Interviewed by Hans Tung, Zara Zhang and Kaiser Kuo.
In the first joint live session of GGV Capital’s podcast and The Sinica Podcast, we interviewed Yasheng Huang, a renowned economist and Professor of Global Economics and Management at the MIT Sloan School of Management. GGV Capital’s Hans Tung and Zara Zhang were joined by Kaiser Kuo, host of the Sinica Podcast and producer of GGV’s podcast.
Huang founded and runs the China Lab and the India Lab, which aim to help entrepreneurs in those countries improve their management skills. He is an expert source on international business, political economy, and international management. In collaboration with other scholars, Huang is conducting research on human capital formation in China and India, entrepreneurship, and ethnic and labor-intensive foreign direct investment.
In this episode, we discussed the recent trade tensions between the US and China, how are geopolitical factors affecting the global tech industry, and how China’s growth story compares to that of India and other developing countries.
Hans Tung: Hi there. Welcome to the show, where we interview movers and shakers of China’s tech industry, as well as tech leaders who have a U.S.-China cross-border perspective. My name’s Hans Tung. I am the managing partner at GGV Capital, and have been working at startups and investing in them in both the U.S. and China for the past 20 years.
Zara Zhang: My name is Zara Zhang. I’m the investment analyst at GGV Capital and a former journalist.
Zara Zhang: Welcome, everyone to this joint GGV and Sinica Podcast live recording. I’m Zara Zhang, and I’m joined by my cohost Hans Tung, managing partner at GGV Capital, and by Kaiser Kuo, host of the Sinica Podcast and producer of the podcast. Please join me in welcoming our special guest, Professor Yasheng Huang.
We’re delighted to have Professor Huang with us today. He is the international program professor in Chinese economy and business and professor of global economics and management at the MIT Sloan School of Management, and he’s the founder and head of the China Lab and the India Lab at MIT.
Kaiser Kuo: Yasheng, I’m so glad that you could join us here. It was such a pleasure talking to you for Sinica last year in San Francisco. Your straight talk and your frankness is always quite the breath of fresh air. So let’s deal with the elephant in the room first; I think we all know that’s the trade war. We’ve seen volleys in both directions now. First the steel and the aluminium tariff, and then a very subdued Chinese response. Then you had the $60 billion punitively over the 301, the WTO complaint. Then, China’s announcement and now just on Thursday of this week, the threat of an even larger tariff of $100 billion by Trump.
So it’s quite clear that the Trump administration really is opposed to one particular target of this tariff, China’s new tech-focused industrial policy that’s called Made in China 2025.
America has basically always opposed industrial policy, you had MITI in Japan in the 1980s, which was a target of American ire, for instance. What is it that they object so much to in Made in China 2025? Is there actually something to object to? Is there something that’s deliberately quite unfair?
Yasheng Huang: Thank you, Kaiser and very good to share the podium with Hans and Zara as well. Yeah, this is a big elephant in the room and I think the possibility is a real one that things can get out of control. So essentially, you have an escalation of the conflicts and the more you escalate, it’s more difficult to walk down from that high position that you have made very, very clear.
And so in terms of your specific question about what the U.S. is objecting through this tariff action, I guess there are three things falling in two categories.
One is a macroeconomic one, which has to do with the trade imbalances, and there are different calculations about exactly what is the right number. But I think, by and large, there is a decent consensus that the U.S. has a persistent trade deficit with China. Maybe the size is not as big as they say, and the complications are enormous in terms of how do you count processing trade and things like that. So that’s one, that’s on the more macroeconomic side.
On the more sort of microeconomic side, this has to do with the issue of IP. So Trump actually used that term, which is IP theft. And you know, we can have a debate whether or not a trade tariff is the right instrument to deal with that. I don’t think it’s the right instrument to deal with even the macroeconomic issue, but for the microeconomic issue, it is definitely the wrong instrument.
And then there’s the political security issue, which has to do with how an incumbent established power and deals with a rising power that has such a fundamentally different political, economic, socioeconomic institutions and values, and that’s unprecedented.
Kaiser Kuo: Yeah, it’s multi-dimensional.
Yasheng Huang: It’s multi-dimensional. You know there was the Soviet Union before, but the Soviet Union, we kind of always knew their weaknesses.
Kaiser Kuo: Right. They had great ballet, but what consumer products? We wanted like the Stolichnaya vodka, very good vodka, but nothing much else we want from Soviet friends, right?
Yasheng Huang: But there’s nothing to be trivial about ballet. I mean the Soviet Union has science.
Hans Tung: They have science, yeah.
Kaiser Kuo: They launched Sputnik before us, but little basketball. They make big noise.
Yasheng Huang: I won’t be with you in imitation of Russian accent.
Kaiser Kuo: Okay.
Yasheng Huang: But the Soviets had science, the Soviets had physics, the Soviets had biology and chemistry. The fundamental difference is–
Kaiser Kuo: WeChat, they didn’t have WeChat.
Hans Tung: They definitely don’t have that.
Yasheng Huang: They didn’t have that, that is true. But neither did China at that time, right? So let me point that out. But the fundamental difference is that Soviets never used their science for economics, and so there was a gap between how advanced the science was, which was mostly geared toward defense, Sputnik and all of that, we all know that.
It was never really applied to economic development, so the Soviet economy was horrible, whereas the country actually had established excellent scientists. There is a great book, by the way, written by an MIT historian. The title of it is Lonely Ideas. The book is about how the Soviets invested heavily in science and technology, heavily in science, but never gained benefit from that. So this is a huge difference between the Soviet Union and China.
Hans Tung: Yeah, absolutely.
Yasheng Huang: So I think the fear on the part of the United States, let’s sort of separate the two issues. One is whether we should fear China from the U.S. point of view, the other is whether or not superficially there is an objective reason for an average person in the United States to say “wow, look at that country that has a sort of a nominally communist system, a one-party system and all of that, plus science, plus technology, plus Hans.” Especially the Hans equation, which really tips the balance.
Hans Tung: The VC.
Yasheng Huang: The VC, right? So the ecosystem. So if you look at Boston and Silicon Valley, basically you need three things. Scientists/technologists, entrepreneurs and VC. China has all three. So you know, we can debate about the quality and the quantity is impressive. China now in terms of — you probably have more data than I do.
Kaiser Kuo: Quantity is a quality all its own.
Yasheng Huang: But the thing is, so listen. Size matters.
Hans Tung: You have both, Kaiser.
