This time, when you really pull it, you can relax, and the buy order has been executed. Hello, Netrend family. I'm the head of the media department, Choi Won-chun. Today, the domestic stock market has closed, and now it's time to study foreign stock investments. I will study investing comfortably in China. We have Director Kim Ki-ho from Inves Asset Management with us after a long time. Hello. Yes, hello. It's been a month since we last met. Yes, it's been a month. How have you been in the past month? The weather is getting warmer now. Yes, when I started, it was still cool, but the weather has gotten much heavier. Yes, these days, with the back and forth in China, there are some frustrating days. Right, I understand. So, we will study a bit about investing in Chinese stocks comfortably, as you mentioned.

Recently, there have been some fluctuations in the Chinese market, and it seems to be a bit bearish with some manipulation. Today, the Chinese market did not have a holiday record again. It was yesterday. Yesterday, the Chinese market had a holiday record, and today there was some volatility. Could you first explain the trend in the Chinese market? I see on the screen that you are going to talk about the Chinese college entrance exam first. Yes, that's correct. So, yesterday, China had a holiday break, and this time it coincided with the college entrance exam. In Korea, the college entrance exam is in November, but in China, it is in June because the school year starts in September in China. So, they take the exam in June, then start school in September. This time, Kuaishou, with the largest number of test-takers ever.

I recorded it. In Jeongguk, now 13.4 million people took the exam. If you look at the photo here, you might feel that it's over. The students who happily came out seem to be unfolding a bright future, but it's not that bright after all. Because for these students, in the case of Korea, it's not that difficult to get into college if they take the college entrance exam. However, in the case of China, it seems that getting into college itself is not that difficult. But in the case of China, the probability of entering college in the 90s is only one out of two. Yes, that's right. And in a sense, getting into college within the top 55 or 52 is only about 2%. Because the population is large, is that so? That's right. In Korea, if you have a top 2% grade, you can get into a top-tier university.

It's about the sexualities that can enter. In China, now only the top 50 universities can enter. And if I may talk a bit about the somewhat unequal aspects of Chinese society, in China, depending on the area you were born in, your household registration is determined. And based on that registration, there is a quota system when going to university later on. So, for example, if you were born in Beijing, it's very advantageous because Beijing is allocated a large quota. For instance, to enter the top 50 universities, you need to be within the top 2% nationwide, but in Beijing, you can enter as long as you are within the top 10%. However, on the other hand, if you live in a slightly remote area or in a densely populated area, people there have a better chance than me to enter. So basically, depending on the area where you were born.

Therefore, in a way, it can be said that fate is somewhat predetermined. I don't really understand why such a system was established, but I think it might be because there is a large population in the middle, so they tried to control regions to some extent. This doesn't just end here; in fact, later on, when buying a house, if you don't have your family register in that area, you cannot buy a house in that area. So, people born in certain areas buy houses there and become wealthy. Because real estate prices in major cities, including Seoul, are rising at the fastest pace and are unlikely to drop anytime soon. However, in aging cities in rural areas, the population is decreasing. People in those areas cannot afford to invest in major cities, so there is a significant regional inequality.

It seems like such a system that could deepen the imbalance, Chinese people would be very dissatisfied, but they are a patient nation. Yes, they are a patient nation, full of hope, and they are a nation that copes accordingly. Therefore, they have various measures in place. For example, there are even brokers who arrange these things. So, that's why... well, I brought a photo to show how intense the competition is in Chinese society and how hard they work. Yes, earlier, before the broadcast, we briefly talked about it. I was born in 1971, part of the second baby boom generation, the generation centered around education. At that time, when I took the college entrance exam, 0.5 million people took the exam, which was the largest ever. However, now, you mentioned that there are 1342 people, which is the largest ever in China. Isn't it about 15 times larger than the college entrance exam in Korea?

It's about 15 times if we take the population of our country, which is 50 million, and multiply it by 15, it's almost similar to China's population. If we take 15 times, it slightly decreases, but now China has around 1.4 billion. Yes, the reason is that the ratio is much higher. That's right. The ratio of test takers to the population structure is much higher. Also, in China, there are various factors. For example, when entering high school, you have to take exams. Yes, the structure is such that you have to take exams to enter middle school and high school, so it's a bit filtered. That's how these numbers come out. I recently came across news that around 250,000 babies are born in Korea. No, not 53 years ago, 53 years ago, about 20 years ago, around 900,000 babies were born each year, took the exam. So roughly 900,000.

