Notes from the road: scratching beneath the surface

There was much fanfare around China reopening as we entered 2023, but as the macro headlines suggest, the recovery has been underwhelming. However, we don’t focus on the macro. We focus on the individual companies and how they’re operating.

To that end, I visited a number of our Quality holdings – particularly those that are generally less accessible virtually – in addition to some of their competitors and other companies on our bench.

This involved travelling to some of the more remote and less well-known places including Moutai Town, GuiYang, Chongqing Fuling County and Hefei, in addition to the better-known locations such as Shenzhen, Hangzhou and Hong Kong.

I made three key observations during my visit:

• China’s self-sufficiency drive remains prevalent
• SOEs are being encouraged to be more shareholder friendly
• Premiumisation continues across industries

In this note, I dive into further detail on each observation, and share some anecdotes from my meetings with the companies.

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