Chinese Characteristics' 2021 in review
Happy New Year Y'all!
I was on Analyse Asia recently talking about Chinese Cloud and SaaS, check it out. I’m also in a Bloomberg piece talking about common prosperity, it’s interesting enough without me honestly. Premium subscribers will be happy to know (maybe) that I’m uploading videos on to Circles tomorrow. Please check out the product walkthrough for Taobao, XHS, CTrip and more there.
‘Tis the 31st of Dec, and we’re on the cusp of 2022 and the common prosperity era. Let’s go through this year in Chinese Characteristics editions, and I’ll be back next week with the Annual reflections of 2021.
The most widely read piece: China, Semiconductors, and the Push for Independence - Part 1
Jordan knocked it out of the park and then some with a longform intro into the complex world of semiconductors and China’s navigation of these new territories. Must read for all geo-political aficionados, hard tech enthusiastic and VCs rebranding themselves as semiconductor experts.
The most thought-provoking piece: What I talk about when I talk about Chinese tech
This piece puts forward the notion that technology platforms should be conceptualised as new institutions. We typically think of private market actors as constrained by competition and governments with unlimited power that must be restrained. We need new ways to conceptualise and talk about technology platforms for internet platforms, where network effects are power moats, and AI algorithms have increasing returns to scale with more data. Technology platforms can now set their own rules of the game; Facebook sets the content moderation policy for one-third of the world. Twitter and others de-platformed the former president of the US, reducing him to a digital persona non grata. These powerful private entities are a part monopoly and part public goods, but it is unclear whether consumer welfare is a core part of their plan.
Developed countries with mature institutional frameworks have higher incentives to compete against technology platforms. In contrast, developing countries with more immature institutions tend to form cooperative relationships with tech platforms. Developing country governments rely on tech firms to deliver services and introduce legibility. Technology firms are institutions, and when viewed as such, there should be more explicit boundaries on their power.
The most divisive piece: Let the bullets fly for a while
Coming in hot during the ‘tech crackdown’, this piece added ammunition to the continual war of opinion on whether Chinese regulators were out to destroy Big Tech. As a Keynesian by training and a pragmatist by habit, I still think it’s a good move by the Chinese regulators to level the playing field this year. Even if short term portfolio performance suffers.
The most prescient 2021 piece: Alibaba: From growth to value
I called out a ‘bear’ case for Alibaba in Jan 2021. Even though it wasn’t that much of a bear write-up, it still flew in the face of optimism around Chinese tech (esp once Munger got into the game). Nearly 12 months later, I was right for the wrong reasons.
The most influential piece for the future: Data as a factor of production
This somewhat theoretical and dry framework will yield dividends for years to come. The Chinese government is making groundbreaking money moves in data conceptualisation and related policy. New conceptualisations pave the way for innovations. Watch this space.
My favourite premium piece: Bilibili Deep-dive
I’m biased, but I do think premium pieces are my best pieces. There I go deeper into source materials and play with frameworks to my heart’s content. I wrote many things I’m proud of this year in the premium section, metaverse was ambitious in scope, Xiaomi reframed hardware platforms for me, DTC allowed me to get excited about the range of Chinese consumer products available (if not VC’s returns in the space). My favourite piece remains Bilibili because after 3 weeks of starting at the page the frameworks came together in a moment of zen. From this piece onwards, I moved from explaining outcomes to creating new concepts.
2021 has been a tough year in English tech and investment discourse since government regulation has become front and centre. There have been high levels of fear and doubt arising from uncertainty and the revelation that China's not following a neoliberal script. Loud voices with little information and distorted perspectives have taken centre stage in that haze. People are not comfortable with seemingly unfamiliar stories and lack the imagination to see divergent paths. That has been the history and failure of the Washington Consensus in a nutshell; I see similar reactions now in the Chinese tech discourse.
After this year, I am still resolute in staying in China and investing in Chinese tech for the long term. I say the things I say, having deliberately made difficult decisions to have a lot of skin in the game. I have no agenda apart from making money by seeing reality clearly. I intend to be smart rather than to sound smart. As an investor with at least a decade-plus time horizon, I am comforted by the resolve and decisiveness of the government regulations. I wish the regulations were better sequenced and better communicated, but I think they lay solid foundations for future innovation and growth. When I go through the tech policy white papers put out by CAICT, they are thorough and technically sound. When I go through Chinese reform history, I see continuity in the tension between reforms and free growth stretching back to the Deng era. When I spoke to entrepreneurs, the apprehension and excitement vary from folk to folk, but I rarely hear hopelessness. Make of that what you will.
Thank you for reading and supporting me as I sense make this year. I greatly appreciate your patience and support because I am trying to make a new life in a new land. As I toggle between exploration and extraction, I am not as consistent in output as I’d like to be. It is one of my resolutions to get better at this next year.
Here’s to 2021, you’ve been heaven and hell on too many occasions. And here’s to 2022, may you bring us something new.
Happy new year!
Great write up .. as always. Thank you!
Thank you for all the wonderful writeup this year!