February 26, 2024 • 48 mins
Mia and Gare examine the terrifying rise of Pinduoduo, the Chinese predecessor of Superbowl famous shopping app Temu, and its former CEO Colin Huang.
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Speaker 1 (00:01):
Also media, we could happen. So wow, Okay, we're just
both doing the intro, all right.
Speaker 2 (00:10):
I wanted to be the intro. I was saying that
wokness has won the Super Bowl.
Speaker 1 (00:15):
Ah because yeah, okay, okay, hold on, this is my
this is this is my moment. I've got the soapbox.
This is it could happen here. Everyone has the Taylor
Swift conspiracy wrong. Taylor Swift is completely uninvolved in the
NFL's conspiracy to make sure Patrick Mahomes wins every fucking game.
All of these fucking all these fucking bogged chuns or
fucking Johnny come Late doesn't care about football fans. Real
(00:38):
fans know that if you look at every fourth quarter
of every fucking Chiefs game before Taylor Shift got involved,
it looks exactly the same. All right, this is been
It could happen here. We may or may not cut that.
Speaker 2 (00:48):
I can't believe that the liberal Taylor Swift, Joe Joe
Biden's puppet Taylor Swift and Travis Peiser Kelsey stole the
Super Bowl from the Christian people of San Francisco, the
only bashtate of conservatism left in this country.
Speaker 1 (01:06):
It is so incredibly funny, Like, okay, so it's so
credibly funny to me A that they're not mad at
Patrick Mahomes and b that somehow, okay the Chiefs, like,
imagine you're a Chiefs fan, right, you have been for
like thirty years racist, you have been doing its called
(01:27):
and I quote the tomahawk chop, like you are the
most racist person in your entire small town. And then
all of these fucking dip shits online, all these fucking
right wing dipshits immediately like all of you guys are
like fucking pussy woke libs. And it's just like, like,
imagine being that racist for that long only to be
immediately tossed aside.
Speaker 2 (01:49):
It is kind of baffling that, in like the country's
national divorce overwokeness, somehow the liberals get to keep football
like this that is that's so busy? Are that that
now football is seen as like a liberal cuck thing
to enjoy among the largest swaths of of Republicans, at
(02:09):
least at least online Republicans.
Speaker 1 (02:12):
It's really funny, fascinating this this is how we're going
to beat them in the fucking civil war, because we're
going to take the college campuses, which means that we're
going to have the only watchable footballs. These bastards are
going to be reduced to watching fucking high school games.
Speaker 2 (02:25):
Like speaking speaking of watching football.
Speaker 1 (02:28):
Yeah, so the thing this episode is actually about is
if you watch the Super Bowl or like, God help you,
you've tried to use YouTube without an AD blocker, a
thing I do not recommend at all. You have seen
ads for Temu. W it's Timu or Temu Temu temo. Okay, yeah,
it has the absolute, the absolute Oh good god, yeah,
(02:58):
this this app this one. This one's bad, folks, This
one's I I went insane and have been spiraling for
like two weeks now writing this, so you know. So
it has the absolutely dogshit tagline shop like a Billionaire.
Speaker 2 (03:13):
Wait that's its tagline. Yeah, Oh that's weird.
Speaker 1 (03:18):
It's funny. The everything is they only have one ad, righty,
it's not just super Bowl like it's It's been on
YouTube for like ages. But yeah, so this begs the
obvious question, what on earth is this thing? And the
answer is that Temu is the American version of a
Chinese shopping gap called Pindadu. You will hear people pronouncing
(03:40):
it pin Duo duo. That's because they're hacks and frauds.
So but I'm just gonna call it so. The the company,
the parent company for both Temu and Pinda Doua, changed
their name to PDD, so I'm just gonna call it that.
Speaker 3 (03:55):
So.
Speaker 1 (03:56):
Yeah, PDD is China's worst tech giant. They have worked
multiple of their employees to death. They probably also use
slave labor. Those are unrelated stories. So today, welcome to
the abyss. This is the story of Tamu. I have
stared into it, and now you motherfuckers are coming with
me and staring into it some more.
Speaker 2 (04:15):
Well, it's more like we're listening into it because it
doesn't really.
Speaker 1 (04:18):
Have a visual No, no, you're staring into it. Okay,
you will get visuals. I will say to this bullshit.
Speaker 3 (04:27):
I will.
Speaker 2 (04:28):
I will start hallucinating in my office.
Speaker 1 (04:30):
Yeah. So, Timoo is the American version of PDD. PDD
it roughly translates to together more savings.
Speaker 2 (04:41):
Together, so it's like a co op.
Speaker 1 (04:46):
Actually, it probably sells stuff from co ops.
Speaker 2 (04:51):
Okay, huh.
Speaker 1 (04:53):
So PDD is the second largest shopping app in China
behind Ali Baba. Ali Baba is is like version of Amazon. Basically,
they're the second largest app. Ali Baba reportedly has eight
hundred and sixty sixty three million users per year.
Speaker 2 (05:10):
That's a lot of users.
Speaker 1 (05:12):
Yeah, that's that's multiple us is. PDD has been claiming
that they have seven hundred and forty million monthly users.
It's unclear if that's exactly true, but it's probably around there,
which again, that is twice the entire population of the US.
So this is a fucking unbelievably massive company. And to
understand what this what this company is, and how it
(05:34):
became probably the worst of the Chinese tech giants, we
have to go back to the very beginning. And the
very beginning is this guy named Colin Huang. Huang is
a weird guy. I don't know, he's he's he's he's
the Chinese version of the American tech bro. So he's
you know, he's he's a recognizable like asshole who started
(05:58):
a giant company, but he's not zactly the same. So
he he So he graduates from like college and China
and in the early two thousands he goes to the
University of Wisconsin to get a master's degree in computer science,
which it like it should be illegal for anyone to
get degrees in computer science. Uh, terrible stuff, zero out
of time. I should know how to use computers.
Speaker 2 (06:19):
I can't believe you'd be believe in the status legal
system to prevent people from learning fin social sanctions.
Speaker 1 (06:26):
We're going to make it morally illegal. We're going to
get chased out by people with the rocks on the
street if you try to type something, get do a computer.
So okay. So he's at the University of Wisconsin, and
while he's there, he basically like posts his way into
becoming the pro basically the protege of Chinese tech billionaire
Duan Youngping. This is an interesting relationship. Duan is like
(06:49):
a very very influential Chinese tech tech billionaire. He gets
every single article calls him the Warren Buffett of China.
I don't fucking know, but like, you know, for like foreacta,
like how big this guy is. Like Vivo and like
the one plus company of the mixed phones those are both
like spin offs of like things that he built. But yeah,
so you know, so this is this is an interesting
(07:10):
relationship for Huang because and it's also interesting because like
the narrative around Huang and PDDs that they're like these
like hungry upstarts like clunging their way up from nothing,
and they can like go after Ali Baba and the
Chinese like tech market wars because they're like they're ferocious,
they have like nothing to lose. I'm like they're rich
and fat Alibaba and like nah, Like this guy has
had the backing of like a bunch of really powerful
(07:33):
Chinese tech guys, like from the absolute beginning. Another part
of like the Huang lore is that Duan like took
him to this really famous dinner where Warren Buffett was
offering if if you donated like six hundred and twenty
thousand dollars to charity, he would like eat dinner with
you and like talk with you about like finance stuff.
(07:56):
And so Dwan like buys this thing to go to
dinner with Warren Buffett and brings Huang with him, and
he Huang who's who's Huang's the founder of PDD Again,
so he gives him credit for like this this like
financial wisdom that he got here. Here's just from an
interview with Side Jim. This is a Chinese outlet. What
(08:20):
Buffett said is actually very simple and can be understood
by my mother. Perhaps what this meal meant most to
me was that I realized the power of simplicity and
common sense. Human thoughts are easily polluted. When you make
a judgment on something, you need to understand the backgrounds
and facts after understanding it. What you need is not wisdom,
but whether you have the courage to use reason when
(08:41):
facing facts, use common sense to judge. Common Sense is
obvious and easy to understand, but our various biases and
personal interests form due to growth and learning blind us.
So this is like entrepreneurial bullshit. But you know this
is apparently this is like a big formative like things
like ah, he like got the wisdom of word Buffett
and he listened to it. It's just like what. There's
(09:06):
the thing I think is more interesting is that he
talks about what in the same interview what Dwan taught him.
Swan also taught me a common sense thing. In business,
price fluctuates around value. The price will definitely fluctuate, but
as long as your value increases, the final price will
be close to the value. This common sense allows you
to focus on increasing the intrinsic value of the company
(09:26):
and not be overly concerned about price fluctuations in the
capital market. And this, to me is fascinating because the
first half of that is like orthodox Marxist price theory,
like in like in Marxist price theory. Right, The whole
thing about it is that price is determined by value.
The value of a commodity is determined by like the
number of the amount of labor hour is socially necessary
(09:47):
to produce it, and eventually, like price sort of like fluctuate,
the price can change. It's not price isn't like identical
to like socially necessarily like labor time, but it like
fluctuates around it. And so that's like the first part
of it, which is the Marxist thing, except this is
like China, like modern like twenty twenties China. So Marx's
value theory has been degraded to like make your company
(10:10):
valuable and don't worry about stock prices and market fluctuations.
It will work out in the end.
Speaker 2 (10:16):
So true, so true based based.
Speaker 1 (10:20):
I mean, the funny thing is this is actually better,
like you get the advice than like most of the
shit that like American CEOs use. But it's also, oh god,
what has happened to my poor value theory, my beloved,
my beloved theory of how capitalism works has been turned
(10:41):
into this weird tech bullshit tragedy. So meanwhile, back in
two thousand and four, Duan convinces Hwang to turn down
a bunch of these jobs. So he's he's like a
computer science graduate, right, and he's being headhunted by like
a bunch of the sort of like mainstream tech companies
at the time, like Oracle, Microsoft, and they're giving they
(11:02):
want to give him like an enormous amount of money,
but his mentors like, no, no, no, don't take this
tech job. Take the Silicon Valley tech job. Joined Google.
And so he joins Google, and this is this is
another like very famous thing. It's like, ah, he wanted
to join the like up and coming, hungry tech startup.
