Jianggan Li: China Price War Chaos, EV Subsidy Battles & Why Firms Flee Abroad – E622

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

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

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

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

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

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

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

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

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