Hello, and welcome to What Goes Up, a weekly markets podcast. My name is Mike Reagan and I'm a senior editor at Bloomberg. My co host, Bildata hi Rich is taking a well deserved vacation, and this week on the show, Well, the war in Ukraine and the federal reserves efforts the tame inflation have dominated the storylines for markets this year, but another important development that hasn't gotten as much attention is the situation in China, where a flare up in the COVID virus caused extended lockdowns in Shanghai and other parts of the country. China's COVID zero policies of crippled growth in the world's second largest economy and prolonged supply chain issues around the globe. And while many who were stuck in lockdown in China probably wish they were somewhere else, one analyst and portfolio manager actually traveled into the country to see how the economy was operating and to try to visit some of the company she covers. We'll talk to her about her journey into COVID zero and what she learned about how China's economy has changed in recent years. Well let's meet her. Her name is Winting Shen. She's the co lead portfolio manager of the China Equity strategy at Harding Lovener. One saying, welcome to the show, Marty, Mike, thank you for having me. Oh, it's it's great to talk to you all the way from China. Will tell us, though, why don't we start a little bit and just introduce yourself. Tell us what you do at Harding Lovener. Um, I know you help manage the China strategy, but tell us a little bit about your background and how you got to this role. Sure. So, I've been at Parting Lovener for a little verse six years now, and I am a portfolio manager of the Chinese Aquity strategy and at the same time I'm a China analyst, so cover a range of different sectors consumer, Internet, industrial, companies, you name it. So typically I travel, you know, twice a year to China and you know, meet with companies. But this time I'm doing it a little differently, a little differently to say the least. So, so tell us about this. Um, I guess it's been a couple of years since you've been able to travel to China. I would assume, and and you decided to go make a go for it during COVID zero. How did that all come about? And and just tell us about the experience of actually, you know, traveling into China during this phase of COVID. Yeah, absolutely so. In fact, I started to plan this trip last year and I was looking at the windows, if you will, to to do this trip, and it looks like, you know, between Olympics might be a little difficult the Winter Olympics, which happened during February UM. In fact, the large part of the flights have been canceled in that time. So I just got a ticket which was immediately after the Winter Olympics. That was the only ticket that I was able to get, and I just jumped on it. And later I was told that some people's tickets were canceled eight times. So I was glad that I wasn't even able to board this flight. And so and then you landed and you immediately went into like a quarantine right at a hotel. Yes, So the flight was originally dustined first Shanghai, and it was looking like the city was entering into a quarantine as we flew, so we were rerouted to another city called Fujo, which is right across the Taiwan straight just to give you an idea where it is. Um So, we were put into a quarantine hotel for fourteen days, and that was really the phase one of the quarantine. And then there there comes a second hearts, which is that you know your city of destination. So fourteen days in one hotel room, you must have finished Netflix. I guess. I tell people it was really three months because I came to China on March thirty one and I finished the entire quarantine right before the May one holiday. So it's March to May three months. That's pretty funny. And so so you've finally been able to get out and move about the country a little bit. Are you able to visit the companies you cover and invest in? Yes, it's it's pretty amazing. I'm finding my way around cities. So I have been to six cities at this point where our companies are based. And it's pretty amazing that the companies UM are. You know, they are taking the risks by accepting my meeting requests. But wherever I go, I just find overwhelming hospita quality from people uh to to not only see me in real life to seeing each other in real life, but also looking to find out from me, you know, what is happening out there and what what kind of impressions have shifted around China out there, So you know, it's great excitement to see each other. Can you tell us about some of the companies you visited, which which ones are in your coverage area? Yeah? Sure, So. One one interesting observation that I, UM I I saw during the pandemic actually uh you know, probably dating from a couple of years ago, was um this entire rise of you know, local companies not only in consumer brands, but also in manufacturing spaces. So I have been seeing some companies during this visit. Um, you know, companies that are uh you know, replacing global suppliers if you will, um, you know, they are expanding their market share. The companies have invested are R and D much higher than other spaces, and they have close to that that you know, gap with their global peers, if you will. So, uh, companies making inverters and several motors. For example, a company called Innovans which is based in Shenjen, And I've seen this company over the years and now seeing them in the a new headquarter, which is pretty exciting. And also, um, you know a company called shan Huai making precision gears in hang Joe, which is another city that I visited. Um also consumer companies, they're getting more domestic business. I guess is that just a function of COVID having made it very much more difficult to sort of import and export uh equipment that they're they're actually supplying um, domestic Chinese companies more than they used to. Yeah, there's definitely that element to it. But I would also say even dating during the trade wars, some companies suddenly realized that there's this you know, the supply chain safety concerns. Some components might not be available to them at some day that they're they don't even know of. So they have started this contingency planning process and scramble into to find out what local suppliers could there be. So they started this process and this helped these local companies to really climb up that that learning curve by having these relationships