In the past, around one million people were born in our country. However, now only 250,000 people are born, and in 30 years, the population has decreased by one chunk. So, do you think China is currently facing a low birth rate issue? It could be seen as the peak of the population, right? In fact, the population is gradually decreasing, and the birth rate is dropping as fast as in our country. However, due to strong internal competitiveness, the competition for the college entrance exam is intense. We need to understand this point. Now, I would like to ask about China. It has been said that China is doing very well, but recently, there has been a bit of relaxation in overall emphasis.

Simply put, because there was a steep rise at the beginning of the year, naturally, people are wondering whether it is a kind of pause or if there is a slight downturn in the economic uptrend. Overall, in fact, from February to May, there was a significant increase, especially at the beginning of the year. Suddenly, it rose very steeply for three consecutive months. At this point, there may be forces looking to realize profits. Overall, there was a high level of optimism about the economy, which has now decreased. Various indicators are conflicting. So, when one positive thing comes out, another negative one follows. As a result, nowadays, people seem to be more cautious and overall trading volume has also decreased significantly.

Overall, you can consider it to be in a relatively stable state. Last month, both Hong Kong and mainland China experienced a slight decline. If you look at the chart on the right, the Chinese company index in Hong Kong dropped by about 3%, and then the CSI 300 index in the mainland dropped by about 2.5%. Especially nowadays, the trend is somewhat similar to the beginning of the year, where growth and small-cap stocks experienced a significant decline, followed by a sharp rebound. However, with a slight return of risk aversion, small and growth stocks are showing a relatively larger weakness again. Yes, individual investors are facing a somewhat challenging situation.

Recently, there seems to be some movement in the Chinese stock market. In terms of the fund flow, Hong Kong has been consistently receiving inflows. This was mentioned for the next week. Should we listen to the explanation once? So, first, if you look at the middle chart, the red line represents funds flowing from foreigners into the mainland, while the blue line represents funds flowing from foreigners into the mainland, right? The orange line represents the trend of mainlanders buying Hong Kong stocks. So, you can see that the funds flowing into Hong Kong are steadily increasing. On the other hand, the inflow of funds from foreigners into the mainland seems to be a bit sluggish. Therefore, the current situation indicates that the fund flow towards Hong Kong is more favorable.

The reason why it continues to perform like that is because fundamentally, Hong Kong stocks are a bit cheaper in terms of valuation compared to the mainland, especially when you compare the prices of stocks listed in both Hong Kong and the mainland. Hong Kong still has a significant discount. In such a situation, even now, when investors from Hong Kong invest in Hong Kong, they receive a dividend tax reduction. With such a favorable policy, funds continue to flow into Hong Kong, which is why Hong Kong is now better able to defend itself, and in the mainland, although there are foreign investors coming in, there is not as strong buying pressure as before, so it is in a somewhat stagnant state. This is how you should see it. The dividend tax reduction policy is quite advantageous. Understood.

High dividend stocks are showing some strength. What kind of words are these? Now, let's talk about the stocks. About six or seven companies in China were mentioned for a medium to long-term portfolio. Even though they are good companies, they can't always perform well in recent market manipulation conditions, right? How are they these days? So, last time I mentioned them, I felt a bit burdened because the returns were too high and they had risen too much. Although I said they were good for the medium to long term, with the recent sharp rise, it might be a bit burdensome to enter now. Fortunately, they have been adjusted a bit last month, and there have been several issues during that time. In fact, Maui, for example, has decreased by about 7% in a month.

I've lost a bit of weight, and if you count up until today, I've lost more. I lost more weight today. The stock price hasn't been good recently, right? There's a bit of a speculative aspect to Maotai's stock, isn't there? Yes, there is that aspect. Recently, in May and June, Maotai's stock price has actually been doing quite well, but the thing is, Maotai's stock price tends to fluctuate depending on liquor prices. So, liquor prices have been dropping a lot recently, more than expected, and as a result, Maotai's stock price has also declined. Yes, yes, yes, that's right. So, in the case of Maotai's stock, it dropped about 3% from here today, and oh, about 10% in total. So, it has dropped to that level by today's closing price, reaching a level close to the previous decline.

I think you should watch a little something here now, and if it goes a little faster, you can see it as an opportunity to buy. Yes, companies like Tencent were fine, just holding up well. Oh, especially without any issues, they just held up well. As for CATL, there have been some recent issues. For example, in the U.S. Congress, there was a regulation proposal like Let's not import C batteries anymore. It seems like we need to watch out for these issues. It was just proposed in the House, not fully enacted into law. So, the enforcement decree hasn't come out yet. But the atmosphere seems a bit tense right now. Yes, that's right. So, it seems like we need to keep an eye on these issues. There have been a few private stocks among Chinese stocks that have been somewhat...