But here's the thing. So Google. He joins Google in
two thousand and four, which is kind of early, but
(11:23):
Google also goes public that year, so you know, this
is up working really well for him because he gets
a bunch of stock options that those stock options are
worth millions of dollars. That's a lot of Also some
of the startup capital for like the later companies he
founds comes from that, and Huang really quickly like works
his way up the ranks. But he so he gets
(11:46):
put in charge of like launching Google in China, and
this is a fiasco, does not work at all. Huong
blames like too much oversight from people at the senior
leadership at Google, which I can get, but I mean
it just doesn't work at all. Like he starts as
at two thousand and six, by twenty ten, Google has
pulled out of trying to entirely like they're not they're
not trying to push the fucking search edge because nobody
(12:08):
uses it. So okay, Having having like unbelievably bombed out
of his first tech job, he he does the like
entrepreneur thing. He starts like a couple of these like
shopping like online shopping companies. They do like fine, and
he sells them, but they don't like do incredible and
(12:29):
so okay. So this is the part that a lot
of the accounts of him leave out, like the sort
of like fawning accounts leave out. Is the next thing
that he does, which is he sets up this like
really shitty game studio and they make like a bunch
of like absolutely unbelievably weird and horny mobile games. So
they make like Mafia City, Joy Spade, Texas, Hold'm Poker.
(12:51):
They have this game called Girl ex Battle that is
like you you assemble a harem of girlfriends and then
have them fight other people stuff Like absolutely.
Speaker 2 (13:02):
Have you played any of these?
Speaker 1 (13:03):
Oh no, absolutely not, I refuse. I think I've actually
seen Mafia City ads before, but it's like, like it's
the absolute most dog shit like bargain basement. I guess
they're kind of pre gotcha games.
Speaker 2 (13:17):
I was just wondering how far your dedication to research
went here, but.
Speaker 1 (13:21):
Not far enough. Look here's the thing. My dedication of
research went exactly far enough that I refuse to install
any of these apps for reasons that we'll get into
next episode. I was like, absolutely not. In fact, this
doing this research actually caused me to uninstall chaw Bus,
which is like a Chinese food delivery app, because I
realized that it was constantly running in the background to
(13:41):
like to drive up. It's like user engagement metrics.
Speaker 2 (13:45):
That is completely fair, Although if you were even more dedicated,
you could have bought a burner phone to download all
these apps onto and tested on that.
Speaker 1 (13:52):
So that's true, but I no, I refuse to let
that shit connect my internet. Like, under no circumstances.
Speaker 2 (14:03):
You can go to a Starbucks, you can go to
his See I've just thrown out options here.
Speaker 1 (14:08):
I probably could have done this, but no, absolutely not. Actually, well,
it's actually really hard to download the Chinese version of this,
for reasons that we'll get into the next episode. All right,
all right, but okay, So, like he's running this shitty
game company and he has a genuinely brilliant and terrible insight,
which is that she sees how addictive like mobile gaming
(14:32):
and how addictive like micro transactions are, and he goes,
oh shit, what if I put this in a shopping gap?
Except that okay, so that's the reasonable way to explain it.
But like, the thing he actually did was like why
are Okay, his thought his actual thought process was why
are we not selling game? Games are all like advertised
in men, right, like these the apps that he's making
are like weird, horny stuff for guys. Why are we
(14:55):
not making games with women? Which is reasonable, But then
his follow up was U, effectively women be shopping, and
he was like, so trying it will make a shopping
thing it's just like, we'll make we'll make we'll make
an app to make shopping into a game. And so
one of the things he's he's also been doing one
of the like the kind of like search engine optimization scams,
(15:18):
where like he just keeps making different shopping like shopping
websites and hoping that one of them will like climb
in the search rankings. But eventually he hits on a
like a combination of using the like dog shit like
addictive mobile gamification stuff from his mobile games in a
like in an online shopping app, and he hits on
that as the idea for a new shopping app. And
(15:40):
this is what turns into PDD. Now do you know
what didn't turn into PDD and is in fact better
Hopefully these ads that are.
Speaker 2 (15:49):
Not for tebou we better not get a fucking temo ad. Hopefully, I.
Speaker 1 (15:56):
It's actually possible. It's oh god, well, careful what you
wish for. And we're back. So PDD doesn't start in
(16:17):
the way that normal tech app things do, which is
to say that PDD starts as an online fruit vendor. Now, okay,
if you know anything like a.
Speaker 2 (16:28):
Like a farmer's market online like what what yeah, okay,
So if you know anything about how like Amazon worked, right,
So Amazon goes from books to a bunch of stuff
to food.
Speaker 1 (16:42):
PDD does this backwards. They start in food. Now, this
is very weird. And the reason this works, and the
reason that PDD starts as a marketplace for rural farmers
and self roofs and vegetables like directly to consumers is
because unfortunately of the structure of the Chinese agricultural mark,
which we have to talk about a little bit. So
(17:02):
something I talked about. God, I don't know how many
years ago this was now, but like a while back
I did an episode about this company that poisons like
three hundred thousand babies by making poisoned milk in China,
and one of the things, though that was a Bastard's episode.
Of the things I talked about in that episode was
how the Chinese agricultural market is incredibly fragmented. We don't
(17:25):
have time to do a full history of rural decollectivization here,
but the upshot of it is that it results in
a lot of farmers working really small plots of land
who are forced to sell their goods to a series
of middlemen who make the actual profits. And because these
farmers have like a tiny amount of land and grow
stuff on or they have like two cows, right, they
(17:46):
don't have the financial leverage to negotiate with like the middleman.
The middle bank can just set prices on them. And
the product of this is you have a really really
fragmented market where there's just like all of these like
unbelievably large numbers of these really small sellers and part
of and you know, and and and this and this,
this locks all of these people into the middlemen. The
middle man can set the prices. The middlemen set the
(18:06):
prices incredibly low, and they're locked in because they don't
have another distribution method because the only thing they can
do is sell to these like agricultural middleman companies. The
companies like above them, like your grocery companies are like
actual milk company who packages the milk. They love this
stuff because it means that they don't have to like
pay the farmers. They can just buy like the goods directly.
(18:27):
They don't have to deal with like employment stuff, and
they don't have to deal with quality control too, because
they can pass that on to the middlemen. Now, something
else we talked about in our anti work Lying Flat
episodes like three years ago, is that China has these
like far like rural influencers. That was it was like
a huge wave of these people that sort of like emerge.
You might actually have seen you've seen the videos of
(18:48):
just like someone in rural China like cutting wood or something.
Speaker 2 (18:52):
Oh yeah, totally, totally yeah.
Speaker 1 (18:55):
So those those things were We're like, Okay, the US
catches up the stuff on the Chinese internet like usually
several years after like happened there and that makes sense. Yeah.
And the next thing in line after the original sort
of rural influencer waves was these like was this wave
of like farmer influencers and these people they're using like
(19:17):
a different Chinese like it's like another it's like another
tick dot clone basically, and they're doing the thing that
they're doing is okay. So you you know, you have
your regular influencer who's trying to sell you like the
image of rural life, right, and then you have the
farmer influencers who are trying to sell you the image
of rural life and also their potatoes. And this is
this is like the marketing strategy. This is this is
(19:39):
this is this is how you can skip the middlemen
and like actually sell your fruit is by becoming an influencer.
Which it's so cursed. It's so cursed. I hate it
so much.
Speaker 2 (19:49):
That is kind of dystopian, and it's just the constant,
the constant performance.
Speaker 1 (19:55):
Yeah. But the problem is that the alternative to it
is even worse because PDD really is this. They're looking
at these markets and they're like, hold on, these farmers
are already selling their goods for like next to nothing.
If we come in, pay them a bit better, use
our text or like our tech money to ourex startup money.
They have an enormous amount of tex startup money. If
we use that tech startup money to give them rebates,
(20:18):
we can do things that like you know, we can
not charge them commission, right, And if we can do this,
we can turn around and sell these fruits for like
zero dollars a zero dollars is this l like exaggeration,
but when I like, they're selling these fruits for an
are unbelievably cheap, Like we are talking ten mangos for
a dollar and thirty nine cents, which is like a steal, outrageous, right,
(20:42):
And you know this is this is incredibly successful. What
they're doing basically is a giant version of the Amazon gambit. Right,
they're eating shit and taking losses to sell all of
this stuff, although they're losing less money than you'd think,
like the actual price of these goods is already so low,
and we're gonna come back to that too, because that
that's an aspect of what's so messed up about this
whole thing. But you know, so they eat shit, it
(21:03):
takes some losses, but they really really quickly build market share.
So this is a very very short smart strategy because
it's not just in the sort of real market. China
has a shit ton of like small and medium sized
producers that make a whole bunch of things, or like
guy with one factory person doing like craft production stuff.
(21:25):
And pdd's plan is to pull together all of these
sellers like this, this whole all all of these people
from different markets into just one giant, like one giant
like market that they control now importantly unlike Amazon, And
this is unlike ali Baba too, because Ali Baba works
on a fairly similar model to well, okay, in a
(21:45):
lot of ways, is a similar model to Amazon. It's identical,
but Unlike those two companies, PDD doesn't run their own
logistics network. It's all it's all third party. Like the
shipping and all that shit is done by is done
through third party logistics stuff. So like their shipping companies,
they don't own warehouses like that stuff, you know, what
(22:06):
they're What they do instead is they use the shipping
companies and warehouses that were developed in like the earlier
parts of the Chinese tech boom, and they're able to
just use that infrastructure to you know, to to ship
all their stuff around. And this means that the company
is extremely lean in the sense that like they don't
have a lot of physical assets like they know, and
this means they don't have to deal with labor costs
(22:26):
or like the logistics problems of actually having to like
you know, of actually having employees packing boxes and making things.
They're just an app. It's it's it's well, they're they're
like the original model of Uber in some sense, right
where like you don't like Uber doesn't fucking own or
wasn't supposed to be owning cars. I mean, I guess
Uber's a bad example because they were trying to do
(22:47):
the automated car thing. But that was a fiasco. But
you know, the thing that PDD makes is just an app,
but it's it's an incredibly addictive app, like it's it's
it's a shopping gotcha game, which is like maybe the
worst sentence in the history of the human language.
Speaker 2 (23:05):
And this was like this was around the time, like
I want to say, like tennish years ago, give or
take a few years, where like micro transactions were becoming massive,
like all, like it took over gaming, It took over
so many parts of just being online, It took over apps,
like it just it just infected everything, and we luckily
(23:26):
kind of pushed back on some some of that. We're
still not all of it, but like there was definitely
some some degree of like, oh, well, we are simply
not going to be buying all of these games if
it's just full of micro micro transaction bullshit. And then
Fortnite took over and we're back and how again, but whatever.
