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Investing

Three sectors to watch for growth opportunities in China

Edith Yeung, a fund manager with 500 Startups, says she’s upbeat on education, health care and entertainment in China

PUBLISHED : Monday, 20 February, 2017, 8:29pm
UPDATED : Monday, 20 February, 2017, 10:57pm

Edith Yeung, the newly-appointed Greater China partner of venture fund 500 Startups, has her sights set firmly on three industries in mainland China – education, health care and entertainment.

Yeung, who is taking over the Greater China market from Rui Ma, was previously based in San Francisco as partner of 500 Startups’ Mobile Collective, a micro-fund that invested in mobile app start-ups.

“China now allows two kids per family, it used to be just a one-child policy,” said Yeung, noting the massive opportunities in China’s education space. “Just that alone is a big macro trend for education.”

“There is a really big opportunity in two key areas – one is for education for younger children, and secondly, top notch US education in areas such as science, technology, engineering, and mathematics (STEM), where children are trained in areas such as coding,” Yeung said. “Chinese parents have a lot of respect for US education.”

According to a report by Deloitte, the Chinese education market is expected to almost double from 1.6 trillion yuan in 2015 (US$232.63 billion) to 2.9 trillion yuan by 2020.

Yeung said that she was more interested in investing in “business-to-business, vertical-driven” companies, as opposed to direct, consumer-facing services, which face more challenges in succeeding.

Health care is also an industry that 500 Startups is keen to explore, Yeung said. China alone, for example, has more than 110 million diabetics.

“The magnitude of challenges and problems [in health care is worth doing something about ... and we will double down our efforts to do even more in health care,” she said.

China is also a huge market for entertainment, according to Yeung, who quoted statistics from app analytics firm App Annie which show that China had the second-highest average revenue per user on Apple’s iOS app store, coming behind Japan and surpassing the United States.

Yeung previously invested in entertainment businesses such as DayDayCook, a Hong Kong multimedia platform that strives to provide Chinese recipes and cooking advice for its users, as well as online content and social media platform 9GAG.

China’s middle-class is rising, and they’re willing to pay as long as it’s quality content,” Yeung said.

“Regardless, the business model now for entertainment companies are that users either pay for a subscription to have an ad-free experience, or you can access the content for free, but get served a lot of ads. Either way, these companies still monetise.”

“China’s slowly getting more sophisticated when it comes to monetising for content,” she added.

Prior to 500 Startups, Yeung was the general manager for Dolphin Browser, a Chinese mobile browser start-up that was among the first Chinese apps to find a large user base overseas. She managed Dolphin’s marketing and business development efforts, growing installations to over US$150 million.