of Amalfi Capital, Tristen Langley, talks with our host, Nina Xiang, on Alibaba Group's $586 million acquisition of an 18% stake of Sina's Weibo, her investment firm's winning and losing bets, and the future challenges facing China's e-commerce industry. Listen to the full-interview in the audio podcast, watch the shortened video version or read an excerpt below. Q: Alibaba Group just bought 18% of Sina's Weibo for $586 million, valuing the Chinese twitter-like site at $3 billion. Do you think it's a fair valuation? A: Weibo has almost 500 million users, and is still growing. Compared to Twitter and other U.S. comparable, the valuation is probably modest. But this is a very strategic alliance. So a lot of the valuation is driven by Alibaba's motivation to leverage Weibo's audience. It's estimated that 14% of Weibo's traffic is being pushed onto Alibaba's Taobao site. That sort of potential synergy makes the valuation very reasonable for Alibaba. Q: Sina expects that the new strategic alliance will generate $380 million in extra revenue over the next 3 years. Do you think users' habits will be changed? A: Any group who communicates on a free platform and doesn't expect to be marketed to can be disengaged (when there is an effort to sell products to them). But by this alliance, Taobao has an opportunity to innovate around product discovery (among Chinese consumers). I think the ways consumers become aware of products still haven't been fully explored in China. Another thing is, Alibaba has a lot of cash. I did a quick tally of Tencent, Netease, Baidu, Focus Media, Qihu, Sina and Alibaba, there are all together $13 billion of cash sitting on their balance sheet. Q: Where do you see as some good new venues for these companies to invest the cash? A: We've seen (misjudgment) over time. Netease, for example, was putting their cash towards pig farms in 2010. Thank goodness that Netease is now looking to develop their own content and games. So I think the cash should go into their own innovations. It's estimated that about 18% of the options from 2010 to 2012 were given to Weibo's management team as an incentive to create value in essentially a start-up within a big public company. Tencent has proven that this kind of investment (into start-ups within a big company) can have a clear internal rate of return (IRR) and be extremely advantageous. Q: Alibaba is facing competition on all fronts. How do you see China's e-commerce industry's competitive landscape evolving in the next few years? A: The offline and online worlds are going to meet in ways that present unprecedented challenges. For example, Suning Appliance bought Redbaby, an online e-commerce site for baby goods and now expanded to other products. Redbaby started from catalog services, developed into online e-commerce, to telephone ordering. This merger with Suning will present extreme challenges just integrating the back-end systems. But Alibaba and Taobao are still well ahead of the game. It's up for others to catch up, form alliances to take on the gorilla in the room. Q: Tell us some background on Amalfi Capital that you co-founded? A: Amalfi Capital is a global technology investment fund with a long-short equity strategy. Co-founder, Paul Waide, and myself founded the firm in 2010. We interview around 500 entrepreneurs, engineers and CEOs from around the world every year. We build this thematic approach to profile about 50 companies from that group. Then we choose about 20 to 30 companies that we invest in. Our portfolio has a 60% to 80% exposure in China. Q: When you were working at venture capital firm, DFJ (Draper Fisher Jurvetson), you led its investment in Skype.

In this episode of China Money Network, founder and CEO of Beijing-headquartered, $500 million-under-management HAO Capital, Simon Eckersley, talks with Nina Xiang on HAO Capital's investments in the healthcare and environmental protection sectors, the firm's plans for future fundraising, and some key methods it uses to help portfolio companies grow. Listen to the full-interview in the audio podcast, watch the shortened video version or read an excerpt below. Q: First, give us a brief introduction of HAO Capital? A: HAO Capital is a Beijing-based private equity firm. We take minority stakes in growth businesses in China, and focus on healthcare, consumer and light industrial (including clean tech) sectors. We started raising our first fund in 2005, and closed in 2007 with $100 million. We raised our second fund of $400 million from 2007 to 2008. We've done a number of co-investments worth around $50 million as well, so we currently manage over $500 million. Q: Going back in history, can you share with us your experience of raising your first fund back in 2005 and 2006? A: At the time, there was less competition in terms of the number of (China-focused) funds. But then, a lot of LPs (Limited Partners) were also not really focused on China, as it's still a fledgling private equity market. It's different today. Looking at our own LPs, they are invested in (many more) China funds compared to back then. Q: What is the average size of your investment, and how many active investments do you have now? A: On average, we look at investments in the $20 million to $50 million range. We currently have 14 active investments between the two funds. The first fund is almost fully paid back. We've exited a lot of the investments from that 2006 and 2007 investment vintage, and are only managing a couple of investments from that fund. We started investing the second fund in 2008, and is now about 80% invested. We've exited or partially exited a couple of investments, but are still managing most of that portfolio. Q: And one of the portfolio companies is SKR, a company focused on diagnostic imaging medical equipment. It has a joint venture with Chinese electronics maker, TCL Corp. Can you share with us the latest on this investment? A: The per capita spending on medical equipment in China is a few dollars compared with hundreds of dollars in the developed countries. It's obvious that China's healthcare market has enormous potential for growth. But there are actually very few medical equipment companies of any scale in China. There are a lot of small regional companies. Many of them don't have the research capabilities to develop Generation II or Generation III products after launching Generation I products. They also tend to lack management talent......

