The coastal cities of China have become some of the most crowded, popular investment regions in the world today. However, the increase in prices and tough competition are forcing private equity firms to dig deeper in an effort to find good investment opportunities.
Some of the most popular areas include Beijing, Shanghai, Guangzhou and Shenzehn. Numerous companies such as ARC Investment Partners with Adam Roseman have seen the potential in China, and have made it one of their primary investments.
Derek Sulger of Lunar Capital, a Shanghai-based firm, says, “By and large, Eastern China is home to more investments that are larger, and more mature companies, so it’s logical that a disproportionate focus develops on these regions.”
The negative effects can be felt by many, though. Zheng Song of MDC explained: “Even some of the top-tier fast food chains feel that the rent in Beijing/Shanghai is too high and it is too difficult and competitive to make money. They also plan on expanding to second and third tier cities in the next few years.” For this reason, many firms have begun to shift their focus towards the mainland.