AMA: Peking University Professor / Global PE Investor / Former Alwaleed Exec

Bio:
Jeff Towson is currently a Professor of Investments at Peking University's Guanghua School of Management in Beijing where he teaches global investing and private equity in developing economies. Peking University is often referred to as the "Harvard of China"

Jeff has a pretty unique background. Previously, he was Head of Direct Investments for MENA and Asia-Pacific for Prince Alwaleed of Saudi Arabia, nicknamed the "Prince of Deals" and the "Arabian Warren Buffett". Prior to that he was a consultant at Booz and Co.-- he didn't have to go through investment banking-- and received his MBA from Columbia University. He was also a Fulbright scholar, and lastly, has an MD from Stanford University.

His new book, "The One Hour China Book", is co-authored with Jonathan Woetzel (one of the founding partners of McKinsey China). To sum up, this is a down-to-earth, speed-read style publication that focuses on what you need to actually need to know about what's happening in China. No one wants to read a 300 page book- his can be read in an hour, and can be found here.

Comments (35)

Mar 14, 2014

Hi, Thank you very much for coming on to speak with us. I wanted to ask, how has your MD helped you in your work? Do you find what you learned to be valuable?

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Mar 14, 2014

Well probably not directly valuable relative to time spent (4 years). But I do focus on healthcare investments a lot and that is a space a lot of smart business people have a lot of trouble in. It's a quirky specialty and it's pretty hard to understand if you haven't spent years in a hospital or insurance company in some form.

Mar 14, 2014

I definitely took the long way around the block in terms of career. Not that smart but has been fun.

Mar 14, 2014

Thanks for doing this, you have quite an impressive background. Since its Friday, my question is going to diverge from the typical professional question - I have some friends that have done some contracting in the Middle East for people of similar wealth to Alwaleed, and they have some crazy stories of the sheer extravagance / luxury they encountered there. If you don't mind, can you give us a few examples of some of the craziest, most surreal social events / experiences you had while in the Middle East?

Mar 14, 2014

The Middle East is a pretty fun place. I don't know if it is off the charts in terms of wealth relative to NYC, LA or Hong Kong. They just to go to different places, like Marbella, Geneva, Beirut and London and spend a lot shopping. And they have big huge houses in the Middle East. But people aren't buying islands and such like tech billionaires.

Mar 14, 2014

Surreal experiences. I had a guy pull out a gold-plated pistol during a negotiation once. I once opened my office door and Tony Blair was standing in the doorway. Almost spilled coffee on him. I once got a call at 2am in Riyadh to come pick up some of my employees from a Saudi jail.

Mar 14, 2014

Thanks for doing this. The answer to my question is probably "Read the book," but what is one of the most common misconceptions of US and Western investors with regards to China?

Mar 14, 2014

The one that bugs me the most is that everyone starts thinking like a politico-economist when they come to China. In the West, it's usually about customers and competitors and industries. As soon as Westerners come to China (or read the WSJ), they start thinking about the communist party and new regulations coming out of Beijing. They all go macro and my experience is most of the business here (sitting in a Starbucks in Shanghai) is about competition (which is pretty ruthless). I find the macro economic and political talk way overemphasized.

Mar 14, 2014

Would be really interested on hearing your summarized view on the Chinese economy.... there are some very bearish signs out there!
Going to look at that book.

Mar 14, 2014

I think the bull bear thing doesn't really work well with China. There are too many uncertainties and the whole massive situation is moving to fast. It's just huge amount change happening very quickly. There are booms and busts in industries all the time. More like tubulence on a rocketship. I think more in terms of the potential for major shocks. Like an acute credit crunch (possible). or a major real estate fall (likely but probably not a big deal). It's hard to think macro for China. Things make more sense at the industry level.

Mar 14, 2014

Can you speak and read Chinese fluently? If not, how do you get by in work and in life without mastery of the language?

Also, what's your outlook on the finance industry in China? Would you recommend young finance professionals to launch a career in China?

Mar 14, 2014

I can read Chinese and understand everything people say in meetings. That seems to be enough to do business. I speak Chinese with friends but use English in business (I speak better). It's not a hard language to learn. I learned in Riyadh by doing 1-to-1 lessons on Skype with teachers in kunming (cost like $5 per hour). Doing business in Asia pretty much requires Chinese now. Takes about 1-2 years to get functional.

Finance is pretty awesome in Asia. Big money. Very dynamic. For foreigners, I generally recommend you stay cross-border. Be the person at your company in New York that speaks Chinese. I focus on US-China deals. But I would not go head-to-head with the sea of young Chinese finance professionals coming up. If you go cross-border, you eliminate that competition.

Mar 14, 2014

If you can commit to spending 1 hour a day, 4 days a week on Skype, you can be pretty good at Chinese in about 2 years. That's how I did it.

Mar 15, 2014

The Skype lessons sound very interesting. Can you expand a bit on those? (i.e. which website to find tutors, how to find some of the better tutors, and any tips for a beginner looking to start with these lessons?)

Thank you for your advice!

Mar 14, 2014

A good career strategy is to be the person in New York who knows China. A friend just got an offer from a HF right out of MBA because of this. She jumped the cue. China expertise is pretty important for a lot of industries and a lot of finance careers - and few people have it.

Mar 15, 2014

Hi Jeff
Thanks for doing this!
A few questions:
-What did you like the most about working in Saudi Arabia?
-What does the future of Saudi Arabia look like to you?
-If you were just graduating from university and headed home for Saudi Arabia, what industry do you think has the largest entrepreneurial opportunities/opportunities to serve the market in the near future and would try your best to position yourself in?