Yasheng Huang: Well I mean sometimes you do have a tradeoff, but the thing is, let me put it this way. If you don’t have a big scientific establishment, a big VC establishment, the probability of having stellar science and stellar investment is actually low. So you kind of need the size because precisely the probability is low, you need the size to make the absolute number high. And this is really in terms of country-to-country comparisons, it is the absolute number that matters.
So it’s not so much the ratio to Chinese success rates, if you can use sort of the success of X’s and maybe that can be low in China, but as long as the number is large to the other country, that’s significant. So sometimes we need to establish our benchmarks more clearly.
Kaiser Kuo: So you think that this is what’s producing the anxiety around industrial policy?
Yasheng Huang: In terms of industrial policy, it is true that if you look at Silicon Valley and Boston, there was less of an overt industrial policy explaining the development of Silicon Valley and Boston 128. But let’s face it, MIT benefited tremendously from federal.
Kaiser Kuo: The fed spending, absolutely.
Hans Tung: Federal funding, for sure.
Yasheng Huang: And so it is not explicitly designed to increase the trade surpluses. So this is where the mercantilism comes in, and the mercantilism is an idea that first you use the government directly, specifically to advance economic growth. Secondly, you focus on trade. China has a flavor of both, and that worries people here.
Hans Tung: And for me, it’s surprising to hear people in the U.S. keep on talking about China’s government role at funding all this research, putting all this money to work, as if that made a huge difference. If I look at the actual facts of how Tencent and Alibaba have become amongst the most valuable companies in the world, they have very little, like this much government funding.
Yasheng Huang: Yeah, that is true.
Hans Tung: It had almost no impact at all. Those two companies can do well if the government doesn’t bother them. And they work hard to make sure the government doesn’t bother them too much, and they find a way to coexist.
Kaiser Kuo: And so many of China’s Internet companies were founded by people who were either Americanized or actually had been in the United States for an awfully long time.
Hans Tung: Like Robin Li for Baidu.
Kaiser Kuo: Sure, sure. Absolutely. And with American venture capital listing on American —
Hans Tung: And most of them who are making money from Tencent and Baidu and Alibaba were Americans and people from outside of China.
Kaiser Kuo: Preaching to the choir, man.
Yasheng Huang: Now try to make that argument with Trump.
Hans Tung: It’s very difficult.
Kaiser Kuo: I do want to ask you about the trade number. You know Trump says $500 billion. I think that the real number, the nominal number is $350 billion maybe?
Yasheng Huang: I think focusing on that number is a mistake. Whether it is 500 or 300, the reason is that fundamentally, the trade imbalances with China are driven by the difference in savings rate.
Kaiser Kuo: Exactly, exactly.
Yasheng Huang: So if you don’t incur $500 billion or $300 billion of trade imbalances with China, then you have to do that with somebody else.
Kaiser Kuo: If you want to borrow that money, if you want people to show up in your Treasury option or —
Yasheng Huang: So if you consume a lot right, relative to your savings rate, that means by definition that you have to sort of borrow and then that is a deficit, right. So essentially it is the difference between that capital account, which is importing the money from the rest of the world and the trade account, which is the deficit.
China has exactly the opposite problem. So everything else being equal at its current level, if China doesn’t have this huge trade surplus with United States, then the savings and investment and consumption ratios are such that it has to have a trade surplus.
Kaiser Kuo: With someone.
Hans Tung: Or the Chinese government —
Yasheng Huang: No, with somebody else.
Hans Tung: Or the Chinese government can spend more and consume more.
Yasheng Huang: That is a legitimate discussion to have, which is the discussion is really about why you need to have such a big trade surplus in the first place, rather than whether or not this is the right way to deal with it.
So that discussion has to do with the consumption issues and maybe you are investing too much, maybe you are not consuming —
Hans Tung: Enough.
Yasheng Huang: Enough, right? That’s a legitimate discussion to have.
Hans Tung: Right. I wish the discussion was around that, because as VCs, we actually actively fund companies that are riding the consumption upgrade wave in China. We want to see consumers consume more, not just locally, but from the rest of the world as well.
Yasheng Huang: So that’s both the analytically right discussion to have, as well as an economically meaningful discussion to have. So for people like you and for my relatives in China, I wish that they could consume more.
So the discussion there is, what is constraining their consumption, and why is their savings rate so high?
Kaiser Kuo: Lack of a social safety net…
Yasheng Huang: Lack of a social safety net, yes, but that is a discussion that’s about domestic policy issues rather than about cross-border policy issues. So country to country, they typically don’t have those discussions.
Kaiser Kuo: No, they don’t. Even though, I mean think it’s interesting to note that if you are going to slap a bunch of tariffs, I mean, is it really going to hurt China so much or is it just going to accelerate the rebalancing?
Yasheng Huang: My own view is that it is hurting China more than it is hurting the U.S.
Kaiser Kuo: Interesting.
Yasheng Huang: This is strictly in economic terms. So if you think about what the U.S. is, what kind of products they are imposing tariffs on, these are from Chinese industries that are competing with the U.S. industry. So essentially, China sort of, the economics would distinguish between absolute advantages and comparative advantages.
China has a comparative advantage in light industry, labor-intensive industry, but it is producing these AI companies, drone companies such as DJI, companies like that, that are gaining in terms of absolute advantages vis-a-vis the U.S. companies.
So the U.S. is targeting those guys, and those are competing with the U.S. companies, whereas the Chinese imports from the U.S. are basically complementary with Chinese society and Chinese businesses. We are talking about soybeans.
Hans Tung: Right, agricultural goods.
Yasheng Huang: Yes, agricultural goods, so soybeans go into a tofu, I guess. Is that one of the applications? There may be other applications. Also Dòujiāng (豆浆).
Kaiser Kuo: Dòujiāng (豆浆), yeah, sure, sure.
Hans Tung: Soy milk.
Yasheng Huang: So if you think about the supply chain, so essentially soybean is the upstream product, Dòujiāng (豆浆) is the downstream product, and your mouth is at the very end of the downstream. So that’s one. So essentially it is complementary.
And the other effect on China is agriculture is a part of the core inflation, so China cannot afford to have inflation.
Kaiser Kuo: It really does hurt China.
Yasheng Huang: It does have more of an impact on the Chinese macroeconomic situation than it does on the United States. And also if you look at the size, China depends on the U.S. in terms of the export much more than the other way around. So if you just cut off all the trade, the U.S. is losing $150 billion. China is losing $500 billion, something like that. So it does have a bigger effect on China than it does on the United States.
Politically, I think a lot of times a trade war is about politics. So basically, who is going to blink first? There, I don’t really have a very good way of reading the situation.
