According to KKR, China’s consumer-driven sectors present a favorable opportunity for investors

KKR, a global investment firm, is diversifying its focus in China by investing in various consumer-driven sectors, including pet food, liquor, and lighting fixtures. This move marks a departure from their previous emphasis on technology-related investments.

Joseph Bae, co-CEO of KKR, stated in an interview with CNBC’s “Squawk Box Asia” that KKR has approximately $6 billion invested in China. He highlighted that their primary focus has been on the significant market opportunity presented by domestic consumption.

KKR aims to seize the opportunity and meet the demands of China’s expanding middle class, which consists of approximately 400 million individuals seeking higher-quality food and services.

Additionally, KKR maintains a strong presence in China, with active offices located in Beijing, Shanghai, and Hong Kong.

Bae elaborated that KKR has made investments in various consumer-driven companies in China, including the largest pet food company, the largest lighting fixtures company, retail pharmacy chains, and domestic liquor and alcohol brands. Their investment portfolio is focused on catering to the consumer market in China.

China’s State Council recently introduced proposals to stimulate the consumption of household products, although specific details were not provided.

Additionally, China has recently released a series of economic data that fell short of expectations, indicating a weakening growth momentum and increasing demands for additional stimulus measures.

Bae emphasized that KKR has not focused on sensitive technology areas like semiconductors, artificial intelligence (AI), and supercomputing.

In an escalation of the technological trade war over microchip access, China recently imposed export restrictions on two metals that play a crucial role in semiconductor manufacturing.

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This move serves as a warning to the United States and Europe regarding the ongoing dispute.

Bae further highlighted the significant increase in geopolitical complexities between China and the United States, emphasizing the need for greater prudence when considering investments in China.

He emphasized the importance of carefully navigating the competition between these economic superpowers to make informed investment decisions.

As of today, the investment company manages assets worth over $500 billion, including a notable $15 billion in its Asia private equity fund.

Bae mentioned that KKR’s presence extends beyond private equity, encompassing growth equity and infrastructure investments. He highlighted that KKR is currently the largest investor in infrastructure in Asia. Additionally, KKR operates a private credit fund and platform in the region.

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