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The famous ultra-long-term growth stock investment institution, the foreign giant with over 2 trillion in assets under management—Baillie Gifford—recently held its 2026 annual digital investment conference; among the highlights was a discussion about investing in China.
Linda Lin, head of Baillie Gifford's China equity team, and Tom Slater and Lawrence Burns, investment managers of Baillie Gifford's Scottish Mortgage Trust, discussed China's investment opportunities, prospects, and the sectors and companies driving China's next wave of growth.
According to Liuli Investment Report, Baillie Gifford was founded in 1908, spun out of a partnership law firm, starting from Edinburgh and entering the investment field by chance; click here for details. After more than a century of evolution, it has become one of the world's most outstanding long-term growth investors, with assets under management exceeding 2 trillion RMB.
Baillie Gifford adheres to a "global long-term growth strategy," uncovering high-growth investment opportunities worldwide. Tesla is one of Baillie Gifford's most famous investments. Baillie Gifford entered in 2013 when Tesla's market value was less than 10 billion USD, and this investment brought Baillie Gifford floating profits of 17 to 20 billion USD over 7 years.
Baillie Gifford has also invested in the Chinese market for nearly 20 years, heavily investing in Tencent, Alibaba, Pinduoduo, ByteDance, BYD, CATL, and many other Chinese companies. Click here for details.
The holdings disclosed by SMT (Scottish Mortgage Trust), co-managed by Lawrence Burns and Tom Slater, as of August 31, 2026, show that ByteDance, Pinduoduo, Meituan, BYD, and other Chinese stocks remain in its portfolio, with the largest Chinese holding currently being ByteDance.
As opportunities and risks have changed, Baillie Gifford's total exposure to Chinese assets has also adjusted; Baillie Gifford believes the current level is comfortable, requiring no particularly heavy position to invest in a group of highly innovative companies, and at current prices, the corresponding risk-reward is very attractive.
The core guest of this dialogue, Linda Lin, is the head of Baillie Gifford's China equity team. Linda spent many years building a local research team in Shanghai and has long tracked representative companies of China's industrial transformation. Also participating in the dialogue were Baillie Gifford fund managers Lawrence Burns and Tom Slater, who continue the ultra-long-term growth strategy of betting on disruptive innovation. They also participated in the long-term heavy position in Tesla (2013–2026) and led the positioning in Chinese companies such as BYD and CATL, excelling at betting on global technological transformation leaders.
In the more than 20-minute dialogue, they discussed a group of Chinese companies like BYD and CATL that have truly achieved global leadership; Baillie Gifford believes that when analyzing any market globally today, one cannot ignore the power from China; for example, when analyzing Western e-commerce markets, it is impossible to bypass the impact brought by Temu and Shein—these business models born in China going overseas have completely rewritten the competitive landscape of overseas markets; and for something like Meituan food delivery, its business scale is simply unmatched by overseas peers.
Moreover, due to China's rapid technological development and the convenience of life, they can even observe China to predict some consumer trends that may emerge in Western countries in the future. Foreign investors who have truly experienced China's advantages thus have great confidence in the Chinese market, while we ourselves are prone to fleeing at the first sign of trouble.
Baillie Gifford reminds that for global investors, the truly easily overlooked risk is precisely: underestimating China's ability to reshape global industries. Reading this article carefully will also provide different inspiration for our local investors investing in China.
Liuli Investment Report (liulishidian) has compiled and finely translated the essence of this discussion as follows: China is no longer just a "chaser"—it has already taken the lead in some areas. Moderator: Linda, you have lived in China for many years and conducted on-the-ground research. What is the biggest difference between the China we learn about from news reports and the China you see when visiting companies and meeting founders? Linda Lin: If you only understand China through news headlines, you mostly see macro narratives, such as the weak real estate market, low consumer confidence, and intricate geopolitical situations you mentioned. These situations are all true, and I do not intend to refute these news reports. But this is like judging a restaurant solely by the outdoor weather. Because whenever we truly sit down and communicate with founders, we see a completely different side. We can see their grand ambitions and their determination to promote the rapid penetration of innovative technologies into various industries. In some fields, such as green technology, advanced manufacturing, robotics, and even AI, I think China is no longer just a "chaser"—in fact, it has already taken the lead in some areas. So, when looking at China, one should not simply ask "Is China developing well or not"—that is not the point. For our team, the real question is always—even in a difficult economic situation, can we still find those highly promising growth companies in China? This is exactly why I think stock selection matters.