To the extent that I have to say something about it, I would say the following which is, we typically think democratic societies are more vulnerable to political backlash, because business people speak up; people who are losing from trade wars speak up. In an authoritarian society, you don’t have that.
So typically we say that a democratic country has a lower tolerance for pain. There is actually research that shows that democracies don’t go to war with each other, in part because they have a low tolerance for pain.
Kaiser Kuo: Which is good.
Yasheng Huang: Which is good, which is one of the reasons I support democracy.
Hans Tung: Correct.
Yasheng Huang: Whereas in China, you censor this, you censor that. Even if you have pain, you don’t express it. In this particular situation though, I’m not so sure.
Kaiser Kuo: The pain is manifest. It is there when you go to the grocery store or when you go to the market.
Yasheng Huang: But Trump is not targetting consumer products, at least for now.
Hans Tung: Only for now.
Yasheng Huang: He is targeting industrial products.
Hans Tung: So far, but —
Yasheng Huang: That will have a feed-on effect —
Kaiser Kuo: But I’m talking about China’s own levying of pork, corn.
Yasheng Huang: Oh yeah, so that’s directly affecting the consumers, right?
Kaiser Kuo: Exactly.
Yasheng Huang: But if that society has a higher tolerance for pain, then one would imagine that it is going to be the U.S. who’s going to blink first.
Kaiser Kuo: Let’s talk about what they are targetting in the U.S.
Hans Tung: Who is this targetted for? U.S. business will complain more.
Yasheng Huang: So this is where it is getting interesting. U.S. businesses, unlike before, are not split on China. So before, 10 years ago the U.S. business community was almost unified in terms of supporting —
Hans Tung: China, ultimately.
Yasheng Huang: Trade and investment, MFN, the Most Favored Nation trading status, WTO and all of that and not going after China in the aftermath of Tiananmen. The U.S. business community was unified.
Hans Tung: Yeah, engage China, try to make it better.
Yasheng Huang: Engage China, so essentially what is known as the engagement policy.
Hans Tung: Right, the Clinton administration.
Yasheng Huang: The Clinton administration.
Kaiser Kuo: And even George Bush.
Yasheng Huang: Yes, George W. Bush. But the business community now is split.
Kaiser Kuo: So where does the split go?
Hans Tung: The reason it has split is because China has increasingly become more buy local, you have to set up in China. It has made it harder over the last five to 10 years for foreign companies to do more business in China.
Yasheng Huang: Correct.
Hans Tung: There are exceptions. Apple is doing well and Starbucks is doing well; in general, Pepsi is. There are exceptions that are doing well.
Yasheng Huang: Caterpillar is doing well.
Hans Tung: Caterpillar is doing well. But for the most part, even IBM, Microsoft to some extent are being affected by the Chinese government wants everything buy local.
In some sense, you can argue that the Trump trade war demands in the situation is making China think harder about being a global citizen. And so in some sense — and we see this in Internet investing all the time — you want to have two powers or companies or countries compete against each other, to keep each other honest. They don’t have to be nice. They have to respect and fear each other to do the right things.
In that respect, from our point of VCs, we don’t mind that.
Yasheng Huang: But it can get out of control, right?
Hans Tung: Yes he can.
Yasheng Huang: So essentially it is a high stakes —
Hans Tung: It’s a high stakes poker game.
Yasheng Huang: It’s a high stakes poker game, and it could have that kind of effect that you want, and definitely that would be the effect I want.
Hans Tung: What we all want, that’s right.
Yasheng Huang: But you never know.
Hans Tung: You never know. The risk has increased a lot, dramatically.
Yasheng Huang: The risk has, I mean just in the last few days. So now Trump is escalating this to $100 billion.
Kaiser Kuo: That’s right.
Yasheng Huang: So how do you, I mean if you walk down from $50 billion, even as an MIT professor, I know something about math.
So then you go down to $25 billion. Now it is $150 billion?
Hans Tung: Right, it got worse.
Yasheng Huang: So you essentially frame the discussion at a higher level. Once you frame that discussion, and also this is something that I have noticed in China, in the young Chinese here. The young Chinese in China are much more nationalistic than when I was a young Chinese.
Hans Tung: Because you have seen some things.
Yasheng Huang: And I was young before.
Kaiser Kuo: We were all nationalistic back during the —
Hans Tung: No, we were not.
Yasheng Huang: No, I was not nationalistic.
Hans Tung: Because you saw the shortcoming of the system back then, so you were more objective.
Yasheng Huang: We were closer to the culture revolution so we kind of knew what that system was.
Hans Tung: How bad it could be, that’s right.
Yasheng Huang: So the current generation, you know they play games, they don’t really know that.
Hans Tung: They shop online. Great experiences, overall.
Yasheng Huang: And also, I think they have this sort of wrong view about what GDP means. So the size of the GDP is big, the second in the world, but per capita GDP is right in the middle of 198 countries in the world, so China is sort of a middleish kind of a country. In the end, it is per capita GDP that matters, it is not the aggregate GDP.
Zara Zhang: Just speaking from personal experience, I think Chinese students of my generation who come to the U.S. to study, actually want to go back these days, because things actually work in China. They want to contribute. They want to make a lot of money. There are more opportunities there. It is harder to get a U.S. visa now. So there are lots of push and pull factors that are pulling them back home.
I think part of the reason why Chinese tech companies can grow so fast is because they can’t attract all these Western-educated talents.
Yasheng Huang: I think that’s a very good thing and I celebrate young people’s aspirations and all of that.
I just want to say that sometimes we need to be more cool-headed–
Hans Tung: More cautious.
Yasheng Huang: Yeah, about these macro issues, right?
Hans Tung: Objective.
Yasheng Huang: So I think, don’t translate the microeconomic optimism so blindly into macroeconomic optimism. China still has a lot of children in the countryside who are not being educated. There are 60 million left-behind children, so the country has some challenges, it has a lot of challenges.
Hans Tung: It has to overcome the challenges —
Yasheng Huang: It has a lot of challenges. And I would argue that if the young technologists from China think about making money, that’s great, but also think about how to use technology to solve these social problems; that would be also very good too.
Kaiser Kuo: I want to ask you a couple of questions. I mean first I want to ask you about Americans’ likely reactions and I think Zara, you should ask about Chinese people’s reactions to the burgeoning trade war.
