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Last month, we asked: Is China’s Jan–Feb strength organic, or just stimulus? Two pillars are important for answering this question: the wealth effect (real estate) and income (salary). Through the week ending April 11, both still point up.

Real estate: activity broadens after the Chinese Spring Festival

Property viewings and transaction volumes are both tracking materially above their 2025 levels following the Spring Festival. Specifically, the transaction volume of second-hand homes has surpassed the peak following the 2023 Spring Festival, when a surge was driven by pent-up demand from COVID.

The recovery of the second-hand home transaction also seems even across city tiers:

The inventory level also improved materially across all city tiers, albeit at different paces. Using total listings / weekly transaction volume * 4.33 as a proxy (where 4.33 is just the average weeks per month), the average “months of supply” now trends down for every city tier post Spring Festival.

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Bottom line: the real estate recovery is widening, not narrowing. Although signs of a strong rebound are not in the near future (we see the listing price still trending down slightly or holding steady), real estate’s weight on the economy is decreasing.

In the previous post, we also observed from job posting data that the real estate and related industries (the orange area) saw their share of total recruitment cut in half, dropping from 15% in 2020 to less than 8% by the end of 2025.

Salaries: healthy growth in March

Average posted salaries on Chinese online recruitment platforms bottomed in November 2024 and have accelerated almost every month since.

March 2026 printed +5.7% YoY — the strongest reading since mid-2022 — with MoM momentum also picking up.

Two caveats: the data sample can skew toward while-collar roles. Additionally, the salary growth may not be even across industries. As we’ve previously pointed out (see Old to New), higher-paying “new productivity” jobs in tech and AI-adjacent roles are crowding out lower-paying ones.

But even after adjusting for both, a full year of accelerating wage growth is a meaningful break from 2023–24.

A note to readers: We recently launched Baiguan Pro, a professional tier for investors seeking more in-depth analysis directly related to Chinese equities. There, we share our team’s monthly view on Chinese assets, built on macro data points like these, along with other proprietary data and market inputs. If the Charts of the Week help you calibrate the China investment, Baiguan Pro takes it a step further.

Interested readers can read the inaugural post here.

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As early as August 2024, right before POP MART’s shares really took off, we first commented on its stellar growth based on our own data.

In June 2025, took a deep dive into the consumer psychology around this company, including her own personal conversion as a consumer.

The stock price of POP MART recently had a major setback. After its annual earnings announcement, the stock has tanked by more than 30% over five sessions, wiping out around HK$100 billion in market value.

Three main reasons explained this market’s sudden lack of confidence. First, the market is concerned that the overseas business performed worse than expected. Second, there are concerns that POP MART relies too much on a single IP, namely Labubu (The Monsters). Third, Wang Ning, the founder and CEO, gave an ultra-conservative guidance of “no less than 20% growth” during the earnings release.

In the first half of 2025, overseas revenue skyrocketed 440% year over year. However, in the second half of the year, the overseas revenue growth rate “slowed down” to 243% year over year.

240%+ growth is certainly slower than 440%+ growth, but we can’t help but feel that calling this a “deceleration” runs the risk of nitpicking.

POP MART’s phenomenally explosive global growth story was a huge surprise for everyone in 2025. The market was naive to build a linear extrapolation of future growth rates from this level in the first place, and it is only natural to expect that, after such triple-digit hyper-growth, the company is bound to see some deceleration.

On the other hand, it’s important to note that China's sales have been remarkably robust and resilient. In the first half of 2025, Greater China revenue grew 135% year over year. In the second half, the growth rate remained virtually unchanged at 134% year-over-year. This demonstrates that China remains the main growth engine for POP MART, with strong and stable growth momentum that has not lost steam.

Our own proprietary data, tracking in-store transactions in China, also shows the growth rate in Q1 will be substantially higher than “no less than 20%”. (You can find the exact data behind the paywall.)

As for over-reliance on IP. It’s true that Labubu now accounts for 38.1% of total revenue, in 2025, up from 23.3% in 2024. However, the growth picture is more nuanced than it first appears. Labubu grew by 365.7% year-over-year, which is indeed the fastest growth rate among POP MART’s established IPs. Yet the company’s portfolio is diversifying rapidly. DIMOO grew at 205.3%, SKULLPANDA at 170.6%, and CRYBABY at 151.4%. More significantly, Twinkle Twinkle, positioned as the next major IP, grew at an extraordinary 1,601.6% year-over-year, from just 120.8 million yuan in 2024 to 2.06 billion yuan in 2025, now capturing 5.5% of total revenue.

If Labubu had not existed, you would still consider this company a high-growth one, if only with these IPs. An investor simply should not blame something for growing even faster than its fast peers.

We believe the real trigger for the big share price slump is the highly conservative “guidance” that Wang gave to the market.

Overall, POP MART grew 185% in 2025, reaching 37 billion yuan in total revenue. But now the management slapped a mere “20%” on the market’s face. A violent re-rating is only natural afterward.

According to Wang Ning’s explanation. It was a voluntary decision to decelerate and regroup internally after a “F-1-style” helluva ride. But the market is usually skeptical of such a statement. Is it a genuine choice to decelerate and regroup, or a just cover-up for a company that’s losing steam?

Regardless of the reason, it is certain that the company won’t pursue rapid growth in the near future. In a hot stock that has been dominated by long-short hedge funds, this is enough to scare many investors away.

At the same time, we start to see signs of super-long money coming into the scene. Duan Yongping, often dubbed as “Buffet of China” and a mentor of PDD’s Colin Huang, very publicly retracted his previous comment that he would not invest in POP MART, and praised POP MART as “right business, right people, and right price” and a “real precursor of the internalization of Chinese brands”.

It seems a rotation of investor types is underway right now.

Is POP MART valued correctly?

POP MART inspires many analogies. Back when it was a hot name, analysts often imagined POP MART would become the future Disney of China. While a closer analogy might be Japan’s Sanrio (8136.JP), creator of the Hello Kitty franchise.

We don’t believe POP MART is Disney or Sanrio, yet.

The crucial difference is that POP MART is still too young. By simple definition, when someone is young, they can’t prove that they are evergreen.

If you're looking for an analogy to understand POP MART, we think it's more like a video game company right now.

The situation is similar to Tencent Games back in 2017, when one super franchise, Honor of Kings, accounted for ~50% of its mobile game revenue. At the time, investors were also concerned about the sustainability of the situation.

Just like Tencent Games in 2017, POP MART has not yet demonstrated the longevity of the super franchise. On the other hand, the success and runway of each franchise are far from predictable. Even their own management cannot predict them. They also don’t have a long enough track record to prove that they can keep producing hit after hit.

Adding to the problem is that, so far, POP MART’s IPs lack narrative power. This is a key difference between POP Mart and Disney at this moment. Disney’s IPs have narratives and stories, while Labubus are storyless, making it even harder for investors to look ahead.

All of these mean that the current valuation of POP MART, at a low double-digit TTM P/E and even single-digit forward PE, is exactly where it should be.

Investors love linear extrapolation. Investors hate it when there is too much uncertainty, and they can’t perform linear extrapolation due to low visibility. POP MART is thus rapidly, violently gearing down from a high-growth, high-multiple story to a stable-growth, low-multiple value play that many institutional investors would not want to participate in.

Looking ahead over the next few years, we should focus only on whether the share price can be driven by actual EPS growth, and assume that re-rating will occur only after years, and even decades, of solid, healthy growth.

Even if you are a POP MART bull, this is the reality you have to be clear about.

So, should we expect POP MART to sustain long-term growth?

We think we should.

In fact, we believe if there is any company that is able to deliver a long-lasting enterprise value capitalizing on China’s (and the world’s) growing demand for high-emotional-value consumption, it’s got to be POP MART.

There are at least three reasons to support our conviction: people, platform, and attitude towards investors.

First, let’s look at it from a first-principle perspective: for a business as ephemeral and as unpredictable as that of POP MART, what’s the single most important factor to consider? Technology? Marketing capability? Cash?

None of that.

The single most important factor is people and culture.

This is not the first time that POP MART has faced a crisis. In fact, the “crisis” of today is far less significant than previous ones.

When POP MART IPOed in 2020, investors questioned whether the company relied too much on its main IP, Molly. There was the same debate over whether the business model worked and if the company could keep delivering long-standing IPs. Following that, the share price fell by more than 80% from its IPO price by 2023, before rising 30-fold over the next two years.

And even further back, POP MART had been building this unique and lesser-known business for more than a decade before its IPO. There weren’t many overseas models to copy. Many people do not understand the model. It’s not a red-hot sector with an existing roadmap to show them the way. They have always been lonely.

It’s also when Wang Ning developed the core tenet in his management culture: “Respect time, respect operations” (尊重时间, 尊重经营), which sounds very much like benfen of Duan Yongping and Pinduoduo.

Over the last 16 years, the company has proven it can survive cycles, find its own audience, and keep innovating on its own timeline and pace. They seem able to consistently make the right choices and are unafraid of being alone or singled out, which is a remarkable characteristic in Chinese business culture and society.

This is why we believe this current voluntary deceleration of growth in exchange for operational improvement is real, and not a cover-up for slow growth. It’s yet another sign that this company does not care about short-term performance but is squarely focused on the long term.

It’s also important to understand that “no less than 20%” is not “guidance” in traditional Wall Street speak. The “20%” number is the least Wang Ning thinks they can deliver with 100% certainty. Anything above is not planned for and will not be the focus of this year. It’s the equivalent of saying there is no quantifiable business target for this year at all.

It’s healthy that they are sober about where they are, despite the immense market expectations. This is the right way to do it, especially in a business that nurtures and manages intangible assets. Focusing too much on short-term financial metrics would only kill its soul.

The second reason for our confidence is that we should not forget that POP MART has already achieved incredible success, leaving it with a formidable moat that won’t be easily surpassed by copycats in the short term.

The most formidable asset is its brand. POP MART now has significant branding power, not just at the individual IP level but also at the company level, both in China and, very uniquely, worldwide.

This immense brand equity gives them a significant edge over copycats and competitors in their dealings with all stakeholders, not just consumers. For example, they have moved into prime real estate locations across China and in many parts of the world, ensuring that each of its new product lines and IPs will be the first for their consumers to encounter. They have also built a great reputation with designers and a strong connection with their core community, which gives them a real edge in continuing to produce new product lines.

Last but not least, despite POP MART’s long-term mindset, they also care about shareholder interests.

This is unlike PDD, which is also a very long-term-focused company but has never shown a commitment to boosting shareholder returns, the main factor driving PDD’s extremely low valuation now. Most people do not doubt that Pinduoduo is a superbly run company. But investors are concerned that if a company never cares about minority shareholders' interests, the very foundation of any financial modeling based on distributable discounted cash flows will be pointless.

POP MART is different: it has also proven itself to be an investor-friendly company. Whenever the share price dropped dramatically, it bought back shares aggressively. In the several trading sessions since its share price tanked, the company has already repurchased close to 1% of its total capital. An aggressive share buyback will also be part of POP MART’s path toward stronger EPS growth, alongside sheer profit growth.

The latest data

Behind the paywall, you will see the latest data from BigOne Lab, our parent company, about POP MART’s latest performance in China.

The data below are currently accessible to all paid subscribers. But in the next few months or quarters, we will provide regular updates of this data (and similar data) for Baiguan Pro subscribers. One of the many key differences between a paid subscription and a Pro subscription is that Pro subscribers will receive much more ongoing data updates.

Once again, for existing Baiguan paid subscribers: We are offering an upgrade to the Professional tier, giving you full access to all Baiguan Pro content. To upgrade, please REPLY to this email with the email address associated with your paid subscription. We are processing these upgrades manually through the end of the second quarter (June 30). (Please note that if you opt-in to the Baiguan Pro tier, your subscription will renew at the new rate if auto-renewal is enabled.)

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China’s Jan & Feb prints were improving across the board

Inflation: In January–February 2026, China’s CPI rose 0.8% year-on-year, and Core CPI hit 1.3% — the strongest reading since January 2023. PPI also showed encouraging signs at the factory gate, with industrial producer prices rising for five consecutive months on a month-on-month basis.

