How China Invests for the Future
American technology powerhouses pay huge dividends and execute share buybacks to investors to stimulate their stocks. In China, they do but not at the same scale. The rest of the savings is poured into startup investments. None is largely better. If the American investors make money, they would also invest more in traded companies or even startups. Of course, China has to do more startup investments as their markets have not matured at the same level as the U.S.
The aggressive investment strategies of Chinese tech firms was recently observed by Sequoia partner Mike Moritz in the Financial Times. In his analysis, Moritz wrote, “Between 2015 and 2017, the five biggest US tech groups (especially Apple and Microsoft) spent $228bn on stock buybacks and dividends, Bloomberg data shows. During the same period, the top five Chinese tech companies spent just $10.7bn and ploughed the rest of their excess cash into investments that broaden their footprint and influence.“
“Most Chinese activity is outside the US, with Tencent and Alibaba building vast constellations of satellites. Tencent has more than 600 investments, while Alibaba has around 400 — totals that almost make Japan’s SoftBank look like a penny-pinching slowpoke.”
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