Now in the United States, China has obviously targeted not just red states, not just swing states that went for Trump. Obviously bullying is not in a red state, it is in a very blue state. But corn, again soybeans, and pork. These do target states that have been traditionally pro-Trump. Is this a smart strategy, or is this going too far? Is this crossing a line? Is this going to look like playing, meddling in American politics? How are Americans likely to respond to this? Maybe has China picked a too-obnoxious strategy?
Yasheng Huang: So the one issue is, what is the alternative? I think this is as smart a strategy as you can play under the circumstances. But I have a feeling — and I may be wrong, I have often been wrong — I have a feeling that it may not work this time. Trump is not a conventional politician. His supporters, there may be some here, I don’t know, but his supporters are —
Kaiser Kuo: Let’s really hope not.
Yasheng Huang: His supporters sometimes are not super clear about their true economic interests. Many of his supporters would have a lot to gain from Obamacare, and he’s the one who promised to demolish Obamacare. So the economic calculations may not work this time with him.
I was going to finish my earlier example about sort of the political capacity to bear pain. I actually think Trump has quite a bit of political capacity to bear pain.
Kaiser Kuo: Evidently.
Yasheng Huang: If you look at the Mueller investigation, so what’s wrong with offending 1.4 billion people? What more can they do? And also, if you look at his approval rating, his approval rating is rising. Right in the middle of the trade war.
And also, the business community is more split than before and there is more of a bipartisan consensus about this particular issue than there was before. Even the Democrats support some of the tariffs.
Kaiser Kuo: So we’re going to go out for a cocktail tonight and we have to decide between a “Moscow Mueller” or a “Dark and Stormy Daniels”. Maybe a “White Russian Interference”?
Yasheng Huang: I won’t go there.
Hans Tung: We won’t go there, you can do it by yourself.
Kaiser Kuo: I am ripping off jokes from my little brother from Facebook. Sorry about that.
Zara Zhang: Professor Huang, how do you think the ordinary people in China are reacting to this? Are they rallying around the flag and boycotting American goods?
Yasheng Huang: What’s that hashtag that I keep seeing?
Zara Zhang: Zhōngguó bùshì xià dà de (中国不是吓大的)
Hans Tung: Chinese did not grow up out of fear. So it’s, you know, whatever you want to do, give us more.
Kaiser Kuo: Yeah, bring it on.
Hans Tung: Bring it on.
Kaiser Kuo: Bring it, b***h. Just like that kind of thing.
Yasheng Huang: Again, that is Kaiser speaking.
Hans Tung: Exactly. We don’t take any responsibility. That is not 996.
Kaiser Kuo: Beep it. I’ll beep it. Sorry.
Yasheng Huang: Well I think, my own view, again I am a professor so I can say these things which is that, I think the biggest fear is the lack of fear. So if you look at Chinese economic growth, if you look at the Chinese macroeconomic picture, we are talking about an economy that is still heavily dependent on investment-driven growth.
Household consumption GDP ratio is about 40, 39 percent, which is actually very low compared with major economies in the world.
Hans Tung: Yes, U.S. and Japan.
Yasheng Huang: So to have more sustainable growth, you need to decrease the investment, you need to increase the consumption, and you need to have a healthy export growth.
Hans Tung: That’s right.
Yasheng Huang: So if you curtail export now, to keep the growth rate as it is, 6.5, 6.7, the only thing available to the policymakers is to increase the investment.
Yasheng Huang: More FAI, right?
Yasheng Huang: More FAI, and then that means more bank loans, debt-driven growth, more printing of the money. So the two parts of the economy that are healthy, the household consumption and the exports, we need both of them.
I would again, as a professor, I would just swallow the bitterness or whatever, I would just say okay, let’s just have a compromise, rather than sort of playing on this psychological nationalistic sentiment.
I think that’s very, very dangerous because nationalism has never been a friend to economic growth.
From where we sit, I can kind of say that the chance of Trump changing position, because he always does stuff you just don’t expect. So there’s a possibility that he will change. You look at China, it can change somewhat, but not too much.
So what is most likely to happen in our view, or at least in my personal view, is that things will get nastier for a while and see which side can take on more pain, and make adjustments accordingly. It makes the whole thing a lot riskier than ever before, but we could see this prolonged for a while.
Zara Zhang: And in the long run, do you think this whole episode will go down in history as a hiccup in the bigger trend of globalization? Or, do you think globalization is actually stoppable by individual leaders?
Yasheng Huang: Globalization has been stopped before.
Hans Tung: By individual leaders, for instance —
Yasheng Huang: By wrong policy choices.
Kaiser Kuo: Are you talking about a Smoot-Hawley tariff?
Yasheng Huang: Smoot-Hawley tariff, and if you look at the cross-border investments as a share of worldwide GDP, the world reached a peak just before the First World War, and then for the next 50 years or 60 years, it went downhill.
Hans Tung: It went downhill.
Yasheng Huang: So maybe with Hans around, things will be different, who knows. But I am not a blind optimist. If you make wrong policy decisions, you can really go down a path that you regret later.
So in terms of your question, whether or not this is a short-term hiccup or not, I actually don’t think this is a short-term thing. I think sometimes we distinguish between structural components and cyclical components. In the past, the U.S.-China relationship has been governed by cyclical ups and downs.
Hans Tung: With a high degree of co-dependency.
Yasheng Huang: But structurally, it was moving in a positive direction, so you have this sort of up and down, but the long term –.
Kaiser Kuo: Trend lines were moving in the right direction.
Yasheng Huang: The trend line is moving in the right direction. I’m not so sure, precisely because I see more evidence of bipartisan consensus getting harsher on China. Trump obviously, but also the business community being split.
And from the Chinese side, more nationalism, strong leadership; the country also, in my own view, is not implementing economic reforms as fast as they should.
Kaiser Kuo: By reforms, do you mean market liberalization reforms?
Yasheng Huang: So if you look at FDI as a measure of some sort of liberalization, that has been pretty flat. More worrisome is the component of the total FDI inflow in the early 1990s, sort of mid-1990s, much of the Chinese FDI was money coming from Hong Kong –.
Kaiser Kuo: Other Chinese.
Hans Tung: Taiwan and Singapore.
Yasheng Huang: 70 percent, or something like that, and then it went down because Western companies began to invest; Japan, Europe, Germany, United States. Now we are coming back to the situation in the early 1990s. The Hong Kong investments are outpacing Japanese investments, U.S. investments and European investments. I have nothing against the Hong Kong investments, but I would argue that the U.S. investments, European investments, Japanese investments, bring to China technology management in a way I don’t think Hong Kong investments can can do that.
Kaiser Kuo: Right, they are more indicative of broader global integration.