Investing in China at current prices is attractive. Moderator: But finding quality companies is only part of it. In China, geopolitical and regulatory risks are particularly important. How are these risk factors incorporated into investment decisions? Lawrence Burns: I think these factors are mainly reflected at two levels. The first level is that when analyzing each company, we construct multiple future scenario projections, and in these scenarios, geopolitics and China's domestic regulatory environment are factors that must be considered. Taking BYD as an example, when we analyze it, we mainly base it on the assumption that BYD will never sell passenger cars in the US market—not because its product competitiveness is insufficient, but precisely because its product competitiveness is too strong and the political level will not allow it to enter. Based on this premise, we further make more detailed projections: due to tariffs and political resistance, how much market share can BYD gain in Europe? After considering all these factors, we ask ourselves: even in the face of these headwinds, is the risk-reward ratio of this investment still attractive? In some cases, the answer is no; but for BYD and some of our other holdings, we believe they are still worth positioning in. The second level is that risk is not only a problem for individual companies, but more about our common exposure to the Chinese market—geopolitical risks like these act on multiple different holdings at the same time, and we must be clearly aware of this. For example, there is a type of risk that the US may restrict its capital from investing in Chinese companies, which would directly depress the valuations of these companies. Therefore, we not only evaluate the risk-reward of a single company, but also consider the total China exposure of the overall portfolio. As mentioned earlier, our China position has already dropped from 24% to 11%, and the reason we believe 11% is now a more comfortable level is that we still want to capture this group of excellent companies, but we also understand some of the risks they share, so the overall portfolio's China allocation ratio has decreased compared with the past. However, I want to add one point: even if you do not directly hold any Chinese companies, your portfolio will still have implicit China-related risks. For example, Tesla and Apple—for both companies, China is both an extremely important consumer market and an extremely important manufacturing base. But I am not sure how much discount the market has priced in for this risk when evaluating these two companies. In contrast, when truly investing directly in China, you will find that market sentiment is very pessimistic, and many companies with strong growth and outstanding competitive advantages are valued very low. So, for us, the opportunity here is that without taking a particularly heavy position, we can invest in a group of highly innovative companies, and at current prices, we think the corresponding risk-reward is attractive.
By observing China, one can predict future Western consumer trends. Moderator: Companies like Meituan, Pinduoduo, and Xiaohongshu have already fully integrated into the daily lives of Chinese consumers. If viewers watching this video spent a day in Shanghai, what consumption scenarios do you think would surprise them? Linda Lin: The three of us often go to China together for on-the-ground research. I think what amazed the two gentlemen most was the convenience of life. This convenience does not only exist in Shanghai. Even if you go to the Great Wall in Beijing, even if you stand at a remote location on the Great Wall, you can use Meituan to order an iced latte and have a drone deliver it to you. As you experience thousands of years of Chinese history, you may not even have found a place to sit yet, and your iced latte is delivered to your hands in 5 minutes. So, I think one major feature of China's digital life is its enormous scale. For example, Meituan served more than 800 million users last year, and this year, drone delivery orders have exceeded 1 million. On the one hand, it is a very large market; but on the other hand, it also foreshadows what digital life in other countries will look like in the future. Especially every time I return to Edinburgh, I can strongly feel this gap. Tom Slater: You could say that some things appearing in the West now were already experienced by us in Shanghai 5 years ago. For example, the penetration rate of electric vehicles is much higher in China; there are also QR codes that can call various services; 5 years ago, these things were already everywhere in China, but here they are basically still unseen. In a sense, by observing China, one can predict in advance some consumer trends that may appear in Western countries in the future.
