Reopening of Shanghai Disneyland | Photo: Time

In Conversation with
Dr Jeffrey Towson
Professor of Investment
Peking University
#1 Followed Professor on LinkedIn in China

Watch full interview here!

The trend with China’s economic recovery right now will be an indication of what the rest of the world may experience with their economy in the near future. What can we learn from China?
China got hit by the coronavirus first. They were also the first to quarantine their people. That was a very radical idea. When China started quarantining millions and millions of people, everyone thought that was crazy. And now, everyone is doing it.
So they went first. They are the first in recovery as well. People are back at work. From there, we will be able to see if the virus will come back. And from there, we will also see whether or not there will be a change in consumer behavior. Are the consumers going to be the same now as before? Or will they be more pessimistic, more hesitant? Are they no longer going to the movies because they are used to watching at home now? Have their habits changed? 

My guess is, the Chinese consumers are notoriously optimistic about the future relative to other countries. They are amongst some of the most optimistic people I have seen on the planet. And being optimistic makes you more willing to spend. I think we are going to see them come back faster than the other countries. That’s only a guess, but I think that is fairly consistent with what is going on right now. 
Wouldn’t you agree that if the global economy is sick right now; it doesn’t matter how well China is doing, it still is going to be affected, as no one is going to buy stuff from China?
It depends on what sector. If you are in manufacturing in China, then it is going to be a problem because you are selling to the world because a lot of the world is shut down. However, if you are a local business serving the consumers, the Chinese consumers are still there, and they still have all the money. Those businesses are not necessarily affected by what is happening in Europe.
So, if you are a mine producer in Brazil, and you are selling to steel manufacturers in China, the Chinese are probably not placing too many orders right now. However, if you exporting avocado from Mexico, the Chinese consumers are becoming pretty decent consumers of avocado. So, it really depends on the nature of your offer. That said, you need to understand that the Chinese are not as dependent on the world economy as it used to be. China is more and more focused on domesticl consumption.

Watch interview clip here
How long does it take before we get back to normal?
The question is; is this going to be a one off pandemic or is it going to be a recurring problem? Are we going to deal with this again in the fall? Is it going to happen every year? The flu happens every year. What makes us think that this is going to be a one-time thing? That’s the “health” question here. I don’t think it is clear that we know where this pandemic is going to be in 6 months. Most of the health people seem to be saying that this thing is coming back. It’s out there, it’s moving around, and we are just going to learn how to manage it better. 
As an investor, are you worried?
No. The way I view it, this is a health situation impacting the economy. But there’s nothing wrong with the economy. It is not like 2008, where there is a fundamental real estate, bank and liquidity crisis, where you had a real problem with the economy. We do not have a problem with the economy. If you solve the health problem, everything should be fine. 
If you are from a health background, the idea of a disease and how you treat it is not as foreign to you, and you would have a better sense in this area, comparing to regular business people, you just don’t know how to think about this, as you don’t know what it is.
We would probably not cure COVID-19 anytime soon, but we would figure out how to manage it and how to live with it. Nobody has ever cured HIV, it is still out there. However, the drug is so good that if you get HIV, it is not as big a deal (comparing to when it first started). It is treatable and manageable even if there is no cure. 
We are quite used to dealing with the regular flu, which comes around every year. 60,000 Americans die per year from the regular flu. But people know what to do. Typhoon hits Hong Kong every year, and everyone knows what to do when a typhoon hits. 
So I think that we will get better at managing this pandemic. I think half of what we are dealing with here is that, it is a new thing, and we don’t know what to do. I think we will figure out a way to deal with it relatively quickly.
Interview recorded 8th April 2020. Watch interview clip here.

Dr Jeffrey Towson is a private equity investor, Peking University professor, best-selling author and speaker. His writing and speaking are on Chinese consumers and digital China.

According to LinkedIn, he is the #1 followed professor in China. He was a LinkedIn Top Voice for 2016 and 2017 (#1 for Finance). And he was one of Alibaba’s 15 “Global Influencers” in 2017. Dr Towson’s investment / advisory work is in healthcare, primarily in the US and China. He was previously Head of Direct Investments for Middle East North Africa and Asia Pacific for Prince Alwaleed of Saudi Arabia.

Dr Towson spoke at AFES 2018 on The Emergence of Asia’s Super Platforms. You can watch his speech here!

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