Chinese internet darlings, the decoupled VC sector, and open-source leaders, with Jing Yang, Asia Editor of The Information

In this conversation, Jing Yang, Asia Bureau Chief of The Information, a former WSJ reporter, discusses the evolution of China's tech landscape over the past decade.

We explore the corporate strategy and positioning differences between established tech giants like Baidu, Alibaba, and Tencent and newer entrants like Pinduoduo and Shein. Jing also talks about her reporting on Shein and Temu and their attempts to be publicly listed in the West.

The conversation delves into the regulatory challenges faced by these companies both domestically and internationally, and how that has led to a belief shared amongst Western investors that “China is uninvestible.”

She dives into the implications of the AI arms race between China and the US, and the shifting dynamics in the venture capital landscape in China. She explains the differences between RMB-denominated funds and US-dollar-denominated funds, as well as how the VC ecosystem has evolved over the last few years.

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Jing Yang is the Asia Bureau Chief at The Information. Based in Hong Kong, Jing leads a team of reporters covering the region's vibrant tech and venture capital scene and has written and overseen agenda-setting stories on topics ranging from AI to semiconductors to marquee companies like Nvidia and ByteDance.

Prior to joining The Information, Jing was a Senior Correspondent at The Wall Street Journal where she covered a broad range of topics, including Wall Street’ foray into China, Beijing’s crackdown on internet platforms, and the 2022 Beijing Winter Olympics. Jing also has reporting stints at Bloomberg News and the South China Morning Post.

She has won three Society of Publishers in Asia Awards and three Best in Business Awards at the Society for Advancing Business Editing and Writing in the US. She is an honorary lecturer at her alma mater, the University of Hong Kong’s Journalism and Media Studies Centre, and a board member of the Foreign Correspondents’ Club in Hong Kong.

In today’s world, there’s no shortage of information. Knowledge is abundant, perspectives are everywhere. But true insight doesn’t come from access alone—it comes from differentiated understanding. It’s the ability to piece together scattered signals, cut through the noise and clutter, and form a clear, original perspective on a situation, a trend, a business, or a person. That’s what makes understanding powerful.

Every episode, I bring in a guest with a unique point of view on a critical matter, phenomenon, or business trend—someone who can help us see things differently.

For more information on the podcast series, see here.

Chapters

00:00 Introduction to Jing Yang and Her Journey

02:35 The Evolution of Chinese Tech Mindset

08:08 Comparing Old and New Chinese Tech Giants

11:16 The Unique Business Models of Pinduoduo and Shein

17:41 Regulatory Challenges for Chinese Tech Companies

22:04 The Impact of AI on Chinese Tech Giants

32:30 US-China AI Arms Race: Context and Implications

34:55 Bridging the Gap: US and China Perspectives

39:10 China's AI Strategy: Open Source vs Closed Source

44:32 Emerging Players in China's AI Landscape

51:41 The Impact of Decoupling on VC Landscape: Sequioa to HongShan

01:05:44 Future Trends in China's AI Tech Space

Auto generated transcript for reference, typos might occur

Grace Shao (00:00)

Hi, this is your host Grace Shao and joining me today is Jing Yang, Asia Bureau Chief of Information. Previously, she was a senior correspondent at the Wall Street Journal in Hong Kong where she covered a range of topics including Wall Street’s foray into China, the globalization of China’s most prominent tech companies, and the country’s domestic tech regulatory crackdown. Jing, it’s so great to have you on and ⁓ it was lovely running into you actually recently at Karen’s book launch in Hong Kong. We’ve known each other for a few years now, you know, over like our paths crossing.

whether in journalism or when I was working in Alibaba, you’ve covered Chinese business and tech for over a decade across from SCMP, Bloomberg, Wall Street Journal, and now obviously leading the information out here in Asia. So looking back right now, like over the last decade, what’s really changed the most in terms of talent, capital, and company building China, and just your own kind of observations of the whole industry?

Jing Yang (00:52)

Sure. Thank you for having me. Yeah, it was indeed good to run into you at Karen (Hao)’s book talk. So I think the one thing that sort of really struck me is that when I started covering the, started ⁓ working as a reporter, 10 plus years ago, at that time, if you recall, then China was rapidly still integrating into sort of the West led global order.

A lot of the Chinese companies and executives and entrepreneurs, think their mindset was still like there’s so much we can learn from the West, from the US, from Europe, from what companies have achieved there. And then now that has changed for various reasons we can get into later into sort of, know, this is the way actually, you know, we do things in China and it has in so many cases proved to be actually working better or

or there’s more this awareness of things are different in China, whether it’s cultural or economical or social. And I think then you also have seen sort of equally some examples from Silicon Valley or elsewhere sort of looking eastward and looking at what are the things that China or Chinese companies have done that we may actually

there are some lessons or experiences we can draw from. I think that is a very interesting sort of shift. It’s not just one way anymore, it’s more two-way.

Grace Shao (02:17)

For sure. But I think in that sense still, you know, we have people like Bill Gurley going on his podcast saying like Chinese entrepreneurs or business leaders are just so much more attuned to what’s happening in the U.S. compared to vice versa. But there’s definitely more more interest coming from the West to China. Right. I think on that, like one interesting, you know, Chinese tech culture that’s really being adopted and, you know, seeing it being embraced by Silicon Valley right now is the 996. You know, like

That’s an interesting phenomenon. What do you think of that? Do think people are realizing that you got a 996 to really push ahead?

Jing Yang (02:50)

Yeah, that is a very good question. And I think I’d like to actually unpack what we are talking about when we’re talking about 996. When it first started in China, and by the way, that wasn’t just something adopted by tech companies, but also in general, a lot of big companies in the private sector in China were doing that. And I think what in that sense, from the mid to late 2010s,

When companies were adopting 996, it was mostly codified. Remember, that was a pre-COVID world. You are expected, when you’re working, you’re expected to show up in the office, at your booth or whatever. So that means you have to clock in at 9 a.m., clock out at 9 p.m., and then for six days a week. But why you actually do in those 12 hours and six days a week is another question.