After comparing Chinese EV companies, I am worried about the prospects of European cars. Moderator: And this innovation is not only reflected in the consumer field. Many people still stereotypically believe that Chinese EVs are just cheaper, but their technical level is average. Lawrence, you visited BYD's headquarters last year. How big is the gap between what you saw on the ground and this stereotype? Lawrence Burns: I think the first half is right—Chinese EVs really do offer high cost performance. BYD's cheapest model in China is the Seagull, with a starting price of about 8,000 pounds, and the car itself is quite good. But the second half—the view that "technology is not mature enough"—is wrong and completely outdated. Both Linda and I have been to BYD, and for many years we have disagreed with this view, and this visit further confirmed it. If we look deeper, I think what is impressive is BYD's technological maturity. They have independently developed chips, motors, and batteries, which is very rare in the automotive industry. Musk once said that Western automakers outsource their entire "brains" to the supply chain. But this is rarely seen in Chinese automakers; you will see a lot of excellent innovation. For example, BYD's fast-charging technology can add about 400 kilometers of range in 5 minutes of charging; Europe is currently far from meeting this standard, and BYD also plans to bring this technology to Europe. I can frankly say that after seeing Chinese EVs on the ground, I am worried about the prospects of Europe's mass car market. In the long term, I do not know how they will cope with this competition.
CATL's moat is its understanding of technology and correct decisions. Moderator: Behind the EV revolution, there is also Baillie Gifford's holding company—CATL. Tom, what made CATL so large? Where will the next round of growth come from? Tom Slater: I think, on the one hand, it comes from the extremely high maturity of its manufacturing processes; on the other hand, it comes from the huge market size of the EV industry itself, and we believe that in the future EV penetration will continue to increase, and the advantages of industry leaders will become more and more significant. In addition, there is also the so-called energy storage market, including stationary energy storage, grid-level energy storage, and other energy storage applications. This market is growing rapidly. We believe that in the coming years, electrification will not only serve as the ultimate energy solution in the transportation sector, but will also penetrate into various industries on a large scale. So what truly attracts us to CATL is the combination of two things: it has already established scale advantages in a very large market, and that market itself is still growing rapidly. At the same time, its corporate culture is also key—that is, as long as a better technical route appears, it dares to abandon the route that was already proven last year; it advances multiple technical routes simultaneously to ensure it can bet on the technology that ultimately wins. Even with top-tier manufacturing capability and enormous scale, CATL's real moat, I think, is still its deep understanding of technology and its repeated correct technology decisions. This is the foundation for it to achieve its current industry position.
Whether to invest in Horizon requires conclusive evidence of competitive advantage. Moderator: We see that AI is gradually integrating into the physical world through cars and robots. This brings us to Horizon Robotics. Linda, you knew Yu Kai when he was still at Baidu, and later he founded Horizon Robotics. How did knowing him so early help you later understand what he wanted to do and ultimately decide to invest in this company? Linda Lin: After Yu Kai left Baidu and founded Horizon, we actually tracked this company in the primary market for many years. As you said, today's Horizon Robotics can be classified as "physical AI." It is now a leading company in China's local autonomous driving chips and software systems, and at the same time, it has also laid a solid foundation for future robotics business. Although knowing Yu Kai earlier helped us identify China's best founders and companies earlier, after that, the team still had to spend a lot of time studying the company's management team, products, and R&D capabilities. We must see conclusive evidence that Horizon can build long-term, sustainable competitive advantages and occupy a leading position in domestic AI competition. In fact, most of Baillie Gifford's China holdings follow this logic: human connections help us open the door, but whether to invest in the end still depends on in-depth research.
