Jianggan Li: China Price War Chaos, EV Subsidy Battles & Why Firms Flee Abroad – E622
episode
BRAVE Southeast Asia Tech: Singapore, Indonesia, Vietnam, Philippines, Thailand & Malaysia Startups, Founders & Venture Capital VC (English)
30 min
2 speakers
8 chapters
transcribed 17 days ago
Transcript
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Transcript generated automatically by AI and may contain errors.
Why is over‑competition described as daily life in China?
Every CEO I talk to, they're saying that, okay, 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. The question is that we don't have the pure growth to incentivize people. What else do you have to get people motivated? I mean, and to make people sort of, almost satisfied, but sort of happy with the lifestyle that they're living. So what else is there to drive people, to make people comfortable, happy, and actually looking forward, so having hope for the future?
Welcome to Brave. Learn from Southeast Asia's best tech leaders. Build the future, learn from our past, and stay human in between. No BS on success. I'm Jeremy Au, venture capitalist, CERA founder, Harvard MBA, science fiction nerd, and dad of two daughters. Every week, we debate startup news, interview changemakers, answer listener questions, and share personal insights. Join our movement of over 40,000 members and get transcripts, resources, and community at www.bravesea.com. Stay well and stay brave. Hey, Jiangnan, really excited to have you on the show. We're 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 all the 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, Jiangnan, can you tell me what's going on?
Well, when I say over competition, lots of friends of mine in China, that's daily life. And even last night, I was meeting a bunch of people doing smart wearable devices. It just turned out that, okay, 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 do. I mean, innovate to do it better than them.
How did JD, Meituan and Alibaba’s food‑delivery battle turn into a billion‑yuan subsidy war?
But the context of this is, I think this year, hundreds of, sorry, tens of billions, maybe hundreds of billions of dollars are burnt in subsidizing people's bubble tea and coffee. The core pieces 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 enter food delivery. So the founder actually rode a e-bike to deliver food himself and went out for drinks with the delivery riders, etc. And then, of course, the incumbent, the mid-time, which owns like 70% of the market share, was forced to respond.
But I think for a while they said, OK, JD is structured very differently. So for them to mount an offensive mechanism. in food delivery will 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 the course of one year. And of course, Alibaba owned the second ranked food delivery platform called Elema in China, which historically had like 25 to 30% 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... They made an entry point on top of saying that now you can buy everything like instant on top of 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. 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 of hours. But when we look at JD, when we look at Meituan, they caught their entire profit, which they have managed to build over the years, wiped out because of that.
I think that's kind of crazy. And it feels like, of course, you know, prisoner's dilemma, right?
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Chapters
8 chapters
1
Why is over‑competition described as daily life in China?
0:00–2:06
2
How did JD, Meituan and Alibaba’s food‑delivery battle turn into a billion‑yuan subsidy war?
2:06–6:07
3
What mixed signals are regulators sending about subsidies and competition?
6:07–9:27
4
Why did hardware margins, like AI note‑taking devices, collapse from 20% to 1% in a year?
9:27–14:49
5
How are EV subsidies causing price‑war chaos and prompting government concern?
14:49–19:11
6
Which regional clusters (Shenzhen, Hangzhou) are thriving despite the price wars and why?
19:11–23:44
7
How are younger Chinese workers reshaping talent migration and work‑life expectations?
23:44–28:37
8
When might the irrational competition and subsidy‑driven price wars finally be resolved?
28:37–30:36
Speakers
2 identifiedMore from BRAVE Southeast Asia Tech: Singapore, Indonesia, Vietnam, Philippines, Thailand & Malaysia Startups, Founders & Venture Capital VC (English)
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