" But you see the situation with actual wars, right? Once somebody starts, they expect a quick assault to win the war and take the enemy's territory. But typically, it ends up in a war of attrition, where everybody spends a lot of money and resources with very little result. When that happens, you need to find an excuse for everybody to de-escalate because promises were made to stakeholders that there was a reason to launch this, and admitting defeat would be a humiliation for many. Especially since many of these companies are still founder-driven, a defeat could mean losing credibility as a founder. If you look at the messages from every platform, each one says they are committed to defending market share and that competitors are irrational. But if everybody says the competitors are irrational, then I don’t know. " - Jianggan Li, Founder & CEO of Momentum Works


"In July, Alibaba committed to invest 50 billion yuan into subsidies over one year. Alibaba owned the second-ranked food delivery platform Ele.me, which historically held 25 to 30 percent market share. This time, they used their biggest weapon, Taobao, the daily shopping app with 400 million active users even before the war. They created an entry point on Taobao where customers could instantly buy food, bubble tea, gadgets, and more, all delivered within 30 minutes. That move triggered the war, and it has been bloody." - Jianggan Li, Founder & CEO of Momentum Works


"Talent migration has always been happening. Internal migration is not as restrictive as it was 20 years ago. The Hukou system still exists, but there are many ways to get around it, and in cities like Hangzhou it is much easier to obtain a local Hukou. With the housing price issue, governments are more incentivized to grant registrations to migrants so they can take up housing. Many factors are driving this migration." - Jianggan Li, Founder & CEO of Momentum Works

Jeremy Au and Jianggan Li explore why China business environment is locked in cycles of over-competition that destroy margins and push firms to seek growth abroad. They trace how JD, Meituan, and Alibaba’s food delivery war escalated into billions of yuan in subsidies, why regulators hesitate to intervene, and how clusters like Shenzhen and Hangzhou still thrive despite intense rivalry. Their discussion highlights collapsing product margins, subsidy-driven chaos in the EV sector, and the role of provincial governments in fueling excessive competition. They also examine how talent migration and generational shifts are reshaping workforce dynamics, with younger Chinese workers increasingly prioritizing lifestyle and aspirations over hardship-heavy careers.

00:24 Over-competition defined daily life in China: Companies copied each other’s hardware and burned billions on subsidies in food delivery, bubble tea, and coffee.

02:49 JD, Meituan, and Alibaba escalated into a price war: Subsidies wiped out profits and locked companies into a prisoner’s dilemma.

07:11 Government offered mixed signals: Some regulators praised subsidies for boosting consumption while others warned about disruption.

13:04 Hardware margins collapsed quickly: AI note-taking devices saw profits fall from 20 percent to 1 percent within a year as competitors rushed in.

15:35 EV industry showed subsidy-driven chaos: BYD slashed prices by 25 percent, alarming regulators who feared smaller firms would be wiped out.

18:58 Shenzhen and Hangzhou emerged as key clusters: They benefited from policy support, inertia, and government backing for overseas expansion.

23:59 Younger workers demanded balance: Unlike older generations, they sought personal aspirations and resisted hardship-heavy roles abroad.

Jeremy Au (01:22)

Hey Jianggan, I'm really excited to have you on the show. We are going to be discussing over-competition, or the crazy price war that keeps happening in China. It's quite strange because I'm so used to reading the American and Europe news, where other companies are recording, you know, like monopoly profit, price wars don't happen. And, you know, stock markets are still at all-time highs, right? So Jianggan, can you tell me what's going on?

