GuShiio.com 
Hello, welcome to listen to this book every day, I am Xiang Shuai. Today I will interpret for you my new book “Where Does Money Come From 6: The Year of Narrative” published in January 2025.
Looking back, at the end of 2019 and the beginning of 2020 when the “Where Does Money Come From” series was born, history was drawing a heavy dash.
Every year since then, there have been “dramatic changes” and “major turning points”, which sound like empty words and big words, but the taste of it, entrepreneurs, store owners, those in the system, those working in the Internet, those working in the financial circle, those buying houses, those in Beijing, Shanghai, Guangzhou and Shenzhen, those going out to sea to survive… Everyone has more or less felt it. The reason why the physical sensation is so strong and the impact is so wide is that China is indeed facing an environment where multiple historical changes in the past 100 years are superimposed:
The decoupling of China and the United States and the game between major powers may be similar to the Cold War pattern in the 1950s;
The inflation and energy problems in Europe and the United States are quite similar to the high inflation and oil crisis in the 1970s;
Trump’s tariff increase and the rise of trade protectionism are quite similar to the Japan-US trade war in the 1980s;
The breakthrough in artificial intelligence technology is more similar to the subversive changes in wealth accumulation, social organization, distribution mode, and living conditions experienced by human society after the industrial revolution in the 18th and 19th centuries, which is far greater than the impact brought by Internet technology in the 1990s.
Any of the historical periods mentioned above is accompanied by huge wealth changes and social reorganization, not to mention the superposition of these historical periods. According to Luo Pang, in this period full of variables, there are almost no things and phenomena that can be concluded. Therefore, what is really helpful to people is not the conclusions that point to the east and the west, but a “crystal ball” that can see those fluid structural changes. Because only by finding the structure of change can we adapt to change and survive.
So, how to answer the core question of our book through these structural changes: Where will the money come from in 2024-2025?
Narrative
The first keyword I want to give is: “narrative”.
The so-called narrative NARRATIVE is an academic expression, which means storytelling in layman’s terms.
Don’t think that “storytelling” is a trivial matter. According to Yuval Noah Harari in “Sapiens: A Brief History of Humankind”, we Homo sapiens are originally narrative animals. Stories are our core ability to create common imagination, build consensus, achieve large-scale cooperation, and thus stand at the top of the food chain.
For thousands of years, we humans have been shuttling between two different realities: one is the objective world within reach, such as mountains, rivers, lakes, cars and houses; the other is the virtual world constructed by our imagination and cognition, such as religious beliefs, currency values, stock prices, and these are mainly composed of narratives.
In fact, if you think about it carefully, in a sense, the entire human history is the product of narrative. For example, why do the changes of dynasties or peasant uprisings in Chinese history always require a story of “accepting the will of heaven”? From “Are there any kings, princes, generals, or ministers?” to “Han Gaozu drunkenly killed the white snake” and then to “Liu Xiu should be the emperor”, they are all using a more intuitive and more communicative story to create a common enemy or shape a common belief, thereby inspiring the power of “sharing the same hatred and the same heart”.
But if we say that the capital market is the most affected and shaped by “narratives”, it must be one of them.
Why?
Because narratives can shape beliefs and change expectations, and asset prices reflect expectations.
For example, a person had a stomach disease that could not be cured for many years. As a result, he drank a certain liquor for a few years and got better. Then he came to the conclusion that “such and such liquor can cure stomach disease”. This is actually a typical narrative.
Suppose this story becomes popular on a certain occasion or because of a certain celebrity or for a certain reason, then investors in the market will expect the sales of this liquor to increase, with higher profits, which will be good for the stock price. Because of this expectation, investors start to buy this stock, and the stock price starts to rise, thereby attracting more investors to buy, and the stock price continues to rise. Market expectations are strengthened, forming a positive feedback mechanism.
When will this mechanism be broken? It depends on whether the narrative can be falsified and whether it can be sustained. The more difficult it is to falsify a narrative, the stronger its vitality, such as Bitcoin, such as “the AI (artificial intelligence) revolution will bring about increased productivity.” On the contrary, the policy narrative that the A-share market likes to tell, “there will be tens of trillions of yuan in fiscal stimulus next week”, is easier to be falsified, so market expectations are more likely to reverse, and asset prices will fluctuate accordingly.
