Local Market Expertise

 

In China,  "who you know" is more important than "what you know."   Many so-called Private Chinese Companies have major shareholders comprised of state-owned companies, provincial and local governments and government-owned banks.  EM Capital Management (Hong Kong) Ltd. officers and advisors understand these complexities and maintains key relationships that facilitate developing accurate and actionable information.

 

Our extraordinary local market relationships and senior-level corporate and official access provides the opportunity to gather facts, validate, interpret and analyze published and direct information in light of high-context communication, inaccurate reporting and pervasive misinformation.

Third-party ESG Consultants and

Data Providers

 

Data available from financial and ESG specific data providers is improving in terms of the number of Chinese companies in their covered universe and the depth of information provided.  However, numerous, critical information holes and inconsistencies exist coupled with opaque corporate structures and shareholder identities must be filled with in-country, on-the-ground research and analysis, including sometimes sensitive or officially forbidden subject matter.

 

Working closely with investors, data vendors and consultants, we can develop appropriate metrics and benchmarks used for both relative financial performance metrics as well as for benchmarking ESG data sets and reporting. Environmental, Social and Governance factors can be used to measure and report on Impact(s) achieved through dedicated or cause-oriented investment strategies.

Management Engagement & Activism

 

Our local market expertise and credibility grants EM Capital Management (Hong Kong) Ltd. access to key influencers and decision-makers.  Credibility means that Chinese officials and business leaders are willing to engage with us in sharing ideas related to opportunities to incorporate ESG values, practices and improvement in existing practices, policies and reporting.  

 

We perceive a rapidly growing appreciation by Chinese officials and senior management for dealing with issues related to the environment and sustainability.   Through regular contact and targeted meetings and seminars, we believe that achieving changes and actions is indeed possible, with patience and persistence to overcome general skepticism and low strategic prioritization.

Chinese Impact Investment and ESG Factors

 

EM Capital Management (Hong Kong) Limited believes investing in China should produce positive collateral benefits in addition to financial profits.  Through our U.S. affiliate, our company is a Signatory to both the UN Global Compact and UN Principles for Responsible Investment (UNPRI).  

 

Mr. Michael Chen, CEO and Seth Richard Freeman, Group Chairman have for nearly a decade advocated incorporating principles and goals of Impact investments and projects throughout the firm's activities.  Environmental, Social and Governance (ESG) factors guide investment strategies and management.

 

The Six Principles of Responsible Investment provide a framework for incorporating ESG factors into the complete life-cycle of the investment process.   Developing countries, an in particular China, present many challenges due to the prevalence of State Owned Enterprises (SEO's) and debunked perceptions that incorporating ESG factors implicitly lowers investment returns.  

 

Notwithstanding, the Chinese government and corporations acknowledge the need to remediate environmental damage and high levels of pollution.  Incidents related to exploitation of workers highlight the opportunity for improved labor practices.  Many foreign Institutional Investors are requiring in-depth disclosure of ESG policies, risks and practices as part of their due diligence and analysis of proposed investments.  

 

Thus, Chinese companies can expand access to foreign capital by embracing ESG factors in their overall business growth strategies.  EM Capital Management (Hong Kong) Limited is available to assist China's Central and local government agencies and Chinese companies by making presentations and provide ESG-related training

 

Evaluating and managing China-related investment opportunities and service providers includes initial and periodic assessments of the potential positive (and conversely, the negative) impacts and environmental, social and governance factors attributable to the decision to invest or engage services; or to exit an investment or vendor relationship that is inconsistent with our investment philosophy or values.