Tag Archives: Asia

China’s Crypto Ban and the Road to Total Control

You just went to a protest marking the anniversary of the Tiananmen Square massacre. You were scared, but you went. You wore a mask and took a winding route home. No one could have seen you.

You arrive home to your Hong Kong apartment and decide to check your bank account. Did the rent get deducted yet?

But when you log in, you see the balance has gone from 21,000 yuan to zero.

A notice appears to contact your local Party office.

This is the future China wants to bring about. Its tools:

1) The social credit score
2) The digital yuan
3) The banning of cryptocurrencies other than the digital yuan

Today, China banned bitcoin and all other cryptocurrencies. All, that is, except its own digital yuan, which debuted this spring.

It wasn’t hard to see this coming. China banned cryptocurrency mining earlier this year. This is part of a long term trend toward total control under Xi Jinping.

China’s government has cracked down hard on tech companies, Hong Kong dissidents, and even seemingly random targets like celebrities.

What’s next? About five years ago, China’s government created a social credit score. Any action that upsets the government, from farebeating to protesting, can have dire consequences. One may be unable to get a loan, a job, or access the internet.

After the crypto ban, the next logical step for China’s dictatorship is to ban cash and all non-digital yuan. Then, all money is electronic, traceable, and centrally controlled.

Step out of line, and your life savings could be gone.

It’s a dark, dystopian future. But I strongly suspect it’s coming.

We in the United States and the rest of the free world should guard against any such thing being done here. I will be wary of attempts to ban cryptocurrencies or cash as paving the way for similar control. Control that has no place in a democratic society.

More on China tech:

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

How China’s Tech Industry Dies

China Is Crushing One of Its Most Innovative Companies

Photo: “1984” by jason ilagan is licensed under CC BY-ND 2.0

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China Is Crushing One of Its Most Innovative Companies

Didi Chuxing, or “Honk Honk Taxi”, was one of the greatest success stories of Chinese tech. Founded in 2012, it broke out just months later by providing rides during a heavy Beijing snowstorm. A regular taxi was impossible to get, but Didi came through.

After that, the company was on the fast track. It raised over $23 billion in funding from major venture firms like Softbank and beat Uber to dominate the Chinese market. So when the time came to go public this summer, markets had every reason to cheer.

Just sixteen days later, things look a lot different. Here’s what Didi’s stock has done:

Investors are down 15% in just two weeks, a disappointing debut. Meanwhile, Didi’s offices are flooded with Chinese state security agents:

China sent regulators including state security and police officials to Didi Global Inc.’s ride-hailing business on Friday as part of a cybersecurity investigation, the latest development in a regulatory saga that has gripped China’s tech industry.

Regulators from government units including the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport and Ministry of Natural Resources will be stationed at Didi starting Friday for the investigation, the cyberspace administration said in an online statement.

Potential outcomes include financial penalties, suspensions of business licenses and criminal charges.

Imagine if, shortly after its IPO, FBI and CIA agents raided Uber headquarters. This is exactly what’s happening to Didi.

Didi may not have adequately disclosed the concerns the Chinese government had about its security practices. That, and substantial investor losses, set the stage for a tsunami of shareholder lawsuits. Indeed, a class action suit has already been filed against Didi.

I see Didi being increasingly distracted by heavy pressure from the authoritarian Chinese government along with cascading lawsuits in the US. Even if the company survives, they’re distracted and ripe for disruption.

There is no evidence Didi has actually done anything improper with user data. But the Chinese government doesn’t like any information passing outside its borders, and companies are required to make disclosures to IPO in the US, so Didi is now under fire from a powerful and dictatorial government.

Another company had its IPO on the same day as Didi: SentinelOne, a California-based cybersecurity startup. Here’s how they’ve done since:

Up 4% with no regulatory problems: a situation Didi can only dream of.

If one Chinese company after another comes under the Communist thumb, and investors suffer as a result, why wouldn’t the venture funding go to the SentinelOnes rather than the Didis? Even in today’s hot market, there are always more startups than there is funding. Chinese companies, with their unique regulatory risks, are likely to be the last in line.

China has generated amazing innovation, but those days may be coming to an end.

Have a good weekend everyone!

