Some of China's greatest advances depend heavily on local conditions
bloomberg.com
bloomberg.com
I travel a fair bit in sub-Saharan Africa and the extent of Chinese influence has changed dramatically in the last decade or so. The airports in most countries are being built/upgraded by Chinese companies. The major highways are almost always built by the Chinese. Often enough these are financed by Chinese banks. Even at a consumer level there is a visible presence of Chinese cars and trucks. Chinese motorcycles are everywhere. Most supermarkets are filled with Chinese products, and quite often with Chinese brand names. Union Pay from China is starting to get accepted along with Visa and MasterCard at retail establishments. Even WeChat is taking root as a communication tool of choice though WhatsApp is still hugely more popular. There are Chinese owned/run hotels in most cities to cater to the increasing number of visitors and it won't be long before they compete with the large chains like Accor and Marriot for non-Chinese visitors.
To me, there seems a very clear influence at all levels in a very large number of countries (including Sri Lanka, Maldives and many others in Asia). Even in India, where I am from, with its rather complex relationship with China, Chinese products are everywhere. A recent article (https://www.gadgetsnow.com/tech-news/chinese-fashion-e-taile...) shows Alibaba competing quite well with Amazon and Flipkart, the current leaders, in some categories.
There is also a sense that I see of the Western companies withdrawing a bit, if only anecdotally. Most flights I take to the African countries less popular on the tourist circuit has more and more Chinese people looking like they are on business, and a corresponding reduction from everywhere else.
It may be less in-your-face when compared to the spree of Middle Eastern purchases in major Western cities from the earlier decards, but this looks more steady and lasting.
He mentions the gravity model being a limiting factor. Huh? If anything, including the gravity model would sway the balance further towards China and away from the US. China is extremely close to a massive number of highly populated Asian countries, and can run inexpensive trains to Europe. The US has Canada (population 36 million) or Mexico (127 million) close by, but not really much else. As a result, China can inexpensively ship to ~5 billion people, and the US can ship to maybe 500MM. Throw in all of South America (only 400MM or so people) and the US's reach is still under a billion.
Some figures: Northeast US to southern South America is about 11,000 km straight line, which has to be done with a complicated series of trucks, trains, boats, more trucks, etc. Beijing to Eastern Europe is 6400km, and can be done with two trains.
I think that one of the big blocks for China will be regulations around product safety and manufacturing/labor standards. There will be also regional pride ("made in USA"/"made in Europe") products and specialized equipment (processors, optics, scientific equipment.) There are a lot of cases to be made, but I don't think this article makes any good ones.
I am from India and trust me, even a small shop keepers (I don't mean to be offensive) refuses to carry Chinese goods because "Why support a country who screws up at the global stage".
It is a surging wave which might hurt China.
p.s. the 'screw up' is about designating a Pakistani terrorist as a global terrorist in the UN and China has been vetoing against it.
Like Oppo, Xiaomi phones are basically everywhere. Basically everyone uses PayTM (Alibaba owns 40% of it). Even small vegetable sellers on the side of the rode will have a QR code for you to pay with PayTM
In the end, practicality trumps blind nationalism every time. The Chinese dislike Japanese too, but still buy their cars and stuff.
of course, there are many such things which are Chinese but the general populous doesn't know (hello oppo, oneplus and vivo, which are owned by the same company!). but I am happy with what I saw. Indians should slowly stop importing substandard Chinese products not because of blind nationalism but because Chinese products are dumped pan India
Secondly, the english block tends to have a similar legal and regulatory mindset in dealing with companies. The Chinese system seems opaque and hard to understand for outsiders and for good reason. There is a lot of government influence and thinking that shapes Chinese products which doesn't appear elsewhere. That is a huge disadvantage.
When you consider all the of the other issues a young company face, having a huge multi-national singular language and somewhat similar regulatory framework is helpful in getting started.
Just look at the EU. We have a much bigger population than the US, but most speak their own language, which makes grow from lets say Germany to France or Spain a bigger issue than from the US to Canada.
Anywhere else: Arabic (Mid East/Africa), Chinese (Asia), Spanish (South America).
[1]: https://www.economist.com/news/europe/21721861-despite-jean-...
