The AI consumer bet might surprise you
Belgian electronic music festival Tomorrowland came to Shanghai for the first time in July 2025.
Hero Esports
Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a snapshot of what I’m seeing and hearing from local businesses.
The rise of artificial intelligence could be creating an unexpected winner in China: the experience economy.
The big story
Money might be piling into AI, but for BAI Capital’s Annabelle Yu Long, the Chinese consumer is still king.
An “unintended consequence” of AI is the transformation of how humans interact with each other — and the businesses around them, she said. That means now is the “best time” to get in on the consumer trends of the future, which will require much more focus on offline experiences.
Beijing-based BAI Capital, whose roots lie in German media conglomerate Bertelsmann, raised $800 million in May for its latest U.S. dollar fund — a relative rarity in China’s venture capital world, which has recently leaned more on local investors for Chinese yuan-denominated funds.
Long said she looks for three things when making investments: that the companies are regulation-neutral, consumer-facing and market-oriented.
“Not all technology has to be nerdy, has to be aerospace, quantum computing, so-called hard core,” she said. “If I was able to invest into the next TikTok, ByteDance … I’d be more than happy to do it, in addition to the Nintendos, the Sonys and Panasonics arising from China. I see it happening now.”
Global investors have long eyed the potential of China’s hundreds of millions of consumers. But spending has remained sluggish since the pandemic, while money has flowed instead into AI, chips and hardware. Retail sales turned negative in May before eking out 1% growth in June.
In an effort to boost spending, China launched a nationwide trade-in subsidy program in 2024, encouraging consumers to trade in old goods for new ones. Local authorities, meanwhile, are trying other ways to get residents and foreign tourists to spend.
The traditional Wangfujing shopping district in downtown Beijing is trying to revamp itself with more in-person experiences, such as a forthcoming themed area featuring virtual reality and characters from iQiyi‘s online dramas.
Sharon Tan, CEO of consultancy Beijing Lyvion International, which is working on the Wangfujing project, said she is also looking to get Vogue parent Condé Nast on board. Young people’s demands ultimately shape consumer venues, Tan told reporters this month. Condé Nast did not immediately respond to a CNBC request for comment.
In new measures published July 13, Chinese policymakers made clear that their focus over the next five years is to support experience-focused consumption, such as in the performing arts and sports.
‘Genuine offline social connections’
Belgium’s Tomorrowland electronic music festival came to China last year, with its first event in Shanghai. It was held in partnership with Dino Ying’s Hero…
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