On June 15, the Yuanhe Chencun Kunpenghui Industry Salon event was held, focusing on the new materials sector. The event brought together leading companies and industry investors to jointly explore technological innovation and industrial upgrades in the face of evolving market dynamics.

"From 'Value Discovery' to 'Value Creation'"

Feng Shichao, Founding Partner at Longxiang Capital

From 2008 to 2013, capital resources weren’t particularly scarce across China, and in fact, the likelihood of successful back-end investments remained relatively high. However, over the past five years, many projects have become less attractive for investment. As a result, it’s increasingly essential to shift gradually from merely identifying value to actively creating it. Given that both ends of this process carry inherent risks, investment teams might consider strategically engaging in operational support or providing key resource empowerment to help entrepreneurial teams accelerate their growth.

On one hand, we’re pushing further upstream, while on the other, we’re exploring opportunities through mergers and acquisitions. Leveraging the team’s rich historical experience, we also use the market’s key benchmarks—such as customer feedback on technology, facilities, supply chains, and products—as critical references. By getting involved early in projects, we provide strategic support across multiple dimensions, including financial backing, internal standard-setting, cost estimation, supply chain management, and channel development, thereby accelerating the incubation of new enterprises. For instance:

Capital Funding Center On one hand, addressing the issue of insufficient working capital for business expansion by leveraging diversified equity financing and tailored loan solutions, we help companies tap into government, industry, and financial institution funding. This approach not only enables businesses to secure equity investments but also opens up additional low-cost capital channels. On the other hand, we develop comprehensive capital strategies, outline clear IPO pathways, and determine the optimal capital structure, empowering companies to navigate the capital markets more effectively.

Human Resources Center : Human resources also have a positive impact on the company's operational performance. By helping organizations establish robust mechanisms—covering allocation, decision-making, and work processes—they encourage talented individuals to join the company early on and remain committed to it over the long term.

Order Center : From channels to specific orders, helping businesses gain access to major corporations' supply chains and achieve order growth.

M&A and Production Expansion Center : Deeply exploring and coordinating resources to guide enterprises in gradually integrating across the upstream and downstream of their industrial chains, while simultaneously empowering companies to strategically select new production sites and optimize operational efficiency—ultimately driving business performance improvements, accelerating capacity deployment, and fostering win-win outcomes for all stakeholders.

This year, we’ve further refined our investment strategy by collaborating with publicly listed companies and bringing in industry-focused teams, ensuring our continued focus on a relatively promising track. At the same time, we’re consolidating key resources to empower our projects and unlock even greater value. Finally, we’re consistently studying the operational best practices of leading companies in the industry, continuously optimizing our corporate investment and management strategies.

"Reflections on Investing in New Materials"

Mo Junxing, Partner at Zhongqi Capital

The recent situation

External Environment: In the short term, weak external demand, coupled with substantial mid-to-low-end production capacity constrained domestically, has led to intensifying industry competition in traditional manufacturing. Meanwhile, chemical product prices have plummeted sharply, forcing traditional industries to accelerate their transformation and upgrade. Looking ahead, we anticipate a shift away from China as the global supply chain hub, with the domestic economy increasingly relying on its own robust internal circulation. This means the "world's factory" model is poised for a significant transformation. Under extreme circumstances, our strategy will focus on tapping into the vast domestic consumer market—or, alternatively, speeding up the overseas expansion of key industrial chains.

Domestic environment: The era of rapid growth has come to an end, with frequent black swan events. This places higher demands on entrepreneurs and calls for investors to place greater emphasis on people and teams. At the same time, there’s a growing focus on strengthening national strategic security, achieving technological self-reliance, and firmly climbing toward high-end industries—while keeping a close eye on import substitution and driving innovation through cutting-edge technology.

Future opportunities

Transforming and upgrading traditional industries

Currently, as traditional product markets enter the red ocean, leading companies are accelerating their efforts to incubate and develop new business ventures.

From the perspective of core competencies, some traditional industry leaders in the materials sector may actually possess greater advantages in terms of industry expertise, capital, and talent. Backed by robust industry platforms, these companies also demonstrate stronger resilience against risks. As a result, established industry giants are likely to trigger a new round of intense competition—often referred to as "involution"—against emerging startups specializing in next-generation materials.

Looking ahead, we will continue to monitor leading companies across key industrial chains such as fluorochemicals, phosphochemicals, silicochemicals, and biofermentation—watching closely for opportunities to nurture new businesses or explore potential spin-offs, and even collaborating with these industry leaders to co-mentor and incubate innovative ventures.

Focus more on people and teams

In an uncertain future landscape, it’s increasingly important to focus on building a company’s foundational strengths: from team capabilities to industry/product expertise. Entrepreneurs are the core competitive advantage—and the ultimate safety margin—for any business. Looking ahead, the demands placed on entrepreneurial skills will only grow higher. To thrive, entrepreneurs must leverage their core competencies as a solid foundation, continuously iterating and adapting to meet evolving challenges.

In the future, Zhongqi will remain committed to tracking, nurturing, and retaining outstanding entrepreneurs, firmly committing investment from the very early stages of their entrepreneurial journeys.

Moreover, with primary and secondary market valuations inverted, only by acting early can you seize investment opportunities.