Spring Festival spending held up well, with services standing out. We covered this in detail in a previous post.

The key question: Is this organic or policy-driven?

This is where the honest read gets more nuanced. Much of the consumption uplift to date has been policy-assisted — trade-in subsidies, vouchers, and a record-long nine-day holiday that pulled spending forward.

The 2026 Government Work Report set a GDP target of “4.5% - 5%”—realistic but unexciting. The report prioritizes technology and new productive forces. The report prioritizes technology and new productive forces. Among its measures, China plans to issue RMB 250 billion in ultra-long-term special government bonds to support trade-in subsidies for consumer goods and to establish RMB 100 billion in fiscal-financial coordinated funds to boost domestic demand. To put that in perspective, these measures amount to less than 0.2% of GDP — hardly a massive fiscal stimulus. There is also no large-scale direct transfer to households on the table.

The elephant in the room: Is the strong Jan & Feb spending organic, and will it continue?

To put this into perspective, in today’s Charts of the Week, we return to two key pillars of domestic consumption: the wealth effect (real estate) and income expectations (salary).

Our January–February proprietary data on both fronts points in a positive direction.

Real estate: Our tracking of China’s online real estate platforms shows the second-hand housing market stabilizing under policy support, with transaction volumes in 90+ cities up 15% YoY. Viewing activity also picked up, with week-on-week viewings across 80+ sample cities rising 15%, reflecting strong buyer interest and a recovering market.

Salary: Average salaries growth across online recruitment platforms are gradually recovering, rising from near-zero in 2024 to around 4–5% in early 2026. This steady wage growth supports household purchasing power, suggesting consumption could continue at a measured pace.

Importantly, the worst of the real estate bubble’s impact on the workforce appears to be behind us, as we covered earlier:

Additionally, in select discretionary categories, we are already seeing what looks like organic spending growth that isn’t purely subsidy-driven. That is the signal worth watching. For example, we wrote about the Sports & Health sector yesterday and will follow up with more examples in future posts.

One additional tailwind: China sits in a different risk bucket than the rest of Asia

The escalation of the Iran conflict has rattled Asian markets, but not all of Asia is equally exposed. China actually sits in a more defensive position, holding large strategic and commercial oil reserves that help cushion short-term disruptions. It has also spent years diversifying its supply toward Russia and Central Asia.

In contrast, Japan relies on the Middle East for roughly 90% of its crude oil imports. South Korea sources about 70% of its crude from the region and routes over 95% of that through the Strait of Hormuz.

Market reactions reflect this. Compared to other Asian markets, China has seen a comparatively modest decline since the conflict began.

A-shares also carry a structural cushion that most markets lack: the “national team” actively intervenes when needed, reducing correlation to external shocks in ways that are hard to replicate elsewhere in the region.

Therefore, I am more constructive on Chinese markets, especially the on-shore market at this particular time.

We will continue tracking real estate and job market data — crucial macro datapoints for our paid subscribers in future posts.

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In this newsletter, I’ll walk you through some of my observations from this year’s festivities and share where the potential investment opportunities lie.

Overall trend: Strong demand; the rise of “Chinese aesthetic” in tourism

This year’s tourism numbers are impressive: Domestic tourism during the 2026 Chinese New Year holiday grew 19% year-over-year, reaching 596 million tourists, with tourism revenue increasing by 19% to RMB 803 billion. This means per-tourist spending, averaging around RMB 1,348, remained steady compared to last year. Outbound travel also saw a strong rebound, with a 24% year-over-year increase to 4.8 million travelers.

However, beyond these headline figures, the tourism boom is becoming more structural. The year 2026 may very well be the year when the “Chinese Aesthetic” takes full control of the tourism market.

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What the Spring Festival Gala tells

To understand the social climate in China today, one can’t overlook what happened at the Spring Festival Gala, an event watched by almost every Chinese person, or at least used as background noise. This year, the Gala featured more AI, robotics, and other high-tech elements, which have already been widely discussed. However, what often goes underreported is the increasing presence of foreign-language programs—something that very rarely appeared in recent years’ Gala. This shift signals a change in the social climate, moving away from political focus toward a more open-minded, economy-driven, and everyday-life-oriented vibe.

Most notably, rather than hosting the entire performance in the central television studio in Beijing, the Gala continued its format of holding satellite events across various cities. These events highlighted the unique cultural heritage and innovative economies of these locations, further showcasing China’s diverse regional identities.

During the Chinese New Year, famous tourist cities tend to get crowded, but this year, the Gala program selected cities that are less congested yet still rich in tourism resources or unique culture. Four cities were selected to host the satellite events: Harbin, Yiwu, Hefei, and Yibin, which are expected to drive the tourism sector forward.

The Spring Festival Gala serves as a microcosm of this broader trend: China has been increasingly promoting smaller cities and their tourism offerings, incorporating more intangible cultural heritage, and catering to the growing interest in unique local craftsmanship and cultural heritage. We have been covering this trend since 2024, which explains why smaller and lower-tier cities have outpaced big cities, provincial capitals, and traditional tourist hubs in tourist growth in recent years.

Beyond obvious factors like crowding and rising transportation costs, tourists have developed a genuine interest in “in-depth travel”—exploring the rich cultural and historical diversity of China’s provinces. (I often feel that visiting different provinces and regions in China could feel like stepping into a completely different “country,” each offering countless unique historical and cultural experiences developed and fused over a long history. This vast diversity will continue to fuel curiosity and growth in the tourism sector.)

Investment Implications: Overall, this trend is positive for hotels and airlines. The tourism boom is unlikely to be short-lived. People are genuinely exploring various cities, towns, and cultures, not just indulging in post-pandemic “revenge consumption.”

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Trend 1/4: The rebound of luxury spending

Hainan duty-free sales have seen growth since the official establishment of the Hainan Free Trade Port (FTP) last December. In January, Hainan duty-free sales grew by 45%. During the 9-day holiday period, the sales growth slowed to 15% year-over-year, but shopper counts still maintained a steady +20% year-on-year increase.

Outbound travel to Hong Kong also rebounded during the 9-day holidays, largely driven by duty-free shopping and high-end retail.

Investment Implications: The revival of luxury spending could continue this year, partially supported by the rally in the stock market, which could help improve sentiment among middle-class and affluent families. This should also benefit Hong Kong tourism and commercial properties, especially in high-end retail.

There could also be idiosyncratic opportunities, such as Laopu Gold, which benefits from the increase in jewelry spending, the cultural preference for gold in China, and the perceived value retention of gold amid rising gold prices.

Trend 2/4: “Experiential” over physical products

This is a structural trend that I previously explored in our inaugural post this year: 2026 China Equity Outlook. During this Spring Festival, live events, shows, concerts, and “emotional value” consumption continued to trend high.

During the 9-day holiday, Damai (HKG: 1060), China’s leading ticket booking platform, saw the number of performance projects grow 27% YoY. Specifically, Livehouse booking surged 65%, and immersive shows grew over 40%. Live events have become a lifestyle for the Chinese consumer.

“Mood boost” consumption, such as pop toys (潮玩), continues to trend high. Take Pop Mart, for example: without going into detail in today’s post, we still see triple-digit sales growth in January leading up to the 9-day holiday, extending the growth and IP rotation trend explored in our deep-dive previously.

Investment Implications: The rising demand for live events and “emotional” retail should be beneficial to booking platforms and IP-heavy brands.

Trend 3/4: Surge in agentic bookings

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“Charts of the Week” is Baiguan’s series that features key data points to help you quickly grasp the general state of affairs in China in just a few minutes. We handpick the highlights of the data charts from a variety of sources, analyzing and delivering insights trusted by 100+ top institutional and corporate clients worldwide at BigOne Lab.

Understanding China’s true job market is complex. On the one hand, official data suggests the overall unemployment rate remains steady and healthy. On the other hand, if you live in China, you hear constant conversations about how difficult the job market has become and how salary growth has stalled.

This is a crucial question: gauging the health of Chinese households is essential to determining whether China can successfully transition into a consumption-driven economy, which depends on healthy, organic income growth.

So, what is really going on?

China’s economic structure has been undergoing a quiet transition from “old” to “new” over the past few years. Much of this shift was muted by pandemic news. While headlines consistently mention “industrial upgrading” (产业升级) or “New Quality Productive Forces” (新质生产力), it can be difficult to decipher whether this is actually happening on the ground. Today, we dive into online job postings data to find the answer.

Methodology Note: To map this transition, I classified millions of job postings from major recruitment platforms into six categories: New Productivity & Industrial Upgrade, Real Estate & Related, “Old Tech” & Traditional Manufacturing, Finance, Education, and Others.

The “New Productivity” category tracks the strategic pivot toward sectors like EVs, semiconductors, AI, green energy, biotechnology, etc. “Old Tech” includes industries that grew rapidly over the past decade—such as e-commerce, software, and internet platforms—which have increasingly matured into traditional industries rather than representing the current “cutting edge.” Other categories are self-explanatory.

While some cross-functional roles defy perfect classification, the massive scale of data since 2020 provides a definitive view of the structural transformation occurring over the last five years. (See the footnote for full definitions.)

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Q1: From “old” real estate to “new” productivity: has the transformation happened?

News headlines are swamped with news of China’s struggling real estate market (rightfully so, as listing prices for existing homes have yet to find a bottom). However, a quiet transformation has taken place within the job market. Since 2020:

• The real estate and related industries (the orange area) have seen their share of total recruitment cut in half, dropping from 15% in 2020 to less than 8% by the end of 2025.

• Simultaneously, the “New Productivity” sectors (the blue area) have shown powerful counter-cyclical growth, with their share of job postings climbing from 10% in 2020 to over 15.4% in 2025.

It is no coincidence that the added value of China’s real estate industry fell to only ~6.3% of GDP in 2024 [*]. (In my opinion, this partly explains why Beijing feels less urgency to launch a massive stimulus; real estate no longer influences overall employment as heavily as it did just five years ago.)

Despite the “structural pain” society is currently enduring, this shift proves the underlying logic of the Chinese economy has fundamentally changed. The absolute number of jobs created by the ‘New Productivity’ sectors (an increase of about 300,000 positions) has effectively offset the bulk of the losses in the real estate sector (a loss of about 350,000 positions).

The transformation of the “New” replacing the “Old” real estate is now firmly established in the trend data.

Q2: Why do on-the-ground sentiments feel so cold?

If the overall number of jobs has remained relatively stable and “Hard Tech” is booming, why is public sentiment so gloomy?

The answer lies in structural friction and a perceived “quality downgrade” for the middle class. Real Estate, Finance, and Education—industries that traditionally recruited a significant and highly educated portion of the population—have seen a consistent shrinkage in job postings since 2022, never recovering to pre-pandemic levels. These happen to be the three high-paying industries most favored by the university-educated, urban middle class (the demographic with the strongest voice on social media). These traditional sectors also still serve as a massive reservoir for the labor force, maintaining a share of roughly 32%.

For those who managed to keep their jobs in these industries, salary growth has been optimistic for them.

The new jobs replacing the old ones offer no easy transition. You cannot simply retrain a real estate marketing manager to design semiconductors or engineer hydrogen fuel cells. The booming “New Quality Productive Forces” require highly specific STEM backgrounds (often Master’s or PhDs). Meanwhile, the other side of the job growth spectrum—such as wholesale, retail, and local services—often represents a downgrade in social prestige and stability for university graduates.

This “talent incompatibility” is what creates the profound sense of a “job crisis” on the ground.

Q3: Are there other interesting insights and key takeaways for investors?

If you want to find the next structural growth opportunities in China, follow the hiring.

Trend 1: Consumer internet could soon become a “utility”

The era of hyper-growth for tech platforms and e-commerce—sectors that once defined the ‘cutting edge,’ provided the most sought-after roles for China’s top-tier talent, and made investors filthy rich—is over. When we examine the absolute job gains and losses across sub-industries from early 2020 to early 2026, the data paints a vivid picture of an economy executing a ruthless, structural pivot.

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First, Alibaba’s Qwen triggered a nationwide frenzy by offering “tea freedom” through a massive milk tea subsidy, sending its Qwen AI app to the top of the charts and creating messes at some milk tea shops as delivery people scrambled for orders.

