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By Camellia Huang, Investment Analyst, Aubrey Capital Management.

Aubrey's investment strategy focuses on market-leading companies whose products can define or transform their industries. Cultivating a loyal customer base, which translates into pricing power and sustainable profitability, is key to many of these business models. My colleague, Tom Dalrymple, recently wrote about Netflix and Spotify (for our Global Conviction Strategy), two companies that have proven how powerful consumer loyalty can be.

In China, we see parallels emerging with a wave of companies monetising small-ticket purchases ranging from affordable subscriptions and collectibles to digital experiences. These purchases are driven by identity, entertainment, and belonging, and have remained resilient even in weaker macro conditions. This is known as the Emotional Economy.

The shift in Chinese consumer behaviour

While emotions drive much of this consumption, the more fundamental shift has been the transformation of Chinese consumers' perception of content and membership. A decade ago, subscription models struggled: users expected free access, piracy was widespread, and intellectual property carried little weight. Paying for digital services felt unnecessary.

Today, the landscape looks very different. China has entered a rapid expansion cycle of cultural and IP industries......................

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