Jianggan (01:45)

Well, when I say over-competition to lots of friends of mine in China, that's daily life. Even last night, I was meeting a bunch of people doing smart wearable devices. It just turned out that everybody was copying each other. And everybody has bought each other's hardware, dissected it, and said, Okay, this is what we can copy, this is what we should innovate to do it better than them. But the context of this is, I think this year,

hundreds of billions of dollars were burned in subsidizing people's bubble tea and coffee. The coffees are the top platforms in China, Meituan, Alibaba, and JD. So the whole thing started in February when JD, one of the largest and one of the more premium e-commerce platforms in China,

decided to say that, okay, now we're not satisfied with just being an e-commerce platform We want to end our food delivery. So the founder actually rode an e-bike to deliver food himself and went out for drinks with food delivery riders, etc. And they, of course, the incumbent Meituan, which owns like 70% of market share, was forced to respond, but I think for a while they said, okay, JD is structured very differently. So for them to mount an offensive offense

in food delivery would be quite hard, because that requires a lot of refined operations. Things took a turn in late April when Alibaba entered the show. And in July, Alibaba committed that they would invest 50 billion yuan into subsidies over a course of one year. And of course, Alibaba owned the second-ranked food delivery platform called Ele.me in China

which historically had like 25 to 30 percent market share. But this time around, they threw in their biggest weapon, Taobao, right? Taobao is the daily app for shopping and everything. Even before this war, they had like 400 million daily active users. So they made an entry point on Taobao, saying that now you can buy everything like instant on Taobao.

Food, bubble tea, gadgets and stuff, everything will be delivered to you in 30 minutes. So hence, the war started. And it has been bloody. Sorry, it's been bloody if you look at the financials of all the companies. I think Alibaba is announcing their financials as we speak in a couple hours. But when we look at JD, when we look at Meituan, they caught their entire profit, which

they had managed to build over the years, wiped out because of that.

Jeremy Au (04:15)

I think that's kind of crazy. And it feels like, of course, you know, prisoner's dilemma, right? I mean, if everybody is throwing all this money and making all these pledges about subsidies, that is very hard to be the person that first surrenders. So everybody's trapped in subsidizing, but it still doesn't solve this problem for me. I understand that now that they committed, they have by each other's a little bit, but how did they even get into it in the first place? Was it like

Jianggan (04:35)

Mm. Mm. Mm. Mm.

Jeremy Au (04:41)

there's so little avenues for growth, or they really have to start price war to win and fight each other?

Jianggan (04:50)

I think one theme for many platforms in China for the last couple of years since the pandemic is that the overall consumption is relatively flat. It's not growing. I mean, it's growing modestly quarter over quarter, but by and large it's flat. So that causes a lot of people to look for new avenues for growth.

I wouldn't say smarter ones, but there are a few which said, okay, let's tackle international markets, right? I mean, PDD launched Temu, which is now in like 80 plus countries. And TikTok also focused a lot of their e-commerce efforts outside China. And Meituan is now trying to enter Brazil after Saudi Arabia. But domestically, you still see people trying to find growth avenue. And one key driver,

this time around was Meituan saying that, hey, we have built this instant fulfillment network, right? Whatever you order, food, drinks, and stuff we can deliver to you in 30 minutes, and we can use this network to sell goods. So the earset I'm wearing now, I bought it on we'll try to buy something premium, and you would go to JD because it's same-day delivery, next-day delivery. But

when somebody else says, same price, but you get it in 30 to 40 minutes, the calculations are very different. And obviously, since Meituan was going aggressively into instant retail of e-commerce goods, JD felt threatened. That's probably why they entered food delivery, to defend the mind share, right? Because historically, they've been telling customers, we are fast, we are premium. But now you have somebody else who is delivering even faster, and you want to

make sure that consumers don't switch. But somehow that triggered everybody jumping in, saying, that okay, we feel threatened as well and we need to make sure that we are in the space. And then, I don't know, once it started is hard to stop.

Jeremy Au (06:40)

I mean, it definitely, you know, it's interesting, because one is an attacker and the other one is defensive or reactive. But he said now it doesn't matter anymore. People have forgotten who started it. Now that you're in a price war, you can't be the first to surrender. Yeah, it doesn't matter anymore. It's like, who started the fight between the three brothers? Nobody remembers, but now they're fighting, right? I think the interesting part is that obviously this is going to be quite destructive, right? The margins are going to be destructive to, I think, the public market.

Jianggan (06:46)

Mm.