Population of South America: 421M¹
Population of Brazil: 208M²
It would look like the current EU Hacker News: nonexistent.
Despite having, relatively speaking, [some islands of] fairly decent English education, EU doesn't have broad native-level English literacy. The level of discussions in English is fairly low, and people are not as likely to recognize or casually learn cross-disciplinary jargon like full time English speakers.
It's relatively straightforward for a native English speaker to enter into discussions at the level of HN, but for somebody who does not use English absolutely every day in every function of daily life, it'll be a chore.
Honestly, it might be interesting if there were a central, yet multilingual, place where tech-oriented Europeans could congregate just to see what would happen.
Of course the subset of the population that is likely to end up on "European Hacker News" would mostly consist of at least part-time English speakers. But then what is going to keep non-European English speakers out of that forum?
I don't think HN would look any different if it were hosted in Europe. Any website with mostly English content is going to be dominated by visitors from the US.
I speak English fairly well, but most people here just understand it when spoken to them, they can't speak it fluently.
But in the BeNeLux or Scandinavian countries people speak english rather fluently, even if they don't need it at their jobs.
Source: I feel quite at home commenting here, but I'm a mumbling wreckage when navigating the day to day linguistic perils of e.g. something as trivial as a US supermarket checkout.
Yeah, I think that's a fairly common issue (overspecialization). I have that problem with studying Japanese: I get most of my practice in listening, so I can listen to and understand at a level far above my speaking, reading, or writing.
I also can’t read a lot of regular prose very well. I can read any technical subject quite well though.
To be fair I was shocked when visiting the US how bad many Americans are at formulating themselves on paper.
The thing about English is that it's such a clusterfuck; slang, contractions, and "incorrect" grammar are hard to criticize when the language is already such a mess. Partly in jest, I liken it to a linguistic Broken Windows Theory[0].
While lots of professionals speak English more or less well, what is telling to me and a big indicator that the situation does not look as good as some people want to believe is the fact that there is hardly any English-language cinema or movies/series (on TV).
Even where I am, a major German city, there is the one huge cinema complex (10 cinemas) that only shows 2 or 3 English language movies - in their smallest rooms and with less than 10% of seats taken. Every single movie and TV series gets German speakers for this market.
I can't say how reliable of an indicator this is, but I think given that this stuff (TV and cinema) still is a huge part of daily mass entertainment the fact that those offering the (often originally US-made) material choose to spend a lot of effort creating a German voice track pretty much without exception probably is significant.
You also see this in book translations. Here in Denmark, the choice is sometimes rather limited (outside of bestsellers) and the translation quality suffers. Compare this to Germany, where the market is significantly larger, so more more and higher quality translations are available.
I'm Danish and my girlfriend is German, and I definitely notice the difference whenever I visit her family in Baden-Württemberg.
I also noticed it while I was studying. Technical documentation was usually only available in English and German. When you have a population of >80 million people, there is a large incentive for producing native language products.
As a consequence, a lot of Germans over a certain age simply do not speak English very well, or at all.
[0]: https://www.wolframalpha.com/input/?i=Population+of+Norway+%...
Facebook by contrast, by the time they fully dominated just the US market, had a billion dollars per year (doubling annually) in cashflow to throw at expansion globally. If you flip that down to a smaller market, and say you start in Estonia and capture that market (while somehow fending off Facebook), how much cashflow do you have per year to spend on trying to take the next market? How well protected is your home base from Facebook taking it from you in the meantime, and so on. The US/Canada + english starting advantage is extreme.
1.5x bigger
I looked it up just to make sure I wasn't insane, it's "right off the bat" and it's a baseball idiom.
"Right you are" is an extremely common fixed expression.
Is this not the case for all companies who want to scale internationally? Maybe I am naive but I think it would have to be extremely difficult for a U.S company to immediately succeed in China w/o extensive knowledge/expertise beforehand.
I don't think this will be a problem for China.
They got enough people on the inside to make their companies really big, more than the US and they got rather big too before selling to outside customers.
It doesn't matter how many people you have on the inside in isolation. It matters what the output per person is combined with how many people you have.
