This article comes from the WeChat public account: 42 chapters (ID: myfortytwo) , author: Zhou Xiao (China Jingwei former senior investment manager), from the title figure: vision China

I often face this question: “What will change in the next decade?” And what I want to say is: “What will remain unchanged in the next ten years?” The most important issue is that you must formulate your long-term strategy on a constant basis. —— Jeff Bezos

In the past ten years, venture capital has usually been associated with tuyere, but from the perspective of time, the long-term nature of venture capital is completely incompatible with the unpredictable characteristics of tuyere.

If the underlying logic of all outlets in the past decade is the opportunity of mobile Internet brought by smartphones, then we stand today in 2020, and the internal and external conditions of this country are very different time nodes, to look at the future ten The underlying logic of annual venture capital is a very meaningful thinking.

For venture capital institutions, this determines who will grow with entrepreneurs in the next decade and share their benefits.

In the past ten years, “Internet” has been equal to innovation, because the connection between people is enough to produce very powerful leverage and huge innovation.

But The next ten years, especially in the industry, “mutually”Networking” may only be a part or a link of innovation. Because the leverage factors of different industries, in addition to technology, there will also be asymmetric information, capital or supply and demand adjustments. This is our focus on the industrial Internet, and also It is the core logic of industrial innovation.

ROE is a standard we often use to assess the state of business operations.

So, if we think of China as a company, what changes are taking place in our business environment today, and what kind of adjustment is his ROE going through?

If GDP per capita is used as the benchmark, and the ratio of the secondary industry to the tertiary industry is used as the main indicator, China ’s 2010 is probably close to Japan ’s 1968, South Korea ’s 1991, and Taiwan ’s 1987.

China and East Asian countries ’annual GDP growth rate during the benchmarking year

We regard the benchmark year as 0 years.

From the perspective of GDP, the decline cycle of economic growth we have experienced in recent years is in the context of East Asia and is in line with the normal development trend. Even without the impact of the new crown epidemic, our economic slowdown will be a mid- to long-term trend in the future. Moreover, before falling to an average of 4.8%, we may still have a period of timeSlowdown.

So, the problem we face for a long time is likely to be “guarantee four fights for five”.

This means that the opportunity to enlarge the economic aggregate will become smaller and smaller, and our leverage ratio will hardly have room for improvement. The equity multiple of this company in China will touch the ceiling, and there will be no more and The same room for growth as before.

Investment rate in China, Japan and South Korea (%)

It is also worth noting that compared to Japan and South Korea, their investment rates have started to decline after the benchmark year, and our investment rate has always been significantly higher than that of other economies, and the decline is still very large. slow.

This is very much related to our frequent use of infrastructure and real estate to stimulate the economy, and these two industries are precisely industries with very low asset turnover. The price is a lot of debts of state-owned enterprises and governments, the leverage ratio of residents has increased significantly, a large amount of money has entered the real estate and infrastructure and cannot generate a cycle, and lost the opportunity to recreate value. So from the perspective of asset turnover, today is also facing great challenges.

Comparison of population aging trends between China, Japan, and South Korea