Yeah, it doesn't matter anymore.  ⁓

Jeremy Au (07:08)

You know, metrics, and as a result, I think equity is probably going to drop, and obviously the cost of capital is going to rise for them, right? So I think it's going be interesting because I think it's interesting to watch them pledge a large quantum of subsidies and also have the cost of capital rise on them. So I don't know, like, I wonder if they're going to really spend all the money they promised, or is this going to have to... I don't know what's the word.

Jianggan (07:09)

Mm. Mm.

Mm.

Mm.

Jeremy Au (07:35)

Surrender a fold earlier if it keeps going like this.

Jianggan (07:39)

Well, I'm not sure whether it's appropriate to draw that parallel between this and actual wars where people die. But you see the situation with actual wars, right? Once somebody started, and they would expect sort of his quick assault, I'm going to win the war and take the enemy's territory and that's it. But quite typically, it ends up in a war of attrition. So everybody spends a lot of.

a lot of money, a lot of resources, with very little results. So when that happens, you need to find an excuse for everybody to de-escalate, right? Because everybody has made promises to their stakeholders, saying, hey, there's a reason for us to launch this, and admitting defeat will be a humiliation for.

for many of them. And especially, I think many of these companies are still founder-driven, so it's a defeat. It's something like, I mean, you might lose your credibility as the founder. So that's why I think everybody's sort of saying that. And if you look at the messages from every platform, every platform is saying hey,

we are committed to defending our market share, and the competitors are irrational. But if everybody says the competitors are irrational, so I don't know.

Jeremy Au (08:46)

I guess the one face-saving signal would be if the government says, cut it out, right? Because, the government has been against, or at least has made some noises about, over-competition. So I can imagine the government saying, hey, please cut it out. And then all the management team saying, okay, the government told us to stop it, not because we wanted to stop it.

Jianggan (08:51)

Mm.

Yeah.

A couple of pointers. First, historically, the government has no track record actually stopping the price war, but you have lots of cases of government stopping an industry as a whole. So you certainly don't want government to be too heavy-handed. You sort of more want the government to send a subtle signal and get everybody into a meeting and stuffs.

The messages that the government has been sending seems to be mixed. Some parts of government saying hey, all you guys are subsidizing the small merchants, that's boosting consumption, that's good for us. Other parts of government saying, hey, this is excessive, this disrupts the normal trade, et cetera, et cetera. So I'm not sure whether the government actually has a consolidated stance on this, or maybe, as regulators always do, Okay, if you act within a band

we are fine, but if you don't, don't exceed whatever that's permitted that causes social disruption.

Hmm

Jeremy Au (10:05)

What's interesting is that

obviously it's good for consumers, right? Because now you get bubble tea, you get different services. I think riders probably get more jobs. So I think it's a way to the reach issue profits, I guess, to some extent from the corporate side to the consumer. I can definitely see why the government is not against it. All these could be favorable to it. I guess the other part is, like, I feel, isn't this whole dynamic of involution we talked about and over-competition. What does the government think about it?

Jianggan (10:18)

Mm. Mm.

Jeremy Au (10:31)

Do they have a role to play in it?

Jianggan (10:34)

The government has been saying that they're firmly against evolution, firmly against excessive competition for very little results. They're firmly against 996 working culture. And they are firmly pro giving everybody, worker proper social security. So that has been the top-line message for long time.

The challenge is that when it comes to implementation, there's so much

complexity and so many nuances across different regions in China, across different sectors, across different sort of segments of the society. So that makes a lot of time-specific government regulators and that they are very cautious about what they say, right? Because whatever they say, that impacts and they might have to be responsible for that.

So historically, until there's a parliament authority in the government saying, hey, we will head this way, otherwise, everybody's saying that, okay, we're setting the boundaries and please be safe.

Jeremy Au (11:38)

When you think about this, what's going to happen? Do you think it's which regulators or which bodies are most likely touching this conversation, least on the quick delivery and instant commerce side.

