#150. Andrea Fenn: The Great Digital Leap
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I really, really, really, really, really times 10 enjoyed that conversation. I mean, you can tell. I felt the energy. I kind of woke up. I felt the energy. I kind of woke up. I know. I thought you were going to be like really lethargic and just really pathetic because you came directly from the hospital. Yeah. I did come from the hospital. So what was it about that that really got your engines revving? Well, I totally remember that moment.

When social media sites like Facebook and whatnot and YouTube just got blocked.

And it was just like, what the... But that moment, it was crystal clear. I was unaware and oblivious that those sites were ever open in China in the first place. Yeah, before 2007. Yeah. And parts of 2007. Fast forward 15 years, this is the norm. But throughout the conversation, we broke it down from that period on to now. And into the future. And into the future, yeah. Because ever since then, it was the beginning. It was the first...

You know, the first flake. That's not a good one. That's a horrible one. It's the first push of the snowball. You really want to stick with the snow analogy. I don't know why. It's the first leaf to drop. First apple to sour. It's the first worm from the can. The first worm.

It's what got the ball rolling. There we go. We landed on one. We kind of really dived into the whole evolution of the digital landscape here. It's fascinating. In China. What better place to talk about this kind of stuff than in China where the digital kind of penetration here

It's just so wide and deep. We're a truly cashless society. I mean, everything is done digitally. Our lives are controlled digitally. And we really break it down. I really like what he was saying, how when we, especially when we compared Western standards of social media use regulations,

But it's really important that, and I think a lot of what we talk about today was really kind of understanding the evolution of it here. And for you to understand why things happen here the way it happened, how the digital ecosystem developed here and for what purposes and how it's controlled, like to have some sort of more nuanced understanding or conversation around that, I think is really important before we go and start comparing it to, you know, maybe places where we grew up, right? Yeah.

So I think that's really worthwhile to understand, especially...

given how much it dominates our life. Yeah, 100%. You hit the nail on its head. All right. Our guest is an award-winning digital strategist, former journalist, and an expert on China's digital ecosystem and social media. His work in China for the last 16 years focuses on the country's evolving digital landscape. He was a founding member of the Asia Pacific social media team at Ogilvy, a researcher of Chinese social media at Leiden University, and a journalist for CNN and

and China Daily. So, without further ado, please give it up for Andrea Fenn. Andrea. Justin. Nice to meet you, man. Thanks for having me. Here, cheers. So, what is this again? I was just setting up. I wasn't totally listening. It's an artisanal cider made out of cherries from Hebei. Hebei, nice. Among all places. Cheers. I'm having my water.

Interesting that you said that from Hebei. I'm discovering this world of producers of organic stuff through my wife's wine business. And it's very interesting. Hebei produces wine, massive production of wine. A lot of places coming up. Very interesting. So honestly, as an Italian, okay? I mean, you guys have, you know, certain standards when it comes to wines, I guess. Yeah.

So when you go around China, you know, tasting all these locally made wines, like what do you think about it? Like just from a consumer perspective. So it's true that Italians have very high standards of wine. In fact, everybody in my family is a trained sommelier.

apart from me. Is that air quotes, trained sommelier? Or are you just more humble? No, no, they like, you know, they've taken courses. Oh, they're so serious. They sip. I've been at family. So yeah, he was being serious. I thought he was joking. No, no, no. I'm talking when my wife got into wine, I myself got into wine. And I have to say, Chinese wine is not bad. It's not bad. There is a tendency to make it quite expensive.

It makes sense for commercial reasons, because if you have to set up a production and all of a sudden you have to make it work, as opposed to say somebody that has had a family. Like a history. For like generations and they just have a small plot of land and they, but in China, it's not like that. I feel like something really interesting about you is you were formerly a journalist, right? Correct. And so what was your time? So you worked at CNN and China Daily?

Yes, I'm a trained journalist. And then I briefly, I don't, I wouldn't say I had a proper full career as a journalist. But yes, I did work for foreign and Chinese publications alike.

And that was very interesting. I was already observing social media and the digital landscape. I guess we'll talk about this. And funny that we're talking about something that is craft and artisanal, but it's made in China. I remember a story that I always wanted to write, but never got to write because I just couldn't get my editor to approve it. It was a story about...

good things made in China, well-made in China products. A positive China story. Positive China story. And this was before the time, this was before the, it was even conceivable to have a product made in China that was good. It was not a political story. We were trying to write a feature on a lifestyle magazine. I was like, okay, I've observed so many interesting little products, little brands in China. Let's try and write a story about well-made in China products.

No, it just didn't go down. Yeah, we criticize often on this show kind of the current state of mainstream media. What was your experience working at either CNN or China Daily in terms of

Like what goes on behind the scenes? Right. So again, my period as a journalist was only a couple of years. So I wouldn't definitely call myself a media expert. I think in general, I feel for journalists in China right now because it's very hard. They have this increasingly deteriorating climate in China because it is

effectively harder and harder for a foreign journalist to talk about China. But then you also have an increasingly unwelcoming climate and environment at home, because in the end, journalists can only push the agenda that far. It's the editors, it is the line of the publication that decides what actually goes down, you know, going back to that story.

I wanted to write a story, but it's simply that it got blocked at the editor level because the editor felt that the audience or maybe their editorial direction wasn't in line with that. And obviously there is the commercial side of it. People like click-based stories. People want to create echo chambers. There's pressure on creating stories that the editor

audience back home would read. So in the end, I think right now it would be very difficult for a story like a China recovering story because simply it's very hard for the journalist to write it and find the information here. And it's very hard for the story to be approved.

So when you say home, you're talking about Italy or just in the West in general? In the West, home. So you're not a journalist anymore, but you read the news. How do you feel about the state of journalism today? I think it would be very hard for audiences in the West to form a proper idea of what is happening in China because it is very hard for journalists to form a proper idea of what is happening in China.

I think there's a vicious cycle that has been created where journalists are unable to push positive stories in China because there is no commercial interest back home. And the more they can only focus on the negative stories, the more they are badly treated by the authorities, perceived as a threat. And this kind of reverberates and it creates this increasingly hostile relationship, I think. Yeah, I get it. So it's like...

Because what you're saying is like commercially in the commercial demands, they want the negative stories out in the West. So they publish the negative stories. And when they do China by like, Hey, you're only publishing negative stories and then cracks down on them, making journalists less here. And it's harder to,

you know, become a journalist and do the right work. And then it just feeds right into that cycle of around and around we go. Right. I think obviously at the bottom of it, there is a big misunderstanding or lack of understanding that they are not vehicles of foreign propaganda. However, by reading a lot of the information that you read on Western media right now, you cannot but think that maybe they are.

So as part of your work, is there any facet where you're trying to bridge those gaps, create more understanding?

Yes. So ever since I started observing China, I started looking at the digital landscape. So again, we're talking about 2008, 2009. These are the very, very first moments in which a digital society, a digital civil society was forming in China. And we think of the beginning of the digital era in China as somewhere around the SARS epidemic, you remember? So it's funny that

Then we spoke about COVID 15 years later or so, and we observed once again this big digital push. But this is exactly what happened in China. So people started using social media, digital media as a way to kind of like counter or remedy the lacks of information, the lacks of the systems.

and to simply just like try and understand what the heck was going on at a time when really information was difficult to obtain. And that kind of like got a few people, and I was one of them, interested in the possibility that this would bring change. Are these channels where information is less filtered, will they then ignite deeper changes in society? Of course, because

in maybe naive mindset of a Western observer, this would have meant, okay, is this thing going to bring Western-style democracy to China? That definitely hasn't happened. I hear a lot of people arguing, and they bring a lot of data points, I'm not saying that their position is ungrounded, that

the space of the digital society in China has eroded and, um, and got, gotten smaller with the years. So paradoxically, the more... What space has eroded? The civil society space. So, um, the more digital has taken off, the more, uh,

civil society has eroded its prerogatives. Though I think that's a tricky thing to say because it's unquestionable that the information that

Chinese people can find right now is enormously more than the information that they could find 20 years ago before digital media was around. So this is going back to the bridging the gap. So to me, this digital economy is a place where China and the rest of the world

can meet, it's the space that I've continued to work on. So let's rewind a little bit, going back to what you were saying around 2008 or so. During that time, so I moved here in 07. Okay, so it's very similar to that time. And one thing that really sticks out is around the end of 2007 towards early 2008, I

is when Facebook, YouTube, these Western social media sites got banned.