and you know, manufacturing larger scales, and that helped their capability to move up over the last few years as well. And what sort of level are they operating at? Our most companies in the the manufacturing and that you visited, or they sort of back to or is it, you know, is the pandemic still keeping them at somewhere below a d percent of what they formerly you know, their former capacity. Yeah. Absolutely, some companies are you know, really feeling the pinch from the pandemic, the logistics pains, and while other companies located in cities which are better managed, for example Shinjin Um which is very close to Hong Kong, actually they are feeling less less pain than than those other companies based in Shanghai. So I think Shinjin is is better managed because of its rolling testing policies, which basically requires people to produce a uh COVID test of voluntarily every forty eight to seventy two hours. So when when I was in shan Jen, I was I was even a little tighter on myself and asked myself to to to get a test every day, so I get a test when the lines are smaller, but still takes like you know, forty minutes to an hour every day from me to get those tests. But you know, under zero COVID, I think that is the least invasive way if you will to maintain that, you know that daily life, and Shenzhen was able to more or less, you know, not quite lockdown as hard as Shanghai did. I guess in this latest wave is that they just the virus didn't really crop up there again, like it wasn't Shanghai, I guess. So Shenngen did have their own chapter of lockdown in March, but they reacted very quickly. They had a very smooth and quick lockdown for for several days, and the city opened up immediately after that and has since been pretty much COVID free. So this sort of you know, rolling testing is is helping the city to be able to find out any hot spot very quickly and react to that. But um, make no mistake, not every city can afford this arrangement because it is a big cost municipal finances to to give those tests. And and gent is very well known for being an internet and you know manufacturing financial hub, but not every other city can can do that in large scale, right right, It's to afford that is quite an expense, I imagine. So, uh, what's when you speak to the management, you know, I'm assuming you speak to sort of the CFO type level and that type of person at these companies. What is their mood are they, I'm assuming everyone's kind of tired of all the COVID prevention measures. Are they sort of just you know, ready to reopen. Is there an eagerness, you think to be done with this and and sort of get past COVID zero or or do they appreciate this, this effort to contain the virus? Are they Are they happy to you know, comply with all the the lockdown orders, uh in order to to curtail the virus, or are they just like, I'm done with this, let's open up. Yeah. First, I think that everybody is excited to see people in person, so they are excited to see me. And yes, I think the companies are looking for some sort of certainties in the in the you know, policy wise for sure, so they would like to to you know, be able to to get a timeline they they're hope hoping to um have some clear idea about how the policies will be going forward, so that they can know, for example, whether they should uh, you know, diversify their capacity to vietnams for example, and then they can you know, they can plan that in for the next few months and they can allocate that capital. So so yes, people are definitely looking for some um, you know, clarity right right. And I'm curious about the consumer companies UH that you cover and invest in. UH. You know, obviously, my impression is that UM, consumer spending UH must be very much curtailed in some ways, obviously not in others. I'm sure there's still people getting take out food and that sort of thing. But UM, how has the consumer economy been changed during COVID zero and or any any of the companies you cover sort of struggling to to to deal with that and and to adapt. Yes, we definitely see some impact in the last couple of months. At the end of March, Shah entered this this big lockdown, and that's you know, a big economic have been a big part of a lot of consumer companies revenues UM and you know, April may were worse, but I think, you know, again, a very um, you know, a very consistent trend that I'm observing is that uh, you know, consumer spending where where it's going higher is this you know, spending on these local brands, for example, these local UH sportswear brands, UM cosmetic brands, even in the milk's formula brands, which is known to have had some quality concerns, and people used to always perform multinational brands. And now consumer impression has shifted a little bit around this, you know, these these spaces, and I guess that has to do with the rising banding power of the younger, uh consumers, And these consumers have grown up in an age where the quality of mating China products have have risen and they didn't really have that baggage in their mind. Um, and they're they're more willing to pay for these domestic brands at a higher premium. They're willing to consider them as higher quality, especially that infant formula sector. I mean, with with all the issues we're having in this country, I imagine the locals they're are are doing pretty well, you know what saying. I think our listeners, especially in the United States, the American listeners, are pretty familiar with the big major Chinese companies, you know, the Ali Babas and the and the ten cents. But you seem to really be sort of going down and looking at the smaller companies and and uh, perhaps someone's we we haven't heard of, could you tell us a few of companies that you're excited about that maybe we haven't heard about that that you're interested in. Yeah so, um, I mentioned the Innovns and Shaan Juan Gear uh Anta in the consumer space, leaning in the consumer space prior UH Cosmetics. So these are some of the companies which are just rising up the new generation of made in China products I would describe. And it's just younger companies, younger, smaller growth type of stocks as we would think of them. Yeah. So, um, there's this this shift uh if you will, to the manufacturing type of companies over the years, and um, so there's it was more spontaneous in the beginning, but there's also a policy tail wind of into these high tech small medium enterprises and they have been