Jianggan (11:51)

I would say that there are lot of agencies which might get involved, and the foremost would be the State Administration for Market Regulation. they are the ones which have coordinated cross agency collaboration in the past few years against... Sorry, what was I saying?

Jeremy Au (12:23)

I was asking the question about which regulators are involved in it.

Jianggan (12:27)

Mm.

yeah, so I think for the last few years, any regulatory effort against large platforms will be handled by a joint effort by different regulators because some of the platforms are so large that whatever they do, they touch different sort of segments of society and different industries. One of the main agencies which have been coordinating these efforts has been

the State Administration for Market Regulation. But so far they have not been sending any sort of clear signal of what exactly is allowed what is not allowed, but they have been making the stance saying that we're anti-evolution. So I personally think that, if I'm a bureaucrat in the regulator, I don't want to be responsible for anything that might go

on the sideways, right? I don't want to be seen as killing innovation. I don't want to be seen as, I mean, if everybody's happy getting five cups of free bubble tea a day, I don't want to be seen as the one stopping that. But on the other hand, they need to be seen as doing their job. So that's why you see a lot of, you know, statements and stuff, but not much actual sort of enforcement.

Jeremy Au (13:34)

When you think about this law enforcement, I mean, it's not enforcement. It's probably going to pulling people to have that reading and meeting and conversations. ⁓ I guess the question I have is, then probably what I'm hearing is that instead of one folding and the rest following, it would probably be some sort of meeting. And then everybody would meet, and everybody would do it simultaneously or

Jianggan (13:41)

Mm.

Hmm.

Jeremy Au (14:00)

roughly around the same time. So to me, that seems like the natural end stage. It's going to take a few more months for the regulators to shape up to it.

Jianggan (14:10)

I would think so. Of course, by the time we are recording this, it's a few days before the military parade in Beijing to celebrate the end of the Second World War. And this is a time that no regulator dares to do anything drastic, because anything that becomes public news that's negative before a staged government event in China.

I mean, whoever instigated that would be in lots of trouble. So I would imagine that things would stay at status quo until this whole military parade is over. And then I think all the players are trying to get this

and de-escalate. I've seen them sort of going out in public interviews saying, okay, we're all against involution, we are for a sort healthy competitive environment. Everybody's saying that. The question is how. The question is, who would provide that step for you to actually to work down and de-escalate?

Jeremy Au (15:04)

So, you know, this is not just happening in quick commerce, right? It's also happening for other verticals. Could you share more about that?

Jianggan (15:07)

Mm.

It is, I mean, as I was saying in the beginning, in every single sector people feel threatened about their competitors in the same space or in adjacent spaces. And the so friends that were talking about hardware, right? If I make a smart glass and everybody else is in industry is forced to make a smart glass as well. And ⁓ I'm not sure if you know this thing called a Plaud the AI note taker which we can attach to your phone.

Jeremy Au (15:29)

Yeah. Yeah. I mean, yes, iCloud. I mean, you're talking about Amazon and cloud, right? C L E.

Jianggan (15:46)

⁓

I'm talking PLAUD. It's a small device you can attach to your phone. So it's linked to ChatGPT, and it records all the conversations you have throughout the day, and at the end of the day it gives you a daily summary. So there's a startup which did this and fairly successfully. They've sold a lot internationally. But within six months, you would have all the big companies, Alibaba, ByteDance, et cetera, all doing the same thing. And they have other large

smart hardware companies doing the same thing. So you have some innovation for a fairly large market, and the first day you you make the innovation and people are like, wow, this is amazing product they were gonna have like what, 20% net margin. And within six months that 20% becomes five percent. Within a year that becomes one percent. So that's basically what's happening across all industries in China.

And that is driving a lot of players to say that there's too much competition internally, let's get outside. So that's why you see from brands to internet platforms to retail companies, over the last year and a half or two years, so many people are trying to come out. And I think you will be seeing more of this in the next two years, unless there's drastic resurgence of consumption in China.