It was one of those things that I remember just waking up one day and be like, why can't I log in? What's going on? Oh, so it was because I came in 09. So it was open before that? Yeah, it was. When I first came here, it was open. Oh, so you can get onto YouTube, Facebook, like just without any... It's true. I was at uni. I was studying in Shandong University. And yes, from one day to another, I think there was a trigger. I don't remember what was the trigger, some...

bad some rumor some bad negative news it was something to do with XJ and something was happening around that time with some terrorism and there was a lot of I guess social media posts so after that happened I remember all of a sudden boom

the lights got turned off. - Right. - Right? - Right. - I remember where I was sitting. It was like one of those things, like those moments in time where it's clear and- - So like it occurred to you in real time. - Yes, yes. - Like you were on Facebook. - I was literally sitting on my bed and trying to log in because I was trying to do this whole diary thing 'cause I just moved here. - Right, right, right. - So I was updating my friends and everything like that. - And that was the time when Facebook was really big. - Yeah, it was really big. And all of a sudden I'm like, why can't I send?

What is going on here? And then I remember asking people and having conversation. I forgot where I got the news from, but the news started coming out that it's starting to get gone. Yeah. These sites are no longer good. And my first response, and I want to link it back to you. My first response was,

That's so fucked up. Like, why would you just block out these companies just going nuts about that from that negative side without thinking about any other deeper rooted reasons or any economic reasons? Right, right. So, yeah. So, going to you, that's about the time where you got your interest in the digital economy, what's going on in China, because it started...

like a turbo button got pressed. Am I correct? Right. Once the Western media got blocked out, all of a sudden you saw the turbo button get pressed and it's like local companies go.

- True. It's very much like that, you're right. Because when you think of these platforms being blocked, you think of the inability for people to then find outlets because naturally, okay, so Facebook is not there, so people cannot communicate.

But that is not what's happened. When we observed the real Chinese social media, we wouldn't think of Facebook, we wouldn't think of Chinese users on Western platforms. We would think of this really interesting underworld of platforms that were really connecting people together. So the real sociological place for the online

online space to develop in China is the Wamba. Do you guys remember the Wamba? Oh yeah, I used to go! The internet cafes. You're talking about some really smoky, dingy, little areas where people would just play games online. And why is that important? Why is that important that these places were hangouts for people to play games online? Because a lot of those users were migrant workers.

So they were coming and we're talking about a time when, you know, like a journey from the whatever rural area to the big city was a journey in space, considerable space, but also a journey in time, really all of a sudden, like getting to modernity and not being able to communicate with people back home. Phones, smartphones didn't exist. So the Wamba was the place where people could connect, could connect with their families back home and we could

could connect with new people. Yeah. Or using QQ. Or using QQ, the same. Do you remember the ding, ding kind of like sound? So those were the spaces that we were observing and we still, I still believe that those are the real roots of how

the social media in China has taken over and really evolved to be something that moves society forward. Because when we think of social media in China, why is it so important? Why is social media in China so important? Because it really made up for what wasn't there.

leapfrogging. A lot of the story of China is a story of leapfrogging, right? We didn't have anything. We didn't have computers and then we moved straight to the smartphone. We didn't have infrastructure and then we moved straight to the high-speed trail. Well, we went from cash straight to digital payment and bypassed the credit card.

Social media is the same. We didn't have any form of social interaction, social spaces, and then we moved straight to the digital medium as a way to interact with each other. And yes, One Bar, QQ, these type of spaces, they were the ones that created connections and really could make up for the lack of physical connection. Yeah.

at the very beginning when I started then working in the commercial side of digital, so helping companies set up accounts, set up platforms, start using these systems to influence their audience, we would use one data point that would always blow people's mind, which is like China is the only country, was the only country in the world where people said they have more friends

online, then offline. Now, at that time, talking to say a Western executive, people would literally not understand. What do you mean they have friends online? Who are these people? Oh, these are people that they've met in a Wamba, on a video game or on QQ.

but they don't know these people. Yes, they know them because they are friends on QQ, but they have never met these people. They're not friends. So at the time it was completely inconceivable for somebody that had a normal traditional way of interacting with friends to imagine that people would leapfrog straight to

online only relationships. - I feel like that's the global norm now, right? Like people have more friends online. - Exactly. Now if you said that, people would be like, of course friends online, you know, avatars. - Now if you say the reverse, like I have more friends offline than online, they're like, you're such a loser. - Yeah, they're like, who are these people? It's like, people that you meet in person? - You're so right. I'm just going back. I'm telling, putting myself back to that time again and having conversations with local friends

they would literally be talking about people in their QQ list. And I'd be like, oh, who's that? Why don't you call this person out? They're like, no, no, no, this person lives in Sandong. You are perfectly right. I was always absolutely mesmerized by...

people I met, a lot of young women I met, they were like, oh, my boyfriend. Oh, I have a boyfriend. It's like, okay, you know, it's like you're meeting him tonight. It's like, no, no, my boyfriend, I've never met him. This is my boyfriend. He's on QQ. And I think this is strange. This is completely wrong. Now, as you said, Justin, I think it would be the norm. Who has more friends offline than online? And also, I'm just thinking now, putting like two and two together,

The community back then is just so forward-thinking in a weird way. The avatars they'd use were never their own photos. It would always be these caricatures or cartoons or whatever, which now, these days, globally, people use these avatars that are not themselves. It's just so interesting that back in 2008... Like, what an irony, right? So, is China kind of the first to...

really dive headfirst into this digital transformation? Yes, I think China is the country that has leapfrogged the most. And this leapfrogging that China has done, you know, you mentioned, you know, the cash to cashless, the straight to cashless, no credit card in the middle, no traveler's checks in the middle. This is something that China has pioneered and has become the model of a lot of

of developing countries. In Southeast Asia, exactly the same has happened. In Africa, exactly the same has happened. We're observing the digital revolution of Africa right now. And the digital revolution of Africa is a very similar revolution, maybe even more pronounced, let's say, is that people are switching directly from not being connected at all to the smartphone and to engaging on TikTok.

Yeah. That's one of the advantages of developing later as a country, right? I remember, this was way back in the day. I remember I was reading this article in China and throughout the country, they were digging up the ground to lay the internet lines. And back then they were just directly, this was like when it was still state of the art in many countries, their infrastructure still didn't have it. It was like a new thing. They were just directly laying down fiber optics, right?

Like forget, we're just jumping to like the newest thing. So in China, like all the internet lines on the ground are all like fiber optic cables from like day one. And so, and like you see it also with the subway systems here, right? Like, you know, a lot of people make comparisons between like, look how modern, you know, Shanghai subway station is compared to like, let's say New York subway station, right?

- Well, that's also a factor of time, right? Like the New York subway station has been there for so long. - The infrastructure is hard to change. - Yeah, it's impossible, especially when you live in that kind of system. - Same thing with the railway system. That's why this whole country is connected with Galtier. - And in the States, like to get anything done infrastructurally, it's like a nightmare. Like you're never going to get it done.

