1
00:00:02,480 --> 00:00:19,240
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to

2
00:00:19,280 --> 00:00:21,880
Speaker 1: another episode of the Odd Lots Podcast.

3
00:00:21,960 --> 00:00:25,360
Speaker 2: I'm Jill Wasisenthal and I'm Tracy Halloway Terracy.

4
00:00:25,480 --> 00:00:28,240
Speaker 1: I don't know this for sure, but I kind of

5
00:00:28,280 --> 00:00:31,640
Speaker 1: have this feeling that there's a bit of a fantasy,

6
00:00:32,120 --> 00:00:35,800
Speaker 1: perhaps on the part of Americans or the administration or

7
00:00:35,800 --> 00:00:39,680
Speaker 1: so forth, that in this trade war that non China

8
00:00:39,720 --> 00:00:42,920
Speaker 1: Asian countries they could be our partner, they could be

9
00:00:42,960 --> 00:00:45,560
Speaker 1: our big trading partner, and that somehow China could be

10
00:00:45,640 --> 00:00:46,560
Speaker 1: isolated from them.

11
00:00:47,120 --> 00:00:47,640
Speaker 3: Maybe.

12
00:00:47,760 --> 00:00:49,520
Speaker 2: I mean, I know there's a lot of concern about

13
00:00:49,600 --> 00:00:53,239
Speaker 2: Chinese goods basically flowing over the border in two places

14
00:00:53,240 --> 00:00:55,200
Speaker 2: like Vietnam, So I think it's a little bit more

15
00:00:55,280 --> 00:00:58,440
Speaker 2: nuanced than that. You know, one thing I find really funny,

16
00:00:59,280 --> 00:01:02,040
Speaker 2: and my nition of fun might differ to a lot

17
00:01:02,040 --> 00:01:02,840
Speaker 2: of other people's.

18
00:01:02,880 --> 00:01:03,560
Speaker 4: But you know, if you.

19
00:01:03,480 --> 00:01:06,760
Speaker 2: Look at the real exchange rate, Yeah, so currency adjusted

20
00:01:06,920 --> 00:01:11,119
Speaker 2: for inflation and stuff like that, the real effective exchange

21
00:01:11,200 --> 00:01:16,640
Speaker 2: rate for the dollar is up like twenty percent since January,

22
00:01:16,840 --> 00:01:19,600
Speaker 2: and the real effective rate for the UN, the Chinese

23
00:01:19,720 --> 00:01:23,600
Speaker 2: UN is down fourteen percent. So if you're trying to

24
00:01:23,720 --> 00:01:27,960
Speaker 2: like make your own goods competitive. Oh, American goods competitive.

25
00:01:28,440 --> 00:01:30,840
Speaker 2: It feels like we're heading in the opposite direction.

26
00:01:31,280 --> 00:01:32,639
Speaker 5: Wait, isn't that really true?

27
00:01:32,720 --> 00:01:36,640
Speaker 1: They even with the massive nominal decline in the US dollar,

28
00:01:36,680 --> 00:01:39,280
Speaker 1: gets all these currencies that on a real basis.

29
00:01:39,240 --> 00:01:41,560
Speaker 2: According to Bank of America.

30
00:01:41,680 --> 00:01:44,480
Speaker 1: Huh, that's pretty crazy. I would not have I certainly

31
00:01:44,480 --> 00:01:47,440
Speaker 1: would not have guessed that. And also this sort of

32
00:01:47,440 --> 00:01:49,560
Speaker 1: gets back to the point that, like with the tariffs

33
00:01:49,600 --> 00:01:52,600
Speaker 1: and with the trade war, I still don't know what

34
00:01:52,640 --> 00:01:55,040
Speaker 1: the goal is and it changes a lot. I don't

35
00:01:55,080 --> 00:01:57,440
Speaker 1: know the degree to which any of it was successful.

36
00:01:57,800 --> 00:02:00,840
Speaker 1: But under the Biden administration I had some sense of, Okay,

37
00:02:01,240 --> 00:02:04,440
Speaker 1: we had this specific goal with trade policy and other

38
00:02:04,480 --> 00:02:08,760
Speaker 1: tech transfer policies to be at or near or ahead

39
00:02:09,200 --> 00:02:12,079
Speaker 1: of the frontier of cutting edge in a certain key areas.

40
00:02:12,320 --> 00:02:15,200
Speaker 1: And when it comes to trade policy under this administration,

41
00:02:15,880 --> 00:02:17,119
Speaker 1: it strikes me as all over the map.

42
00:02:17,480 --> 00:02:17,799
Speaker 3: Yeah.

43
00:02:17,840 --> 00:02:21,000
Speaker 2: So there's the question obviously of whether the US needs

44
00:02:21,040 --> 00:02:24,960
Speaker 2: to be manufacturing things like toys in America, whether people

45
00:02:25,000 --> 00:02:28,800
Speaker 2: would be interested in taking those manufacturing jobs. And then, finally,

46
00:02:28,840 --> 00:02:32,360
Speaker 2: as you pointed out, the goals are so confusing because

47
00:02:32,360 --> 00:02:34,600
Speaker 2: on the one hand, it seems like, all right, it's

48
00:02:34,639 --> 00:02:37,359
Speaker 2: about bringing manufacturing back to the States. But on the

49
00:02:37,400 --> 00:02:40,120
Speaker 2: other hand, the Trump administration has said that it's a

50
00:02:40,120 --> 00:02:42,960
Speaker 2: way of raising revenue. Yeah, as well, And then you

51
00:02:43,000 --> 00:02:45,520
Speaker 2: have Trump saying I'm going to strike all these deals,

52
00:02:45,560 --> 00:02:48,840
Speaker 2: so deals are seen as a win for him as well.

53
00:02:49,040 --> 00:02:51,720
Speaker 2: But then if he needs to raise revenue, is he

54
00:02:51,840 --> 00:02:53,880
Speaker 2: actually going to strike deals totally?

55
00:02:53,919 --> 00:02:56,960
Speaker 1: Well, anyway, there's a million questions and we will have

56
00:02:57,880 --> 00:03:01,000
Speaker 1: hundreds of more episodes in our life time probably that

57
00:03:01,120 --> 00:03:03,160
Speaker 1: revolver on this topic. But I think it's a good

58
00:03:03,200 --> 00:03:05,960
Speaker 1: time to get some perspective from the perspective of the

59
00:03:06,000 --> 00:03:10,560
Speaker 1: Chinese business community, Chinese manufacturing and so forth, Chinese policy,

60
00:03:10,639 --> 00:03:12,720
Speaker 1: et cetera. And like how a lot of this is

61
00:03:12,760 --> 00:03:17,040
Speaker 1: being perceived from the Chinese perspective and the response to

62
00:03:17,440 --> 00:03:18,239
Speaker 1: the aggressive action.

63
00:03:18,440 --> 00:03:21,839
Speaker 2: Yeah, because US policy isn't happening in a vasha right,

64
00:03:22,000 --> 00:03:25,359
Speaker 2: like China is reacting to it, and you know, sometimes

65
00:03:25,480 --> 00:03:27,959
Speaker 2: China can move pretty fast, So we should talk about

66
00:03:28,000 --> 00:03:28,520
Speaker 2: it totally.

67
00:03:28,560 --> 00:03:30,360
Speaker 1: Well, I'm very excited to say I think we do

68
00:03:30,440 --> 00:03:32,400
Speaker 1: have the perfect guest. We are going to be speaking

69
00:03:32,400 --> 00:03:35,440
Speaker 1: with Cameron Johnson. He is a senior partner at title

70
00:03:35,480 --> 00:03:39,120
Speaker 1: Wave Solutions. He's based in Shanghai, but he's temporarily here

71
00:03:39,160 --> 00:03:42,080
Speaker 1: in the US visiting US. Someone who has his finger

72
00:03:42,200 --> 00:03:45,480
Speaker 1: on the pulse of Chinese business and manufacturing. Cameron, thank

73
00:03:45,480 --> 00:03:46,960
Speaker 1: you so much for coming on oud lots.

74
00:03:46,960 --> 00:03:48,360
Speaker 3: Thanks for having me guys. It's great to be here

75
00:03:48,400 --> 00:03:49,000
Speaker 3: in New York with you.

76
00:03:49,120 --> 00:03:50,280
Speaker 5: What Title Wave Solutions?

77
00:03:50,280 --> 00:03:52,680
Speaker 3: What do you do? So? It's a boutique firm focused

78
00:03:52,720 --> 00:03:56,040
Speaker 3: on supply chain, manufacturing advice and consulting. I think if

79
00:03:56,080 --> 00:03:57,960
Speaker 3: you're a business that needs a supply chain map and

80
00:03:57,960 --> 00:04:01,400
Speaker 3: a risk assessment, maybe you need some operationalfficiencies, maybe you

81
00:04:01,400 --> 00:04:03,480
Speaker 3: need to understand the policy roadmap for the next five

82
00:04:03,560 --> 00:04:05,600
Speaker 3: years that the various governments around the world are doing.

83
00:04:05,760 --> 00:04:07,320
Speaker 3: Those are some of the things that we focus on.

84
00:04:07,680 --> 00:04:10,720
Speaker 2: Given recent events. How busy have you actually been?

85
00:04:11,320 --> 00:04:14,000
Speaker 3: You know? Interestingly enough, in April business was quite slow

86
00:04:14,040 --> 00:04:16,120
Speaker 3: because it started off that we thought it was going

87
00:04:16,160 --> 00:04:17,840
Speaker 3: to be kind of a normal Q one was okay,

88
00:04:18,240 --> 00:04:20,720
Speaker 3: April was kind of starting off to be a normal year,

89
00:04:20,800 --> 00:04:23,880
Speaker 3: but then when the tariffs came in, everything stopped, and

90
00:04:23,880 --> 00:04:25,560
Speaker 3: so essentially in China what you had is yet a

91
00:04:25,600 --> 00:04:28,120
Speaker 3: couple of weeks, we're almost nothing moved in the supply chains.

92
00:04:28,560 --> 00:04:31,560
Speaker 3: Walmart came out eventually and said let's get some stuff moving,

93
00:04:31,560 --> 00:04:34,640
Speaker 3: and that kind of unclogged things. But April was really tough,

94
00:04:34,800 --> 00:04:36,960
Speaker 3: and then after Geneva's kind of the fire hose came

95
00:04:37,000 --> 00:04:39,680
Speaker 3: on and everything and everybody was how do we move

96
00:04:39,720 --> 00:04:41,760
Speaker 3: products around? How do we move production around? How do

97
00:04:41,839 --> 00:04:43,440
Speaker 3: we get talent in different areas that we need to

98
00:04:43,440 --> 00:04:46,120
Speaker 3: get it into. So it's actually been quite a rampage

99
00:04:46,160 --> 00:04:46,560
Speaker 3: since then.

100
00:04:46,920 --> 00:04:49,720
Speaker 1: So we're recording this on July sixteenth, and I have

101
00:04:49,800 --> 00:04:52,640
Speaker 1: to admit, I don't know what the tariff rate China

102
00:04:52,680 --> 00:04:55,599
Speaker 1: these days. I don't know where Thigs stand in terms

103
00:04:55,600 --> 00:04:57,719
Speaker 1: of what the latest deadline is. I've sort of lost

104
00:04:57,720 --> 00:04:59,719
Speaker 1: track of it all. Like many people in the market,

105
00:05:00,120 --> 00:05:02,599
Speaker 1: a lot of this has suddenly become noise. But I

106
00:05:02,640 --> 00:05:06,160
Speaker 1: can ask on July sixteenth, from what's been announced so far,

107
00:05:06,240 --> 00:05:10,480
Speaker 1: whether it's tariffs or various other actions, is the state

108
00:05:10,640 --> 00:05:15,400
Speaker 1: of business in China meaningfully different than it was prior

109
00:05:15,480 --> 00:05:16,200
Speaker 1: to April?

110
00:05:16,240 --> 00:05:16,600
Speaker 5: Second?

111
00:05:17,080 --> 00:05:20,839
Speaker 1: Or would you say mostly things are kind of the

112
00:05:20,880 --> 00:05:24,360
Speaker 1: same and adjusting to different tariff raids? Had there been

113
00:05:24,400 --> 00:05:26,520
Speaker 1: some major shift in flows or supply.

114
00:05:26,360 --> 00:05:28,520
Speaker 3: Chain, No there hasn't been that. What you do see though,

115
00:05:28,600 --> 00:05:30,720
Speaker 3: is a lot of moving around to pieces and parts,

116
00:05:30,760 --> 00:05:33,400
Speaker 3: you know, toys, furniture, these kinds of things. If they

117
00:05:33,440 --> 00:05:36,520
Speaker 3: were made in China before, they're definitely not now. But

118
00:05:36,520 --> 00:05:39,000
Speaker 3: that doesn't necessarily mean you're pulling your factories out. One

119
00:05:39,000 --> 00:05:40,320
Speaker 3: of the things we have seen is that a lot

120
00:05:40,360 --> 00:05:43,520
Speaker 3: of companies now are upskilling right. They e they're going

121
00:05:43,600 --> 00:05:46,360
Speaker 3: to put the higher margin on higher level products in China,

122
00:05:46,360 --> 00:05:48,320
Speaker 3: they'll put the lower products outside of China. Think of

123
00:05:48,400 --> 00:05:53,359
Speaker 3: Vietnam versus China can make any squ you want, known demand. Essentially,

124
00:05:53,800 --> 00:05:55,880
Speaker 3: Vietnam can't make that many. So when actually look at

125
00:05:55,920 --> 00:06:01,040
Speaker 3: the trade flows, Vietnam produces far fewer SKUs and ships

126
00:06:01,040 --> 00:06:03,120
Speaker 3: them to the States. China ships it to the rest

127
00:06:03,120 --> 00:06:03,919
Speaker 3: of the world.

