On the road: China's innovation goes global

Back in 2023, on my last visit, much of China was still recovering from the pandemic and widespread lockdowns. Property-sector worries dominated headlines, while government measures to control prices in areas like medical equipment weighed on sentiment.

Fast forward to today and the atmosphere is tangibly different – more confident, more forward-looking. What’s behind this shift? Let’s dive in.

Policy shifts powering progress

For starters, the government’s “anti-involution” policy is tackling excess capacity in traditional manufacturing industries like solar, autos and coal. In the past, growth at the local and national level was everything – even if it meant sacrificing pricing power. Today, the focus has shifted to greater capital efficiency and competitiveness, reshaping both policy and the corporate mindset.

More than that, I was struck by the rise of a new generation of Chinese champions – privately owned, innovative, tech-savvy growth engines.

From automobile brands to consumer apps, these firms are leveraging their domestic know-how and scale to win market share abroad.

Smart lenses, smarter growth

I met Shanghai Conant, the world’s second-largest optical lens supplier. Its ability to mass-produce highly customised, technically complex lenses gives it a material competitive edge.

China already controls 80% of global lens production. Importantly, tariffs haven’t dented that dominance. Why? Because the local ecosystem is hard to replicate elsewhere. Add favourable industry dynamics and management-led distribution initiatives, and you have a recipe for double-digit growth.

What really excites investors, though, is Shanghai Conant’s move into AR (augmented reality), VR (virtual reality) and XR (extended reality) lenses. Product qualification is extremely difficult and only Essilor Luxottica and Shanghai Conant make the grade.

Next year, ‘smart’ lens production is expected to ramp up significantly, boosting company profits. Shanghai Conant is already the sole supplier for Alibaba and Rokid’s smart glasses and is developing lenses for three major US customers. A big growth story in the making.

Mid- and large-cap innovators

We’re seeing the same story play out among mid- and large-cap names: innovative private enterprises turning domestic dominance into global reach.

Li Auto

A leading new energy vehicle company that views itself more as a consumer-facing technology company like Apple than a traditional carmaker. Through tech, it’s disrupting the consumer’s view of the car as a product, reconfiguring expectations of safety, entertainment, comfort and space.

Li Auto is taking market share from heavyweights like BMW, Audi and Mercedes, thanks to a competitive cost structure, strong management team and clear strategic vision. With a high net-cash balance sheet and profitability that funds reinvestment, Li Auto is well positioned to keep disrupting the market.

Shanghai Huace Navigation Technology

A dividend-growth company and a leader in high-precision geospatial navigation systems. Its customised solutions – and potential applications in autonomous driving – point to profitable road ahead.

Naura Technology

China’s dominant player in semiconductor production equipment. It offers pure exposure to the country’s fast-growing semiconductor industry, backed by a solid balance sheet and healthy free cash flow outlook.

Final thoughts…

China is changing. The old mantra of “growth at all costs” has given way to a sharper focus on capital efficiency and global competitiveness.

Crucially, the country is now home to a new breed of private, pioneering tech firms that are harnessing domestic strengths to make their mark on the world stage.

I look forward to watching their progress as we move into 2026 and beyond.   

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