Forbes Midas Lister JP Gan Still Upbeat On China Consumer Growth Amid Policy, Taste Shifts

JP Gan obtained his stripes in venture capital (VC) by investing in businesses that cater to Chinese consumers. A good return helped place Gan in No. 24 in the 2021 Forbes Midas List, the sixth time he’s been included in the list of the top venture capitalists in the world. The long-running success of Qiming Ventures led the University of Chicago Booth School of Business graduate to co-found INCE Capital in 2019. INCE began with a capital of $352 million from investors such as Duke University, Carnegie Mellon University, and C.V. Starr; it is focused on early – to expansion stage businesses.


The world has seen a significant shift since the year 2019. While China has emerged from the most severe pandemic, its economic growth is slowing down during the 4th quarter due to increased delta-related cases and power outages (see this post). China is the second-largest economy, has been fighting against celebrity trends, sexually effeminate males, and extensive Internet platform companies, threatening the business model of focusing on consumers.
But Gan does not change his strategy. “We remain committed to investing in our customers,” he said in an interview with Shanghai’s Lujiazui Financial District. “The young generation is a bit different and has distinct preferences. Consumption power, in general, is still present, especially in major cities and among the top-quartile families.”


However, along with the optimism have been massive stocks declines at companies and retailers which haven’t kept pace with the current trends. The Shanghai shares traded Shanghai Metersbonwe, an apparel retailer that has lost 40 percent of its value over the past five years. Zhejiang Semir Garment has lost 25%, and C.Banner, a footwear retailer, has sunk 84% in the last five years. JNBY, a brand that has been successful in the past, is now struggling. JNBY was the subject of controversy in September when it released a children’s t-shirt featuring the English phrase “welcome to Hell.” The shares that trade in Hong Kong have dropped nearly one-third of their value following the controversy.


Gan 49-year-old Gan is searching for younger companies that are agile in the way they approach marketing in the present market. “If key opinion leaders (key opinions leaders) and famous people can no longer represent the brands, they’ll turn to normal individuals,” Gan said. “The businesses we invest in will always be able to find the highest value-for-money performance marketing. If a real celebrity cannot achieve it, they’ll develop another way to do it. It’s always changing due to the availability and demand for various resources.”


Influencers’ sources that might be missed include social media platforms such as TikTok, Gan said. While China people are attracted to celebrities but it’s not as much about their names as their traits, Gan said. The characteristics, Gan believes, can often be found in the most popular stars.
The most recent investment made by INCE was financing round with others in September worth more than 200 million Yuan in the apparel brand Beaster. INCE was the lead investor with”Off-White,” the China variant of “Off-White,” and was joined by Meridian Capital and Belle Consumer Fund. Beaster is targeting one billion yuan of sales by 2021. In the past, INCE also invested in the collectible toy brand ToyCity and the China-based PETKIT that has 1500 retail stores signed by PETKIT across China that sell the company’s “intelligent pet” items, including water dispensers. In the past year, INCE also invested in Ponhu Luxury, a luxury goods company that also drew investors through Focustar Capital, ATM Capital, and Before Capital.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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