128
00:06:04,279 --> 00:06:08,240
Speaker 2: Wait, talk more about shifting I guess lower quality production

129
00:06:08,480 --> 00:06:11,160
Speaker 2: into other areas, because again a lot of people when

130
00:06:11,160 --> 00:06:14,919
Speaker 2: they think of China will still think of basic goods manufacturing,

131
00:06:15,040 --> 00:06:17,919
Speaker 2: right when in fact, I think it's progressed quite a

132
00:06:17,920 --> 00:06:18,599
Speaker 2: lot since then.

133
00:06:18,960 --> 00:06:20,480
Speaker 3: It has, and often you know, when you look at

134
00:06:20,640 --> 00:06:22,599
Speaker 3: kind of the last ten years to a short history.

135
00:06:22,600 --> 00:06:24,279
Speaker 3: When the first trade war came out, a lot of

136
00:06:24,680 --> 00:06:26,880
Speaker 3: companies want to do China plus one plus two. Right,

137
00:06:26,920 --> 00:06:29,000
Speaker 3: you have a primary manufacturer in China, then you have

138
00:06:29,360 --> 00:06:31,440
Speaker 3: you know, a sister factory maybe in Southeast Asi or

139
00:06:31,520 --> 00:06:33,479
Speaker 3: Latin America, that kind of thing. What has happened now

140
00:06:33,680 --> 00:06:36,679
Speaker 3: is that those factories now outside of China are also

141
00:06:36,720 --> 00:06:40,200
Speaker 3: being upskilled, but they're also being more specialized. In China,

142
00:06:40,240 --> 00:06:42,880
Speaker 3: you can still upscale because of the local ecosystems that

143
00:06:42,960 --> 00:06:45,200
Speaker 3: offer you far more advantage than anywhere else in the world.

144
00:06:45,200 --> 00:06:48,200
Speaker 3: Particularly for certain products. You'll still keep that and eat

145
00:06:48,200 --> 00:06:51,159
Speaker 3: the margin within the tariffs, but in other places it

146
00:06:51,200 --> 00:06:53,160
Speaker 3: gives you more flexibility. So now if you're in Vietnam,

147
00:06:53,160 --> 00:06:55,840
Speaker 3: for example, sure you might have a twenty percent tariff

148
00:06:55,880 --> 00:06:58,560
Speaker 3: from the States, but when you compare with China, you're

149
00:06:58,560 --> 00:07:01,880
Speaker 3: still getting that margin and you'll be okay. The reality is,

150
00:07:01,920 --> 00:07:03,800
Speaker 3: when you actually look at what's happening overall in the

151
00:07:03,839 --> 00:07:07,760
Speaker 3: tariff schedules, it's a mess. Nobody knows what's going on,

152
00:07:08,080 --> 00:07:10,320
Speaker 3: and in fact, we're hearing now that some companies actually

153
00:07:10,440 --> 00:07:14,400
Speaker 3: are reshoring manufacturing back to China because when you actually

154
00:07:14,400 --> 00:07:17,800
Speaker 3: look at how the tariffs are working, twenty percent then

155
00:07:17,880 --> 00:07:23,080
Speaker 3: supposedly forty percent on the transhipment at twenty percent, certain

156
00:07:23,120 --> 00:07:25,320
Speaker 3: goods are more competitive to maybe made in China, even

157
00:07:25,400 --> 00:07:28,720
Speaker 3: with eating the tariffs. And essentially it would go something like, Joe,

158
00:07:28,760 --> 00:07:30,760
Speaker 3: you're making a certain type of cup. Maybe it's a

159
00:07:30,840 --> 00:07:32,680
Speaker 3: Christmas branded cup, right, so you need a little bit

160
00:07:32,680 --> 00:07:37,960
Speaker 3: more specialized machinery, people talent. Okay, it's fifty percent from China,

161
00:07:38,000 --> 00:07:40,280
Speaker 3: twenty percent from Vietnam. It's difficult maybe to get in

162
00:07:40,360 --> 00:07:43,120
Speaker 3: Vietnam because they're not as specialized. So here's Joe. You

163
00:07:43,160 --> 00:07:45,920
Speaker 3: as the manufacturer. You're going to go to the packaging

164
00:07:45,960 --> 00:07:48,120
Speaker 3: supplier who gives you your cardboard and plastic. You're going

165
00:07:48,200 --> 00:07:50,240
Speaker 3: to go to your raw material supplier. You're going to

166
00:07:50,280 --> 00:07:51,480
Speaker 3: go to this, to that, and you're all going to

167
00:07:51,480 --> 00:07:53,360
Speaker 3: ask them to take two or three points off their

168
00:07:54,000 --> 00:07:56,600
Speaker 3: sales to you, and all of a sudden that fifty

169
00:07:56,600 --> 00:07:59,679
Speaker 3: five percent or fifty percent or automatically becomes twenty percent.

170
00:07:59,720 --> 00:08:02,280
Speaker 3: So that's how a company is in the granular or

171
00:08:02,320 --> 00:08:04,080
Speaker 3: starting to work around some of these challenges.

172
00:08:04,600 --> 00:08:06,720
Speaker 1: If I did have a Christmas cup that I wanted

173
00:08:06,760 --> 00:08:11,880
Speaker 1: to design right now, how quickly could I have a

174
00:08:12,160 --> 00:08:14,160
Speaker 1: manufactured product that then could ship?

175
00:08:14,200 --> 00:08:16,760
Speaker 2: Now do you know there's a whole like Christmas town

176
00:08:17,040 --> 00:08:20,000
Speaker 2: in China that specializes in Christmas class familiar.

177
00:08:20,280 --> 00:08:22,040
Speaker 5: Could I have a cup by this Christmas season?

178
00:08:22,320 --> 00:08:25,200
Speaker 3: You could have any cup of any design, of any material,

179
00:08:26,040 --> 00:08:29,880
Speaker 3: non demand. How quickly what depends on the design. It

180
00:08:29,920 --> 00:08:32,040
Speaker 3: depends how many parts of the process you need. If

181
00:08:32,120 --> 00:08:33,920
Speaker 3: you already have the design, you have the cat and everything,

182
00:08:33,960 --> 00:08:37,240
Speaker 3: you're looking at probably two months, maybe less. If it's

183
00:08:37,240 --> 00:08:39,320
Speaker 3: at scale. For example, you want to shew of every

184
00:08:39,640 --> 00:08:41,679
Speaker 3: Starbucks in the country, then of course would be much longer.

185
00:08:41,679 --> 00:08:43,679
Speaker 3: But if you're looking just for specialized runs. Maybe you're

186
00:08:43,800 --> 00:08:46,920
Speaker 3: a company, right you want to Christmas giveaways for your staff.

187
00:08:46,960 --> 00:08:49,120
Speaker 3: Maybe it's a couple hundred, couple of thousand that you

188
00:08:49,160 --> 00:08:50,240
Speaker 3: can do very quickly.

189
00:08:50,679 --> 00:08:52,920
Speaker 2: This is something that actually came up in a previous

190
00:08:52,960 --> 00:08:56,439
Speaker 2: episode with Sarah Lafleur where we were talking about apparel,

191
00:08:56,559 --> 00:09:00,560
Speaker 2: but I think it applies more broadly. But she size

192
00:09:00,559 --> 00:09:05,679
Speaker 2: the importance of basically just China's expertise in doing this

193
00:09:05,800 --> 00:09:09,240
Speaker 2: and the supply network that it's actually built up. So

194
00:09:09,640 --> 00:09:12,280
Speaker 2: if you are a foreign investor or a US company

195
00:09:12,360 --> 00:09:15,720
Speaker 2: or whatever and you go to China, like immediately people

196
00:09:15,840 --> 00:09:17,800
Speaker 2: kind of know what to do now if you're asking

197
00:09:17,840 --> 00:09:22,480
Speaker 2: for a factory, So I'm curious, is that replicable in

198
00:09:22,640 --> 00:09:25,400
Speaker 2: a reasonable amount of time by places like Vietnam?

199
00:09:26,000 --> 00:09:27,920
Speaker 3: It is, and you are you are seeing it being

200
00:09:27,960 --> 00:09:32,439
Speaker 3: replicated overall, I argue that supply chains aren't relocating, but

201
00:09:32,480 --> 00:09:35,840
Speaker 3: they're expanding and replicating. So essentially, again, if you're a

202
00:09:35,840 --> 00:09:37,959
Speaker 3: cut producer in China, now you're going to make in

203
00:09:38,040 --> 00:09:40,959
Speaker 3: Vietnam or Thailand. So you have this now mini ecosystem.

204
00:09:40,960 --> 00:09:42,640
Speaker 3: You go to your different suppliers in China and say, hey,

205
00:09:42,679 --> 00:09:45,040
Speaker 3: I need this product next to me and Hochi man,

206
00:09:45,160 --> 00:09:46,400
Speaker 3: you need to figure out how to get me that.

207
00:09:46,440 --> 00:09:48,840
Speaker 3: Oh this packaging guy, okay, you have a sister company

208
00:09:49,200 --> 00:09:51,160
Speaker 3: maybe in Hanoi. Okay, now I need to figure out

209
00:09:51,160 --> 00:09:53,720
Speaker 3: how to access that. So you're seeing the replication of

210
00:09:53,800 --> 00:09:56,760
Speaker 3: supply chains around the region. For example, I look at

211
00:09:56,760 --> 00:09:59,840
Speaker 3: supply chain ecosystems and five components. The first is advanced

212
00:09:59,840 --> 00:10:02,720
Speaker 3: and structure. It's not just ports and railroads, it's also

213
00:10:02,760 --> 00:10:06,080
Speaker 3: things like five G the electrical grid sewers. Second is

214
00:10:06,160 --> 00:10:08,640
Speaker 3: talent and educational apparatus where are you going to get

215
00:10:08,640 --> 00:10:11,920
Speaker 3: the workers from? But also as things evolved, for example, AI,

216
00:10:12,000 --> 00:10:13,440
Speaker 3: how are you going to train them up into these

217
00:10:13,440 --> 00:10:15,600
Speaker 3: new areas. The third is government support, which is kind

218
00:10:15,600 --> 00:10:19,040
Speaker 3: of obvious. The fourth is raw material access and or

219
00:10:19,080 --> 00:10:20,839
Speaker 3: the ability to process it. We actually look at what

220
00:10:20,960 --> 00:10:23,720
Speaker 3: China does. It doesn't have a lot of raw materials,

221
00:10:23,720 --> 00:10:26,600
Speaker 3: but it has expertise in the processing. And the fifth

222
00:10:26,600 --> 00:10:30,280
Speaker 3: is technology. Now China has this in most industries across

223
00:10:30,320 --> 00:10:32,480
Speaker 3: the board. The US has a for example, an aerospace.

224
00:10:32,600 --> 00:10:34,920
Speaker 3: Europe does too, but just in terms of So that's

225
00:10:34,920 --> 00:10:37,079
Speaker 3: how I evaluate a supply chain ecosystem. So when I

226
00:10:37,120 --> 00:10:40,120
Speaker 3: work with customers or even policy makers and they say, well,

227
00:10:40,120 --> 00:10:42,440
Speaker 3: what about Vietnam, I look at it in context of

228
00:10:42,440 --> 00:10:45,199
Speaker 3: those five key areas because that will tell me where

229
00:10:45,240 --> 00:10:47,200
Speaker 3: the gaps are and where we need to actually improve.

230
00:10:47,800 --> 00:10:49,080
Speaker 5: Talk about that process.

231
00:10:49,120 --> 00:10:53,560
Speaker 1: I mean, if Vietnam had the talent to be China,

232
00:10:53,600 --> 00:10:55,360
Speaker 1: it would be China, or would be it at that scale.

233
00:10:55,400 --> 00:10:57,559
Speaker 1: So obviously there's a gap. But this is something that's

234
00:10:57,679 --> 00:10:59,840
Speaker 1: come up before. What does all Right, let's say there's

235
00:10:59,880 --> 00:11:02,640
Speaker 1: a Chinese company that makes X or Y. Let's say

236
00:11:02,679 --> 00:11:06,160
Speaker 1: they're making sporting goods or something like that. They want

237
00:11:06,200 --> 00:11:09,760
Speaker 1: to have more production of the low and in Vietnam,

238
00:11:09,800 --> 00:11:13,600
Speaker 1: But presumably there is still some deficiency of some of

239
00:11:13,640 --> 00:11:17,560
Speaker 1: these five categories, including infrastructure, including access to raw materials.

240
00:11:17,880 --> 00:11:22,640
Speaker 1: What is their process for making it such that, given

241
00:11:22,960 --> 00:11:26,560
Speaker 1: the gap between China and Vietnam, that debt manufacturing in

242
00:11:26,640 --> 00:11:28,360
Speaker 1: Vietnam does become economical.

243
00:11:29,640 --> 00:11:33,160
Speaker 3: Well, part of it is again just the lower SKU level, right.

244
00:11:33,200 --> 00:11:35,000
Speaker 3: So if you look at how hockey sticks, for example,

245
00:11:35,000 --> 00:11:37,400
Speaker 3: are producers five levels of hockey stick the best to

246
00:11:37,480 --> 00:11:39,440
Speaker 3: the worst, and you have five different levels, and so

247
00:11:39,480 --> 00:11:41,040
Speaker 3: in that regard, you'll send a couple you know, the

248
00:11:41,240 --> 00:11:45,199
Speaker 3: probably level five and four, maybe four and three to

249
00:11:45,360 --> 00:11:45,920
Speaker 3: Vietnam to.

250
00:11:45,840 --> 00:11:47,800
Speaker 5: Be presund Like you've had a hockey stick, fine.