spending R and d um you know over the years and have rising on their their quality. So you know, these type of companies similar to uh you know the sort of hidden champion idea from the from from Germany. Um, these these companies regarded as the little giants, um you know in the in the in the Chinese policy language, is sort of the new wave of manufacturers that we're seeing today. And do you think you know we've seen so many regulatory crackdowns in China, you know, the education companies and the big tech companies. Do these sort of smaller manufacturing companies, in your opinion, do you think they're perhaps safer from that sort of risk that um you know that that regulatory risk that we've seen towards the big tech companies. Are they sort of immune from that, do you think? Um? I think they're they're under some policy tail wind at this point, and I think they are there there's a there's that fact about you know, regulatory favorable treatment upon these companies. But at the same time, I think the rise has been uh, sort of spontaneous. They have um you know that a lot of it has come up from the investment into their their I d s. They're they're they're able to close the quality gap with their their larger global appears. They're able to offer better services and at the same time they're also cheaper. So I think that this this trend is a medium term trend that we're looking at will continue for you know, several years in future. And as you said, you've go on to China every year for several years, made similar trips to this, not not quite similar in that he didn't have to stay in the same hotel room for two weeks. But are there any big major shifts in the economy that that you've noticed, you know, uh, and not just from COVID, but you know, as you pointed out that the trade were uh during the Trump administration. UM, could you describe if you've seen any sort of major themes in the economy change because of both of these events. Yeah, I think so. So as you mentioned there, there's this some sort of this shift priority shift from the internet economy or the quote unquote intangible part of the economy to the more tangible part the manufacturing space, the making of the things. UM. And I think that that's where where the you know, the focus off you know, the government, but all so like investors from venture capital to you know, secondary market are focusing right now. UM. And I think that that is going to be a longer term trend. As for the for the internet Internet part of the economy, that way, we are already seeing a you know, organic slow down of the of the growth UM as China has reaching you know, high penetration rate of Internet users, so so that high growth in the prior years is probably not going to maintain in the next few years. But at the same time, UM, there are industries like electric vehicles, uh, you know, renewable energy solar for example, where China is already a leader or is becoming a leader, where there's you know, visible UM leaders in this space that we were interested about. You sent over some about your trip before the podcast, and one line that really caught my eye said, relationships between people have become closer post pandemic. Could you talk a little bit about that. Is it's sort of like you said, people are just happy to see each other once again. You know, you're finally able to go out and sort of mingle again. Is Is that? Is that basically what's going on, Just you know, everyone's everyone's happy to be out and about again. Yeah. I feel really glad that I'm able to do this trip, especially considering that, you know, unfortunately a lot of the local analysts, the local investors are trapped in Shanghai and unfortunately they're they're not able to move around at this point. Well, while you know, I'm able to you know, move from city to city, and some companies are telling me that they haven't had any investors uh visit this year. Some told me that they simply haven't had any investor just since the pandemic. So, uh, it's really high excitement to be able to meet each other. So after my my first of three cities that ran out of name cards, first of people are still using name cards. And then second that I'm able to complete all these company visits and speaking to the you know, the CFOs and the investor religions people and there you know, we're we're you know, chat uh, not only about the companies, but you know, things that we're seeing in the US outside of China as well. Right, well, let's talk about that the traveling you've done. So you you know, you came in and you were immediately quarantined for fourteen days, right, and then after that what happened after that, You've been able to move around more freely. So after the first fourteen days, there was another fourteen days that uh and the right before the main first holiday, and after that, I was able to move from city to city from my hometown Cien to uh Hanjo and then Shenjin uh san Ya Guangjo, which is where I'm at now. And it's it's really tricky to move from city to city still because they are all all these hidden rules and the hidden blacklists, if you will, so you know, they don't put it on paper, but you have to find out which cities are banned UH to go to the next city. So um. You know, for example, when I was moving from UH moving to to Sanya, which is a tropical island um in the southern part of China, they they banned honjo Um. And then you know you have to be you have to you know, be away long enough for them not not to recognize that. So you have to It's like playing a video game and and then you have to find out all the tricks to be able to level up. And I'm clearing all the levels at the moment. So you have to research every step ahead, I guess, and make sure you're able to go from that city to that city. You're better than me. I would have landed in that tropical island that you mentioned and probably stayed there and explained to my my boss that arms. Now I'm quarantined on this beach for a few weeks. So where are you off too next after this? Yeah? Good questions. So interestingly, a big news in in the last a few days. It's definitely Shanhai opening up. So my original destination for my flight in was Shanghai, and I feel like that that's a that's a that's a circle that I need to complete making Shanghai my final destination. We have a lot of companies that we typically visit in Shanaha, friends in Shaha, family in Shanghai. So yeah, I would like to make Shanghai my my final