Why shareholder alignment matters

In the early days of share ownership, Chinese companies were mostly state-owned, with priorities that revolved more around the government’s agenda, including raising the employment level and growing GDP. Chinese companies have evolved to become more market-driven and aligned with investors, as seen in the increasing use of share incentives based on performance targets. We find businesses that treat their shareholders as partners rather than as privileged onlookers are more likely to treat all stakeholders well, which is crucial for minority investors like us.

Share incentives have been increasing

Source: Wind, CICC, CLSA as of June 2022.