✶Explainer
The China podcast that scripts every episode and records apart
Tech Buzz China does not record as a conversation at all. Each host writes the episode out beforehand and records their part separately, then the parts are cut together so it sounds like two people reacting to each other in real time. The result sits closer to an audiobook than to an interview show.
- Episodes are fully written before recording
- Hosts record their parts separately and never in the same room
- The finished cut simulates a live back-and-forth
- Research load is comparable to Acquired's
“We just record separately. I record my part and then Ying records her part. It's more like an audiobook each episode”
#podcasting#production#research#media
✶Explainer
OEM to ODM to OBM: how Chinese factories moved up the stack
The old model was that you arrived in China with a finished spec, brand and design and only needed someone to build it. Factories then took on design (ODM), and now market themselves as original brand manufacturers doing nearly everything including marketing copy. Rui Ma cautions that the OBM label is still largely PR, but the underlying capability has genuinely improved.
- OEM: you bring the spec, they build it
- ODM: you bring a fuzzy brief, they design and build it
- OBM: they do nearly everything except the final branding
- The OBM label is partly marketing over what remain ODMs
“To today, I hear people call it, you know, call these factories OBMs, right? Original brand manufacturings, where literally they're doing pretty much everything for…”
“I should caveat with saying that is still, in my opinion, a lot of PR.”
#manufacturing#supply-chain#consumer-brands#china-tech
✶Explainer
Shein's five days from design to shipment, a thousand designs a day
Shein compressed apparel's design-to-ship cycle to about five days and pushes roughly a thousand new designs a day, entirely online and entirely outside China. Demand runs through social media, with around nineteen million Instagram followers at the time of recording. For contrast, the show notes that Zara-era fast fashion was praised for five weeks.
- Around five days from design to shipment on average
- Roughly a thousand new designs a day
- About ten billion dollars in revenue, sold outside China
- Fast fashion's old benchmark was five weeks, not five days
- Nineteen million Instagram followers, not a Chinese platform
“So Shein takes five days of designing to ship. This is on average.”
“the knock was, oh, they're, you know, busting their ass to get this to customers' hands, you know, five weeks after they come up with…”
#shein#fast-fashion#supply-chain#dtc#e-commerce
✶Explainer
Why saturated margins push Chinese DTC brands to sell abroad
Domestic Chinese DTC brands work to a gross margin benchmark of thirty to forty percent, but in some industries brands charge closer to ten percent over cost. When a player like Xiaomi enters, prices get pushed toward five percent and weaker competitors die. Selling overseas without a native advantage can be less brutal than fighting a saturated home category.
- Domestic DTC gross margin benchmark is 30 to 40 percent
- Some categories run at roughly 10 percent over cost
- Xiaomi-style entry compresses margins toward 5 percent
- Overseas expansion is chosen as the less vicious fight
“within China, DTC brands insist on having a gross profit margin of 30 to 40%”
“when someone like Xiaomi enters the same market, then they'll kind of push all of the prices down to something like 5%, and all of…”
#margins#competition#dtc#cross-border#china-tech
✶Explainer
China leads in digital retail, not only in e-commerce
The under-covered story is offline retail that is highly digitised. US stores turned into e-commerce pickup points during the pandemic; Chinese stores have been designed that way for a decade, changing layout, warehouse placement and customer flow. Store apps are integrated rather than siloed, unlike the Costco versus Costco.com split, and consumers simply think of it as shopping.
- Digital retail means a highly digitised offline experience
- Chinese stores were built as pickup points from the start
- Store layout and warehousing are designed around it
- App and store are integrated, not separate businesses
- Consumers do not distinguish online from offline shopping
“yes, China leads in e-commerce, but China actually also leads in digital retail”
“in China, actually, that's something that's been happening for the last 10 years, where shops are designed that way from the get-go because e-commerce has…”
#retail#omnichannel#e-commerce#china-tech
✶Explainer
The 'operations' team that has no Silicon Valley equivalent
Every Chinese e-commerce platform runs a large operations org constantly working promotions and merchant relationships so the storefront changes between sessions. There is no clean analogue at US internet companies, but Ben Gilbert identifies one: live ops teams inside US gaming companies. Rui Ma notes that gaming was the only reliably working Chinese business model a decade ago, which is likely where the habit came from.
- Operations teams constantly rework promotions and merchant deals
- Users expect new content every time they open the app
- Closest US analogue is live ops in gaming, not e-commerce
- Gaming was once the default monetisation path in China
“in China, like there's a huge team called operations uh that's really hard to find an analog in the you know in Silicon Valley companies”
“It's actually very common in gaming companies in the US to have a live operations team.”
#operations#e-commerce#live-ops#gaming#personalization
✶Explainer
Why advertising never became China's default business model
Selling advertising in China was hard for years, and the reason is structural rather than cultural. With GDP per capita around ten thousand dollars against over sixty-five thousand in the US, capital was better spent building distribution than buying attention. Advertising is the business model of a saturated economy where distribution is already built and competitors fight over the same shelf.
- Advertising was genuinely difficult to sell in early China tech
- Growing distribution beat advertising on return
- Advertising suits saturated economies with built-out distribution
- Gaming and commerce were the direct value-capture routes instead
- ByteDance and Alibaba are the notable advertising exceptions
“you should just invest your profits into growing distribution that you got way more bang for your buck out of just organically growing, you know,…”
“advertising, if you think about it, it's really for a kind of saturated economy where all the distributions are already built out”
#advertising#business-models#distribution#china-tech
✶Explainer
Every Chinese internet company suddenly wants to build an EV
Within a single month Huawei announced software for EVs, Xiaomi committed ten billion dollars over ten years, and even drone maker DJI joined in. Tencent backed NIO, Alibaba backed XPeng and Meituan backed Li Auto, all three now listed and all sharply up. Rui Ma frames the driver as national security as much as climate: dependence on oil is destabilising.
- Huawei, Xiaomi and DJI all announced EV moves within a month
- Xiaomi committed ten billion dollars over ten years
- Tencent, Alibaba and Meituan each backed a listed EV maker
- NIO was near-death in late 2019, later valued around 59 billion dollars
- Climate policy is framed partly as national security
“Xiaomi announce that they're going to invest 10 billion dollars over the next 10 years into EVs.”
“EVs are the new games for Chinese companies.”
#electric-vehicles#china-tech#investing#climate
✶Explainer
China's antitrust crackdown was years in the making, not a surprise
China's first antitrust law arrived in 2008, more than a century after the US, and effectively nothing happened in internet for the following decade beyond the Qihoo 360 versus Tencent case. Drafts issued from January 2020 target platform companies, aimed at exclusivity demands and discriminatory pricing. Alibaba's 2.8 billion dollar fine follows practices where penalties had been capped near a token amount.
- China's first antitrust law passed in 2008 versus the 1890s in the US
- Roughly a decade with no internet antitrust cases heard
- The Qihoo 360 versus Tencent fight reshaped Tencent's strategy toward investing
- Alibaba fined 2.8 billion dollars for exclusivity abuse
- Platforms were charging loyal customers more than new ones
- Founders and VCs on the ground welcome the rules
“Chinese antitrust law, the first version was passed in 2008, which is really late, right?”
“They're like, we know you're really sticky and you're very loyal. So we're gonna actually charge you more for the same thing than for a…”
#antitrust#regulation#china-tech#platforms