Jeremy Au (16:53)

I think what's interesting is that from a Southeast Asia America perspective, a lot of these consumers, or I'll say companies, look at Chinese companies as very aggressive competitors. It's funny because the way you describe it is that these Chinese companies are actually refugees from the Chinese over-competition, rather than big, bad, state-subsidized Chinese terminator machines attacking Europe or Southeast Asian businesses.

Jianggan (17:02)

Mm.

Obviously, there are a few industries which are strategic, which basically grew big because of subsidies. So I think solar power is one. But I think that just talking about subsidies is not the whole narrative, right? What has happened is that the state gave subsidies for this industry to grow. But at some point in time,

it gives the boost to escape the gravity so that okay, the industry can take off, the whole ecosystem can form. But afterwards, it's basically ruthless competition. If you look at the EV industry, historically, the government gave lots of subsidies, gave lots of of incentives for people to adopt EV. Okay, now it has formed an ecosystem, but

what result is also like a dozens, if not hundreds, of brands competing against each other. And I think it was last quarter, yeah, BYD, the leading player, slashed the price by 25%. That caused the government to be in jitters. They said, look, if you are really that aggressive in pricing tactics, you are going to kill off all your competition. That's not something we want.

Jeremy Au (18:22)

I mean, this feels like economic history, right? This happened in America as well in the early days. I think basically we ended up with government regulations to be like, okay, we don't want monopolies, we don't want price fixing. Because one way to solve this is if all the companies all said, Hey, we all announced to raise prices together and the coordinate one another. That's considered price fixing, which is illegal in both America and China, and most of the world, I believe.

So I think that's one approach that was a reaction to the price wars that were first seen in America during those crazy days. I think what's a little bit different, if I were to add to this, is that Chinese provincial government subsidies and industrial policy are a much bigger component of this. So I think that's the part that I feel is a bit different from American economic history, right? Because Americans had

perfect competition, I mean, that's what economists would say, perfect competition, but that was very privately driven, but it feels like China has lot of industrial policy behind the scenes.

Jianggan (19:11)

So yeah, I think about 15 years ago I already argued in a conference that

that a lot of dynamics in China are because of the competition amongst the provinces, amongst the prefectures, and amongst the counties. Quite often you see situations saying that, of like, this county has identified this industry as a core industry. Then another county, 500 miles away, saying hey, we want this industry as well. Then here goes the competition. Everybody's giving free land, everybody's giving tax breaks for people in this industry.

And when you multiply that, I mean, there are, I don't know, 200 prefectures in China, close to 2,000 counties. So when all these people are competing against each other, firstly, you start forming clusters, but second, you also see like excessive competition.

There's argument that bureaucrats in China are evaluated by KPIs, which are usually the GDP growth of that county. So that was lots of incentives for them to compete against each other. When you set up that system, that helps the initial momentum for the economy to take off because of this competitive pressure.

But at some point in time, for certain industries, it becomes too much, right? When everybody has competed so profits away, what do you do next?

Jeremy Au (20:27)

Yeah, I think it's quite interesting, because in America used to be this similar dynamic as well. But Boston used to be where all the first wave of hardware, the mini-computer boom in Boston route 128 next to the Harvard MIT universities, used to be the cluster. And then eventually it got killed or taken over by Silicon Valley, right? It was more open, more nimble. So obviously, there was an interesting piece where one cluster gave way to the other cluster. Now Silicon Valley is number one in America.

Jianggan (20:35)

Yeah.

Mm.

Mm. Mm.

Mm.

Mm-mm-mm.

Jeremy Au (20:56)

It's

kind of interesting to hear you share that. So which clusters do you think are going to win in China? You think this will be a Shenzhen cluster? Obviously, there's a huge cluster. But which clusters do you think are going to be more likely to win, and which are more likely to struggle?

Jianggan (21:11)

No, I think as far as tech is concerned, think Xinjiang and Hangzhou and some areas have a very, very good inertia that they can tap on. They also have a fairly liberal policies and government support.