And I think over time, some companies realize there’s actually some kind of waste and inefficiency that this codified system has created. For example, a lot of companies, ⁓ employers, in order to entice employees to work longer hours, they provide dinner and then they provide, say, you can expense your cabaret home if you work past 9 p.m., that kind of thing. And over time, then, I think that actually did lead to some sort of inefficiency in the sense that

Maybe some people just want to stay back. If I’m going to go home and have a take on myself, then why don’t I do it at the office when it’s paid for? I’m not saying everybody does that, right? But certainly there are people who did that. And I think while I’m not discounting at all, Codefine 996 has led to burnout and even much worse things. But on the flip side.

is that when you codify something like that, that is the problem. So then if we look at in the US, for example, if you are a Wall Street banker or lawyer or a management consultant, I think you are expected to work long hours when you are servicing a client who has urgent needs or you are just on some really tight project deadline or say if there is a market meltdown.

And then nobody would say anything about, that is 996 or not. And then so I think it’s easy to throw the labels around and then not to actually look at what is happening. It’s not like in the US or anywhere in this world that people just don’t work extra hours. That’s certainly not true. And in terms of, I read the reports. I think there was a wide article that wrote in depth about this.

But the one thing that I think is quite different is that we haven’t seen this being adopted as a policy across-broad, especially by big companies in the US or anywhere else. And in China, when they loosened the 996, what was loosened was just like you are not expected to clock in and out at 9 a.m. and 9 p.m. But you do still expect to work when needed.

And then, and I think in a way, the post COVID world where most workplaces is set up to have employees work, you know, virtually from anywhere has actually made it worse for people everywhere, right? You know, as long as you still have your laptop or even your phone with you, you’re expected to say if your boss messages you at, you know, 10 PM with some questions.

I think it’ll be unthinkable that I just ignore that, right? And so I think that is actually the real issue than when we say, you know, 9-8-6.

Grace Shao (06:26)

Yeah, think it like I totally agree with you in many ways that like this whole working from home thing has actually made everyone feel like they’re more like glued to their devices and more clocked in. But I think it also just showcases that this whole adoption of so-called 996 in the US right now is really driven by, you know, just the excitement and I guess competition now we’re seeing in AI because, you know, for big tech for many years, we’re used to this kind of story of like, you know, ⁓

not a very like, it’s a very cushy job, not that competitive internally once you get in, you get all the perks of like the gyms and the free food and everything and people can just kind of go for walks in the middle of afternoon, right? and that culture’s completely changed. And I do want to really double click on that on the China US AI arms race per se later on. But before we get into that, I really want to kind of look backwards first, try to start of your career, right?

You’ve been covering China’s tech and business space for more than 10 years, essentially. Comparing the earlier BATs, whether it’s the Baidu, Baidans, Alibaba, Tencent ones, to the new companies like the Pinduoduo, Shianti, Moos, what are the kind of differences in their corporate structures or management styles or even their so-called Chu Hai strategy, like their going global strategy? What are some observations on that front?

Jing Yang (07:44)

Yeah, I think overall, I would say, you know, since you mentioned BAT, I think what the B-stands for Baidu are Bytedance, right? But if you look at just the A&T, you know, the Jack Ma and the Pony Ma, I think they represent sort of the last generation of Chinese entrepreneurship. And then moving on to like Jiang Yimin, who’s younger, and then obviously, Kuanlin Huang as well. And then to like the...

the founders of the hottest startups nowadays in China. think one big shift is that the entrepreneurs, the builders who grew up, who were born post 1985, post 1990, they grew up in an era when China was rapidly integrating with the world.

And they likely grew up watching a lot of American TV, really engrossing a lot of American culture. then that sort of... And it was also during that time when China was really just thinking like, we are the students learning from the superpowers from the West, that kind of era, right? So they sort of grew up to have a more global view.

of the last generation of founders and entrepreneurs. then so now this is why the companies that they are trying to build right from Bydowns, which is already a giant today, to the smaller startups that we’re seeing, they want to compete at a global level from day one. Whereas in the case of Tencent, Alibaba, or Baidu, what they did was we

took something that has worked on, for example, Amazon or Paypal in the US, and then we replicate that model, adapting it to the Chinese soil. And then we make it work first in China. Then if that has worked, then let’s see if we can export that success somewhere else. I think that that’s probably the biggest difference.

Grace Shao (09:41)

And I know that beyond the BAT, you know, covered actually, Temu and SHEIN quite extensively. I feel like these two companies are a bit more mystical to the world because, know, they feel like in some ways they were the first companies that really succeeded at not being seen as Chinese, even when they went global. Yet they were caught in the geopolitical rows when the first round of trade wars happened. And, you know, now they’re not really making the front of the headlines anymore. So what do you really make of these two companies?

I guess their positioning, how they’re doing now and their journey to potentially trying to get listed in the West and just frankly failing at it at this point or not being able to.

Jing Yang (10:21)

Yeah, I mean, maybe we’ll just separate PDD slash Temu and SHEIN a little bit because as you know, Temu is a subsidiary of PDD, right? So I think Xin is a very interesting company in the sense that it’s kind of, I mean, of course, you know, people see them as an e-commerce company. But however, if you look back at the roots of the company and the background of their founders, it’s not really a tech company in the sense that, you know, they are

very good at doing international trade, foreign trade in China. And then e-commerce is just internet, it’s just a way through which they made their, it was like a marketing and a sales channel for them. But the company didn’t start as like say with tech or internet in its genes. It was...

For example, in the early years of SHEIN, they really basically went to like all these markets in Guangzhou or somewhere else and then see what we can sell to overseas markets. And then ⁓ they’ve sold a bunch of random things from teapots to wedding gowns and then, know, basically whatever.

sold, they will sell it. ⁓

Grace Shao (11:33)

It was like a glorified

drop shipping business essentially, right? Like a bigger scale drop shipping business essentially in the beginning.

Jing Yang (11:39)

Yeah, exactly.

