China’s consumer growth is a key plank underpinning the investment thesis for many of the country’s big technology companies. The press release included references to growth rates in various units, but failed to point out that sales and marketing expenses climbed by 120 percent — more than double the rate of revenue growth. Over at NetEase Inc., China’s second-largest games company, e-commerce is becoming a growing component of revenue. That problem hasn’t eased, with marketing growth exceeding revenue growth for the past two quarters. But investors who buy into the China growth story need to understand that things have changed, and rapid growth now comes with higher costs.

Source: Washington Post August 27, 2018 00:11 UTC