destination if I can. But still I have to look at the hitting rules. Yeah. So it looks like Shanghai is starting to open up and maybe in the next next week or so you'll be able to actually get in and travel around and see Shanghai. Is that is that the hope? Yeah, So June one is the date of open up. Um, so we're gonna have to see, probably for the first day a few days, how the how the process is going to be. I imagine it's going to be a step by step process. Um might not open up in immediately. Um, maybe some people will still not be able to move freely, maybe transportation will still be restricted. Um, so we'll have to see. But um yeah, I'm thinking that. Uh yeah, I have things to do there once in one of the big teams in the US over the last couple of years for investors has been you know, when to buy the opening up stocks, when to buy the stay at home stocks. I'm curious how your strategy, you know, are you more of a buy and hold long term type of strategy or would you try to sort of find the beneficiary areas of Shanghai opening up that we're being in lockdown? How how are you viewing, you know, the the lockdowns and the reopenings as sort of a fund manager, is it is it worth trying to chase the opening up and closing down stocks or do you try to look past that and just look towards the future. Yeah? Sure, I think people have tried to trade around that, but since there were there there were some false hope in the beginning of the year, so that that strategy hasn't really been so successful. In China's case, we we are trying to stick to the longer term. Um, you know, uh themes if you will, like the you know, the manufacturing, the localization trend, the consumer brands, those kind of things that we pay attention to and try to you know, stay with those companies. Well, it's been quite an adventure for you and uh, for listeners out there who want to read more, Wednesting has been writing a blog about her trip into COVID zero, China at Parting Lovener's website. I hope do you have some more posts coming up for us soon? Yes? So yeah, we published our first my first part of the journey, and uh, I hope on second part of the journey is going to be more exciting than the first one, where I will be sharing with our readers, you know, about my visits and trips around China, not just stuck in the hotel. I know, I imagine you got sick of the food, and I know you you did a lot of yoga to keep yourself saying. So that's a good tip if for anyone who YouTube YouTuber exercise sessions. Well, one thing, we have a tradition on this show where at the end we all discuss uh the craziest things we've seen in markets in the past week. So for your case, I want to hear the craziest story of your trip. What's the sort of most interesting, most wild thing that's happened to you during this trip. Well, Mike, I guess that has to be my ambulance right home between my face one and face too quarantine an ambulance right home, right home, and you weren't sick. Though you weren't sick, right, it was just uh so between phase one and phase two, since I was moving from one city to another. After I landed to the second city, which is my hometown, registered well after you know, uh an hour long register register process. Actually they assigned me a vehicle which turned out to be an ambulance, and the driver just you know, took my luggage, took me to the ambulance. No siren luckily, but there was some uh laring, flashing lights. So what would have been an hour drive turned out to be twenty minutes. So I guess the regret that was that I just feel like I don't deserve all this care and all I don't deserve all this attention. You know that that would have been resources could have been spent elsewhere, and you know, I just wish that I don't have to to do another ambulance right anytime. But it's face some people right around town in a in a limo to flex. You know, you got your ambulance. I gave turn those sirens on it, like you said, you can cut the trip in half. So it's it's it's a good way to get around if you if you can do it, and you know you don't need it for uh, for medical reasons. That's a great story, though, I H, I don't know, I don't know if I'll ever if I could get an ambulance through Manhattan sometime, that would, uh, that would probably cut my commute in half. But you're right, we we got to save them for people that need it. Well, that's that's definitely the craziest story I've heard this week. But let me tell you about the craziest thing I saw in markets this week. Went saying, and I gotta say, I don't need an ambulance, but I got really bad poison ivy over the weekend doing yard work, So I think I do need this thing that I read about, And it's what it is. It's I believe it's the world's tallest ever bottle of whiskey, the largest ever bottle of whiskey. It is six ft tall bottle of Scotch whiskey, uh, distilled by McAllen in Scotland in in and the reason it qualifies for the show is it went up for sale and an auction so it's even giant bottles of whiskey have a market that all their own. Uh. And it was the auction house Lion and Turnbull. So when saying as as a financial analyst, I have an important question for you here. What do you think the world's largest bottle of whiskey? A six ft tall bottle of McCallan whiskey sold for an auction. No pressure, but your clients are gonna want you to get this one right. I'm going to just throw in my gas. I would say two thousand dollars, two thousand dollars one point three seven million. You can believe it. I wouldn't pay more than two hundred thousand. I'd have to taste it first, I think before I paid one point three million. No, one glass is more expensive than I thought. Well, once you enjoy that glass whiskey and uh, I hope you enjoy the rest of your trip and have a safe travels back to the United States. And we really appreciate you joining the show and tell us about your trip. Thank you, Mike, very nice talking to you. What goes up? We'll be back next week and so then you can find us on the Bloomberg terminal website and app, or wherever you get your podcasts. We love it if you took the time to eight and review the show on Apple Podcasts so more listeners can find us. And you can find us on Twitter. Follow me at reag Anonymous. Bildanna Hirich is at Bildanna Hirach. You can also follow Bloomberg Podcasts at podcasts. What Goes Up is produced by Stacy Wang. The head of Bloomberg podcast is francesco Leavie. Thanks for listening. To see you next time.