Stocks were fine, but some stocks have missing parts, so in these areas, there needs to be some risk management. You need to observe from the risk management window. Yes, other stocks like Puyao Glass have undergone some adjustments. Considering that the stock prices have increased significantly for a while, the valuation process is normalizing. Macy's, for instance, is a similar case. Therefore, from a valuation perspective, it has become more attractive. Also, last week, the two stocks introduced last month, such as Syrup and China Mobile, have shown a slight rebound. However, SenNa and CATL are still recording positive annual returns.

In cases like Maid, the associated profitability is quite high, and even in recent price manipulation processes, there are some steady trends such as the top unemployment difference in companies like 10 Cent. This can be seen in a way that, by slightly, skillfully utilizing price manipulation, you can buy at a low point and provide good selling opportunities 6 months or 1 year later. From your perspective, among these six stocks, which stock do you think we should keep an eye on now? Personally, I think about Maota because when the price drops in May or June, isn't it a good time to buy, and when the price rises, it will rise again, right? If you look at the history, it has been like this every time there has been a crisis. Prices drop, and then they rise again.

It was supposed to end there, but in the end, it kept bouncing back up. Yes, there is a lot of history, so actually, when it was pulled up as a potential here, now Maotai seems to have a bit of resilience. Yes, and if it drops further from there, it will actually be a very good buying opportunity. So, Maotai has fallen until today, the price has dropped about 25 times. But if it drops to 20 times, wouldn't that be a very good buying point? That's what I think. Yes, I see. I understand. Well then, I looked into the current situation of the mid- to long-term portfolio, and on the next page, it says China is in the middle of a war. You have prepared some data for that. What does that mean? On the left, I brought a chart. Do you know what this picture is on the left?

What is the chart? What is this picture? I have a bit of presbyopia, so the number is 3,000 something, 3,501. Is this possibly the Shanghai Composite Index in China? If you look at the chart, it sharply rose from 2,567 in 2007, breaking through 3,000, and has been fluctuating around 3,000 for a long time. So, in China, we have been fighting a defense battle around the 3,000 mark for the 15th year. We talk about this, but we don't know when it will end, and it has been continuing until now, right? It's still fluctuating around the 3,000 mark these days, isn't it? Yes. So, this is a long-term battle, and if you look on the right, what kind of battle is happening these days?

When you do it these days, nowadays, the economy is tough, and competition is fierce, so price wars are happening. Therefore, they are now destroying their own brand image by slashing prices with a stick. It's a competitive competition, but in order to survive and win in the market, there is no choice but to engage in a price war. So, I would like to talk about this trend of fierce competition today by giving you a few examples. For example, if you study hard, then let's start with the first example, Porsche. Yes, Porsche is also reducing prices now. Yes, Porsche has actually been greatly loved in the Chinese market for a long time, made a lot of money, and was doing very well. China is the world's largest paradoxical market, especially for German cars, it is truly the best.

China was Porsche's largest market to the extent that they sold one car, which was the best market until 2022. It was rapidly growing and very good. Even until the first quarter of last year, the sales increased by 20%. However, this year, suddenly in the first quarter, the sales dropped by more than 20%. If you look at the picture, it may be related to the recently released products. Last time, we looked at a picture together. The design looks a bit similar to Chanel. So, when you look at the picture on the left, it's hard to distinguish. Actually, what is this? Anyway, one of the reasons why Porsche, which was very popular in China, has recently declined is due to the introduction of the largest park, which is actually Taikan. Taikan, an electric car, has been a big hit for Porsche for a long time.

As for the models that were popular, now, there are many remaining types. The most representative one is the Taycan, followed by what? Cayenne, Macan, and those kinds. They used to be very effective. China is the fastest-growing market for electric cars, isn't it? So, these days, starting with Xiaomi, cost-effective models continue to come out. Unlike before, Taycan hasn't been updated much. Especially, in terms of mechanical performance, of course, it cannot catch up with Porsche. But in reality, when most people drive, they mostly drive in the city, right? In that case, what's important is the interior, convenience, and those things. In terms of these electronic devices, like smart city functions, it can't keep up, so the sales volume has dropped sharply, and compared to last year, Taycan has dropped by more than half. That's how it goes.