China is running into an increasing blockade with its largest trading partners, as they recognize China has been playing the game one-sided for a long time (to say nothing of the rampant state-supported dumping). It's still illegal to acquire the majority ownership of a Chinese company as a foreign entity, 16 years after they joined the WTO.
It cost China $40 to $50 trillion the last ten years, to grow as they have. The return they're yielding on each dollar of debt has long since gone below 1 to 1. Now their households are rapidly taking on large amounts of debt. Their corporations are the most indebted on the planet. It's a trick that can't be duplicated in the next ten years to keep the magic growth machine going.
In the span of ten years, China caught up to the US in terms of total debt load as a percentage of GDP. S&P is projecting they'll expand that by a further 77% by just 2021. That would entail taking on another $25 to $35 trillion in debt, in just four years or so. To put that into context, in four years they'll add roughly ~$3 trillion to their GDP; can that amount of economic expansion fund another $25 to $35 trillion in debt? We'll soon find out (by another contrast, the last $25 to $35 trillion in debt they took on, coincided with $8 to $9 trillion in new GDP; while high, a $3 of new debt to $1 of new GDP ratio sure beats a $10 of new debt to $1 of new GDP ratio).
Their large foreign reserves used to be a safety offset to their debt. Except now debt has grown ~15 fold beyond the $3 trillion they have in theoretical reserves and is still rapidly expanding while their reserves haven't net moved in years (with at least half of those reserves already spoken for).
They're well aware of this dangerous situation of course. Which is why they're attempting to slow the growth of debt, but they've entirely failed at that:
https://www.cnbc.com/2017/11/26/chinas-deleveraging-debt-sti...
And this vast collection of debt has happened while China still almost entirely lacks an actual entitlement system similar to developed nations with the highest standards of living (such as Sweden, Germany, Denmark, Canada, etc). I don't see how they can ever afford that, if they're already starting from a position of such extreme debt entanglement. As their population ages rapidly, they'll find a far greater need for those types of systems, and it will further drain their growth potential by siphoning growth capital (up to now, China has gotten a free ride on that aspect, they've had to devote very little capital to such things as a total percentage of their GDP or budget).
Probably the only reason China is still chugging along with growth at this point, despite the mounting problems, is that they've done a pretty great job learning from other developed economies. It has helped them get huge at warp speed without tipping over. They expended a lot of effort on studying other major economies and their central bank systems. If anything gives them an opportunity to not fall into the Japan-trap in terms of debt and growth, it's that willingness to learn fast, adapt fast and rechart the map quickly if needed (when it came time to change course, Japan refused, they kept piling up debt even after it crushed their budget and savings rate; they kept over-spending on public works even as the return on investment went negative, and they entered a repeating cycle of making the same mistakes over and over again for years as it increasingly trapped them in a huge debt spiral).
One possible explanation: printing money doesn't cause consumer price inflation because so much of that money never reaches consumers.
And that’s why American tech companies have a huge advantage over Chinese tech companies when it comes to going international. Immigration.
What kind of double speak is this? At least some of the success of wechat, alibaba, et al is due to the fact that China is not operating in an open economy. International companies can't operate in China for reasons related to IP or information availability - and we're talking about how people outside China operate under different conditions?
Color me surprised
That wechat would have won over Facebook is completely hypothetical given that they weren’t allowed to compete. Facebook, WhatsApp, and YouTube are dominating in china’s backyard, including newly opened internet markets like Cambodia and Myanmar.
Also they are opaque because no copyright law exists and it is too big of a market that other countries will do something offensive against it.
wecash is used as an acceptable form of currency by everyone, including Starbucks in China. That's WeChat's currency launched way back. Tencent can't repeat WeChat's success elsewhere because we have an open market and they do not.
I know of this one.
Do you know of any significant programming languages, libraries, or frameworks that originate from China?
Seems like most of the best Chinese software talent moves abroad. I suspect Chinese government's decision to cripple their internet plays a significant role.
My point is, yes, they enjoy large advantage in mainland that could possibly make it hard for them overseas. But has it actually? Are they failing or succeeding?