Not to be outdone, Yuanbao, Tencent’s own AI chatbot, launched a billion-yuan red packet campaign, hoping to recreate the success of WeChat Pay. However, the plot twisted when WeChat, the centerpiece of the Tencent family of products, abruptly restricted the sharing of these promotional links to curb spam and “induced sharing.”

ByteDance’s Seedance 2.0, on the other hand, stunned the whole world by its mesmerizing audio-video co-generation technology, strong character consistency, and director-level scene transition, effectively giving every social media user their own Hollywood-quality production studio.

And Spring Festival has not even started!

At this point, I want to put down some preliminary observations here, if only to make a mental mark for the record amid these rapid, crazy changes that are unfolding at this very moment.

Observation 1: The market rewards the cutting edge, but penalizes the old playbook

If it were a decade ago, Tencent’s Yuanbao red packet campaign would have excited the market. After all, the whole red packet playbook was exactly what ushered WeChat Pay into success a decade ago. However, this time, the campaign has caused much more doubt than excitement. As a result, Tencent’s share price has already dropped more than 15% year-to-date at the time of writing this piece.

Nor is the market very excited about BABA’s milk tea giveaways either. Its stock price has traded sideways despite its Qwen app almost becoming the most actively used AI app in China within an extremely short period of time.

Contrast that with Zhipu AI, believed to be behind Pony Alpha, an open-source coding model that many developers compare to Claude Code in capability. Zhipu also announced its GLM-5 model just now, which sent its shares almost quadrupling only a month after its IPO.

The divergence is striking. In this decade, the old playbook no longer inspires. The market is clearly looking for genuine frontier capability, not user growth engineered by subsidies. Merely having more users, if those users are acquired through incentives rather than through technological excitement, is heavily discounted.

Observation 2: The real market leader is not tradable

It’s also a pity that the company that is arguably leading China’s AI race is not listed.

ByteDance, which has Doubao, currently has the most popular AI chatbot in China and arguably the highest user stickiness. Many users already treat Doubao as a daily companion, almost in the sense portrayed in the film Her. While Qwen may be close in daily active users, much of that still appears subsidy-driven. Doubao’s user base feels more organic and durable, at least at this stage.

At the same time, ByteDance’s Seedance 2.0 has become the global leader in video generation since its recent debut. ByteDance’s trial with AI-native smartphone also inspires imagination. (You can check out a product test of Doubao phone here made by , our partner newsletter.)

Yet ByteDance is not listed. Neither is Huawei, another important AI force.

As a result, even if one believes strongly in the long-term future of Chinese AI, the Hang Seng Tech Index may unfortunately not be the most direct way to express that view at this moment. Core constituents such as Alibaba and Tencent have been weak, and the index has traded sideways.

Observation 3: The great divergence of how AI would impact other industries

As much as there is a domestic divergence in how old and new forces tackle AI, internationally, a significant divergence is emerging in how markets interpret AI’s impact on other industries.

In the US, when Anthropic or Google launched a new model, software and business service stocks sold off sharply. Hundreds of billions in market value could be erased in days. The dominant narrative is that the old industries are at risk of decimation.

In China, sentiment looks different. When major breakthroughs in video generation like SeeDance appear, online literature, film-making, and content platform stocks rally. Even if China’s software sector has not been exceptionally strong, it has not collapsed in the same way as in the West either. And milk tea brands like Guming and Mixue are emerging as the biggest net beneficiaries of Alibaba’s generous subsidies.

Why?

One reason is industry maturity. China’s SaaS industry never truly developed into a large, standardized, high-margin sector comparable to the US. Much of the market remains project-based and customized. Ironically, that lack of maturity could prove resilient in an AI era. Companies built around implementation and consulting may still be needed, while benefiting from lower AI-driven costs.

As for the entertainment industry, China does not yet have a Hollywood-sized creative market to disrupt. When AI improves content creation, investors focus on new possibilities rather than on the elimination of entrenched incumbents.

There may also be a deeper cultural and political layer. In the current Chinese context, it is difficult to imagine technology wiping out an entire industry overnight without at least paying some price. The concept of common prosperity has shaped expectations around these things.

I do not claim to have a definitive explanation here. But this divergence itself is worth watching.

Observation 4: Trust first, commerce later?

The next major milestone in AI, after coding, may be agentic commerce: how AI changes how people transact and live.

Alibaba is positioning itself as the leading global experimenter in this space. As the operator of one of the largest e-commerce ecosystems in the world, it is pushing consumers to shop in an AI-native way earlier than anyone else.

The results so far are mixed, however.

When I tried shopping through Qwen’s agent, the experience proved that AI-mediated shopping is technically feasible. But beyond that proof of concept, it did not feel revolutionary. Which leads me to think that chatting back and forth with a bot to find something to buy may not be the final form of commerce.

By classic internet logic, this is not a problem. “Move fast and break things” has been the motto for the industry since its very beginning. Early user experience can be rough as long as feedback loops are strong and iteration speed is fast.

But it may be too premature to push agentic commerce too aggressively, which leads to a more fundamental question: what do people actually look for when they shop?

For purely utilitarian purchases, such as recurring household goods, automated agents make sense. But much of consumption is not utilitarian. For many high-value purchases, the experience itself is part of the product: walking through a store, browsing shelves, and discovering items serendipitously. I don’t believe these are inefficiencies to be eliminated. For many, shopping is not just a means, but an end in itself.

A better model, intuitively and logically, would be to build trust first.

If users see their AI agents as friends, advisors, or companions, they will naturally ask them for shopping recommendations. Commerce then becomes an extension of trust, not vice versa.

If this theory is true, then agentic commerce does become mainstream, ByteDance, again, may still capture the largest upside. Doubao already has user trust and stickiness. Combined with Douyin’s e-commerce ecosystem, all the essential pieces are in place.

Tencent may also be underestimated. Even if it currently lags in model leadership, it possesses vast behavioral data to eventually build a trustworthy AI virtual assistant as well as a deeply integrated WeChat mini-program commerce ecosystem within to build a complete e-commerce experience.

Alibaba has limited social advantages and does not control the most popular AI companion app right now. It is therefore logical that it plays to its core strength: commerce. Whether that will work is questionable, but it just does not have many alternative strategic choices.

Observation 5: 2026 as the year of mass adoption

The upcoming Spring Festival holiday is shaping up to be another holiday about AI. Chinese AI companies are clearly timing product releases around this period, when users are at home, traveling, and experimenting with new apps.

It is not yet clear who will ultimately win. What is increasingly clear, however, is that 2026 is shaping up to be a year of mass AI adoption in China.

This adoption will go far beyond chatbot novelty. By the end of 2026, it is highly likely that a majority of urban consumers will have completed at least one transaction through an AI agent. Coders will routinely use domestic Chinese coding agents. Video creators will rely on AI-native tools as a standard workflow.

This unprecedented mass experimentation and mass adoption of AI applications, with all of the potential impact and consequences, will provide meaningful lessons for the whole world to see.

This should be our last post before the Spring Festival commences.

Finally, to all our readers, thank you for staying with us through another turbulent year in markets. May the Year of the Horse bring you momentum, milestones, and more exciting breakthroughs in your work and in your life!

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Since 2023, we have been frequently pointing out a clear trend: Chinese companies’ hiring for overseas positions has been outperforming the domestic job market, as firms actively expand abroad. “Going abroad” has been a prevailing theme among Chinese enterprises even before Trade War 2.0, and overseas hiring has only continued to gain momentum even after Trump’s second term commenced (as did China’s exports).

Now, the natural question for Baiguan readers and China investors is: what do we do with this trend?
In today’s Charts of the Week issue, let’s dig into that question with some interesting data insights.

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Chart of the Week: Growth in China’s overseas job recruitment slowed significantly in North America in 2025, but remained steady in almost every other region.

In 2025, exports remained one of the brightest spots in China’s economy, defying the headwinds from Trade War 2.0. Amid heightened volatility in US–China relations, hiring demand for jobs in North America cooled notably after the explosive growth seen in the prior year (though it still continued to grow).

Demand in other key regions, however, remained steady. Southeast Asia and Africa continued to be the largest overseas job destinations for Chinese enterprises, with no signs of slowdown. Meanwhile, demand in the Middle East — while still not a majority destination — has seen explosive growth over the past two years.

This suggests that China’s “going abroad” blueprint has become far more diversified over time, giving Chinese companies greater resilience — and more cards in hand — amid trade tensions.

When we break down overseas job recruitment by industry, we also see an interesting pattern of rotation and diversification.

In 2024, construction, business services, and information technology led the “going abroad” initiatives. (Internet and e-commerce giants such as Pinduoduo (Temu) were categorized under IT, which significantly drove the overseas hiring demand. Remember when we covered how China was exporting both merchandise and manufacturing capabilities back in 2023? Chinese companies going global: merchandise and manufacturing exports in the new era.)

In 2025, however, we are seeing a more mixed portfolio of industries ramping up overseas expansion — not just in physical products, but also in services such as financial services, research, and design. Notably, business services jobs saw explosive growth, largely driven by companies that support overseas expansion, including digital advertising, consulting, legal, and human capital services.

One interesting example: we observed that Michael Page’s China arm — a recruitment agency focused on senior and executive talent — experienced very rapid hiring itself. This suggests that Chinese companies are increasingly “settling down” abroad and investing in professional expertise and management talent. If anything, they are expanding their overseas footprint even further after Trade War 2.0 commenced.

Some companies in the spotlight

Looking ahead, 2026 is shaping up to maintain strong export momentum. One key takeaway here is that investors may want to pay close attention to companies with meaningful overseas exposure — or those actively ramping up efforts to expand international market share — as they have a higher likelihood of delivering positive earnings surprises.

This is especially relevant for industries weighed down by persistent pessimism around domestic “involution” and price wars, such as upstream raw materials, EVs, consumer electronics, and food delivery platforms. While the domestic market is unlikely to see a demand boom overnight, companies with strong overseas exposure could see overseas revenue surprises that are not yet fully priced in.

Let’s look at a few examples — companies that were hiring aggressively for overseas roles (or domestic roles targeting overseas markets) in 2H25. These are the firms positioning themselves for a much larger international footprint in 2026.

XPeng (XPEV) | Smart EVs & AI mobility

Overseas job hiring trend: +78.4% YoY

By the end of 2025, XPeng expanded its global footprint to 60 countries, with its overseas deliveries soaring 96% YoY to 45,008 units [*]. Entering 2026, XPeng will establish independent supply chain teams in Europe and Southeast Asia starting in 2026 to support localized operations [*]. One key upside is that Chinese EV makers can generate significantly higher margins in overseas markets. For instance, BYD reportedly generates three to four times more profit per vehicle overseas compared to its fiercely competitive domestic Chinese market as of late 2025. Overseas growth could therefore serve as a catalyst to lift pessimism surrounding China’s saturated EV market and shrinking margins amid ongoing price wars. (XPeng also comes with attractive autonomous driving optionality this year, which is shaping up to be an important investment theme to watch.)

Other EV makers have also ramped up overseas hiring, including Li Auto (+385%), Changan 000625.SHE (+385%), and Dongfeng 0489.HK (+180%). BYD’s overseas hiring did not expand further in 2025, largely because its hiring already surged in 2023, as BYD began building its overseas footprint well ahead of peers.

Yili Group (600887.SH) | Dairy products

Overseas job hiring trend: +408.3% YoY

This might come as a surprise to many. It’s hard to imagine a traditional dairy maker—dealing with fresh, perishable goods—successfully selling into overseas markets. Yet, Yili is doing exactly that by building actual factories on the ground. Their Indonesian production base is now the largest ever built by a Chinese dairy firm in Southeast Asia [*]. Instead of just exporting Chinese milk, they are localizing the brand; for instance, their Joyday ice cream is now the fastest-growing brand in Indonesia and has already reached over 10 countries across the Middle East and Africa. They are essentially exporting their manufacturing playbook and supply chain efficiency to high-growth emerging markets where dairy demand is still booming. I think this could bring a nice catalyst, especially given that the narrative is predominantly dominated by concerns over deflation and low birth rates in China.

