Hello Interconnected Readers:
Last week, I shared my five big themes to explore in 2021, one of them is non-US innovation cities and corridors. As someone who tends to act quickly (almost to a fault sometimes), I’ve decided to spend time in one of them starting later this month: Mexico City.
[If you’d like to skip ahead to the six news stories and commentaries – three from English language sources, three from Chinese language sources -- here are this issue’s items:
- “U.S. Weighs Adding Alibaba, Tencent to China Stock Ban” (English Source: Wall Street Journal)
- “Intel Talks With TSMC, Samsung to Outsource Some Chip Production” (English Source: Bloomberg)
- “Did the EU rush into the China investment deal before the 2020 deadline?” (English Source: SupChina)
- “Tsinghua graduates love to work for Huawei” (Chinese Source: CSDN)
- “Far from 996, they started businesses in non-first-tier cities” (Chinese Source: China Venture)
- “Douyin gets punished for pornography; ByteDance ‘angry at’ Tencent: no reason to block Lark” (Chinese Source: InfoQ)]
This decision is not a reaction to escape some version of the American decline, though given what happened in Washington DC last week, there are good reasons for people to assume so. To the contrary, if “buying low” is the wise investment strategy it’s supposed to be, I think now would be a good time to “buy America.”
Having a better understanding of where innovations are happening around the world is important to continue refining my “Global by Nature” investment thesis for the next 10 years. As I outlined in the four-part “Global by Nature” series, more technology products will be created that transcend borders and address a global market from day 1, especially developer-focused products. More of these creations will happen outside of the US as technical know-hows become more distributed and accessible. Yet, this trend will benefit the US enormously, given that it is still home to the world’s largest tech companies, largest cloud platforms, and the most advanced R&D programs, thus the largest customer of technology for decades to come.
Mexico City, along with Guadalajara, could be one of these innovation hubs. Mexico’s top universities are graduating more than 130,000 engineers a year. Guadalajara is already the designated LATAM engineering hub for US tech giants, like Oracle, IBM, Intel, and Tesla. Mexico City, in particular, has a higher concentration of full-stack developers, IT operators, and sysadmin professionals, which is where my sweet spot lies as an open source and enterprise tech focused investor.
Good attributes aside, Mexico’s startup ecosystem is undercovered by the tech media. Some of that appears to be intentionally; successful founders tend to shun the media spotlight to avoid criminals and kidnappers. Another reason is simply the self-fulfilling prophecy of “news desert.” The less a place is covered, less the interest there is about that place, and less the demand still for more information about that place. Silicon Valley has the opposite problem.
Whether Mexico City’s potential is hype or real, my only solution is to get to know people there and see for myself. So if you happen to be in Mexico City, or know of any local entrepreneurs, developers, or open source hackers, please make an introduction via email (kevin AT interconnected DOT blog) or DM me on Twitter. I’d love to buy you lunch while I’m there (with a mask on and socially distanced of course).
Before you read on, please check out last week's deep dive post: "Lame Duck Delisting"
“U.S. Weighs Adding Alibaba, Tencent to China Stock Ban” (English Source: Wall Street Journal)
My Thoughts: After delisting three Chinese telcos and banning transactions with eight Chinese apps, US regulators are weighing whether to add Alibaba and Tencent to the Defense Department’s “Communist Chinese military companies” list as well. If that happens, it will trigger the delisting of two of the most valuable tech companies in the world. Unlike the state-owned telcos delisting, which I deemed minimally damaging and largely symbolic, removing Alibaba and Tencent from Wall Street will hurt. It’ll hurt the two companies, who have an increasingly large global presence and ambition for more. It’ll also hurt the many US funds and indexes that are exposed to them. For example, MSCI Emerging Markets Index has a $7.8 billion market cap and 11% of that value is from its exposure to Alibaba and Tencent.