Hello, and welcome to What Goes Up, a weekly markets podcast. My name is Mike Reagan and I'm a senior editor at Bloomberg. My co host, Bildata hi Rich is taking a well deserved vacation, and this week on the show, Well, the war in Ukraine and the federal reserves efforts the tame inflation have dominated the storylines for markets this year, but another important development that hasn't gotten as much attention is the situation in China, where a flare up in the COVID virus caused extended lockdowns in Shanghai and other parts of the country. China's COVID zero policies of crippled growth in the world's second largest economy and prolonged supply chain issues around the globe. And while many who were stuck in lockdown in China probably wish they were somewhere else, one analyst and portfolio manager actually traveled into the country to see how the economy was operating and to try to visit some of the company she covers. We'll talk to her about her journey into COVID zero and what she learned about how China's economy has changed in recent years. Well let's meet her. Her name is Winting Shen. She's the co lead portfolio manager of the China Equity strategy at Harding Lovener. One saying, welcome to the show, Marty, Mike, thank you for having me. Oh, it's it's great to talk to you all the way from China. Will tell us, though, why don't we start a little bit and just introduce yourself. Tell us what you do at Harding Lovener. Um, I know you help manage the China strategy, but tell us a little bit about your background and how you got to this role. Sure. So, I've been at Parting Lovener for a little verse six years now, and I am a portfolio manager of the Chinese Aquity strategy and at the same time I'm a China analyst, so cover a range of different sectors consumer, Internet, industrial, companies, you name it. So typically I travel, you know, twice a year to China and you know, meet with companies. But this time I'm doing it a little differently, a little differently to say the least. So, so tell us about this. Um, I guess it's been a couple of years since you've been able to travel to China. I would assume, and and you decided to go make a go for it during COVID zero. How did that all come about? And and just tell us about the experience of actually, you know, traveling into China during this phase of COVID. Yeah, absolutely so. In fact, I started to plan this trip last year and I was looking at the windows, if you will, to to do this trip, and it looks like, you know, between Olympics might be a little difficult the Winter Olympics, which happened during February UM. In fact, the large part of the flights have been canceled in that time. So I just got a ticket which was immediately after the Winter Olympics. That was the only ticket that I was able to get, and I just jumped on it. And later I was told that some people's tickets were canceled eight times. So I was glad that I wasn't even able to board this flight. And so and then you landed and you immediately went into like a quarantine right at a hotel. Yes, So the flight was originally dustined first Shanghai, and it was looking like the city was entering into a quarantine as we flew, so we were rerouted to another city called Fujo, which is right across the Taiwan straight just to give you an idea where it is. Um So, we were put into a quarantine hotel for fourteen days, and that was really the phase one of the quarantine. And then there there comes a second hearts, which is that you know your city of destination. So fourteen days in one hotel room, you must have finished Netflix. I guess. I tell people it was really three months because I came to China on March thirty one and I finished the entire quarantine right before the May one holiday. So it's March to May three months. That's pretty funny. And so so you've finally been able to get out and move about the country a little bit. Are you able to visit the companies you cover and invest in? Yes, it's it's pretty amazing. I'm finding my way around cities. So I have been to six cities at this point where our companies are based. And it's pretty amazing that the companies UM are. You know, they are taking the risks by accepting my meeting requests. But wherever I go, I just find overwhelming hospita quality from people uh to to not only see me in real life to seeing each other in real life, but also looking to find out from me, you know, what is happening out there and what what kind of impressions have shifted around China out there, So you know, it's great excitement to see each other. Can you tell us about some of the companies you visited, which which ones are in your coverage area? Yeah? Sure, So. One one interesting observation that I, UM I I saw during the pandemic actually uh you know, probably dating from a couple of years ago, was um this entire rise of you know, local companies not only in consumer brands, but also in manufacturing spaces. So I have been seeing some companies during this visit. Um, you know, companies that are uh you know, replacing global suppliers if you will, um, you know, they are expanding their market share. The companies have invested are R and D much higher than other spaces, and they have close to that that you know, gap with their global peers, if you will. So, uh, companies making inverters and several motors. For example, a company called Innovans which is based in Shenjen, And I've seen this company over the years and now seeing them in the a new headquarter, which is pretty exciting. And also, um, you know a company called shan Huai making precision gears in hang Joe, which is another city that I visited. Um also consumer companies, they're getting more domestic business. I guess is that just a function of COVID having made it very much more difficult to sort of import and export uh equipment that they're they're actually supplying um, domestic Chinese companies more than they used to. Yeah, there's definitely that element to it. But I would also say even dating during the trade wars, some companies suddenly realized that there's this you know, the supply chain safety concerns. Some components might not be available to them at some day that they're they don't even know of. So they have started this contingency planning process and scramble into to find out what local suppliers could there be. So they started this process and this helped these local companies to really climb up that that learning curve by having these relationships