So that’s how the company got started. But obviously, they then fine-tuned their business model over the years and then did make some true innovations in terms of how to adopt technology and making fast fashion more, not only more efficient, but also more trendy and also through the process, it really drove down the cost.

But all of that was happening against the backdrop of China really has achieved that kind of manufacturing base that enabled this kind of opportunity to arise. And I think that is the part of the Shenzhen’s business model that was most misunderstood and why there was all these allegations of slavery for slavery. Because it’s just the...

the cost efficiency was just mind blowing to a lot of people. And then obviously what Temu has done is to expand, know, Shin’s business model, replicate that from not just apparel, but to many other sectors. But essentially these two companies and or as e-commerce platforms per se, they’re actually quite

you know, different in a sense, because what SHEIN has been selling, apparel, is like a pretty non-standardized kind of merchandise, right? Every piece of clothing is different. And then they change so rapidly in terms of what is the market trend. Whereas when you are selling, say, toys or home appliances, these are standard goods that don’t really change that much over time. And also,

⁓ the marketing and the shipping and everything is also a lot, is quite different. But in terms of like sort of how they were misunderstood, I think the rise of SHEIN team was really to a large extent misunderstood in the West because what I said earlier about, know, because those kind of business models was enabled because of the decades of, you know, China being the worst factory really

accumulated the manufacturing capabilities. when I say manufacturing capabilities, doesn’t just mean factory, the efficiency of the factory floors, but also everything that goes behind it, you know, the infrastructure, the logistics, etc. And then in the process of that rise, I think in the typical Chinese mindset is like, I don’t want to talk about my success or how great I am. I just want to

You know, this very, maybe very pure mindset. I just want to make money. I just want to build a successful business. Right. I only need to satisfy my customers. Like my customers are the only stakeholder I need to think about. Right. They don’t think about, there is also, you know, investors or potential investors, regulators, politicians.

I used to joke back when Shane started to face all this backlash in the US. I used to joke that the people who came out against criticizing Shane in the US are like the pirates of their customers. That shows you sort of where the mismatch is.

Grace Shao (14:52)

Yeah, I think it’s so interesting that you brought that stakeholder engagement part up and it’s really funny, I think. I remember SHEIN when they were like, they made it to the front page of Bloomberg saying, like you said, being accused for labor malpractice or whatnot. They were just trying to hire so like crazy, like frantically hire people who can manage their PR. But it was kind of one of those things where frankly it was a bit too late. Like they really didn’t have the sense to.

actually put out their messaging and put out that what like explain what they’re doing beforehand. But I actually do want to kind of bring it back to the regulatory side of things. So basically, where are we at right now with the two companies? ⁓ Like, well, I guess, and more on the team side, as far as our she inside, are they still trying to pursue a IPO in the West? Or, you know, what where we are right now? And what’s really the hurdle? Is it like an international?

kind of a geopolitical hurdle, or do you think it’s actually a domestic regulatory?

Jing Yang (15:50)

Right. I think it’s sort of a both. I mean, I’m just like repeating what has been reported out there that SHEIN now as a confidentially submitted application to listen in Hong Kong. By the way, that is sort of an exception made by the Hong Kong Stock Exchange because usually, like typically the only times that the Hong Kong listing regulatory regime does not usually allow confidential filing unlike in the US and in the times that they would

usually ground that exemption is for companies that already listed elsewhere. You remember all that homecoming listing wave that happened a few years ago, Alibaba and Baidu, cetera, that when they were applying to list in Hong Kong, they were all exempted to file confidentially. And the Hsing, in that sense, being a company that is not listed elsewhere, that is a of a waiver that the Hong Kong Stock Exchange gave them. And then in terms of hurdles, mean,

All of this happened after the Didi debacle, right? And after which CSRC tightened the regulatory framework for companies, for Chinese companies taking the list overseas. And then SHEIN sort of was caught in, know, SHEIN and many other companies IPO have suffered significant delays because of that.

And in SHEIN’s case, because the company is really quite big in terms of the size and also all the attention it has attracted. But if you look at from, like, say, a pure domestic Chinese angle, what is what SHEIN is as a company? It really, as I said earlier, in the China domestic angle, SHEIN is an employer. SHEIN is a company that that is a big customer to a lot of factories in China.

That’s essentially what it is, because it doesn’t sell in China. So then in that sense, SHEIN is a very big contributor in terms of the whole economy that it has given rise to, as well as the tax dollar, the number of employment that either directly and indirectly has contributed. And then that sort of makes it like a case.

Grace Shao (17:34)

Exactly.

Jing Yang (17:57)

in the regulatory context, that case that cannot be, that has to be really, say, deliberated on. But then does China want a company like this to live, in the US or in London? I think that’s why there is the interplay between the domestic consideration and the geopolitical tensions and also the backlash to that.

that came with it.

Grace Shao (18:20)

Yeah, I think that explains it really well. think for a lot of people outside of China, they don’t realize SHEIN actually is not like a household name at all. The people, the consumers actually are, it’s not a consumer facing company in that sense in China at all. It’s actually to be business per se in China, right? I think it’s perfect. Exactly. I think it’s great you brought up the Didi (Chuxing) situation and I think that’s where I want to kind of bring it back to last question on the big tech space in China, which is like, you know,

Jing Yang (18:32)

Exactly.

is like a B2B wholesale company, essentially.

Grace Shao (18:47)

We all know there was a domestic, domestic regulatory kind of tightening over, you know, between 2020, 2023 per se. know, Didi being kind of at the very top of the epitome of what was happening. And then Baba, Tencent being faced with the, situation as well, right? Like the two choose one between the two kind of camp situation, the regulatory problems. So, but after that.

Basically international investors pulled out of China. People were kind of scared of the China regulatory crackdown. think people outside of China don’t really fully understand why the domestic regulators were cracking down on these companies. Could you give some context on that? And then I think what I really want to also ask you, the second part of the question is, are we seeing a revival of these companies now with

AI being supercharged into their strategies? know, recent BABA and tens of earnings have done really well, all driven by AI, right? Their new AI strategy. Or are they kind of just, you know, the last generation staying there back in 2023, they just kind of stalled and stopped there? Are they becoming relevant again? So I think it’s two parts of the question.

