Trip stats

3 cities covered 9 days spent 38 companies visited $278bn total market cap

Key Takeaways

Purpose of the trip

I wanted to see China with my own eyes after its re-opening, and I focused on three sectors: semiconductors, software and renewable energy. Among my goals, I wanted to gauge the impact on the mainland semiconductor industry following US actions to hobble China’s access to the most advanced chip-making technology. I also attended two conferences and spoke to 38 companies, in Beijing, Shanghai and Chengdu.

Highlights from the trip

Semiconductors: The US curbs have dented China’s ambitions in advanced chipmaking. But localisation is ramping up fast in areas left untouched, such as the analog segment including power semiconductors. The auto semi segment still has the strongest demand and highest growth visibility. AI development also remains unhindered for now. I experienced first-hand how much faster autonomous driving was developing than I had expected, as a driverless car brought me around busy roads in Beijing for 30 minutes.

Software This sector is underappreciated by foreign investors because of the quality gap with Western peers. I see opportunities here because of the stronger-than-ever policy push for xin4 chuang4, that is, the localisation of information technology (IT) systems including chips, middleware, operating systems and application software. For instance, all central SOEs are now mandated to complete conversion by 2027, which will boost the corporate demand for many domestic software companies.

Renewable Energy: The outlook for solar demand is positive this year, owing to lower polysilicon prices. China’s dominance in solar is hard to replace over the near term given its large capacity and cost advantage. As for electric vehicles (EVs), domestic brands have become quite popular and been gaining market share. Falling EV prices driven by rising supply will help increase EV penetration in the lower tier cities. There is also good opportunity for domestic brands to tap into the global market.

Charging ahead

person in factory

Key growth driver: Company A has penetrated into the auto power semiconductor market in recent years, viewing this as a key growth area.

I visited one of Company A’s factories near Chengdu, which does the testing of and packaging for its own auto semiconductors. The company aims to become one of the largest power semiconductor companies in China. It specialises in producing power management semiconductor products.

Its market strength was historically in home appliances, and it started expanding to auto and industrial products in recent years. The company is focusing on product development and capacity expansion because it is confident of demand on the back of the positive prospects for renewable energy and EVs in the country.

It's automatic

Car interiorcar

In the driving seat: Company B is among the top-tier players in the autonomous driving technology segment in China, with the largest revenue stream among its peers.

I found Company B, an unlisted company offering autonomous driving technology solutions, a compelling prospect, and I was delighted that I had the opportunity to sit for 30 minutes in one of its driverless cars as part of my trip. The car took me and other investors through the roads of Yizhuang town, which is in the southeast suburbs of Beijing. The streets were busy, and I had to admit that when we crossed paths with another vehicle, I wondered if the two cars would collide. But that did not happen at all. I found the ride surprisingly smooth, and it left me convinced that such technology will penetrate the mass market over the next five to 10 years.

Company B is among the top-tier players on this ground in China. It has three main businesses: Robotaxi, Robotruck, and advanced driver assistance systems, or ADAS, solutions for private vehicles. It has the largest revenue stream so far among its domestic peers, with good operational numbers and collaboration with carmakers. Its safety metrics are almost comparable to that of human drivers, which makes me believe that autonomous driving will become a common feature on streets over the next decade.


We remain constructive on the China A-share market. It has lagged the recent Chinese offshore market rally while foreign investor allocation to China remains below global index weights.

With the Chinese population achieving herd immunity rapidly, we are forecasting consumption recovery to be the main pillar for economic growth this year. This bodes well for our consumer holdings, where we have an overweight exposure versus the index and our peers.

Elsewhere, the real estate market has stabilised and shows good signs of recovery, which is an important piece of the broader macro improvement.

We expect and welcome a market consolidation in the near term after a strong rally since the market bottomed in November 2022. We believe this provides an excellent opportunity for long-term investors as valuations are still attractive and the secular growth in our five portfolio themes – aspiration, digitalisation, going green, health and wealth – remains intact.

It was the first time that I stepped foot on the Chinese mainland after it re-opened. Not needing PCR tests or hotel quarantines made my travel that much more convenient. My trip was mainly to visit companies in technology and renewable energy, and to observe China’s post-Covid economy on the ground. From what I saw, footfall at shopping malls was brisk. There were long queues at restaurants. Domestic and international travel recovered notably. Traffic congestion was back while jams in Beijing were particularly bad. It seemed like everything was returning to normal, back to pre-Covid conditions. If I were to summarise my trip in one line, it would be “China is back”.

Companies selected for illustrative purposes only to demonstrate the investment management style described herein, and not as an investment recommendation or indication of performance.

Important information

Risk factors you should consider prior to investing:

  • The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.

  • Past performance is not a guide to future results.
  • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years. 
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV. 
  • Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries. This may mean your money is at greater risk.
  • The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down. 
  • As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen. 
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value. 
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends. 
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares. 
  • Movements in exchange rates will impact on both the level of income received and the capital value of your investment. 
  • The Company invests into other funds which themselves invest in assets such as bonds, company shares, cash and currencies. The objectives and risk profiles of these underlying funds may not be fully in line with those of this Company.

Other important information

Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.