Like many American investors, I have been trying to expand my circle of competence to the point where I can evaluate and potentially participate in opportunities in China. The growth patterns in China have been widely reported and there may be elements of hype associated with some Chinese investment strategies. However, the importance of the Chinese economy over the next century simply cannot be ignored.
From a value investing perspective, the toolkit that works well in the United States should theoretically work equally well in foreign countries assuming equivalent access to information and reliable markets. Gaining adequate familiarity with a society and culture vastly different from the United States is perhaps the most daunting part of the process for American investors.
Caijing magazine has proven to be an interesting source of information on the Chinese business and economic climate. I first learned about Caijing earlier this month while reading an article about a series of resignations at the magazine. In addition to the English language website, Caijing provides an international newsletter free of charge. Over the past several days, I have received a number of interesting reports via email with links back to the English language website.
My interest in China was sparked by Berkshire Hathaway’s investment in BYD. Over the past several months, a number of articles related to BYD’s electric car initiatives have appeared on The Rational Walk. While Charlie Munger and David Sokol have been more heavily involved in the BYD investment than Warren Buffett, it is interesting to note that Mr. Buffett traveled to China several years ago. It is possible that this first hand exposure to Chinese society and culture may have helped him to gain confidence with the idea of committing funds to a Chinese investment.
While reading about China through news articles will not provide the level of exposure of firsthand experience, it is a good start for American investors who are interested in long term Chinese investment opportunities. However, I suspect that I will not be comfortable enough to commit funds to Chinese investment opportunities prior to visiting the country and learning about the business and investment climate directly.