Yasheng Huang: Correct.
Hans Tung: But I think what’s different now than before for China is that we all hope China will do more economic reforms, because it helps to have a safer world when it’s more balanced. But the signs that we do see is that instead of choosing between being more militaristic and being more antagonistic versus economic reform, there’s a third route which is the One Belt, One Road campaign.
Instead of depending on the U.S. for export, why don’t we sell more of our services business model and goods to Southeast Asia, to India, to Central Asia, to Eastern Europe, to Africa, to even Latin America. I think over the next 10, 20 years, you’ll see a lot more push by the Chinese government aligning with the Chinese Internet companies to export and to expand into these other developing markets.
That’s why the chance of more Chinese companies coming to the U.S. is less. These Chinese companies going out to these other developing markets and world will increase dramatically.
Kaiser Kuo: Hans, this has felt very cynical. Let’s move this more to the 996 territory and talk more about tech investment and stuff like that. What do you think? Is it time to shift it into that?
Hans Tung: Sure, let’s do that.
Yasheng Huang: Yeah, let’s do that.
Hans Tung: Professor Huang, you spent a lot of time studying Chinese private enterprise as well. You started with looking at SOEs early, and starting shifting to the private enterprises, and then even with the China Lab, look at the Chinese Internet companies.
As you see a shift from SOEs to private enterprise through Internet companies, do you see the quality of the management team, the sophistication of management systems, and the growth change quite a bit?
Kaiser Kuo: Is it commensurate with the change?
Yasheng Huang: So this is an excellent question. I founded China Lab and India Lab in 2008, and since then it has been 10 years we have worked with about 300 Chinese companies now, about 70 Indian companies now.
As an academic, it’s actually extremely hard to study management because we don’t have data. Through the work I did in China Lab, I did have access to the Chinese entrepreneurial companies.
The shift from sort of 10 years ago, essentially if you look at the type of projects we are doing vis-a-vis the type of projects we were doing 10 years ago, 10 years ago most of the projects we were doing were about marketing; marketing overseas. I have a product, I want to sell to Japan, I want to sell to U.S., and you have a team. Please help us come up with a marketing plan on how to sell overseas.
Increasingly, the projects are about management, improving the management. Human resource management, financial reporting controls, devising KPIs, things like that. So essentially, there is a dramatic shift from the external orientation of these companies to internal capacity-building on the part of the companies we have worked with.
I think this is not a systematic piece of data, but it is systematic enough to tell me that the Chinese entrepreneurial companies now put more value, more premium, on management. Also before, if you look at Chinese private sector companies, they had a simple structure: one boss, everybody else was a worker. So essentially there’s a missing management. I would say 20 years ago it was irrational for Chinese to go to business school, because you can be a worker, but they don’t want to be a worker, and they can’t be the boss immediately.
Hans Tung: There is no room for you.
Yasheng Huang: So there is no management. There is no marketing management, there is no finance. The boss is doing everything by himself or herself.
Now you have a more sophisticated managerial system. You have top management, you have middle management, you have line management. I think this is really reflecting the dynamism and the rising quality of the Chinese private sector.
I think part of it is when the economy is more competitive, you can’t just rely on connections and government connections, although there is still some of that, so you cannot just rely on that. You have to rely on management know-how, but also technology. Technology is playing a more and more important role.
In our China Lab projects in the last three years, I would say the ratio, the percentage share of the technology products are now 70 percent.
Kaiser Kuo: Not surprising.
Hans Tung: Internet related.
Yasheng Huang: Internet related, all sorts, even the real estate projects have a piece of technology. So I think definitely at that level, the Chinese economy is —
So I tend not to look at these macro numbers, like GDP and all of that. I actually think that these microeconomic indicators are a more reliable indicator of how China’s economy is getting healthier.
Kaiser Kuo: I used to spend a lot of time looking at India, and of course you run the India Lab as well. I’m really curious about your impressions, either just sort of qualitative or quantitative, from having worked with both the China Lab and the India Lab, at the state of entrepreneurship and make some comparisons. Be totally politically incorrect and talk about the Chinese and the Indian engineering style, the management style, the entrepreneurial style.
Yasheng Huang: So I also run the India Lab, and just as an anecdote, five years ago, 10 years ago, when China Lab and India Lab began, mostly we had Indian students doing India Lab, Chinese students doing China Lab. Now it is just the opposite. The Chinese students want to do India Lab. The Indian students want to do the China Lab.
Hans Tung: I’m not surprised at all.
Yasheng Huang: They are more curious about each other. And by the way, I got interested in India a long time ago and I was criticised for being optimistic about India, but I think that India has, within the huge constraints it is facing, has done well.
So it is now able to grow 7 percent; that’s actually very impressive for India, because before there was a term called “the Hindu rate of the growth”. It’s like in economic conferences if you say, “Oh, this country is growing at a Hindu rate of the growth”, it doesn’t have to be about India. It can be about Country X. everybody nods their head, okay, 1 percent, everybody knows that. But now it is at 7 percent, we’re talking about East Asian growth. So with a savings rate of about half of the Chinese savings rate, with an investment rate half of the Chinese investment, you are growing 80 percent of the Chinese growth rate, that’s actually not bad.
Kaiser Kuo: I take responsibility for this. I did ask him to be politically incorrect and then he obliged.
Yasheng Huang: Was I politically incorrect?
Yasheng Huang: East Asian rate versus the Hindu rate, yeah.
Yasheng Huang: These are technical terms.
Hans Tung: Come on, guys. I’m a personal investor in two Indian companies. One is Flipkart, one is Snapdeal, number one and number two Indian e-commerce companies. when I look at them, especially Snapdeal and even other Indian VCs and leading tech startups, they actually spent a lot time coming to China and meeting with Chinese VCs, meeting with Chinese reporters. They actively want to learn and get knowledge about what has happened in China, because they feel that a lot of big urbanization problems that they are trying to solve in India, somebody in China has solved a similar problem already.
And now the local adaptation will be very different for sure, but there are a lot of principles and lessons learned that will actually be quite valuable. It reminds me how the Chinese teams used to come to Silicon Valley from American companies.
Kaiser Kuo: Right, is that happening the other way though? Are any of your portfolio companies huge and looking at–
Yasheng Huang: Alibaba.
Zara Zhang: Xiaomi is number one.
Hans Tung: Yeah, Xiaomi is number one in India.
Kaiser Kuo: I know that as a market, but are they looking at it from sort of to learn management? I mean there’s got to be some reason why so many more Indians are making it into the senior management of major Silicon Valley companies.
