The State of China 2023 with Shai Oster

Dec 12, 2023

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"You will continue to see Western investment continuing to decline. The risk-reward calculations won't change in the next 12 months, as far as I can see. The Chinese economy is not about to take off. What you will see is the beginnings of some people who are willing to take the gamble. They are going to try different ways to exit. You're going to see more people experimenting with domestic IPOs, and onshore IPOs because you can get the money off. For example, if you're investing in LiDAR or approved industries, you can do a joint venture or a WOFE or anything. It'd be a joint venture to be able to try and do some kind of onshore listings. I think by chance will stay in this weird suspended state. I don't think we're going to get a resolution from them. The big question is - how much stimulus will the Chinese government throw at the economy and how far are they willing to go to goose the economy?" - Shai Oster

Fresh out of the studio, Shai Oster, independent consultant and former Asia Bureau Chief from The Information is back for the sixth time with the annual review of what is happening to the China tech ecosystem in 2023. The conversation started with Shai's predictions last year on what happened and what did not happen. From there, we discuss the major themes of the year: the decline and restructuring of venture capital in China, how the 2nd generation CEOs from Shein, Pinduoduo and Bytedance have successfully expanded globally as compared to their predecessors, the October surprise of Huawei's 7nm chip. Last but not least Shai offered his predictions in the road ahead for 2024.

Episode Highlights:

[0:48] Quote of the Day #QOTD by Shai Oster

[1:42] Introduction

[2:20] What has Shai been up to?

[3:18] Experience in Thailand is similar to being in China as compared to Hong Kong

[5:30] What did Shai get right or wrong in 2023

[6:00] Sequoia splits into 3: US & Europe, China and India & Southeast Asia

[12:41] Why Sequoia split out India & Southeast Asia to Peak XV

[15:08] State of Venture Capital in China, the 2023 Edition

[22:38] The restructuring of China’s tech ecosystem and where Alibaba Group is heading

[26:10] Why 2nd generation tech founders in Shein, Pinduoduo and ByteDance did a better job in expanding globally compared to BAT

[33:40] Will TikTok be banned in the US and will it go IPO as well?

[38:30] Investors in public China tech companies in the US have now read the regulatory risk section in their S1 filings.

[41:51] Huawei’s October surprise with their 7nm chip and the US sanctions might have accelerated the Chinese’s chip development and independence.

[45:52] Macroeconomics in China due to the declining real estate market in 2023.

[47:49] Why China is still booming despite the doom and gloom of less foreign-directed investments.

[49:55] Shai’s predictions on China for 2024

[53:46] Chinese entrepreneurs coming to Southeast Asia to start companies.

[55:49] Gaming in China and Tencent’s ability to respond to the Chinese government’s demands is still going on.

[59:10] Closing

Podcast Information: Bernard Leong (@bernardleong, Linkedin) hosts and produces the show. Proper credits for the intro and end music: "Energetic Sports Drive" and the episode is mixed & edited in both video and audio format by G.Thomas Craig (@gthomascraig, LinkedIn).