As Taikan is now offering discounts, what will the cost be in China? Probably around 130 million won for the base model. Currently, they are offering about a 5,000 won discount, so if they reduce nearly 50 million won from 130 million won, it will be around 89 million won, right? So, they are offering a discount equivalent to the value of a small car. Porsche is said to be feeling a lot of crisis in Korea. It would be nice if they did something like that. We don't have such competitors now, right? Because we don't have competitors, many things like this are happening in various fields in China. Not only Porsche, but yes. Therefore, now, in order to maintain competitiveness in the Chinese market, we need to crush our pride, right? That's the price.

Competitiveness is currently a priority. It seems that even Porsche is thinking about it now. Yes, that's right. Also, the chairman must do live broadcasts on the second page. It's like shortening live broadcasts. Yes, the chairman must definitely do broadcasts like this. Nowadays, it's an unavoidable trend to survive. But, if the chairman is not very entertaining and not good at it, I don't know. However, this time, the chairman is doing very well and adding some fun. The chairman, who has a 20 trillion won fortune, is currently working hard on live broadcasting. He did it last month. Last month, he did a live broadcast from top to bottom, from Xiaomi to autonomous driving. But when he did this, 39 million people watched it. It was done for an hour and a half. Yes, it was not very interesting to drive a car for three hours.

It seemed like it wouldn't be fun, but of course, going in and out, all combined, all combined, so we tested it, and a lot of people really enjoyed it. Now, in between, there were various small talk and occasionally bad people appeared, you know, suddenly cutting in at high speed, and so on. Then, we are curious about the chairman's reaction, right? Whether he curses or not, there were also incidents like that, but anyway, it ended successfully. During the three and a half hours, almost autonomously going, and then showing the performance once again, so it ended very successfully. Well, anyway, these things are quite fierce, even the chairman must do live broadcasts in this world. I would like to say this, yes. And these days, so.

These days, because they do a lot of live broadcasts, the popularity of Ray Yu has increased significantly. Yes, yes, I'm not sure if Ray Yu is a YouTuber or not. That's right. So, in China, they are still doing a program called I Am a Singer, which is a direct copy of the one in Korea. In Korea, it ended up to season 3 ten years ago, but in China, they are still doing it. So, there were high expectations for this season. After a long time, they brought up the issue again, saying that Bruno Mars is coming, BLACKPINK is coming, and so on, raising expectations. However, none of them appeared, and many people were very disappointed. So, what should we do? In this way, people were hoping for someone new to come out. But Chairman Shamie Ray Zen took first place. However, this person has one flaw. Later, if you are bored, please search on YouTube for Ray Zen from before.

When this person first launched a test in India, they should have done it in English, but this person graduated from a prestigious university in China, so their English is very limited. Because of this, they speak English in a somewhat mechanical way. So, the most famous part of this person now is when they do IOK. But that's like a rough clip, about one minute long, where they keep speaking English continuously, which is hilarious. People made audio clips out of that and it's been 10 years now. People still have that, so now I want to send this person to a gas station. So, now it's the first round of voting. Yes, I am a singer. It feels like distorting the true spirit of I am a singer a bit, but it seems like they are not good at singing. I haven't heard them sing. Just that. Okay, got it. Next, now the third example is.

Is Starbucks in China also implementing some discount policies now? Yes, Starbucks is also continuously distributing coupons. When I was in the situation, they were not giving out as many coupons or providing discounts as dramatically as they are now. The discount I received was only around 10% off at IKEA, or if you eat a set meal in the morning, you get around a 15% discount. If you look now, for certain beverages like a latte or a frappuccino, it's either around 2,000 won cheaper than in Korea, almost half the price. There are promotions like this, and they also directly give discounts. So, if you eat three times, you get a 40% to 50% discount, and after a certain time, you get a 30% discount. They are currently distributing many coupons like this.

Even Porsche, Starbucks, and other companies like that in Korea are implementing discount policies that we have never heard of before. Right now, in China, they are actively pursuing similar strategies. It feels like these companies are somewhat ahead of the curve. Anyway, next, the dynamics of the e-commerce market are changing. Currently, companies like Alibaba are struggling due to fierce competition. The consumer behavior has significantly shifted, and the market that used to be dominated by Alibaba is no longer guaranteed to remain stable. In just five years, the market has completely overturned.