251
00:11:48,440 --> 00:11:53,120
Speaker 3: I've had multiple clients, but you know, ultimately you look

252
00:11:53,160 --> 00:11:55,680
Speaker 3: at where you can get the largest amount of volume,

253
00:11:56,400 --> 00:11:58,400
Speaker 3: not just at the cheap, not at the cheapest prices,

254
00:11:58,440 --> 00:12:01,400
Speaker 3: but at the least amount of problems. If you're selling

255
00:12:02,080 --> 00:12:04,800
Speaker 3: let's say a level five hockey stick where you know

256
00:12:04,840 --> 00:12:08,319
Speaker 3: it's not NHL grade, the cost is going to be lower,

257
00:12:08,320 --> 00:12:10,640
Speaker 3: and the tariffs actually hit more and bite more. If

258
00:12:10,679 --> 00:12:13,199
Speaker 3: you're making NHL grade hockey sticks, which they do make

259
00:12:13,200 --> 00:12:15,559
Speaker 3: in China, it doesn't really matter what the tariff is

260
00:12:15,559 --> 00:12:17,839
Speaker 3: at that point, because they are expertise levels. You have

261
00:12:17,920 --> 00:12:20,880
Speaker 3: to have that quality regardless. And so the other thing, Joe,

262
00:12:20,880 --> 00:12:23,440
Speaker 3: to your point about China versus Vietnam and pretty much

263
00:12:23,480 --> 00:12:25,280
Speaker 3: China versus the rest of the world. China has about

264
00:12:25,280 --> 00:12:29,800
Speaker 3: two hundred and twenty million workers in manufacturing, about twenty

265
00:12:29,840 --> 00:12:32,559
Speaker 3: eight percent of its population. Vietnam has fifteen million, about

266
00:12:32,559 --> 00:12:35,840
Speaker 3: thirty and so the scale is a quality all into itself,

267
00:12:35,960 --> 00:12:38,400
Speaker 3: and people just really don't understand that the difference is

268
00:12:38,440 --> 00:12:42,040
Speaker 3: not just China moving forward in technology and in different

269
00:12:42,080 --> 00:12:43,640
Speaker 3: ways of doing business. All of that is true, but

270
00:12:43,640 --> 00:12:46,400
Speaker 3: it really is just the massive scale of ability of

271
00:12:46,400 --> 00:12:48,920
Speaker 3: talent where you can call and say I need a

272
00:12:49,000 --> 00:12:51,560
Speaker 3: Christmas cup in three months, and it doesn't matter what

273
00:12:51,640 --> 00:12:54,240
Speaker 3: the size, shape, or material is. They'll figure out how

274
00:12:54,280 --> 00:12:55,920
Speaker 3: to do it, and nobody else in the world.

275
00:12:55,920 --> 00:13:13,160
Speaker 4: You're doing it, Tracy.

276
00:13:13,240 --> 00:13:15,960
Speaker 1: It just clicked to me that there's an interesting lesson

277
00:13:16,000 --> 00:13:19,079
Speaker 1: here that relates to the episode we did on snack

278
00:13:19,120 --> 00:13:22,640
Speaker 1: food warehouses in the US, which is that with technological

279
00:13:22,679 --> 00:13:25,840
Speaker 1: advance comes the ability to have more skews. So as

280
00:13:26,280 --> 00:13:29,679
Speaker 1: warehouses in the US got more roboticized, the sheer variety

281
00:13:29,840 --> 00:13:32,600
Speaker 1: that they could hold any given time made sense because

282
00:13:32,600 --> 00:13:34,800
Speaker 1: you can never robots go behind and pick them out

283
00:13:34,840 --> 00:13:37,280
Speaker 1: and so forth. And so it's interesting to hear like

284
00:13:37,360 --> 00:13:42,199
Speaker 1: about like skew diversity as being this major sort of

285
00:13:42,280 --> 00:13:44,199
Speaker 1: gap between China versus the rest of the world.

286
00:13:44,400 --> 00:13:48,080
Speaker 2: I'm smiling because you just reminded me of Peetos from

287
00:13:48,080 --> 00:13:50,800
Speaker 2: that episode, the pee Cheetos.

288
00:13:50,920 --> 00:13:52,079
Speaker 5: Yeah, that's right, that's right.

289
00:13:52,320 --> 00:13:55,040
Speaker 2: Anyway, I better move on and stop laughing.

290
00:13:56,000 --> 00:13:56,320
Speaker 4: I will.

291
00:13:56,360 --> 00:13:57,719
Speaker 3: And we don't have those in China, so I don't

292
00:13:57,720 --> 00:13:59,040
Speaker 3: know what they are, Okay.

293
00:13:59,040 --> 00:14:01,840
Speaker 2: But on this note, how does labor costs actually fit

294
00:14:01,920 --> 00:14:04,920
Speaker 2: into this entire process? And can you maybe compare and

295
00:14:04,960 --> 00:14:06,720
Speaker 2: contrast Vietnam and China right now?

296
00:14:07,160 --> 00:14:09,920
Speaker 3: So labor costs really, again, it really depends on the industry.

297
00:14:09,920 --> 00:14:12,079
Speaker 3: For example, if you work in certain industries like composits,

298
00:14:12,120 --> 00:14:14,160
Speaker 3: your labor cost actually is a small component of the

299
00:14:14,240 --> 00:14:17,360
Speaker 3: overall cost. It really isn't the materials, right, maybe the

300
00:14:17,360 --> 00:14:20,440
Speaker 3: carbon or glass fibers, the resin systems, the machinery, so

301
00:14:20,720 --> 00:14:23,120
Speaker 3: it's not equivalent. What you have to look at really

302
00:14:23,160 --> 00:14:25,920
Speaker 3: is what's work or productivity and efficiency because at that

303
00:14:25,960 --> 00:14:30,000
Speaker 3: point the cost really doesn't matter as much, particularly with

304
00:14:30,160 --> 00:14:33,880
Speaker 3: tariffs right. The reason for tariffs ultimately, according to the

305
00:14:33,960 --> 00:14:35,960
Speaker 3: US is they want to reshore, but they also want

306
00:14:36,040 --> 00:14:39,480
Speaker 3: to deal with Chinese overcapacity or industrial policy. But the

307
00:14:39,520 --> 00:14:43,400
Speaker 3: reality is in Asia, labor across the board is not

308
00:14:43,640 --> 00:14:47,480
Speaker 3: as important as it is such as I have this ecosystem,

309
00:14:47,640 --> 00:14:52,160
Speaker 3: I have access to cheaper raw materials, I have plentiful electricity.

310
00:14:52,400 --> 00:14:54,440
Speaker 3: You know, one of the challenges in Asia overall is

311
00:14:54,520 --> 00:14:56,640
Speaker 3: just the stability of electrical grid, and it's trying to

312
00:14:56,680 --> 00:14:59,000
Speaker 3: continues to build out more and more of its own

313
00:14:59,040 --> 00:15:02,440
Speaker 3: electrical infrastructure. You're seeing more of this actually play. For example,

314
00:15:02,560 --> 00:15:04,280
Speaker 3: a certain amount of I think it's about twenty percent

315
00:15:04,280 --> 00:15:07,320
Speaker 3: of Vietnam's electricity ultimately comes from China, and so you're

316
00:15:07,320 --> 00:15:09,040
Speaker 3: seeing more and more of the spiller. So it's less

317
00:15:09,040 --> 00:15:11,800
Speaker 3: about what is the cost per worker, because for example,

318
00:15:11,840 --> 00:15:15,440
Speaker 3: in China, particularly with entry level white collar workers, ten

319
00:15:15,520 --> 00:15:17,960
Speaker 3: years ago, you might have twenty five to thirty thousand

320
00:15:18,080 --> 00:15:19,600
Speaker 3: R and B per month, which is roughly four to

321
00:15:19,680 --> 00:15:22,000
Speaker 3: five thousand dollars that would be maybe a first entry

322
00:15:22,040 --> 00:15:24,200
Speaker 3: level job. Now that level is half and part of

323
00:15:24,200 --> 00:15:27,120
Speaker 3: that is because the economy is challenged, there's more plentiful

324
00:15:27,280 --> 00:15:29,840
Speaker 3: graduates every year about ten million, and at the same

325
00:15:29,880 --> 00:15:32,280
Speaker 3: time businesses are just using them for different things than

326
00:15:32,280 --> 00:15:35,200
Speaker 3: they were in the past. So labor is not it's

327
00:15:35,240 --> 00:15:36,840
Speaker 3: a part of the key component, right, It's part of

328
00:15:36,840 --> 00:15:38,960
Speaker 3: that key five key areas. The talent, you definitely have

329
00:15:39,000 --> 00:15:40,560
Speaker 3: to look at it, but there's a lot of other

330
00:15:40,600 --> 00:15:41,680
Speaker 3: parts in the picture as well.

331
00:15:42,440 --> 00:15:48,080
Speaker 1: How do the governments of other Asian nations feel about

332
00:15:48,160 --> 00:15:51,000
Speaker 1: you know, there's obviously anxiety in the US about what

333
00:15:51,040 --> 00:15:53,800
Speaker 1: the rise of Chinese manufacturing, which is an age old

334
00:15:53,840 --> 00:15:56,960
Speaker 1: story means, you know, meant we had the China Shock

335
00:15:57,160 --> 00:16:00,800
Speaker 1: for American manufacturers, et cetera to the European ones.

336
00:16:01,440 --> 00:16:04,440
Speaker 5: Is there similar anxiety among Malaysia?

337
00:16:04,480 --> 00:16:06,200
Speaker 1: For example, I don't know if they still make the

338
00:16:06,200 --> 00:16:09,800
Speaker 1: Proton Saga the car like you know, these countries have

339
00:16:09,880 --> 00:16:12,880
Speaker 1: their own sort of longtime national champions and so forth.

340
00:16:13,000 --> 00:16:18,320
Speaker 1: Did they feel anxiety about the growing presence of Chinese power,

341
00:16:18,480 --> 00:16:20,920
Speaker 1: both as imports but also just setting up a shop

342
00:16:21,080 --> 00:16:21,720
Speaker 1: at home.

343
00:16:22,160 --> 00:16:24,360
Speaker 3: To some to go. There's always a hesitation, But the

344
00:16:24,400 --> 00:16:26,880
Speaker 3: reality is that the counterbalance to that, the United States

345
00:16:27,000 --> 00:16:29,080
Speaker 3: is not doing anything. Sure, So for example, one that

346
00:16:29,120 --> 00:16:30,720
Speaker 3: one of the things we've seen particular in the last

347
00:16:30,760 --> 00:16:33,400
Speaker 3: couple of months is when you talk about how is

348
00:16:33,520 --> 00:16:36,120
Speaker 3: China versus the US. For example, in Southeast Asia, Chinese

349
00:16:36,200 --> 00:16:38,960
Speaker 3: leaders are going all around Southeast Asia talking to them about, hey,

350
00:16:39,000 --> 00:16:41,400
Speaker 3: here's the market opportunities, here's what we're looking at. The

351
00:16:41,520 --> 00:16:43,480
Speaker 3: US is saying, come to DC and then we'll figure

352
00:16:43,480 --> 00:16:45,640
Speaker 3: out what we're going to do. They're very different and

353
00:16:45,760 --> 00:16:47,960
Speaker 3: there is a lot of hesitation. You know, for example China,

354
00:16:48,360 --> 00:16:50,840
Speaker 3: you know my experience. I went to Southeast Asia recently.

355
00:16:51,080 --> 00:16:54,720
Speaker 3: They're essentially discussing six key areas with these different countries.

356
00:16:54,760 --> 00:16:57,280
Speaker 3: The first is Chinese firms will continue to do fdi

357
00:16:57,880 --> 00:17:01,200
Speaker 3: or investments in your countries. American not American firms are

358
00:17:01,200 --> 00:17:03,520
Speaker 3: going to retrench to North America. Think of Apple as

359
00:17:03,520 --> 00:17:05,960
Speaker 3: a prime example. So that basically takes away a key

360
00:17:06,000 --> 00:17:09,399
Speaker 3: component of US diplomacy and also influence. Second is we

361
00:17:09,480 --> 00:17:12,680
Speaker 3: have legions of young educated workers. They're ready and willing

362
00:17:12,720 --> 00:17:14,480
Speaker 3: to go to other places. They want to work overseas,

363
00:17:14,520 --> 00:17:16,119
Speaker 3: they want to get that experience, maybe they have better

364
00:17:16,200 --> 00:17:19,280
Speaker 3: job opportunities. The third is we can share technology and

365
00:17:19,280 --> 00:17:22,080
Speaker 3: again with people. Look like there was an article yesterday

366
00:17:22,080 --> 00:17:25,919
Speaker 3: about how China is a restricting technology that's actually not

367
00:17:25,960 --> 00:17:29,200
Speaker 3: what's happening. If you want the technology of twenty twenty five,

368
00:17:29,280 --> 00:17:30,879
Speaker 3: you're probably not going to get it. But if you

369
00:17:30,920 --> 00:17:34,400
Speaker 3: want the technology of twenty twenty three, no problem, because

370
00:17:34,440 --> 00:17:36,199
Speaker 3: we're a couple generations ahead. So when you look at

371
00:17:36,200 --> 00:17:39,359
Speaker 3: what the discussions are in the region, all you need

372
00:17:39,520 --> 00:17:42,199
Speaker 3: is that because you're probably at a twenty twenty or

373
00:17:42,240 --> 00:17:44,920
Speaker 3: below in terms of technology, you need those couple extra

374
00:17:44,960 --> 00:17:48,440
Speaker 3: steps to actually fuel your growth. The fourth is there's

375
00:17:48,480 --> 00:17:50,720
Speaker 3: still a lot of commitment to do infrastructure in region,

376
00:17:50,760 --> 00:17:52,919
Speaker 3: but it's not going to be a bri A Belton

377
00:17:53,040 --> 00:17:54,520
Speaker 3: Road kind of thing, but it will be. Hey, you

378
00:17:54,560 --> 00:17:56,640
Speaker 3: need certain ports will work that will build those out.

