November 15, 2020: 16 Days

Hello Interconnected Readers:

I had a busy week last week that was mostly self-created. While still doing volunteer work at the Reno campaign office (work doesn’t stop when Election Day is over) and continuing my day job as an investor (doing calls with founders, helping with recruiting), I took it upon myself to produce an English version of Jack Ma’s Bund Finance Summit speech and focused my weekly deep dive on providing additional context and nuances to the speech. (You can read them here and here.)

[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:

• “The unsigned Op-Eds that foreshadowed Ant Group IPO suspension” (English Source: TechNode)
• “China draws up first antitrust rules to curb power of tech companies” (English Source: Financial Times)
• “U.S. Backs Down on TikTok” (English Source: Wall Street Journal)
• “10 days after IPO suspension, Ant Group appoints Li Chen as head of compliance” (Chinese Source: Sina Finance)
• “Rumor: Huawei plans to sell Honor product line for 100 billion yuan, Digital China and others will take over” (Chinese Source: CN Beta)
• “A Li Xueqin personal livestream sales event filled with bots: 3.11 million views, less than 110,000 are real humans” (Chinese Source: Deep Net)]

Both pieces received a lot of positive reactions. The speech made it onto Hacker News front page. The deep dive analysis was shared and referenced.

I’m obviously happy that people found my work useful, but last week’s experience also illuminated something deeper that caught me by surprise: the lag in information flow between the Chinese language and the English language world.

Jack Ma gave his speech on October 24. I didn’t watch it until November 4, because I was busy with the election. I didn’t decide to translate it until November 9, when I watched it for a second time and thought it was compelling enough to be worth translating -- something I rarely do because Interconnected is focused on original work. In the period between Ma giving the speech and my translating the speech -- 16 days -- it appears that there was no other published English version of it. And if I got lazy and didn’t do it, perhaps we still won’t have one?

Maybe this is my personal bias as someone obsessed with speechwriting, but I think a good, consequential speech should be watched, listened to, and read in its entirety in order to be fully understood. Regardless of which side of this issue you are on, we can all agree that Ma’s speech was consequential. Its impact may not have been obvious initially, but surely became obvious when Ant’s IPO was suspended on November 3.

I will continue to do my little part by continuing to write Interconnected. But I hope more people produce bilingual content and contribute to the information flow between the English and Chinese language world, so we don’t depend on the free time of some random person on the Internet like me -- 16 days after something big happened.

Real improvement in US-China relations depends on it.

Kevin

The summary below covers the period between November 9 - 15, 2020 of six news stories – three from English language sources, three from Chinese language sources. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.

Before you go on, please check out last week's deep dive post: "Jack Ma, P2P Lending, Responsibility, Legacy"

“The unsigned Op-Eds that foreshadowed Ant Group IPO suspension” (English Source: TechNode)

My Thoughts: This is one of the best pieces of reporting on Ant’s suspended IPO, which combs through the impact and implications of the various unsigned Op-Eds published in response to Jack Ma’s speech from official publications run by key regulatory authorities, like the People’s Bank of China. These essays are important primary sources to pay attention to, if you want to read the tea leaves and anticipate any Chinese government actions on, well, everything! Understanding their substance, as well as the rumored identities of who these “senior scholars” really are, is just as valuable as parsing through an official communique. Highly recommend this article.

“China draws up first antitrust rules to curb power of tech companies” (English Source: Financial Times)

My Thoughts: China’s antitrust actions have been rumored for quite sometime -- I made a brief comment on it back in August. Like many parts of China’s economy, antitrust as a regulatory realm is young and without many precedents; the only one I can think of was the Tencent vs. Qihoo360 case (or the “3Q War”) back in 2010. By comparison, the current US antitrust regime was formed more than 100 years ago, based primarily on the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. There is a lot of updating the US antitrust system needs to cope effectively with the rise of Big Tech; the traditional definitions of monopoly power, market power, and predatory pricing don’t really work when tech products are effectively deflationary. As for China, I hope the regulators take a more first-principle, sui generis approach to drafting these rules. Regulating Alibaba cannot be the same as regulating Amazon, but the experiences from both sides can be useful for each other.

“U.S. Backs Down on TikTok” (English Source: Wall Street Journal)

My Thoughts: Still remember the TikTok “ban”? I almost forgot myself, even though I wrote plenty of articles about it just two months ago. It seems like the Trump administration forgot about it too. As I’ve written before, I’m not opposed to a ban, if there is evidence, not just speculation, that products like TikTok and WeChat are being used as tools for foreign influence campaigns or to steal American people’s data. We just had an election. We should have real data to investigate now. But will we have serious regulators who would do their job?

“10 days after IPO suspension, Ant Group appoints Li Chen as head of compliance” (Chinese Source: Sina Finance)

My thoughts: Li Chen may be the person to watch, as we wait for not just Ant Group’s IPO to resume at some point, but also how new regulations on fintech will impact how companies will behave and comply -- something that Tencent, JD, Meituan, Xiaomi, etc. will all have to figure out. There’s not much information available on Li Chen, except that he appears to be an Ant veteran, having held executive positions in Ant’s division in Chongqing as well as the company's blockchain and cloud divisions.

“Rumor: Huawei plans to sell Honor product line for 100 billion yuan, Digital China and others will take over” (Chinese Source: CN Beta)

My thoughts: This sale could become official as early as this Sunday, likely before you get around to reading this weekly issue. I discussed this impending sale back in October, and it appears that Digital China (a key Huawei distributor and partner) along with a group of investors connected to the Shenzhen municipal government (where Huawei is headquartered) will be the buyers. There is rumor that the Honor unit may IPO in three years as an independent company after this sale. I maintain my previous opinion that this move is intended to keep its higher-end product, Mate, alive and competitive by consolidating internal resources and R&D focus. Veteran executive Gordon Orr of McKinsey also believes this sale is a "park and hold for me" strategy, rather than a "sell and move on." Only when the details of the sale is public, which may come soon, will we have a better sense of the bigger strategic intention behind the sale, if any.

“A Li Xueqin personal livestream sales event filled with bots: 3.11 million views, less than 110,000 are real humans” (Chinese Source: Deep Net)

My thoughts: Livestream e-commerce in China has been so huge for so long that young startups trying to replicate it in the US are fetching big funding rounds at a massive valuation. The latest example is Popshop, a two-year-old product that raised at a 100 million pre-money valuation from Benchmark, even though the app just came out of private beta and has ~3000 daily active users. This article on a recent Singles’ Day shopping livestream featuring Li Xueqin, a livestream star and comedian, reveals how many fake bots are behind the raw viewers and engagement metrics that people see on the surface. It also uncovers the overall frothiness of the livestream e-commerce industry, where streamers routinely buy fake engagement to generate buzz and, hopefully, sales. It’s an uncomfortable truth that US entrepreneurs, and the investors who fund them, should pay attention to.

(To close out on a lighter note, Li Xueqin happens to be my favorite Chinese comedian. Here’s one of my favorite routines of hers. Let me know if you like/dislike her humor and why!)

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