At the center of this is now a well-known company called Pinduoduo. And on TikTok, as electronic commerce is rising, it is also explosively growing. As a result, Alibaba's market share is now dropping from 70% to 40%. In this situation, it seems like something needs to be done. So, this kind of situation is unfolding. Therefore, I would like to talk about how Alibaba is being overturned by Pinduoduo. How did they achieve such growth and what is happening? Let me explain. So, Pinduoduo is a company that is well known in Korea as a platform called Teuwora. It is a company in China called Pinduoduo for domestic platforms. So, I will explain a little bit about selling products and prices on the shopping mall there.

I brought this. You might not see the screen very well, but the one on the far left is a car vacuum cleaner. This vacuum cleaner has a very narrow suction port that can now suck up even very fine crevices. It's priced at 8th place, about 4th place, so it's around 1,500 won, maybe 2,000 won. Well, most of the products they sell are in that price range, like around 3,000 to 4,000 won. There aren't many products that go beyond that price range. The products they promote at the forefront are like this. How do they come out at that price? Most of them are brought directly from the factory. Yes, a lot of liquidation items are coming from the factory, and if you just buy those, you actually have to pay a little more than me. So, how do they do it? If a few people gather like this, I'll give you that price. So, send invitations to your friends.

Let's say we buy this together, collecting it like that from users, it's a very good strategy to increase from users. So, if you look at other products together, you might feel a bit of a crisis product vibe. So, when you look at things like dental floss, for example, you get 1 for 500 won. Yes, one for 500 won, and on the right side, toilet paper comes in 60 packs, giving you 60 packs. So, normally, if you buy 60 of them in Korea, you would pay around 1,000 won. Now, if you buy 60 packs, it would be 500 won for toilet paper and 1,000 won for the dental floss. But here, they sell 60 packs of toilet paper for 1,000 won. Yes, that's right. So, the prices that come out are prices that we can't raise. So, it's a platform like that. So, what they sell at Daiso, they are selling it at almost one-fifth of the price online. Yes, yes, and what's even more fatal is that everything is free shipping. Yes, yes, so if you buy in Korea,

The delivery fee is strange, 3,000 won, 2,500 won. If you live in Korea, you would be used to paying those delivery fees. So, the delivery fee is 3,000 won. However, when selling a 1,000 won product, the delivery fee is free. You might wonder how this is possible, but it's because of China's highly efficient logistics system. Oh, right. But initially, people didn't react strongly to this. Especially people living in big cities thought, Oh, I can't use that. I can't use these kinds of items. There were even many parody videos. For example, if you bought slippers and wore them, the black color from the slippers would rub off on your feet, and there were parody videos like that.

The changing trend, how has it changed? Before discussing that, let me talk about something different. First of all, the market capitalization of Pinduoduo has been growing like this, surpassing Alibaba now. Also, the target audience is quite different. In the case of other shopping platforms like Alibaba, in the past, there were products from small and medium-sized companies coming in, and their stores were selling diligently. Now, there are Tabara shopping malls, then Tmall has brand shopping malls. But the proportion of brand shopping malls is gradually increasing. As consumption is becoming more upscale, brands are coming in to sell a lot here. However, Pinduoduo is moving in a direction where it is thoroughly going towards factories or small and medium-sized shops.

So, the target is a bit different. Alibaba, for example, is relatively high-priced, but Pinduoduo strictly targets low prices. Their focuses are slightly different. For example, in the case of Alibaba, the main source of revenue is actually the sellers who spend money on advertising. Of course, there are also transaction fees, but earning revenue through advertising is the main part. Therefore, Alibaba's main customers are more sellers rather than consumers. However, for Pinduoduo, it's also the same, but Pinduoduo prioritizes consumers with low prices. They went out with that strategy, so there is a bit of a difference. Going out with that strategy, at first, there were some troubles, but gradually.

Especially, we timed that period well. With the huge adversity of the coronavirus hitting, causing an economic downturn, demand for products increased, leading to a gradual rise. To explain a bit more in detail, selling only low-priced products makes it difficult to make a significant profit margin. Obviously, there must have been some customers. At first, people living in big cities completely ignored this shopping mall, so we had to somehow attract them to consume. What strategy did we use? Well, we invested some money and implemented subsidy policies to supply Apple's iPhones at the lowest price. Yes, but the interesting thing is that Model 5, which is the most popular, has never been traded before. So, Apple's sales channel...

There are several places, right? There will be the official store, or they can make a contract with other e-commerce shopping malls to sell there. Then, they could also sell through the telecommunications company. Or there might be wholesalers below that. But if they attack a certain point, they target the small retailers under the wholesalers. So, after some time, these retailers may feel burdened with selling the products, especially when it's hard to restock after some time. Therefore, they give subsidies and clear out all the products there, selling them on the internet at the lowest price to capture consumers' interest. Originally, Apple used to sell everything wholesale here.