and you know, manufacturing larger scales, and that helped their capability to move up over the last few years as well. And what sort of level are they operating at? Our most companies in the the manufacturing and that you visited, or they sort of back to or is it, you know, is the pandemic still keeping them at somewhere below a d percent of what they formerly you know, their former capacity. Yeah. Absolutely, some companies are you know, really feeling the pinch from the pandemic, the logistics pains, and while other companies located in cities which are better managed, for example Shinjin Um which is very close to Hong Kong, actually they are feeling less less pain than than those other companies based in Shanghai. So I think Shinjin is is better managed because of its rolling testing policies, which basically requires people to produce a uh COVID test of voluntarily every forty eight to seventy two hours. So when when I was in shan Jen, I was I was even a little tighter on myself and asked myself to to to get a test every day, so I get a test when the lines are smaller, but still takes like you know, forty minutes to an hour every day from me to get those tests. But you know, under zero COVID, I think that is the least invasive way if you will to maintain that, you know that daily life, and Shenzhen was able to more or less, you know, not quite lockdown as hard as Shanghai did. I guess in this latest wave is that they just the virus didn't really crop up there again, like it wasn't Shanghai, I guess. So Shenngen did have their own chapter of lockdown in March, but they reacted very quickly. They had a very smooth and quick lockdown for for several days, and the city opened up immediately after that and has since been pretty much COVID free. So this sort of you know, rolling testing is is helping the city to be able to find out any hot spot very quickly and react to that. But um, make no mistake, not every city can afford this arrangement because it is a big cost municipal finances to to give those tests. And and gent is very well known for being an internet and you know manufacturing financial hub, but not every other city can can do that in large scale, right right, It's to afford that is quite an expense, I imagine. So, uh, what's when you speak to the management, you know, I'm assuming you speak to sort of the CFO type level and that type of person at these companies. What is their mood are they, I'm assuming everyone's kind of tired of all the COVID prevention measures. Are they sort of just you know, ready to reopen. Is there an eagerness, you think to be done with this and and sort of get past COVID zero or or do they appreciate this, this effort to contain the virus? Are they Are they happy to you know, comply with all the the lockdown orders, uh in order to to curtail the virus, or are they just like, I'm done with this, let's open up. Yeah. First, I think that everybody is excited to see people in person, so they are excited to see me. And yes, I think the companies are looking for some sort of certainties in the in the you know, policy wise for sure, so they would like to to you know, be able to to get a timeline they they're hope hoping to um have some clear idea about how the policies will be going forward, so that they can know, for example, whether they should uh, you know, diversify their capacity to vietnams for example, and then they can you know, they can plan that in for the next few months and they can allocate that capital. So so yes, people are definitely looking for some um, you know, clarity right right. And I'm curious about the consumer companies UH that you cover and invest in. UH. You know, obviously, my impression is that UM, consumer spending UH must be very much curtailed in some ways, obviously not in others. I'm sure there's still people getting take out food and that sort of thing. But UM, how has the consumer economy been changed during COVID zero and or any any of the companies you cover sort of struggling to to to deal with that and and to adapt. Yes, we definitely see some impact in the last couple of months. At the end of March, Shah entered this this big lockdown, and that's you know, a big economic have been a big part of a lot of consumer companies revenues UM and you know, April may were worse, but I think, you know, again, a very um, you know, a very consistent trend that I'm observing is that uh, you know, consumer spending where where it's going higher is this you know, spending on these local brands, for example, these local UH sportswear brands, UM cosmetic brands, even in the milk's formula brands, which is known to have had some quality concerns, and people used to always perform multinational brands. And now consumer impression has shifted a little bit around this, you know, these these spaces, and I guess that has to do with the rising banding power of the younger, uh consumers, And these consumers have grown up in an age where the quality of mating China products have have risen and they didn't really have that baggage in their mind. Um, and they're they're more willing to pay for these domestic brands at a higher premium. They're willing to consider them as higher quality, especially that infant formula sector. I mean, with with all the issues we're having in this country, I imagine the locals they're are are doing pretty well, you know what saying. I think our listeners, especially in the United States, the American listeners, are pretty familiar with the big major Chinese companies, you know, the Ali Babas and the and the ten cents. But you seem to really be sort of going down and looking at the smaller companies and and uh, perhaps someone's we we haven't heard of, could you tell us a few of companies that you're excited about that maybe we haven't heard about that that you're interested in. Yeah so, um, I mentioned the Innovns and Shaan Juan Gear uh Anta in the consumer space, leaning in the consumer space prior UH Cosmetics. So these are some of the companies which are just rising up the new generation of made in China products I would describe. And it's just younger companies, younger, smaller growth type of stocks as we would think of them. Yeah. So, um, there's this this shift uh if you will, to the manufacturing type of companies over the years, and um, so there's it was more spontaneous in the beginning, but there's also a policy tail wind of into these high tech small medium enterprises and they have been