379
00:17:56,640 --> 00:18:01,439
Speaker 3: You need again maybe electrical grids or railroads connected Kunming

380
00:18:01,560 --> 00:18:03,960
Speaker 3: now down to Singapore. Those are the things that you're

381
00:18:03,960 --> 00:18:05,360
Speaker 3: going to start to see more and more of because

382
00:18:05,400 --> 00:18:07,720
Speaker 3: again they fuel and countries are like listen, I have

383
00:18:07,800 --> 00:18:10,120
Speaker 3: to have economic growth. I have to be able to

384
00:18:10,440 --> 00:18:13,320
Speaker 3: continue to raise the standard beingium of my people. The

385
00:18:13,400 --> 00:18:16,399
Speaker 3: fifth is there's a lot of discussion and Foreign Minister

386
00:18:16,440 --> 00:18:19,560
Speaker 3: Wangi had a discussion recently with odd the Aussian countries

387
00:18:19,560 --> 00:18:23,000
Speaker 3: about doing more trade agreements, free trade agreements with Southeast

388
00:18:23,000 --> 00:18:25,600
Speaker 3: Asia and the sixth one. To your point, and this

389
00:18:25,640 --> 00:18:27,520
Speaker 3: is one in my most recent trip to Southeast Asia.

390
00:18:27,560 --> 00:18:28,920
Speaker 3: I had never heard this before, and I've been going

391
00:18:28,960 --> 00:18:31,720
Speaker 3: there since I was a kid. Essentially, there's an understanding

392
00:18:31,720 --> 00:18:34,760
Speaker 3: that there are local manufacturing or industries that are indigenous

393
00:18:34,800 --> 00:18:37,479
Speaker 3: to do these countries, and the Chinese are acknowledging that

394
00:18:37,520 --> 00:18:39,119
Speaker 3: we may not We're not interested in blowing those up

395
00:18:39,160 --> 00:18:42,119
Speaker 3: those that's my interpretation, but essentially that we're going to

396
00:18:42,119 --> 00:18:44,600
Speaker 3: be sensitive to local concerns. Now, to your point, does

397
00:18:44,600 --> 00:18:47,159
Speaker 3: that mean that happens in all cases? I don't know,

398
00:18:47,240 --> 00:18:49,320
Speaker 3: But the reality is is that there is an understanding

399
00:18:49,359 --> 00:18:52,639
Speaker 3: of there's an opportunity here because the US is what's drawing.

400
00:18:53,040 --> 00:18:55,000
Speaker 3: But at the same time, it's just not good business

401
00:18:55,000 --> 00:18:57,440
Speaker 3: to make people unhappy when we're doing business.

402
00:18:57,920 --> 00:19:02,280
Speaker 2: You mentioned going to Washington, and we opened this discussion

403
00:19:02,359 --> 00:19:04,879
Speaker 2: by talking about how well we don't really know what

404
00:19:05,000 --> 00:19:07,480
Speaker 2: the tariffs are, and I think it's difficult for anyone

405
00:19:07,480 --> 00:19:11,600
Speaker 2: who's trying to track them. Now, you mentioned that production

406
00:19:11,760 --> 00:19:15,320
Speaker 2: is already moving in response to this. Is there any

407
00:19:15,359 --> 00:19:18,800
Speaker 2: concern that, like in two months, Trump is just going

408
00:19:18,880 --> 00:19:21,159
Speaker 2: to reverse position and the tariffs are going to go

409
00:19:21,200 --> 00:19:25,399
Speaker 2: away or be altered, and that changes the economic calculation

410
00:19:26,000 --> 00:19:28,680
Speaker 2: for setting something up in say Vietnam.

411
00:19:29,960 --> 00:19:31,760
Speaker 3: I think there's just a lack of confidence overall of

412
00:19:31,800 --> 00:19:34,439
Speaker 3: the direction we're going, and there's no clarity whatsoever. And

413
00:19:34,480 --> 00:19:36,639
Speaker 3: you're right, this kind of back and forth. It is,

414
00:19:36,680 --> 00:19:38,639
Speaker 3: but it isn't. It is, but it isn't. Supply chains

415
00:19:38,680 --> 00:19:41,560
Speaker 3: take probably fifteen to twenty years to fully develop. You

416
00:19:41,600 --> 00:19:43,200
Speaker 3: may be able to build a factory in a couple

417
00:19:43,240 --> 00:19:45,200
Speaker 3: but that again, that doesn't mean you have the raw materials,

418
00:19:45,240 --> 00:19:47,359
Speaker 3: to people and the other key components that you need

419
00:19:47,400 --> 00:19:50,479
Speaker 3: to build out your business. And so yeah, it's not

420
00:19:50,520 --> 00:19:53,679
Speaker 3: only uncertain, but all these other countries are going. China's

421
00:19:53,720 --> 00:19:56,680
Speaker 3: not doing that to us. I'll give an example Bangladesh, right,

422
00:19:56,760 --> 00:19:59,800
Speaker 3: population larger than Russia. They have a zero percent tariff

423
00:19:59,800 --> 00:20:02,159
Speaker 3: to China. They have a thirty five percent to the US.

424
00:20:02,560 --> 00:20:04,240
Speaker 3: So which one do you think they're going to prefer more?

425
00:20:04,280 --> 00:20:05,920
Speaker 3: They're obviously going to do more business with China. And

426
00:20:05,960 --> 00:20:08,080
Speaker 3: ultimately this is the issue with the tariffs. If the

427
00:20:08,119 --> 00:20:11,480
Speaker 3: tariff was listen, this is the standard rate for country.

428
00:20:11,720 --> 00:20:13,960
Speaker 3: Of course, it fluctuates depending on market need and so on.

429
00:20:14,320 --> 00:20:16,400
Speaker 3: We want to have more market access into your own

430
00:20:16,400 --> 00:20:19,760
Speaker 3: countries for American products. There's a general understanding that that's

431
00:20:19,800 --> 00:20:23,320
Speaker 3: probably what could happen. May maybe not perfect in all cases,

432
00:20:23,720 --> 00:20:25,920
Speaker 3: but the reality is is that the way it currently is,

433
00:20:26,240 --> 00:20:29,440
Speaker 3: it basically puts the US in a horrible light. And

434
00:20:29,480 --> 00:20:32,040
Speaker 3: the people who we need the most are the ones

435
00:20:32,080 --> 00:20:34,439
Speaker 3: who are suffering the most. And how long do we

436
00:20:34,480 --> 00:20:36,879
Speaker 3: think that's really going to be able to last before

437
00:20:36,880 --> 00:20:39,119
Speaker 3: they're like, that's enough, We're going to go with the Chinese.

438
00:20:39,640 --> 00:20:42,360
Speaker 1: What is trying to import from Bangladesh? Because my impression

439
00:20:42,720 --> 00:20:45,480
Speaker 1: is that China just does not import that much period,

440
00:20:45,600 --> 00:20:48,000
Speaker 1: not just from the US, but is not a big

441
00:20:48,040 --> 00:20:50,920
Speaker 1: import of anything. Is in part because of how much

442
00:20:51,160 --> 00:20:53,960
Speaker 1: it's been able to build out its domestic capacity.

443
00:20:53,480 --> 00:20:56,320
Speaker 3: In a range of things scrap not all maybe yeah,

444
00:20:56,400 --> 00:20:59,240
Speaker 3: you know, clothes, process, raw materials, you know. And again

445
00:20:59,320 --> 00:21:02,639
Speaker 3: it's China expansion. One point zero was kind of what

446
00:21:02,680 --> 00:21:05,840
Speaker 3: we had up until twenty twenty, meaning in the country,

447
00:21:05,920 --> 00:21:08,639
Speaker 3: your world class at most everything you have. Now we're

448
00:21:08,640 --> 00:21:11,040
Speaker 3: seeing China two point oh, which is China for the world.

449
00:21:11,160 --> 00:21:14,439
Speaker 3: So it's less about Bangladesh selling to China. It's more

450
00:21:14,480 --> 00:21:16,920
Speaker 3: about as the Chinese supply chains and supply chains in

451
00:21:16,960 --> 00:21:22,359
Speaker 3: general continue to evolve, replicate, relocate now Bangladesh. Who wants

452
00:21:22,359 --> 00:21:25,080
Speaker 3: a piece of that supply chain puzzle, that's what they want.

453
00:21:25,160 --> 00:21:27,080
Speaker 3: And remember, one of the things that China is discussing

454
00:21:27,080 --> 00:21:29,959
Speaker 3: with aussion in Southeast Asia is market access for your

455
00:21:29,960 --> 00:21:32,879
Speaker 3: products back into China. So you could have Chinese manufacturers

456
00:21:32,880 --> 00:21:35,240
Speaker 3: who moved to Bangladesh because maybe it is cheaper or

457
00:21:35,240 --> 00:21:37,840
Speaker 3: they have better raw material access for India for cotton,

458
00:21:37,840 --> 00:21:39,760
Speaker 3: for example, and then they could produce and sell it

459
00:21:39,800 --> 00:21:41,480
Speaker 3: back into China. So there's a lot of things that

460
00:21:41,480 --> 00:21:43,600
Speaker 3: can actually happen across the board of supply chains that

461
00:21:43,640 --> 00:21:45,000
Speaker 3: we haven't even experienced yet.

462
00:21:45,240 --> 00:21:50,040
Speaker 2: Do you see anyone maybe shifting focus Chinese companies shifting

463
00:21:50,080 --> 00:21:54,480
Speaker 2: focus into selling domestically in the domestic market, because of course,

464
00:21:54,960 --> 00:21:59,040
Speaker 2: that would dovetail with one of the government's key ambitions,

465
00:21:59,080 --> 00:22:02,280
Speaker 2: which is to try to boost consumption in an economy

466
00:22:02,320 --> 00:22:06,200
Speaker 2: where saving has been pretty traditional.

467
00:22:06,880 --> 00:22:09,359
Speaker 3: We do see some shift to that, but domestic demand

468
00:22:09,359 --> 00:22:12,399
Speaker 3: overall is not fantastic. There's a lot of hangover from

469
00:22:12,440 --> 00:22:15,680
Speaker 3: the COVID years. Some Western products are still seen as

470
00:22:16,000 --> 00:22:21,040
Speaker 3: a better option than Chinese products. And also China historically

471
00:22:21,080 --> 00:22:23,440
Speaker 3: as a saving nation. The Chinese are never going to

472
00:22:23,480 --> 00:22:25,440
Speaker 3: buy like the Americans ever, And this is one of

473
00:22:25,480 --> 00:22:28,000
Speaker 3: the actually debates I have with economists who say they

474
00:22:28,000 --> 00:22:30,880
Speaker 3: need to buy more. Sure, but what does that actually mean?

475
00:22:31,440 --> 00:22:33,280
Speaker 3: What is the actual rate you have to hit, because

476
00:22:33,280 --> 00:22:35,480
Speaker 3: if you expect them to do a US rate, that's

477
00:22:35,520 --> 00:22:39,080
Speaker 3: never going to happen. So you do see people and

478
00:22:39,400 --> 00:22:42,879
Speaker 3: companies are still spending on machinery upgrades. They're still buying

479
00:22:42,960 --> 00:22:48,160
Speaker 3: iPhones and huaweis and ites and Shami cars and everything else.

480
00:22:48,200 --> 00:22:50,960
Speaker 3: But they're not spending like Americans would spend, and they're

481
00:22:50,960 --> 00:22:52,920
Speaker 3: saving more than they used to. Again, I would argue

482
00:22:52,920 --> 00:22:54,880
Speaker 3: a lot of that's from the COVID years, but it's

483
00:22:54,920 --> 00:22:57,920
Speaker 3: also has to do with other challenges inside the country,

484
00:22:57,960 --> 00:23:01,679
Speaker 3: the social welfare uncertainty, these things as the population gets older.

485
00:23:02,119 --> 00:23:04,880
Speaker 1: Actually talk about what is the sort of debate that's

486
00:23:04,880 --> 00:23:08,879
Speaker 1: happening in China with regards to this idea of so

487
00:23:09,000 --> 00:23:13,359
Speaker 1: called Chinese overcapacity Because American economists love to talk about this.

488
00:23:14,320 --> 00:23:15,840
Speaker 1: Sometimes it feels like cope.

489
00:23:15,840 --> 00:23:16,080
Speaker 3: To me.

490
00:23:16,240 --> 00:23:19,720
Speaker 1: It's like, oh, we can't compete, therefore they must be cheating, right,

491
00:23:19,760 --> 00:23:22,520
Speaker 1: Therefore they must be flooding our market because they have

492
00:23:22,600 --> 00:23:27,000
Speaker 1: this overcapacity. On the other hand, you do see comments

493
00:23:27,040 --> 00:23:30,399
Speaker 1: from leaders in Beijing from time to time talking about

494
00:23:30,440 --> 00:23:35,479
Speaker 1: the provinces engaging in unhelpful, unproductive race to the bottom

495
00:23:35,480 --> 00:23:39,520
Speaker 1: competition between each province's champion, et cetera. Explain to us,

496
00:23:39,560 --> 00:23:42,280
Speaker 1: like how this question of quote overcapacity is sort of

497
00:23:42,320 --> 00:23:43,760
Speaker 1: metabolized in China.