Speaker 1 (23:43):
Actually it's it's pretty funny. China kind of recently the
Chinese government like did a crackdown on like loop boxes
and stuff because they were some of some of the
some of the regulations they put in place are nuts,
but some of it was like, you can't sell loop,
you can't sell gambling the children. Yeah, and this caused
like it's funny because they're kind of walking it back
now because it hurt their gaming market so much. They're like, well, shit, okay,
(24:06):
we have to we need those yeah, like that's the
only way to make money. Yeah. But you know, but
PDDs like brilliant. They're sort of like the the the
absolutely evil shit that they realized is like, we can
just we can just do this for shopping. And so
like the moment you log in, right, there's like these
flash deals, and there's these group deals, and this is
the thing that the group deals are, the thing that
(24:28):
that PDD is based around. So the way it works
is you get these group deals, and so you get
a link and you send it to people, and the
more people click on the link to buy the thing,
the cheaper it becomes. So and then you send the
links over we chat, which is the curve of like
catch all Chinese messenger or like social media app that
everyone uses to like talk to their boomer parents. And
(24:49):
so the thing that your boomer parents are doing is
they're sending these shopping links to each other, and you know,
and the the the more like the more people click
on these links, the cheaper the good becomes. So when
the more people are buying it, the more people you
rope into buying stuff from this app, the cheaper it is,
and the more deals you get you get things like
they'll just like give you like quote unquote free money
(25:10):
if you spend enough money, basically like in the same
way that like micro transaction works right, where it's like,
you know, in a game, it's like if you play
the x number of games, will give you like in
game currency, whereas this is just like will literally give
you money. We're like send things to you.
Speaker 2 (25:24):
God, that sounds like hell, it's awful.
Speaker 1 (25:27):
It's so bad and very importantly right, It's this giant
loop that it not only gets people to spend money,
but it gets people to bring their friends in because
you have to bring your friends in to get the
group deals, so everything gets cheaper and cheaper, and the
tactics they use are absolutely wild. They get in trouble
in twenty twenty one for this promotion called Bargain for
Free Goods, where you'd get a link and the claim
(25:49):
was that if enough people clicked it, you would get
the good for free, and so this guy tried to
do it, but he could can only get it two
point nine percent of the cost. So we sued them
for false advertising, and the claim got thrown out, but
the company had to pay him like money, So like
this is the kind of shit that they're doing. Rechat
(26:10):
actually like blocked their links for a while because, you know,
because like some enormous portion of messages suddenly we're just
like these people sending these spam links to like every
single person they know, trying to get them to buy
like a fucking toothbrush so that your toothbrushes can be cheaper. Right,
But eventually we Chat kind of like you know, WeChat
(26:31):
gives up and they start like allying more with PDD.
I mean, there's a whole there's a whole complicated story
I'm not going to get into here about like the
like China's really really ferocious like tech company wars because
like in the US, you know, like our tech monopolies
are relatively stable, right, Like they've sort of portioned up
the Internet into and like distribution and stuff into just
(26:52):
like basically like local monopolies. Right, Like like Google is
like the only search engine company there's there's basically no
competition there, right, Like there's some competition in terms of
social media, but even then it's like and it's not
like the Chinese version words like unbelievably ferocious competition and
sometimes they cooperate, but yeah, you know, it's it's really fierce.
(27:14):
And PDD. You know the thing that they do, right
is they pair this app stuff with direct to consumer sales,
and PDT is really the pioneers of this. She In
and okay, so i I she In is that fucking
fast fashioned clothing company. I learned today that it is
actually pronounced she In because the name of the thing
(27:37):
is she In, like s a she she and then
she's like she's in. Yeah, I hate it so much.
I'm so sad. I I mean, I feel slightly better because,
like I kept trying to read it in Chinese. It's
like this doesn't make any sense, Like it's just baffling.
It doesn't and it's like, oh no, it's because it's
(27:57):
in English. Yeah, but PDD is the precursor of Shean's
like strategy, right, like they're they're the originators of this,
except they're you know, they're what they're doing basically, it's
it's a fact. It's kind of like drop shipping. But
you know, the sales are being pushed by these these
sort of gamified app stuff, and this means that they
(28:19):
have this like real time supply management system that tells
producers like like they can like they go down and
like tell their sellers like what to produce more of
based on like app sales. So you know the way
it works is you start off with a small it's
like a small number of things, and then you get
ads to push that those like fucking toothbrushes or whatever.
And then as like sales ramp up, you ramp up productions.
(28:42):
You can ship people more toothbrushes. Now do you know
who else will ship you toothbrushes that will probably be
better quality than the PDD tooth pressure. No, we can.
Speaker 2 (28:52):
We can guarantee all of our sponsors have only the
top quality toothbrushes. That is, that is what we call
the cool Zone Guarantee. Go do toothbrush dot com and
put in the keyword MIA for a ten percent off
on your top of the lines.
Speaker 1 (29:07):
Please don't do this, so all right, D and D
just it takes rural China by storm.
Speaker 2 (29:27):
Sure it sounds convenient, Like yeah, yeah for some.
Speaker 1 (29:31):
Pan and it's really really cheap, is the thing, right,
And the thing about rural China is you're dealing with
a level of poverty that like is like almost like
it's not unimaginable in the US, but it's like unbelievable,
(29:52):
Like it's something.
Speaker 4 (29:53):
That like like we don't really have it in the
same way because Okay, so like an example of the
kind of stuff we're dealing with, right, Like, so, China's
GDP per capita in like the sixties was lower than hades, Right,
this is an unbelievably poor country.
Speaker 1 (30:10):
And there are there are places in real China that
are still like basically not quite that poor, but are
like unbelievably poor in ways that like, you know, we're
talking about people who are like people who are doing
kind of well in these regions are making seven hundred
dollars a month. Like that's like on a good month, right,
(30:32):
they're making seven hundred dollars a month, which is that's
eight four hundred dollars a year, and that's that's that's
if you have twelve good months, right, if you have
normal months, it's more like six thousand dollars a year,
and so you know, and when when when when you're
in a place where people are using stuff like this,
And again that's someone who like has a job full time,
is making like six thousand dollars a year, and so
(30:54):
people use PDD to shop because it's incredibly cheap and
it's also addictive. And when I say cheap, like we're
talking like two dollars for a pair of genes cheap, right,
and like that's that's also like cheap and you on too.
It's like unbelievably low prices.
Speaker 2 (31:10):
I mean this, this kind of this kind of reminds
me a little bit of that recent Tucker Carlson Russia
is great actually media stunt. Oh yeah, look, all of
these groceries only cost one hundred dollars in American currency.
And it's like yeah, because they're getting paid like two
hundred dollars like a week, Like they're not they're not
taking home very much money, so all of the costs
(31:34):
like slide very differently, Like you can't just compare this
one to one.
Speaker 1 (31:37):
Yeah, Altho, The thing I will say about about PDD
is that their prices are unbelievably low by Chinese standards,
Like this is a This is also why they look
so low by America standards too, is that these are
these are low by Chinese standards, and because they're so
low by Chinese standards, like people, people buy stuff from it.
The cost of this is that the stuff they're selling
(31:58):
is really cheap. I mean, the other is the unbelievable
exploitation of the Chinese working class. But you know, we'll
get to that. We'll get to that next episode. The
main cost of the stuff being cheap is that the
stuff they buy like sucks ass like literally literally this
only the CEO talks about is that their gambit is that, Okay,
we'll ship you ten mangos for for like a dollar
(32:18):
thirty nine. Two of them will be rotten, but that
means you still get eight mangos.
Speaker 2 (32:22):
That we're still an unbelievable like.
Speaker 1 (32:25):
That's the thing, and like, you know, the stuff that
they get like sucks. Here's from the Chinese media outlet
sixth Tone, which has done a lot of good coverage
of PDD. They they used to be better. They're like
the kind of like left e like say media outlet.
They used to be better and then their staff got
run out because they they went they walked too close
(32:47):
to the line. So but here's here, here's what. Here's
they They've done a lot of they because the most
of the PDD coverage came from before their people got
run out, so quote following the IPO, a number of
purchase series is allegedly bought from PDD. We're shared online,
including a hair dryer that broke out in flames after
it was switched on and a part bake.
Speaker 2 (33:09):
Hey, that also happens in America. Don't worry, you know,
you're like, I know, you're like, oh, I'm missing out
on all these great deals, all these great products. Not true.
This could also happen in the States.
Speaker 3 (33:20):
Yep.
Speaker 1 (33:22):
There's another one where they had a power bank and
someone ordered it and they came and it was just
four triple A batteries and a container.
Speaker 2 (33:29):
That's funny. That's good. That's a good bit. That's yeah,
that's pretty good.
Speaker 5 (33:34):
You know.
Speaker 1 (33:35):
There's stuff like like one of one, like sixth time
was interviewing people in real areas you bought off and
they were like, yeah, I brought it. I bought a
fishing rod for like two bucks and it was broken.
I bought a pair of shoes and it literally fell
apart after three days.
Speaker 2 (33:47):
So I have complicated feelings on this because I think
there is a place for gambling in purchases. If if,
for example, on Amazon, if every fourth product you bought
there was a completely like defective, like purposely like lower
quality version, I think that would be a good for
(34:08):
the world. We would have problem, we would have less
people using Amazon, and you would kind of get slightly punished.
So I think this actually could be a good thing
if used correctly, where we where we purposely sabotage every
like fourth person who buys anything online.
Speaker 1 (34:24):
But the problem is that people fucking love gambling. Like
that's that's just gonna make people do more because now
there's more of a downside if we're trying to get
your fucking deal. So I mean, and this is the thing, right,
Like you're rolling the dice every time every time you
take a.
Speaker 2 (34:40):
You order like an election generator online and they send
you a double a Oh my god, it'd be so
funny funny.
Speaker 1 (34:48):
Well, I mean, now, hey, you too can now shop
on Temu, you too can experience getting shipped just fucking bullshit.
Speaker 2 (34:55):
You order some nice Hawaiian coffee and they send you
some like camameal, Oh god devastating.
Speaker 1 (35:02):
So this this whole thing of you buy stuff that
sucks or doesn't work. And the fact that PDD starts
in rural China means that like initially there's this like
real class element about how who uses PDD. It's seen
as like the site for poor and gulibal people who
don't care about quality.
Speaker 2 (35:20):
Yeah, it's like it's the place where lower class people shop.
Speaker 1 (35:22):
Yeah sure, yeah, And well that stops being true kind
of because everyone starts using it. But Comma, the other
problem they have is that it is absolutely rife with
Kinterfit products. Right after they go public in twenty eighteen,
there's like a Chinese state investigation into the sale of
their Kinterfit products. And pdd's response is like, well, we're
just a marketplace. Anyone can sell on it. How are
(35:43):
we supposed to control who makes counterfeit stuff? But this
is this is actually like it gets to a kind
of like cultural thing where you know, what is one
of the things that happens in world trying This happens
in a lot of places where like almost everyone is
wearing like clothes that are like knockoff brand stuff because
it's just the cheapest clothes and like that's that's the
kind of clothes that's being made that you can afford
(36:06):
if you're you know, like you're you're trying to sort
of make it like in World China, so you get like,
you know, you have like entire villages where you walk
in and everyone's wearing like like niaky and like a
dietis or something like it's like nice. This stuff gets
really wild, really fast. So here's from that that sedging
(36:28):
interview with Colin Huang. Again, so here's here's a catching.
