How to understand China Technology Companies as an investor with Elliott Zaagman

Elliott Zaagman, co-host of China Tech Investor podcast, joined us to discuss how to understand Chinese technology companies as an investor. We discussed the theme and intended audience for his current podcast, and dived deep into how we can value the technology giants in China from Baidu, Alibaba and Tencent to the recent upstarts such as Pinduoduo and Xiaomi. Elliott laid out the deep misconceptions on Chinese technology companies and provided a different perspective to how they are vertically integrated companies with different products and services contrast to their western counterparts.

Here are the interesting show notes and links to the discussion (with time-stamps included):

• Elliott Zaagman, (@elliottzaagman , LinkedIn), consultant and executive coach for CEOs of China tech companies, writer and co-host of China Tech Investor podcast [0:20]
  • How did you start your career? [0:45]
  • Throughout your career journey, what are the interesting lessons that you can share with my audience?  [1:57]
  • Can you talk about the new China Tech Investor podcast you are co-hosting under Technode and who it is intended for? [2:44]
  • Do you find that most investors from outside China do not understand Chinese technology companies because they have no prior knowledge or have used their apps such as Meituan-Dianping, Wechat or Alipay? [4:58]
• How to understand Chinese Technology Companies as an investor? [8:31]
  • How do you introduce Chinese tech companies to investor and how are they compared against US companies? Are labels such as “Google, Groupon or Facebook of China” still work for investors out there? [8:57]
  • Should these retail investors visit China to see how these technology companies work before bringing themselves to invest these companies? [11:33]
  • What will be the key metrics or indicators which you will identify in Chinese technology companies for investments? [13:38]
  • For example, there is a backlash with the Singles Day GMV numbers most notably by Tim Culpan from Bloomberg & yourself, can you elaborate why those numbers from one day are meaningless or what can we really infer from them meaningfully? [15:42]
  • BL’s comments on using logistics numbers as a way to understand whether the ecommerce transactions are really real. [19:08]
  • Given that most of the upstarts: Xiaomi, Meituan-Dianping, Pinduoduo and soon, ByteDance have gone IPO, how does that change the way to investors reviewing their China tech portfolio? [20:54]
  • Unlike US tech companies which seemed to be one product or service focused, Chinese tech companies are much more integrated. Just as an example, Meituan-Dianping is an amalgation of Yelp, Groupon, Foursquare, Uber Eats and even Uber into one. How should investors think of them differently? [22:41]
  • What are your thoughts on the current companies based on their last quarterly earnings: [24:37]
    • Baidu
    • Alibaba
    • Tencent
    • JD
    • Xiaomi
    • Meituan-Dianping
    • Pinduoduo
  • What is the future of Chinese tech companies in the next year? Will US-China escalating trade tensions or other external event change that calculus? [33:15]
• Closing [34:45]
  • Can you recommend a book, podcast or anything else that has impact to your work and personal life recently? [34:54]
    • Elliott’s recommendation: John Pornfret’s “The Beautiful Country in the Middle Kingdom“
    • BL’s recommendation: Howard Marks “The Most Important Thing” and “Mastering the Market Cycle“
  • How do my audience find you? [36:16]

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The show is hosted by Bernard Leong (@bernardleong & weibo) and are sponsored by Ideal Workspace (Twitter, Facebook and LinkedIn) with their new Altizen Desk (Twitter, Facebook, Medium). Sound credits for the intro music: Taro Iwashiro, “The Beginning” from Red Cliff Soundtrack and this episode is edited by Carol Yin.