'Import substitution' demands urgent
'Import substitution is actually China's old endowment advantage gradually diminished in the international division of labor, and the new endowment advantage has gradually emerged and the birth of demand, the trade friction is only to make this issue explicit.' Yang Ling said.
In the past, China had a large number of cheap laborers, and therefore it has been a global foundry. With China’s demographic dividends passing the “Lewis turning point” around 2011, labor costs have gradually increased, and China’s advantage in factor endowments under the original global division of labor is positive. In the context of deleveraging, the incremental investment also faces the ceiling. Therefore, in the future, it is necessary to abandon the model of relying on demographic dividends and capital investment to stimulate the economy, and to realize the economic development model with technological innovation as the core driving force.
Even if there is no trade friction between China and the United States, the change in factor endowments also requires upgrading and restructuring of China's industrial structure, which is reflected in this year's national 'high-quality growth' and 'kinetic energy conversion' strategies. Recent 'U.S. Sanctions for China's Famous Communications Corporate events can be seen as a lesson: If China can not complete industrial upgrading in high value-added and core technology areas, China can easily be replaced as a supplier in the global industrial chain of work. As a demand-side, it is easier to be controlled by others. Therefore, it is imperative to upgrade the core technological innovation capability and realize the 'import substitution' of strategic products as soon as possible.
Industry investment opportunities comparable to 'smartphone'
Previously, China has achieved import substitution for primary products (most agricultural products, textiles) and industrial products (such as ferrous metals, chemical products), and the current 'import substitution' has gradually spread to high-end industries.
Judging from the existing factor endowments, China already has the conditions for further import substitution. Although China’s demographic dividend has gradually declined, benefiting from the rising proportion of overseas returnees as well as the expansion of domestic higher education, the number and quality of talent have increased simultaneously. At present, the quantitative weighted scores of scientific papers in China are already ranked No. 2 in the world. According to statistics from the National Bureau of Statistics and WIPO, the number of PCT patent applications in China in 2016 and 2017 (as of September) are all ranked No. 3 in the world. It can be said that , China's talent bonus has begun to release.
Policy support also provides sufficient resources for the implementation of 'import substitution' in high-end industries. From the '863 Project' in 1986 to the 'Torch Plan' in 1988, to the '973 Project' in 1997, and to 2016's In the 'national key R&D program', the gap between China's international advanced level in many fields has gradually narrowed. The report of the Nineteenth National Congress pointed out: 'Strengthening the construction of national innovation system and strengthening the strategic technological forces'. The recent Politburo meeting also pointed out the need to strengthen Key key technology research. Starstone Investment expects that this year's related industries will accelerate the introduction of 'import substitution' related support policies.
Yang Ling believes that the investment opportunities triggered by the 'full import substitution' main line may be comparable to the past smartphone industry chain and will be the investment direction for the next five years.
Ten years ago, Steve Jobs led smartphones to be born. Since then, the global demand for smart phones has driven the booming development of the mobile phone industry chain, covering materials, production, and foundry fields. Initially, these companies were mainly located in Japan and South Korea. The United States, Taiwan, and later mainland China gradually replaced these countries and regions, becoming the main gathering place for products and services for smart phones. Battery industry components, electro-acoustic devices, touch screens, module processing, and other sub-industries arose.
At the same time, the Chinese smart phone industry is gradually changing from the 'supply chain alternative' to the 'mobile phone brand'. In the rapid development of domestic smart machines over the past few years, R&D strength and cost control capabilities have been continuously improved, with independent brands such as Huawei. , Xiaomi, OPPO, Vivo, etc. have gradually emerged as the strong competition for brand competition in the smart phone industry. In the domestic market in 2017, the market share of self-owned brands exceeded 60%, and the global market share reached almost 1/3.
As smartphone shipments continue to strengthen, the performance of listed companies continues to rise, and the huge mobile phone industry chain has spawned a dozen of shares, making it one of the most growth areas in the A-share market in the past decade.
Consumer Technology Becomes the Main Position for Import Alternatives
Which industries will pick up the banner of 'import substitution'?
Yang Ling thinks that there are more companies in the consumer and technology sector that are internationally competitive and have large import substitution space.
Among them, some mid-end manufacturing industries in the large consumer segment and technology sector are currently in the process of import substitution, such as pharmaceuticals, agriculture, supermarkets, and autos, which are expected to accelerate import substitution in the future.
The pharmaceutical biotechnology benefited from the gradual landing of ten years of research and accumulation, as well as the driving factors of the domestic medical reform policy, import substitution is continuing to advance. Since 2015, the pharmaceutical industry has initiated a new round of drastic reforms, the main line in the pharmaceutical field is to encourage innovation Pharmaceuticals and high-quality generic drugs have greatly improved the market efficiency of innovative drugs and high-end generic drugs through priority review; the conformity assessment of generic drugs is a powerful supply-side reform of the imitation drug market, which accelerates the listing of high-quality domestic generic drugs. , Under the background of the medical insurance control fee, it will be expected to replace the expensive imported original research drug, directly benefiting domestic generic pharmaceutical companies.
Similar logic also appears in the seed sector. At present, China's dependence on imports of agricultural products gradually reduced, the main varieties of self-selected varieties have accounted for more than 95% of the market share, the dominant species even gradually go abroad to achieve international substitution.
In addition, new retail and other industries are also experiencing a trend of accelerated import substitution. In recent years, foreign-owned supermarket companies have gradually given up business in China. In 2017, Carrefour opened only 3 new stores, but there were 6 stores closed. In contrast, the leading domestic supermarkets have built strong barriers to competition through their strong operating capabilities, accelerated the expansion of stores, increased income and profits, and the Internet giants have entered the realm of retail sales. It is hoped that they will start from innovative formats, improve marketing, and improve the supply chain. Efficiency and other benefits.
Although China has already made breakthroughs in the cutting-edge fields such as electronics and military manufacturing, some key materials and core components are still dependent on foreign countries. Such industries are expected to usher in policies and funds to create conditions for import substitution. The potential for future development is relatively high. Big.
For example, in the field of semiconductor materials, the high-end product market is monopolized by a few large international companies such as Europe, the United States, Japan and South Korea, and the self-sufficiency rate of most domestic products is less than 30%, and most of them are lower-technical barrier materials. Currently, the country has begun to vigorously support semiconductors. Industry, and the establishment of a trillion-dollar national integrated circuit industry fund. Although import substitution is not completed overnight, but in the gradual release of talent dividend, the high degree of national policy support and continued investment in capital investment, the industry is expected to form a positive direction with capital Feedback, usher in accelerated development.