It's a Chinese media outlet, so they're their interviewer. One
of the best selling products on PDD is a bottle
of affidisi at priced at twenty seven point eighty on
that is like three almost four dollars, with a total
of four point seven million orders sold. Do you think
(36:51):
this medicine might be real? Here's the CEO. First of all,
medicines are healthcare products sold on pdd's platform must have
national certification marks. Secondly, the gross profit margin of healthcare
products is already extremely high. Just like facial mass. Do
you think the two hundred yond facial max is useful?
(37:13):
So again, again, what is happening here is that like
they have sold like one point four point seven million
orders of of like a fake afrodisiac, And when the
CEO is asked about his response, it's like, well, but
who could really say if any health products work?
Speaker 2 (37:32):
Like wooo, that is a pretty funny bit. I mean,
it sucks that people, the poor people are losing money,
but well, I to be fair, to be fair, pretty
fine bit.
Speaker 1 (37:41):
If you are trying to like buy an afrodisiac, I
don't really care. Sure, sure yeah, but like you know,
so part of it, like they're selling like fake hack medicines.
This is like the Chinese version of the American like grift,
like right wing grift like supplement market.
Speaker 2 (37:57):
Yeah yeah, yeah, it's the brain pills to help libido
or whatever.
Speaker 1 (38:01):
Yeah, but this also gets a lot darker. One of
the there's one of the stories that kind of like
made the rounds Chinese social media that six Tone reports
on is that people found PDD like advertising like sleep
medicine as date rate drugs. Ah yeah, fucking bleak. There's
(38:22):
like fuck And that's the thing. There's like no fucking
content moderation on this, right, so people just do that
shit and it really sucks. But on their hand, none
of the constant bad press like stop pdd's rise, right,
and now it is time to leave Colin Huang behind soil.
Until about phil twenty twenty, pdd's rise was synonymous with
(38:44):
its CEO, Colin Huang. But in mid twenty twenty, Huang
resigned as the CEO and kind of like exited public
life effectively, like not entirely, we kind of like he
like took he like he resigned as CEO, and then
twenty twenty one he resigns as like a chairman of
the board and he's like, you know, he's doing this
like philanthropic stuff instead, and he's you know, he's doing
his like post CEO life thing, right, And we've never
(39:08):
gotten a good answer as to why he stepped down.
But I have a theory, and I think my theory's
pretty good. And also it goes into have I Garrison,
have I explained to you the thing about I don't
remember if I've done it on this show, I talked
about the Chinese payday loan app thing.
Speaker 2 (39:28):
H I don't think.
Speaker 1 (39:29):
So okay, So all right, we are now going to
do We're going to close this episode out on one
of the most absolutely insane moments of Chinese internet history.
So okay, one of the things that happens in the
Chinese tech market in the late twenty tens and early
twenty twenties is this mass proliferation of app base payday loans.
(39:49):
This is one of the worst things I have ever seen.
What effectively happens is at around like twenty fourteen twenty fifteen,
a bunch of Chinese tech companies, especially like delivery companies
like sort of like China's version of grub, Public Door,
Dash and Ali Baba, they're like Amazon equivalent gets in
it too, and these people realize that they can start
their own payment platforms. So basically like all these companies
(40:11):
are making their own version of PayPal. But then they
realize that they can use these platforms to give out
payday loans, so that you can in one app take
out a paid a loan to order delivery, or you
can in one app take out a payday loan to
buyshit from Amazon with the payday loan. Ten Cent gets
(40:31):
in on it, so you can buy Mitro transactions with
your payday loans. This, as you might expect, Spiral's out
of control. Immediately on. The interest rates on these loans
are enormous, and this means that they make an unbelievable
amount of money, and so apps just start like shoveling
these loans in people's faces the momently long onto apps.
But the thing is, like this doesn't stop with just
(40:53):
like the big shopping apps right by twenty nineteen. It's
not just you know, like when I say this is
going to apps right like you're fucking Like imagine if
Twitter was trying to offer you payd A loans.
Speaker 5 (41:05):
Like that's the main point of that that might happen,
but that might actually maybe based on the plans for
the Twitter to become the banking app.
Speaker 1 (41:16):
Yeah, well that's actually the funny thing. So so Elon
Musk really really likes China. And part of the reason
for this is that, you know, a bunch of Tesla
factories are in shing John. Part of the reason for this,
like he's trying to like recreate the like weed chat environments,
but everyone doesn't right, Like people don't actually like it.
But the thing is the other thing that he really
(41:37):
loves is the number of hours that you can get
people to work in China that you can't really in
the US, So we'll get to that fucking next episode.
But you know, okay, so like like your your fucking
Twitter is trying to see you paid a apps. But
then it gets the point where your fucking flashlight app
is trying to sell you, trying to get you to
take out payday loans, like your like photo app, like
(41:58):
every fucking app on your phone is trying to sell
you pay loans. That sounds incredibly at this and this
is one of these things, right that like, okay, like
as bad as like American apps are, right, like it
is as bad as like the version of capitalism that
we have in the American app ecosystem, Like the wildest
shit is always going on in the Chinese tech market,
(42:20):
which is like even more insane than the American tech market.
And this is the thing, like we don't actually have
this here, and I've I've been trying to figure out
why it never happened here. I think it has to
do it partially with banking regulation and partially with like
the fact that like the actual American payd A loan
companies don't want other companies to like cut in on
their business. So I think that's what's happening, but like
(42:41):
in China, it's literally like and this is happening in
like like like twenty nineteen, twenty twenty, twenty twenty one,
that this stuff is happening, so you know, and it's
an all and this this gets I mean, it turns
into just a fucking nightmare because you know, obviously, like
this turns into this giant wave of people who got
it in over their heads and can't pay their loans
back because they took out a payday loan with thirty
(43:03):
percent interest. And also, and this is one of the
fun things, companies just straight up lie about their interest rates.
Like there's a lot of examples of the companies saying
we have a nine percent interest rate, and then you know,
in the contract it says nine percent interest rate, and
then when they try to get you to pay it back,
it's like thirty percents, right, Like this is like you know,
and sometimes they're they're even they're you know, you're getting
up to like one hundred two hundre percent interest. Like
(43:23):
he's like organized crime levels of interest. And you know,
like Alli, like the tech giants are all into it,
Ali Baba isn't quite as big into it. As like
some of the other companies, but like they're doing it,
like they absolutely are doing the payday loan shit. And
I mentioned Alibaba here because in late twenty twenty, Jack
mob who's the founder of Alli Baba, just like disappears.
(43:45):
He's just gone for like several months, nobody, nobody knows
where he is, and then he reappears in like twenty
twenty one, but he's not doing tech ceo stuff anymore.
He's doing like weird public education tours and like rural China.
And this causes like a huge, a huge like kind
(44:06):
of thing in the American press because what they're reading
it as, and they're kind of right, is that there's
this in twenty twenty one, there's this enormous raft of
financial regulations on tech companies, and this GUS interpreted is
like a crackdown on chech companies, Like the CCP is
trying to bring the tech giants in line, like they
disappear Jackmaw and you know, one of them. This is
(44:28):
something something that a story that gets lost in this
in the American press is that like one of the
big things they're trying to do is stop is stop
all of these fucking companies, I'm turning their apps to
THEO ped alone factories. And you know, like I'm I'm
not like a CCP fan, Like it is well known.
Like it's like my dislike of the CCP is so
(44:51):
large that like a non insignificant number of people in
the US think I work for the CIA, right, But
like this is like those fucking companies they were like
they were like like on the edge of completely annihilating
the Chinese economy. They were very they got very very
close to just like reducing like enormous swaths of the
(45:12):
entire Chinese population and to like peer at based debt pionage.
It was a fucking disaster. And this is part this
is a big part of why this like tech crackdown
came in because the CCP was like, holy shit, if
you guys do this, like you're actually going to like
like you're you're gonna you're gonna fucking nuke the Chinese economy,
Like we cannot allow every single fucking app to be
(45:32):
a paid a loan like service and things. I mean,
it's still not great now, but it things have gotten
a lot less bad in the in the pay a
loan like thing since then. But you know again, like
it it. It had to get bad enough that your
flashlight were trying to get your take out of payd
a loan for the CCP to actually like go after
their like tech giant darlings. And I think what happened
(45:56):
is that I I think what happened is that Colin
Huang like saw which way the wind was blowing and
he was like, Okay, there's gonna be a giant crackdown
now now two wits credit. This is the only time
I will give PDD credit for anything. PDD actually didn't
do the payday loan shit, I think because Colin Huang
(46:18):
was just like was like smart enough to be like,
this is a fucking terrible idea. Like if we try
to get our like rural customer base hooked on payday loans,
all these people are gonna just be completely broke in
like nine months. So PDD doesn't do it. But he
takes this moment like he picks twenty like July twenty twenty,
which is like a couple months before Jack modest speers,
(46:40):
and he just fucking nopes and he's like I'm out
and yeah, like things, you know, and he picked a
good time and this meant that, like, you know, he
never really faced any consequences for you know, he wasn't
really caught up in the crackdown. He got out fine,
and you know, he he picked, he picked the time
to do it, and pdd's future in America was still
(47:02):
ahead of it. But when the Chinese media began to
uncover the dark side of PDD in twenty twenty one,
Colin Kwang was nowhere to be found. And that is
what we're covering tomorrow. We haven't even gotten to the
bad stuff yet.
Speaker 2 (47:17):
I haven't even got to Temu proper.
Speaker 1 (47:20):
Yeah, well the thing about Temu, and we will get
to ten me next episode. But Temu's like a twenty
twenty two thing, right, so it's really recent. It's only
been around for like two years, which means that if
we're going to talk about this, ninety percent of it
is going to be PDD because PDD is like nine
years old. But yeah, tune in tomorrow for a bunch
(47:43):
of absolutely harrowing shit. Yeah, this is this is, this
is it could happen here.
Speaker 2 (47:49):
We love dude, so exciting. I love learning about new
harrowing shit. It could happen years.
Speaker 3 (48:00):
A production of Cool Zone Media. For more podcasts from
cool Zone Media, visit our website coolzonemedia dot com or
check us out on the iHeartRadio app, Apple Podcasts, or
wherever you listen to podcasts, you can find sources for
It could happen here, updated monthly at coolzonemedia dot com
slash sources. Thanks for listening.