Greed is Good.

Mar 15, 2014

In KSA, I would be looking for a big industry where you have something that the local giants (investment groups, banks, real estate groups, etc.) don't have. Typically the big ksa industries are real estate / infrastructure, energy and finance/ banking. That's the really big money that tracks oil wealth. Everything else tracks population which is actually quite small. I would definitely target one of those industries.

For finance / banking / investment, there is a lot of interesting investment banking, private equity and some venture capital. There is some interesting cross-border stuff happening into Africa and up into Kazakstan and Azerbaijian. If it was me, I would probably focus on private equity deals and I would either find good companies in Europe / UK and bring them to KSA - or I would take KSA investment capital into somewhere like Africa. That's a pretty good position Ultimately, KSA has more money than opportunities. So either bring the company from the UK or take the money out to somewhere like Africa. Abraaj is moving into Africa and India right now. Egypt is a possibility.

Real estate is a big big sector. Also infrastructure and constuction. Lots of money being made. But the big companies control this so working for them would be a good start.

Energy is a lot of money. But mostly government. Hard to do much there.

I like KSA. Lots of good business. Kind of tough living. But an interesting place to be.

    • 1
Mar 15, 2014

Hi Jeffrey,

Thanks for doing this! Really appreciate your time. My question is, for those starting out as an investment banking analyst in a Western country, how would you recommend them to develop China expertise? Is living there and soaking in the culture required or are there other great sources of knowledge?

If we were to go to China, what are good ways to learn if we don't have any local connections?

Thanks!

Mar 15, 2014

hey. good question. I'm not a big fan of the "china business environment" and such general classes taught at US business school. General knowledge is not that useful. I tell my students to think in terms of industry. If you're getting some depth in energy as an analyst or banker in the west, start looking at Chinese energy companies (and customers). Some industries won't have much interaction with Asia - but more and more do. Is it possible to understand Coca Cola without understanding Chinese consumers anymore?

I would start pulling industry reports out of Hong Kong for your industry. See what the smart analysts there are writing about energy companies and whatever your field is. From there I would start reaching out to various thinkers in your field in Asia. If you do end up taking a trip to China, spend your time meeting with experts in your industry.

Mar 15, 2014

Looks like a sweet book, but it says its not available in asia on Amazon?

Mar 15, 2014

sorry about that. I know its available on Amazon in most countries but to buy it in Asia / China I think you need a US Amazon account. Easy to set up. Just go to Amazon.com instead of Amazon.cn. Something weird about Amazon in China. I always have to go through the us or uk site.

Mar 15, 2014

Hi Jeffrey,

Thanks for offering this opportunity. Just a small question: are you planning on making all resources on your website jefftownson.com (linking to townsongroup.com) available again? I look forward to reading more articles there.

See you in Guanghua (fall '14) for all the other questions!

Mar 15, 2014

yeah. that site kind of sucks. So have pulled most things off. Going to start putting videos and articles in the Resources section. I'm also going to start videoing all our speakers at Peking U and putting them up there I think. But got kind of embarressed by how bad that site is.

Mar 15, 2014

Coming to Guanghua or already here?

Mar 16, 2014

I will be visiting Guanghua in the fall under a faculty exchange program. However, I'm planning to stay or return there since 4 months can hardly be enough to really get to know these markets/clusters (or get some language proficiency...) Your website/books/links to PE funds are a great start, thanks for that!

edit: In the Shanghaiist you mention that you know 'ten 500-pagers on China', which are your favorites?

Mar 16, 2014

Thanks so much for taking the time to do this Jeff. I will definitely be picking up a copy of your book.

I'm currently working at a top long-only fund as a research analyst, but definitely see myself doing investing that's more China-focused in the long-term. I'm ethnically Chinese and have spent over half my life there, and can speak/read fluently, although not as well as I can in English.

Aside from continuing to improve my Chinese and keeping up with Chinese news, do you have any suggestions on how I can better prepare myself for a China-focused investing career?

Mar 16, 2014

hey. that's pretty great. I have friends in a similar situation. They all ended up jumping to HF / MF jobs in NYC as the China expert (relative to their industry). or they got really great offers to move to China with top companies. I would start looking at competitor and customer questions in your industries. See if they are impacted. Depends on the industry but hard to look at anything in manufacturing without thinking about China competition. Lever that into your current analysis. Most all the good research is in Mandarin so the language thing will help.

Mar 16, 2014

Thanks Jeff! Forgot to add that I'm fluent in Bahasa Indonesia as well, might be a good idea to take Saudi capital to Indonesia then! :) all the best to you

Greed is Good.

Mar 16, 2014

There is some interesting Islamic finance and investment stuff going on between the Gulf and Indonesia. You see quite a bit of KSA investment and projects going there.

Mar 20, 2014

I studied in HK during my undergrad for the reasons you're mentioning here. I think during my generation everyone will have to know China. I started learning a little bit of Mandarin but stopped because everyone's English is so good in China. I think I'll start taking learning the language more seriously now. Thank you for doing this.

Edit: Just realized I've already read your book!

Mar 20, 2014

Yeah, I just tell people here I don't understand English. Otherwise they always speak English now. It's kind of annoying.

Thanks for buying. If you're generous, would appreciate an Amazon review. These things apparently are important (I'm not really sure why).

Mar 22, 2014
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