Jing Yang (19:52)

Yeah, so yeah, let me tackle the first part. I try my best even back when I started, you know, this whole thing happened when I was still at the Wall Street Journal. And back then, I think in the beginning, it’s been called the China tech crackdown a lot. And I actually made a point when I was writing about it at the journal, after a while, it has become very clear it’s not a tech crackdown. It’s not a

crackdown on tech companies. Because if you look at sort of the hard tech companies, either it’s a Huawei or any other that’s in that space, they were all fine, right? Essentially, the crackdown was targeted at internet platforms, right? Which sort of is equivalent of big tech in Silicon Valley or in the US when we talk about it. But in China, there is actually a differentiation between

Internet platforms and tech companies. So that’s the first thing. And secondly, I think in terms of that regulatory assault, there are, you know, there are, you know, legitimate sort of economical and regulatory reasons to do so. Right. As you mentioned, the Arsheng, the truth one from two, that was that was indeed a violation of China’s antitrust regulation where

e-commerce merchants were forced to only choose to sell their wares between Alibaba and JD, for example. when this whole thing happened, was indeed sort of the regulatory incentive to do that. was indeed raining years of flouting.

anti-trust regulation and other types of regulation. But then obviously, the problem that came with it is that the way that the Chinese regulatory framework and the Chinese government in general works is that it doesn’t really care about doing a very good job at telegraphing its regulatory intention.

That’s not just on the tech space, like overall, So that’s why if you remember the online tutoring crackdown, Just essentially what happened was just, that was very scarring, by the way, for a lot of investors, right? Because they targeted a sector where the biggest companies are listed in the US.

So then when you can’t just do this, issuing a piece of document that just evaporated the entire sector, that decimated the entire sector overnight. That was very scary. ⁓

Grace Shao (22:31)

Yeah, it was so sudden. That’s what it was. There was no hints or clues. I feel like with the anti-monopoly, was actually, you know, there was like momentum building up to it.

Jing Yang (22:41)

Yeah, so that really, I think in my recollection, that really crystallized the saying that China is uninvestable. When people say China is uninvestable, they mean Chinese stocks are uninvestable because that really crystallized how precarious, so to speak, that Chinese policymaking can be. And then so...

Similar thing with the Didi debacle. think the biggest problem with that is, one can argue on Didi’s behalf that the company didn’t do anything wrong because what happened at the time was there really was just no regulation governing Chinese companies listing overseas. Things were just not formulated. And obviously, Chinese regulators realized that was the problem. that’s why they...

came up with this new framework that has been in effect since early 2023. However, the absence of a formulated framework did not stop them from punishing companies in the first place for flouting rules that are not explicit. Then that is another piece that shows, OK, so this is unpredictable.

this whole virtual environment.

Grace Shao (23:58)

And the second part of the question is, you think we’re seeing a comeback? Because essentially, now you can’t really get into China’s private AI sector, right? If you’re a foreign investor and the way they can get some kind of exposure, I guess, is through the US listed companies, tech companies. In this case, it would be the Alibaba’s of the world, right? So are we seeing kind of a shift in interest again, or a revival of these tech giants?

Jing Yang (24:23)

Yeah, I like to answer that question by going a little bit further back first. So you remember the Shanghai Stock Exchange when they first came out with the NASDAQ-style starboard, right? There was a lot of discussions on what are qualified as innovation so that a company can qualify as being listed on starboard.

Grace Shao (24:36)

Mm-mm.

Jing Yang (24:47)

And you remember Xiaomi actually was going to become the first company and then it didn’t happen. And I remember having conversations because I was covering IPO and capital markets of Wall Street Journal at the time. I remember having conversations with some lawyers who consulted with who advised the Shanghai Stock Exchange on designing the rules for Starboard. And there were still a lot of undecided issues such as, OK, for example, did the other time remain unlisted?

Then the conversation was like, Didi as a company, even though it wasn’t an innovation in terms of the technology of like, ride-hailing, for example, but it was innovation in the business model. Then does innovation in business model qualify as true innovation, therefore qualified being listed on Starboard? There was all these questions at the time. And obviously, we now know the answer with what happened with Didi later on.

And I’m bringing this up because shortly after the crackdown was on the Internet platforms, followed ⁓ the zero COVID and the whole Chinese economy and many other things related to that just were in a really depressing, know, slipped into a really depressing state. Then

Around that time, toward the end of zero COVID, had the arrival of Chagabitie that sort of shocked the core of a lot of tech companies and researchers and investors in China, which we can get into later. But I think what the crackdown on internet platforms made people believe that actually China’s paramount leader, Xi Jinping, is probably not a fan of internet platforms.

He probably does not think the type of innovation in business model that I just talked about qualifies as true innovation. Instead, the things that achieve their companies at Huawei are true innovation, are the real technological advancement that can help bring China forward. And so I think that coupled with the arrival of ChatGPT,

sort of, you know, really served as a wake up call, I think, to both the tech incumbents and the startups in China that we really need to, you know, we are actually behind. We have been, you know, because you remember like in the mid 2010s, you know, China had this four AI dragons in the computer vision age. And then you have a lot of people proclaiming that China is ahead of the US now in terms of AI, right? And obviously, that was all.

That sort of dream or awareness was just shattered. All things came together between late 2022 and early 2023. And then that’s where we are now. So it’s hard to tell whether when we see the BATs nowadays...

really doing some of them doing really good work and innovation in AI is driven by the regulatory reason or else. But I would say just the way that things have played out seem to point out to the direction that this really is the era that they have to go through.

Grace Shao (28:01)

Yeah, like to your point, I think there was like an awakening where the focus or the wanted focus was on the so-called hard hard power competition, right? And like you said, that the kind of slippery slope downward trajectory for the industry was really not just caused by one thing, but it was just the macro situation, the regulatory situation, the companies also not innovating in some people’s eyes, were not doing tech for good for the community somewhat.

