In July 2025, the renowned electronic music festival Tomorrowland made its debut in Shanghai, marking a significant moment for China’s vibrant festival scene.
One surprising beneficiary of the surge in artificial intelligence is the experience economy within China, as highlighted by industry expert Annabelle Yu Long of BAI Capital.
Hello, I’m Evelyn, reaching out from Beijing with the latest insights in The China Connection, where we dive into trends shaping local businesses.
While investment in AI continues to soar, Long emphasizes that the Chinese consumer remains paramount. She points out an "unintended consequence" of AI, which has altered the dynamics of human interaction and their relationship with businesses. This shift signals an opportune moment to invest in emerging consumer trends, notably those that enhance offline experiences.
BAI Capital, rooted in the German media giant Bertelsmann, successfully secured $800 million in May for its latest U.S. dollar fund, an unusual achievement amid a trend toward domestic, yuan-based investments in China’s venture capital landscape.
When considering investments, Long prioritizes companies that are consumer-focused, regulation-neutral, and market-oriented. She believes that technology doesn’t need to be limited to complex areas like aerospace or quantum computing. "If I could invest in the next TikTok or ByteDance, I would be thrilled, just as I would be to see more companies like Nintendo, Sony, and Panasonic emerge from China," she remarked.
Foreign investors have long been attracted to the potential of China's vast consumer base. However, post-pandemic spending has been lackluster, with focus shifting towards sectors like AI, semiconductors, and hardware instead. Retail figures showed a decline in May, although a modest growth of 1% was reported for June.
In a bid to invigorate consumer spending, China initiated a nationwide trade-in subsidy program in 2024, encouraging individuals to exchange old products for new ones. Local governments are also exploring various strategies to motivate both residents and tourists to increase their spending.
The iconic Wangfujing shopping area in central Beijing is undergoing a transformation, introducing more engaging in-person experiences. This includes plans for a themed space centered around virtual reality and beloved characters from iQiyi's dramas.
Sharon Tan, CEO of consulting firm Beijing Lyvion International, which is involved in the Wangfujing initiative, expressed her hope of partnering with Condé Nast, the parent company of Vogue. She noted that the preferences of younger consumers play a crucial role in shaping retail environments. A request for comment from Condé Nast remains unanswered.
On July 13, Chinese policymakers outlined new strategies focusing on bolstering experience-driven consumption over the next five years, particularly in sectors such as performing arts and sports.