But so to change it out, it's like they're never going to change out. So it's just growing old and becoming decrepit. You touch on a few interesting points. The first is about the latter one, the later ones to develop have an edge. Well, it's like that in China with digital media as well. Okay, now everything is almost saturated. Everything usage is...

close to 90-95%. But a few years ago, if we were looking at the way that people were using, say, digital payments, you would think that in absolute terms, of course, Shanghai, Beijing, Shenzhen, Guangzhou, those are the areas where the most digital payments are happening. But in relative terms, as in the penetration in the population, you would think once again that

Shanghai, Beijing, Guangzhou, or Shenzhen are the places where the most people are using it. But in fact, the most digital payments in relative terms were happening in less developed areas of China, the West of China, Ningxia, Qinghai. So like more rural parts of China. More rural parts, because once again, those are areas where like no alternative was available. And all of a sudden, as soon as this fantastic alternative that allows you to not carry the

stashes of cash that you had to do before, online payment, the mobile payment is extremely preferable. - That's interesting thing to note. Where are the needs most needed? I'm sure there's a better way to say that. But I guess because we tend to think like, oh, the first tier cities, the advanced cities, they're gonna be the early adopters into a lot of these things.

but that might not always be true. And like what you're saying is where is it most needed? It was in the rural areas. That's pretty fascinating, I guess. - I mean, in platforms like Douyin, Kuaishou, they have heavily developed in rural and lower tiers more than the big tiers. Because once again, the opportunity cost is lower. People, all of a sudden, they have something to jump on that will entertain them that,

in a world where no traditional alternative is available. And also, when you say the amount of information, it's absolutely true that for a long period of time and still today, the Chinese users had a much higher need for information online. And once again, this goes back to the fact that

no information was available before the internet or very little information, very filtered information. So you could read the Renmin Zhibao or you could, you know, you open one of these newspapers, you open another one and you realize that they're pretty much the same. Yeah, your options are very limited. Very limited. So the information availability online in China was also a massive factor. So like minimalism until very recently was not, was out of the question because there was

No, the real need was for maximalism. They were already in minimalism. Exactly. They lived 70 years in minimalism. Now we want maximalism of information. Maximalism. And that applies to, that applied to political and social information. And that interest also got channeled

successfully by the government into commercial information because people need commercial information as well. In fact, I would argue that from a deep down personal need you need commercial information more than you need social and political information. You need to know what to buy in order to

live and improve your lifestyle. And for that, the internet, online commerce provided a fantastic outlet. All of a sudden, you have these many thousands, millions of products available on Taobao. Consider that before the internet came to China, China was one of the countries that had the lowest amount of retail space available online.

So in the US, and you know the US better than me, there were so many alternatives to online, and there still are so many alternatives to online commerce. I can go to the shop, I can go to the corner shop, I can go to the supermarket,

supermarket, the hypermarket, the shopping mall, this and that. I believe it's more than a thousand square meters of retail space available for every 1,000 users, 1,000 consumers. In China, we're talking about 36, if I'm not mistaken, square meters, that's smaller than this room, for a thousand people. So before the internet came, a thousand people had to shop in here.

And sure, you can have three types of potatoes, you can have two types of cartons of milk and five options for vegetables, and that's about it, right? So all of a sudden, the internet provides this enormous, limitless availability of

information and products, which is really what Chinese people have been looking for. I don't have the data for this, but I would argue that once again, in less developed areas of China, the need for information is higher than in Shanghai, Beijing, the big cities. And this is probably why in Shanghai, in the tier one cities, we are starting to see a trend towards minimalism.

we're starting to see it. That's what I was going to ask you. Do you feel like there's a, well, I guess you just answered it. There's this correction now back, rebounding back from maximalism, which we've been like living through, through like the last few decades, I guess. And then now coming to this, like this push for minimalism, is that more of a cultural thing? Or do you think it's, it's mostly driven by the state of the economy right now? So I,

I think this trend is happening because inevitably as people will start being flooded by information, as people start being able to filter through information, they'll start making some informed decisions.

On the other side, what I observe, and I'm sure you see it every day, we just, I don't know if you passed by Chandler Law just today, where the new Supreme shop is open. I mean, you see that there is still an enormous need for people to express and communicate themselves, which again, you know, I completely understand that is also the result of the fact that there aren't any traditional outlets for people to express themselves.

politically, socially, culturally, somehow. So in a way, I think there's still a lot of space for people to use the internet to really just make up for what is not there in the offline world. First of all, what you're saying is really...

fascinating for me to put those pieces together why the Chinese market was so quick to adapt to online retail. It totally makes sense because what else are they going to do? It's like somebody who doesn't have access to shop, like you said, the 30 square meters for a thousand people. All of a sudden, I have limitless options. Of course I'm going to adapt to that.

Why else wouldn't I? So that to me is really interesting and it makes total sense why China e-commerce has always been killing it.

right? And everybody looks at China, even in the West has like Shuangshi and stuff. Now, you know, China e-commerce dwarfs any other e-commerce. It's ridiculous. And literally if you were successful here, you can, you can kill it anywhere else. Right? So that's one, one point. But, but what I'm trying to get to is, and I really want to know what you think about this. This is just my own perception without any type of analytics, right?

Rewind four years ago, five years ago, I can say with confidence, the life that we live here in China is more futuristic than my friends back in America. Whether it's the digital payment, whether it's goods and services that we have access to, whether it's high-speed rail, etc., etc. I feel like now...

it's kind of caught up. I feel like the playing grounds are even now. I feel like when you go abroad or you hear stories abroad, they also have full of cashless systems. They also have all these new technology and everything. And maybe even more. Right. Is that true? What do you think? I think...

Countries that are developing right now, they probably will have an edge even on China. Even on China, because once again, they will leapfrog to the next thing that will come after the smartphone. We don't know what that is.

Right now, we haven't seen that. So like, because there hasn't been a proper massive breakthrough from the, let's say, digital commerce, online video, smartphone based type of like consumer technology. As of now, we haven't seen that, right? The West has caught up largely during COVID on a lot of matters. But I think that China retains an important advantage over China.

the West in terms of digital technology and that is geography based. So the internet economy is helped by the density of people. I let that sink in. The density of people. The denser the people, the easier it is for the digital economy to catch up. Why? Because digital interaction

Mobile-based, the gig economy, mobile-based substitution of services, they work very well where the people are very strongly concentrated. Think about food delivery. Why food delivery works very well in China is because people are very densely packed.

I can immediately find a lot of restaurants within a reasonable radius. - And it makes sense for them to do it. - And I have a lot of people that can deliver food from that restaurant to my house within a reasonable radius that can do it for a reasonable price, okay?

In fact, there is geography and then there is the price of salaries. Those are the two ones. But geography is even more... It makes sense. ...is even stronger. Because if you think of very sparsely populated regions of...

Again, I'm not a US expert, but there's a lot of it that is very, very, very thinly populated. How are you going to create a digital economy there? It's very hard. It's very hard. It makes sense. Because people are simply not very dense. Now, China is a very dense country. Something that people always misunderstand about China is like, oh, there's a lot of people in China. Sure, there's a lot of people in China, but they're all kind of like in a little...

little tissue on a fragment, on a snippet of the map. If you look at the map, you know the famous Heihe Tanchong line that divides 94% of the population in this little corner here and 6% of the population in the enormous, ginormous, big of the country. But even within regions, the majority of people tend to be concentrated in

cities. This is an advantage that China has that people often tend to overlook over Europe, over especially the US. So I don't know, for example, in Africa, there's going to be an enormous digital revolution happening, but I don't know how that's going to make up for the unevenness of the way that the population is distributed.

and also the size of the country. Yeah, it makes sense because you have first tier cities are larger than countries, right? Shanghai is larger than, it's like Australia, you know? And then you go to like second and third tier cities, which are larger than first tier cities in America. Even second, third tier cities are also larger than countries. Exactly. So it makes sense, this density, because if you have...