Also media, we could happen. So wow, Okay, we're just
both doing the intro, all right.
Speaker 2 (00:10):
I wanted to be the intro. I was saying that
wokness has won the Super Bowl.
Speaker 1 (00:15):
Ah because yeah, okay, okay, hold on, this is my
this is this is my moment. I've got the soapbox.
This is it could happen here. Everyone has the Taylor
Swift conspiracy wrong. Taylor Swift is completely uninvolved in the
NFL's conspiracy to make sure Patrick Mahomes wins every fucking game.
All of these fucking all these fucking bogged chuns or
fucking Johnny come Late doesn't care about football fans. Real
(00:38):
fans know that if you look at every fourth quarter
of every fucking Chiefs game before Taylor Shift got involved,
it looks exactly the same. All right, this is been
It could happen here. We may or may not cut that.
Speaker 2 (00:48):
I can't believe that the liberal Taylor Swift, Joe Joe
Biden's puppet Taylor Swift and Travis Peiser Kelsey stole the
Super Bowl from the Christian people of San Francisco, the
only bashtate of conservatism left in this country.
Speaker 1 (01:06):
It is so incredibly funny, Like, okay, so it's so
credibly funny to me A that they're not mad at
Patrick Mahomes and b that somehow, okay the Chiefs, like,
imagine you're a Chiefs fan, right, you have been for
like thirty years racist, you have been doing its called
(01:27):
and I quote the tomahawk chop, like you are the
most racist person in your entire small town. And then
all of these fucking dip shits online, all these fucking
right wing dipshits immediately like all of you guys are
like fucking pussy woke libs. And it's just like, like,
imagine being that racist for that long only to be
immediately tossed aside.
Speaker 2 (01:49):
It is kind of baffling that, in like the country's
national divorce overwokeness, somehow the liberals get to keep football
like this that is that's so busy? Are that that
now football is seen as like a liberal cuck thing
to enjoy among the largest swaths of of Republicans, at
(02:09):
least at least online Republicans.
Speaker 1 (02:12):
It's really funny, fascinating this this is how we're going
to beat them in the fucking civil war, because we're
going to take the college campuses, which means that we're
going to have the only watchable footballs. These bastards are
going to be reduced to watching fucking high school games.
Speaker 2 (02:25):
Like speaking speaking of watching football.
Speaker 1 (02:28):
Yeah, so the thing this episode is actually about is
if you watch the Super Bowl or like, God help you,
you've tried to use YouTube without an AD blocker, a
thing I do not recommend at all. You have seen
ads for Temu. W it's Timu or Temu Temu temo. Okay, yeah,
it has the absolute, the absolute Oh good god, yeah,
(02:58):
this this app this one. This one's bad, folks, This
one's I I went insane and have been spiraling for
like two weeks now writing this, so you know. So
it has the absolutely dogshit tagline shop like a Billionaire.
Speaker 2 (03:13):
Wait that's its tagline. Yeah, Oh that's weird.
Speaker 1 (03:18):
It's funny. The everything is they only have one ad, righty,
it's not just super Bowl like it's It's been on
YouTube for like ages. But yeah, so this begs the
obvious question, what on earth is this thing? And the
answer is that Temu is the American version of a
Chinese shopping gap called Pindadu. You will hear people pronouncing
(03:40):
it pin Duo duo. That's because they're hacks and frauds.
So but I'm just gonna call it so. The the company,
the parent company for both Temu and Pinda Doua, changed
their name to PDD, so I'm just gonna call it that.
Speaker 3 (03:55):
So.
Speaker 1 (03:56):
Yeah, PDD is China's worst tech giant. They have worked
multiple of their employees to death. They probably also use
slave labor. Those are unrelated stories. So today, welcome to
the abyss. This is the story of Tamu. I have
stared into it, and now you motherfuckers are coming with
me and staring into it some more.
Speaker 2 (04:15):
Well, it's more like we're listening into it because it
doesn't really.
Speaker 1 (04:18):
Have a visual No, no, you're staring into it. Okay,
you will get visuals. I will say to this bullshit.
Speaker 3 (04:27):
I will.
Speaker 2 (04:28):
I will start hallucinating in my office.
Speaker 1 (04:30):
Yeah. So, Timoo is the American version of PDD. PDD
it roughly translates to together more savings.
Speaker 2 (04:41):
Together, so it's like a co op.
Speaker 1 (04:46):
Actually, it probably sells stuff from co ops.
Speaker 2 (04:51):
Okay, huh.
Speaker 1 (04:53):
So PDD is the second largest shopping app in China
behind Ali Baba. Ali Baba is is like version of Amazon. Basically,
they're the second largest app. Ali Baba reportedly has eight
hundred and sixty sixty three million users per year.
Speaker 2 (05:10):
That's a lot of users.
Speaker 1 (05:12):
Yeah, that's that's multiple us is. PDD has been claiming
that they have seven hundred and forty million monthly users.
It's unclear if that's exactly true, but it's probably around there,
which again, that is twice the entire population of the US.
So this is a fucking unbelievably massive company. And to
understand what this what this company is, and how it
(05:34):
became probably the worst of the Chinese tech giants, we
have to go back to the very beginning. And the
very beginning is this guy named Colin Huang. Huang is
a weird guy. I don't know, he's he's he's he's
the Chinese version of the American tech bro. So he's
you know, he's he's a recognizable like asshole who started
(05:58):
a giant company, but he's not zactly the same. So
he he So he graduates from like college and China
and in the early two thousands he goes to the
University of Wisconsin to get a master's degree in computer science,
which it like it should be illegal for anyone to
get degrees in computer science. Uh, terrible stuff, zero out
of time. I should know how to use computers.
Speaker 2 (06:19):
I can't believe you'd be believe in the status legal
system to prevent people from learning fin social sanctions.
Speaker 1 (06:26):
We're going to make it morally illegal. We're going to
get chased out by people with the rocks on the
street if you try to type something, get do a computer.
So okay. So he's at the University of Wisconsin, and
while he's there, he basically like posts his way into
becoming the pro basically the protege of Chinese tech billionaire
Duan Youngping. This is an interesting relationship. Duan is like
(06:49):
a very very influential Chinese tech tech billionaire. He gets
every single article calls him the Warren Buffett of China.
I don't fucking know, but like, you know, for like foreacta,
like how big this guy is. Like Vivo and like
the one plus company of the mixed phones those are both
like spin offs of like things that he built. But yeah,
so you know, so this is this is an interesting
(07:10):
relationship for Huang because and it's also interesting because like
the narrative around Huang and PDDs that they're like these
like hungry upstarts like clunging their way up from nothing,
and they can like go after Ali Baba and the
Chinese like tech market wars because they're like they're ferocious,
they have like nothing to lose. I'm like they're rich
and fat Alibaba and like nah, Like this guy has
had the backing of like a bunch of really powerful
(07:33):
Chinese tech guys, like from the absolute beginning. Another part
of like the Huang lore is that Duan like took
him to this really famous dinner where Warren Buffett was
offering if if you donated like six hundred and twenty
thousand dollars to charity, he would like eat dinner with
you and like talk with you about like finance stuff.
(07:56):
And so Dwan like buys this thing to go to
dinner with Warren Buffett and brings Huang with him, and
he Huang who's who's Huang's the founder of PDD Again,
so he gives him credit for like this this like
financial wisdom that he got here. Here's just from an
interview with Side Jim. This is a Chinese outlet. What
(08:20):
Buffett said is actually very simple and can be understood
by my mother. Perhaps what this meal meant most to
me was that I realized the power of simplicity and
common sense. Human thoughts are easily polluted. When you make
a judgment on something, you need to understand the backgrounds
and facts after understanding it. What you need is not wisdom,
but whether you have the courage to use reason when
(08:41):
facing facts, use common sense to judge. Common Sense is
obvious and easy to understand, but our various biases and
personal interests form due to growth and learning blind us.
So this is like entrepreneurial bullshit. But you know this
is apparently this is like a big formative like things
like ah, he like got the wisdom of word Buffett
and he listened to it. It's just like what. There's
(09:06):
the thing I think is more interesting is that he
talks about what in the same interview what Dwan taught him.
Swan also taught me a common sense thing. In business,
price fluctuates around value. The price will definitely fluctuate, but
as long as your value increases, the final price will
be close to the value. This common sense allows you
to focus on increasing the intrinsic value of the company
(09:26):
and not be overly concerned about price fluctuations in the
capital market. And this, to me is fascinating because the
first half of that is like orthodox Marxist price theory,
like in like in Marxist price theory. Right, The whole
thing about it is that price is determined by value.
The value of a commodity is determined by like the
number of the amount of labor hour is socially necessary
(09:47):
to produce it, and eventually, like price sort of like fluctuate,
the price can change. It's not price isn't like identical
to like socially necessarily like labor time, but it like
fluctuates around it. And so that's like the first part
of it, which is the Marxist thing, except this is
like China, like modern like twenty twenties China. So Marx's
value theory has been degraded to like make your company
(10:10):
valuable and don't worry about stock prices and market fluctuations.
It will work out in the end.
Speaker 2 (10:16):
So true, so true based based.
Speaker 1 (10:20):
I mean, the funny thing is this is actually better,
like you get the advice than like most of the
shit that like American CEOs use. But it's also, oh god,
what has happened to my poor value theory, my beloved,
my beloved theory of how capitalism works has been turned
(10:41):
into this weird tech bullshit tragedy. So meanwhile, back in
two thousand and four, Duan convinces Hwang to turn down
a bunch of these jobs. So he's he's like a
computer science graduate, right, and he's being headhunted by like
a bunch of the sort of like mainstream tech companies
at the time, like Oracle, Microsoft, and they're giving they
(11:02):
want to give him like an enormous amount of money,
but his mentors like, no, no, no, don't take this
tech job. Take the Silicon Valley tech job. Joined Google.
And so he joins Google, and this is this is
another like very famous thing. It's like, ah, he wanted
to join the like up and coming, hungry tech startup.
