BA Capital held the 2024 Annual General Meeting. BA Capital firmly believes that structural opportunities in China’s consumer market will persist over the long term. We remain committed to continuously building capabilities to identify different types of opportunities.
China’s consumer market stands as one of the world’s largest single unified consumer markets. Within this fertile soil, a “niche demand” amplified by China’s population scale can generate economic returns sufficient to nurture multiple companies valued in the billions of dollars.
BA Capital has been investing in China’s consumer market for eight years. Whether through frontline research or accumulated market insights, our confidence in this market has deepened — China, as the largest unified market by population, undeniably offers the greatest opportunities.
Over the two-day conference, we shared BA Capital’s perspectives on how to seize consumer investment opportunities in the new cycle, and engaged with investors in in-depth discussions on market trends, shifts in consumer behavior, and potential areas of growth.
Building the Capability to Continuously Identify Diverse Opportunities
David He, Managing Partner of BA Capital, sharing at the event
Since its establishment in 2016, BA Capital has witnessed both the exuberance and rational return of the consumer investment industry. Why are we confident that BA Capital can sustain consumer investing? Because within China’s vast consumer market, we can continuously identify different types of opportunities based on socioeconomic development stages, industry evolution, changes in channels and supply chains, and shifts in consumer demand.
BA Capital’s core strengths lie in our ability to cover projects broadly, integrate resources effectively, and gain deep consumer insights. Among these, consumer insight has been a distinctive characteristic since BA Capital’s inception. We believe consumer entrepreneurship and investment combine rational and emotional components. The rational aspect requires logical reasoning, data analysis, cost control, and efficiency enhancement, such as discerning genuine market validation and identifying product models with real barriers. The emotional aspect requires us to consider product-market fit carefully, especially for experience-driven businesses that emphasize consumer insight.
Over many years of consumer research and interviews, we have accumulated rich knowledge of diverse consumer groups. These insights enable us to provide professional support to BA Capital’s ecosystem companies and deliver value from a comprehensive perspective.
Regarding exit strategies, for each project we invest in, we consider both current and future capital market conditions.
We want to share that in the past one to two years, we have established close connections with many listed companies. In these interactions, we strongly sense their desire to pursue acquisitions. Particularly in the food sector, where category sizes are relatively small and growth is slowing, founders of listed companies clearly express their needs — the categories they seek, target scale, and desired traits of acquisition targets. We believe the consumer M&A market will become increasingly active. From the perspective of the U.S. and Europe, consumer is one of the most active M&A sectors.
Seeing Structural Opportunities in China’s Consumer Market
Zhang Michael, Managing Partner of BA Capital, sharing at the event
China is a vast market spanning five time zones with 1.4 billion people and a multi-tiered structure. We remain optimistic about consumer investment because structural opportunities persist.
Firstly, the lower-tier consumer markets show strong resilience. Generally referring to markets below third-tier cities, these include over 300 cities, 2,800 counties, 44,000 townships, and 660,000 villages in China, accounting for 64% of the national population and approximately 60% of total consumer spending. Economic growth in lower-tier markets has outpaced the national average over the past decade, increasingly driving retail sales growth.
In these markets, rising population density and improving infrastructure expand consumption demand. However, there remains a supply gap in quality consumer goods, presenting development opportunities for consumer companies.
Secondly, business model and technology upgrades bring efficiency improvements. Data shows that in 2023, the number of Sam’s Club stores and its sales revenue in China grew, while traditional supermarkets saw declines in store counts and sales. In the snack retail sector, Busy Ming Group exceeded RMB 20 billion in nationwide revenue in 2023 and surpassed 10,000 stores in June 2024.
From these trends, regardless of region or income level, consumers are embracing more efficient channels for functional and practical goods. The popularity of warehouse clubs and snack collection stores reflects improved efficiency and consumers’ rational choices.
Finally, service and experience-oriented consumption will continue to grow. According to data from the National Bureau of Statistics, service retail sales in 2023 grew 20% year-over-year, outpacing goods retail by 14.2 percentage points.
We see consumption entering a new cycle but recognize enduring structural opportunities: demand in lower-tier markets, continuous efficiency gains, and growing experience needs.