Let alone your first tier cities, but second and third tier cities so dense, you're going to have penetration. You're going to have economic scale. And that's going to be a lot much harder for smaller countries or smaller cities to be able to adapt. Think of growing up in Jersey, like the suburbs of Jersey. The equivalent of a suburb in China is still going to be millions of people. Like my Xiaoqu is bigger than New Jersey. And also think about if you live in sparsely populated areas,

in the suburbs of a medium-sized American city, you will find it very hard to completely switch to an online economy.

Because simply like it would take too long, it would cost too much, it just wouldn't make sense. You know, you would still resort to traditional solutions. It's like the cost per transaction would be too high. Yes, you would resort to traditional ways of resolving your problems. Like I'll actually go to the shop, to the hospital, to the whatever I need to go instead of using your app to

to do it. In China, the opportunity cost is very low on this because of density and obviously because of the price of labor. Labor is still very affordable in China and that allows for all these things to make sense economically. So,

Okay, let me ask you a bigger question about, we're talking about this, China's digital transformation, its advancement, all this progress and development digitally. And obviously, living in China, we feel it, right? It's like everything is digital. The convenience of life is the highest I've ever experienced. But beyond that, what's the actual benefit from...

doing all this? What's the negative impact of not adopting a digital economy? It's a difficult question. For China, I think the choice is clear cut. Because once again, you know, like, what is the alternative? There is no alternative. And I feel that a lot of developing economies right now probably feel the same. If you want to improve

dramatically improve the lifestyle of you as a person, the state of the economy from a country point of view, you have to do it. In developed economy, yes, it is a choice that people can make. It is a choice that people can make. I see these very fierce debates about whether the West really needs to switch to electric vehicles. And from a China perspective,

point of view, you think that's ludicrous. Why wouldn't you adopt the latest technology? But then you start thinking about the fact that the infrastructure there and the way that the supply chain and the economy is built is built for a previous type of technology. And switching to this new type of technology is not going to be easy. Just like you said, infrastructure is not easily replaceable.

And not always the cost, it will make sense from a transaction point of view. Density, what you call density, that focus on density to me is,

It answers a lot, actually. - Yeah, density is great. - Right? I never thought of it in that way. - I'm not the inventor of that principle. I think it was already like a hundred years ago that an architect or an urbanist called Jane Jacobs, if I'm not mistaken, made a book about the great American cities

And her point is like the great American cities are created by density. So you need to pack a lot of things. So it's the exact opposite that cities have developed into right now. From my understanding, they're very sparse, they're very suburban. When instead she argued that everything needs to be extremely densely packed. And I think that's also for energy saving reason. You know, the more you pack people, the more you're able to save people.

to save energy, which I think is also one of the reasons why China still today from a per capita point of view is a relatively prudent country in terms of consumption and in terms of ecological impact. - But what do you mean by prudent? - I think like they don't consume much. They don't consume much. - Really, China doesn't consume much? - On a per capita. - On a per capita basis, I see. Compared to other countries, you know.

It's like a 4.x population versus America, but the same land mass size. Your anecdote about the EVs reminded me. Remember Rich? We have a mutual friend, and he visited just a couple weeks ago to Shanghai. We haven't seen him in years, but he's been living in the States all this time. We were talking about cars and cars.

I was like, oh, are you going to get an EV? And he's like, no, I'm not going to get an EV in the States because charging stations, there are just not as many of them. And then an often frequent problem with the charging stations, when you do get to one, a lot of them are broken. Right. And so you can't really charge. Also, he was citing, at least where he was living, there was a homeless issue there. And then so...

The homeless people will like pee on the charging stations or something. Yeah. He was just describing this to me, but anyway, it's just to reinforce what you're saying. It's like, you know, it takes a lot of things to come together to, for people to adopt certain changes. It's not just, Oh, here's a technology. Why don't you use it? There's a multitude of things that have to come together to, to make it effective or convenient or to raise the standard of quality to make it, you know, worthwhile or,

makes sense to use, I guess. There's something interesting about also the willingness that Chinese people

have in adoption of new technology. So like, if you look at the time that it took for every new kind of like breakthrough digital thing, payments, online payments, e-commerce, social media, online chat, if you look at the time that it took China to achieve general availability, so over say 50% of the population in terms of penetration,

it's much shorter than the US. And like, I'm talking about like a fraction of the time. It only took like four years for e-commerce to really catch up to like 50% penetration. A handful of years for mobile payments to catch up in the West. That felt like overnight. Yeah, like I didn't even notice it. All of a sudden everybody's doing cashless. I'm not even sure whether the West has now achieved

50% of penetration in terms of online payments, of mobile payments. That is to say the enormous difference. And if you look at the availability and the willingness to jump on this new technology by segments of the population that you really wouldn't think

the rural areas which we saw are in terms of like penetration in relative terms are the ones that use it the most. But even elderly people or extremely, extremely young citizens, they're like, they are extremely willing to use it. The grandma of my wife, she was texting me on WeChat all the time. She was sending me

She was a chemistry teacher, so she was sending me articles about the type of chemical supplements that I should eat to improve my fertility. She was giving you some hints. Some subtle hints. And this was when she was above 90. Yeah.

Honestly, my mom still has certain problems in using the smartphone right now. And we're talking about a generation after. That's true. Well, what do you think... Do you feel there's any risk to all this? Like, you're talking about the penetration rate here and how our lives are basically like...

digital right like everything we need to do like you basically can't survive here without your smartphone like everything you need to do you do it digitally now while that on a day-to-day basis without thinking about it it feels like it offers an enormous amount of convenience for us and i feel it does but then there's also i think what looms above that is there's this i feel like there's this risk and and

I'm going to simplify it just like in terms of like, sometimes I think, oh shit, if I lost my smartphone or if the grid suddenly went down, right. Like then I'm like, we're just fucked. Like how do I, I don't even know how to survive anymore. So, so I mean, do you feel that with all this digital advancement here and how ubiquitous it is here in China, do you feel there's a, there's a, there's a risk to that?

There are several risks. One is the one that you just pointed out. What happens when you die? What happens to your data? What happens when you lose your phone? Another one is what happens when you're not interacting with the same self-referential digital ecosystem? So something that

So why the digital ecosystem was perfectly fine and so amazing during the period when China was not communicating with the rest of the world in terms of people coming in and out, because it was completely self-referential, right? Everything was based around the same set of protocols and protocols.

apps and data exchanges and government that allowed all that to happen. But when you start opening it up, then questions arise. Okay, so, okay, foreigners are coming to China. How do they engage with this? It's complicated. It's such a complicated. Chinese are going outside. How do they engage with this? And then obviously there is the political side of TikTok going in and out, or do we want it in the US or not? Or a new...

app that will develop in the west do we want it in china or or not so there is there is that and obviously i i'm i'm not an expert by any means but i was um i saw some recent report that kind of like

enunciates as a fact but I think we all observe that the use of smartphone especially in young people produces important developments and most of them are negative developments in the way that their brain functions in their perception of self and the development of psychotic disorders yeah yeah we've talked about that a bunch on the show do you have kids? I don't not yet yeah