spending R and d um you know over the years and have rising on their their quality. So you know, these type of companies similar to uh you know the sort of hidden champion idea from the from from Germany. Um, these these companies regarded as the little giants, um you know in the in the in the Chinese policy language, is sort of the new wave of manufacturers that we're seeing today. And do you think you know we've seen so many regulatory crackdowns in China, you know, the education companies and the big tech companies. Do these sort of smaller manufacturing companies, in your opinion, do you think they're perhaps safer from that sort of risk that um you know that that regulatory risk that we've seen towards the big tech companies. Are they sort of immune from that, do you think? Um? I think they're they're under some policy tail wind at this point, and I think they are there there's a there's that fact about you know, regulatory favorable treatment upon these companies. But at the same time, I think the rise has been uh, sort of spontaneous. They have um you know that a lot of it has come up from the investment into their their I d s. They're they're they're able to close the quality gap with their their larger global appears. They're able to offer better services and at the same time they're also cheaper. So I think that this this trend is a medium term trend that we're looking at will continue for you know, several years in future. And as you said, you've go on to China every year for several years, made similar trips to this, not not quite similar in that he didn't have to stay in the same hotel room for two weeks. But are there any big major shifts in the economy that that you've noticed, you know, uh, and not just from COVID, but you know, as you pointed out that the trade were uh during the Trump administration. UM, could you describe if you've seen any sort of major themes in the economy change because of both of these events. Yeah, I think so. So as you mentioned there, there's this some sort of this shift priority shift from the internet economy or the quote unquote intangible part of the economy to the more tangible part the manufacturing space, the making of the things. UM. And I think that that's where where the you know, the focus off you know, the government, but all so like investors from venture capital to you know, secondary market are focusing right now. UM. And I think that that is going to be a longer term trend. As for the for the internet Internet part of the economy, that way, we are already seeing a you know, organic slow down of the of the growth UM as China has reaching you know, high penetration rate of Internet users, so so that high growth in the prior years is probably not going to maintain in the next few years. But at the same time, UM, there are industries like electric vehicles, uh, you know, renewable energy solar for example, where China is already a leader or is becoming a leader, where there's you know, visible UM leaders in this space that we were interested about. You sent over some about your trip before the podcast, and one line that really caught my eye said, relationships between people have become closer post pandemic. Could you talk a little bit about that. Is it's sort of like you said, people are just happy to see each other once again. You know, you're finally able to go out and sort of mingle again. Is Is that? Is that basically what's going on, Just you know, everyone's everyone's happy to be out and about again. Yeah. I feel really glad that I'm able to do this trip, especially considering that, you know, unfortunately a lot of the local analysts, the local investors are trapped in Shanghai and unfortunately they're they're not able to move around at this point. Well, while you know, I'm able to you know, move from city to city, and some companies are telling me that they haven't had any investors uh visit this year. Some told me that they simply haven't had any investor just since the pandemic. So, uh, it's really high excitement to be able to meet each other. So after my my first of three cities that ran out of name cards, first of people are still using name cards. And then second that I'm able to complete all these company visits and speaking to the you know, the CFOs and the investor religions people and there you know, we're we're you know, chat uh, not only about the companies, but you know, things that we're seeing in the US outside of China as well. Right, well, let's talk about that the traveling you've done. So you you know, you came in and you were immediately quarantined for fourteen days, right, and then after that what happened after that, You've been able to move around more freely. So after the first fourteen days, there was another fourteen days that uh and the right before the main first holiday, and after that, I was able to move from city to city from my hometown Cien to uh Hanjo and then Shenjin uh san Ya Guangjo, which is where I'm at now. And it's it's really tricky to move from city to city still because they are all all these hidden rules and the hidden blacklists, if you will, so you know, they don't put it on paper, but you have to find out which cities are banned UH to go to the next city. So um. You know, for example, when I was moving from UH moving to to Sanya, which is a tropical island um in the southern part of China, they they banned honjo Um. And then you know you have to be you have to you know, be away long enough for them not not to recognize that. So you have to It's like playing a video game and and then you have to find out all the tricks to be able to level up. And I'm clearing all the levels at the moment. So you have to research every step ahead, I guess, and make sure you're able to go from that city to that city. You're better than me. I would have landed in that tropical island that you mentioned and probably stayed there and explained to my my boss that arms. Now I'm quarantined on this beach for a few weeks. So where are you off too next after this? Yeah? Good questions. So interestingly, a big news in in the last a few days. It's definitely Shanhai opening up. So my original destination for my flight in was Shanghai, and I feel like that that's a that's a that's a circle that I need to complete making Shanghai my final destination. We have a lot of companies that we typically visit in Shanaha, friends in Shaha, family in Shanghai. So yeah, I would like to make Shanghai my my