September 2021: The Latest from Tech Buzz China
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September 2021 Tech Buzz China Newsletter
Hey everyone, hope you are ready for fall! It is about to be the Golden Week National Holiday in China, but we are as busy as ever at TBC! For those of you looking to join our Insider community, where we have a forum and active Discord channel, we have a special coupon for you, just enter “YOUAREGOLDEN” for $10 off! Start by taking our Quiz or getting a fellow Insider to refer you.
Tech Buzz China Livecasts are usually recorded live in front of our Tech Buzz China Insider audience, and later edited and made available to the public. They are conversations with investors and operators in China tech, and think of them as our effort to open-source our network so you can be a part of the conversations that we would typically have when we do our research! Don’t miss these! Please subscribe below!
William Lee is the CEO of Akulaku, the largest consumer finance company in Indonesia, and a very fast-growing digital bank. Akulaku is a Southeast Asian tech company that has both Chinese and Southeast Asian management, and investors from China. Hear about:
How they identified the opportunity in SEA, and pivot the business from Bitcoin to a digital bank;
Why they started with eCommerce, and how it helped with the rapid growth of their digital bank business;
The difference in the banking system among Hong Kong, mainland China, and Indonesia;
How Akulaku is structured and resources are allocated to optimize the efficiency, as well as balanced between the eCommerce and digital bank business;
What the SEA market looks like today, and why they decided to expand to Europe next.
Richard is the co-founder of Grandview Capital, a VC fund focused on investing in Chinese entrepreneurs who do business outside of China (AKA go overseas or "chuhai" in Chinese). He's based in Silicon Valley and his co-founder is in China. Hear about:
Why he started to look at Chinese entrepreneurs who are attacking overseas markets back in 2015;
How the nature of the manufacturing & technology industry makes it easier for these companies to globalize;
How he believes in applying the "time machine" paradigm to his investments;
How it's no longer about copying but localizing;
Why Chinese companies favor Southeast Asia and Latin American markets;
What he's investing in these days.
Livecast #9: Albus Yu of China Growth Capital on China DTCs
Albus Yu works for China Growth Capital, a venture capital fund that manages about 1.4 billion dollars. He specializes in consumer internet, consumer brands, and services investment. Hear about:
The reason that he had started to invest in consumer internet and e-commerce marketplaces;
What the growth of DTC brands in China looks like these days;
The differences that the DTC brands are growing between the US versus in China right now, and Why it is a better opportunity from both the consumer side and supply & manufacturing side; and he gave the Chinese "Lululemon" as an example;
The reason that Albus recommend brands to start off online and build offline presence as well;
He perceives the potential for some Chinese new brands to expand internationally as positive.
Join our paid, premium community for serious China tech nerds Tech Buzz China Insider! Designed for investors and operators, we go in depth on China tech analyses that don’t typically make it into English language coverage. If you want to join us, click here to take our Insider Quiz or get referred by a current Insider! For this month only, use the code “YOUAREGOLDEN” for $10 off as part of our Golden Week promotion! Insider has multiple posts per week, and we’ll be sharing with you at least two selections every month. If you like this content, you know what to do, join us!
Since Chinese government policy and directives have had such a large impact on all businesses so far this year, we decided to do something different and summarize one of the best books we’ve read on the subject. “Putting Oneself Inside: Chinese Government and Economic Development” is a new book (August 2021) from Fudan Associate Professor of Economics Xiaohuan Lan. It’s well reviewed on Douban (currently 8.8/10) and a great, very simple and succinct overview of how the Chinese government oversees economic development.
Chapter 1: Local Government Powers & Responsibilities
Local governments aren't just there to create good business environments, they are a deep participant. Many local governments basically require all departments to be involved in investment & promotion.
Local governments will often give financial support to large businesses, lead investments and get others to invest, facilitate bank debt, invest using a government-controlled platform, etc. They're also crucial for getting licenses, which often requires interfacing with the central government and is quite difficult. Tax breaks are also common, eg the most common 3 yrs tax-free, 3 yrs half-tax. To attract senior management talent, they often give tax breaks to individuals as well. This is a hybrid model not market vs. state as is taught in schools or "government builds the stage & the companies perform the play." Local governments are much more involved.
We’re also making available Chapter 2: Finance, Taxation and Government Action, and Chapter 3: Government Investment, Fundraising and Debt.
Alipay’s split into different apps was already largely suspected to be the outcome back in April when Alibaba's record fine was announced and remedies prescribed for Ant. #1 of the 5 objectives? Huabei and Jiebei must be disconnected from Alipay. The exact words that the government actually said:
"First, correct unfair competition in payment business, give consumers more choices in payment methods, disconnect Alipay from other financial products such as Huabei and Jiebei, and correct irregularities such as nesting the credit business in the payment chain."
Besides these posts, we also wrote about up and coming unicorns, NFTs in China, and community members contributed their thoughts on topics such as the Great Internet Cleanup and Tencent’s 2B strategy. Want to learn more? Join us!
As you know, we are regularly featured in media. Here is a selection of our appearances in the last month! Take a read or listen and let us know what you think!
Rest of World, Aug 23, 2021. The China tech bubble is bursting. That’s not a bad thing for investors.
BBC, September 25, 2021. Huawei's Meng Wanzhou flies back to China after deal with US.
BBC, September 3, 2021. Tech Tent - China's crackdown on young gamers.
The Guardian, August 30, 2021. China cuts amount of time minors can spend playing video games.
Wired, August 23, 2021. China’s digital yuan is a warning to the world.
That’s all everyone! Thanks for reading this September issue of our newsletter. Let us know if you have any questions or comments, and we’ll see you in a few weeks!