China is in a strong position, despite the proclaimed intention by U.S. President Donald Trump to impose trade barriers, Wolfgang Fickus, investment specialist at Comgest told finews.ch in an interview. The People's Republic is much more than a mere gigantic manufacturing powerhouse.

Mister Fickus, China is currently celebrating its New Year. But is there anything to celebrate given the looming conflict with the U.S.?

The shift to a more protectionist policy, which U.S. President Donald Trump probably will carry out, will have negative consequences in both developed countries and emerging markets. This will hamper the possible recovery of global trade. China's economy however is increasingly relying upon domestic consumption and services. This makes it much less vulnerable for negative demand moves resulting from protectionism.

«The shift to a more protectionist policy will hamper the possible recovery of global trade»

So President Trump's U.S. is overestimating its influence in the region?

It is both possible and realistic that the economic cooperation in Asia, where 45 percent of the global population live, will intensify. Demographic effects and the growth of the middle class will make China and India the dominant economies of world in coming decades.

Possible trade barriers may however impact Chinese companies in the short term?

Countries with both core competences and a substantial market automatically are strong powers in trade discussions. China in other words is in a strong negotiating position – and far more than just a mere production powerhouse targeted by President Trump.

China imposed capital controls last year. And Chinese companies in 2016 bought more competitors than ever outside the country's borders – in what sectors do you expect them to be active in 2017?

It is important for Chinese companies to face the global competition. With its «Made in China 2025» plan, the Chinese government last year made clear that it aims to make leaps forward in core industries such as robots, machines tools, aircraft, drugs and IT. In those sectors, we expect further takeovers such as the acquisition of Kuka last year.

We also need to keep an eye on the Chinese domestic market. What sectors in particular?

The mobile Internet has revolutionized a great many things in China. Telecommunications giant China Mobile has 850 million customers. The Chinese mobile-phone market measures 1.4 billion subscribers. This is an industry with a great number of interesting business models.

«Growth in the Chinese life insurance market has been very strong»

For instance in online gaming, where Netease and Tencent are the strongest competitors. Furthermore, there are growing companies in e-commerce because Chinese customers in general are very modern and less eager on department stores.

Swiss banks such as UBS and Credit Suisse are putting great hopes in the Chinese market. What are the chances for foreign finance firms in China?

We aren't holding bank titles in our funds, but a number of life insurers. Growth in the Chinese life insurance market has been very strong – premiums increased an average 15 percent annually over the past twelve years. But with about 5 percent, the market share of foreign competitors remained pretty small.

Why?

One of the reasons is the size of the country. China Life, the biggest company in the industry, has more than 1 million agents, the biggest sales force by far. This is not possible to achieve organically for a foreign company. A careful development of business in the rich cities along the coast generates good growth figures. Foreign life insurers won't however play a bigger role in the entirety of the market in the foreseeable future.

By contrast, Chinese banks such as CCB or payment providers such as Alipay already are active in Switzerland. What other finance firms do you expect to start business in the west?

Financial service in our opinion is more of a domestic story. With the globalization of Renminbi, Chinese banks will gain in importance across its Asian neighborhood.

Wolfgang Fickus is a member of the investment committee at France-based Comgest. The independent fund manager in mid-2016 managed 20.7 billion euros and employs some 130 staff at offices in Paris, Dublin, Hong Kong, Tokyo, Singapore, Dusseldorf, Amsterdam and Boston.