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Capturing Consumer-related
Opportunities
The continued rise of China’s middle class is leading
to increased sales of a wide range of consumer
goods and services, from cars and box office tickets
to healthcare products. CITIC has long been in the
consumer-facing businesses. Our bank offers financial
services to retail customers, and our insurance
company tailors products to consumers as well.
On the non-financial front, we have a publishing
business and also cater to the increasing desire of
consumers to travel. As we observe the continuing
growth of China’s consumer economy, Dah Chong
Hong represents a valuable platform for capitalising
on consumer trends.
Dah Chong Hong, a company listed in Hong Kong
with a history of nearly 70 years, distributes motor
vehicles and a host of consumer products, ranging
from frozen chicken to coffee beans and imported
packaged foods. The company operates across Asia
with a focus on Greater China. At the moment, the
profit contribution from mainland China is quite
small but has good potential for growth. Dah Chong
Hong’s purchase of Li & Fung’s consumer and
healthcare distribution business this year is a good
example of how we are deliberately deepening our
exposure to promising consumer growth areas. Dah
Chong Hong’s enlarged consumer products portfolio
will boast a range of leading food, personal care and
healthcare brands, giving it an immediate position in
Asia’s rapidly-growing healthcare market.
The Power of Data
As you know, I have faith in our conglomerate
business model as it provides diversification for our
long-term stability. To investors, one of the greatest
attractions of the CITIC platform is that our businesses
mirror the Chinese economy. How can we continue to
leverage this unique platform, particularly in today’s
era of big data?
Some may know that I am the president of the
International Go Federation. Go is a complex game
of strategy played in Asia for thousands of years.
The year 2016 was particularly interesting for Go
fans because a computer program called AlphaGo
beat one of the world’s best Go players. Although it
is common knowledge that machines can calculate
faster than even the smartest humans, it was still a
big surprise that AlphaGo was able to formulate such
strong playing strategies, spot patterns and make
winning moves.
There are two key reasons why AlphaGo was able to
accomplish what we thought would not be possible
for years to come. First, AlphaGo collected and tested
a huge number of Go moves and, second, it was
backed by a farsighted company — Google. Both the
data and the supporting platform were responsible
for AlphaGo’s subsequent success.
I can see parallels with CITIC. Through our diversified
businesses, we already have an impressive data bank
with a huge amount of information about customers
and economic trends. The CITIC platform is essentially
an incubator for our franchises, not unlike Google’s
backing of AlphaGo. Some investors are not yet
convinced of the intrinsic value of our platform and
view us simply as a collection of subsidiaries. Yet, if all
of our data points can be better and more effectively
connected, I believe we will have much greater
insights and opportunities as well as the ability
to make our businesses more efficient. These can
transform CITIC into an enterprise whose value is not
merely its access to capital, nor one based on a well-
established brand, but an ecosystem that will touch
almost every aspect of China’s market economy and
beyond.
These ideas have potential, and I have gathered a
group of experts to further explore the practical
applications of the data we have collected.
CITIC LIMITED
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