Similar companies are taking the same strategy: Mengniu Dairy 2319.HK (280% YoY) and Anjoy Foods Group 603345.SHA (550% YoY) are both ramping up the hiring for the overseas market in 2025H2. Pleasant surprises may emerge from these “boring” businesses in 2026.

Continue for more examples and data points. To get a sense of what is offered, you are welcome to check out this older post in the same series: Charts of the Week. You can also get free access by sharing us. Paid subscribers enjoy a variety of benefits. Check out the benefits: exclusive benefits for Baiguan’s paid subscribers.

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Following a series of bearish reports, short interest in the stock has remained stubbornly high. Pop Mart’s price has since corrected more than 35% from its peak.

The core narrative driving this sell-off is straightforward and, admittedly, compelling. Many argue that Pop Mart’s explosive 2025 run was a temporary ‘supercycle’ driven by a single IP anomaly—Labubu—and a viral moment in the West that is now effectively over.

For instance, short sellers argue that Labubu is a ‘one-hit wonder’ that has already faded from its peak with no successor in sight. They cite plummeting search interest, cooling social media buzz, and falling resale prices on second-hand platforms as proof of demand destruction.

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While our own social media data confirms this trend—and I do acknowledge that the Labubu craze has decelerated—I remain constructive on the current setup for the company following this sharp correction.

In a nutshell, I believe the operational reality at Pop Mart points to normalization, not a total collapse. There is a massive difference between a company going to zero and a company returning to ‘normal’ (and still rapid) growth.

Behind the paywall, I will explain why Pop Mart doesn’t look particularly expensive at these levels, backed by BigOne Lab‘s recent sales and social media data, as well as some on-the-ground observations of new monetization mechanisms the company has recently rolled out.

Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. Please do your own research or consult your financial advisor.

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Back in July, I wrote about how Chagee was selling caffeine “the Chinese way,” and its ambition to become the “high-end” tea brand in China—much like Starbucks is to coffee. I noted that while Starbucks was struggling with poor localization and declining “price-for-value,” Chagee had captured the “ancestral blood awakening” of Gen Z consumers who were rediscovering tea as a healthier, cooler alternative to coffee.

The irony today is thick enough to chew on. As we enter 2026, both the “master” (Starbucks) and the “apprentice” (Chagee) are running into the same wall in China. What was once a race to define premium branding in coffee and tea has devolved into a cut-throat fight for survival.

In 2025, China’s food delivery platforms entered into a fierce price war. With massive subsidies flooding the system, coffee and tea brands emerged as the biggest beneficiaries: consumers rushed to order beverages for delivery at steep discounts—to the point where “zero-yuan milk tea” briefly became a reality.

Chagee and Starbucks, however, took a more principled—and ultimately painful—stance. Both brands largely refused to join the subsidy bloodbath in order to protect their premium positioning. The outcome was mixed. By November 2025, Chagee’s relative takeout market share had fallen sharply. Meanwhile, peers such as Luckin used subsidies to aggressively expand, and Starbucks—despite also staying out of the price war—managed to retain comparatively greater resilience in market share.

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Chagee’s PR Crisis: Crossing the Red Lines

If the recent numbers weren’t bad enough, a series of PR crises has begun to erode Chagee’s premium branding.

In December, Chinese social media erupted over Chagee’s high caffeine content after a prominent KOL claimed that some of its teas, due to their caffeine concentration, were “edging toward drugs 蹭准毒品”. Even before this incident, it was not uncommon to see consumers sharing experiences online about difficulty sleeping or heart palpitations after drinking Chagee’s tea. Most of these discussions were anecdotal and hard to verify—personally, I’ve never experienced such effects, though I know people who have—but the KOL’s remarks pushed the controversy to an entirely different level.

In China’s historical and cultural context, “drugs” is an absolute red line—and the comparison clearly struck a nerve with consumers. Chagee’s caffeine levels—roughly 117 mg in a 600 ml cup—remain well within accepted adult safety limits, regardless of consumers’ subjective experiences. Yet, whether due to quality-control issues or something else, the brand has gotten this reputation, and the mere association with “drugs” was enough to damage the image of a brand that markets itself as “clean” and “low-burden.”

To make matters worse, a viral livestream days later showed a Chagee employee preparing drinks with her bare hands. For a brand that charges a premium, this single moment delivered a visceral blow to consumer trust.

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The IPO Aftermath: A Turnaround or a Trap?

Since Chagee’s high-profile NASDAQ debut in April 2025, Chagee’s stock has been in a freefall, losing 60% of its value.

Now it’s time to ask the hard question: What went wrong? Is the “Starbucks of Tea” narrative dead, or is there a turnaround story?

The High-End vs. Mass-Market Trap

Chagee, often positioned as the “Chinese student” of Starbucks, has closely mirrored the coffee giant’s strategy by targeting white-collar professionals in premium shopping malls. While mass-market competitors are shrinking their store footprints to cut costs, Chagee has doubled down on the idea of the “Third Space”—the zone between home and work where people are meant to linger.

To reinforce this positioning, Chagee has moved beyond its standard 60–80 square-meter stores and begun opening oversized “Super Tea Warehouses.” One example is its roughly 1,000-square-meter flagship in Hong Kong, designed to cement its premium image. These locations function less as beverage outlets and more as brand-experience teahouses, leaning heavily on cultural storytelling: wood-toned interiors, seal-script wall designs, and high-end decorative installations inspired by Tang-dynasty tri-color Sancai glazes. The underlying bet is to reframe tea as a “lifestyle” product rather than a simple drink, capturing high-frequency moments such as office tea breaks.

Yet this commitment to high-end positioning has unfortunately left both Chagee and Starbucks trailing their peers in a deflationary market. While I’ve previously argued that Chinese consumers are indeed spending more on “experiences” and “lifestyle,” drinking tea is rarely perceived as one of them. For most Chinese consumers, tea remains a functional staple—not an experiential indulgence. Chagee’s 15–22 RMB price range makes it “expensive” in a deflationary environment.

Seen this way, the struggle is less about “foreign” versus “domestic” brands, and far more about a structural mismatch between high-end positioning and a market that is trading down.

Why Chagee Wins Abroad While Stalling at Home?

While Chagee’s domestic performance is facing a squeeze, its overseas performance tells a completely different story. In 3Q25, Chagee’s overseas GMV surged by 75.3% year-over-year, reaching RMB 300 million. Its network outside Greater China expanded to 262 stores, with Malaysia alone accounting for 196 locations.

This raises an interesting question: Why is a brand that is struggling to hold onto market share in China finding such traction abroad?

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Price Wars Cool Down as In-Store Shopping Returns

The price war among Chinese instant delivery platforms began in early 2025 when JD entered the race, intensifying through the summer as Meituan and Eleme joined the fray. While this initially created a massive spike in takeout demand, the momentum has since collapsed as prices returned toward normalization in the second half of the year.

Earlier this year, competition became so intense that consumers could occasionally get bubble tea for virtually zero yuan through platform subsidies. While this was clearly a lose-lose situation for delivery platforms, food and beverage chains benefited from the subsidy war as consumers rushed onto takeout platforms.

Coffee and tea brands were the biggest beneficiaries of these price wars. In today’s newsletter, we examine the performance of five major coffee and tea chains—Luckin (OTCMKTS: LKNCY), Starbucks (NASDAQ: SBUX), Mixue (2097 HK), Chagee (NASDAQ: CHA), and Guming (1364 HK). Together, these companies account for a large share of China’s overall coffee and tea market. Using data up to November this year, we analyze their performance and assess who emerged as winners—and losers—in the subsidy war.

My colleague and I have also examined the impact of the subsidy war on delivery platforms in earlier newsletters. Interested readers can find our analysis here:

For today’s newsletter, we use BigOne Lab’s offline transaction panel data, along with tracked takeout data from major platforms (Meituan and Eleme), to analyze performance across both in-store and delivery channels. Historically, this dataset has allowed us to track sales growth trends with a high degree of accuracy.

The price erosion

Amid cut-throat market competition, most brands have already seen their in-store average selling prices (ASPs) contract over the course of the year.

The takeout market tells a more dramatic story. Following JD’s entry, takeout ASPs for most beverage brands fell sharply. In contrast, Chagee and Starbucks largely stayed out of the subsidy war, keeping their pricing relatively stable compared with other brands.

Behind the paywall：

• Chart 4: relative market share for 5 coffee & tea beverage brands (in-store)

• Chart 5: relative market share for 5 coffee & tea beverage brands (take-out platforms)

• Chart 6: estimated sales growth for 5 coffee & tea beverages brands (in-store)

• Chart 7: estimated sales growth for 5 coffee & tea beverages brands (take-out platforms)

To get a sense of what is offered, you are welcome to check out this older post in the same series: Is Laopu Gold’s Rally Over? 6 Charts on Recent Performance — Charts of the Week. You can also get free access by sharing us.

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Relative market share

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To justify further gains, we need to see the baton pass from policy-driven sentiment to genuine fundamental earnings growth.

While deflationary pressures haven’t vanished, the floor is firming: salaries are showing early signs of increase, and the property market has stopped its freefall. (This stability was achieved without massive “flood-like” stimulus—I think that suggests the bottom is likely in.)

So moving forward, I expect a “Slow Bull” market.

Additionally, the rate-cut cycle that is now in place is traditionally a positive catalyst for Hong Kong. I think 2026 will be a year of selective alpha. Here are my thoughts on the themes that will define the years to come.

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Theme 1: The Consumption Pivot (Services > Products; Discretionary > Staples)

In my opinion, the Chinese consumer market is neither a total “trade down” nor a “trade up” story, but rather presents opportunities in its pivot from physical products to services, and from staples to discretionary.

What’s not working:

The struggle to escape the deflationary gravity is evident in the macro data. November data points to a clear cooldown: social retail sales growth slowed to 1.3% year-on-year, marking six consecutive months of deceleration. Within this slump, I have observed that staples are consistently performing worse than discretionary items; for instance, premium Baijiu continues to suffer from persistent price erosion. Furthermore, the momentum from earlier “trade-in” (以旧换新) subsidies is hitting a wall. Categories like smartphones, EVs, and home appliances are seeing sales stalls as these subsidies taper off.

A lot of these big-ticket, non-recurring items essentially exist in a saturated “stock market” where policy has simply pulled forward domestic demand that would have happened later. This is why I am avoiding stocks caught in the “involution” trap (to name a few examples: BYD and the broader EV sector, as well as Meituan and JD, where the price wars in food delivery and e-commerce show no signs of a ceasefire.)

What’s working:

However, I still see prosperity in sectors that reflect a fundamental shift in the Chinese lifestyle—the so-called “new consumption“ that we covered multiple times previously. This “new consumption” isn’t just about chasing 2025 stars like Pop Mart or Laopu Gold (in fact, I would be cautious about chasing those specific highs in 2026.)

The broader theme is that we must focus on the “new” things the younger generation actually values: items or services that bring joy, comfort, meanings and differentiation rather than generic utility.

For instance, this pivot directly favors the gaming sector. I remain bullish on Tencent and NetEase because they are uniquely insulated from deflationary cycles; they provide high-frequency “emotional value” that consumers are loath to cut.

I also see continued outperformance in “experiential“ spending on services (instead of physical goods). Throughout 2025, service-sector growth consistently outpaced the broader retail spending. In particular, spending on travel, live concerts, shows, and other offline events remained highlights. This trend will continue to benefit OTAs and lifestyle-centric hospitality brands like Atour that have successfully differentiated their “experiential” offering.

“Pet economy” is another high-conviction example. In an environment defined by lower birth rates among the younger generation, the “humanization” of pets represents one of the few areas where spending remains remarkably inelastic and growth remains certain.

Related reads about China’s service sector potential:

Theme 2: Domestic AI/Chips Independence

Semiconductor self-reliance in China is a high-certainty theme that will persist regardless of external geopolitical shifts. For instance, even with the Trump administration recently easing export restrictions for Nvidia’s H200s—albeit with a 25% fee attached—Beijing’s push for independence remains unwavering: China set to limit access to Nvidia’s H200 chips despite Trump export approval, proving that this is a core national strategy rather than a reactive measure to sanctions.