But here's the thing. So Google. He joins Google in
two thousand and four, which is kind of early, but
(11:23):
Google also goes public that year, so you know, this
is up working really well for him because he gets
a bunch of stock options that those stock options are
worth millions of dollars. That's a lot of Also some
of the startup capital for like the later companies he
founds comes from that, and Huang really quickly like works
his way up the ranks. But he so he gets
(11:46):
put in charge of like launching Google in China, and
this is a fiasco, does not work at all. Huong
blames like too much oversight from people at the senior
leadership at Google, which I can get, but I mean
it just doesn't work at all. Like he starts as
at two thousand and six, by twenty ten, Google has
pulled out of trying to entirely like they're not they're
not trying to push the fucking search edge because nobody
(12:08):
uses it. So okay, Having having like unbelievably bombed out
of his first tech job, he he does the like
entrepreneur thing. He starts like a couple of these like
shopping like online shopping companies. They do like fine, and
he sells them, but they don't like do incredible and
(12:29):
so okay. So this is the part that a lot
of the accounts of him leave out, like the sort
of like fawning accounts leave out. Is the next thing
that he does, which is he sets up this like
really shitty game studio and they make like a bunch
of like absolutely unbelievably weird and horny mobile games. So
they make like Mafia City, Joy Spade, Texas, Hold'm Poker.
(12:51):
They have this game called Girl ex Battle that is
like you you assemble a harem of girlfriends and then
have them fight other people stuff Like absolutely.
Speaker 2 (13:02):
Have you played any of these?
Speaker 1 (13:03):
Oh no, absolutely not, I refuse. I think I've actually
seen Mafia City ads before, but it's like, like it's
the absolute most dog shit like bargain basement. I guess
they're kind of pre gotcha games.
Speaker 2 (13:17):
I was just wondering how far your dedication to research
went here, but.
Speaker 1 (13:21):
Not far enough. Look here's the thing. My dedication of
research went exactly far enough that I refuse to install
any of these apps for reasons that we'll get into
next episode. I was like, absolutely not. In fact, this
doing this research actually caused me to uninstall chaw Bus,
which is like a Chinese food delivery app, because I
realized that it was constantly running in the background to
(13:41):
like to drive up. It's like user engagement metrics.
Speaker 2 (13:45):
That is completely fair, Although if you were even more dedicated,
you could have bought a burner phone to download all
these apps onto and tested on that.
Speaker 1 (13:52):
So that's true, but I no, I refuse to let
that shit connect my internet. Like, under no circumstances.
Speaker 2 (14:03):
You can go to a Starbucks, you can go to
his See I've just thrown out options here.
Speaker 1 (14:08):
I probably could have done this, but no, absolutely not. Actually, well,
it's actually really hard to download the Chinese version of this,
for reasons that we'll get into the next episode. All right,
all right, but okay, So, like he's running this shitty
game company and he has a genuinely brilliant and terrible insight,
which is that she sees how addictive like mobile gaming
(14:32):
and how addictive like micro transactions are, and he goes,
oh shit, what if I put this in a shopping gap?
Except that okay, so that's the reasonable way to explain it.
But like, the thing he actually did was like why
are Okay, his thought his actual thought process was why
are we not selling game? Games are all like advertised
in men, right, like these the apps that he's making
are like weird, horny stuff for guys. Why are we
(14:55):
not making games with women? Which is reasonable, But then
his follow up was U, effectively women be shopping, and
he was like, so trying it will make a shopping
thing it's just like, we'll make we'll make we'll make
an app to make shopping into a game. And so
one of the things he's he's also been doing one
of the like the kind of like search engine optimization scams,
(15:18):
where like he just keeps making different shopping like shopping
websites and hoping that one of them will like climb
in the search rankings. But eventually he hits on a
like a combination of using the like dog shit like
addictive mobile gamification stuff from his mobile games in a
like in an online shopping app, and he hits on
that as the idea for a new shopping app. And
(15:40):
this is what turns into PDD. Now do you know
what didn't turn into PDD and is in fact better
Hopefully these ads that are.
Speaker 2 (15:49):
Not for tebou we better not get a fucking temo ad. Hopefully, I.
Speaker 1 (15:56):
It's actually possible. It's oh god, well, careful what you
wish for. And we're back. So PDD doesn't start in
(16:17):
the way that normal tech app things do, which is
to say that PDD starts as an online fruit vendor. Now, okay,
if you know anything like a.
Speaker 2 (16:28):
Like a farmer's market online like what what yeah, okay,
So if you know anything about how like Amazon worked, right,
So Amazon goes from books to a bunch of stuff
to food.
Speaker 1 (16:42):
PDD does this backwards. They start in food. Now, this
is very weird. And the reason this works, and the
reason that PDD starts as a marketplace for rural farmers
and self roofs and vegetables like directly to consumers is
because unfortunately of the structure of the Chinese agricultural mark,
which we have to talk about a little bit. So
(17:02):
something I talked about. God, I don't know how many
years ago this was now, but like a while back
I did an episode about this company that poisons like
three hundred thousand babies by making poisoned milk in China,
and one of the things, though that was a Bastard's episode.
Of the things I talked about in that episode was
how the Chinese agricultural market is incredibly fragmented. We don't
(17:25):
have time to do a full history of rural decollectivization here,
but the upshot of it is that it results in
a lot of farmers working really small plots of land
who are forced to sell their goods to a series
of middlemen who make the actual profits. And because these
farmers have like a tiny amount of land and grow
stuff on or they have like two cows, right, they
(17:46):
don't have the financial leverage to negotiate with like the middleman.
The middle bank can just set prices on them. And
the product of this is you have a really really
fragmented market where there's just like all of these like
unbelievably large numbers of these really small sellers and part
of and you know, and and and this and this,
this locks all of these people into the middlemen. The
middle man can set the prices. The middlemen set the
(18:06):
prices incredibly low, and they're locked in because they don't
have another distribution method because the only thing they can
do is sell to these like agricultural middleman companies. The
companies like above them, like your grocery companies are like
actual milk company who packages the milk. They love this
stuff because it means that they don't have to like
pay the farmers. They can just buy like the goods directly.
(18:27):
They don't have to deal with like employment stuff, and
they don't have to deal with quality control too, because
they can pass that on to the middlemen. Now, something
else we talked about in our anti work Lying Flat
episodes like three years ago, is that China has these
like far like rural influencers. That was it was like
a huge wave of these people that sort of like emerge.
You might actually have seen you've seen the videos of
(18:48):
just like someone in rural China like cutting wood or something.
Speaker 2 (18:52):
Oh yeah, totally, totally yeah.
Speaker 1 (18:55):
So those those things were We're like, Okay, the US
catches up the stuff on the Chinese internet like usually
several years after like happened there and that makes sense. Yeah.
And the next thing in line after the original sort
of rural influencer waves was these like was this wave
of like farmer influencers and these people they're using like
(19:17):
a different Chinese like it's like another it's like another
tick dot clone basically, and they're doing the thing that
they're doing is okay. So you you know, you have
your regular influencer who's trying to sell you like the
image of rural life, right, and then you have the
farmer influencers who are trying to sell you the image
of rural life and also their potatoes. And this is
this is like the marketing strategy. This is this is
(19:39):
this is this is how you can skip the middlemen
and like actually sell your fruit is by becoming an influencer.
Which it's so cursed. It's so cursed. I hate it
so much.
Speaker 2 (19:49):
That is kind of dystopian, and it's just the constant,
the constant performance.
Speaker 1 (19:55):
Yeah. But the problem is that the alternative to it
is even worse because PDD really is this. They're looking
at these markets and they're like, hold on, these farmers
are already selling their goods for like next to nothing.
If we come in, pay them a bit better, use
our text or like our tech money to ourex startup money.
They have an enormous amount of tex startup money. If
we use that tech startup money to give them rebates,
(20:18):
we can do things that like you know, we can
not charge them commission, right, And if we can do this,
we can turn around and sell these fruits for like
zero dollars a zero dollars is this l like exaggeration,
but when I like, they're selling these fruits for an
are unbelievably cheap, Like we are talking ten mangos for
a dollar and thirty nine cents, which is like a steal, outrageous, right,
(20:42):
And you know this is this is incredibly successful. What
they're doing basically is a giant version of the Amazon gambit. Right,
they're eating shit and taking losses to sell all of
this stuff, although they're losing less money than you'd think,
like the actual price of these goods is already so low,
and we're gonna come back to that too, because that
that's an aspect of what's so messed up about this
whole thing. But you know, so they eat shit, it
(21:03):
takes some losses, but they really really quickly build market share.
So this is a very very short smart strategy because
it's not just in the sort of real market. China
has a shit ton of like small and medium sized
producers that make a whole bunch of things, or like
guy with one factory person doing like craft production stuff.
(21:25):
And pdd's plan is to pull together all of these
sellers like this, this whole all all of these people
from different markets into just one giant, like one giant
like market that they control now importantly unlike Amazon, And
this is unlike ali Baba too, because Ali Baba works
on a fairly similar model to well, okay, in a
(21:45):
lot of ways, is a similar model to Amazon. It's identical,
but Unlike those two companies, PDD doesn't run their own
logistics network. It's all it's all third party. Like the
shipping and all that shit is done by is done
through third party logistics stuff. So like their shipping companies,
they don't own warehouses like that stuff, you know, what
(22:06):
they're What they do instead is they use the shipping
companies and warehouses that were developed in like the earlier
parts of the Chinese tech boom, and they're able to
just use that infrastructure to you know, to to ship
all their stuff around. And this means that the company
is extremely lean in the sense that like they don't
have a lot of physical assets like they know, and
this means they don't have to deal with labor costs
(22:26):
or like the logistics problems of actually having to like
you know, of actually having employees packing boxes and making things.
They're just an app. It's it's it's well, they're they're
like the original model of Uber in some sense, right
where like you don't like Uber doesn't fucking own or
wasn't supposed to be owning cars. I mean, I guess
Uber's a bad example because they were trying to do
(22:47):
the automated car thing. But that was a fiasco. But
you know, the thing that PDD makes is just an app,
but it's it's an incredibly addictive app, like it's it's
it's a shopping gotcha game, which is like maybe the
worst sentence in the history of the human language.
Speaker 2 (23:05):
And this was like this was around the time, like
I want to say, like tennish years ago, give or
take a few years, where like micro transactions were becoming massive,
like all, like it took over gaming, It took over
so many parts of just being online, It took over apps,
like it just it just infected everything, and we luckily
(23:26):
kind of pushed back on some some of that. We're
still not all of it, but like there was definitely
some some degree of like, oh, well, we are simply
not going to be buying all of these games if
it's just full of micro micro transaction bullshit. And then
Fortnite took over and we're back and how again, but whatever.
