I recently finished reading “Apple in China” by Patrick McGee, which inspired me to allocate bit more to my favorite tech companies in China, and also start a position in Apple AAPL 0.00%↑ which is up 25% so far.
China held the world’s largest or co-largest share of GDP for long stretches, especially from the 1st through the early 19th century, before a late-19th/20th-century decline and a modern rebound. China’s “Golden Age” periods support dominance in the Han, Tang, Song, Yuan, Ming, and early Qing eras. In short for about 14 of the last 20 centuries Chia was a dominant economic power. The century of humiliation is long over and China has been trending back to the top for a while now. Underweight China at your own peril.
China entered the Global Innovation Index top 10 for the first time in 2024, taking 10th and displacing Germany to 11th.
Drivers of China’s rise include strong private-sector R&D, high-tech exports, and leading global patent filings, about one quarter of all international applications in 2024.
The top nine ahead of China are Switzerland, Sweden, United States, South Korea, Singapore, United Kingdom, Finland, Netherlands, and Denmark.
Germany’s drop reflects difficulty shifting from industrial to digital innovation, despite filing over 16,700 international patents in 2024.
China leads in science and tech clusters with 24 in the 2025 index, with Shenzhen–Hong Kong–Guangzhou ranked the top hub.
Global trends noted by GII 2024: overall R&D investment remains high, international patenting is down, global CO₂ emissions from fossil fuels rose 0.8% year over year, and China accounts for 32% of global emissions with only a 0.2% increase.
Enter the Dragon
The Dragon Portfolio consists of my top picks of publicly traded tech companies in China, that are undervalued compared to USA counterparts.
Despite the Dragon portfolio being up 40% since it’s creation all eight these picks are still undervalued from a fundamental investment perspective. More time I spend researching these companies and their financial more I end up adding to my portfolio.
These are my top 8 tech companies in China you should consider adding to your portfolio, but if you are not an individual stock picker kind of an investor, I also have an ETF that has most of these in it, to make your like easier. No shame in passive ETF investing.
KWEB (KraneShares CSI China Internet ETF)
What: KWEB is an exchange-traded fund that holds a basket of China-focused internet and tech stocks.
How it works: Like any other ETF, they take a fee for managing the collection of holdings, so you don’t have to buy each one individually. Also they professionally allocate based on risk. Again no shame in owning China tech this way, 42% YTD performance is as good as Dragon Portfolio.
$XIACY (Xiaomi)
What: Xiaomi designs and sells smartphones, Electric Cars, smart devices, and consumer IoT products, plus internet services. Xiaomi says a car rolls off its Beijing line about every 76 seconds. That converts to roughly 47 cars/hour or about 1,100 cars/day if the line ran 24 hours. Some factories are so automated with robots they don’t even need lights, because there are no humans.
How: It earns mainly from hardware sales, with higher-margin revenue from internet services such as ads, apps, and cloud offerings. Link to a previous deep dive at the end.
$TCEHY (Tencent Holdings)
What: Tencent operates social platforms (WeChat), online games, digital content, fintech, and cloud services. Almost like owning a VC fund that invests in lots of innovative tech. WeChat is the everything app in China. We don’t have anything like it in the US.
How: It monetizes through game sales and in-app purchases, advertising, payments and fintech fees, subscriptions, and cloud services.
$BYDDY (BYD Company)
What: BYD makes electric and hybrid vehicles, batteries, and energy-storage systems, and also supplies electronics components. Is biggest EV producer in the world with financials similar to Tesla at 1/10 of market capitalization.
How: It earns primarily from vehicle sales, battery and energy-storage shipments, and contract electronics manufacturing.
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