According to sell-side research, domestic chips are expected to account for 40% of Chinese cloud provider capex in 2026, a significant leap from the 20-30% range we saw in 2025.

In a recent breaking news, China has already produced a working EUV lithography prototype in a high-security Shenzhen laboratory. While mass production remains a long-term goal (likely for 2030 or beyond), the existence of a working prototype generating extreme ultraviolet light suggests the timeline for semiconductor independence is accelerating faster than most analysts projected.

Finally, we cannot ignore the recent heat in the capital markets. The explosive IPO debuts of Moore Threads and MetaX in December 2025—with first-day surges exceeding 500%—demonstrate that investor appetite for the sector is high. This influx of liquidity will serve as a powerful catalyst for market sentiment heading into 2026.

Theme 3: Innovative Drugs—China’s Next “EV” Growth Story

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Recent macro data has sent mixed signals. On one hand, China’s CPI has turned positive for two consecutive months, sparking discussions on whether the economy is finally walking out of deflation. Although November’s headline CPI was primarily driven by an increase in vegetable and gold prices, the core CPI (excluding more volatile items, including food & energy) continues to trend upward.

Chart in highlight: After excluding goods related to trade-in programs and the gold category, the core CPI remains on an upward trend.

From our partner CF40 Research‘s latest takeaways from China’s November 2025 macroeconomic data. CF40 Research is a leading independent think tank in China focused on macroeconomic and financial policy.

This resilience is largely driven by services. As we noted previously, services are becoming the structural growth engine of China’s economy. Service consumption grew 5.4% year on year from January to November (which is above the 4% for total social retail sales).

In contrast, physical goods consumption remains weaker. Additionally, the “sugar high” from the National Day Golden Week in October appears to be fading. November data points to a cooldown: social retail sales growth slowed to 1.3% year on year, marking six consecutive months of deceleration. The broader consumption recovery is facing more challenges as government subsidies taper off.

Today, we look at high-frequency data across housing, dining, liquor, retail, luxury sales, and the job market to gauge the true temperature of the recovery as we head into the end of 2025.

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Real Estate: The post-holiday cool-down

Key Takeaway: Transaction volumes and viewings continued to drop after the October peak.

In week 50 of 2025 (Dec 7–13), second-hand home transaction volumes across 90+ cities fell 20% year on year. Households remain in a wait-and-see mode, with no clear signs of a meaningful improvement in market confidence.

Across first-tier, new first-tier, and second-tier cities, viewing activity has turned negative across the board on both a month-on-month and year-on-year basis.

Dining

Key Takeaway: Consumers return to rational spending following the holiday splurge.

While October saw a spike in dining activity, November data from BigOne Lab’s offline dining index shows a rapid normalization. Notably, the average selling price (ASP) growth slowed significantly to just 0.4% year-on-year in November.

High-end Baijiu (white liquor), especially Moutai, is often viewed as a barometer for business activity and sentiment in China. Wholesale prices for major premium brands, including the bellwether Moutai 1935 and Wuliangye, have seen steep declines throughout the second half of 2025, reflecting weak business and banquet demand.

Correspondingly, the sales performance of major liquor companies (Moutai, Wuliangye, Luzhou Laojiao) in offline channels has also cooled down after the holiday season pick-up. Most recorded negative or slowing year-on-year growth in Q3, and moving into Q4.

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Retail

Key Takeaway: Discretionary consumption is outperforming, while housing-related spending drags down the total.

Data from October and November (combined) paints a clear picture of the structural divergence in Chinese spending.

• “Discretionary” and “feel-good” categories are growing. Cosmetics (+5.4%), Sports & Entertainment (+7.0%), and Gold/Jewelry (+18.9%) saw decent growth.

• Housing-related sectors are deep in the red. Building and decoration materials plummeted -15.1%, and household appliances fell -20.6%.

Categories with lower growth rates mainly included building and decoration materials, tobacco and alcohol, daily necessities, and Chinese and Western medicines. Among these, the relatively low consumption of building and decoration materials may be related to the accelerated weakening of commercial housing sales in the second half of the year.” [CF40 Research]

This reinforces our view that the consumption slump is not uniform—investors should focus on alpha rather than beta, and avoid staples and sectors tied to the property market downturn.

This year’s Double 11—China’s largest e-commerce shopping festival—delivered a muted performance. The tapering of national consumption subsidies was a key factor.

Take JD.com as an example. As one of the platforms that benefited the most from subsidy policies, JD saw GMV growth in October–November 2025 (including both overall and self-operated businesses) come in well below last year’s pace.

To unlock the full analysis on e-commerce sales (Tmall/JD/Douyin), luxury sales, and the latest salary trends in the job market, consider becoming a paid subscriber. To get a sense of what is offered, you are welcome to check out this older post in the same series: Charts of the Week. You can also get free access by sharing us.

Paid subscribers enjoy a variety of benefits, including discounts on other quality China content, and more timely discussions in our private Discord channel for paid readers. Check out the benefits: exclusive benefits for Baiguan’s paid subscribers.

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The Signal

If you are looking for the next breakout consumer product in China, AI/AR smart glasses might finally be it.

For years, smart glasses were dismissed as pricey prototypes or novelties for tech YouTubers—not daily necessities for average consumers. Apple Vision Pro, while impressive, remains too heavy, too expensive, and too weird to wear in public.

But a shift has occurred.

Data from BigOne Lab, Baiguan’s parent company, suggests we are witnessing the early innings of a platform shift. Since the second half of 2025, online sales of smart glasses have seen exponential growth, driven by new rollouts from market leaders like Xiaomi.

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According to our tracking across major e-commerce platforms, smart glasses have consistently topped sales charts over the past three months, recording the fastest year-on-year growth across all categories.

From Niche to Mass Market

Why is this happening now?

As smartphone innovation stalls and hardware becomes a commodity, consumers are hungry for a new interface.

More importantly, affordability has materially improved in recent years. Decent AI glasses in China now retail for around just 1,500–3,000 RMB ($212–$424 USD). This is competitive when compared with overseas market leaders such as Meta’s latest Ray-Ban glasses (which are not officially sold in mainland China), which start around $299 USD for Gen1, over $400 for Gen 2, and $799 for the newest model that was launched this year. Manufacturing costs will likely decrease further in the long term as economies of scale kick in, thanks to China’s supply chain.

Battery life, camera quality, and, most importantly, real-world applications have also greatly improved. Beyond standard features like recording POV videos, real-time AI translation, navigation, and audio control, China has unlocked a unique but high-frequency use case: payments.

This September, Xiaomi AI Glasses received a firmware update adding the Alipay “look-and-pay” function. Users simply speak a command to the built-in voice assistant, look at a QR code, and the payment is confirmed via voice.

In a country where QR codes are everywhere, the ability to “look and pay” is a game-changer.

China’s national subsidy for consumer electronics has also lowered the bar for purchase. As demand for other consumer electronics like smartphones and home appliances slows while the subsidy effect fades, smart glasses could be starting their run as the next fastest-growing hardware category. These factors are colliding to turn a niche toy into an emerging mass-market product.

Behind the paywall, we continue to walk through the competitive landscape of AI/AR smart glasses in China, including current market leaders, their latest online sales, and supply chain beneficiaries.

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Recently, two of China’s private data providers—China Real Estate Information Corp. and China Index Academy—have halted the publication of monthly sales figures for the nation’s top 100 developers at the government’s behest (though financial institutions can still access this data if paid for) [Bloomberg]. These figures have long served as the primary pulse check for China’s real estate market, and their sudden disappearance has stoked transparency concerns across the sector.

The timing is concerning. In October, new home sales for the top 100 builders slumped 41.9%, according to China Real Estate Information’s reading. Baiguan’s own tracking of second-hand home sales also showed a year-on-year slump since the National Day Holiday in early October, struggling against a high base from last year’s strong government stimulus package.

This follows a pattern of increasing information opacity; for instance, online transaction platforms (like Lianjia and Beike) had already quietly stopped displaying historical transaction prices in various cities.

Is the decline expected to continue in November? Now that more data has gone dark, we rely on our high-frequency data from the second-hand market to gauge the true temperature of the sector.

Here are the three charts for today:

• Transaction volume & property viewings (indicators of potential buying interest).

• The inventory trend: listings of second-hand homes.

• Listing prices

*Data as of November 29, 2025

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Today, I want to show you what that shift looks like on the ground for two key demographic groups where the upgrade in services is already obvious: pregnant mothers and the elderly.

(Disclaimer: not sponsored by any company mentioned.)

The Maternity Market: Less Quantity, More Quality

We are witnessing a fascinating paradox in China’s demographic data. You have likely read the headlines: China’s birth rate is declining. According to the National Bureau of Statistics, the number of newborns dropped from 17.86 million in 2016 to just 9.02 million in 2023—the lowest since 1949.

Logic dictates that the maternity market should be shrinking. Yet, the opposite is happening at the premium end. While the quantity of consumers (babies) is dropping, the quality of consumption (spending per birth) is rising, at least for families who still choose to have children.

This trend is best exemplified by a uniquely Chinese industry: the Postpartum Confinement Center (月子中心).

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The Upgrade of the “Postpartum Confinement Period”

For centuries, Chinese culture has dictated that a mother must rest for a full month after giving birth—a practice known as the “postpartum confinement period.“ Traditionally, the new mother’s own family (typically her mother or mother-in-law) would provide care during this time. However, while most families offer unconditional love, this often doesn’t translate to a smooth and stress-free period, as they frequently lack professional knowledge.

For instance, many older generations would dictate rigorous, sometimes unscientific advice to their daughters, involving superstitions like not washing hair, avoiding cold water, staying indoors, or eating endless amounts of pig trotters (an example of overly nutritional food seen as beneficial for postpartum recovery), and even avoiding air conditioning in hot summer.

Many Chinese women born in my mom’s generation (the 1960s) experienced that confinement period culture to some degree. But decades later, the mindset of modern urban Chinese women has profoundly shifted. In China’s fast-paced urban environment, professional women need to recover quickly and effectively to return to the workforce. A stress-free, scientific, and professional postpartum recovery period has become a necessity for many.

Moreover, Chinese mothers increasingly prioritize “loving themselves” over traditional duty. They no longer want to be seen as only responsible for giving birth; the pregnancy experience must also be a meaningful, self-fulfilling journey for the mother. Once the child is born, they no longer accept that all focus should be on the baby. The new mother herself now demands professional nutritionists and nurses, not just her mom or mother-in-law’s pig trotter soup.

This demand created the Postpartum Care Center—a high-end, hotel-like experience where all needs are managed by a professional postpartum team. Services include health checks, hair washing, scientifically designed recovery workouts and nutritional recipes, and, in more luxury centers, even programs to support mental health, such as yoga and meditation.

During our inaugural China Tour in late October, we took a cohort of investors to visit Saint Bella (HKG: 2508), a market leader in the premium postpartum care space.

Saint Bella mostly caters to affluent families—celebrities, KOLs, business owners, etc. A 28-day stay can cost from RMB 160,000 ($21,000 USD) to as high as 760,000 ($105,000 USD). The group has taken the confinement experience to the next level by offering stays in 5-star hotels and luxury programs, such as SPA treatments.

What justifies this premium? It isn’t just the luxury accommodation; it is the standardization and “philosophy” of service. For instance, one memorable takeaway was the founder explaining that the father is required to join the postpartum journey at their center—a level of engagement sometimes missing in Chinese families in the past. These are small but significant signs that the service industry in China is upgrading its values toward what counts as “good service.”

Interestingly, they are even “exporting” this model. They are taking the Chinese cultural concept of the “postpartum confinement period,” rebranding it as a “Baby Honeymoon,” and expanding into global markets. This is a rare instance of China exporting a high-end lifestyle service, rather than the mass-market manufactured goods that the global market traditionally associates with “Made in China.”

The company already has a presence in Asia, where a similar confinement period culture exists, including Singapore and Hong Kong, and is debuting in the U.S. this year with locations at Waldorf Astoria Monarch Beach Resort (California) and Baccarat Hotel New York.

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Why the Mindset Is Changing: From One-Child Policy to “Better Births, Better Upbringing”

To understand why young parents spend differently, we need to rewind to the one-child policy era.