You remember the common prosperity rolled down, right? All these things are kind of just adding up together. And then there was the whole COVID zero thing that just really made everything even worse. think that that definitely fed into the fear for international investors and international, I guess, China watchers per se, if you have to put it that way. But I think I want to really now go into the next section of our conversation, which is what you’ve kind of touched on already, which is China and AI, right? And China.

Jing Yang (28:31)

yeah.

Grace Shao (28:57)

China’s AI space and how China is positioning itself right now. I think from the West, especially Western media, it’s very, very, very much focused on this idea of arms race between China and the US. You know, there’s a lot of ⁓ comments about how deep the deep sea moment woke Silicon Valley up, made people realize that China was catching up, you know, there’s some fear mongering, frankly, I think, but there’s some

I think some charged by actual fear or confusion or even surprise. How do you kind of make up that? Like, I guess just a high level context first before we go into details.

Jing Yang (29:34)

Yeah, mean, truly, when we talk about US-China AI race, we cannot talk about without talking about US-China competition, whether it’s, I think people now generally call them this strategic rivalry. That is all happening against this broad backdrop. And then the one thing I would sort of

⁓ note though is that, you know, it’s not like there’s a lot of companies or builders or funders in China from day one thinking about, I want to like outcompete ChatGPT or, you know, Anthropic with what I’m doing right now. I don’t think that’s... Yeah.

Grace Shao (30:13)

Yeah, that’s the point. Yeah, like, like, there’s not that strong narrative in China domestically, right? And I think

the information you guys because you guys write for such a frankly, sophisticated audience and people who are kind of more focused on really the business. I feel like your coverage is not as geopolitically charged. It’s actually just talking about what the innovation is, how the capital market is moving. So I can think from your perspective, like, what how do we make a business? this all noise? Is it just like

because of American domestic political reasons that there’s this kind of geopolitical narrative? Or do you think there’s some sense that in the tech space in the US, they genuinely see China as a rivalry that they have to hold down versus like we said, like the China tech space actually just, they don’t talk about that as much. If anything, I think the China tech space actually admires American tech space quite a lot, like as in they really worship a lot of business leaders. They study their business models, you know, like there’s less of a rivalry sense, right?

Jing Yang (31:08)

Yeah, so I think in the US there is a bit of a boast of what you just talked about. I’m not an expert on America, but what I have observed, at least the China relevant people that I talked to from Silicon Valley to Washington DC, I do sort of see like increasing bridging. I think in the past, you know,

Silicon Valley, obviously, we know is more left leaning and then, know, this is different. then with, you know, Trump’s presidency, you see all of that, you know, that that gap is bridging. And that actually ended. And when I say the gap bridging, the gap is also bridging when it comes to the China discourse. So on one hand, there is definitely fear mongering. And that fear mongering, think previously probably mostly concentrated in the D.C. and now is like spreading to Silicon Valley. That’s what I.

observed, right? And also, when I was talking about in China, how people were shattered with the release of ChatGPT in late 2022. Equally, think in the US, what do we see about 12 months later is that with the advent of a DeepSeek R1, a lot of people in the US are like, know, America is far ahead, is the indisputable global leader in AI.

from the China-GDP moment to then the deep sea moment is that China is faster catching up or in some cases they even say China is already ahead. And also that in particular is very true, the fear mongering in the semiconductor space as well, because we can’t talk about it without talking about semi. So I’ll just be very quickly talking about here.

from Jensen Huang to like many other people. I think the last year or so they have been talking up of Huawei and other homegrown semiconductor companies in China and the capabilities of their chips. But the reality, I’m not saying Huawei is not progressing, but the reality as our reporting has shown.

the information. The reality is that actually the BATs themselves actually do not want to adopt a Huawei’s ascent chips for various reasons. First is just the tech is just still not there. Nvidia is still the gold standard. And the second is also because all these companies compete with Huawei in the cloud computing business as well. Like why do you want to enable a big competitor? But you don’t see this being talked about when in the US.

From Silicon Valley to DC, when people talk about how Huawei is threatening Nvidia, how US semi control policy has enabled, has forced China to compete and innovate faster. So I hope that makes sense, by the way.

Grace Shao (33:52)

Yeah, yeah, definitely. think that’s something I wrote about as well. just like, it’s actually people are not realizing from a very selfish business perspective. At the of the day, these companies are for profit. they’re public listed companies. Their goal is to make money. They’re not like, you know, following government orders to like, know, create something on a national level for the sake of that. So like, to your point, like they don’t want to give money and give business to Huawei because essentially one of biggest competitors, right?

Jing Yang (34:15)

Yeah.

Grace Shao (34:20)

because like Baba and Tencent, they all have their own cloud business. I think I want to double click on one thing. said, know, there was, when Deepseek came out, R1 came out, well, V3 and then R1 back to back, know, Silicon Valley said, maybe China is ahead in some ways, right? At that point, it was talking about the engineering and efficiency, You know, from your reporting, where is China actually ahead?

behind or really differentiated in terms of their whole AI strategy? And this is a broad question. So it could be about the companies particularly, or do you think the whole ecosystem is operating a different way? How do you see that?

Jing Yang (34:55)

I think obviously DeepSeek sort of made it cool, made it the open source and open weight school, sort of school of thinking. Cool, right? I think if you remember before DeepSeek became phenomenal, from Baidu to Alibaba to Bydance, everybody was just doing their own closed-source models.

