Relations between the United States and China have been tumultuous since the 20th Century, and the worldwide coronavirus epidemic only amplified things.
Of course, geopolitical tensions don’t mean that American and Chinese citizens and businesses don’t get along. It’s quite the opposite – China is the largest trading partner of the U.S., with over $730 billion in goods traded each year. Similarly, investing in Chinese stocks that could be the next big thing is a great idea for savvy investors.
Foreign investment can help protect your assets in the event other countries recover faster from the negative economic effects of the global shutdown.
Each of these companies is based in China but trades on a U.S. market like NASDAQ or the NYSE.
1. Viomi Technology Co Ltd (VIOT)
There are over 620 IoT platforms competing for $1.1 trillion in annual revenue projected to be spent on the Internet of Things industry by 2023.
Several of them are collectively owned subsidiaries of Viomi, which is a holding company heavily focused specifically on the Chinese IoT market.
It’s also pushing for complementary consumables to create paid subscription model pricing for water heaters, dispensers, and purifiers, refrigerators, fans, washing machines, and more.
Coronavirus hit Viomi like any other business, leaving some analysts wondering whether it’s a bargain price for a company that’s in the right place at the right time.
The push for work-from-home and economic turmoil is only creating an ideal environment for IoT to help in both consumer and industrial use cases.
Still, some hedge funds are dumping Viomi along with other Chinese holdings in the face of an escalating U.S.-China trade war.
Viomi is unlikely to have the problems tech companies like Huawei or TikTok are facing in foreign countries, like the European Union and India. It’s focused mostly on its local Chinese market, so it should be able to successfully navigate the next decade.
However, this lack of exposure in other markets also serves to limit its potential growth.
2. Joyy Inc. (YY)
These users were once gamers, but voice chat has been pretty standard in games made over the past 10 years. In that time, the community shifted toward online learning and private meetings with celebrities and fans.
Think of it as Zoom but in China, except it didn’t receive the same massive influx of users during the coronavirus pandemic and global lockdowns.
In fact, the company is competing on every end, including content creation (through its iQiyi platform, a Chinese Netflix competitor) and several video social media platforms, called Likee and Bigo, whose $1.45 billion acquisition gave it broader reach in Singapore.
However, it’s expanding at a time when China is cracking down on video content on social networks.
Chinese censorship is sure to remain a threat, as is the company’s lack of geographic diversification. Its offerings are all focused in the Southeast Asia market, where often stringent government regulation and often-changing consumer sentiment makes monetization difficult.
Still, Joyy’s broad range of subsidiaries and brands keeps it well armed in the ever-changing market.
3. Bilibili Inc (BILI)
Bilibili was launched in 2010 By Xu Yi, an AcFun user who created a video-sharing platform for the same fandoms of anime, manga, and more.
Its most popular feature was the ability for people to watch videos together and comment in the form of moving subtitles.
This gave it an element of fun that landed it some lucrative anime licensing deals, which inevitably led to Sony Corporation of America buying a nearly 5% stake in the company for $400 million in April 2020, giving it an $8 billion valuation.
The community continues to grow, and its highly active members are attractive to major advertisers around the world. Major advertising partners over the past decade have included Durex, Taobao, and Xiaomi.
The company is also heavily invested in affiliate marketing and other forms of online ads across all its platforms. Bilibili is not just curating content – it’s growing fandoms of its own through original intellectual properties, including games, videos, and more.
It has a variety of subsidiary companies in its group that push out new content, which makes it a competitor to the very fandoms it was created to support.
Of course, that also means its digital archive of content was in high demand when widescale quarantines hit, and the company’s stock price has been soaring while the rest of the economy suffers. The question isn’t whether Bilibili is succeeding (it is) but where the inevitable roof is in its growth.
4. Huya Inc (HUYA)
Digging deeper into gaming, esports is a lucrative market, raking in over $1.1 billion in annual revenues in 2020.
One company making a sustainable killing in this niche is Huya, which competes (and arguably wins) with DouYu. Each company serves the esports infrastructure, which includes internet cafes, home users, streamers, and more – consider them to be in competition for the title of “Chinese Twitch.”
Like Twitch, the company owes some of its success to the backing of a large technology giant in the form of Tencent.
It was initially developed as a subsidiary of Joyy before its highly profitable model started drawing more mainstream attention.
China’s gaming market is a juggernaut, with an expected compound annual growth rate of 34%, but the company is expanding even further past it into livestreaming content, video chats, and more.
The company took a hit from coronavirus, but its focused in a market that shows no sign of slowing. This could mean the stock is a great price for lucky investors who buy in right now.
But that means it’ll need to successfully compete with other video game livestreaming options coming from China, all of which are ultimately being compared to American competitors like Twitch, YouTube, and Facebook Live.
5. Weibo Corp (WB)
Despite stories of stringent censorship by China’s government, Weibo remains one of the most popular forums for people to express their opinions in real time on the stories of the day.
In fact, even U.S. President Donald Trump has his own fan club on the platform, due to his very public battles with China’s ruling dynasties.
The company recently released $750 million of public notes that’s registered with both the U.S. and Chinese governments. Analysts have a mostly positive outlook for the company, even though it’s competing with the likes of Tencent Weibo, Baidu, and more.
Social media is a hot-button issue across the world, especially with issues of privacy and security. It’s unknown how Weibo will fare in the future if the carpet is pulled out from under it.
These are far from the only stocks in China that are also available for U.S. investors. Keeping an eye on this market is useful for anybody looking to diversify beyond our shores into foreign markets. Just be sure to perform due diligence before investing anywhere.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.