498
00:23:44,280 --> 00:23:45,879
Speaker 3: Well, over capacity is very much in the eye of

499
00:23:45,920 --> 00:23:48,359
Speaker 3: the beholder. If you're a consumer, in many cases you

500
00:23:48,400 --> 00:23:51,760
Speaker 3: love over capacity risis keep going down, right, I think

501
00:23:51,760 --> 00:23:53,520
Speaker 3: you're right. Part of it is is that when you

502
00:23:53,560 --> 00:23:56,879
Speaker 3: actually look at the buildout of initiatives and like a

503
00:23:56,920 --> 00:23:58,879
Speaker 3: five year plant structure, a lot of it is we

504
00:23:58,960 --> 00:24:01,080
Speaker 3: need to do X Y, and we need to have

505
00:24:01,280 --> 00:24:03,800
Speaker 3: more AI data centers, we need to have more EV companies,

506
00:24:03,800 --> 00:24:08,320
Speaker 3: and so different regional governments champions will undertake those initiatives,

507
00:24:08,320 --> 00:24:11,840
Speaker 3: and so that ultimately will contribute to a buildout of

508
00:24:11,880 --> 00:24:14,880
Speaker 3: the overcapacity argument. I think the other thing to realize

509
00:24:14,960 --> 00:24:17,080
Speaker 3: is that we actually look at how a lot of

510
00:24:17,080 --> 00:24:20,080
Speaker 3: this is done. It's done in a way to figure

511
00:24:20,080 --> 00:24:23,720
Speaker 3: out how to build out an ultimate supply chain, not

512
00:24:23,880 --> 00:24:27,240
Speaker 3: an end product. Here, we want to make a forward truck. Great,

513
00:24:27,600 --> 00:24:29,880
Speaker 3: that's the goal, but in China it's actually reversed. How

514
00:24:29,880 --> 00:24:32,159
Speaker 3: do we actually figure out how to make a million

515
00:24:32,160 --> 00:24:34,920
Speaker 3: Shami cars every year? Well, first you have to figure

516
00:24:34,920 --> 00:24:37,480
Speaker 3: out how to deal with the raw materials, the battery suppliers,

517
00:24:37,520 --> 00:24:39,800
Speaker 3: with the different part suppliers, and so it's actually a

518
00:24:39,800 --> 00:24:42,639
Speaker 3: full breakdown. So the overcapacity actually isn't just in the

519
00:24:42,640 --> 00:24:45,800
Speaker 3: final product. Ye, it's in all the ancillary products in

520
00:24:45,840 --> 00:24:48,960
Speaker 3: the tier one, third, fourth, fifth, sixth, seventh suppliers as

521
00:24:48,960 --> 00:24:51,720
Speaker 3: well throughout the entire country. Now it's not the same

522
00:24:51,720 --> 00:24:54,280
Speaker 3: in all industries. I don't want your listeners to get

523
00:24:54,280 --> 00:24:57,000
Speaker 3: the wrong idea, but you take for example, EVS. The

524
00:24:57,080 --> 00:24:59,080
Speaker 3: leaders in EVS are not the soees, they're all the

525
00:24:59,080 --> 00:25:02,040
Speaker 3: private companies. And so one of the significant shifts we've

526
00:25:02,040 --> 00:25:05,600
Speaker 3: seen in China is that the soees and the traditional

527
00:25:05,640 --> 00:25:09,800
Speaker 3: automotive manufacturers now have a far less not just dominant position,

528
00:25:09,840 --> 00:25:12,800
Speaker 3: but influence in the market. It's all the private companies generally,

529
00:25:13,119 --> 00:25:15,840
Speaker 3: and so is that over capacity. That's definitely one of

530
00:25:15,880 --> 00:25:18,600
Speaker 3: the overhangs for sure, and one of the challenges. You know,

531
00:25:18,680 --> 00:25:21,119
Speaker 3: I was just in Europe last week and this is

532
00:25:21,119 --> 00:25:23,159
Speaker 3: one of the debates I keep having with them. You

533
00:25:23,200 --> 00:25:26,520
Speaker 3: were fine with overcapacity for German in Japan and they

534
00:25:26,600 --> 00:25:29,880
Speaker 3: ultimately they're They're exported mar much more every year than

535
00:25:29,960 --> 00:25:31,840
Speaker 3: whatever China does. Now that the Chinese do you have

536
00:25:31,880 --> 00:25:33,760
Speaker 3: a you have an issues like come on, guys, like

537
00:25:33,760 --> 00:25:36,240
Speaker 3: you can't have everything. The other thing is is that

538
00:25:36,320 --> 00:25:39,719
Speaker 3: in many cases, this is how you develop world class technology.

539
00:25:40,440 --> 00:25:43,000
Speaker 3: For example in EVS is you have this intense this najuan,

540
00:25:43,119 --> 00:25:47,040
Speaker 3: this extremely intense internal competition. Because that's the word us,

541
00:25:48,600 --> 00:25:52,960
Speaker 3: it's internal basically fierce internal competition. Right. There's another interesting

542
00:25:52,960 --> 00:25:54,840
Speaker 3: word that has come out a lot, particularly because of

543
00:25:54,880 --> 00:25:58,800
Speaker 3: the recent moves with the age twenties, is called chop woods.

544
00:25:59,160 --> 00:26:02,000
Speaker 3: Basically mean you're strangling us. And so the Chinese have

545
00:26:02,080 --> 00:26:04,760
Speaker 3: used this in terms of the Americans saying, hey, you're

546
00:26:04,760 --> 00:26:07,919
Speaker 3: strangling our industry with semiconductor controls and everything else. And

547
00:26:07,920 --> 00:26:10,840
Speaker 3: now there's a new discussion about the new job boards

548
00:26:10,960 --> 00:26:13,040
Speaker 3: in China as oh, we have rare earths, so now

549
00:26:13,080 --> 00:26:14,520
Speaker 3: we can also do it right. So, and this is

550
00:26:14,600 --> 00:26:17,600
Speaker 3: kind of an interesting when you talk about overcapacity part

551
00:26:17,600 --> 00:26:19,720
Speaker 3: of my discussion. When you look at supply chains, it

552
00:26:19,760 --> 00:26:21,840
Speaker 3: really depends on the supply chain, but also where it is.

553
00:26:22,400 --> 00:26:25,360
Speaker 3: For example, overcapacity is great if you're Australia because you're

554
00:26:25,400 --> 00:26:28,480
Speaker 3: getting cheap automotive cars out of China. Right the Japanese

555
00:26:28,520 --> 00:26:30,840
Speaker 3: don't like it because they're losing market share as an example,

556
00:26:30,880 --> 00:26:33,720
Speaker 3: and so where does it actually work out. One of

557
00:26:33,760 --> 00:26:36,840
Speaker 3: the interesting things about overcapacity is it's not just overcapacity

558
00:26:36,880 --> 00:26:38,960
Speaker 3: again in the final product, it's the entire supply chain.

559
00:26:39,000 --> 00:26:40,760
Speaker 3: So this is one of the things that's contributing to

560
00:26:40,840 --> 00:26:44,399
Speaker 3: China global. In China, because of this nagement, this fierce

561
00:26:44,440 --> 00:26:47,840
Speaker 3: internal competition, companies, a lot of them cannot make very

562
00:26:47,920 --> 00:26:50,200
Speaker 3: much money, if any, so they have to go out.

563
00:26:50,320 --> 00:26:52,560
Speaker 3: So what you're seeing now as they go out they're

564
00:26:52,560 --> 00:26:55,520
Speaker 3: building supply chains. Bid is a perfect example. They're actually

565
00:26:55,560 --> 00:26:58,120
Speaker 3: bringing that entire ecosystem with them. So while it may

566
00:26:58,160 --> 00:27:01,680
Speaker 3: be overcapacity inside China, the benefits to other parts of

567
00:27:01,720 --> 00:27:04,120
Speaker 3: the ecosystem outside of China is now you get access

568
00:27:04,160 --> 00:27:07,080
Speaker 3: to cheaper technology and products overall that you can build locally.

569
00:27:07,640 --> 00:27:10,960
Speaker 2: I have so many questions I have to focus, but okay,

570
00:27:11,040 --> 00:27:14,480
Speaker 2: net would you say that the crackdown on Chinese technology

571
00:27:14,560 --> 00:27:19,080
Speaker 2: has accelerated China's technological development or hindered it.

572
00:27:19,480 --> 00:27:22,600
Speaker 3: I'd say it's definitely accelerated it because, again referring to

573
00:27:22,600 --> 00:27:25,280
Speaker 3: those five parts of the supply Chin ecosystem earlier, it

574
00:27:25,359 --> 00:27:28,119
Speaker 3: essentially focused everything in the entire country and all the

575
00:27:28,160 --> 00:27:30,919
Speaker 3: companies into this. We have to figure out how to

576
00:27:30,920 --> 00:27:33,919
Speaker 3: make this work because now it's an existential threat to

577
00:27:33,960 --> 00:27:37,439
Speaker 3: our businesses. The one thing I've learned since I've been

578
00:27:37,480 --> 00:27:39,600
Speaker 3: in China as a kid, never focus the Chinese on

579
00:27:39,640 --> 00:27:40,200
Speaker 3: a problem.

580
00:27:40,000 --> 00:27:41,960
Speaker 5: Because they will attack and kill that problem.

581
00:27:42,240 --> 00:27:44,800
Speaker 3: And with that you also see the expenditure of massive

582
00:27:44,800 --> 00:27:48,439
Speaker 3: amounts of resources, and it is very intensive, it is

583
00:27:48,480 --> 00:27:51,320
Speaker 3: sometimes wasteful, but the end result is pretty clear, you

584
00:27:51,400 --> 00:27:54,200
Speaker 3: have world class companies and technology.

585
00:27:54,640 --> 00:27:57,800
Speaker 2: Speaking of resources, So one thing I remember from my

586
00:27:57,920 --> 00:28:01,879
Speaker 2: time in Hong Kong was the Chinese government crackdown on

587
00:28:02,320 --> 00:28:06,959
Speaker 2: education companies and what they termed wasteful capital. And they

588
00:28:07,000 --> 00:28:09,800
Speaker 2: basically came out and said they wanted to encourage more

589
00:28:09,840 --> 00:28:13,960
Speaker 2: money to go into high tech businesses. Is that still happening?

590
00:28:14,000 --> 00:28:17,200
Speaker 2: And then also do you see money, government money, maybe

591
00:28:17,320 --> 00:28:22,240
Speaker 2: lending standards being eased up for other industries. Basically, is

592
00:28:22,400 --> 00:28:28,359
Speaker 2: China using financing to encourage other types of industries to

593
00:28:28,400 --> 00:28:31,560
Speaker 2: be able to expand go abroad things like.

594
00:28:31,480 --> 00:28:34,800
Speaker 3: That, so they're not necessarily using financing like hey, here's

595
00:28:34,960 --> 00:28:37,119
Speaker 3: an import export bank for you, and such as the

596
00:28:37,200 --> 00:28:39,479
Speaker 3: US for example. What's going What they are doing though,

597
00:28:39,560 --> 00:28:42,800
Speaker 3: is particularly on with different incentives. Think AI for example.

598
00:28:43,160 --> 00:28:47,080
Speaker 3: They are providing the entire ecosystem different levels of support.

599
00:28:47,160 --> 00:28:49,640
Speaker 3: Maybe that support is some finance. Maybe the support is

600
00:28:49,960 --> 00:28:52,360
Speaker 3: a guarantee of we'll buy x amount of your product

601
00:28:52,480 --> 00:28:54,880
Speaker 3: over X number of years. Maybe it's we're going to

602
00:28:54,920 --> 00:28:58,120
Speaker 3: work with universities to tweak and change our educational programs

603
00:28:58,160 --> 00:29:00,840
Speaker 3: so we can actually train the new ends in terms

604
00:29:00,880 --> 00:29:03,720
Speaker 3: of a more effective way to go into business. That's

605
00:29:03,760 --> 00:29:06,440
Speaker 3: where we see the changes. Ten years ago, it would

606
00:29:06,480 --> 00:29:09,640
Speaker 3: be more financial stimulus, financial incentives going out and the

607
00:29:09,680 --> 00:29:11,880
Speaker 3: tax incentives and so on going into the system. But

608
00:29:11,960 --> 00:29:14,760
Speaker 3: now we're seeing these tweaks and changes because they understand

609
00:29:14,800 --> 00:29:16,680
Speaker 3: that money isn't everything. You also have to build out

610
00:29:16,680 --> 00:29:19,360
Speaker 3: all these other components to actually move forward in an.

611
00:29:19,320 --> 00:29:39,680
Speaker 1: Instagent talk to us about AI. You know, obviously we

612
00:29:39,720 --> 00:29:42,600
Speaker 1: had the deep seek moment that was just earlier this

613
00:29:42,680 --> 00:29:44,400
Speaker 1: year kind of feels like ancient history.

614
00:29:44,600 --> 00:29:46,880
Speaker 5: Have you tried Kimmy yet? Have you heard this one.

615
00:29:47,000 --> 00:29:49,800
Speaker 1: There's some company called Moonshot and they have a new

616
00:29:49,800 --> 00:29:53,240
Speaker 1: model called Kimmy, and some people are saying it's better

617
00:29:53,280 --> 00:29:53,960
Speaker 1: than Deep Seek.

618
00:29:54,280 --> 00:29:54,920
Speaker 5: I'm not sure.

619
00:29:55,160 --> 00:29:58,240
Speaker 1: So yeah, you know, they all kind of it seems fine,

620
00:29:58,280 --> 00:30:00,440
Speaker 1: It seemed very good. You know, they all to kind

621
00:30:00,440 --> 00:30:02,760
Speaker 1: of look the same. But how does the AI race

622
00:30:03,080 --> 00:30:04,920
Speaker 1: look for We know how it looks from the perspective

623
00:30:04,920 --> 00:30:06,360
Speaker 1: of your Deep Seak moments, et cetera.

624
00:30:06,400 --> 00:30:08,680
Speaker 5: What does the AI race look like in China?

625
00:30:08,800 --> 00:30:10,840
Speaker 3: You know, it's interesting. It really depends on who you

626
00:30:10,880 --> 00:30:13,280
Speaker 3: talk to. But my personal belief is that China's ahead

627
00:30:13,280 --> 00:30:15,280
Speaker 3: and AI and it's not even close. When you look

628
00:30:15,320 --> 00:30:17,560
Speaker 3: at the Great Yeah, when you look at Great, when

629
00:30:17,600 --> 00:30:20,480
Speaker 3: you look at the Deep Seek moment, it was a watershed.