If you do open source, only release smaller or more inferior models. You only open source those. And then now that what happened with DeepSeek, just really made in the LLM space, made people realize actually China can be ahead. China can have a real edge if it pushes ahead with open source. And then

And then that and also when you open source your model models, it also just naturally encourages like a broader and wider adoption of your models. It sort of can travel beyond the national borders on its own. Right. And if China were to let’s say if, you know, by the way, as we established, right, it’s not like the Chinese companies that are building large language models are thinking about what the policy.

or what the government officials are telling us. They really truly are just thinking about, like, I want to be better, right? How do I get... If you build a model, obviously you want your model to be used. You want developers to build applications on top of your models, right? You want the cloud providers to include your models as part of their offering. So I think that’s what’s driven that. And I think the open source thing really sort of shown that, you DeepSeek made it...

a lot people realize that a lot of people in China realize actually open source is the way for China to pull ahead. And that has happened obviously with Alibaba’s Qwen and also I think most recently, Zhipu as well as Moonshot came up with their own latest models that also have impressed a lot of AI watchers in the US as well. So I think that’s where,

That is where China is different. And I just want to add one more point as well. In the US, there’s a lot of money to be made in providing enterprise software solutions. then naturally, that’s when AI applications are being built. You want to build for survival. You want to build to be able to become profitable.

naturally the enterprise software solutions, right? You build a 2B business. But in China, it’s completely the opposite. Chinese companies in general just are very stingy in terms of paying for software, right? And then so that sort of is the way the ecosystem works. And it has always been like that, right?

enterprise customers just naturally go to the next cheaper solution. then, you know, entrepreneurs and also venture capitalists that see who see these companies know that this is the environment, then then they also know that, you know, if you go down that route, you’re just basically, you know, waiting to to go out of business. And then so that’s also what makes the open source led, you know,

an open source led business model, you know, like have a better chances of working in China. Right.

Grace Shao (38:04)

Yeah, definitely. I think the open source versus closed source discussion has been even, you know, rooted out in the software era. like, to your point in China, it’s really like a market share like business. you it’s like you commoditize open source models, you try to capture all the market share, right? Like it’s it’s very consumer facing right now. A lot of the LLM they’re all rolling on consumer applications versus the US to your point. You know, it’s it’s you actually make you try to make higher margins on a lot of these enterprise products, but you just can’t in China.

like the willingness to pay is still so low and not just trying to buy things across Asia in general, like the willingness to pay or I don’t know if it’s a cultural thing or it’s just like people just don’t want to pay. you know, I was even shocked I think when I was working for one of the big companies and like a Chinese company for a while where you would even have like pirated software in their company computers. like, ⁓ you definitely don’t need to save from that money. But it’s just a mentality and then there’s a lack of like.

I must pay for privacy, whatever mentality around it. So culturally, that definitely has shaped the markets quite differently. So I think we touched on quite a few of the startups. So like you mentioned, was Drupal, Bytron, Moonshot, Minimax. Do you think there are any companies that are kind of going unnoticed still in the West? Like we named the four that are still called, there’s still a...

call it what was the four dragons at one point? Wait, four tigers. I get the mixed up with just tigers, dragons.

Jing Yang (39:30)

Six little dragons. Yeah. Yeah.

Grace Shao (39:33)

Yeah, they keep on updating them. It’s

like new versions of Dragons and Tigers. are there any online companies right now that you think are going kind of under a notice? Because DeepSeek in many ways actually was not being, they don’t have strong PR. Liang Wenfeng clearly is a very low profile guy. And I don’t think people really knew about him outside of China and China’s AI ecosystem until V3 came out. So like, are there any kind of...

Jing Yang (39:38)

Yay.

Grace Shao (39:59)

companies that you’re eyeing or covering that you think could be the next one, or you think the LLM space is already pretty saturated and incumbents are going to kind of stay as leaders at this point, or we might use the consolidation.

Jing Yang (40:10)

Yeah, so back when we talking about the six little dragons or tigers or whatever, DeepSeek was part of it, of the six, but it was probably the least talked about because it’s just very different from all the other five, right? All the other five had half venture capital funding, have outside investors. DeepSeek remains fully funded by High Flyer Capital Management till this day. But if we’re limiting the...

the scope to just the LLM developers and I would say that I don’t see the possibility of having anyone that we haven’t seen out there. As a matter of fact, I’m actually surprised that the consolidation hasn’t happened at a bigger scale with the exception of of Alibaba essentially acquiring 0.1.AI. We haven’t simply seen other

consolidation happened yet. And I’m actually surprised. If you ask.

Grace Shao (41:05)

For context,

sorry, readers, sorry, listeners, that one’s the one that Lee Kaifu founded. outside of Tsinghua campus, yes.

Jing Yang (41:09)

Yes.

Yes. And then now we see that Jhipu has filed to or is sort of looking at to go IPO in both, you know, Chinese, Asia market and Hong Kong. You know, I think whenever they release their prospectus, people will be reading it with a lot of interest. Other than that, you know, I’m just surprised that the so-called dachang, the tech incumbents in China have not consolidated.

I think there was a time in my, you know, I recall in my reporting, like say in my conversations with sources about 12 months ago, there was a time when some tech companies were seriously thinking of acquiring some of the companies which is mentioned. And for one reason or the other that didn’t happen. And all the tech companies in China actually decided to build their own as well, right? So this is quite different from Silicon Valley if you look at it, right?

we’ve seen from Google to the other companies, are crying pretty sizable startups, or not really are crying, are quite higher. So I do think that the Chinese LLM space doesn’t need some consolidation. It’s just not sustainable. need the level of compute that is needed and coupled with the chip

shortage China finds itself in. It’s just not sustainable.

Grace Shao (42:32)

It’s such a high capex game here, so how do these startups continue to fund themselves? I want to go into the VC space later, but mean, end of the day, it’s only the big check comes to have the money to keep on even chucking into that machine.

Jing Yang (42:39)

Yes.

Yeah,

that’s exactly what I was trying to get to, just not sustainable to have, say, 10, 12 LLM developers.

Grace Shao (42:55)

Exactly. I think it’s

interesting, a lot of them are financially backed by them, but not at a very big scale at this point. It’s like, you know, like a hundred million dollars here and there, but nothing bigger than that rate.

Jing Yang (43:08)

Yeah, exactly. if I were to, I Alibaba has probably backed it the most, right? And obviously, it did it also for the sake of promoting, know, helping the cloud business, you know, expand its market share as well. But if I were to take a guess, I would say that some of these companies will just have to really run out of money.