In this episode of China Money Podcast, founder and CEO of Beijing-headquartered, $500 million-under-management HAO Capital, Simon Eckersley, talks with Nina Xiang on HAO Capital's investments in the healthcare and environmental protection sectors, the firm's plans for future fundraising, and some key methods it uses to help portfolio companies grow. Listen to the full-interview in the audio podcast, watch the shortened video version or read an excerpt below. Q: First, give us a brief introduction of HAO Capital? A: HAO Capital is a Beijing-based private equity firm. We take minority stakes in growth businesses in China, and focus on healthcare, consumer and light industrial (including clean tech) sectors. We started raising our first fund in 2005, and closed in 2007 with $100 million. We raised our second fund of $400 million from 2007 to 2008. We've done a number of co-investments worth around $50 million as well, so we currently manage over $500 million. Q: Going back in history, can you share with us your experience of raising your first fund back in 2005 and 2006? A: At the time, there was less competition in terms of the number of (China-focused) funds. But then, a lot of LPs (Limited Partners) were also not really focused on China, as it's still a fledgling private equity market. It's different today. Looking at our own LPs, they are invested in (many more) China funds compared to back then. Q: What is the average size of your investment, and how many active investments do you have now? A: On average, we look at investments in the $20 million to $50 million range. We currently have 14 active investments between the two funds. The first fund is almost fully paid back. We've exited a lot of the investments from that 2006 and 2007 investment vintage, and are only managing a couple of investments from that fund. We started investing the second fund in 2008, and is now about 80% invested. We've exited or partially exited a couple of investments, but are still managing most of that portfolio. Q: And one of the portfolio companies is SKR, a company focused on diagnostic imaging medical equipment. It has a joint venture with Chinese electronics maker, TCL Corp. Can you share with us the latest on this investment? A: The per capita spending on medical equipment in China is a few dollars compared with hundreds of dollars in the developed countries. It's obvious that China's healthcare market has enormous potential for growth. But there are actually very few medical equipment companies of any scale in China. There are a lot of small regional companies. Many of them don't have the research capabilities to develop Generation II or Generation III products after launching Generation I products. They also tend to lack management talent......

In this episode of China Money Network, head of non-listed real estate Asia in APG, one of the largest pension fund asset managers in the world with assets under management of approximately €325 billion, Daan van Aert, discusses APG's investments in China such as car parks and logistic warehouses, his views on the Chinese residential property market and if distressed properties in China present good opportunities for investors. Listen to the full-interview in the audio podcast, watch the shortened video version or read an excerpt below. Q: APG is one of the largest pension fund asset managers in the world with €325 billion under management. Give us some background on AGP's investments in Asia, and what kind of role does Asian real estate play in APG's overall strategy in Asia? A: APG started an office in Hong Kong in 2007 with a mandate for private equity real estate and infrastructure investments. Shortly after, we expanded our team to include listed real estate equity and emerging market equity. Since we started, our portfolio in Asia has grown from €1 billion to €9 billion under management. Of the €9 billion assets currently under management, €6 billion is in both listed (€4 billion) and private (€2 billion) real estate. In terms of geographical breakdown, about 70% to 75% of our total real estate portfolio is in developed markets such as Japan, Hong Kong and Australia. The rest is in emerging markets, and China takes about half of this portion. Q: How much capital are you deploying every year into private real estate? A: We don't have a target. What we do is to look at our already large existing portfolio and focus on strategies and the right partners to add value. If we can find interesting strategies and strong partners, then we will invest more money. During the last few years, we have been investing considerable amount of money continuously. Our real estate portfolio has grown from €1 billion in 2007 to €6 billion, from both investment appreciation and new allocations. That gives you a sense of our growth. Q: What is the average size of your investments and how many investments do you usually keep in your portfolio? A: We serve very large institutional clients, therefore we won't look at transactions under $75 million. In terms of the number of investments we have, we don't really have any preferences, as our global real estate portfolio is already very diversified. Q: Among some major categories of real estate: residential, retail, office buildings, logistics, which segment(s) do you find the most attractive in China right now? A: We think logistic warehouses are the most attractive sector. China's strong growth – not only in imports and exports, but also in domestic consumption – is leading to enormous amount of flow of goods. The need for quality logistic warehousing is gigantic. In addition, the amount of capital spending for developing logistic warehouses is less compared with office buildings and retail properties, for example. The challenge is that it's difficult to buy land to develop logistic warehouses, as the land sales and tax revenues are less attractive to local governments. We have already invested in a logistic property in Shanghai, and we think there is still room to increase our investments in this category. Q: You've invested in Australian logistics properties, Indian hotels and car parks in China. Are there any sectors that you would avoid in China now? A: In general, we are less interested in the office sector because of its cyclical nature. In China, you usually cannot buy and hold a whole office building because lots of transactions are what we call "strata title sales," where the developers are selling the building floor by floor. This makes it harder to buy and manage a whole building,...