630
00:30:20,840 --> 00:30:25,160
Speaker 3: But there's one hundred Deep Seak equivalents that are coming online.

631
00:30:25,200 --> 00:30:27,160
Speaker 3: We've only seen ten of them, right, I don't know

632
00:30:27,160 --> 00:30:29,000
Speaker 3: what the equivalents are in the stage, sure, but when

633
00:30:29,040 --> 00:30:32,480
Speaker 3: you look at again, things like infrastructure, China has copious

634
00:30:32,480 --> 00:30:35,160
Speaker 3: amounts of electricity they can build out. They're constantly building

635
00:30:35,160 --> 00:30:37,880
Speaker 3: out their electricity grid. Last year, in twenty twenty four,

636
00:30:37,920 --> 00:30:40,080
Speaker 3: they had three hundred and eighty gigawatts built out. The

637
00:30:40,160 --> 00:30:42,480
Speaker 3: US only had sixty maybe eighty, I don't remember if

638
00:30:42,600 --> 00:30:45,120
Speaker 3: to my head, but essentially that gives them a huge

639
00:30:45,200 --> 00:30:47,120
Speaker 3: runway to build out all of these AI all of

640
00:30:47,160 --> 00:30:50,000
Speaker 3: these data centers the talent. I was at the Semiconductor

641
00:30:50,080 --> 00:30:52,160
Speaker 3: show in Shanghai at the end of March and they

642
00:30:52,200 --> 00:30:54,400
Speaker 3: had a booth there SEMIU and essentially this is the

643
00:30:54,400 --> 00:30:57,360
Speaker 3: goal of this organization, is to help young graduates get

644
00:30:57,360 --> 00:30:59,680
Speaker 3: into the fields of the future. Last year when I

645
00:30:59,680 --> 00:31:02,040
Speaker 3: talked to them, it was very much ore we're trying

646
00:31:02,040 --> 00:31:05,400
Speaker 3: to help young graduates get internships and introductions. This year

647
00:31:05,640 --> 00:31:07,840
Speaker 3: was hey, we're gonna have one hundred thousand graduates going

648
00:31:07,880 --> 00:31:13,240
Speaker 3: to five key industries AI, quantum computing, robotics, semiconductors, and batteries.

649
00:31:13,600 --> 00:31:16,840
Speaker 3: Now one hundred thousand per year. That's more than all

650
00:31:16,880 --> 00:31:18,760
Speaker 3: of the Western world combined. By the end of the decade,

651
00:31:18,760 --> 00:31:20,440
Speaker 3: they want to have half a million. That's more than

652
00:31:20,480 --> 00:31:22,560
Speaker 3: the entire world combined. And when you actually look at

653
00:31:22,560 --> 00:31:26,000
Speaker 3: how China is building out again in this AI situation,

654
00:31:26,320 --> 00:31:28,400
Speaker 3: and all sidestep a bit. When you just look at

655
00:31:28,400 --> 00:31:33,000
Speaker 3: battery chemistry, China has fifty graduate programs of battery chemistry

656
00:31:33,200 --> 00:31:36,920
Speaker 3: and metallurgy in it. The US doesn't really have that.

657
00:31:36,920 --> 00:31:38,280
Speaker 3: They we have a couple of professors. And so when

658
00:31:38,320 --> 00:31:41,200
Speaker 3: you look at again the talent the government support, it's

659
00:31:41,240 --> 00:31:43,760
Speaker 3: not just hey, guys, we want to use AI. It's

660
00:31:43,880 --> 00:31:46,280
Speaker 3: every kid in the country now, from kindergarten all the

661
00:31:46,280 --> 00:31:47,920
Speaker 3: way on up. I mean even my own kids. Now

662
00:31:48,120 --> 00:31:51,760
Speaker 3: they are mandated starting this fall to have AI education,

663
00:31:52,720 --> 00:31:56,600
Speaker 3: the entire apparatus in the whole country. And so again

664
00:31:56,600 --> 00:31:58,200
Speaker 3: when you look at these different areas and I'm like, hey,

665
00:31:58,240 --> 00:32:01,520
Speaker 3: wait a minute, guys, like this is not comparable. I'll

666
00:32:01,520 --> 00:32:04,280
Speaker 3: give an example. I was in southern China at a

667
00:32:04,280 --> 00:32:07,320
Speaker 3: consumer goods manufacturer who I've known and I do work with.

668
00:32:07,680 --> 00:32:10,000
Speaker 3: They have deep Seek in the factory. They have five

669
00:32:10,000 --> 00:32:12,440
Speaker 3: factors in China, a couple of Southeast Asia. And I'm like,

670
00:32:12,480 --> 00:32:14,040
Speaker 3: why do you who make consumer why do you have

671
00:32:14,080 --> 00:32:16,680
Speaker 3: deep Seek? And he goes, oh, Cameron, we have a

672
00:32:16,720 --> 00:32:18,200
Speaker 3: lot of different products and we want to figure out

673
00:32:18,160 --> 00:32:20,160
Speaker 3: how to use it. We have over one hundred R

674
00:32:20,160 --> 00:32:23,560
Speaker 3: and D and technical guys. Business is slow because consumer

675
00:32:23,600 --> 00:32:25,719
Speaker 3: goods in the trade war. I'm trying to have them

676
00:32:25,760 --> 00:32:27,880
Speaker 3: figure out while we have the time how to use it.

677
00:32:28,160 --> 00:32:31,040
Speaker 3: So I go talk to the technology team. The technology

678
00:32:31,040 --> 00:32:34,200
Speaker 3: team is talking to the entire supply chain how to

679
00:32:34,320 --> 00:32:37,640
Speaker 3: use deep seek and these different programs to do more

680
00:32:37,760 --> 00:32:41,240
Speaker 3: efficient business and solve problems. So he shows me his

681
00:32:41,280 --> 00:32:43,520
Speaker 3: w Chat system. He's got hundreds of people in a

682
00:32:43,520 --> 00:32:48,240
Speaker 3: we Chat group. They're plastic providers, they're raw material producers,

683
00:32:48,920 --> 00:32:51,920
Speaker 3: the packaging guys, and there's like, oh yeah, they'll say,

684
00:32:52,000 --> 00:32:54,240
Speaker 3: you know, I looked at the wa chat feed. Oh

685
00:32:54,280 --> 00:32:56,400
Speaker 3: this didn't work. Try this, do that. I don't know

686
00:32:56,400 --> 00:32:58,640
Speaker 3: what this means. What are you've seen? Here? Was the

687
00:32:58,800 --> 00:33:03,080
Speaker 3: entire supply chains having this massive compounding knowledge throughout all

688
00:33:03,080 --> 00:33:05,440
Speaker 3: of it, from the raw material producer all the way

689
00:33:05,480 --> 00:33:09,080
Speaker 3: down to the final component manufacturer of the OEM. Then

690
00:33:09,120 --> 00:33:10,520
Speaker 3: he says, by the way, this is now happening in

691
00:33:10,600 --> 00:33:13,360
Speaker 3: Vietnam and Thailand because there it's a lot of Chinese

692
00:33:13,360 --> 00:33:16,240
Speaker 3: management and now there are suppliers which are Vietnamese are tied.

693
00:33:16,280 --> 00:33:18,720
Speaker 3: So you're seeing this massive compound threat all of the

694
00:33:18,720 --> 00:33:22,880
Speaker 3: supply chains. And that's just one company. Joe. Is Boeing

695
00:33:22,960 --> 00:33:25,360
Speaker 3: doing that, is now Chemical doing that? Is BMW doing that?

696
00:33:25,360 --> 00:33:27,680
Speaker 3: I would argue no, and this is why In my mind,

697
00:33:28,000 --> 00:33:30,840
Speaker 3: China is very far ahead in the AI race. People

698
00:33:30,880 --> 00:33:32,280
Speaker 3: look at it as that we have breakthroughs, we have

699
00:33:32,320 --> 00:33:34,440
Speaker 3: this in that, and that's absolutely true. The US is

700
00:33:34,480 --> 00:33:36,520
Speaker 3: one hundred percent ahead in that. But I call it

701
00:33:36,520 --> 00:33:39,760
Speaker 3: the metaphysical versus the tangible. The US and the West

702
00:33:39,800 --> 00:33:43,000
Speaker 3: is going to be great at the metaphysical discoveries.

703
00:33:42,520 --> 00:33:44,600
Speaker 5: And everything that build the digital God first.

704
00:33:44,640 --> 00:33:48,520
Speaker 3: That's right. The technology and the adaptation and the integration

705
00:33:48,680 --> 00:33:49,760
Speaker 3: is all going to be Chinese.

706
00:33:50,720 --> 00:33:53,520
Speaker 2: Joe, this is kind of depressing from a US person factor,

707
00:33:54,080 --> 00:33:54,720
Speaker 2: depressed forever.

708
00:33:55,040 --> 00:33:58,520
Speaker 5: Okay, I was born depressed. I wouldn't go there. No,

709
00:33:58,600 --> 00:33:58,960
Speaker 5: you weren't.

710
00:33:59,000 --> 00:33:59,719
Speaker 3: No, I wasn't that.

711
00:34:00,000 --> 00:34:04,320
Speaker 2: The show is generally a happy You mentioned young people

712
00:34:04,600 --> 00:34:07,840
Speaker 2: and the education system quite a bit here, But I

713
00:34:07,840 --> 00:34:12,640
Speaker 2: imagine this is still a shift in the labor force. Right,

714
00:34:12,760 --> 00:34:16,719
Speaker 2: So if more factory jobs are going from China to Vietnam,

715
00:34:17,200 --> 00:34:21,960
Speaker 2: that means fewer factory jobs domestically. How does all of this,

716
00:34:22,120 --> 00:34:26,480
Speaker 2: the trade war, the responses from private companies in China,

717
00:34:26,840 --> 00:34:30,879
Speaker 2: how does that play into domestic politics at a time

718
00:34:30,960 --> 00:34:34,160
Speaker 2: when there's been a lot of anxiety within China about

719
00:34:34,200 --> 00:34:35,879
Speaker 2: things like youth unemployment.

720
00:34:36,600 --> 00:34:39,719
Speaker 3: It unifies it more than disunifies it, because again it

721
00:34:39,719 --> 00:34:42,440
Speaker 3: gives them a focus. We need to stand up against

722
00:34:42,480 --> 00:34:44,800
Speaker 3: the attacks that we're receiving. What's actually having the opposite

723
00:34:44,800 --> 00:34:46,920
Speaker 3: effect in many ways. I think the other thing is

724
00:34:46,960 --> 00:34:49,560
Speaker 3: people understand that the industry of today is not going

725
00:34:49,600 --> 00:34:52,080
Speaker 3: to be the industry of tomorrow. So we have to upscale,

726
00:34:52,120 --> 00:34:54,040
Speaker 3: we have to train our workers, we have to automate more.

727
00:34:54,400 --> 00:34:56,600
Speaker 3: If we do have a parder component that really just

728
00:34:56,680 --> 00:34:58,720
Speaker 3: isn't profitable for us, we can send it to Southeast

729
00:34:58,719 --> 00:35:00,799
Speaker 3: Asia and it will be profitable. Need to explore that.

730
00:35:01,080 --> 00:35:03,320
Speaker 3: So you're seeing the different ways that they can attack

731
00:35:03,360 --> 00:35:04,360
Speaker 3: that problem.

732
00:35:05,280 --> 00:35:07,440
Speaker 1: I have one more question, and I'm also worried it's

733
00:35:07,480 --> 00:35:10,000
Speaker 1: going to be sort of leading to a depressing answer.

734
00:35:10,480 --> 00:35:13,799
Speaker 1: But I think it was twenty forty nine that Dung

735
00:35:13,920 --> 00:35:16,719
Speaker 1: Hopeng targeted for. Like, okay, by twenty forty nine, will

736
00:35:16,719 --> 00:35:20,680
Speaker 1: have achieved a modern socialist state, maybe a modern communist

737
00:35:20,680 --> 00:35:23,520
Speaker 1: state or something like that. And seems like one way

738
00:35:23,640 --> 00:35:27,040
Speaker 1: you could get there is just like have robots do everything.

739
00:35:27,040 --> 00:35:29,520
Speaker 1: And I know there's a lot of investment in China

740
00:35:29,560 --> 00:35:34,080
Speaker 1: in humanoid robotics, which if you could really have you know,

741
00:35:34,200 --> 00:35:37,000
Speaker 1: a robot that more or less moved like a person,

742
00:35:37,320 --> 00:35:41,400
Speaker 1: pretty incredible productivity gains. There's efforts here obviously, and Tesla's

743
00:35:41,440 --> 00:35:44,040
Speaker 1: in that space. Can you talk a little bit about

744
00:35:44,080 --> 00:35:48,839
Speaker 1: like the state of the Chinese humanoid robotics industry, their

745
00:35:48,880 --> 00:35:55,480
Speaker 1: contribution to essentially reducing the burdens of human labor, and what.

746
00:35:55,400 --> 00:35:58,319
Speaker 5: The sort of competitive vision for that industry is.

747
00:35:59,320 --> 00:36:01,560
Speaker 3: I think they, I mean, the competitive vision is still

748
00:36:01,560 --> 00:36:03,600
Speaker 3: being built out because again we don't know exactly what

749
00:36:03,640 --> 00:36:06,320
Speaker 3: they can and can't do. For example, human oild robots

750
00:36:06,320 --> 00:36:08,600
Speaker 3: will be great at repetitive tasks, whether they're on an

751
00:36:08,640 --> 00:36:11,319
Speaker 3: assembly line or maybe it's I have.

