Bin Shi
Head of China equities

Many Chinese companies are successfully navigating the complex environment of economic slowdown and trade tensions and turning outward for growth and opportunities.

Chinese equities had a volatile start to the year as the threat of a trade war with the US, a slowing economy as well as a depressed real estate market continued to unsettle investor sentiment. At the Greater China Conference 2025 in Shanghai, my UBS Investment Bank colleagues James Wang, Head of China Equity Strategy, Dr. Zhang Ning, Senior China Economist, and I discussed and weighed the various risks.

But while there are downside risks, the resilience of many Chinese companies makes them bright spots in my book. These companies are finding their way in an adverse environment and are successfully competing domestically and internationally. They are crafting their own future. I see this trend continuing in the long term, and it is a main reason that my equity outlook is positive.

No great policy expectations

The UBS Investment Bank forecast for China’s economic growth this year is conservative at around 4%, building into its baseline scenario a possible 60% US trade tariffs on three-quarters of Chinese goods in total over this year and next. The message behind the emphasis on tariff risks and a potential 1.5 percentage points hit on the GDP is clear: we need stronger and more proactive government support to offset the unprecedented external shock to come.

I too believe that more should be done – and more will be done, but investors should keep their expectations in check. In my opinion, Beijing has made efforts in earnest and taken a more proactive approach that includes the provision of forward guidance. However, a policy U-turn is unlikely, if not uncharacteristic, of Chinese leadership. Although government support such as the trade-in programs have some positive effect in the short term, issues constraining the Chinese economy are in part structural and would require a far-reaching solution to address and resolve over time.

Consider the loss of confidence. What needs to be done to get households spending and investors and companies investing again? To influence consumer behavior for the longer term is a tall order on its own. A change in mindset demands a deliberate, targeted and sustained approach, and it will take time before any material impact arises.

That said, a savvy investor should not let a tricky environment stop them finding investment opportunities. What keeps me confident is how competitive Chinese companies are becoming in global markets.

Competing on the world stage

A full-scope supply chain ecosystem together with cost advantage makes a unique competitive edge for Chinese exporters and manufacturers. One standout example is a Fuzhou-based automotive glass producer, one of the largest in the world and recognized for its smart glass technology. Innovative products like all-glass roofs, head-up display (HUD) glass, dimmable glass and advanced driver assistance systems (ADAS) glass are driving topline growth. Thanks to the company’s significant investments in research and development and end-to-end production capabilities, it has established a strong global presence, serving major carmakers from production hubs around the world. Its global market share grew from 20% in 2013 to 35% in 2023.

A leading home appliances maker is also growing internationally. The industry has gone through a round of consolidation, raising barriers-to-entry and solidifying the positions of top players. This particular company’s overseas business accounts for more than 40% of its revenue, partly enabled by supply chain efficiency and e-commerce integration. Its robotics and automation segment has turned around after a challenging post-acquisition transition, now expanding into new industry verticals and experiencing improving profit margins. It is also working towards establishing its own designed and branded product lines on top of a thriving OEM business.

Successful examples are not limited to manufacturers, either. The online entertainment sector, particularly gaming, has experienced sizable growth in recent years and expanded internationally. Chinese games are gaining market share in the US, Japan, South Korea and Europe. Growth has been consistent over the years despite interruptions in new Chinese game approvals between 2021 to 2022. The approval process has returned to normal, with the addition of 1,400 new titles last year.

Be resourceful, stay agile

More and more Chinese companies are turning their focus to overseas markets, with many gaining a foothold and achieving great results. International markets offer opportunities, especially at a time when domestic demand is weak and local markets are hyper-competitive. It is no small feat to understand and serve an international customer base with diverse needs and backgrounds – not to mention the complexity of operating under different jurisdictions – but we are hopeful Chinese companies will adapt and prosper.

Going global is a long-term investment theme of ours. Resourceful companies will continue to evolve and find a way to succeed, even in a less-than-ideal environment. In the same way, while challenges might persist, there are investment opportunities to be found in the Chinese equity market for savvy investors.

S-01-25 NAMT-2087

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