Starting in the 1980s, the government promoted the idea of “优生优育”, or “better births, better upbringing.” Urban families absorbed this message deeply. Parents were encouraged to invest heavily in their only child’s health, education, and overall development.

Today’s childbearing-age adults—mostly born in the late 80s and 90s—grew up as only children in households where virtually every resource was spent on them. They internalized this intensive investment as the norm. This means that the emergence of services like the postpartum confinement center isn’t just a natural result of the country’s rising per-capita GDP.

The reality of modern life also makes it a necessity rather than a luxury for many young parents: this generation faces a more intense work environment, with many being dual-income households. Not every family can afford the same luxury service offered by places like Saint Bella, but securing basic but professional help at a confinement center has become a new consumption trend among young mothers, so they can properly recover and return to the workplace.

This trend is not unique to metropolitan urban families; it has permeated into even small towns and lower-tier cities. For instance, the last time I visited my grandma in a small town in Sichuan province (only 3 million people—small by Chinese standards), one of the landmark buildings in the city center had been turned into a confinement center with clear signage and advertisements, making it much more noticeable than other empty office buildings nearby.

Combined, these factors produce a new mindset: for the families that still want to have kids, they want to do it right—and they are willing to pay for it.

According to Yuwa Population Research, a Chinese think tank led by renowned demographer Liang Jianzhang (a co-founder of Ctrip), the average cost of raising a child in China from birth to age 17 is about 538,000 yuan; to the age of college graduation, it rises to around 680,000 yuan.

In relative terms, the cost corresponds to about 6.3 times China’s per-capita GDP—making China among the highest worldwide for raising a child. Costs are much higher in top-tier cities: for instance, raising a child in Shanghai costs around 1.01 million yuan and in Beijing about 936,000 yuan.

Elderly Care: An Even Bigger Market for Service Upgrade

Apart from postpartum care, the elderly care industry sees a similar, if not bigger, opportunity.

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Lu Ming, a Distinguished Professor at Shanghai Jiao Tong University and a member of the National Committee of the CPPCC, argues that the pessimism is misplaced. In a keynote speech delivered at the 8th Hongqiao International Economic Forum on November 6, Lu contends that China is not suffering from deflation, but rather “structural divergence”—a mismatch where manufacturing faces overcapacity while demand for services outstrips supply.

With the 15th Five-Year Plan on the horizon, Lu outlines a radical shift necessary for the next stage of development: abandoning the obsession with hardware and investing instead in “soft” infrastructure—from increasing household leisure time to densifying urban grids. He argues that service consumption is not “low-end,” but the essential fuel for absorbing manufacturing capacity and retaining talent in cities.

To help you understand this pivot, today we translate Lu Ming’s full keynote speech, delivered on November 6 at the 8th Hongqiao International Economic Forum in Shanghai organized by Yicai Media Group. This address offers a crucial preview of the policy logic likely to shape China’s economic agenda for the next five years, redefining where the real growth opportunities lie.

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Lu Ming: Riding the Tide: Unleashing the Power of Service-Led Growth in China’s 15th Five-Year Plan Period

Lu Ming: China is on the verge of becoming a high-income economy and is entering a post-industrial phase. Although the service sector remains smaller than what is typical for this stage of development, it holds substantial untapped potential for future growth.

Distinguished hosts, organizers, and guests,

Thank you for the invitation. Today, I would like to examine China’s consumption landscape from a focused, micro-level perspective—by looking specifically at service consumption.

Let me begin with a fundamental question: Where does China stand in its economic development today? According to publicly available GDP data, China’s per-capita GDP reached USD 13,500 last year and is expected to exceed USD 14,000 this year, placing the country firmly on the threshold of becoming a high-income economy. In China’s more advanced regions, per-capita income is already approaching USD 30,000—comparable to moderately developed economies.

Crossing this threshold signals a profound structural shift. I describe this transition as China’s entry into a “post-industrial society.” Two indicators illustrate this clearly: the composition of GDP and the composition of employment. Services now account for 57% of China’s GDP and 49% of total employment. In leading metropolitan areas, the service share exceeds 60%, and in Shanghai it is now approaching 80%.

The report of the 20th National Congress of the Communist Party of China reaffirmed China’s commitment to becoming a strong manufacturing nation. Yet from a structural standpoint, China’s service share remains relatively low. The chart I am showing here places per-capita GDP on the horizontal axis and the service-sector share on the vertical axis. The upward-sloping line represents the pattern seen across advanced economies: the more developed the economy, the higher the share of services.

Where does China stand on this trajectory? The red arrows indicate that the share of services has indeed been rising over time. Yet, when compared with the historical paths of today’s advanced economies, we find that China’s service-sector share has been consistently lower at every stage of development.

Lu Ming: During the 15th Five-Year Plan period and beyond, the share of service consumption in China’s GDP is bound to rise, and its expansion will only accelerate. Strengthening China’s manufacturing capabilities will, in turn, rely increasingly on the development of producer services.

Let me address a natural question: will China’s drive to become a strong manufacturing nation disrupt the broader structural shift toward service-driven growth? From both a theoretical and empirical standpoint, the answer is no. There are two key reasons.

First, a stronger manufacturing sector creates stronger demand for producer services. As China upgrades its industrial base, manufacturing will rely more heavily on R&D, design, logistics, finance, trade, branding, and consumer-facing services. The stronger the manufacturing sector becomes, the larger the share of producer services will be in the overall economy.

Second, China is entering a phase of consumption upgrading. As incomes rise, the structure of household spending naturally shifts. When income levels were low, most spending went toward basic necessities. Over the past 25 years of rapid growth, Chinese households poured much of their budget into big-ticket manufactured goods—home appliances, cars, and housing. But as China approaches high-income status, these categories are hitting structural limits. The auto market is a clear example: China already produces around 30 million vehicles a year, a level close to saturation. There is very little room left for further expansion on the goods side.

So where will incremental consumption come from as incomes continue to rise? The answer is clear: services. This allows for a highly predictable outlook. During the 15th Five-Year Plan—and well beyond—service consumption will continue to rise as a share of total spending, pushing the service sector to occupy an increasingly central role in China’s economic structure.

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Lu Ming: China is not experiencing deflation. What we are seeing instead is a case of structural divergence. In today’s economy, many segments of the service sector are facing a situation of “demand exceeding supply,” while existing supply-side infrastructure, institutional arrangements, and policy frameworks have not kept pace with the rapid rise in service consumption.

With this structural view in mind, let’s turn to prices. Over the past several months, the decline in certain price indices has sparked debate about whether China is slipping into deflation. But from my perspective, “deflation” is not the most accurate description. What we are seeing is better understood as structural divergence.

These figures come directly from China’s official price statistics. Each cluster of bars represents one month of data, with the National Bureau of Statistics releasing a full set of price sub-indices every month. The bar on the far left—CPI—is the figure that usually gets the most attention, and indeed, it has shown negative year-on-year readings in a number of months. But once you look beyond that single number, a very different story emerges.

The bars on the left side of the chart are dominated by manufactured goods, which account for much of the downward pressure. Meanwhile, the bars on the right—especially the orange “Other” category—are more closely tied to services. This “Other” category typically captures two kinds of items: new forms of consumption, and service categories that don’t fit neatly into traditional classifications.

And here is the key point: the “Other” index is not only consistently above 100 every month, it has also been rising. In other words, in many of China’s emerging service sectors, the real issue isn’t deflation—it’s inflation.

Take childcare services as an example. Regardless of income level, every household with young children needs access to early childcare. Prices have been rising simply because demand has far outpaced supply. This captures a structural reality in today’s Chinese economy: in manufacturing, supply exceeds demand; yet in many service sectors, demand exceeds supply. And that gap represents one of China’s most important opportunities for future growth.

Look at the photos in the slide. The one on the left shows what China’s tourist destinations look like during the May Day or National Day holidays. Many people ask: “If demand is weak, why are all these places packed?” Clearly, this is not a story of insufficient consumption. Or consider the film industry. When a high-quality movie is produced, demand explodes. This year’s blockbuster Ne Zha has already exceeded 10 billion RMB in ticket sales and is approaching 20 billion—ranking among the top five globally. The demand is there; the question is whether supply can keep up.

Jiangsu’s “Su Chao” amateur football league offers similar insight. Its rapid rise—driven by grassroots enthusiasm, supported by local authorities, coordinated across departments, and amplified through social media—has become a powerful engine for new offline consumption.

Now, let us look at the supply side. Inspired by Jiangsu’s success, other provinces have tried to create their own local sports events—only to discover that many cities lack adequate stadium infrastructure. This has prompted a rush to build or upgrade facilities. Again, this is not deflation. It is unmet demand—demand that the existing infrastructure, institutional framework, and policy environment were not prepared to support. This kind of supply-demand mismatch is a defining feature of China’s economy today.

Lu Ming: Crossing the 10,000-dollar threshold in per-capita GDP is a critical inflection point in global consumption patterns. Once a country moves beyond this level, the share of services in total consumption begins to rise rapidly. China is now entering this phase, and the potential expansion in service consumption is enormous.

To understand what lies ahead for China, it is helpful to look at how advanced economies have moved through a similar stage of development. The United States offers a particularly instructive example. As shown in the chart, American household consumption can be divided into three broad categories.

The purple portion represents durable goods—automobiles, home appliances, and other long-lasting physical products. The ochre portion shows non-durable goods—everyday necessities such as food, clothing, and basic items. And the dotted line captures services, spanning healthcare, education, tourism, leisure, cultural experiences, and a wide range of modern service activities. Together, these three components map out the full landscape of U.S. household consumption.

There is a particularly important feature in this chart: the red line marking the point at which U.S. per-capita GDP crossed the $10,000 threshold. Before reaching this level, the share of services in total consumption actually declined each year. This is easy to understand if we look at China’s own experience over the past 25 years. For those born in the 1960s, 70s, or 80s—who lived through the period of rapid economic expansion—rising incomes first went toward cars, apartments, and home appliances. Big-ticket durable goods naturally crowded out the share of services in the consumption basket.

China has now moved past this phase. With per-capita GDP expected to reach USD 14,000 this year, the country has effectively crossed the same “red-line threshold” that the United States once did. And once the U.S. crossed that point, its service-consumption share kept rising—ultimately reaching about 70% today.

Yet the current share of services in China’s household consumption is only 46%—far below what global comparators would suggest.

Looking ahead, if China maintains a medium-term growth rate of around 5%, per-capita GDP would double over the next 15 years. The national average would approach $30,000, while leading metropolitan regions such as Shanghai could reach $60,000, comparable to advanced OECD economies. At those income levels, service consumption in China’s most developed regions would naturally converge toward 70%, with the national average rising toward 55%. If we compare this with the U.S. trajectory, the growth potential is enormous. And even if the pace of expansion is slower, the structural shift is only a matter of time.

Lu Ming: We must abandon the outdated view that service consumption is “low-end” or somehow in opposition to manufacturing. Cities should first aim to retain people by improving the quality of urban life before they can foster innovation. A vibrant service sector not only enhances urban attractiveness but also helps absorb and support the productive capacity of a strong manufacturing base.

To unlock this enormous growth potential, we must also confront several deeply rooted challenges. In China, a long-standing mindset still treats service consumption as something “low-end” or even wasteful. Many in the older generation—the parents of people my age—continue to believe that spending on travel, cultural activities, or other services is frivolous, a sign of indulgence rather than meaningful consumption.

Underlying this is a persistent belief that pits services against manufacturing, as if only tangible goods count as “real” consumption while services do not create value. This mindset needs to change.

Let me offer a few observations on why service consumption is not “low-end” at all, but in fact a crucial engine for raising productivity and upgrading China’s economic structure.

First, consider domestic and household services. These services play a far more important role in improving labor productivity than we typically acknowledge. When families outsource part of their household workload to trained service providers, they free up time for work, learning, and innovation.

Second, look at the role of “third spaces” in cities today—places like cafés. Some people dismiss cafés as symbols of “involution,” or complain that a cup of coffee costs ten yuan. But the value of a café is not in the beverage. It’s never just the coffee. It’s the brainstorming, the spark of innovation, the exchange of ideas that happens around it. That value, of course, never shows up in the price tag of the drink.

