Key takeaways:
China’s demographic structure has long been emerging as a source of pain for the country’s economy and productivity. Subsequent falling productivity and an inequitable pension allocation structure are creating a perfect storm of downward pressure on GDP growth.
In an approaching environment of overcapacity and insufficient consumption, recycling and remanufacturing could provide the ongoing support needed in the absence of new growth.
End-of-life vehicles provide a great example of a source of remanufacturing opportunity for the Chinese economy.
How is our Asian Equity team seeking to capture this opportunity?
Beijing has shown through the ongoing formalisation of the remanufacturing industry that it sees worthwhile benefits in supporting its growth, and their view is becoming even more impactful with the number of ELVs set to outstrip the number of new vehicles registered. The gap in process efficacy when compared with Europe shows that the opportunity is there to be taken.
The Asian Equity team is made up of industry and country experts who specialise in bottom-up stock picking with ESG considerations integrated throughout. We see investment opportunities from a long-term, global point of view, and we aim to identify strong businesses that can navigate demographic challenges or disruptive industry changes better than others. We believe that for leading firms such as CATL, ESG is not only about managing risk, but shaping and seizing new growth opportunities.
Our own firsthand bottom-up work assesses these opportunities holistically, studying dynamics across the value chain, and gauging how management team works with various stakeholders to win over the long term.