And then to the point that existing investors are willing to sell, say, don’t know, five cents on the dollar or whatever. So that it becomes financially attractive for any of the tech companies to actually acquire them. Otherwise, you know, it’s just not going to, you know, I don’t know the tech companies. They’re all very, you know, the people sitting on top of this company are all very like sophisticated. They’re not just going to be, you know, spending like, I don’t know.

20 billion dollars or even not 20 billion, like 10 billion dollars or five billion dollars by a technology that they think maybe they already have on their own, or they can do better on their own. So the only way that it can work is that, you know, things have to just drag along a little bit longer for the pricing and expectation to match. Right now, I think there’s a pretty big gap. And also, lot of the entrepreneurs of the

Grace Shao (44:21)

Yeah.

Jing Yang (44:25)

among the six little dragon camp. But they also don’t want to call it quits yet, I think.

Grace Shao (44:30)

Yeah, I think that people are holding on to their dream. And I think I like people ask me about what I think of the AI startup founders of this generation as well. Like to your point earlier, they kind of grew, they grew up differently from the last generation entrepreneurs. And there’s less of a, want to make a quick buck kind of mentality. They are really much more mission driven when you, you know, like hear, hear about them or, know, their media appearances or what they say out loud, you know, like where you’ve been the moonshot guy, Yang Zhilin really, really just talking about how much of a

know, philosophical pursuit it is for him to chase AGI. Actually, you know, I want to kind of pivot into the VC space. We touched on the fact that China’s VC space, frankly, is not as vibrant right now. You know, obviously the majority of the money right now, even to back these startups are from the VATs or the situation like any of the bigger internet companies from the last generation. So how has the regulatory reset

since 2021 really reshaped the local domestic VC landscape because we saw that Sequoia was probably one of first that started the decoupling effort, splitting out their Chinese business called Hongshan, which is like a literal translation to Sequoia, the tree. Are we continuing to see this play out or do you think we’ve kind of finished it, wrap that up already? It’s been a couple of years and the VC space is getting a bit of an energy back or...

recapitalization.

Jing Yang (45:53)

Yeah, I’ll talk about decoupling first. I I think the US China venture capital decoupling is already over, right? Like it’s already decoupled. And it’s decoupled mostly for driven by factors out of the US, out of American politics, right? When the Treasury Department in Biden’s final month, in the Biden administration’s final month,

came up with this long expected rule that essentially restricted any American investors, be it institutional individual to invest in tech and AI related sector in the US. That basically just shows this is over. That piece of regulation is not retroactive. So the money that American LPs have committed to Chinese GPs still remains like, okay, to invest.

But other than that, once the dry powder runs out, the dry powder that’s raised before earlier this year, when the regulation came into effect, then it’s pretty much over. And a lot of American LPs realize that. And then that’s what makes it difficult for Chinese GPs, for Chinese venture capital firms, because

If you are the CIO of a Endowment Fund, you know that, even though you remain committed to about the opportunities in China, but to be honest, DeepSeek only proved that the most potentially lucrative opportunities coming out of China is in the AI and the AI land, which is the various sector that you cannot have any exposure, then what do you do?

So then because of this conundrum, that’s what makes it so difficult for Chinese venture capitalists, the GPs, to raise funds from American LPs. just so you know that American LPs traditionally, think before the decoupling that started from around 2021, American LPs actually made up for about half. I mean, there’s no like sort of

consensus, statistics on this. I’m giving you a number that was given to me by a lot of people in the industry. Before that, before the deep coupling, American LPs make up for like about at least a half in terms of capital raised by Chinese VC firms. And then so that is a big chunk of money that is sort of people know is going to be gone.

is gradually dying. So then, you know, to make up for that, you know, we’ve seen Chinese VC firms going to other parts of Asia, Europe, Middle East, to try to, you know, fundraise. And that really hasn’t gone that well for various reasons, right? It takes time to build relationships, to understand the culture.

and the thinking behind all these ⁓ LPs and all these big institutions that you are trying to basically ask money for. And then that is sort of on the fundraising part. And on the exit part, for Chinese VCs, the biggest issue right now, the biggest bottleneck, the single, if you ask any Chinese venture capitalists, what is the biggest problem, the difficulties that you are facing?

tell you it is because it’s a difficulty to exit. We talked a little bit about the new framework guiding overseas IPOs by Chinese companies. And that has created a significant bottleneck on VC exits. And then so when you are managing a fund, if you can exit and then return capital to investors and then show it in your DPI,

then obviously it’s very hard for you to show that this is what I’ve done so that you can raise a new fund. And on top of that, we still have like Ant. Let’s not forget about Ant. I was recently in a conversation with an LP investor in the US who started investing in the China VC space from

like the 2000s, so pretty early on, right? He was telling me that, you know, almost every big American, you know, endowment or pension fund is still remains like locked in Ant. And without that being unlocked, without some kind of exit in Ant, it also really affects the appetite for this, for them to continue to invest.

in the China VC space. I think we just need to see, I know that in terms of the IPO pipeline that we’ve seen, for example, last year, there was a trail of autonomous driving companies being approved to list in the US or Hong Kong, but that’s just not enough, right? We still haven’t seen like say a billion dollar sized IPO.

from the tech space. We just haven’t seen that yet. And I think with the absence of clear sign of the IPO pipeline being cleared up without clear sign of a sizable exit, a sizable IPO, sizable meaning at least a billion dollar, it’s just going to be very difficult for Chinese GPs.

Grace Shao (51:09)

Yeah, I know you actually cover quite extensively when you’re still with the journal. It’s probably like your main story for the last year where you had the journal read before you moved over to information. What are some potential scenarios actually on that point? Like, you know, like you said, this year in Hong Kong, it’s supposedly Hong Kong Exchange has hit like the most filings since like pre-COVID, right? But majority are relatively small.

