Cross Sector Analysis – Theme Report – Chinese anti-involution – Hamlet’s ‘to be or not to be’?
Published on 15 Oct 2025
As Chinese companies engage in price wars bleeding each other, the government announced an anti-involution policy in 2024/25. However, the contours of the same have been left open for the companies to decide. In this context, we analyze similar actions initiated across the globe and come to the conclusion that such consolidation has been successful only in developed nations, or where unemployment is not an issue. Our industry checks also suggest that, so far, no concrete steps for capacity closures have been taken in China.
Like the typical fund disclaimer that says past performance is not a precursor to the future, it is difficult to say if things would be different this time. But such restrictions in the past have only been similar to Hamlet’s profound indecisiveness. Will it result in better profitability or the tragic death of many, only time will tell. We believe, China’s high unemployment, at +5%, will make consolidation a distant mirage.