“Intel Talks With TSMC, Samsung to Outsource Some Chip Production” (English Source: Bloomberg)
My Thoughts: Intel’s continued decline in its chip manufacturing capabilities is a microcosm of America’s broader inability to make anything. This news of outsourcing to TSMC and Samsung isn’t surprising. What is surprising is the lack of information on Intel’s own plan to revamp and reinvent itself. Influential investors, like Dan Loeb of Third Point, are more actively and publicly voicing their concerns, couched in both lack of innovation and national security grounds. On January 21, one day after Joe Biden is inaugurated president, Intel is due to report quarterly earnings. That’s when Intel will have to communicate some kind of plan forward or continue on its path of decline.
“Did the EU rush into the China investment deal before the 2020 deadline?” (English Source: SupChina)
My Thoughts: I personally did not track the EU-China Comprehensive Agreement on Investment until it was signed, so the event was a bit surprising to me. This SupChina article does a good job of sharing and compiling the main concerns about the agreement, most of which is labor and human rights related. It’s also safe to say that given everything that has been happening in Hong Kong, this deal might not have happened if Britain was still part of the EU. The European economy has been stagnating, hovering around 0% for the last 10 years until the pandemic, which is projected to cause a 7.8% contraction in 2020 before bouncing back in 2021. China is the only major country projected to have any economic growth in 2020. The big question in my mind is how will the EU balance its relationship between the incoming Biden administration, decidedly more multilateral than Trump, and China? In more blunt terms: how much money are decades-old alliances since WWII worth?
“Tsinghua graduates love to work for Huawei” (Chinese Source: CSDN)
My thoughts: Tsinghua University is the undisputed leader in training the top technical talent in China. This list of the top companies its 2020 graduates decided to work for is telling of these companies relative strength and future potential (image of list below). Huawei is number 1 and leads by quite a wide margin over Tencent and Alibaba, number 2 and 3 respectively. ByteDance is number 10, Meituan is number 13, and Baidu is nowhere near the top 20.
“Far from 996, they started businesses in non-first-tier cities” (Chinese Source: China Venture)
My thoughts: 996 is back in the headlines and for all the wrong reasons, with the death of a Pinduoduo employee and also the firing by STO Express of someone who refused to work 996. It was only two years ago that the anti-996 movement caught wide attention with 996.icu. It doesn’t look like much has changed since then. Instead of piling on, I’m linking a different story that shares the experiences of entrepreneurs who work in non-first-tier cities in China to, at least in part, hopefully escape the 996 trap. Based on these anecdotal experiences, the 996 culture seems to permeate some non-first-tier cities too, like Hangzhou, or the ceiling of entrepreneurial success is very low, like Jinan.
“Douyin gets punished for pornography; ByteDance ‘angry at’ Tencent: no reason to block Lark” (Chinese Source: InfoQ)
My thoughts: There are a couple of ByteDance-related items I want to highlight in this news compilation from InfoQ. One is Douyin getting fined and punished by the Beijing municipality for having pornographic content on its app, after apparently more than 900 user complaints. It’s a level of punishment we don’t see in the American regulatory environment, even though porn-like content certainly exists on TikTok, as well as Snap and YouTube. The other is ByteDance’s own complaint against Tencent, which has held Lark (ByteDance’s workplace enterprise product) in review for more than two months without explanation. Tencent of course has a competing product in WeChat Work. This type of behavior would be considered “anti-competitive” in China’s newly drafted set of antitrust regulations. Will Tencent be punished when the regulations are fully implemented?