AI or tech companies, they’re not making international headlines. The last one that was really like a major international like candy, eye candy was really Ant and where are we kind of at with that? I mean, this is a bit off topic, but I just find it so fascinating they brought it up.

Jing Yang (51:49)

Yeah, I mean, just a quick thought on the record amount of filings we see in Hong Kong. It’s basically a lot of smaller companies as well as a lot of companies are already listing in a share market and doing a share listing. With the H-share listings of say ATL and SF, it’s just something that for the moment that Chinese regulators are more amenable to.

But in terms of your end question, I think what I have come to believe, and I’m willing to be proven wrong because I’m really only just a journalist, but I think if the NIP were to come back one day, will most unlikely come back in its original form, if that makes sense.

It was supposed to be the world’s largest IPO ever. They were on the cusp of raising $35 billion. I just don’t think when Ant finally was going to IPO again, it will come back in that exact shape or form.

Grace Shao (52:46)

Fair enough. think the company has restructured quite a bit as well, right? Since then. So I wanted to kind of get a sense. I’m not familiar with the space, but are R &B denominated VC funds versus what we were just talking about predominantly being like USC denominated VC funds in China? Are the incentives different for their funds? And do they kind of invest in different kinds of companies? Or are they actually fighting for the same deals?

Jing Yang (53:12)

Yeah, so first, the incentives are quite different. It’s really like two quite different worlds, right? Different worlds. So in the RMB world, one of the biggest pockets of money comes from government guidance funds and SOE-related funds. And then these types of LP, they are driven by local GDP growth targets kind of incentives. And then so then

invariably when they write a check to you, they would require you to bring back some of the investment back to their local city or province. Say I write you a 10 million yuan check, then that means that usually there’s a very detailed percentage requirement written saying that you need to bring back, say for example, 1 % of your portfolio investments or you need to invest this much in our province or city.

And then that is obviously some can argue not very market driven. That is the reality. And I will probably also just play a bit of a devil’s advocate if you are asking for money from a local government related fund, then obviously that is sort of the bottom line. That is the profitability, so to speak, that they are thinking about.

Other than that part of the difference, the other difference is that, it’s funny though, like say, know, for a while you don’t see the R &B world and the UST world sort of overlap. For quite a long time, it would just like coexist and then they know that they go into, they all have their own strengths and then they do quite different types of deals or do different types of...

going to different types of sectors. However, since this USD funding drought that we have just talked about, what do you see is that some of the Chinese VC firms that were only raising in USD also have started exploring raising our yuan denominated funds. And then there are mostly two reasons behind that phenomenon. First is obviously driven by

you know, the USD funding. Second reason though is also because of the geopolitics made it as we talked about impossible for a lot of American dollar investor to invest in social sectors. So that some of the venture capitalists in China realize there are sectors, for example, semiconductor, right? That is a sector that has just become like not possible.

⁓ for ⁓ USD funding to get any exposure in, then if they want to get exposure, if they want to invest in that sector, the only way to do that is through raising our UN-denominated fund and invest. So that’s why you see the two walls that previously just co-exist in parallel now sort of start to overlap.

Grace Shao (55:57)

Thanks, Zach, lay out.

Jing Yang (56:06)

love it.

Grace Shao (56:07)

Thank you for that explanation. Actually, that’s really helpful for even me to understand. think I was also noticing this trend. I was like, why are all these former USD denominated funds, like primarily now actually raising RMB funds, but it’s up to your point to make sense. You know, the Manus AI agent company was probably the most high profile Chinese AI company that received USD VC money. If anything, the only one, right?

this past year, what do make of that? And you know, that they moved their operations from Shanghai to Singapore, you know, where do you see this? Is this like the start of a new opening or like a new way for Chinese companies to go find US investment? Or do you think this is like a one-off thing because they did actually receive scrutiny from the US, not so much actually attention from the Chinese that it doesn’t seem like, at least not publicly. So what do you make of that?

Jing Yang (56:56)

Well, ⁓ Manus is just the latest example, right? But if we look at, if you remember a company, Heijin, that also gained some traction about two years ago, think what we’ve seen that what all these companies, all these startups represent is this new generation of Chinese ⁓ founders and builders, right? They were born and raised in China, some of them educated in China, some of them a bit of China and elsewhere.

But they all grew up with that global vision, global view that they want to compete at a global level. However, it’s just so unfortunate that it’s not possible anymore for a company to even try to succeed in both China and global ex-China if you are building a consumer-facing product. That’s just the reality these days. So then realizing that, I think a lot of them now just, you know, if I have to choose China or global ex-China, then...

Some choose the former and some choose the latter. And then for those that have chosen the latter, we’ve seen example exemplified by metas, by hygiene and many others.

Grace Shao (57:59)

I think just one last question, which is if you look ahead three to five years, we can’t predict a future, but what do you think will be the next big story in the China AI tech space?

Jing Yang (58:07)

Yeah, that is a very difficult question. if I were to try to answer that, would say just follow. I was in the conversation with someone else the other day, know, like, what is a Chinese startup these days? Like, how do you define that? The definition has to change and it has already started to change, right? A company like Manus, right? A company like HeyGen, a company like, you know, GenSpark.

Genspar is slightly different than Manus. They actually incorporated as a company in California, but they are funded by two Chinese entrepreneurs who used to work in China. So I think what is really worth watching is these builders and these entrepreneurs. Chinese entrepreneurs, they are definitely going to make waves in the

⁓ AI and tech space globally, not just in China, right?

Grace Shao (59:02)

Yeah, I think we’ve even seen that shift. Remember when Zoom went IPO and everyone was freaking out? Oh my god, it’s a Chinese company, but he’s like an American Chinese. Well, I think he goes naturalized. And just that kind of mentality completely shifted. now, especially in the AI era, more than 50 % of AI researchers are essentially of Chinese descent. So how do you then define it, right? That’s a really interesting take. I really, really appreciate your time. I know you said you had a hard cut off today.

Thank you so much, Jing.

Jing Yang (59:30)

Yeah, thank you so much for having me.

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