Pindodo said you can buy it at the lowest price on the internet. So, when this hit, the influx increased once, and then came out, now, Maotai. Yes, Maotai was at its peak at that time, running on the main street. You could buy one bottle for 600,000 won, but if you go to Pindodo, you can buy it for around 400,000 won. As they started to pull some of these products, brands used to ignore and avoid entering this platform called Pindodo. Because the low-priced shopping malls were selling products, they thought, If we enter here, it will only damage our brand image, and there is nothing better. However, seeing that things were selling here, they thought, Let's consider it too. So, little by little, brands started to open up their minds. But for brands that include tints, there is a bit of a strategy.

It's different because Pinodo itself is not a low-cost shopping mall, so it serves as a channel for disposing of February products. For example, anyway, clothing products for February are sold at very cheap prices in other online or offline shopping malls, right? So, instead of making it difficult, let's just give it to Pinodo. With nearly 700 to 800 million users, if we just give it here and sell it, we would be much more comfortable. Therefore, as more and more cases of entering in this way occur, more and more brands are coming in, and with the increase in the number of users, other small and medium-sized merchants who want to enter are also coming in. This way, it has grown significantly, right?

Next, looking at the data, there is information that Pinduoduo has finally surpassed Alibaba's quarterly operating profit. When I saw that they were selling so much and wondered how much profit they would make, they actually surpassed Alibaba's operating profit. Yes, so Pinduoduo is really impressive with just a few employees. Yes, as far as I know, Alibaba already has around 100,000 employees, but Pinduoduo has only about 10,000 employees. It's just about 1/10th in terms of size. With such a small workforce, they focus on maximizing efficiency. In fact, most of the stores on their platform operate independently. Pinduoduo mainly focuses on sourcing products and heavily invests in advertising to attract users. In the early days, around 2018 in China.

Back then, we could see Pinduoduo advertisements every day on Chinese state-run TV. By doing so, they raised brand awareness through advertising, attracted users, and in the last couple of years, they heavily advertised on Facebook or Instagram to attract international users. However, now the number of users has increased significantly, but the costs have drastically decreased. Now, they hardly use advertising much. As a result, with the efficiency greatly improved, they were able to generate such profits. Yes, that's right. Also, let me make a comment. It's a great company for consumers. I mentioned earlier that the shipping is free, and even recently, probably since last year, they have been selling products at very low prices.

Since it's a product, there may be some parts where the quality is not guaranteed, right? So if the product description in the advertisement here is very different from the actual product or if the quality is poor, you can get a refund right away without having to return the item. Oh really? Yes, there is such a policy. So, even though we sent out that cheap product for free, when you request a refund, you don't have to return it. But of course, if there are people without conscience, they will naturally raise a claim and there might be conflicts, but if that's not the case, it's designed to be handled that way. So, in terms of the company or the seller, isn't that a loss for the product? It could be seen as a confidence expression in the quality, or it could be considered a benefit for consumers. Oh, this is quite remarkable.

I also have a thought that it's not some kind of marketing. I didn't use Taewoo, even though I knew about it, but I have a thought that I should try using it once. For example, just for fun, if I buy it, when I see the Pin Do Do, I feel like suddenly I've become rich. Because when I see the price, even though it's not a large sum of money, I can get what I want. Right? If I just spend 10,000 won, I think, What is this? It feels like I'm saving a lot. Yes, I think I should try using it once. Okay, I got it. Then, now, Alibaba may not be the only one like that, right? What about the 88 VIP members? So, in the end, Alibaba kind of follows Pin Do Do's strategy. In fact, for example, in terms of return policies, within the discounted products,

I try to benchmark those things a bit, and now that prices have been falling so much, these days if you look at Alibaba Tower and Baorong Findo, it seems like they are checking each other's prices every hour. When the best price comes out from here, if you go in a bit, the prices are matched here. So, they are having this intense competition. However, Alibaba also has its own strengths. In the second-hand market, Alibaba is still the leader, so among them, there are benefits for VIP customers. This is somewhat similar to Amazon Prime. Yes, 88 VIP. So, Alibaba, now 88, in China, the number 8 is a very good number that brings in a lot of money. Alibaba also pronounces it as ba and pa the same way, so they do 88 VRP. What is this? 88 for a year.