When and if you do have kids in the future, how would you want to introduce them to social media? Right, right, right. I get the feeling that, and maybe I'm wrong, that a very exaggerated phase of social media has ended. And a lot of this me, me, me online kind of is already like,

this peak. Again, maybe I'm wrong. Why do you say that? I don't know. I think you're on the wrong platform. Your algorithm must be really good. No, I have this feeling that... Like people are getting sick of it? That there is a little bit of fatigue here and there. So I think in a way...

again, we don't know what's going to happen in three years when a new technology, a new system, a new platform will come up and revolutionize and change everything. So there is that. So in a way, I think one needs to anyway be even not...

overly, let's say, pessimistic, but at the same time understand that all these things are cyclical and they come and go. I was just talking to a friend and business partner and she was telling me that she didn't want to restrict usage of smartphone because her thinking was like, life is increasingly complicated and my kid will be exposed to an enormous amount of

epileptic information anyway so i better gradually get her used to it rather than like all of a sudden like make her not prepare for this and then kick her out in the world and all of a sudden she will be like bombarded by uh lights uh uv messages online from all sorts of platforms so it's uh it's an it's an interesting position there is some uh some some reason in that yeah that reminds me of um

maybe my philosophy with alcohol, I think in the States growing up, right? I mean, you're a European, so you guys have a whole different philosophy when it comes to drinking age and, you know, during your youth and stuff. Ooh, speaking of, thank you. But in the States, they put like alcohol on a pedestal for your entire life up until you're 21. Like, but you can't have it. This is like the greatest thing, but you can't have it. This is the forbidden fruit.

And you're just like, oh my God, I want it. And then at like 21, when you can actually drink, you just go crazy. And then so many kids, like I see, I saw it when I was in college, um,

Like so many kids just, they don't know how to control it and they don't know what they're getting themselves into. And they get into a lot of trouble that way, whether it's like trouble, like legally or like health. Right. And so I think it's that same philosophy. It's like, you kind of want to maybe diffuse it for them where it's like, it's not this, it's not a big deal. Don't make it a big deal in their minds because the more you do that, the more pent up they get about it.

And the more unprepared they are for it, I guess. No, it's very true. And also maybe the fact that there are alternatives in the real world that you should be reminding yourself and the people around you about, you know, like, okay, sure, we can spend some time on the phone, but let's also not forget that there's an amazing world out there that we can enjoy and let's enjoy. So maybe that can also be... But it's easy to say that, but...

It's like giving someone a drug that's addictive and be like, hey, but remember, there's all these other things you're going to be doing, right? Because it's so addictive once you're on there. And I think the research is out, that's not even debatable anymore. Right, right. But then you have to think, just going back to the main crux of our conversation, which is more of the Western versus Chinese digital economy and what's the differences and et cetera. Yeah.

The way that locally the government has been sort of clamping down on social media use, whether it's through gaming or even some social media platforms, there is a vast difference in terms of how people use these social media platforms and gaming than the West. The West is free for all. I mean, it's pretty open, like we talk about, quote unquote, open to a certain extent, but it's open.

Here, you have regulations. You have time limits. You have, you know, for people under 18, you have to always identify, sign in with your ID number so that there is a sort of control to it. Now, the debate is, is that right? You know, should you have that control? Because only with that control can you sort of have this sort of parental figure, so to say. I don't even think that's where the actual, I mean, it's the debate, but I don't think that's the actual debate.

Because I think the actual debate is these tech companies that don't want to limit the age because a lot of their users are like 18 and under. Right. So, and so, I mean, this whole conversation that you just started, Howie, was like, for me, was like really pointed out during the whole TikTok thing, hearings in the States. Yeah.

And they kept bringing up how, you know, China's TikTok version is different from America's TikTok in terms of the regulations, in terms of the child protection rules around it and stuff like that. And yeah, so it's like, it's this big issue, but it's just like, what are you, like, I mean, at that point, it's either on the companies to implement them, right? Or the government to step in and mandate the companies do that.

I don't know if either of those two things in the States have a real incentive to do it. Right. I mean, China has a strong tradition of being a patronizing government, right? So it has a strong idea of what its citizens should do.

B, what kind of life they should be living. There is an enormous amount of control and some of it is coercive, so there's no doubt about it. But I want to say that there is also a strong feeling that the government should step in and try and avoid before the inevitable happens, right? And I think in the digital economy, China does it all the time. So it's completely inconceivable for China to not

clamp down on Alibaba when it gets too big or take Douyin when it gets too big because that's the rule of the game. China will step in before one company becomes so big that it can impact and influence the life of its citizens to a point that it's

very, very important. And this, I think, in a way, it's an interesting model. I don't want to say it's the best possible model, but it's a different model from the one that the West uses, which is like, oh, waking up years after things are already past a monopolistic or an extremely difficult point and try and set up regulation ex post.

Well, I think that's even giving them too much credit over there. I think they like to talk about it, but they don't like to do anything about it. And they're only talking about it now because they're talking about TikTok. Otherwise, it wouldn't even be a subject of conversation. Well, a lot of times in the West, well, I'm using West only because I'm America, only because I'm American. They use this sort of excuse, like it should be the parents' job to control the kids, not the government, right? But...

I feel like it's such a gray area because a lot of times the kids, when they're in school, they feel the pressure from other students. Even though maybe like my kid, let's say I'm raising them really well, but the people around my kid,

I cannot control how their parents are raising them. And if they're all hanging out and they're all being able to use the tablet or phone nonstop playing games for countless amount of hours, meanwhile, I don't allow them, my son or whoever, to play that much.

it becomes the societal pressure on the kid. And that is beyond a single parental figure that can remedy. So that's when all of a sudden, if the government steps in or higher authority figure comes in, then everybody's on equal ground. We're all like, look, we all have to kind of abide by the rules. We can't play for 10 hours a day. We can only do an hour a week. So we're all on equal grounds. Yeah.

So it's a gray area, right? Right, right. I mean, maybe there's an ideal middle ground in between the way that China does it in a very coercive way and the way that the US doesn't do it because the pressure of capitalism and companies is too high. Maybe there is a middle ground. I don't know. Sometimes I like to think that Europe has a middle ground in this sense. I mean, they have done some...

uh interesting they've stepped in let's say ahead of the time uh to try and regulate artificial intelligence which is uh which is interesting but the china has done that uh as well yeah but even then that's that's a debate right the way european countries are especially let's say germany i don't know about i don't know about how italy is or other france but i know for example in germany they are

It's not that they're stifling entrepreneurs creating AI to compete against open AI and et cetera, but they are definitely coming in strong with regulation. And that could mean that some of these companies are having more difficulty to kind of step up to compete. Meanwhile, regulation is almost non-existent in the States and everywhere.

China, that's a different story, right? We don't even know what's going on in China, right? The AI that's been released are pretty much useless. They're kind of pretty low. But you know that the technology is there. You know the engineers are here. They got something up their sleeve. They got something up their sleeve. I just don't know what's going on. They've been investing. So, yeah, in terms of what you're saying, it is good and bad when government comes in to regulate because it's almost like

It's just a gray area. I can't, I can't, there is no middle. Is there a middle ground? I mean, it's tough. It's a tough conversation, but I think the timing of it is also because a lot of how I think we react to certain things as people is,

is a lot of human psychology, right? So I think the timing has, when there's this new technology, right? That's not so ubiquitous yet. That's just budding. And then let's say the government comes out at that point from the very beginning and sets the rules. I think we swallow that much easier as people.

But when something's already been the status quo for so long, and we've been used to using a certain way, and then you want to retroactively later on to be like, nope, sorry, you know, you can't do this, you can't do that. Then we're like, hey, what the hell? What the hell? You know, had they...

