Buffett Says China Is “Totally Miraculous”; But Owns Few Assets There

Buffett Says China Is “Totally Miraculous”; But Owns Few Assets There
By Mark Hirschey (Work of Mark Hirschey) [CC BY-SA 2.0], via Wikimedia Commons

Warren Buffett is a big fan of China and the rapidly growing Chinese economy. He went as far as to say that China’s growth was “totally miraculous” at the 2015 annual meeting of Berkshire Hathaway.

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The Oracle of Omaha is also extremely popular in China, and had made four trips to the country in the last few years. As a matter of fact, a Chinese online-game developer bid $2.35 million in a charity auction for the privilege of dining with Buffett just last week. In 2008, Chinese businessman Zhao Danyang placed a $2.1 million bid for lunch with Buffett.

It is also quite well known that Warren Buffett buys his suits from a tailor in China. He said at last count he has 20 Chinese tailored suits in his closet.

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Buffett's Berkshire Hathaway has few holdings in China

Despite Buffett's obvious personal interest in China, it turns out he has relatively little economic interest in China.

As a June 9th article in the Wall Street Journal by Anupreeta Das points out, "Berkshire’s holdings don’t reflect this appetite for China, it’s not for lack of trying on Buffett’s part". In fact, Berkshire Hathaway made a bid on a large block of shares in a major Chinese company in 2014, but the deal eventually fell through, Buffett noted in a recent interview (he played coy would not provide a name). Buffett said he's looked at other deals as well, but has not pulled the trigger yet.

Analysts note that back in 2003, Berkshire Hathaway bought a 1.3% stake in PetroChina Co. at a cost of just under $500 million.

A mere four years and change later, Buffett and Berkshire sold their shares, earning more than $3 billion in profits (600+%) on the investment.

Of note, Berkshire does still have an almost 10% stake in fast-growing Chinese electric-vehicle maker BYD, an acquisition made back in mid 2008. The EV firm's shares have been volatile, and the stock crashed last December on rumors that Berkshire was looking to sell out. Buffett reiterated Berkshire has never sold a share of BYD and has no plans to sell any shares.

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