By Tao Huidong | China Venture

As Chinese regulators signal a more accommodative stance toward consumer-sector listings, some investors see a broader shift underway: after years in which advanced manufacturing and technology dominated policy attention, consumption may be moving back toward the center of the economic agenda.

Few investors have argued that case as consistently as Alan Song Xiangqian, founding partner of Harvest Capital, a Beijing-based private equity firm focused on consumer businesses. For nearly two decades, Song has concentrated on companies tied to everyday spending habits — beverages, convenience food, quick-service dining, personal care and household staples.

That positioning once appeared unfashionable in an era defined by internet platforms, electric vehicles and semiconductor ambition. Yet as China grapples with slower growth, weak private demand and persistent deflationary pressure, businesses linked to recurring domestic consumption are drawing renewed attention.

Harvest’s portfolio includes Eastroc Beverage, snack maker Qiaqia Food, bakery chain Babi Food, restaurant operator Laoxiangji and Xiaocaiyuan. Several of these companies have benefited from a common trend: consumers trading down selectively while continuing to spend in categories that combine affordability, convenience and familiarity.

Earlier this year, Harvest participated again in Eastroc Beverage’s Hong Kong share sale. The company has emerged as one of China’s strongest consumer performers in recent years, supported by expanding distribution, disciplined execution and resilient margins.

Song argues that many investors misunderstood the nature of China’s consumer market. Rather than chasing premium niches or short-lived fads, he says, long-term value often lies in businesses serving broad-based daily demand.

“The ordinary needs of ordinary people are where demand proves most durable,” Song said in an interview.

A Policy Shift Toward Consumption

China’s domestic demand remains one of the central questions facing policymakers. Household consumption accounts for a smaller share of GDP than in many advanced economies, while property weakness and income uncertainty have weighed on spending sentiment.

Against that backdrop, a reopening of equity financing channels for consumer companies would carry significance beyond capital markets. It would suggest greater recognition that consumption-led growth may need to play a larger role in the next phase of China’s economic transition.

Song describes the recent policy signals as a correction to earlier market preferences that favored industrial upgrading and strategic manufacturing.

“For a period, consumer businesses were seen as less aligned with national priorities,” he said. “That distinction is beginning to fade.”

Many economists argue that stronger consumption growth ultimately depends less on listing policy and more on household confidence, wage growth and social welfare reform. Song agrees, saying income expectations remain the key variable for any sustained recovery in spending.

“If households feel secure about the future, they spend differently,” he said.

Betting on the Mass Market

Harvest’s investment philosophy centers on scale rather than novelty. Song looks for businesses capable of serving large portions of China’s population frequently and at reasonable price points.

That reflects a structural reality of the Chinese market: it is vast, but income levels remain uneven across regions and demographics. As a result, companies offering value, convenience and operational efficiency often have deeper growth runways than premium concepts aimed at narrow urban segments.

Song rejects the distinction between “new consumption” and “old consumption,” labels widely used during China’s venture boom.

“Consumption is consumption,” he said. “What changes are technology, channels and management capability.”

That thesis has gained traction as some once-fashionable direct-to-consumer brands struggled with customer acquisition costs and thin margins, while traditional operators with strong supply chains and physical networks proved more resilient.

Can Chinese Brands Go Global?

Song says the next challenge for Chinese consumer companies is internationalization.

China has already produced globally competitive industrial and technology companies, but fewer consumer brands with the same level of international recognition. Building them, he says, will require patience, localization and brand-building rather than relying solely on manufacturing scale.

Recent expansion efforts by Chinese beverage, tea, beauty and restaurant chains suggest early momentum, particularly across Southeast Asia and parts of the Middle East.

“The next generation of Chinese brands will not simply export products,” Song said. “They will need to understand local consumers and compete as global companies.”

That evolution could take years. But if it succeeds, it would mark an important shift: China moving from being primarily a manufacturing base for global brands to becoming home to consumer brands with global reach.

Markets Want Consistency

Song also cautions that investor confidence depends heavily on regulatory predictability. Whether companies choose mainland China, Hong Kong or offshore listing structures, he says, capital tends to reward clarity and stable rules.

For global investors reassessing China exposure, that message may resonate as much as any sector call.

In the meantime, Song remains committed to a simpler proposition: in uncertain economies, the most ordinary forms of demand can be the most dependable.