Hans Tung: I think it is two different issues. I think the Chinese companies are looking at India as a market to expand, for sure. I think that there are more Indian executives who have done well in Silicon Valley. That may never change, at least not for a while.
Partially because most successful — a lot of successful, not most — a lot of successful, promising Chinese engineers or product managers end up going back to China instead of staying here. And for the Indian executives, being here has a better payoff, up until now. But as India grows, it could change.
And what’s interesting about India is that more and more American executives who have done well in the U.S. in Silicon Valley are more willing to invest heavily into India. Amazon is investing in India in a way that they never would dare to try and quote-unquote waste money and be irrational for China.
But look at the market cap of JD.com, 80, 90 billion. That’s what Amazon gave up by not being in China. So we see a lot more competition in India now between American companies, Indian local start-ups, and Chinese companies.
Kaiser Kuo: Okay, that’s interesting.
Zara Zhang: Beyond India, do you think the other emerging markets around the world will look more like China or more like the U.S. as they develop? How optimistic are you about the ability of Chinese companies to expand into those markets like Southeast Asia, Eastern Europe, Indonesia, Middle East, North Africa.
Hans Tung: These are technology companies, not SOEs.
Yasheng Huang: I should defer to Hans.
Kaiser Kuo: Yeah, but we’re asking you.
Hans Tung: From what you have seen with China Lab and India Lab, what do you think?
Hans Tung: I think the Chinese companies tend to, so I know a little bit more about Chinese companies in the U.S. than I do about Chinese companies in Indonesia. So the Chinese companies, unlike Japanese companies which came to the U.S. in the 1980s, the Chinese companies tend to have a separate operation in the United States, as compared with their home operations in China. The management team is separate, they typically have an American at the head of the U.S. operation. Some companies are not like that, but quite a few.
Hans Tung: Key post, the key posts.
Yasheng Huang: And they don’t quite impose the Chinese managerial method on their U.S. operations. Whereas if you compare that with Japan –.
Hans Tung: Or Korea.
Yasheng Huang: Or Korea, in Japan lean manufacturing, zero inventory and they impose even the morning exercises, the bowing. Just imagine doing that in Ohio. So Honda opened its plant in Ohio in 1987. Imagine in Ohio, in 1987, with Americans there bowing to the boss. They actually imposed these things on their U.S. factories. Chinese companies don’t do that.
Kaiser Kuo: Yeah, none of that 9-9-6 nonsense, right?
Hans Tung: You can tell Kaiser really does not subscribe to 996.
Yasheng Huang: What is 9-9-6?
Kaiser Kuo: I’m joking. It’s 9 a.m. to 9 p.m. six days a week they are working.
Yasheng Huang: I see. So I think there, the Chinese managerial approach is quite different. For a time, I served on the board of a Chinese investment company and they pretty much left the company alone, rather than exercising an active managerial voice. We can debate whether that’s the right thing to do, but that’s what I see.
So maybe when they go to Indonesia, they may be more hands on. I just don’t know. But I do know that Alibaba is investing in India, Paytm.
Hans Tung: Alibaba also invested in Tokopedia in Indonesia and acquired Lazada in Southeast Asia.
Yasheng Huang: I don’t really know how interventionist Alibaba is.
Hans Tung: With Tokopedia they are not hands on at all. With Lazada that is 100 percent acquired, they are more hands on, so both are happening.
Zara Zhang: So how how do you think the relationship between tech and government differs between the U.S. and China? I feel like in the U.S., Washington D.C. is often at loggerheads with Silicon Valley, whereas in China the interest of tech and the government seems to be more aligned. Do you agree with that?
Yasheng Huang: Well I think in the U.S., whether loggerheads is the right word to use, I don’t know, but there is a dissonance. Silicon Valley took pride in the fact that it is not located on the East Coast, but they are more realistic now; they have Washington operations.
Hans Tung: Everybody has offices in Washington and New York.
Yasheng Huang: Because the government is going to regulate, right? Look at what happened at Facebook. And so if you don’t work with the government, the government will come to you. So I think even the tech sector in the U.S. has to be realistic about the role of the government.
The government is not going to go away. I think whether that’s good or bad, that’s a separate discussion. The government is not going to go away.
Hans Tung: And if anything, could be even more active going forward.
Yasheng Huang: It could be even more active, right? So we talk about the current wave of technology potentially producing huge winners, but also a lot of losers.
Hans Tung: Yes, and the gap could be widened.
Yasheng Huang: The gap could be widened, so the government has to play a role. In China, I think if you look at Alibaba, maybe this is an old story now, about Alibaba, Tecent and Baidu. It is absolutely true, as Hans pointed out, when they first developed they didn’t really have any meaningful relationship with the government. Alibaba was backed by SoftBank.
Hans Tung: By SoftBank, and the government did not stop that, by the way.
Yasheng Huang: And Tencent was backed by a South African —
Hans Tung: Naspers from South Africa.
Yasheng Huang: And Baidu I don’t know.
Hans Tung: Baidu was mostly by VCs, all with U.S. LPs, partners.
Yasheng Huang: All the U.S,, right?
Hans Tung: All U.S.
Yasheng Huang: The question is, now they are getting so big, Alibaba now is in finance and all these areas, whether or not the government is going to get more involved. There is evidence that the government is getting more involved.
Hans Tung: Showing more interest.
Yasheng Huang: Showing more interest in getting involved. So then, how you structure that relationship is going to be an interesting issue. You definitely don’t want to get involved so far to kill them, but on the other hand, they are doing so many things the government has to sort of get involved. So that’s one kind of involvement.
The other kind of involvement that I see more of in China than I do in the United States is government-run venture capital funds investing very aggressively in early-stage startups. You don’t see that in the United States.
Kaiser Kuo: You have one CIA fund.
Yasheng Huang: A CIA fund?
Hans Tung: I can’t tell.
Yasheng Huang: Okay, the fact that I have never heard of it means that it probably is not happening very frequently. The U.S. Department of Energy has loan programs, but that is different from equity investments, whereas in China, Shenzhen Capital –.
Hans Tung: There are a few R&D funds that raise money from local governments.
Yasheng Huang: There are quite a few, and they are actually quite big. I actually think if you look at that model, that model is closer to the Israel model than to the U.S. model. In Israel in the 1970s, this is how they invested in the early startups.
Hans Tung: And jumpstarted the VC industry.