China and the US are taking two different AI systems; China hopes to lower the cost of using AI. Moderator: At present, much of the discussion about AI still focuses on American companies. Baillie Gifford's largest Chinese holding is currently ByteDance, which is also growing into an important force in China's AI field. From ByteDance, what differentiated development paths can be seen between Chinese AI companies and their American peers? Linda Lin: I think the two sides are taking two different systems, and we often discuss this. Many American companies we hold aim to achieve artificial general intelligence (AGI) and build the most capable frontier large models. But in China, you will see many companies choosing to make open-source models. An important reason behind this is that China hopes to lower the cost of using AI. It hopes AI can truly be used by all industries, rather than remaining only in the internet or digital world. It hopes AI can enter factories, schools, and even the public service system, truly entering the whole of society. So China's attitude toward AI places more emphasis on practical application. Speaking of our holding ByteDance, many people do not think of it first when mentioning AI, but it is actually one of the strongest AI companies in China. It has its own large model and at the same time holds the strongest content distribution platforms in China and globally. From a commercial perspective, even at its current large scale, it is still China's fastest-growing company.
When analyzing any global market, one cannot ignore the power from China. Moderator: Tom, based on your understanding of Chinese companies, how does it affect your evaluation of other overseas companies in Baillie Gifford's portfolio? Tom Slater: Going back to what we just discussed—what you would see if you spent a day in Shanghai. Today I think that if you want to know where business models elsewhere may develop in the future, China is already a very important observation window. And often, if you want to truly understand the competitive landscape of Western markets, you must also know what Chinese companies are doing now. If you look at Xiaohongshu, it is a completely different way of consuming internet content; it combines social networking, content, and shopping. This model itself is an investment target worth studying, but it also helps us understand the evolution of how people interact with the internet, and how this change will ultimately affect existing Western platforms. Looking at e-commerce, when analyzing Western e-commerce markets, it is impossible to bypass the impact brought by Temu and Shein. These business models born in China going overseas have completely rewritten the competitive landscape of overseas markets. There is also the scale effect, just like the Meituan food delivery Linda mentioned—its business scale is unmatched by overseas peers. So on the one hand, these Chinese companies themselves, the quality of their founders, their business scale, and growth space are very worth studying; on the other hand, when we analyze any market globally, we cannot ignore the power from China.
The truly easily overlooked risk is underestimating China's ability to reshape global industries. Moderator: If global investors observe China from a Western perspective, what are they most likely to miss? Linda Lin: Tom just gave some examples. For a long time, the market has liked to attach labels, calling Xiaohongshu "China's Google," Pinduoduo "China's Amazon," and Didi "China's Uber." The labels look concise and make it convenient to benchmark against American companies. But looking again today, this method is becoming less and less useful. Yet it is hard to say which foreign company ByteDance corresponds to; and TikTok under ByteDance is now instead being imitated by Western companies. This shows that the old benchmark labels have become ineffective. And the truly easily overlooked risk comes precisely from the other side: underestimating China's ability to reshape global industries. We talked about EVs and batteries, corresponding to our holdings CATL and BYD. Now there is also AI, with China vigorously developing open-source models. Some people will say its frontier capabilities are not top-tier, but the cost advantage of this AI approach not only serves China and the US, but can also be deployed in Africa and other emerging markets. And cost advantage is crucial in these regions. The same goes for robotics. If China can continue to strengthen its manufacturing capability with AI and robotics, then this will directly affect its competitive advantage in global manufacturing, and this will ultimately affect global trade. At the same time, the US wants manufacturing to return home, so the game between the two sides will change the industry landscape. And one of the most worthwhile areas to observe may be semiconductors. This is a very good touchstone. Imagine that even in the face of severe external restrictions, if China can achieve independent technological substitution, what would that mean for our holdings? And how would it affect the companies we hold elsewhere in the world? How would it affect other industries? So I think the significance of understanding China has never been only about uncovering investment opportunities; more importantly, it is about understanding the development direction of a group of key industries in the coming years. Sina statement: This news is reprinted from a Sina partner media outlet. Sina publishes this article for the purpose of conveying more information and does not mean it agrees with or confirms its views or descriptions. The article content is for reference only and does not constitute investment advice. Investors operate at their own risk based on this.
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