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- “美方权衡将阿里巴巴、腾讯加入中概股禁令”（英文来源: 华尔街日报）
- “英特尔与台积电、三星谈外包部分芯片生产”（英文来源: 彭博社）
- “欧盟是否在2020最后期限前过于匆忙与中国签署投资协议？”（英文来源: SupChina)
- “清华毕业生最爱去华为” (中文来源: CSDN）
- “远离996，他们在非一线城市创业” (中文来源: 投中网）
- “抖音因涉黄受行政处罚; 字节跳动‘怒怼’腾讯：无理由封杀飞书系列产品” (中文来源: InfoQ）】
做出这个决定并不是为了逃避某种版本的“美国衰退”的反应，尽管考虑到上周在华盛顿发生的事情，很多人都有充分的理由这样认为。恰恰相反，如果 "逢低买入" 是投资真理，我认为现在是 “买入美国" 的好时机。
更好地了解世界各地的创新地点，对于继续完善我未来10年的 "生来全球化" 的投资视角非常重要。正如我在 "生来全球化"的四篇系列文章种所聊到的，未来将有更多的创新从第一天起就超越国界，面向全球市场，尤其是以开发者为中心的产品。随着科技知识越来越分散，更容易获得，更多创新将发生在美国境外的地方。然而，这一趋势将使美国受益很多，因为它仍然拥有世界上最大的科技公司，最大的云平台和最先进的研发项目，因此在未来几十年内，美国将继续是最大的“技术”客户。
不管墨西哥城的潜力是炒作还是真实的，我唯一的办法就是去认识接触当地的人，亲自去体验一下。所以，如果您碰巧在墨西哥城，或者认识当地的创业者、开发者或开源黑客，麻烦介绍一下。请发邮件（kevin AT interconnected DOT blog）或在Twitter上给我发私信。我期待能在墨西哥城请您吃个午饭（当然都要戴上口罩，拉开社交距离哦）。
我的想法: 在逼三家中国电信公司退市，和禁止与八款中国公司的app进行交易后，美国监管机构正在权衡是否将阿里和腾讯也加入国防部的 "中共军工企业" 名单。如果发生，将意味着全球最有价值的两家科技公司的退市。与国有电信公司退市不同，我认为国有电信公司退市的损失较小，主要是象征性意义，但如果阿里和腾讯也退市，会造成的损失可不小。不仅会伤害两家公司的运营（它们在全球的业务规模越来越多，并且有野心继续扩大），还会给许多投资于它们的美国基金和指数带来客观的损失。例如，MSCI新兴市场指数的市值为78亿美元，其中11%的价值来自于阿里和腾讯。
我的想法: 英特尔的芯片制造能力持续下降，也是美国整体制造力下降的一个缩影。与台积电和三星合作外包的这一消息并不令人惊讶。令人惊讶的是，英特尔还没有宣布具体怎么改造和重塑自己的未来。像Third Point的Dan Loeb这种投资届巨头已经开始更积极公开地表达他们的担忧，其理由从缺乏创新和国家安全两个方面出发。1月21日，也就是拜登就任总统之后的一天，英特尔将发布季度财报。届时，英特尔将不得不宣布某些未来计划的细节，否则将继续走下坡路。
“清华毕业生最爱去华为” (中文来源: CSDN）
“远离996，他们在非一线城市创业” (中文来源: 投中网）
我的想法: 996又上了头条，而且都是因为不好的理由，从拼多多员工猝死，到申通快递解雇拒绝 996的应届生。仅仅两年前，996.icu主导的反996运动引起了广泛关注。自从那以后，情况看起来并没有什么改变。我也不在这里继续“添油加醋”了，链接一条稍有些不同的故事，其中分享了在中国非一线城市创业的经历。选择非一线城市至少部分期望是能逃离996的陷阱，但根据文章里的采访，996文化似乎也渗透到了一些非一线城市，比如杭州，或者创业成功的天花板就非常低，比如济南。
“抖音因涉黄受行政处罚; 字节跳动‘怒怼’腾讯：无理由封杀飞书系列产品” (中文来源: InfoQ）
我的想法: 在InfoQ的这篇新闻总结中，有两条与字节跳动有关的新闻我想特意评论一下。一条是抖音因App上有色情内容被北京市“扫黄打非”办公室罚款和处罚，用户投诉超过900多次。这种程度的惩罚在美国监管环境里很少看到，尽管TikTok以及Snap和YouTube上肯定都有类似的色情内容。另一个是字节自己对腾讯的投诉。腾讯对飞书进行了两个多月的审查，还没有做出答复。腾讯当然有自己的一款竞品：企业微信。这种行为在政府新起草的反垄断法规中很可能会被认为是 "垄断行为"。条例全面实施后，腾讯是否也会受到惩罚？