The conclusion would be different if the author analyzed Chinese smartphone brands instead. Five years ago, even the domestic market was dominated by foreign brands like HTC and Samsung; now the domestic market is the complete opposite. Looking at the supply chain, back then all China provided was low-paid final assembly. Now, Chinese companies are very competitive in supplying most of the parts: displays, camera modules, fingerprint scanners, enclosures, sound components, RF components, batteries, SOC, etc. Only high-end semiconductor components (RAM, NAND, application processors) are lacking but Chinese industrial policy will rapidly help this area catch up.
Chinese smartphones (phones with a Chinese brand not just manufactured there) have seen massive success internationally in the past couple of years and now make up HALF of global marketshare. In India, OnePlus has higher customer loyalty and sales than Apple in the high-end and Xiaomi is neck in neck with Samsung as the marketshare leader starting from zero two years ago.
Now remember, all of this happened in just the last five years. What other industries will break out in the next 5 years?
This is a misconception. Holland has the earliest (2003) and most popular bike-sharing service offered by the NS (National Railways).
Btw westerners would also use Wechat if they could. But my doctor doesn't have his computer system integrated with the Wechat appointment API. And I can't pay Taobao because I can't have an Alipay account as foreigner without a Chinese mobile number.
If we could we would use it, because the mobile market in China is way more developed than in the west. Users don't want to have 1000 ways to pay one product. They want one way to work all the time without hassle.
> Alibaba has succeeded in large part because brick-and-mortar retailing is so challenging on the mainland. Roughly a quarter of the world's cities with more than 500,000 people are located in China -- twice as many as India, the next country on the list. Real estate prices in those urban areas are astronomical, which limits how big stores can be and thus the range of consumer choices.
Shops are everywhere in Chinese cities. Rents are often pretty low, even in the new fancy malls where they’ll offer good deals for new shops. Consumer choice in physical stores is often limited by the ‘herd mentality’ of retailers who crowd hundreds of identical shops together and rarely attempt to cater to niche markets (eg. I’m a woodworking enthusiast and it’s almost impossible to find hobbyist tools in a physical store in China).
Alibaba succeeded because of convenience and customer service - before Alibaba/Taobao, the idea of getting a refund, exchange or return on a faulty product was unheard of. Shopkeepers would often just shrug when you told them the product you bought broke the next day. Alibabas policies on returns and the competitive environment for stores to distinguish themselves changed everything.
That said i enjoy Taobao for how i can get out of town prices inside of Beijing. But that pales in comparison to the sheer amount of stuff you can get on there. Want a chair? Done. Want beta-amylase in a 20kg bag? Done. Want socks? Done. Want a reverse osmosis system? A rotary evaporator? 12kg of chicken wings? Done, done, done.
Very, very true. It's one of the things about China that I totally don't understand. I've been in Shanghai and visited some of the "malls" with each of them having thousands of these tiny shops inside, everyone selling the exact same stuff as the next one. And I mean "the exact same stuff". The primary tool to differentiate yourself from the others seems to be the attempts at screaming louder than the shop next door. I mean, it's good for the inevitable price negotiation (just walk away, they'll most likely chase you and offer a much smaller price, and even if they don't, one out of the next 5 stores will definitely offer the exact same item so you can retry), but it severely limits the choices, and if there isn't a huge mall that specifically caters to whatever you currently need you may have a hard time getting whatever you want to buy.
I can't make economic sense of this behavior from the point of the shopkeepers. Why be the 50th shop selling the exact same hats as the other 49 shops right next to you? Wouldn't it make sense to sell stuff that you can't get anywhere else in the vicinity? Is the demand for the weird hats you and all the other stores sell really at least 50 times higher than for anything else not being sold in the area?
The idea that you can generate wealth independent of environmental conditions is flawed - there's no such thing as absolute wealth generation. Demand has a price point, and fulfilling that demand has a cost point, and its the environmental conditions that dictate if you'll operate at a profit or loss.
Favorable conditions enable you to operate at profit. These conditions can be a number of things, like location, access to capital, labor, competition or lack thereof, etc. Most of the time, these things are not under your control (unless you're a large corporation that can lobby the government, or you are backed by the government).
China's government has created conditions for profit by creating favorable environments. Profit allows for innovation, which is where the technical advancement comes from.