752
00:36:11,280 --> 00:36:13,520
Speaker 1: To I saw a video of a full service gasoline

753
00:36:13,560 --> 00:36:15,200
Speaker 1: station where the robot filled up the time.

754
00:36:15,320 --> 00:36:15,520
Speaker 5: Sure.

755
00:36:15,719 --> 00:36:18,040
Speaker 3: I mean, again, those are repetitive. You can only program

756
00:36:18,080 --> 00:36:21,000
Speaker 3: them for a certain number of variables. But things like

757
00:36:21,000 --> 00:36:22,640
Speaker 3: you know, when I was working in carbon fiber, we

758
00:36:22,640 --> 00:36:25,160
Speaker 3: did a lot of textile production where you had to

759
00:36:25,480 --> 00:36:29,839
Speaker 3: essentially thread very thin fibers into islet holes to feed

760
00:36:29,880 --> 00:36:32,160
Speaker 3: into the machine. That will be done by humans for

761
00:36:32,200 --> 00:36:34,640
Speaker 3: a very long time. Because it's a very it seems simple,

762
00:36:34,640 --> 00:36:36,560
Speaker 3: but it's actually very complex. We have to line everything

763
00:36:36,640 --> 00:36:39,680
Speaker 3: up tie everything in accurately and so on. I think

764
00:36:39,719 --> 00:36:43,000
Speaker 3: the area to look at for robotics in general is again,

765
00:36:43,160 --> 00:36:46,600
Speaker 3: do you have the supply chain ecosystem And China has

766
00:36:46,640 --> 00:36:48,960
Speaker 3: that from all the way from the raw material processing

767
00:36:49,080 --> 00:36:50,960
Speaker 3: for example, for the magnets, all the way down into

768
00:36:51,000 --> 00:36:54,840
Speaker 3: the installation. And that's why, ultimately, again given where we

769
00:36:54,880 --> 00:36:58,359
Speaker 3: are currently, China will continue to grow ahead. It's great

770
00:36:58,360 --> 00:37:00,759
Speaker 3: that Tesla does it. They absolutely should. Competition is better

771
00:37:00,800 --> 00:37:03,439
Speaker 3: for everybody, but you still get your magnets in China now, Wiello,

772
00:37:03,440 --> 00:37:05,719
Speaker 3: it become a problem in the future, maybe not, Maybe

773
00:37:05,760 --> 00:37:08,319
Speaker 3: it will. I think that's to be debated. Ultimately, when

774
00:37:08,320 --> 00:37:10,440
Speaker 3: you look at how it will affect society, we just

775
00:37:10,480 --> 00:37:12,680
Speaker 3: don't know. I think the one thing to look at though,

776
00:37:12,800 --> 00:37:16,319
Speaker 3: is as they continue to grow the supply chain ecosystems

777
00:37:16,320 --> 00:37:18,600
Speaker 3: in these areas, and regardless of industry, where it's robotics,

778
00:37:18,640 --> 00:37:23,200
Speaker 3: it's semiconductors, it's making paper, the reality is is because

779
00:37:23,200 --> 00:37:25,560
Speaker 3: you have all of that in your country, you can

780
00:37:25,600 --> 00:37:27,920
Speaker 3: tinker with it a lot better than other places in

781
00:37:27,960 --> 00:37:30,440
Speaker 3: the world. So when you actually talk about the innovation

782
00:37:30,520 --> 00:37:32,879
Speaker 3: advancements and the ability to tinker on the fly, which

783
00:37:32,960 --> 00:37:36,640
Speaker 3: China is world class at it's often because they have

784
00:37:36,680 --> 00:37:39,000
Speaker 3: all the different pieces and component parts. You talked about

785
00:37:39,280 --> 00:37:41,520
Speaker 3: the Christmas City earlier, and that's because you can get

786
00:37:41,520 --> 00:37:43,920
Speaker 3: everything for Christmas in that city. You can get the screws,

787
00:37:44,400 --> 00:37:46,759
Speaker 3: you can get the tinsil, you can get a color red,

788
00:37:46,760 --> 00:37:48,719
Speaker 3: you can get or pink, whatever it may be, and

789
00:37:48,880 --> 00:37:51,520
Speaker 3: all of that. Because that ecosystem exists there, it gives

790
00:37:51,560 --> 00:37:54,399
Speaker 3: you far more flexibility in the future to build something out.

791
00:37:54,880 --> 00:37:57,239
Speaker 2: Joe, how do you think New Jersey would respond to

792
00:37:57,600 --> 00:37:58,840
Speaker 2: gas pumping robots?

793
00:38:00,000 --> 00:38:00,120
Speaker 5: Oh?

794
00:38:00,200 --> 00:38:05,800
Speaker 1: Yeah, from either way, Like is the required full service

795
00:38:05,880 --> 00:38:08,400
Speaker 1: guess a benefit for the workers or is it just

796
00:38:08,440 --> 00:38:11,319
Speaker 1: a guaranteed benefit for the drivers? Can I say my

797
00:38:11,360 --> 00:38:15,479
Speaker 1: guilty my guilty thought, which is like I like getting

798
00:38:15,520 --> 00:38:17,719
Speaker 1: gasoline in New Jersey, sure, you know, Like yeah, I

799
00:38:17,760 --> 00:38:19,839
Speaker 1: like being lazy, and I like having any because if

800
00:38:19,880 --> 00:38:20,959
Speaker 1: I'm not like in New.

801
00:38:20,920 --> 00:38:22,760
Speaker 5: Jersey, I'll pump it myself to save them money.

802
00:38:22,920 --> 00:38:24,880
Speaker 1: But I like having an excuse like, oh, you know,

803
00:38:24,920 --> 00:38:26,120
Speaker 1: I had to do it, and then I just get

804
00:38:26,160 --> 00:38:26,879
Speaker 1: to sit in my cars.

805
00:38:26,920 --> 00:38:27,520
Speaker 5: I don't complain.

806
00:38:27,640 --> 00:38:30,759
Speaker 2: That's not that bad, Joe, not that guilty. I have

807
00:38:30,840 --> 00:38:34,040
Speaker 2: just one more question, and it's a really basic one.

808
00:38:34,320 --> 00:38:37,120
Speaker 2: But maybe you could walk us through or at least

809
00:38:37,160 --> 00:38:41,080
Speaker 2: give us some color on how the actual paperwork works

810
00:38:41,360 --> 00:38:45,080
Speaker 2: for these tariffs, like the hoops that companies are having

811
00:38:45,120 --> 00:38:49,080
Speaker 2: to jump through in order to get goods to the US.

812
00:38:49,280 --> 00:38:52,279
Speaker 2: Given that the teriff rate seems to change day by.

813
00:38:52,239 --> 00:38:56,120
Speaker 3: Day, I would refer them to my best customs broker

814
00:38:56,480 --> 00:38:58,960
Speaker 3: because I don't I don't deal with that because, particularly

815
00:38:59,000 --> 00:39:01,040
Speaker 3: to your point, because it's kind of changing and evolving.

816
00:39:01,360 --> 00:39:04,840
Speaker 3: The rules are changing. One day you can't move H

817
00:39:04,960 --> 00:39:06,960
Speaker 3: twenty chips and the next day you can. Right one

818
00:39:07,000 --> 00:39:09,000
Speaker 3: day you don't have anywhere else, the next day you can.

819
00:39:09,080 --> 00:39:11,160
Speaker 3: But there's still tariff and text. And but at what

820
00:39:11,200 --> 00:39:12,759
Speaker 3: rate of they tariff in text because if you get

821
00:39:12,760 --> 00:39:14,800
Speaker 3: it out of Southeast Asia, it's now a different tarif

822
00:39:14,840 --> 00:39:16,319
Speaker 3: rate than China, but they both come from China. How

823
00:39:16,360 --> 00:39:18,680
Speaker 3: does that actually work? The reality is it's so complex

824
00:39:18,760 --> 00:39:21,719
Speaker 3: now that hire a professional because that's what I do. Well.

825
00:39:21,760 --> 00:39:23,600
Speaker 1: I guess I'll ask you one more question then, and

826
00:39:23,640 --> 00:39:26,400
Speaker 1: it relates to the very beginning of the conversation about

827
00:39:26,480 --> 00:39:29,880
Speaker 1: Chinese manufacturers building out more of their supply chain in

828
00:39:30,160 --> 00:39:32,920
Speaker 1: Vietnam and other Asian countries, and one of the things

829
00:39:32,960 --> 00:39:35,400
Speaker 1: you hear about is we have to guard again so

830
00:39:35,520 --> 00:39:38,200
Speaker 1: called like transshipment, which I just take to mean there's

831
00:39:38,239 --> 00:39:40,600
Speaker 1: something that's made in China and then it stops for

832
00:39:41,040 --> 00:39:44,120
Speaker 1: a cup of coffee in Vietnam and then puts on

833
00:39:44,120 --> 00:39:46,880
Speaker 1: another boat and suddenly you know, it's a disguised importance

834
00:39:46,920 --> 00:39:50,560
Speaker 1: made to look like Vietnam. It sounds like though the

835
00:39:50,680 --> 00:39:53,239
Speaker 1: vision is that that just becomes irrelevant, or that that's

836
00:39:53,280 --> 00:39:56,440
Speaker 1: an unnecessary thing, that actually it is a Chinese company,

837
00:39:56,440 --> 00:39:58,960
Speaker 1: but it's actually made in Vietnam, and that ultimately the

838
00:39:59,000 --> 00:40:01,640
Speaker 1: idea of like tranship the idea of just like something

839
00:40:01,760 --> 00:40:05,080
Speaker 1: passing through Vietnam is like a temporary thing, but in

840
00:40:05,120 --> 00:40:07,279
Speaker 1: the end it will just be made in Vietnam, and

841
00:40:07,280 --> 00:40:09,520
Speaker 1: that the companies and the division is not to use

842
00:40:09,600 --> 00:40:12,040
Speaker 1: Vietnam as a passed through. The vision is to use

843
00:40:12,120 --> 00:40:13,600
Speaker 1: Vietnam as the source.

844
00:40:14,200 --> 00:40:16,640
Speaker 3: No, you're correct. I think the issue transhipment is the

845
00:40:16,640 --> 00:40:19,239
Speaker 3: definition that is used now is very twenty eighteen. It's

846
00:40:19,280 --> 00:40:22,160
Speaker 3: not really what's happening. Of course, it still happens on occasion.

847
00:40:22,200 --> 00:40:24,400
Speaker 3: I'm not denying that, but yeah, when you actually look

848
00:40:24,400 --> 00:40:27,400
Speaker 3: at what's happening. It's the raw materials and semi processed

849
00:40:27,400 --> 00:40:29,960
Speaker 3: intermedia goods that are coming into Vietnam. Yeah, and then

850
00:40:30,000 --> 00:40:32,759
Speaker 3: being processed and moved on. Now, at what point is

851
00:40:32,800 --> 00:40:35,520
Speaker 3: that Vietnamese versus Chinese? You know? That actually is the

852
00:40:35,520 --> 00:40:37,640
Speaker 3: debate that nobody knows the answer to, and we haven't

853
00:40:37,880 --> 00:40:40,919
Speaker 3: received guidance on from the government about what that actually is.

854
00:40:40,920 --> 00:40:44,040
Speaker 3: Is it amount of content like it has when the MSCA,

855
00:40:44,160 --> 00:40:45,279
Speaker 3: or is it something else? We don't know.

856
00:40:45,320 --> 00:40:46,719
Speaker 1: You know, one of the things you hear, and we've

857
00:40:46,719 --> 00:40:49,080
Speaker 1: talked about this on the podcast, is that anyone who's

858
00:40:49,120 --> 00:40:52,319
Speaker 1: been in China for ten twenty thirty years has seen

859
00:40:52,760 --> 00:40:56,320
Speaker 1: extraordinary advances and standard of living over this period of time.

860
00:40:56,800 --> 00:41:01,120
Speaker 1: I've never been to Vietnam. Given all this, would someone

861
00:41:01,160 --> 00:41:05,239
Speaker 1: who's forty years old in Vietnam today or younger like

862
00:41:05,360 --> 00:41:07,760
Speaker 1: in the last ten years, would you say the quality

863
00:41:07,800 --> 00:41:10,880
Speaker 1: of life and the quality of infrastructure is massively changed

864
00:41:10,880 --> 00:41:11,960
Speaker 1: in some of these other countries.

865
00:41:12,160 --> 00:41:13,880
Speaker 3: Yeah, I would. I would say that it's also that

866
00:41:13,960 --> 00:41:17,160
Speaker 3: the standard of living, the job opportunities, right, are the

867
00:41:17,200 --> 00:41:19,719
Speaker 3: government's going to have more money in their coffers for

868
00:41:19,760 --> 00:41:22,400
Speaker 3: social services because they have better taxation because there is

869
00:41:22,440 --> 00:41:24,960
Speaker 3: more money coming in. All of that is improved across

870
00:41:25,000 --> 00:41:26,360
Speaker 3: the board in the region. Absolutely.

871
00:41:27,000 --> 00:41:30,160
Speaker 2: I actually have one last question, which is this isn't

872
00:41:30,200 --> 00:41:33,120
Speaker 2: the first time that we've seen the US impose tariffs

873
00:41:33,280 --> 00:41:37,759
Speaker 2: on China. Obviously, in the first Trump administration we had restrictions,

874
00:41:37,800 --> 00:41:41,759
Speaker 2: although clearly not as stringent as they are now. I

875
00:41:41,840 --> 00:41:45,000
Speaker 2: kind of think of them as like maybe practice tariffs

876
00:41:45,080 --> 00:41:48,680
Speaker 2: for China. So I'm curious, what was the most surprising

877
00:41:49,000 --> 00:41:53,600
Speaker 2: thing that you learned or witnessed or saw from the

878
00:41:53,640 --> 00:41:55,600
Speaker 2: first round of tariffs.