More on tech:

HOW CHINA’S TECH INDUSTRY DIES

CHINA IS KILLING ITS TECH INDUSTRY

INSIDE A STARTUP ACCELERATOR DEMO DAY

Photo: “crushed can” by subsetsum is licensed under CC BY-NC-ND 2.0

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Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

How China’s Tech Industry Dies

The Chinese Communist Party has launched a severe crackdown on the technology industry:

  • Didi Chuxing, the Chinese equivalent of Uber, had its app removed from all Chinese app stores shortly after its US IPO
  • ByteDance, parent company of TikTok, shelved its IPO plans under regulatory pressure. Its CEO has resigned.
  • Over 30 tech companies have been hauled in for meetings with regulators
  • Ant Group, a financial company founded by Jack Ma that would’ve been among the largest IPOs in history, had its IPO in China cancelled after Ma criticized authorities

This crackdown makes it nearly impossible for Chinese companies to list their shares in the US, removing one of the main ways that venture capitalists cash out. This will cause venture firms to shy away from investing in Chinese companies.

Why does this matter? Let’s take a look at how venture funding works:

1) Company makes product
2) Company pitches investors
3) Investors give company money
4) Company uses money to hire engineers and make a better product, and…
5) Acquire users through ads and/or building their sales team. Next…
6) With more users and revenue, company comes back to VC’s to raise more money at a higher valuation. Then, they do more of 4-5
7) After repeated rounds of VC funding, the company either gets acquired or goes public. VCs cash out.

But Chinese companies cannot go public in the US for the forseeable future, and even a listing in China may not be possible, as Ant Group proved. And if the Chinese authorities think a US listing brings security risks, surely the acquisition of a Chinese tech firm by a US company would be even riskier and thus also off limits.

What does that leave in terms of exits? Acquisition by a Chinese tech company, which means a lot fewer and smaller potential acquirers. The only other option is an IPO in China, providing the company doesn’t offend anyone. But the Chinese stock market is just 1/4th the size of the US one, so the payoff may be much smaller.

No exit means no investment. For VC firms, the exit is the entire point!

Unlike in China, firms in the US and elsewhere will be able to choose whatever exit is the most lucrative. That means they’ll be able to raise venture capital much more easily. That money will let them hire the best engineers, build the best products, and acquire tons of customers, leaving Chinese firms in the dust.

A couple of years ago, I thought the Chinese technology industry might overtake the US. I don’t think that anymore. With the government’s hand ever heavier, I see Chinese technology falling further and further behind.

The Chinese people have proven they have the skills to compete. But will their government let them?

More on tech:

CHINA IS KILLING ITS TECH INDUSTRY

WHY I JUST INVESTED IN GAUGE, THE BEST WAY TO SELL YOUR CAR

WHY I JUST INVESTED IN CRAFTER, MAKER OF THE MOST BEAUTIFUL ARTS AND CRAFTS KITS IN THE WORLD

Photo: “Vice President Xi Jinping” by nznationalparty is licensed under CC BY-NC-ND 2.0

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Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Why Indian Tech Is Exploding

The Indian tech industry is growing at an incredible pace:

Indian startups have raised a record $10.46 billion in the first half of 2021, up from $4 billion during the same period last year

Salaries are also increasing rapidly, from an average of $40,000 to $70,000, and even $150,000 for some top engineers.

Why is Indian tech growing so fast? I think several changes in the industry in recent years are weighing in its favor:

  • Major investors went remote due to COVID, and have largely stayed that way even as the pandemic recedes in the US. This means they can meet an Indian entrepreneur just as easily as one across the street in San Francisco. This democratization is great for the entire industry.
  • The venture industry as a whole is on fire, with both exits and valuations in the US reaching staggering levels. This gives venture firms more incentive to look outside the US for better deals, and more cash with which to do so.
  • It’s easier to incorporate in the US than ever. I recently invested in a startup that lets companies incorporate, issue stock options, and handle compliance cheaper and easier than ever before. Many of their customers are outside the US, but incorporate here to make fundraising from American investors easy. (More on this awesome company soon!)
  • India is stacked with tech talent. Anyone who has worked at a software company in the US can tell you that Indian-Americans are a huge part of the industry, and they have incredible skills.
  • China is killing its tech industry. Heavy-handed regulation, massive fines, and even disappearances of tech entrepreneurs is having a chilling effect, and the number of Chinese startups breaking out is way down. India competes with China for venture funds, and right now, it’s looking like the better bet.

New regulations that may require companies to expose users and break encryption are the biggest risk I see on the horizon for Indian tech. But with a deep talent pool and ample funding, India’s is a startup scene to watch.

सौभाग्य!