And what we see, the interesting part is that government has also been actively supporting these companies of expanding overseas. So, I mean, Southeast Asia, now you see like a lot of Chinese brands. You go to the mall and see Chinese restaurants, Chinese retailers, and in the showroom, it's all Chinese EV, right? So, I think, people who recognize that when

It has reached a stage that there's no domestic growth, or it's very hard to achieve the same level of domestic growth that you are accustomed to. Either you force your organizations to slow down, which for many is detrimental. Any organization which is not growing anymore will start to have all the problems. So many of them are expanding internationally. But of course international expansion carries its own problems. You don't want to be seen as dumping, and you don't want to

create a dynamic that's unsustainable by shifting all the goods from China to different countries. You need to work with ecosystem in every single large country. So there's a lot of learning that needs to do.

But what I'm confident is that a few of them, or quite a number of them, will figure out how to create a sort of win-win situation with local partners, with the local ecosystem. But during the process, there will be a lot of disruption, as it has happened in many industries in China. Hundreds of players rushed in, and although only two of them will survive, but that creates a huge disruptive force into any sort of value in chain in any industry.

Jeremy Au (22:49)

So it sounds like we should bet on Shenzhen and Hangzhou region for sure. I think it's interesting, because I think there seems like as a result there will be quite a lot of pain, right? I mean, when Boston route 128 as a cluster went down, it caused a lot of pain. Obviously, it was good for the talent, right? Because the talent just moved from Boston to California, sunnier, winter, less non-competes, right? Because in California, talent to be free and mobile and, you know, build their own startups.

Jianggan (23:00)

Mm.

Mm.

Jeremy Au (23:18)

So, you know, I think that's the people movement ended up solving it. Is there a similar dynamic in China? Because I know, obviously, there's the Hukou know, dynamic. Would talent migration be the way to solve this cluster issue, or how do you see this playing out?

Jianggan (23:18)

Mm.

Well, talent migration has always been happening. I don't think the internal migration is as restrictive as it was like 20 years ago. I mean, you have the Hukou, but there are many ways to get around it. And for cities like hangzhou it's much easier to get a local Hukou. Especially now, with the housing price issue, governments are more incentivized to give sort of more registrations to migrants so that they can take up housing.

So I think that there many things driving the migration. So for instance, a few years ago, a lot of friends of mine moved to, I mean, engineers, they moved from Beijing to Hangzhou, and for the pure reason that air in Hangzhou is better.

But of course, you need to have all these opportunities to take in all these people and make sure that they are still properly employed, and they get income, get decent lifestyle.

And now the question becomes interesting when all these companies expanding overseas. Historically, for the traditional companies, okay, they can send people because people can endure a lot of hardship, going to, say, auto factory in northern part of Mexico, when nothing is safe. And I have a cousin who is working in Kuwait and has been working in Kuwait for seven years. And her choice is...

Initially, before she decided to go to Kuwait, amongst other countries, Algeria, Venezuela. She was kind of lucky to be sent to Kuwait, but there are her colleagues which were in those harsher countries. But for younger people, it has become harder, right? So people say that, okay, I grew up

in a society of relative affluence, I don't want to be in hardship anymore. So every every CEO I talk to, they're saying that, for people born after 2000, because now they're entering the working age, it has become increasingly harder to impose the same sort of work ethics that people born in like 1970s and 80s, or early 90s would be able to endure.

Jeremy Au (25:29)

You know, sorry, it was just like, those  good-for-nothing people who want to lie down, no.

Jianggan (25:32)

lazy

Those people actually have personal aspirations. What is personal aspiration? I've never heard of this before. I mean, this is some of the comments.

Jeremy Au (25:43)

You make us sound super old. Like, boo. I mean, I think this is a natural systematic growth, right? As you said, the center of gravity moves away from producers and consumers and benefit from subsidies, new generation benefits from the wealth. And obviously they are going to, I don't know, look more Singaporean, I guess, like they want

Jianggan (25:45)

Yeah.

Mm. Mm.

Mm.

Mm.

