Chinese innovation: what we saw on the ground

China’s innovation advantage is accelerating the commercial deployment of new technologies, but intense competition means investors must focus on companies with durable economics and pricing power.

• China’s old investment- and infrastructure-led model remains under pressure, with weak property, subdued private investment and cautious consumers, while advanced manufacturing, technological self-sufficiency and global expansion are developing rapidly.
• Alibaba illustrates the transition within a single company: its legacy ecommerce operations are slow-growing but highly cash-generative, while AI and cloud revenues are growing at about 45% and management expects cloud eventually to become the larger business.
• China’s execution speed is visible across industries: Xiaomi moved from announcing cars to mass-producing the SU7 in roughly three years, its Beijing factory can produce one car every 76 seconds at full capacity, and Luckin Coffee launched more than 90 new drinks in 2025 using customer data.
• The country’s advantage increasingly rests on engineering talent, dense supply chains and rapid iteration rather than cheap labour; a Dairy Queen robot built by Sharpa could complete 55 processes without human intervention, while Horizon Robotics’ founder warned that expectations for general-purpose humanoid robots had outpaced current capabilities.
• China’s rapid scaling can also create excess capacity, falling prices and weak returns, as seen in solar and electric vehicles and potentially in humanoid robotics; geopolitical restrictions may constrain access while increasing the value of domestic alternatives and pushing Chinese companies to expand overseas.

Takeaway: China is producing globally competitive technologies and brands, but growth alone is not enough for investors; selectivity is essential to identify businesses with sustainable competitive advantages, pricing power and attractive returns amid domestic competition, slower growth and geopolitical uncertainty.