Speaker 1 (23:43):
Actually it's it's pretty funny. China kind of recently the
Chinese government like did a crackdown on like loop boxes
and stuff because they were some of some of the
some of the regulations they put in place are nuts,
but some of it was like, you can't sell loop,
you can't sell gambling the children. Yeah, and this caused
like it's funny because they're kind of walking it back
now because it hurt their gaming market so much. They're like, well, shit, okay,
(24:06):
we have to we need those yeah, like that's the
only way to make money. Yeah. But you know, but
PDDs like brilliant. They're sort of like the the the
absolutely evil shit that they realized is like, we can
just we can just do this for shopping. And so
like the moment you log in, right, there's like these
flash deals, and there's these group deals, and this is
the thing that the group deals are, the thing that
(24:28):
that PDD is based around. So the way it works
is you get these group deals, and so you get
a link and you send it to people, and the
more people click on the link to buy the thing,
the cheaper it becomes. So and then you send the
links over we chat, which is the curve of like
catch all Chinese messenger or like social media app that
everyone uses to like talk to their boomer parents. And
(24:49):
so the thing that your boomer parents are doing is
they're sending these shopping links to each other, and you know,
and the the the more like the more people click
on these links, the cheaper the good becomes. So when
the more people are buying it, the more people you
rope into buying stuff from this app, the cheaper it is,
and the more deals you get you get things like
they'll just like give you like quote unquote free money
(25:10):
if you spend enough money, basically like in the same
way that like micro transaction works right, where it's like,
you know, in a game, it's like if you play
the x number of games, will give you like in
game currency, whereas this is just like will literally give
you money. We're like send things to you.
Speaker 2 (25:24):
God, that sounds like hell, it's awful.
Speaker 1 (25:27):
It's so bad and very importantly right, It's this giant
loop that it not only gets people to spend money,
but it gets people to bring their friends in because
you have to bring your friends in to get the
group deals, so everything gets cheaper and cheaper, and the
tactics they use are absolutely wild. They get in trouble
in twenty twenty one for this promotion called Bargain for
Free Goods, where you'd get a link and the claim
(25:49):
was that if enough people clicked it, you would get
the good for free, and so this guy tried to
do it, but he could can only get it two
point nine percent of the cost. So we sued them
for false advertising, and the claim got thrown out, but
the company had to pay him like money, So like
this is the kind of shit that they're doing. Rechat
(26:10):
actually like blocked their links for a while because, you know,
because like some enormous portion of messages suddenly we're just
like these people sending these spam links to like every
single person they know, trying to get them to buy
like a fucking toothbrush so that your toothbrushes can be cheaper. Right,
But eventually we Chat kind of like you know, WeChat
(26:31):
gives up and they start like allying more with PDD.
I mean, there's a whole there's a whole complicated story
I'm not going to get into here about like the
like China's really really ferocious like tech company wars because
like in the US, you know, like our tech monopolies
are relatively stable, right, Like they've sort of portioned up
the Internet into and like distribution and stuff into just
(26:52):
like basically like local monopolies. Right, Like like Google is
like the only search engine company there's there's basically no
competition there, right, Like there's some competition in terms of
social media, but even then it's like and it's not
like the Chinese version words like unbelievably ferocious competition and
sometimes they cooperate, but yeah, you know, it's it's really fierce.
(27:14):
And PDD. You know the thing that they do, right
is they pair this app stuff with direct to consumer sales,
and PDT is really the pioneers of this. She In
and okay, so i I she In is that fucking
fast fashioned clothing company. I learned today that it is
actually pronounced she In because the name of the thing
(27:37):
is she In, like s a she she and then
she's like she's in. Yeah, I hate it so much.
I'm so sad. I I mean, I feel slightly better because,
like I kept trying to read it in Chinese. It's
like this doesn't make any sense, Like it's just baffling.
It doesn't and it's like, oh no, it's because it's
(27:57):
in English. Yeah, but PDD is the precursor of Shean's
like strategy, right, like they're they're the originators of this,
except they're you know, they're what they're doing basically, it's
it's a fact. It's kind of like drop shipping. But
you know, the sales are being pushed by these these
sort of gamified app stuff, and this means that they
(28:19):
have this like real time supply management system that tells
producers like like they can like they go down and
like tell their sellers like what to produce more of
based on like app sales. So you know the way
it works is you start off with a small it's
like a small number of things, and then you get
ads to push that those like fucking toothbrushes or whatever.
And then as like sales ramp up, you ramp up productions.
(28:42):
You can ship people more toothbrushes. Now do you know
who else will ship you toothbrushes that will probably be
better quality than the PDD tooth pressure. No, we can.
Speaker 2 (28:52):
We can guarantee all of our sponsors have only the
top quality toothbrushes. That is, that is what we call
the cool Zone Guarantee. Go do toothbrush dot com and
put in the keyword MIA for a ten percent off
on your top of the lines.
Speaker 1 (29:07):
Please don't do this, so all right, D and D
just it takes rural China by storm.
Speaker 2 (29:27):
Sure it sounds convenient, Like yeah, yeah for some.
Speaker 1 (29:31):
Pan and it's really really cheap, is the thing, right,
And the thing about rural China is you're dealing with
a level of poverty that like is like almost like
it's not unimaginable in the US, but it's like unbelievable,
(29:52):
Like it's something.
Speaker 4 (29:53):
That like like we don't really have it in the
same way because Okay, so like an example of the
kind of stuff we're dealing with, right, Like, so, China's
GDP per capita in like the sixties was lower than hades, Right,
this is an unbelievably poor country.
Speaker 1 (30:10):
And there are there are places in real China that
are still like basically not quite that poor, but are
like unbelievably poor in ways that like, you know, we're
talking about people who are like people who are doing
kind of well in these regions are making seven hundred
dollars a month. Like that's like on a good month, right,
(30:32):
they're making seven hundred dollars a month, which is that's
eight four hundred dollars a year, and that's that's that's
if you have twelve good months, right, if you have
normal months, it's more like six thousand dollars a year,
and so you know, and when when when when you're
in a place where people are using stuff like this,
And again that's someone who like has a job full time,
is making like six thousand dollars a year, and so
(30:54):
people use PDD to shop because it's incredibly cheap and
it's also addictive. And when I say cheap, like we're
talking like two dollars for a pair of genes cheap, right,
and like that's that's also like cheap and you on too.
It's like unbelievably low prices.
Speaker 2 (31:10):
I mean this, this kind of this kind of reminds
me a little bit of that recent Tucker Carlson Russia
is great actually media stunt. Oh yeah, look, all of
these groceries only cost one hundred dollars in American currency.
And it's like yeah, because they're getting paid like two
hundred dollars like a week, Like they're not they're not
taking home very much money, so all of the costs
(31:34):
like slide very differently, Like you can't just compare this
one to one.
Speaker 1 (31:37):
Yeah, Altho, The thing I will say about about PDD
is that their prices are unbelievably low by Chinese standards,
Like this is a This is also why they look
so low by America standards too, is that these are
these are low by Chinese standards, and because they're so
low by Chinese standards, like people, people buy stuff from it.
The cost of this is that the stuff they're selling
(31:58):
is really cheap. I mean, the other is the unbelievable
exploitation of the Chinese working class. But you know, we'll
get to that. We'll get to that next episode. The
main cost of the stuff being cheap is that the
stuff they buy like sucks ass like literally literally this
only the CEO talks about is that their gambit is that, Okay,
we'll ship you ten mangos for for like a dollar
(32:18):
thirty nine. Two of them will be rotten, but that
means you still get eight mangos.
Speaker 2 (32:22):
That we're still an unbelievable like.
Speaker 1 (32:25):
That's the thing, and like, you know, the stuff that
they get like sucks. Here's from the Chinese media outlet
sixth Tone, which has done a lot of good coverage
of PDD. They they used to be better. They're like
the kind of like left e like say media outlet.
They used to be better and then their staff got
run out because they they went they walked too close
(32:47):
to the line. So but here's here, here's what. Here's
they They've done a lot of they because the most
of the PDD coverage came from before their people got
run out, so quote following the IPO, a number of
purchase series is allegedly bought from PDD. We're shared online,
including a hair dryer that broke out in flames after
it was switched on and a part bake.
Speaker 2 (33:09):
Hey, that also happens in America. Don't worry, you know,
you're like, I know, you're like, oh, I'm missing out
on all these great deals, all these great products. Not true.
This could also happen in the States.
Speaker 3 (33:20):
Yep.
Speaker 1 (33:22):
There's another one where they had a power bank and
someone ordered it and they came and it was just
four triple A batteries and a container.
Speaker 2 (33:29):
That's funny. That's good. That's a good bit. That's yeah,
that's pretty good.
Speaker 5 (33:34):
You know.
Speaker 1 (33:35):
There's stuff like like one of one, like sixth time
was interviewing people in real areas you bought off and
they were like, yeah, I brought it. I bought a
fishing rod for like two bucks and it was broken.
I bought a pair of shoes and it literally fell
apart after three days.
Speaker 2 (33:47):
So I have complicated feelings on this because I think
there is a place for gambling in purchases. If if,
for example, on Amazon, if every fourth product you bought
there was a completely like defective, like purposely like lower
quality version, I think that would be a good for
(34:08):
the world. We would have problem, we would have less
people using Amazon, and you would kind of get slightly punished.
So I think this actually could be a good thing
if used correctly, where we where we purposely sabotage every
like fourth person who buys anything online.
Speaker 1 (34:24):
But the problem is that people fucking love gambling. Like
that's that's just gonna make people do more because now
there's more of a downside if we're trying to get
your fucking deal. So I mean, and this is the thing, right,
Like you're rolling the dice every time every time you
take a.
Speaker 2 (34:40):
You order like an election generator online and they send
you a double a Oh my god, it'd be so
funny funny.
Speaker 1 (34:48):
Well, I mean, now, hey, you too can now shop
on Temu, you too can experience getting shipped just fucking bullshit.
Speaker 2 (34:55):
You order some nice Hawaiian coffee and they send you
some like camameal, Oh god devastating.
Speaker 1 (35:02):
So this this whole thing of you buy stuff that
sucks or doesn't work. And the fact that PDD starts
in rural China means that like initially there's this like
real class element about how who uses PDD. It's seen
as like the site for poor and gulibal people who
don't care about quality.
Speaker 2 (35:20):
Yeah, it's like it's the place where lower class people shop.
Speaker 1 (35:22):
Yeah sure, yeah, And well that stops being true kind
of because everyone starts using it. But Comma, the other
problem they have is that it is absolutely rife with
Kinterfit products. Right after they go public in twenty eighteen,
there's like a Chinese state investigation into the sale of
their Kinterfit products. And pdd's response is like, well, we're
just a marketplace. Anyone can sell on it. How are
(35:43):
we supposed to control who makes counterfeit stuff? But this
is this is actually like it gets to a kind
of like cultural thing where you know, what is one
of the things that happens in world trying This happens
in a lot of places where like almost everyone is
wearing like clothes that are like knockoff brand stuff because
it's just the cheapest clothes and like that's that's the
kind of clothes that's being made that you can afford
(36:06):
if you're you know, like you're you're trying to sort
of make it like in World China, so you get like,
you know, you have like entire villages where you walk
in and everyone's wearing like like niaky and like a
dietis or something like it's like nice. This stuff gets
really wild, really fast. So here's from that that sedging
(36:28):
interview with Colin Huang. Again, so here's here's a catching.
