Some of the top growth stocks in China have gone unnoticed by international investors

Three Chinese companies that Dale Nicholls, portfolio manager at Fidelity China Special Situations, would invest in are highlighted

From well-known technology leaders to enterprising private companies that have not yet gone public, the trust is an actively managed investment vehicle that gives investors wide access to China's growth prospects. Despite the tense trade relations between the US and China and a muted real estate market, Chinese stocks have risen significantly this year. This has also been aided by low initial valuations and growing sentiment toward innovative industries (following DeepSeeks' ground-breaking AI model).

We concentrate on finding businesses with the potential for scalable growth, a long-term competitive edge, and competent management. These frequently coincide with the gains made by long-term structural growth trends, like China's rising domestic consumption and quickening pace of technological advancement.

Smaller, less-studied companies that present alluring opportunities in undervalued stocks with promising futures are also given special attention. The trust currently makes investments in the following three companies.

Growth prospects in China.

Hesai Group (Nasdaq: HSAI) is the top automotive LiDAR light detection and ranging company in the world, expertly situated at the center of the rapidly expanding autonomous mobility revolution. Given that LiDAR is becoming a crucial part of advanced driver assistance systems (ADAS), Hesais stands out for its capacity to provide top-notch technology at affordable costs. Hesai is expected to profit from high demand for increasingly complex ADAS as the market grows, which should contribute to significant volume growth. Long-term growth will be fueled by the automobile sector for many years to come, but there is also significant promise in robotics and other forms of mobility. Additionally, there is a lot of room for margin growth as volumes increase.

A well-known Chinese sportswear company that specializes in the rapidly expanding running market is Xtep International (Hong Kong: 1368). By fusing affordability with a relevant brand, Xtep is well-positioned to capitalize on the trend of sportswear trading down.

Its credibility is reinforced by its sponsorship of marathon events and praise for the performance of its shoes, and the robust growth of its high-end Saucony brand expands the product mix and helps to boost margins.

Meanwhile, a strong dividend yield supports alluring total shareholder returns, and the company is trading at attractive valuations. Xtep is a structural winner in the domestic sportswear market, in my opinion, thanks to its strong branding and exposure to one of China's most resilient consumer categories.

As the leading digital freight-matching platform in China, Full Truck Alliance (NYSE: YMM) matches shippers and truckers more effectively than traditional offline brokers by utilizing strong network effects. With network effects that will prolong the group's lead due to increased efficiencies and reduced costs, its size establishes a strong "moat" (an enduring competitive advantage).

Given its track record of strong earnings and recent quarterly results, Full Truck Alliance (FTA) is well-positioned to deliver sustained growth in commission revenues as penetration deepens and take ratesthe percentage of a transaction used to facilitate a saleincrease. Since my initial private company investment in FTA, I have remained steadfast in my belief in its sound business strategy and execution. It has remained a significant portfolio holding since going public in June 2021, providing steady growth potential as China's logistics sector continues its structural shift to the internet.