Core Technology Asset Deployment

Technological assets are becoming increasingly important, and many of the key technologies in the materials sector are held by research institutions—technologies that have accumulated over decades. As institutional reforms advance and downstream markets grow more reliant on independent innovation, these deeply embedded technological assets are poised to unlock tremendous value in the future.

The institutional reform of research institutes and the strategic leveraging of their accumulated technological assets involve both entrepreneurial ventures initiated by former institute staff, as well as transformative innovations within the existing institutional framework of these organizations.

"Reflections and Strategies by Wo Yan Capital in the Current Investment Environment"

Cheng Yong, Founding Partner at Wo Yan Capital

A small reflection on material investing from an investor's perspective

How do you determine if a company is a good materials supplier? First, check whether the company is profitable; second, examine its core strategic approach to generating profit: high turnover, meaning low average order value but high volume. Finally, assess the full lifecycle metrics of an outstanding materials company—specifically, whether it faces competition and what its material yield rate is.

How can we accurately determine the direction to support growth into an outstanding materials company? First, follow the first-principles approach: return to the fundamental characteristics of the material and the core features of its target market. Second, assess whether you can articulate the essence of both the material and the application market in the simplest possible terms—this is a direct test of the founder’s and GP’s most critical cognitive abilities. Finally, focus on identifying the precise intersection between the material’s inherent performance qualities and the unique demands of its application market. Breaking through material performance limitations and unlocking key improvement opportunities is the primary path to creating a truly groundbreaking materials company.

How can you determine which material company is poised for rapid growth? First, consider the timing—but remember, timing is often beyond your control. Next, examine the relationship between technology and commercialization: how your technological edge aligns with your own financial statements and those of your customers. The stronger this alignment, the faster your growth will be. Without such a connection, there’s a high likelihood that the company is merely a "pseudo-tech firm." Moreover, the true scarcity of technology doesn’t lie in having something others don’t; it resides instead in the pricing power derived from achieving monopoly-like dominance within a specific niche market. Finally, here’s a somewhat blunt but important takeaway: if 90% of new materials companies lack the necessary equipment capabilities, they’re simply not worth investing in.

How can you determine which materials company has the potential to grow significantly? From the perspective of Wo Yan Capital, we focus on investing in companies driven by both "technological scarcity" and "product delivery capability." On one hand, we identify the core elements within niche industries, fostering a holistic mindset that integrates "materials, equipment, and digital solutions." On the other hand, we rely heavily on industry research to pinpoint critical bottlenecks in sector development, actively seeking out high-quality companies across three key dimensions: "domestic substitution (addressing chokepoints)," "global synchronous innovation," and "China's path to global leadership." Meanwhile, we recognize that technological scarcity, cross-industry competitiveness, and massive market potential are the three essential prerequisites for uncovering industry leaders with significant market capitalization.

Share the enterprise

"Tongli Optoelectronics"

Shi Dong, Founder

Tongli Optoelectronics was established in 2012 and specializes in the research, development, and application of cutting-edge nanomaterials in the optoelectronics field. The company primarily focuses on full-lamination water-based adhesives, full-lamination OEM services, full-lamination equipment, and touch-display solutions. As a comprehensive provider, Tongli Optoelectronics offers complete optoelectronic display manufacturing solutions—covering advanced materials, automated equipment, lamination technologies, and integrated system design. Its products are widely used across diverse industries, including automotive, medical, defense, yachting, and aerospace. Notably, Tongli Optoelectronics is an indirectly invested project managed by Yuanhe BingSheng Fund under Yuanhe Chencun.

"KaiXin Semiconductor"

Hu Kai, Co-founder

Founded in 2022, KaiXin Semiconductor Technology is a leading developer of core components for semiconductor epitaxy equipment. The company specializes in the R&D, manufacturing, and services of silicon carbide ceramic parts used in semiconductor devices, leveraging its independently owned CVD core technology. It is a pioneer in domestic CVD silicon carbide product development. Its flagship offerings include CVD silicon carbide graphite substrates and comprehensive thermal field solutions tailored for semiconductor epitaxy equipment. Additionally, KaiXin boasts extensive technical expertise in high-end ceramic components such as sintered silicon carbide ceramics and bulk silicon carbide ceramics.

"Haopu Technology"

Xing Yacheng, Founder

Inner Mongolia Haopu Technology Co., Ltd. was established in June 2018. Specializing in the R&D, production, and sales of innovative organophosphorus-based new material products, Haopu Technology has become a leading domestic supplier of key intermediates for novel herbicides (such as diethyl ester) and high-end phosphorus-based flame retardants (including DOPO and MPPA). The company is dedicated to advancing niche segments within the materials industry and operates as a platform-driven technology firm. Haopu Technology’s independently developed diethyl methylphosphonate has already entered mass production, while several cutting-edge products—such as advanced phosphorus-based flame retardants (featuring DOPO intermediates), antioxidants, and chloride-containing solid waste treatment agents—are currently under development or in pre-research stages. The company boasts an extensive pipeline of both products and technologies. With a robust R&D capability, Haopu Technology has partnered with prestigious institutions like Lanzhou University, Northwestern Polytechnical University, and Qingdao University to establish specialized laboratories focused on chemical new materials research, driving innovation and accelerating the commercialization of next-generation material solutions.