Had these guidelines or policies been implemented from the very inception of social media, then I think it would be a very different story. So I feel like the timing really plays around with human psychology in terms of how we react to these things as well. Also, because we live in a globalist society where everybody's connected globally, then it becomes, if Europe is doing it this way, America is doing it this way, China is doing it, you start comparing. And then that may influence policy.

from a capitalistic society, who's winning and who's losing, quote unquote. - But that trickles down to the individual. You're absolutely right. This reminds me of a conversation. There's this author, Jonathan Haidt. He wrote "The Happiness Hypothesis." He has a new book out now too. The name of the book is escaping me right now. He was talking about the same conversation on social media.

And he put it very eloquently, but basically what he was saying was it really comes down to FOMO, fear of missing out with these children. He has done a lot of modern and current day research, interviewing many kids, doing a lot of surveys, doing a lot of in-depth research on this. And his findings have shown that actually when you talk to a child and you're like,

You can't use social media anymore. Obviously, they get upset about it.

But one of the things they ask, and if you tell them, but neither can your friends, they're totally fine with it. Not only are they totally fine with it, they actually prefer it. They're like, yes. Yes. Finally. They're like, if we all can't use social media, then I'm for that. Equal ground. Yeah. In fact, kids want to be all off social media. They just don't want to be the only person off social media because then they feel like they're missing out on everything. Of course. So one of his proposals, he has like, I think three...

three proposals, but one of them is this idea that you don't have to get everyone off of social media at the same time, because that's, that's not, that's not practical and that's not going to happen, but you just have to get enough people. So you start with like, if you can get like a third of the people or maybe even less, and you build that, there is this community or population that are not of kids that are not using social media, that that's the seed. Because when you talk to a kid, they're,

you can refer to this other group of

this population of people that are also like that, right? It doesn't have to be everybody. They just have to- Make it a trend, right? It just has to be enough where they don't feel alone. Well, funny enough, that is the same principle of adoption of digital media. So we talk about the early adopters. So the seed that you mentioned, and these are the people that will start the trend and then there is the early followers. And then finally there is the mass, you know, like there is a sense in that

When you say something about stifling, and we were talking about how much the government controls and how much the government has a say on the development of the digital ecosystem, got me thinking of a very hot topic right now in the Western narrative, which is like China is stifling the productive forces, the animal spirit of China, right? Of the entrepreneurs, you know, because it's

its hand is much heavier in controlling and trying directing where the economy should be going and what people should be doing and all that. Moderate consumption, you know, like a theory of like, oh, China should not develop into a consumeristic society. And it has done some very strong acts

actions in order to say lower the importance and like try and limit the space of key opinion leaders and the amount of like promotions that they can do online and also to try and kind of like keep low and down some of these consumeristic

uh, impetuses, uh, from people. So literally buying, buying, buying online. So on one side is, um, it's terrible. Okay. Like, oh, you know, like the economy is already not doing too, too well. The consumption, uh, consumption is weak. And, uh,

11.11 is not a thing anymore and brands are struggling. On the other side, you can see that there's a vision, a picture in mind of the regulator about the type of China that they want to create and also the type of interactions that people should have online. Okay, there are some things that I don't want you to do. There are some things I don't want you to do too much. So in a way, I think China...

leaning towards the extreme side, but it really is the kind of country where like at one point may tell its parents to not let the kids use social media.

and maybe they can actually enforce it. And in a way, is that good? Well, certainly is an invasion of personal space, but on the other side, you can argue that it has a positive impact on society. - Yeah. - So it's... - Well, think of it almost like, because there are already research

That has come out saying that the use of social media is a detriment to the mind, right? And just equate it to like smoking. What you were saying before about making it a trend, it's almost like I go back to high school. You have the people who smoked and you have the people who didn't smoke. The cool kids smoked or did they? The cool kids. I'm a cool kid. I don't smoke, right? I don't.

hurt my body and you have a lot of people on that side too so yes you can i can see that right you make that a trend yeah it's like i'm the anti-social social yeah right right so i'm all about real face to face and i can totally see like gen like gen alpha like the kids growing up now being like that especially even in china i have more friends offline than online right it becomes a thing

I see it in China. I see the young people. Also in the West, but I see the young people. Like you said, you said it already. The Chinese people, the young people, that's the next generation that's going to really bring us up. The real cool kids were the cool kids to do what not everyone else is doing. So they kind of went away from the mainstream. They were a little bit more rebellious in that sense. They didn't care for the status quo.

And it could be, and I think it touched upon what you're saying is like, you feel like social media in terms of like this, like me, me, me, me, me thing has kind of reached its peak already.

And maybe the younger generation, there are, there's, you know, not all of them, but there's enough of them that feel that way too. That like, man, social media is played out. It's done. Yeah. This thing is played out. This thing is dead. Like, like, like let's do like the next thing. It's that next generation that's going to be taking that torch. And then rebelling against being online all the time. Be like, you know what? The cool kids, they're offline.

And that we could see a reversal of that. We don't know if the next generation is going to be like, oh, social media is not a thing anymore. Now we're into the even more extreme. Like we are VR. Yeah, we're even more extreme. We're in the metaverse. Isolationist, metaverse-led type of life. It could go the other way, right? It could go even worse, right? I'm loving this conversation, by the way. This is so fascinating and hearing your thoughts. Yeah. One thing you were talking about when you were talking about China that...

is that, yeah, I do feel like the government, they're very much, at least it seems from the outside, like who knows, right? Like I wouldn't know. But it seems like they're very much frequently led by this runaway train idea. Whether we're talking about digital or not, it can be on any issue.

They almost fear like the runaway train effect. Like this thing is going to get to a certain size or a certain momentum where it's going to be uncontrollable and it's going to run away like a greenhouse effect where it just run away greenhouse effect and the whole world dies. Like, I feel like they are very much concerned about that. And that leads a lot of their philosophies in terms of why and when they step in and intervene with certain things. They feel like it's just going to run away and just get out of hand.

I think that explains a lot of their actions.

with these type of things, especially in the digital realm. - Right, you're perfectly right. One topic which it's very hard for us Westerners to get our hands on is like consumption, right? So we all like, where is the consumption? We need more consumption. Everybody's like, every Western analyst is always going like, China, you've got to spur consumption. Consumers, consumers, consumers, consumption, consumption. But then,

Should it? Should China spur consumption? Is consumption the key to everything? The question is why, right? Why should we do it? Is consumerism the way, the only model that is available out there? So in a way...

Well, in a capitalist society, it is, right? Right. But China, like, doesn't want to abide to this, by this consumer capitalist. So they are trying to create this new model and will it work? Will it fail? Nobody knows. But

It is a model. It is a model that is not based on consumerism, that is based on directing the productive forces of the economy. It's based on telling people what to do and telling people when to stop, as you say. Now it's gone. You've done it. Good job. Now you stop because we need to do something else. And that is very hard for us to understand. It's like, what...

I thought I could do it forever. No, you cannot do it forever. China, you know, famously, we need to get, uh, some people, we need to make them become rich first. Right. But like, it didn't like the, the, the implication that we as foreigners, uh,

as Westerners, it's like, okay, so we're going to make those people who are getting rich first more and more rich forever. But no, the alternative connotation is, oh, we're going to make some people rich first and then

Spread it. We will stop that and we will make the other people rich. So in a way, it's like there is a design that has been going on for like decades and maybe we just don't see it. Well, they don't communicate it, right? And they don't communicate it. But all my experience in terms of policy here, you know, I don't agree. Obviously, I don't agree with everything that occurs here, but I do get the sense that there is

a strategy. It's been thought through, and there is a long-term plan to things. Now, whether it works out or not is a different story. Whether you agree with it or not is a different story, but they are thinking long-term. There is a goal, and there is some sort of design around it. I think often, at least from us in the West, when we talk about these things, we focus only on the control aspect of things. We focus only on

what the government is intervening in and the very act of that intervention or that policy that restricts some sort of thing. The conversation is never about, well, why are they doing this? What's the ultimate goal here? And do you agree with that ultimate goal?