Third, in many Chinese cities, we now see a pattern: cities that create vibrant consumption scenes and offer a high quality of life are the ones attracting young people. This approach—what I call “keeping people through better living ”—is effectively a universal, inclusive industrial policy. You first create a good life, attract talent, and only then can you talk about innovation.

Fourth, a large share of modern consumption is heavily technology-driven. The rapid growth of gaming has fueled advancements in metaverse-related technologies. China’s animation industry has also expanded quickly, and many of the underlying technologies used in animation and gaming are essentially part of the metaverse ecosystem.

Fifth, many forms of service consumption directly enhance human capital—education, healthcare, culture, and the creative industries are all examples where consumption simultaneously builds long-term productivity.

Finally, positioning services and manufacturing as opposing sectors is outdated. A strong service sector can help absorb and support the productive capacity of manufacturing. Consider the restaurant industry, promoting dining-out consumption does not mean households will stop buying cookware. On the contrary, restaurants will purchase large quantities of cookware as intermediate inputs. In many sectors, expanding service consumption actually helps digest excess manufacturing capacity.

In this sense, fostering service consumption is a mutually reinforcing, multi-win strategy.

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Lu Ming: Large cities will increasingly hold a structural advantage in the development of service consumption. The diversity of services available in dense urban environments generates powerful consumption spillovers. Urban renewal must therefore pay close attention to population density, mobility, and scale—three factors that are essential for driving sustained growth in service demand.

Let me emphasize that in this new era of expanding service consumption, large cities will increasingly hold a structural advantage. Many emerging forms of consumption require face-to-face interaction—an inherent feature of service industries. Such consumption thrives only under certain conditions: a sizable population, high density, and strong mobility. These factors create the scale economies that make the quantity, quality, and diversity of services in major cities far superior to what smaller cities or rural areas can offer. This is why China has proposed building “consumption-center cities” in major metropolitan areas. Take Tianjin as an example. A recent concert by Jay Chou generated 3 billion yuan in local spending. Remarkably, 40% of attendees were Tianjin residents, while 60% came from outside the city. This illustrates not only the powerful pull of service consumption, but also Tianjin’s emerging role as a regional consumption hub.

Even more telling is the relationship—visible in national data—between city size and the diversity of service consumption. In the chart shown here, the horizontal axis measures urban population size, while the vertical axis reflects a service diversity index. The pattern is clear: the larger the city, the greater the diversity of services. This diversity, in turn, reflects people’s aspirations for a better life—driving them to move to large cities or travel across cities to participate in their service offerings.

Since we are in Shanghai today, let me share an example of this city. In the past two years, the Shanghai Museum hosted a blockbuster exhibition of Egyptian antiquities.

Initial estimates suggested revenue might exceed 100 million yuan, which already seemed impressive. But when the exhibition concluded this summer, the results were astonishing: 300 million yuan in ticket sales; 400 million yuan in cultural-creative merchandise; and 700 million yuan in total revenue. Seventy percent of visitors came from outside Shanghai—mainly from the Yangtze River Delta, but also from other regions and even overseas. This demonstrates the vast potential for consumption unleashed when compelling service-consumption scenarios are provided.

In recent years, we have witnessed explosive growth in concerts, live performances, theater, stand-up comedy, cultural tourism, and exhibitions. These activities increasingly integrate online and offline participation, amplifying their economic impact. Consider Xiaohongshu, a platform headquartered here in Shanghai. Although primarily an online company, it actively cultivates offline consumption. Its “Street Life Festival” and the recent anime-themed carnival on Fuxing Island attracted large crowds—even in 40-degree summer heat. These examples make one point clear: what matters is not a lack of demand, but whether cities can create the right consumption scenarios.

Another example is the hit game Black Myth: Wukong, which triggered a surge of offline tourism in related locations, such as scenic sites in Shanxi. Or take the viral photo wall outside Yanbian University, which brought unexpected foot traffic to the area—so much so that the university launched a barista-skills entrepreneurship program to channel this flow. These cases show how innovative scenarios can generate entirely new sources of consumption.

Let us also consider the choices made by young people today. Contrary to conventional wisdom, surveys by Xiaohongshu show that the top factor for young people when choosing a city is not jobs—it ranks only third. The number-one consideration is quality-of-life affordability. Cities like Changsha, Chengdu, and Hangzhou have become popular precisely because they offer rich consumption experiences at reasonable prices. Today’s young generation chooses where to live first, and only then decides where to work. This underscores the growing importance of building cities where life is attractive and vibrant.

However, many Chinese cities still bear the legacy of past urban-planning approaches—wide roads, low density, and dispersed layouts. These patterns reduce foot traffic and weaken the foundation for a thriving service sector.

In the next stage of urban renewal, Chinese cities must recognize the central role of density, mobility, and scale in driving service consumption.

Let me offer two pieces of evidence.

First, even within China’s own data, the relationship is consistent: when we compare cities by built-up population density (shown on the horizontal axis) with the share of services in GDP and employment (on the vertical axis), the pattern is unmistakable. Cities with higher density consistently exhibit stronger service-sector development.

Second, within cities themselves, street-network density matters just as much. The base images you see here are photos taken from some of Shanghai’s most vibrant service-consumption districts, paired with three statistical charts to illustrate the point. These charts measure each city’s street-grid density—whether the road network consists of wide, widely spaced arterial roads or a tighter grid of narrower, closely connected streets. Cities with denser street grids consistently show stronger service-consumption activity. And where service consumption is strong, quality also improves—because businesses compete more directly. Competition naturally drives differentiation, which in turn creates a richer diversity of services across the city.

In short: the denser the streets, the more diverse the service offerings. I want to emphasize this point again: the low-density, wide-road planning legacy found in many Chinese cities today has become a structural drag on the next stage of urban development and limiting the vibrancy of offline service consumption.

Lu Ming: Looking ahead to the 15th Five-Year Plan period, China must undertake significant structural adjustments. Consumption—not investment—must become the new engine of economic growth. And within consumption, the next major wave of expansion will come from services.

Let me conclude with a brief summary.

As China looks ahead to the 15th Five-Year Plan, I believe the economy must undergo two major structural shifts. First, consumption must assume a much larger role as the country’s new engine of growth. Second, within the consumption structure itself, China must place far greater emphasis on service consumption. This is the future economic momentum.

Lu Ming: Four policy priorities will be fundamental to unlocking China’s service-consumption potential: raising household incomes; improving holiday and working-hour arrangements; creating more compact and livable urban spaces; and strengthening investment in people by improving the conditions under which they live, work, and participate in the economy.

To achieve these structural shifts, several priorities require serious attention from policymakers and society at large.
First, China must boost household incomes by supporting a broad-based economic recovery. Only with rising incomes will people have the financial capacity to expand their consumption—especially service consumption. Today, the share of labor income within national income remains too low, and this is closely tied to the underdevelopment of the service sector. Compared with manufacturing, services are far more labor-intensive and therefore far more effective at generating wage-based income. If the economy continues to rely heavily on capital-intensive manufacturing and large-scale infrastructure investment, overall growth will not translate proportionally into higher household earnings. Therefore, increasing income is not simply a matter of issuing cash subsidies or consumption vouchers; it requires a structural rebalancing of the economy to elevate labor income as a whole.

Second, we should recognize that service consumption requires not only money—but time. Chinese workers today face some of the longest working hours in the world—patterns such as “996” or even “007” leave little room for leisure. Under such conditions, it is impossible for service consumption to grow meaningfully. During the 15th Five-Year Plan period, China should therefore consider optimizing holiday arrangements, extending certain school holidays, and introducing more flexible leave policies. In Zhejiang, for example, proposals have already been made to lengthen spring and autumn breaks for students—but parents also need time off.

At the same time, working hours must be strictly regulated through nationwide coordination. If only individual firms shorten work hours, they will simply lose competitiveness to those relying on heavy overtime. A synchronized, nationwide adjustment is necessary. And if some workers prefer to work overtime, then companies should compensate them fully. Even if they themselves do not have the time to consume, the additional income can still be spent by their family members—ultimately helping drive service demand.

Third, space matters. Urban renewal should prioritize more compact, human-scaled urban design, recognizing that service consumption depends heavily on central locations and dense activity clusters. In my recent book The Concentric City, I argue that future patterns of consumption and mobility may re-concentrate in core urban districts.

Fourth, China must continue to invest in people. This means expanding both public services—healthcare, education, elder care, early-childhood care—and consumer-oriented service sectors such as sports, culture, entertainment, and tourism. Policy should support the creation of more service-consumption spaces while reducing unnecessary regulatory constraints so that the full potential of China’s service economy can be unlocked.

With that, I will conclude here.

Thank you very much.

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In the past, this series primarily covered broad macro trends. Now, we’d like to use the same format to give you quick updates on specific companies or industries we’ve discussed before. Let us know in the comments if you find this useful — your feedback will help us decide whether to continue this format.

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Back in June this year, I wrote about Laopu Gold (HKG: 6181), a rapidly rising brand in China’s luxury market with the potential to become a homegrown luxury giant. In that article, I explained how Laopu’s unique position in traditional Chinese craftsmanship and its connection to cultural heritage have helped it resonate with younger Chinese consumers.

The stock has corrected by more than 36% since its peak in July. After an meteoric rise of over 800% since its IPO in June 2024, it’s a good time to review whether the company’s actual sales and broader consumer sentiment in China justify its current valuation or if we’re entering speculative territory. In today’s newsletter, I’ve selected 6 charts that are key to understanding this question:

1. The tailwind: the broader luxury industry is seeing signs of bottoming out in Q3 China

Most luxury brands showed an improving or accelerating year-over-year growth in Q3 2025, possibly boosted by the improved sentiment among middle-class and wealthier households as China’s equity market delivers upbeat returns YTD.

2. But not every jewelry brand enjoyed the same growth

Laopu continued to take market share from international fashion houses, largely boosted by the gold rally since 2024.

3. But the gold price isn’t the sole determining factor

Although the gold price rally should benefit overall gold jewelry makers, not every leading brand in China experienced the same explosive growth in online discussions compared to Laopu Gold.

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For instance, when analyzing the top keywords mentioned in social media posts about Laopu:

Fewer posts specifically mentioned keywords related to the investment features of gold jewelry (such as gold price, gold bars), whereas it’s more common to see these discussions with other leading jewelry makers.

There were also more mentions of specific consumption scenarios, such as “young people“ and “bloodline awakening“ (a social media trend where young Chinese consumers increasingly appreciate the beauty of gold jewelry as they grow older, something they didn’t care for in their childhood).

Social media discussion indeed matters for sales:

For Zhou Liu Fu Jewelry, the marketing campaign where they collaborated with Jiuhua Mountain (one of China’s four famous Buddhist mountains) in March this year gained good attention from young consumers, as seeking fortune and good wishes from temple visits has become increasingly popular among young Chinese in recent years. (We covered this trend in our 2023 newsletter: “The Zen effect in China: Three Buddhism-inspired consumer trends.“)

Chow Tai Seng also saw increased awareness on Red Note this year after launching products featuring Cloud Brocade, another Chinese traditional craftsmanship that is deemed as the intangible cultural assetintangible and resonates greatly with consumers.

Laopu’s sales are virtually a mirror of its social media awareness: as the company’s stock price increased 8x, so did its sales and social media buzz rise.

These nuances show that while the gold price rally certainly boosted overall sentiment for gold jewelry, this tailwind isn’t an automatic guarantee of sales. Consumers are becoming more discerning about product craftsmanship and design.

4. Laopu’s recent sales

According to our offline payment data, BigOne Lab estimates that Laopu Gold’s sales in mainland China in October grew 551% YoY (excluding SKP stores and after regional adjustments), accelerating from 79% in September and aligning with the YoY growth rate in August.

The acceleration in September was mainly due to the price increase in October and the opening of new stores in Shanghai.

5. The price hike

Notably, or perhaps benefiting from the continued rise in gold prices, the daily sales surged before the price hike in late October. However, after the price increase was completed on October 26, the daily sales data dropped significantly, with the decline speed surpassing that of previous price hikes.