Jeremy Au (26:07)

different lives and different work, and they don't want to work in the factories. They want to have services or art or have their life dream.

Jianggan (26:15)

The question is that we don't have the pure growth to incentivize people. What else do you have to get people to make people sort of honestly satisfied but sort of happy with the lifestyle they are living? So what else is there to drive people, to make people comfortable and happy, and actually looking forward, having hope for the future?

Jeremy Au (26:39)

Oof, that's going to be another big topic for another podcast. ⁓ Maybe just to wrap up this episode here, when you think about the current situation, what's the timeline for this being resolved? Because we know that eventually somebody has got the fold, somebody has to stop this irrational competition. All of them are signaling, using the words "irrational competition," to tell everybody, Hey, it would be nice to stop, right?

Jianggan (26:40)

Big topic.

Yeah.

Mm.

Mm.

Mm.

Jeremy Au (27:03)

Officially, you know, kind of like colluding on prices, signaling on a private individual basis. I'm just kind of curious, what's that timeline? Is it going to be resolved over one year? Is it going be resolved over three years? Can it be resolved in six months? How do you think about it?

Jianggan (27:17)

I think it has to be resolved sooner or later. But the problem is that all the companies have enough cash reserves to sustain for a couple more quarters. And during that time, I think investors are going to give them pressure. And maybe the regulators will give them pressure, while another consumers are happy getting free stuff.

I don't know, again you draw parallel to actual wars. I mean, many of the wars, unless one party can impose a crushing defeat to another, otherwise a couple of wars that we see nowadays that is lasting and it's so much hard to end. Even though it doesn't make sense for any of the parties involved in that conflict. So I think something similar here.

Jeremy Au (27:57)

Yeah, I think there's an interesting quote. I can't remember the exact one, but it's like, it's easy to start a war, It's very hard to end one, right? So, yeah. For me, I don't really know the timeline when it's going to be resolved, but I think the most interesting takeaway is that from a global basis, everybody is, for the first time, seeing price wars happen again. Because historically, it doesn't happen anymore in most of the developed world, right?

Jianggan (28:03)

It's very hard, yeah?

Jeremy Au (28:22)

And I think the part that I wish people understood is that all these Chinese companies are now in Europe, China, sorry, America, Singapore. They're doing it not because they're, like I said, Chinese terminator machines, but yeah, refugees from this over-competition dynamic, trying to get some margin, right?

Jianggan (28:38)

So one good friend was telling me, he said, I mean, when you see this incessant competition and when every player comes to the international markets, they say, okay, how good is it to have a presence in the market where you can actually have some proper margins for the business?

Jeremy Au (28:54)

Makes it easier for everybody to have some margins right and then be more disciplined about it as well.

Jianggan (28:59)

They

should have some margins, otherwise it's not a healthy business environment.

Jeremy Au (29:03)

Yeah. So yeah, I think we'll probably see, my guess is, over the next 10 years, right? I think there'll be companies that go bankrupt, obviously, because they can't complete the competition. I think we'll also see clusters close down as well. So it'll be merger, tele-migration. And lastly, of course, hopefully that means the Chinese economy will also start to orient from, like you said, this over-competition or involution dynamic to more of a imperfect competition,

Jianggan (29:14)

Mm.

Jeremy Au (29:29)

but it's a profit for the customers and businesses.

Jianggan (29:29)

Yeah, I think I'm optimistic for a long term as we should all be, but in the short term and medium term, they can be lot of pain, a lot of adjustment and a lot of sadness amongst the people who lose out in competition.

It's just, I mean, how the world, how the business world in China would evolve from pure Darwinism to some sort of like, I don't even know how to describe a better future.

Jeremy Au (29:54)

Yeah, I know it's like saying like, instead of all of us being microbes, killing shuttled to death. One is a bird, one is a turtle, one is a fish. So we're not killing each other to the same.

Jianggan (30:02)

Yeah, yeah, exactly. Exactly.

Jeremy Au (30:07)

you.

I will catch up next time.

Jianggan (30:09)

Yeah, enjoy.