You're perfectly right. There is something that I was thinking just the other day is like all the narrative, the main narrative that the West has on China right now is that life has become extremely hard in China for rich people.

the big companies, the big guys, the foreign investors. The white collars. The white collars, the real estate owners, the financial market investors. Sure. But China is a socialist country, right? Like,

by definition. Maybe it's not really. Maybe their definition is completely different from our definition. But I think, in a way, the question that we should be asking ourselves, and maybe the answer will not be positive, but is life become harder also for the poor people? How do we judge the society as a whole instead of only looking at the elite? And I agree, the life for rich, very rich people in China has become harder. But

that is exactly what then said, you know, like, oh, we need to get some people rich first and then we get the other rich. So now it's in their mind, the time for those rich people to kind of like pay and spread and contribute back. Which is ironic because I feel like a lot of the dialogue, at least in America is like these damn billionaires, they don't pay any taxes. They're making billions, you know, like spread the wealth

But then when it comes to China, they focus on the rich as the problem. The rich. Right. Well, the other flip side that I've heard spoken about this whole control of rich people here is because you don't want them to accrue too much power. Right. Because once you have, whether it's monetarily or just penetration based off of your application or whatever, that's just...

too powerful, it becomes a challenger. - For sure, for sure, for sure. And I mean, what's happened with Alibaba,

the fact that they've split the company effectively into six, you know, like in the digital economy, they've been very, very clear about this. Sure, you can develop, sure you can be big, sure you can like achieve a super app status, but at one point you have to step back, you personally, you as a company will be- - And no one person can become- - Like when is enough enough? But I think those examples really apply to like if you start some sort of company, right? And then that company gains a lot of power.

I don't think it's specifically targeting the rich, but I think if you're just rich, I don't think the government really fears you at all. Cause like they, they don't care, but it's like when you have something that's global and big and, and it has trickled down into all facets of society, then that's when, you know, that's when they're like, okay, maybe we should start, start, you know, start trimming the weeds a little bit. So I want to, I want to ask you a little bit about adjacent because,

- It's adiassent, right? How do you? - Yes, we pronounce it. - Oh damn, did I butcher your name? - No, no, no, it's okay. - It's an I, not a J, right? - Yes, it's a poetic license. So we pronounce it adiassent. - Adiassent. - Adiassent. - Okay. - Adiassent, which is, I mean, it means adjacent really, but with a little bit of a twist to it. - Forgive me, now I know.

But yeah, I just want to talk a little bit about what you're doing there. Because I find that it's really interesting to hear your perspective. We've been talking about the digital landscape already. And we've been talking about the West and the East and the differences and stuff like that. But just at least give us a little more of that peephole into what you're doing

what you're focusing on. Right. Right. So as I said, I started as a, as a researcher at university first researching the social media landscape. And as we, as we saw, the angle was completely different, was not commercial at all, but more of a political angle. Then I started working. Um, I worked briefly as a journalist and then I picked up that, uh, social media interest again, uh, from a commercial point of view. So I started working in, uh,

helping companies, figuring out what this was all about. And this was a time when really we had to go to massive companies, corporations, Ford, and explain what social media was and explain that it existed in China as well and explain that they could use it and start.

So I worked for a big advertising agency for a while, and then I opened my own company, which developed over time into a more, let's say, comprehensive digital consulting company.

company so we would help companies on every single new trend of obviously we've been working on social media we've obviously worked a lot on e-commerce especially when e-commerce was very big we now work a lot with data data privacy another hot topic china has been stricter and stricter in terms of enforcing data data management regulations there's a

several waves of laws that have been passed over the past three, four years. Is that good for privacy? It's interesting because China is very strong on what in jargon is called data residency, which is something that doesn't only apply to China. A lot of other countries have it, but it's the need for the data pertaining to that country to stay in the country.

And of course, it's completely understandable for China to do so based on everything that we've said before and its need of centralizing, of making everything part of a single ecosystem, and of course, of controlling the data and the people that use the data. So in China, data residency is very strong. So all the data about companies that engage with China

about China needs to stay in the country. And I'm talking about data about employees, I'm talking about data about suppliers, transactions, but more importantly, data about consumers. So there's a lot of work that needs to be done by companies to try and make sure that that is the case.

A lot of it is very similar to the, let's say, the dual track decoupling their supply chains in order to make one specific for China and one for the rest of the world in order to minimize risk. Well, with data, it's very similar. There's data decoupling. So data that stays in China for China and then data that stays in the rest of the world for the rest of the world. But of course, that... Well, isn't that the proposal TikTok was proposing?

putting forward like US data will never leave, will only be hosted on US servers, managed by US personnel. That was like the proposal, right? - Yeah, yes. And a lot of countries as mentioned implement this, yes. - Is that more, what is, I mean, I feel like the term that gets thrown a lot around with that is national security, but do you think it's more about economics rather than national security?

So again, for Western observers, this feels like yet another way to make business difficult and yet another way to thwart the animal spirit of companies and entrepreneurs. But for China to have a strong grip on the data of its own consumers, of course, there's also a way to protect those people.

people, those consumers themselves, from second-hand markets of data, from spamming, from all sorts of violations that can happen. So there is always that element of control in it, the element of coercion in it, but there's also that element of, I want to make sure that you're safe, I want to make sure that you're being taken care of. So once again, the paternal, the kind of heavy-handed paternal figure. Well, digital scams are

pretty crazy right now, right? They are. They are. That's a really dangerous thing. It's only the beginning. It's going to get worse, I feel like. Oh my God. It's, yes, it's, it's, China is trying, just like every country, probably more than a lot of countries to crack down on that and obviously to retain a

and strengthen data control will help, will help. However, we also know that anywhere in the world, but especially in China, people can get very creative about how to extract, extort money from people. And yeah, it's been happening. You know, what are some latest consumer trends that might surprise you?

There's always something that seems unfathomable and you try and understand why that happens. So if you look at the way that companies, foreign companies, the companies I consult, they start considering, the way that their competitive landscape is evolving is quite fascinating. Back in the days, you know, like, oh, this brand's...

competitors are similar companies from similar foreign countries. Oh, we're a clothing brand. Of course, our competitors are those Italian or French brands that produce the similar products in the same level. Now, they increasingly look at all sorts of companies and some of them may be

Minus cool compared to them, but maybe from an online visibility point of view, they're as big as them or even bigger.

Very recently, I had this fascinating conversation with a client of mine who was saying, okay, they are an apparel brand and they're like, okay, so we need to now reconsider our positioning and we need to also reconsider our supply chain because we need to change the way that we are producing to adjust to this new struggling economy. And I was like,

So you want to make your products cheaper, right? Because clearly the consumption economy is, the consumption is weak. So you want to make, you want to reduce cost and price to the final consumer. And they're like, no, the opposite. We want to make our products, we want to reduce our margins by making our products more expensive, by improving the quality because all of our Chinese competitors, their quality is higher than ours.

We're talking about an Italian apparel brand and they are considering that they're

in their competitive landscape, the local producers have a higher quality of products so that therefore they need to react to that in the struggling economy. Completely counterintuitive. You think that it's a race to the bottom and instead it's a race to the top. Yeah. And it's surprising that they would even admit that. Right. My image impression of Italian apparel brands is they're very, you know, they're very pretty much full of themselves.