If you pay less than 20,000 won, you can enjoy all the benefits here. What benefits are there? First of all, free delivery all year round for all products regardless of the number of orders. Moreover, return shipping is also unlimited and free. That's a huge advantage. Additionally, like Coupang Play, we also have various multimedia platforms such as Alibaba. For example, in China, we provide memberships for platforms like Netflix for free. Just that alone costs around 4,000 won per month. But we provide that for free, and also services like Melon in China are provided for free as well. Furthermore, for all branded products, there is almost a 5% additional discount.

And so, there are actually many very good benefits, so when I saw this package benefit, it seems to be almost like a 450,000 won benefit. For excellent customers, we can provide it for 20,000 won. So, for members, in fact, they are truly VIP customers. According to the stories of 88 VIP members, they tend to make about five times more purchases in a year than regular members. The ability to capture these customers is important, especially in times like these when the economy is not good. In fact, consumption is very polarized. In situations where income levels decrease, such as the middle class or somewhat lower class, consumption decreases. However, for high-income groups or wealthy people, it doesn't decrease significantly.

So, this part can actually be seen as a core point. Currently, the number of members is 35 million, and their retention rate is almost 90%. Therefore, by utilizing this pool well, Alibaba can ultimately revitalize itself. From this perspective, I believe that competition is really fierce. It may seem like a paradise for consumers, but for business owners, it is indeed a challenging situation. I wanted to share these thoughts. Shall I proceed? Then, I had a question I wanted to ask earlier. China, which places importance on control, is fiercely competing in a restricted market even within China, adjusting prices, involving global companies, and domestic companies in the competition.

Are they trying to be cautious? Is it because some growth momentum related to the Chinese economy or China is somewhat slowing down, and they are responding to it based on their intuitive feelings? Or was China previously showing intentions to stimulate the economy, but recently discussions about economic stimulus seem to have faded a bit? Is there no additional momentum for economic stimulus, or do you think there is a possibility for some revival in economic stimulus? First of all, economic stimulus will continue to be carried out cautiously. Ultimately, we need to increase fiscal spending. The key now is that in terms of interest rates, we need to look at the United States, so suddenly raising them may be a bit difficult, but we need to gradually increase fiscal spending. So far, we have been very cautious. Recently, a little bit...

There is some positive signal coming out, so that part will probably gradually improve. Recently, policies such as real estate have been significantly relaxed. In the past, to rescue struggling companies, real estate policies have been greatly relaxed. In cities like Shanghai and Beijing, there were many restrictions on real estate purchases. For example, interest rates have increased significantly, loans have been restricted, and even homeownership has been limited. These restrictions have been significantly lifted. So, if real estate policies start to have some effect in the market, money will start flowing, and if fiscal policy supports more, consumption will surely be stimulated.

One aspect is that the current savings rate in China is too high. Yes, the savings rate is at a historical level now. So, the economy that saves and does not spend that money is not good for the economy. It means there is uncertainty about the future predictions, and if that is resolved, things can get better. Therefore, we need to look at the path forward. Alright, I see. Then, the next investment theme is, first of all, stocks. Currently, Europe has started to lower interest rates, as well as Sweden and Switzerland have done so since March. Even the Federal Reserve may find it a bit challenging in July, but there is talk of the possibility of lowering interest rates starting from September. Therefore, dividend merits are likely to revive a bit ahead.

In the case of Hong Kong, you mentioned that they are now considering reducing dividend taxes to attract some funds. It seems quite important. You seem to be asking about companies with high dividends among state-owned enterprises. Well, considering the current uncertain situation, state-owned enterprises are considered as stable investments because they have steady profits without much competition. Recently, demand for such companies has increased. Also, since last year, there have been discussions about reforming state-owned enterprises. In the past, the profit gap between private companies and state-owned enterprises was significant. State-owned enterprises used to have very good profit margins, but there was a huge gap compared to private companies because state-owned enterprises had no growth.

There was no development, especially because there were too many iron rice bowls, efficiency was low. That's how it was, but now they are signing structural contracts. And now, they are saying, Oh, we will use the stock price index as the key performance indicator for the head of the public enterprise. They are really saying that. So, now even public enterprises need to work hard. They need to work hard, increase dividends, and so on. Because of this, many people are rushing in this direction. In the past, it wasn't fun. Those companies that extract oil, banks, and resource companies, when we looked at them before, they weren't interesting. Traditional industrial companies like these were considered boring because internet companies were growing rapidly. But now, when we look at them, they are stable and making money well. As a result, suddenly money is starting to flow back. Especially, as you mentioned, now it's low interest rates.