It's a Chinese media outlet, so they're their interviewer. One
of the best selling products on PDD is a bottle
of affidisi at priced at twenty seven point eighty on
that is like three almost four dollars, with a total
of four point seven million orders sold. Do you think
(36:51):
this medicine might be real? Here's the CEO. First of all,
medicines are healthcare products sold on pdd's platform must have
national certification marks. Secondly, the gross profit margin of healthcare
products is already extremely high. Just like facial mass. Do
you think the two hundred yond facial max is useful?
(37:13):
So again, again, what is happening here is that like
they have sold like one point four point seven million
orders of of like a fake afrodisiac, And when the
CEO is asked about his response, it's like, well, but
who could really say if any health products work?
Speaker 2 (37:32):
Like wooo, that is a pretty funny bit. I mean,
it sucks that people, the poor people are losing money,
but well, I to be fair, to be fair, pretty
fine bit.
Speaker 1 (37:41):
If you are trying to like buy an afrodisiac, I
don't really care. Sure, sure yeah, but like you know,
so part of it, like they're selling like fake hack medicines.
This is like the Chinese version of the American like grift,
like right wing grift like supplement market.
Speaker 2 (37:57):
Yeah yeah, yeah, it's the brain pills to help libido
or whatever.
Speaker 1 (38:01):
Yeah, but this also gets a lot darker. One of
the there's one of the stories that kind of like
made the rounds Chinese social media that six Tone reports
on is that people found PDD like advertising like sleep
medicine as date rate drugs. Ah yeah, fucking bleak. There's
(38:22):
like fuck And that's the thing. There's like no fucking
content moderation on this, right, so people just do that
shit and it really sucks. But on their hand, none
of the constant bad press like stop pdd's rise, right,
and now it is time to leave Colin Huang behind soil.
Until about phil twenty twenty, pdd's rise was synonymous with
(38:44):
its CEO, Colin Huang. But in mid twenty twenty, Huang
resigned as the CEO and kind of like exited public
life effectively, like not entirely, we kind of like he
like took he like he resigned as CEO, and then
twenty twenty one he resigns as like a chairman of
the board and he's like, you know, he's doing this
like philanthropic stuff instead, and he's you know, he's doing
his like post CEO life thing, right, And we've never
(39:08):
gotten a good answer as to why he stepped down.
But I have a theory, and I think my theory's
pretty good. And also it goes into have I Garrison,
have I explained to you the thing about I don't
remember if I've done it on this show, I talked
about the Chinese payday loan app thing.
Speaker 2 (39:28):
H I don't think.
Speaker 1 (39:29):
So okay, So all right, we are now going to
do We're going to close this episode out on one
of the most absolutely insane moments of Chinese internet history.
So okay, one of the things that happens in the
Chinese tech market in the late twenty tens and early
twenty twenties is this mass proliferation of app base payday loans.
(39:49):
This is one of the worst things I have ever seen.
What effectively happens is at around like twenty fourteen twenty fifteen,
a bunch of Chinese tech companies, especially like delivery companies
like sort of like China's version of grub, Public Door,
Dash and Ali Baba, they're like Amazon equivalent gets in
it too, and these people realize that they can start
their own payment platforms. So basically like all these companies
(40:11):
are making their own version of PayPal. But then they
realize that they can use these platforms to give out
payday loans, so that you can in one app take
out a paid a loan to order delivery, or you
can in one app take out a payday loan to
buyshit from Amazon with the payday loan. Ten Cent gets
(40:31):
in on it, so you can buy Mitro transactions with
your payday loans. This, as you might expect, Spiral's out
of control. Immediately on. The interest rates on these loans
are enormous, and this means that they make an unbelievable
amount of money, and so apps just start like shoveling
these loans in people's faces the momently long onto apps.
But the thing is, like this doesn't stop with just
(40:53):
like the big shopping apps right by twenty nineteen. It's
not just you know, like when I say this is
going to apps right like you're fucking Like imagine if
Twitter was trying to offer you payd A loans.
Speaker 5 (41:05):
Like that's the main point of that that might happen,
but that might actually maybe based on the plans for
the Twitter to become the banking app.
Speaker 1 (41:16):
Yeah, well that's actually the funny thing. So so Elon
Musk really really likes China. And part of the reason
for this is that, you know, a bunch of Tesla
factories are in shing John. Part of the reason for this,
like he's trying to like recreate the like weed chat environments,
but everyone doesn't right, Like people don't actually like it.
But the thing is the other thing that he really
(41:37):
loves is the number of hours that you can get
people to work in China that you can't really in
the US, So we'll get to that fucking next episode.
But you know, okay, so like like your your fucking
Twitter is trying to see you paid a apps. But
then it gets the point where your fucking flashlight app
is trying to sell you, trying to get you to
take out payday loans, like your like photo app, like
(41:58):
every fucking app on your phone is trying to sell
you pay loans. That sounds incredibly at this and this
is one of these things, right that like, okay, like
as bad as like American apps are, right, like it
is as bad as like the version of capitalism that
we have in the American app ecosystem, Like the wildest
shit is always going on in the Chinese tech market,
(42:20):
which is like even more insane than the American tech market.
And this is the thing, like we don't actually have
this here, and I've I've been trying to figure out
why it never happened here. I think it has to
do it partially with banking regulation and partially with like
the fact that like the actual American payd A loan
companies don't want other companies to like cut in on
their business. So I think that's what's happening, but like
(42:41):
in China, it's literally like and this is happening in
like like like twenty nineteen, twenty twenty, twenty twenty one,
that this stuff is happening, so you know, and it's
an all and this this gets I mean, it turns
into just a fucking nightmare because you know, obviously, like
this turns into this giant wave of people who got
it in over their heads and can't pay their loans
back because they took out a payday loan with thirty
(43:03):
percent interest. And also, and this is one of the
fun things, companies just straight up lie about their interest rates.
Like there's a lot of examples of the companies saying
we have a nine percent interest rate, and then you know,
in the contract it says nine percent interest rate, and
then when they try to get you to pay it back,
it's like thirty percents, right, Like this is like you know,
and sometimes they're they're even they're you know, you're getting
up to like one hundred two hundre percent interest. Like
(43:23):
he's like organized crime levels of interest. And you know,
like Alli, like the tech giants are all into it,
Ali Baba isn't quite as big into it. As like
some of the other companies, but like they're doing it,
like they absolutely are doing the payday loan shit. And
I mentioned Alibaba here because in late twenty twenty, Jack
mob who's the founder of Alli Baba, just like disappears.
(43:45):
He's just gone for like several months, nobody, nobody knows
where he is, and then he reappears in like twenty
twenty one, but he's not doing tech ceo stuff anymore.
He's doing like weird public education tours and like rural China.
And this causes like a huge, a huge like kind
(44:06):
of thing in the American press because what they're reading
it as, and they're kind of right, is that there's
this in twenty twenty one, there's this enormous raft of
financial regulations on tech companies, and this GUS interpreted is
like a crackdown on chech companies, Like the CCP is
trying to bring the tech giants in line, like they
disappear Jackmaw and you know, one of them. This is
(44:28):
something something that a story that gets lost in this
in the American press is that like one of the
big things they're trying to do is stop is stop
all of these fucking companies, I'm turning their apps to
THEO ped alone factories. And you know, like I'm I'm
not like a CCP fan, Like it is well known.
Like it's like my dislike of the CCP is so
(44:51):
large that like a non insignificant number of people in
the US think I work for the CIA, right, But
like this is like those fucking companies they were like
they were like like on the edge of completely annihilating
the Chinese economy. They were very they got very very
close to just like reducing like enormous swaths of the
(45:12):
entire Chinese population and to like peer at based debt pionage.
It was a fucking disaster. And this is part this
is a big part of why this like tech crackdown
came in because the CCP was like, holy shit, if
you guys do this, like you're actually going to like
like you're you're gonna you're gonna fucking nuke the Chinese economy,
Like we cannot allow every single fucking app to be
(45:32):
a paid a loan like service and things. I mean,
it's still not great now, but it things have gotten
a lot less bad in the in the pay a
loan like thing since then. But you know again, like
it it. It had to get bad enough that your
flashlight were trying to get your take out of payd
a loan for the CCP to actually like go after
their like tech giant darlings. And I think what happened
(45:56):
is that I I think what happened is that Colin
Huang like saw which way the wind was blowing and
he was like, Okay, there's gonna be a giant crackdown
now now two wits credit. This is the only time
I will give PDD credit for anything. PDD actually didn't
do the payday loan shit, I think because Colin Huang
(46:18):
was just like was like smart enough to be like,
this is a fucking terrible idea. Like if we try
to get our like rural customer base hooked on payday loans,
all these people are gonna just be completely broke in
like nine months. So PDD doesn't do it. But he
takes this moment like he picks twenty like July twenty twenty,
which is like a couple months before Jack modest speers,
(46:40):
and he just fucking nopes and he's like I'm out
and yeah, like things, you know, and he picked a
good time and this meant that, like, you know, he
never really faced any consequences for you know, he wasn't
really caught up in the crackdown. He got out fine,
and you know, he he picked, he picked the time
to do it, and pdd's future in America was still
(47:02):
ahead of it. But when the Chinese media began to
uncover the dark side of PDD in twenty twenty one,
Colin Kwang was nowhere to be found. And that is
what we're covering tomorrow. We haven't even gotten to the
bad stuff yet.
Speaker 2 (47:17):
I haven't even got to Temu proper.
Speaker 1 (47:20):
Yeah, well the thing about Temu, and we will get
to ten me next episode. But Temu's like a twenty
twenty two thing, right, so it's really recent. It's only
been around for like two years, which means that if
we're going to talk about this, ninety percent of it
is going to be PDD because PDD is like nine
years old. But yeah, tune in tomorrow for a bunch
(47:43):
of absolutely harrowing shit. Yeah, this is this is, this
is it could happen here.
Speaker 2 (47:49):
We love dude, so exciting. I love learning about new
harrowing shit. It could happen years.
Speaker 3 (48:00):
A production of Cool Zone Media. For more podcasts from
cool Zone Media, visit our website coolzonemedia dot com or
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wherever you listen to podcasts, you can find sources for
It could happen here, updated monthly at coolzonemedia dot com
slash sources. Thanks for listening.
It Could Happen Here News
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Robert Evans
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