Temasek seeks emerging tech in China as it halts internet investments

China’s sweeping clampdown on its internet industry has chilled investors and startups betting on once red-hot areas like games and e-commerce. But investors aren’t slowing their pace in the country. The consumer internet boom in the 2010s gave rise to juggernauts like Tencent and Alibaba. As digitization spreads to more traditional sectors, new giants will emerge within the “tech” industry at large.

Temasek, for example, sees a “huge amount of opportunity” in areas like medtech, biotech, healthcare and sustainability in China, its Rohit Sipahimalani recently told Nikkei Asia in an interview. These are fields “that continue to be in line with government policy.”

Indeed, Temasek recently bankrolled a few Chinese startups in these verticals: Vision X, an ophthalmology and optometry device supplier; Abogen Biosciences, an mRNA-based vaccine and drug provider; Edge Medical Robotics, a surgical robot developer; and Momenta, an autonomous driving tech provider.

As of March 31, China was the Singapore government-owned firm’s largest geographic source of investment, accounting for 27% of its S$381 billion ($280 billion) portfolio.

On the other hand, Temasek is halting capital deployment in internet-focused companies amid the regulatory overhaul.

“I would expect in the next few months to have regulatory clarity, and that would shape some winners and losers out there, and I think we will probably wait to deploy more capital till we have more regulatory clarity in that space,” Sipahimalani said in the interview.

There isn’t one unifying law that molds the development of China’s tech industry. Over the past year, China has introduced a litany of new regulations aiming at the information and technology sector. The Personal Information Protection Law, for example, is designed to protect user privacy and will affect the ways internet services collect data, and eventually their bottom line. The Anti-Monopoly Law seeks to tame the unfettered growth of internet firms and breathe new air into the space. Meanwhile, many see the crackdown on online education as an attempt to address the country’s widening income gap.

The challenge for industry players and investors is not only parsing these new laws but also anticipating when the next one comes.

“[It is] just that in China the way that is being executed is a little more blunt and quick, and that is why it has created a lot of shocks out there,” said Sipahimalani.

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