More on technology:

INDIA IS SOAKING UP VENTURE CAPITAL LIKE A SPONGE

CHINA IS KILLING ITS TECH INDUSTRY

7 COMPANIES HAD 3 MINUTES EACH TO PITCH US. THIS IS WHAT HAPPENED.

Photo: “India – Enroute Tso Moriri, Ladakh” by sandeepachetan.com is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

India Is Soaking Up Venture Capital Like a Sponge

It’s not just about the Bay Area anymore. Indian startups have raised venture funding at a record pace this year, on track to double from 2020:

Startups raised total investments of $7.8 billion in the first four months of this calendar year, which is almost 70% of the overall corpus of $12.1 billion raised in entire 2020 and more than 50% of $14.2 billion raised in 2019, data from US-based research firm PitchBook shows.

More here.

The average deal size is also near record highs, at $25 million. The most valuable venture-backed startup in India is Paytm, a payments and e-commerce company, at $16.7 billion.

India has seen 13 companies reach unicorn status this year ($1 billion valuation and up), an impressive figure. The US remains far and away the leader, with 288 total unicorns as of last month. China has 133, and India is third at 32.

As a US-based investor, I see a lot of companies pitch, but not those from India. The American and Indian VC markets don’t seem well connected. I’m not sure how to fix that, but I’m eager to have access to this big crop of quality companies. The most active VC firms in India are a mix of American and Indian organizations. With numerous people from India staffing (and starting) US tech companies, I hope to see more connections between our markets in the future!

Dig into these posts for more on startups and venture capital:

Photo: “Agra – Taj Mahal” by micbaun is licensed under CC BY-NC 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Will A Massive Uprising in North Korea Mean the End of Kim Jong-un?

North Korean defector and Youtuber Yeonmi Park is reporting a massive uprising in Musan, North Korea. The uprising began when police cracked down on a market selling Chinese products, which is illegal in North Korea despite them being the only goods available.

Farmers took their farm implements and attacked the police. The backdrop for this is an increasingly hungry population with little to lose. Indeed, the situation is so dire that even Russian diplomats are fleeing the country by railroad handcart, appalled at the lack of basic food and goods.

I haven’t been able to find independent corroboration of this uprising, and Park is unclear on what her sources are, but I assume she is still in contact with people inside North Korea.

Her discussion of the uprising begins here.

For more on breaking news, check out these posts:

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Photo: “Kim Jong-un visiting Berlin.” by driver Photographer is licensed under CC BY-SA 2.0

Wallstreetbets’ Next Stop: Asia

Stock mania has gripped the US throughout the year. And now it’s spreading to Asia, where trading volumes are rising far faster than even in the US:

The value of stock trades matched on exchanges, in what is known as electronic order-book trading, gives a sense of the trend. Such trading on the Shanghai and Hong Kong exchanges more than doubled in January from a year earlier, to $1.37 trillion and $517 billion respectively, World Federation of Exchanges data shows. In South Korea, it more than tripled to $709 billion.

For comparison, similar trading for Nasdaq Inc. in the U.S. stood at $2.2 trillion, up 54% from a year earlier, while for Germany’s Deutsche Boerse AG and the London Stock Exchange Group PLC the equivalent figures were $178 billion and $148 billion.

I would expect to see higher volatility in some Asian stocks given this trend. This would mirror the increase in volatility in the US this year that we saw during big run-ups in meme stocks in late January and late February, as seen in the VIX index:

For more on Wallstreetbets, check out these posts:

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Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

This Video Will Make You Smile

Last night, my wife and I watched the newest episode of the adorable Japanese video series Pui Pui Molcar. I’ve mentioned this series before here, and this week’s video was their best yet! The video is below. If you’re stressed, take a couple minutes and enjoy!

Pui Pui Molcar, Episode #5

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Is China Using Its COVID Vaccines to Control Other Countries?

I just read a disturbing report from The Economic Times (essentially the Wall Street Journal of India). It says that China has offered its COVID vaccines to countries in Southeast Asia, but only if they support China in the WHO. There is a similar report from Nikkei Asia (basically the WSJ of Japan). Some Southeast Asian countries are buying vaccines from AstraZeneca and Pfizer instead.

With COVID deaths worldwide exceeding 10,000 per day, I find any attempt to play politics with these vaccines despicable. Anecdotally, I see increasing anger toward the Chinese government (which we must be careful to distinguish from the Chinese people). I recently happened upon a large vehicle protest by Falun Gong against the Chinese government at a rest stop in northern New Jersey.

What do you guys think of this information? Please leave a comment and let me know. I’m curious to hear others’ opinions.