Yasheng Huang: Jumpstarted the tech industry in Israel. Not government as an investor, but the key difference that I see, maybe the difference is not as big, but there could be a difference. The difference is that in the case of Israel, the government was more of a passive investor and relied on the judgment of the general partners. The government kind of took a backseat. Whereas in China, maybe the government is more active. I’m not sure.
Kaiser Kuo: Yeah, I’m not sure either.
Hans Tung: I don’t think that the government is more active, but also if I look at the playing field, across the top 50 VCs in China, I would say probably 30 of them are U.S.-backed, backed by U.S. limited partnerships, LPs, U.S. investors. The ratio is probably 20 of R&D funds that are doing well. And of those 20, I would say less than half are backed by some kind of government money.
Yasheng Huang: I see, okay. But I also think that it is not the wrong thing to do for the government to back these early startups.
Hans Tung: These funds, yes.
Yasheng Huang: The reason is, so we talk about China 2025, a lot of the industries China wants to develop are connected to manufacturing, energy. These are huge investments.
Hans Tung: Capital intensive.
Yasheng Huang: Capital intensive sectors. I actually wish to see more of that in the U.S.
Kaiser Kuo: Exactly.
Yasheng Huang: In the U.S., what you see is a lot of investments in Internet-related things, maybe in AI now, and life sciences. Anything in between actually doesn’t attract a lot of money.
Hans Tung: One thing I do worry is that the skillset it takes to get money from government officials, whether it’s in the U.S. and China, is a different skillset from designing the best product, designing the best customer service, designing the best ecosystem. So while I want to see government invest in the right funds, in my heart of hearts, I still like to see the private sector, or insurance companies, or pension funds, or university endowments, play a more active role, kind of the way the U.S. has.
Yasheng Huang: I agree with everything that you’ve said.
Hans Tung: The only thing I would say though, for example, let’s take DJI drones versus the U.S. drones as an example. I think where the U.S. drones lose out is not that there was no government funding supporting them to fight against DJI, because DJI doesn’t have any government funding either in China.
I think the big difference is that the U.S. is lacking the manufacturing infrastructure, so that it is not helping those companies, the sectors that are manufacturing dependent to do better.
Yasheng Huang: I actually think this is one of the huge advantages that China has, the colocation between technology and manufacturing. So if you look around Boston, where do you see manufacturing? You don’t see manufacturing. If you look around Silicon Valley, you don’t see manufacturing.
Hans Tung: Even less and less.
Yasheng Huang: Lack of manufacturing is okay for a particular kind of technology like software, maybe life sciences, I am not sure. But you know, energy, capital equipment, semiconductors, you really need both large-scale manufacturing and small-scale manufacturing.
Kaiser Kuo: Even biotech. I mean it’s true.
Yasheng Huang: Okay, maybe even biotech.
Kaiser Kuo: China is manufacturing gene sequencing machines right now and they’re no longer —
Yasheng Huang: So Shenzhen, there is no reason why Shenzhen cannot be a manufacturing version of Silicon Valley. There is a book by actually an MIT graduate, Bunnie Huang, about hardware innovations in Shenzhen.
Kaiser Kuo: Yeah, he’s a famous hardware hacker. He’s written a lot about the Shānzhài (山寨) culture.
Yasheng Huang: Shānzhài (山寨) is really interesting. We tend to think about Shānzhài (山寨) as just copying. What he says is that it is much more than copying. It’s incremental innovations, on top of a basic model and they make it a thousand times better. That margin of improvement is all because of this incredible ecosystem of having a lot of technologists involved, a lot of manufacturers involved, and a lot of consumers.
Hans Tung: So you can iterate and try many things.
Zara Zhang: Tencent started with borrowing other people’s products and they called that micro innovation.
Kaiser Kuo: Let’s talk a little bit about the impact of the so-called fourth industrial revolution in the United States and in China. I mean, if you look at all the major technologies that are obviously going to be disruptive, we’ve already mentioned a few of these — advanced robotics, AI, genomics and especially gene editing with the CRISPR/Cas9 and things like that, the two countries that are really at the forefront are China and the United States, and it’s the private sectors. But they don’t seem to really be talking to one another.
These are really important things where interoperability, standards, where ethics issues really need to be in autonomous driving and things like that, all these things are going to be really important. Is this an area where we’re going to see sort of divergence in a lack of interoperability? Or, do you think that this is a potential area for bilateral cooperation? Or does it even even matter?
Yasheng Huang: I think it matters tremendously. If you look at AI, there are some deep, profound, socioeconomic implications with the arrival of AI. Hans mentioned privacy.
Kaiser Kuo: The impact on labor.
Yasheng Huang: Yeah, but that’s one set of issues. That kind of thing can be country specific. Chinese may not value privacy as much as Americans, but in terms of the effect on the labor market –.
Hans Tung: Truckers, long-distance truckers.
Yasheng Huang: Autonomous driving. China is still 1.4 billion people and a lot of laborers, and there are still farmers. So if you just sort of think about how you make this transition from low income or middle income to high income, you still need conventional industrialization, you have employment and all of that. So a failure to talk to each other and to think long term.
One of the things that I read about China 2025 and the visions, you read about the industries, you read about the money, all these things. You read about IP strategy and financing strategy. What you don’t read is the implications on society, the implications on the labor market.
Hans Tung: Right, job displacement.
Yasheng Huang: And this is remarkable to me. If you read Marvin Minsky’s work on AI, he was an MIT professor going back to the 1960s, the father of AI, he began to talk about these things back in the 1960s. I do believe that lack of that conversation — by the way, MIT now has a task force to study the effect of AI on the labor market. I’m on that committee and except for me, everybody else is impressive on that committee.
The disciplines the committee represents, it is a systematic effort to try to understand and anticipate. I just don’t see any of that in China.
Zara Zhang: I would just add that I remember when Amazon Go, the convenience store that Amazon opened, every article mentioned how many cashier jobs will be lost in the U.S., whereas when Bingobox or a portfolio company in China opened their convenience store — and they have 300 of those now — none of those articles in China mention even like the word of cashier jobs. It’s just less of a concern there.
Kaiser Kuo: What explains that cavalier attitude, though?
Hans Tung: I am not so sure it is cavalier. It is that as a country, there are a lot more people who are optimistic on how technology growth in China will narrow the gap between China and the U.S. and some of these other countries.
Kaiser Kuo: And they have plenty of reason to believe that. I mean they’ve they’ve only seen life improve as technologies, with this perfect correlation between these two things.
Hans Tung: Correct. So far, that’s the case. And as it continues to happen, will the government do a decent job of helping to solve that and kind of keep whatever’s not working hush hush? Is it easier to have that transition under an authoritarian government? You could argue that that can happen faster and people get used to it faster.
