China notes (1/3)
Mostly Beijing
Last week I went back to visit China to refresh my sense of what’s going on there (Dan Wang’s Breakneck is great but nothing beats just walking around). Pre-Covid I used to go to Hong Kong once or twice annually but I haven’t actually been back to mainland China since about 2012. These notes are liveblog style as I was walking around. I had a handful of meetings with founders and investors (all anonymised) but the intention was a holistic experience i.e. it’s about a third food-related.
If you are a frequent China traveller, you can probably skip these posts. On the other hand if you haven’t been at all or in a long time or specifically haven’t been to Shenzhen (which is note 2/3), then these might be interesting.
Wednesday (Beijing)
Beijing airport is HUGE. Probably the biggest I’ve ever been in. Didn’t take pics because immigration discouraged.
Had scheduled a driver to collect me and bring to hotel. All done flawlessly through Trip (formerly Ctrip). A ~40m journey in a mid-quality car with driver who met me at arrivals was the equivalent of about £18.50.
It’s surprisingly quiet here-major EVs and people not being rowdy. Maybe that’s Beijing? Or is it a lot of single people?
It’s so cheap. I mean maybe half or even a third of the west?
China has a food culture! I always forget this when thinking about it. Dinner is obviously roast duck because I’m in Beijing. I sneak in to a Siji Minfu about 10m before the main wave. On the way out, the queue looks like about an hour easily. The duck itself is only average but the side dishes are excellent.
I easily ordered enough for two people (half a duck and a bunch of other dishes) and it cost 374CNY or about ~£40 (this is a fairly high end place). In London it would comfortably have been about double that.
Thursday (Beijing)
It’s raining so I grab a DiDi to start a mini coffee crawl. It takes about 20m to cover ~2km at rush hour and costs about 20CNY (~£2). They have a turn-right-on-red concept similar to the US (quite a bit of US driving behavior was imported to China during WW2).
Surprising how much of a coffee culture exists here. A lot of excellent pour-over places, most of which are up side alleys but have seen a couple on larger streets (which obviously have the ubiquitous Starbucks and Luckin brands).
This place (Mer) also serves mini scones, which was quite lovely. Coffee prices here are vaguely similar to London but that reflects coffee bean prices for my rather elitist caffeine tastes (I order pour-overs of imported beans).
While I’m not in an especially tourist-heavy part of Beijing, I’m surprised just how few westerners there are around. Not so few that I’m getting stared at but definitely few enough that they’ll catch my eye at least.
I’m not sure how recent this is (although Reddit seems to suggest it is) but a lot of Chinese services (eg Meituan, Dianping) no longer work without a Chinese number. However you can absolutely survive on just WeChat, Amap and DiDi.
Got lunch in a random (although well reviewed) noodle spot vaguely near Forbidden Palace. Staff are consistently very patient with me pointing at pictures (and other creative ways of ordering) as long as I have Alipay.
This was £3 and excellent.
One of the most obviously divergent cultural trends I see is the prevalence of smoking here. Definitely less than the last time I was mainland but still pretty common among younger people than you would see on average in many western countries.
An interesting chat over another excellent coffee with a founder running an enterprise software business:
Very bearish on Chinese economy. Thinks leadership is doing a terrible job and getting too socialist. Apparently local government just rolled our new law saying that firing anyone requires negotiating with their union
I mentioned the lack of westerners around Beijing and this isn’t me. Post-Covid, so much has changes and China/Xi just not bothered about trying to bring people back
Hugely bullish on AI. Has reduced headcount from 120 to 75 but increased revenue. Thinks he will reduce headcount again to 50 by end of year but continue to grow revenues. Using US models for development because they continue to be 6-7 months ahead but Chinese models for workhorse inference, so much cheaper. Thinks Anthropic is still undervalued at least relative to OpenAI.
The Chinese VC ecosystem has shrunk massively. Most funds are now reliant on state LPs. Most US funds gone. Angel investing has shrunk by about 90% for him and his friends since 2021. Because companies basically have to be approved for IPO, unless you’re in a strategic sector like silicon or AI, a liquidity event will be difficult
New generation of Chinese founders are more likely to have been educated in China than in the US so tend to think very differently, much more aligned with China superiority complex however also less ambitious because less capital available to them.
Noticing far more Gen Z Chinese wanting to get government jobs because they’re safer, feels they generally lower work ethic
That night I go to dinner with some Australian investors who say that, contrary to my observations, China has actually opened a lot more in the last year or so to tourists. However the mix has changed radically. In 2008, US was ~90% of all tourism, today about 1%. They lament the state of Australian politics and are rather large fans of the competent government in China. They’ve been in Beijing for about three years and say ‘it’s the best place they’ve ever lived’.
Ten years ago, you’d see famous actors on the walls of the restaurants which were on the tourist circuit. Now it’s YouTube/Tiktok/Douyin influencers.
Beijing is full of these narrow alleyways (which have all sorts of interesting shops, restaurants and coffee spots on them). A lot have been redeveloped in previous years but now local government is coming under pressure to keep the remainder as proof of the city’s history.
Friday (Beijing/Shenzhen)
I’m flying out of Beijing Daxing airport (south of Beijing). Takes an hour to drive there but it’s a four lane freeway in excellent condition. Traffic is super-light.
Beijing Daxing is another huge airport. Security is quite thorough with proper pat-downs. They are actively reviewing every battery pack and are not at all happy with my Belkin, which gets confiscated (although made in China does not have their safety standard). My coffee grinder, which gets challenged in most western airports, is ignored for the second time. The interior is cavernous and new with high-end retail and what appears to be quite high quality restaurants (a food culture will do that).
Airlines seem to mostly ignore tickets here and anchor everything on ID (the opposite of western systems). This seems quite sensible and reduces document checking by 50%.
I’m flying on China Southern Airlines to Shenzhen and they are still serving champagne in crystal flutes. Magnificent.
Next stop: Shenzhen.