True. And would never compare themselves to like a Chinese. This was a Chinese manager inside the company. So it was obviously coming with this like non-nationalistic approach to it or maybe nationalistic in the other sense, but really it was like trying to find a solution for this one company. Yeah. What do you tell these companies? Because the...

The Chinese market is so cutthroat. The advantage that foreign brands have over local brands, I think it's completely, completely gone because these brands, these local brands have been really successful in communicating. I think what you said is, you just mentioned is, at least from my perspective, is probably one of the most important aspects of the growth of domestic product is branding. And...

I mean, when I first moved here, when talking about branding, when working with brands, domestic companies, branding would never be on the forefront of conversation. It would be sales-based, right? And, but if you work with Western brands, of course, branding is the most important thing, right? What do we stand for? Now, it's the Chinese domestic brands have caught up. Now they talk about branding. They talk about their identity. I think it's now very, very, um,

common to say that Chinese brands are better at branding than foreign brands. - For the local market, right? - For the local brand. I think it's, people would find it a very reasonable statement. Nobody would think it's a strange statement. - So the branding matches the product. Before you can brand all you want, but the product's shit. I mean, it's not going to sell. - Look at the cell phone market.

The Chinese cell phones are killing it. Completely. Even globally. I mean, you have people like Marcus Brownlee and all the other YouTubers reviewing the latest Chinese tech. They drool over the Chinese phones. This is objectively the best technology. It's crazy how times have changed. But that's what I'm saying. Is it that crazy? Going back to the brand example, don't you think this is just the natural curvature of

of a society developing, right? When you start in the beginning, when you're just developing, you know, people are poor, you know, the society and the country, they're trying to get their act together. And so they rely on a lot of imported goods, right? Because these imported brands are established, they have the name brand, they have the quality there, blah, blah, blah. So people naturally are attracted to those things and aspire to buy those things, right?

As a society develops, just like if we take the States as an example, I mean, now, like, I mean, as the society develops, it craves its own, it's flooded with its own brands. It's like its own domestic brands, of course. Like in any society, developed society, you go in, like the vast majority of whatever is available to you are going to be

domestic brands, right? And so that is just a sign of a society that has developed to a certain point. And China is entering or has already entered that stage where

Now it's just about like, yeah, we have our own brands. Like why wouldn't we? - Right, right. There's a lot of that, Justin. I think there's also the other side of it is once again, leapfrogging. So the fact that China has all of a sudden achieved strong production, design, conceptualizing, marketing capabilities,

at a time when new technologies were taking place. And it's been extremely successful to create successful brands and products that suit the new technological developments. Smartphone is a strong example. But think about all these brands that are extremely suitable for the digital economy. So we often talk about brands that are designed for e-commerce.

And these brands exist in the West as well. So like the West also creates e-commerce brands, but China is so much better at creating e-commerce brands because it's so much better at e-commerce and because it developed its capability right then when e-commerce was about to become a thing. So like it literally created its own supply chain, its own way of thinking, its own way of commercializing products,

on the digital economy and not the truck. It was born into it. Their flagship store is e-commerce. Yeah. They bypassed the whole brick and mortar traditional way, right? Think about the electric vehicles. Something that, like a comment that I always relate because I think it's genius, by a major electric vehicle, an Italian company, the manager of an Italian company supplying electric vehicles in

in China and the rest of the world. And his point is like, Chinese electric vehicles are so much ahead of the rest of the world, not only because the battery, not only because they have the supply chain, but also because they completely understand what this new product is all about.

Western companies coming with their Western ideas of what a vehicle is, they think an electric vehicle is a motor vehicle with an electric engine. But Chinese people understand that that is not the case. They think that an electric vehicle is a smartphone with wheels. It's not the same. It's just, it's not the same product. Well, you have a Chinese EV, right? Yeah, yeah, yeah.

Like Justin said, I bought an EV. And so sometimes I'm going through like a Xiaohongsu and I'm looking at, and I get the feed, right? I get feeds of like new cars and then just new announcements. And literally the car I got last year is already outdated. Like the things that are coming out and the technology in these cars are ridiculous. Like there's one car, like the wheels turn 45 degree angle. So it does the crab walk. So basically it's like when you want to get out of tight spaces, it's just...

right so it totally fucked fucking changed like that's already out now like you can buy that it's coming out next month oh wow so it's like it's changing the idea well there's another card that's already out that does that but that's the point these are Chinese brands? they're Chinese brands

So to me, it's like this fantasy that we used to have. Why can't car manufacturers just have all four wheels turn? Yeah. They're like completely attached to an old idea of what the product should be. And they don't want to let go. Yeah. Whereas like the Chinese are looking at it as a completely different product. It's a lifestyle product. It's not just a car. You put it perfectly, Andrea. It's a smartphone with wheels. Yeah, I love it. That's exactly what it is. Again, it's not mine. Okay, so...

We're wrapping up here, but I think going forward, what's your outlook or how optimistic or pessimistic are you in terms of your outlook for like, let's say the next five years here in terms of where this, where the digital landscape is headed and how that affects people, society, the economy, all that politics.

I think the next five years are going to be crucial for China because I think China is now entering the test of its midterm, long-term vision. So until now, the...

the trajectory was very clear. It was an upward trajectory and it was going to be like this until a certain point. And everybody knew that it was going to, at one point, slow down and new challenges would come up. But now I think that the real test is, is this idea that China has about the way that it wants to lead the economy, the way that it wants to lead the digital economy, the way that it wants to be different from China

Western countries and the way that it wants to be different from developing countries that arrived at this very point and then started going down, you know, we talk about, often we talk about the middle income trap. We talk about Brazil, Argentina, Japan, you know, we have all these examples of, oh, they're going to do exactly the same. And China's like, no, we're not going to do exactly the same thing because we are reacting to this

same or similar problems in a different way, and they are. Now, is that going to work or not? I certainly don't know. I certainly hope they succeed because, of course, that will bring benefits to the whole of mankind and obviously to the country that I live in and I love. But obviously, massive challenges loom in, and I think China has a lot of eyes on it and a lot of people that are just...

ready to point the fingers and say, we fucking told you. And they're going to be secretly quite happy if it doesn't succeed. So it's a very tricky moment. And I think this is a moment when the resilience of

of China, of Chinese people, of Chinese companies will be really put to a test. I don't believe that we will in any foreseeable future that we will give up on China in terms of this massive opportunity for

people in China and outside of China alike. I can see it with my own company. We, just like everybody, started looking for options outside and diversified our office, our brand mix, our activities outside of China. But then we realized that very, very simply, you cannot replicate what China has created in another place. And I think the world needs this

ginormous powerhouse of ideas of production needs to be obviously done better in a more green in a more sustainable in a more sensible in a more human way but we need it we need it so I hope it succeeds will it? I don't know let's see

Yeah, I share your same sentiments. And especially regarding the resilience factor, you know, one thing that really scared me when it was, you know, really trendy to talk about the whole like lying flat or kind of let it rot kind of movement, especially with the younger generation here. You know, that really worried me because I feel just as you do that the coming years right now is going to be a really crucial test for us

how we in China pull ourselves out of this, how we move forward. And I think the resilience of the people, that spirit is really going to be tested. And so, yeah, I don't think there's any more crucial time, at least since I've been here, for that resilience to really shine through. And we're going to be tested in so many ways, you know, both from domestic pressures, but also from international pressure as well. And, yeah.

Yeah, I like you. I hope it works out. And that's why I'm here. I'm here to see how it plays out. Let's see. For better or for worse. Let's take a look. Well, thank you, Andrea. Thank you so much for your time. This was a fascinating conversation. Thanks for having me. Cheers. All right. That was Andrea. I'm Justin. And I'm Howie. All right. Be good and be well. Peace.

♪ They wish she knew about that ♪