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Little interest in Asia

In my previous life, as a fund manager, our firm had little interest in Asia.  The reason was that about 30% of our assets under management were from Chinese investors, about half was from European investors and the last 20% was from UK-based investors (I left the firm more than five years ago, and I have no idea as to the source of assets today).  

European investors had little appetite for anything that was not European or American (the world's largest and most liquid market).  Asian investors had zero appetite for Asian exposure.  They give us funds to invest to specifically diversify from Asia. 

It's only after retiring that Asia became of interest, it's not a passion, but when we built our biodigesters I received a lot of information on the equipment and firms.  

I became a fund manager after the collapse of the Japanese stock market.  I was invited to many seminars about Japan as a prime market for investment, but I always had a nagging feeling; that aging is a serious issue, I remember in one of my notes to our managers that I wrote that by 2050 Japan's population would be identical to that of 1950,  except that the population pyramid would be inverted.  I wrote:  "There are no economic theories that discuss how an economy functions when that happens.  My recommendation is to stay away from Japan.  There were too many attractive lower-hanging fruits elsewhere".

I mentioned in a previous blog that I am concerned with spare parts.  I suffered firsthand the covid shortages and I am now cautious.  That's why I was concerned when the best equipment for our biodigesters was Chinese.  What happens if a compressor ring fails, what do we do if a computer fails? Is there a risk if the supply chain fails, are there workarounds?

When we purchased the farm five years ago, it had an abandoned but hardly used static gas-powered generator.  One of my neighbours is an engineering genius and fixed it in two days.  It was really stupid, when someone did the maintenance several years ago, a fuse had been put in the incorrect location...it took him only two days to figure out why the current was not regulated and the generator would shut down almost immediately.  So when I got the specs for the biodigester systems, I hired him to go over the specifications, and he said: "You know that all their specialized computers are really simple Windows machines and if we image them we can easily replace them".

That convinced me to buy this Chinese equipment -- because every part of these compressors, generators and actuators were copies of stuff made in Europe, it's just that the Chinese have better integration.  I remain uninterested in Asia but in this specific instance where we have exposure to China, we found a workaround should it ever be needed.  


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