879
00:41:55,920 --> 00:41:58,319
Speaker 3: From the original trade war tariffs. Yeah, I think the

880
00:41:58,360 --> 00:42:01,480
Speaker 3: thing that I was the most surprised that is that

881
00:42:01,880 --> 00:42:05,440
Speaker 3: the US didn't understand that it's basically squeezing a balloon.

882
00:42:05,480 --> 00:42:07,279
Speaker 3: If you squeez them out of China, they'll go somewhere else,

883
00:42:07,280 --> 00:42:10,120
Speaker 3: but particularly the Southeast Asia, and that by doing that,

884
00:42:10,719 --> 00:42:15,360
Speaker 3: the calculus of ABC anywhere but China has now actually

885
00:42:15,360 --> 00:42:18,359
Speaker 3: cemented Chinese influence in Southeast Asia and it will never

886
00:42:18,680 --> 00:42:21,239
Speaker 3: will never go back to the opposite, particularly with what

887
00:42:21,239 --> 00:42:24,439
Speaker 3: we're currently doing. And so the surprising things are more

888
00:42:24,560 --> 00:42:27,600
Speaker 3: for me as on the US side of strategically, how

889
00:42:27,600 --> 00:42:29,080
Speaker 3: do we think about these things and how do we

890
00:42:29,120 --> 00:42:33,000
Speaker 3: forecast out five, ten, fifteen, twenty years. Is that even

891
00:42:33,040 --> 00:42:36,280
Speaker 3: if that was a consideration, it really wasn't given much credence.

892
00:42:36,360 --> 00:42:38,680
Speaker 3: Those are the things that surprise me more. Of Course,

893
00:42:38,960 --> 00:42:40,880
Speaker 3: a company if their tariff is going to go outside

894
00:42:41,239 --> 00:42:44,320
Speaker 3: and build somewhere else. Of course, companies that have internal

895
00:42:44,520 --> 00:42:46,640
Speaker 3: intensive competition are going to want to go to new

896
00:42:46,640 --> 00:42:49,360
Speaker 3: markets where they can make more profits. That's going to happen.

897
00:42:49,400 --> 00:42:53,360
Speaker 3: That's business. But when you actually look at geopolitics and

898
00:42:53,360 --> 00:42:56,759
Speaker 3: the evolution of geopolitics, particularly in regards to China, if

899
00:42:56,800 --> 00:42:59,040
Speaker 3: you again, if you try to force China into a situation,

900
00:43:00,080 --> 00:43:02,120
Speaker 3: not going to expect the outcome, right, And the outcome

901
00:43:02,120 --> 00:43:04,080
Speaker 3: in this particular case of Trade War one point zero

902
00:43:04,280 --> 00:43:07,960
Speaker 3: is it cemented Chinese influence in Southeast Asia. The outcome

903
00:43:07,960 --> 00:43:09,920
Speaker 3: of Trade Board two point zero, although we don't know,

904
00:43:09,960 --> 00:43:14,080
Speaker 3: it's essentially now cementing China's lead in supply chains in Asia,

905
00:43:14,160 --> 00:43:15,160
Speaker 3: Africa and Europe.

906
00:43:15,960 --> 00:43:17,960
Speaker 1: We're going to get really freaked out in this country

907
00:43:18,000 --> 00:43:20,680
Speaker 1: when it's Ladam, when it's like in our hemisphere, it.

908
00:43:20,640 --> 00:43:23,120
Speaker 3: Is, well, yeah, they're already being freaked out. And I

909
00:43:23,120 --> 00:43:26,440
Speaker 3: mean the reality is that when you talk to Chinese businesses,

910
00:43:26,480 --> 00:43:29,440
Speaker 3: particularly private businesses outside of China, they know that they

911
00:43:29,440 --> 00:43:31,200
Speaker 3: have to abide by local rules. And so one of

912
00:43:31,239 --> 00:43:34,000
Speaker 3: the things that has been most surprising to me is

913
00:43:34,040 --> 00:43:36,920
Speaker 3: that the US doesn't encourage more Chinese firms, particularly in

914
00:43:36,920 --> 00:43:39,480
Speaker 3: industries where we have to have the technology, yeah, battery

915
00:43:39,520 --> 00:43:42,480
Speaker 3: and so on, come here, not just come here, but

916
00:43:42,520 --> 00:43:45,160
Speaker 3: you do it our way, right, fifty one percent JV

917
00:43:45,520 --> 00:43:48,040
Speaker 3: versus four nine percent. And American has to be in

918
00:43:48,120 --> 00:43:50,160
Speaker 3: charge all data silent. You know, there are certain things

919
00:43:50,160 --> 00:43:51,680
Speaker 3: you can do that are low hanging fruit. And one

920
00:43:51,719 --> 00:43:54,480
Speaker 3: of the arguments that I use often is, for example,

921
00:43:54,520 --> 00:43:58,160
Speaker 3: with these advanced supply chains, for example, with EVS China,

922
00:43:58,400 --> 00:44:01,320
Speaker 3: Chinese firms China has invented did hundreds of billions of

923
00:44:01,360 --> 00:44:04,680
Speaker 3: dollars in the last twenty years developing this out. Why

924
00:44:04,719 --> 00:44:06,680
Speaker 3: does the US or Europe want to spend the same

925
00:44:06,960 --> 00:44:09,880
Speaker 3: It's stupid. If you want to build it out, invite

926
00:44:09,880 --> 00:44:13,000
Speaker 3: them to do it, pay them the royalty fee whatever

927
00:44:13,480 --> 00:44:16,359
Speaker 3: it comes out. To take the technology and then fork

928
00:44:16,400 --> 00:44:19,120
Speaker 3: it and make an indigenous So instead of twenty ten

929
00:44:19,200 --> 00:44:22,600
Speaker 3: years twenty years behind, now you're two. That's a much

930
00:44:22,600 --> 00:44:25,480
Speaker 3: different conversation. And these are things to your point crazy

931
00:44:25,520 --> 00:44:27,719
Speaker 3: that we just don't see whether we're not picking it back.

932
00:44:28,800 --> 00:44:31,360
Speaker 1: Cameron Johnson, thank you so much for coming on. That

933
00:44:31,480 --> 00:44:32,840
Speaker 1: was a fascinating conversation.

934
00:44:32,880 --> 00:44:35,200
Speaker 2: Thanks for having me, guys, fascinating and depression.

935
00:44:48,719 --> 00:44:52,000
Speaker 1: Well, that was certainly a very fascinating conversation. I mean

936
00:44:52,000 --> 00:44:55,239
Speaker 1: there's a lot to pick up from this idea that

937
00:44:55,480 --> 00:44:58,319
Speaker 1: China is ahead in AI and that it's not particularly

938
00:44:58,360 --> 00:45:02,920
Speaker 1: close is like a really interesting contention. Yes, it's an

939
00:45:02,920 --> 00:45:05,440
Speaker 1: interesting contention because I think here in the US, the

940
00:45:05,480 --> 00:45:08,120
Speaker 1: way people talk about AI is that this is still

941
00:45:08,160 --> 00:45:11,080
Speaker 1: an area where we maintained some semblance of a quote

942
00:45:11,160 --> 00:45:11,840
Speaker 1: lead unquote.

943
00:45:12,080 --> 00:45:12,440
Speaker 3: Yeah.

944
00:45:12,640 --> 00:45:15,440
Speaker 2: I also thought, well, I guess the emphasis on the

945
00:45:15,480 --> 00:45:19,880
Speaker 2: sort of like iterative process of Chinese companies was important

946
00:45:19,960 --> 00:45:23,279
Speaker 2: because China does have this like background of taking a

947
00:45:23,320 --> 00:45:25,960
Speaker 2: particular piece of technology or a way of doing things

948
00:45:26,280 --> 00:45:29,200
Speaker 2: and then improving on it. So it seems like maybe

949
00:45:29,239 --> 00:45:32,280
Speaker 2: AI just kind of speeds that up, or maybe AI

950
00:45:32,360 --> 00:45:34,880
Speaker 2: itself is a place where it can kind of deploy

951
00:45:34,960 --> 00:45:38,480
Speaker 2: that strategy. The other thing I was thinking about is

952
00:45:39,200 --> 00:45:43,120
Speaker 2: just the importance of the supply network that Cameron was

953
00:45:43,120 --> 00:45:46,960
Speaker 2: emphasizing and how difficult it is to replicate that, like,

954
00:45:47,040 --> 00:45:50,399
Speaker 2: could you imagine a Christmas village in the US?

955
00:45:50,560 --> 00:45:54,960
Speaker 1: No, and or shoe Town, Hue City and all of

956
00:45:55,000 --> 00:45:59,000
Speaker 1: these things. No, it's almost impossible to imagine, you know.

957
00:45:59,080 --> 00:46:02,120
Speaker 1: I think this is something we've talked about Sam Demico

958
00:46:02,160 --> 00:46:05,040
Speaker 1: of Impulse Labs. You know, the idea that the supply

959
00:46:05,160 --> 00:46:07,680
Speaker 1: chain is the product, right, And I think hearing him

960
00:46:07,680 --> 00:46:11,200
Speaker 1: talk about over capacity, as in, it's not about the

961
00:46:11,840 --> 00:46:15,920
Speaker 1: overcapacity of end products per se, it's about that overcapacity

962
00:46:16,040 --> 00:46:18,799
Speaker 1: to the extent that is a meaningful lens of the

963
00:46:19,000 --> 00:46:22,759
Speaker 1: entire the entire chain, right, and all the different suppliers.

964
00:46:22,920 --> 00:46:25,880
Speaker 1: I thought that was like a really interesting idea.

965
00:46:26,000 --> 00:46:26,200
Speaker 3: You know.

966
00:46:26,239 --> 00:46:28,880
Speaker 1: Another thing that I think is important and it sounds trivial,

967
00:46:28,960 --> 00:46:31,680
Speaker 1: but setting us at the cost of labor until we

968
00:46:31,840 --> 00:46:36,640
Speaker 1: have perfect humanoid robotics, there is no substitute for population, right.

969
00:46:36,719 --> 00:46:39,560
Speaker 1: And so just the fact that the sheer number of workers,

970
00:46:39,800 --> 00:46:43,440
Speaker 1: whether we're talking potentially factory workers or the sheer number

971
00:46:43,480 --> 00:46:46,120
Speaker 1: of STEM graduates, which to some extent might be about

972
00:46:46,200 --> 00:46:49,080
Speaker 1: educational priorities, but to another extent, is also just going

973
00:46:49,120 --> 00:46:51,760
Speaker 1: to be about the sheer number of people in the world.

974
00:46:52,440 --> 00:46:55,240
Speaker 1: It ends up being a meaningful qualitative difference.

975
00:46:55,320 --> 00:46:58,120
Speaker 2: What was the stat that Cameron throughout one hundred thousand

976
00:46:58,360 --> 00:47:00,279
Speaker 2: STEM graduates or something per year.

977
00:47:00,560 --> 00:47:02,880
Speaker 5: Yeah, like more more than all.

978
00:47:02,719 --> 00:47:04,600
Speaker 2: The Western countries profess.

979
00:47:04,200 --> 00:47:09,920
Speaker 1: The multiple battery majors and the US doesn't have any anyway,

980
00:47:10,120 --> 00:47:10,560
Speaker 1: I don't know.

981
00:47:10,680 --> 00:47:11,920
Speaker 2: We gotta go to Shoe City.

982
00:47:12,000 --> 00:47:13,200
Speaker 5: We gotta go to Shoe City.

983
00:47:13,320 --> 00:47:14,680
Speaker 2: All right, shall we leave it there?

984
00:47:14,760 --> 00:47:15,399
Speaker 5: Let's leave it there.

985
00:47:15,520 --> 00:47:18,000
Speaker 2: This has been another episode of the Odd Lots podcast.

986
00:47:18,120 --> 00:47:21,120
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

987
00:47:21,080 --> 00:47:23,719
Speaker 1: I'm joll Wisenthal. You can follow me at the Stalwart.

988
00:47:23,840 --> 00:47:27,080
Speaker 1: Follow our guest Cameron Johnson, He's at Cam R Johnson.

989
00:47:27,320 --> 00:47:30,480
Speaker 1: Follow our producers Carmen Rodriguez at Carmen armand Dash I'll

990
00:47:30,480 --> 00:47:32,960
Speaker 1: Bennett at Dashbot and kill Brooks at Kilbrooks.

991
00:47:33,320 --> 00:47:34,320
Speaker 5: More Oddlots content.

992
00:47:34,320 --> 00:47:36,440
Speaker 1: Go to Bloomberg dot com slash od Loots, where we

993
00:47:36,440 --> 00:47:38,680
Speaker 1: have a daily newsletter and all of our episodes and

994
00:47:38,719 --> 00:47:40,640
Speaker 1: you could chat about all of these topics twenty four

995
00:47:40,680 --> 00:47:44,120
Speaker 1: seven in our discord Discord dot gg slash.

996
00:47:43,760 --> 00:47:46,680
Speaker 2: Oplines And if you enjoy odd Lots, if you want

997
00:47:46,760 --> 00:47:49,160
Speaker 2: us to go to China to visit Shoe City, then

998
00:47:49,200 --> 00:47:52,480
Speaker 2: Please leave us a positive review on your favorite podcast platform.

999
00:47:52,760 --> 00:47:55,680
Speaker 2: And remember, if you are a Bloomberg subscriber, you can

1000
00:47:55,719 --> 00:47:59,120
Speaker 2: listen to all of our episodes absolutely ad free. All

1001
00:47:59,120 --> 00:48:01,400
Speaker 2: you need to do is find Bloomberg Channel on Apple

1002
00:48:01,440 --> 00:48:04,720
Speaker 2: Podcasts and follow the instructions there. Thanks for listening.