In this episode of China Money Podcast, head of non-listed real estate Asia in APG, one of the largest pension fund asset managers in the world with assets under management of approximately €325 billion, Daan van Aert, discusses APG's investments in Ch...

In this episode of China Money Network, guest Chenggang Jerry Wu, principal investment officer of IFC's (International Finance Corporation) climate change fund, discusses IFC's commitment to Chinese private equity funds in the climate change sector, the new opportunities arising from China's pollution treatment efforts, and what he looks for in a first-time fund manager. Listen to the full interview in the audio podcast, watch an abbreviated video version, or read an excerpt. Q: Can you first give us a brief introduction of IFC's climate change fund and your role in managing the fund? A: IFC is the largest multilateral organization focused on emerging markets' private sectors. We invest more than $10 billion a year into private sectors across emerging markets. We started investing in private equity funds in 2000, and have invested in more than 130 funds in emerging markets. I believe IFC invested in roughly 10% of all the private equity funds ever existed in emerging markets. We currently have an active portfolio of more than $2 billion. Clean tech and energy efficiency is one of our focuses in our private equity investments. IFC started investing in these areas in 2007. Up until now, we have invested in 17 funds in total, and on average we invest in three to four funds per year. The main focus includes traditional clean tech, renewable energy (both upstream manufacturing and downstream power generation), and all sorts of resource efficiency and environmental services (such as recycling, water efficiency, sustainable agriculture and sustainable forestry). IFC has a subsidiary called IFC Asset Management Co., which is a fund manager that leverages IFC's own expertise and resources with the capacity to raise funds from third party investors. IFC Asset Management Co. set up a Fund of Funds (officially called the Climate Catalyst Fund), which just had its first closing of $500 million, to invest in climate change funds. IFC put $75 million into it, and it will do further fundraising in the future. ......

In this episode of China Money Podcast, guest Chenggang Jerry Wu, principal investment officer of IFC's (International Finance Corporation) climate change fund, discusses IFC's commitment to Chinese private equity funds in the climate change sector, the new opportunities arising from China's pollution treatment efforts, and what he looks for in a first-time fund manager. Listen to the full interview in the audio podcast, watch an abbreviated video version, or read an excerpt. Q: Can you first give us a brief introduction of IFC's climate change fund and your role in managing the fund? A: IFC is the largest multilateral organization focused on emerging markets' private sectors. We invest more than $10 billion a year into private sectors across emerging markets. We started investing in private equity funds in 2000, and have invested in more than 130 funds in emerging markets. I believe IFC invested in roughly 10% of all the private equity funds ever existed in emerging markets. We currently have an active portfolio of more than $2 billion. Clean tech and energy efficiency is one of our focuses in our private equity investments. IFC started investing in these areas in 2007. Up until now, we have invested in 17 funds in total, and on average we invest in three to four funds per year. The main focus includes traditional clean tech, renewable energy (both upstream manufacturing and downstream power generation), and all sorts of resource efficiency and environmental services (such as recycling, water efficiency, sustainable agriculture and sustainable forestry). IFC has a subsidiary called IFC Asset Management Co., which is a fund manager that leverages IFC's own expertise and resources with the capacity to raise funds from third party investors. IFC Asset Management Co. set up a Fund of Funds (officially called the Climate Catalyst Fund), which just had its first closing of $500 million, to invest in climate change funds. IFC put $75 million into it, and it will do further fundraising in the future. ......

visit http://www.chinamoneynetwork.com for more great content. In this episode of China Money Network, guest Sam Gupta, CEO of Grand Trunk Capital, explains why he is bullish on the Indian economy and markets, why Indian banks will consolidate in the next two years, and the reason why he prefers to work with the management team. Listen to the full interview in the audio podcast, watch an abbreviated video version, or read an excerpt. Q: First give us a brief introduction of Grand Trunk Capital? A: Grand Trunk Capital is a private investment partnership, (managing money) for institutions and family offices. We focus on special investments in India. Previously I managed a fairly large fund in partnership with Soros Management called QIF Management. QIF Management was at points in time the largest overseas investment fund in India. The strategy (of Grand Trunk Capital) is to focus on five or ten best investment ideas across sectors and geographies within the Indian markets. We are not a trading fund. We tend to take longer term and focused positions in Indian companies where we think there is sufficient mispricing and where we see sufficient upside down the road. Our strategy is very search based, value driven and focused on catalysts. Q: Can you talk about the performance of the (Grand Trunk Capital) fund? A: The fund was up 42% in 2012. We had a very bullish view on the banking system in India, and started buying some Indian banks towards the middle of the summer. That worked really well for us. We also took opportunities in the media space because of the catalyst of regulatory changes. One of our largest investments, (United Spirits), was bought out by Diageo, the world's largest liquor maker, at a significant premium. That's an investment we got into in early 2012. .....