final destination if I can. But still I have to look at the hitting rules. Yeah. So it looks like Shanghai is starting to open up and maybe in the next next week or so you'll be able to actually get in and travel around and see Shanghai. Is that is that the hope? Yeah, So June one is the date of open up. Um, so we're gonna have to see, probably for the first day a few days, how the how the process is going to be. I imagine it's going to be a step by step process. Um might not open up in immediately. Um, maybe some people will still not be able to move freely, maybe transportation will still be restricted. Um, so we'll have to see. But um yeah, I'm thinking that. Uh yeah, I have things to do there once in one of the big teams in the US over the last couple of years for investors has been you know, when to buy the opening up stocks, when to buy the stay at home stocks. I'm curious how your strategy, you know, are you more of a buy and hold long term type of strategy or would you try to sort of find the beneficiary areas of Shanghai opening up that we're being in lockdown? How how are you viewing, you know, the the lockdowns and the reopenings as sort of a fund manager, is it is it worth trying to chase the opening up and closing down stocks or do you try to look past that and just look towards the future. Yeah? Sure, I think people have tried to trade around that, but since there were there there were some false hope in the beginning of the year, so that that strategy hasn't really been so successful. In China's case, we we are trying to stick to the longer term. Um, you know, uh themes if you will, like the you know, the manufacturing, the localization trend, the consumer brands, those kind of things that we pay attention to and try to you know, stay with those companies. Well, it's been quite an adventure for you and uh, for listeners out there who want to read more, Wednesting has been writing a blog about her trip into COVID zero, China at Parting Lovener's website. I hope do you have some more posts coming up for us soon? Yes? So yeah, we published our first my first part of the journey, and uh, I hope on second part of the journey is going to be more exciting than the first one, where I will be sharing with our readers, you know, about my visits and trips around China, not just stuck in the hotel. I know, I imagine you got sick of the food, and I know you you did a lot of yoga to keep yourself saying. So that's a good tip if for anyone who YouTube YouTuber exercise sessions. Well, one thing, we have a tradition on this show where at the end we all discuss uh the craziest things we've seen in markets in the past week. So for your case, I want to hear the craziest story of your trip. What's the sort of most interesting, most wild thing that's happened to you during this trip. Well, Mike, I guess that has to be my ambulance right home between my face one and face too quarantine an ambulance right home, right home, and you weren't sick. Though you weren't sick, right, it was just uh so between phase one and phase two, since I was moving from one city to another. After I landed to the second city, which is my hometown, registered well after you know, uh an hour long register register process. Actually they assigned me a vehicle which turned out to be an ambulance, and the driver just you know, took my luggage, took me to the ambulance. No siren luckily, but there was some uh laring, flashing lights. So what would have been an hour drive turned out to be twenty minutes. So I guess the regret that was that I just feel like I don't deserve all this care and all I don't deserve all this attention. You know that that would have been resources could have been spent elsewhere, and you know, I just wish that I don't have to to do another ambulance right anytime. But it's face some people right around town in a in a limo to flex. You know, you got your ambulance. I gave turn those sirens on it, like you said, you can cut the trip in half. So it's it's it's a good way to get around if you if you can do it, and you know you don't need it for uh, for medical reasons. That's a great story, though, I H, I don't know, I don't know if I'll ever if I could get an ambulance through Manhattan sometime, that would, uh, that would probably cut my commute in half. But you're right, we we got to save them for people that need it. Well, that's that's definitely the craziest story I've heard this week. But let me tell you about the craziest thing I saw in markets this week. Went saying, and I gotta say, I don't need an ambulance, but I got really bad poison ivy over the weekend doing yard work, So I think I do need this thing that I read about, And it's what it is. It's I believe it's the world's tallest ever bottle of whiskey, the largest ever bottle of whiskey. It is six ft tall bottle of Scotch whiskey, uh, distilled by McAllen in Scotland in in and the reason it qualifies for the show is it went up for sale and an auction so it's even giant bottles of whiskey have a market that all their own. Uh. And it was the auction house Lion and Turnbull. So when saying as as a financial analyst, I have an important question for you here. What do you think the world's largest bottle of whiskey? A six ft tall bottle of McCallan whiskey sold for an auction. No pressure, but your clients are gonna want you to get this one right. I'm going to just throw in my gas. I would say two thousand dollars, two thousand dollars one point three seven million. You can believe it. I wouldn't pay more than two hundred thousand. I'd have to taste it first, I think before I paid one point three million. No, one glass is more expensive than I thought. Well, once you enjoy that glass whiskey and uh, I hope you enjoy the rest of your trip and have a safe travels back to the United States. And we really appreciate you joining the show and tell us about your trip. Thank you, Mike, very nice talking to you. What goes up? We'll be back next week and so then you can find us on the Bloomberg terminal website and app, or wherever you get your podcasts. We love it if you took the time to eight and review the show on Apple Podcasts so more listeners can find us. And you can find us on Twitter. Follow me at reag Anonymous. Bildanna Hirich is at Bildanna Hirach. You can also follow Bloomberg Podcasts at podcasts. What Goes Up is produced by Stacy Wang. The head of Bloomberg podcast is francesco Leavie. Thanks for listening. To see you next time.