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1. Households are still in a “wait-and-see” mode

Transaction volumes have weakened since October (partially due to the high bases last year). In the 45th week of 2025 (Nov 1-8), second-hand home sales across 90+ cities in China dropped 16.3% year-over-year (vs. 16.2% decline in the prior week) and fell 4% week-over-week.

Listing prices continue their downward trend, offering no evidence that a price floor has been reached.

Social media activity confirms the continued caution among prospective buyers: Discussions about “home purchasing” and “property viewings” saw a noticeable drop on Douyin and Red Note, with the trend extending into October and indicating that households are still largely in a “wait-and-see” mode.

2. Toward premiumization: premium discretionary brands see rebounds

China’s biggest annual e-commerce sales event, the “11.11” (Singles’ Day), kicked off in October this year. But so far, online sales in October have been relatively flat compared to last October. Live-streaming sales on Douyin have noticeably slowed down after the explosive growth in previous years.

However, due to the mismatch of the promotion period and strategies this year versus last year, it’s better to wait for the November data to fully judge this year’s “11.11” sales.

A notable counter-trend to the “trading down” narrative is the outperformance of mid-to-high-end brands. For instance, in October, domestic and more affordable skincare and makeup brands—which had outperformed foreign competitors since 2023—lagged in gross merchandise value (GMV) growth. Premium international peers, such as Estée Lauder, SK-II, and YSL Beauty, recorded stronger growth.

Among domestic leaders, only a few brands that position themselves in the mid-to-high-end segment, such as Maogeping (1318 HK), managed to outperform.

The same trend is observed in other discretionary consumer categories, such as sports products and luxury:

To get a sense of what is offered, you are welcome to check out this older post in the same series: Charts of the Week. You can also get free access by sharing us. For more timely discussions, consider joining our private Discord channel for paid readers.

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The correction is not without catalysts.

The most notable driver is the operational reality of its EV business. The initial-year buzz from the new SU7 sedan has given way to harsh facts, including a growing consumer backlash following a fatal accident in Chengdu in October, where a Xiaomi SU7 reportedly lost control, crashed into a greenbelt, and subsequently caught fire. This incident has sparked a PR crisis over its smart driving features. (Unfortunately, at the time of writing this newsletter, another Xiaomi SU7 was reported to catch on fire in Changzhou on November 10.) This latest fatal accident re-ignited skepticism among consumers, following another fatal accident in March this year, as well as an incident in May where hundreds of owners demanded refunds over “false advertising” regarding a cosmetic-only carbon fiber hood on the SU7.

On the smartphone front, the launch of its new flagship series, the Xiaomi 17, also stoked controversy among consumers. The Xiaomi 17’s design is obviously similar to the iPhone 17, and the company strategically released the models on September 27, only 10 days after the iPhone 17’s purchase availability date, a clear move to aggressively compete with Apple in the Chinese market. Lei Jun, CEO of Xiaomi, was also quite upfront with the company’s ambition to rival Apple for the leading position in the smartphone market, stating: “The comprehensive benchmarking (to iphone) we propose is not just about configuration and parameters, but about matching, and even surpassing, Apple in areas like technological leadership and user experience“. As a matter of fact, Xiaomi’s new series should have been named the Xiaomi 16, following the previous 15 series sequentially, but the company intentionally skipped the “Xiaomi 16” naming.

Although the Xiaomi 17 series indeed has some specs, such as its periscope camera, earning praise, the design has also been met with mixed reactions from consumers, with some dismissing its design as a “counterfeit” or “copycat” of the iPhone. Such controversy is not new—Xiaomi previously received the same mixed reaction when it launched the SU7, which looks almost exactly like the exterior design of the Porsche Taycan.

So, after the share price’s significant correction, it’s now time to investigate whether what we are seeing is a sentiment-driven dip or the beginning of a larger normalization. Specifically, do consumers buy the idea of the Xiaomi 17, and what are the real performances of Xiaomi’s EV business?

To answer this, we again share the equity research piece from our partner Horizon Insights, a respected independent research provider based in Shanghai. The research focuses specifically on Xiaomi’s Q3 performance, which draws insights from Horizon Insights’ dealer survey channel research. The equity research covers the performance of Xiaomi’s 17 series, its core business (smartphones, major appliances, etc.), and the new EV business.

You may also want to check out Horizon Insights’ equity coverage list and their sample reports.

About Horizon Insights —Established over a decade ago, Horizon Insights is dedicated to delivering in-depth, cycle-aware insights into Chinese assets. Our core team comprises well-regarded investment research professionals who have been working closely together for almost two decades and have earned the trust of over 1,000 institutional and professional investors worldwide. Our research is recognized for its independence and foresight, grounded not in noise but in long-term conviction and depth. We’re grateful to connect with you through this Newsletter, and we look forward to ongoing, thoughtful dialogue.

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Horizon Insights | Xiaomi Q3 2025 Dealer Survey

Key findings from channel research

• Q3 performance marked by year-on-year growth but quarter-on-quarter decline; single-store efficiency weakened amid network expansion. In Q3 2025, Xiaomi’s overall regional revenues registered varying degrees of year-on-year growth, primarily driven by the expansion of retail outlets and the launch of new smartphone models. However, on a quarter-on-quarter basis, several regions showed clear signs of pressure, most notably Henan and Guangdong, where sales fell significantly due to the withdrawal of government subsidy programs and front-loaded consumer spending in prior quarters. While the Southwest region achieved structural growth, same-store performance remained largely flat. Overall, Xiaomi’s Q3 growth was volume- and product-driven rather than efficiency-driven, with scale expansion and smartphone launches as the key contributors rather than productivity gains per store.

• Xiaomi 17 series emerged as the primary growth engine in Q3, accelerating the brand’s premiumization trajectory. The newly launched Xiaomi 17 series acted as the core growth catalyst for the smartphone business during the quarter. First-month sales were approximately 30%–50% higher than those of the Xiaomi 15 series, reflecting a sustained shift in the product mix toward mid-to-high-end models. Dealers across multiple regions reported a significant rise in the Pro and Pro Max model share, accompanied by a notable increase in average selling price (ASP). Consumers demonstrated growing recognition of Xiaomi’s brand value and product experience. The premiumization trend was driven not only by product improvements but also by upgraded brand perception, targeted subsidy incentives, and a more sophisticated offline sales strategy. Xiaomi’s foothold in the premium market has thus shown substantive progress.

• The phase-out of national subsidy programs weighed heavily on major appliance sales, though structural upgrades toward premium products continued. The major appliance segment underperformed in Q3, mainly due to the sharp reduction or termination of the national “Home Appliance Subsidy” policy, which hit subsidy-dependent categories such as TVs and air conditioners the hardest. Following the high base of 2024, the policy rollback led to both year-on-year and quarter-on-quarter declines in multiple regions. Nevertheless, structural upgrades toward higher-priced products were evident — even without subsidies. Premium product sales accounted for a much higher proportion than in previous years. Dealers expect the subsidy effect to persist through Q1–Q2 2026, after which they anticipate steady normalization and renewed growth in consumer demand for home appliances.

• Xiaomi’s auto business cooled in Q3 amid delivery delays and negative publicity, though long-term confidence remains. Following the strong initial sales surge of the YU7 model in Q2, Xiaomi’s auto sales dropped by over 60% across several regions in Q3. The main reason was the prolonged delivery cycle, which caused substantial customer attrition during the waiting period. Additionally, negative public sentiment and heightened competitive pressure since September have further dampened short-term sales momentum. Nevertheless, dealers remain cautiously optimistic about the medium-to-long term, citing solid product competitiveness and positive consumer feedback as reasons for confidence in the brand’s potential recovery beyond 2026.

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Xiaomi 17 series launch weekend channel survey: Total sales are up 15–50%; Pro Max share exceeds expectations at 35–60%

Horizon Insights conducted dealer interviews across Sichuan, Guangdong, Shanghai, and Zhejiang to assess in-store sales performance during the first weekend following the September 25 launch of the Xiaomi 17 series.

Across these regions, same-store sales increased year-on-year by 25%, 50%, 50%, and 15%, respectively. The Pro Max models emerged as the primary growth driver. Dealers indicated that actual growth could have been higher had inventory levels been sufficient.

• The Xiaomi 17 series demonstrated a clear structural shift in product mix. The Pro Max models became the best-selling variants, followed by the Pro and standard editions. During previous launches (Xiaomi 14–15 series), the standard edition accounted for over 50% of total sales; this share has now dropped to 25%–35%, while Pro Max has risen to 35%–55%. Most stores reported stock shortages for Pro Max models. Dealers widely believe that with adequate supply, the Pro Max share could exceed 50% of total sales.

• Immediately after the launch event, online discussions were polarized, centering on issues such as cross-generation naming, rear-display design, and marketing claims. However, offline performance told a different story — while some customers humorously mentioned these topics in-store, conversion from trial to purchase remained smooth. Dealers reported a sharp rise in store traffic, including from non–Mi users, as well as Huawei and Apple users, who came to test the new models. Although detailed conversion metrics were unavailable, dealers noted no significant difference in purchase intent between returning and new customers. Importantly, Xiaomi’s growing brand equity through its auto business over the past two years has enhanced consumer confidence and positively influenced smartphone sales, providing cross-category brand endorsement.

• Dealers observed a roughly equal gender split (50/50) among buyers, with female customers showing particular interest in the Pro series’ rear-display design, which was viewed as novel and stylish. Many expressed willingness to pay for aesthetic value and design appeal. Consumers also provided positive feedback on frame quality, hand feel, and system smoothness. Dealers widely agreed that Xiaomi’s premiumization efforts have achieved tangible progress in 2025, although the brand has yet to fully penetrate the core high-end user base dominated by Apple and Huawei. Nevertheless, entry-level Apple/Huawei users and customers of OPPO and vivo were more receptive to switching, suggesting that Xiaomi’s expansion into adjacent premium segments is gaining traction.

Xiaomi dealer survey — Q3 2025: sales show YoY growth or remain flat, but decline noticeably QoQ

Xiaomi’s overall sales performance in Q3 2025 exhibited a pattern of year-on-year growth but quarter-on-quarter contraction.

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Two years after ChatGPT went viral worldwide, AI investment and capex have become a major focus for big money. But how are enterprises actually integrating AI technology?

Frequently asked questions among global investors include whether enterprises are adopting AI, pursuing more downstream AI application initiatives, and to what extent AI has impacted human labor. These are important yet complex questions that are hard to answer in one sitting (and for the last one, it may still be too early to tell). But in today’s newsletter, I want to take a first step in exploring these questions by examining Chinese companies’ hiring demand for AI-related roles.

In this week’s analysis, I looked at job posting data across major online recruitment platforms in China, and all indicators point to a key ongoing trend: demand for AI-related talent is decoupling from the overall tepid job market. The number of job postings for AI-related roles has outpaced the broader market since the second half of 2023 — and has accelerated again in 2025. Despite macroeconomic headwinds, Chinese companies’ investments in AI remain firm, strategic, and are accelerating significantly.

More importantly, companies hiring for AI talent have expanded beyond technology into finance, manufacturing, industrials, and even traditional sectors such as agriculture. This is no longer just hype — it’s a signal that the real economy has begun to strategically plan and deploy AI.

*Please note that the job postings data used in today’s analysis may be biased toward white-collar & knowledge-worker jobs, as many blue-collar positions are often filled outside online recruitment platforms.

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Industry Penetration: Who’s Leading the Race?

The AI wave is sweeping across all industries — but at very different speeds.

Unsurprisingly, the software and IT services sector shows the highest penetration of AI-related positions.

Despite lower overall penetration, most other industries have also shown a steady increase in AI hiring over the past five years — especially in 2025.

The charts below show the share of AI-related roles out of total job postings for each industry in September of 2025, 2024, 2023, 2022, and 2021, respectively:

But when it comes to growth momentum, the real story lies in other industries. In Q3 2025:

Behind the paywall, I provide more on industry-level trends, along with case studies and comparisons of hiring demand for some key enterprises. To get a sense of what is offered, you are welcome to check out this older post in the same series: Charts of the Week. You can also get free access by sharing us.

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