Kaiser Kuo: I’m sure Yasheng has a response to that. He is no fan of authoritarianism.
Yasheng Huang: I’m not a fan of authoritarianism, but I also agree with Hans on this cultural difference. When I first came to the U.S., I was surprised to see movies such as Blade Runner, which portrays this very far in the future —
Dystopian. You ought to see Black Mirror.
Yasheng Huang: So it is very interesting in Western societies, and I don’t really know why I should invest time in learning about that.
Hans Tung: Well Frankenstein, this was 1984.
Yasheng Huang: Yeah, so evil scientist working in the basement, trying to destroy the world? There’s a lot of that in the Western culture. Whereas in the Chinese culture —
Hans Tung: Was there a lot of salvation for Renaissance and the scientific revolution and all that, both respect and admiration and distrust.
Kaiser Kuo: I have a book you can start with, it is by a philosopher who used to be at NYU, her name is Anna Greenspan, she wrote a book called Shanghai Future, and she starts it off pointing out something really interesting.
At the 1937 World’s Fair, and at the 2010 Expo in Shanghai, both had GM, General Motors, pavilions. Both of them were about future cities, and that was 1937, and it was called Futurama.
In the time since, Futurama is a byword for cheesy sort of, you know, “Oh, my flight. Where’s my jet pack?” I mean, the spiral towers. And in China, there is still an earnest embrace of this idea that futurity is technologically driven and it is a betterment of humanity. It’s really interesting.
Hans Tung: I think there is a lot of scar from the Opium War, from things that happened in the 19th century that made people feel like technology is good. Without technology, we will be defeated again. And that kind of imprint is extremely, extremely strong.
Kaiser Kuo: We’re still embarrassed about the boxers, but.
Yasheng Huang: But I also think that it is more general than that. It is actually more general beyond technology. In the Western culture, there is always an obsession with the downside. Look at what lawyers do, right?
Hans Tung: Remind us we’re at risk.
Yasheng Huang: Economics is all about scarcity. So trade off and all of that. You always want to think about the downside, and then devise institutions. Democracy is actually to guard against downside, check and balance, and all of that.
Hans Tung: The least of all evils.
Yasheng Huang: Whereas in the Chinese culture, there’s not this similar forward thinking about the downside.
Hans Tung: There’s more glorification about unification, more about being an empire, about being strong and prosperous. Whereas in the West, it’s all about hey, this government is bad or the king is bad. Lets make sure he doesn’t adversely impact us too much. It’s a very different ethos. That’s why institutions —
Yasheng Huang: In China, the sentiment goes like this. “Okay, this king is bad. The next king —
Hans Tung: Will be better!
Yasheng Huang: Will be great!
Hans Tung: Let’s hope the next guy will be better, but you don’t change the system itself. I remember watching the Summer Olympics in Beijing in 2008. The opening ceremony, Zhang Yimou, had 20,000 people all move in unison. I’m like dude, I wouldn’t want to show that to the rest of world.
Kaiser Kuo: It was intended to inspire but it really intimidates.
Hans Tung: It intimidates a lot of people that go, “Oh my God, you have all these people who were brainwashed into all move in the same direction.” That is not a good thing you want to show about China.
But it’s just very different. And actually, all the Chinese reporters I know, they loved that show. They are modern, they are doing Internet stuff, but they feel that it’s very natural. It’s very different ethos, very different values.
Kaiser Kuo: Absolutely.
Yasheng Huang: So I think we should have a broader conversation. The privacy issues, how we think about technology, how we think about all of these things, collectivism vis-a-vis individualism. We don’t have enough of those conversations, which is too bad.
Zara Zhang: Professor Huang, you did a lot of research on the relationship between talent and economic development. I wonder, there are a lot of liuxuesheng (留学生) like me who have gone back and became haigui (海龟), sea turtles, and joined tech companies or started them. What do you think are factors that make them successful in China? Because not all of them are successful. They have a lot of adjustments to go through after they go back.
Yasheng Huang: I don’t know the individual cases, so I think as a cohort, the Highway cohort is going to be very important for China going forward. But the key thing is, I think people like you, Zara, have to make a decision.
Hans Tung: Do you stay or do you go.
Yasheng Huang: So how local do you go? And do you go all the way to the local things and lose your, sort of Western-educated –.
Hans Tung: Or globalness.
Yasheng Huang: So I would argue that China needs more of a globalist perspective and ideas than more MIT students, more Harvard students going back, playing local again. China is not short of local people, but China is short of global people.
Hans Tung: We want them to have experience in both markets. The more of the returning have experience in both local markets and U.S. markets, we think the better it is.
Yasheng Huang: No, but there is a difference between experiencing local things and then totally agreeing with them.
Hans Tung: Sure, absolutely.
Kaiser Kuo: It’s okay to occasionally eat huoguo (火锅) in Chengdu with your shirt off on a hot summer day.
Hans Tung: Is that what you do, Kaiser?
Kaiser Kuo: I do. But don’t live that life, right.
Yasheng Huang: Let me try that next time.
Kaiser Kuo: I’ll take you.
Hans Tung: I’m not going to be bothered.
Zara Zhang: Well Professor Huang, thank you so much for joining us. Kaiser, it is always fun to have you. And thank you so much to everyone in the audience for being here with us on a Saturday night.
Yasheng Huang: Yes, Saturday night.
Hans Tung: Very impressed. Thank you.
Kaiser Kuo: Thank you.
Hans Tung: Thanks for listening to this episode.
Zara Zhang: GGV Capital is a multi-stage venture capital firm based in Silicon Valley, Shanghai and Beijing. We have been partnering with leading technology entrepreneurs for the past 18 years from seed to pre-IPO, with $3.8 billion in capital under management across eight funds. GGV invests in globally-minded entrepreneurs in consumer Internet, e-commerce, frontier tech and enterprise. GGV has invested in over 280 companies with 29 IPOs and 22 unicorns. Portfolio companies include Airbnb, Alibaba, Ctrip, Didi, Domo, HashiCorp, Hellobike, Houzz, Keep, Slack, Square, Toutiao, Wish, Xiaohongshu, YY and others. Find out more at GGVC.com.
Hans Tung: If you have any feedback on this podcast or would like to recommend a guest, please reach out at https://nextbn.ggvc.com/engage/. This podcast is co-produced by our friend and business partner Kaiser Kuo, the host of the wonderful Sinica podcast. It covers China’s economic, political and cultural issues.
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