So, in China, the current 10-year government bond yield is only about 2.5%. So, it's almost 2% lower than in the United States, a historically low situation. Because of this extremely low situation, it's natural to prefer dividend stocks, especially for those who have surplus funds like insurance companies or banks that need to manage their excess funds. In the past, when the real estate market was booming, people used to invest in real estate trust funds that offered around 10% returns per year. But now, as things have cooled down, people are looking for where to invest. Dividend stocks, especially those from old industries, are considered safe bets that won't go under. That's why money is flowing in this direction, providing stable profits. It's quite significant. Also, there's no need to worry about long-term investments. Even if stock prices drop, dividends will still be paid out. So, for that purpose, many people are turning to this option.

Now, high interest rates like in the old days are difficult due to global low growth in the future. It seems natural to turn to high dividends. Next, for companies expanding overseas, in Japan, after the lost 30 years, it's more about export companies than domestic ones. I heard that there are quite a few success stories of Chinese companies that have expanded overseas. For example, companies like Xiaomi in the smartphone industry are doing well. Also, home appliance companies are actively expanding, and in the telecommunications sector, they are showing strong competitiveness. Solar energy is very strong, but lately, due to the economic downturn, it has weakened a lot. China has areas where they excel, right?

So, in the case of overseas expansion, now the two biggest investment themes recently mentioned are actually high-dividend domestic companies and overseas expansion companies. The reason for this is, as you saw earlier, domestic competition is too fierce. That's right. In this way, it's difficult to make money by cutting prices so much domestically. In fact, when we look at those products, they are so cheap that people wonder why they don't buy them, right? Consequently, the need to go abroad has emerged, and sectors that have risen significantly as themes include sectors like housing that I mentioned last time. They showed a very strong trend. Especially companies like Maydy, which are not well-known domestically, but companies like Robolock are doing well. They are companies that make robot vacuum cleaners, probably with the most advanced technology in the world.

It's about the companies that have a bit stood out in terms of that. So, in those aspects, people somewhat, how should I say, acknowledge it. Nowadays, there's a lot of talk about Japan. Also, in China, why is that? Because Japan, from about 30 years ago when they entered a low-growth phase, faced very difficult economic conditions. To overcome this, Japan, after the Plaza Accord, with the exchange rate being too high and all, started to expand overseas. They invested directly, built factories, produced, and sold abroad, greatly expanding their overseas market and significantly increasing exports. If you look at the stock performance, companies that focused only on the domestic market and those that shifted to export-oriented ones show a huge difference in stock performance.

During the period, in fact, domestic companies have only increased by about 100%, so the stock price has doubled. However, export-oriented companies have increased by about 800%, so the stock price has almost increased by nearly eight times. When we see cases like this, shouldn't China also go in this direction? Especially in the current situation where trade disputes are intensifying, domestic production and exports are difficult, and eventually, they have to establish production facilities locally, produce, employ, and sell locally. There are aspects like that, or various brands need to go out. So, if you look at the chart on the right, the orange line represents what we call overseas expansion companies, such as manufacturing companies. If you look at the profitability, it's very good. From around 2023, it has increased by almost 70%. Below, there are consumer companies that are expanding overseas, and they have also increased by nearly 40%. On the other hand, CSI.

In the case of the 300 index, it's negative. So, it's quite severe. In a way, it can be seen as a hot trend in the market, but looking at Japan's case, I think it might not be a trend that can last long. Yes, that's right. Well, today, I studied more vividly about the Chinese market. What I felt today is that, despite China's population of 1.5 billion, they compete fiercely with prices that we cannot see in Korea. Even though the population is 1.5 billion, there are many people who can afford to live like that. I was surprised by these aspects, and also, towards the end, I heard some thoughts like, However, companies with competitiveness survive and their stock prices rise no matter what. So, I got a glimpse of that. Today, let's talk comfortably about investing in Chinese stocks.

I had the pleasure of being with Director Kim Ki-ho of AJM's asset management today. Thank you very much. Thank you so much. Next month, I will promise you something special again. So, I will wrap up all the broadcasts of this trend today. Thank you for being with us today, and please join us at E-Trade tomorrow as well. Thank you. Please note that the investment information provided in this broadcast is for reference only. President Kang Heung-bo, Chief Choi Kang-cheon, Head Lee Han, and experts Kim Min-young do not make individual approaches such as phone calls or messages to individual investors. All payments are made only through the Trade Study site and do not accept deposits to separate accounts. Please be extra careful.

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