Columbia Threadneedle: Chinese New Year is a red-letter day even as tech marches on
Chinese New Year is a red-letter day even as tech marches on
Please find below a comment from Jin Xu, Asian Equities Portfolio Manager at Columbia Threadneedle Investments.
Technological developments are changing almost every facet of our lives – even how we celebrate this most traditional festival.
It is traditional at Chinese New Year to give children a red envelope of “lucky” money. By doing this, people hope to pass on a year of good fortune and blessings. Even though my family and I live in the UK, my wife and I still want our children to experience some of the traditional elements of Chinese culture, so we’re delighted to continue the practice. And thanks to technological developments our children can even receive them from relatives still living in Asia, only now they are “digital red envelopes”.
This is a perfect example of how tech advancements are playing out in China and, indeed, the rest of the world. The inexorable rise of smartphones over the past five years or so has changed the way businesses operate and consumers behave in almost all ways. And as 2020 gets underway we expect the emergence of 5G to be key in furthering these changes.
The launch of 4G around a decade or so ago saw the rise of new types of business which took advantage of the improved wireless coverage and better data transfer speeds: the likes of Google Maps and Uber were based on 4G smartphones and networks and inarguably changed the way we do things. We think that much like this, the launch of 5G will see equivalent new business opportunities emerge. In fact, 5G will offer an exponential increase in data transfer speeds, which could mean an exponential increase in new business opportunities.
Everything will be connected more easily with 5G, so we’re likely to see the rise of new applications in every industry from autos and consumer to education and media. The first phase will likely be based around smartphone hardware and semi-conductor growth. In November and December of last year we saw five million 5G handset shipments a month in China. This number could exceed 100 million over the course of the year, and the impact will be seismic.
But the real growth could well be in firms that don’t yet exist, much like the emergence of Uber 10 or 11 years ago, which realise the capabilities of the new technology and how it can support their business aims.
Either way the opportunities could be huge and offer active investors the chance to add value by identifying them early on. But the likelihood of the red envelope being the last tradition to embrace the future are very slim – change is coming! Here’s wishing you all a very happy and prosperous Chinese New Year.
 China Academy of Information and Communications Technology (CAICT), December 2019
 ‘Huawei may sell up to 100 million 5G phones in China alone next year, Japanese supplier predicts’, RT.com, 28 December 2019