As mentioned earlier, the price of financial assets reflects future expectations. Future expectations are invisible and intangible, which is why narratives are so important to the capital market. Although many narratives sound outrageous, they trigger our animal spirits, such as fear, greed, and blind obedience. These animal spirits make us overly optimistic when we are prosperous and overly pessimistic when we are in recession, so asset prices will also fluctuate excessively.
Robert Shiller, Nobel Prize winner in economics, has a study that proves this conjecture: if people are rational, then in the long run, the fluctuation of a company’s stock price should be basically consistent with the fluctuation of the company’s cash flow (value). However, the historical data of US stocks for a hundred years shows that the actual price fluctuation is 5-13 times that of cash flow fluctuation, and the fundamentals are far from explaining the price fluctuation. What does this show? It shows that the market always overreacts, and narrative is the catalyst that triggers this overreaction.
In today’s era, the power of narrative has been further amplified. Whether from the perspective of trading or the digital economy, it has become increasingly urgent to introduce the new variable of “narrative” into the discussion of asset pricing.
Why? On the one hand, this is because society is increasingly lacking consensus and full of uncertainty; on the other hand, more importantly, it is because of the rise of social media.
First, social media makes consensus formation and collapse faster, market expectations become extremely fragile, and prices are more volatile. For example, in the cryptocurrency market, opinion leaders like Musk can trigger price fluctuations with a single statement, because information can accurately reach the target population in a very short time, and the price reaction will be very fast and intense.
In addition, social media has lowered the threshold for narrative, making market noise louder and more volatile. Previously, economics and finance were high-threshold professional topics, which were elite narrative logic, but on social media platforms, the professional thresholds in these fields have been infinitely lowered. This change has both advantages and disadvantages: on the one hand, it is an improvement that more voices can be heard; but on the other hand, in the fields of finance and economics that are “close to money”, there will be a large number of “popular narratives” of varying quality. They are familiar with the public’s pleasure points and pain points, and are good at grabbing the elements needed for “popular narratives” from news events for reorganization, creating a large number of seemingly plausible, easy-to-understand, and more contagious stories, making it difficult to discern the truth.
So, what kind of narrative is most likely to be popular in the market? Overall, successful market narratives usually have three elements: relevance, repeatability, and self-reinforcement. Let’s talk about them one by one.
The first element is relevance. For a narrative to become popular, it must resonate with the general public. For example, the reason why the “policy shift” narrative of the stock market is easy to become popular is that it hits the biggest consensus of the general public – wealth anxiety. In a period of rising economic uncertainty, any story and expectation that can increase or preserve wealth will touch the most sensitive chord in the hearts of the public.
Taking my country’s A-share market as an example, there are about 60 million active stockholders per day, but the family population involved exceeds 200 million. Unlike the uneven hot and cold real estate markets and price differences in various places, the people of the whole country are facing the same stock market, and the story of price fluctuations can easily resonate with people of different cities, different ages, different classes, and different incomes. When a narrative is strongly related to the public’s vital interests such as wealth, income, and employment, and has a strong “relevance”, it is easy to become popular quickly and on a large scale.
The second element is repeatability. Isolated narratives are often difficult to sustain, and narrative popularity requires continuous ripples. Students who have worked in marketing should have a better understanding of this matter – do you still remember those magical brainwashing advertisements such as “Give away Naobaijin as a gift” and “Hengyuanxiang Sheep Sheep Sheep”? Repetition is an important mechanism to strengthen human memory.
Today, the repetition and reinforcement of narratives on social media is the most important channel for narrative viral transmission. For example, after a hot content comes out, many accounts that do slices will follow closely, “secondary creation” through formal or informal channels, and distribute and broadcast, and then these contents can easily spread like viruses. Moreover, the platform’s own traffic distribution mechanism also naturally tends to repeat popular content. The more popular the topic, the more traffic it will be given, forming a positive cycle between narrative and traffic exposure. In this way, even people who originally didn’t care about a topic at all will be involuntarily exposed to related narratives repeatedly, and their beliefs will be continuously strengthened.
The third element is the self-reinforcement mechanism. This may sound a bit abstract. For example: For example, a well-known investment bank released an analysis report that was optimistic about the future market, and this view quickly spread in the market. From the perspective of investment banks, they certainly hope that their judgment is correct; and when ordinary investors see that “big institutions all think so”, they will naturally increase their confidence in buying.
When more and more people buy and push prices up, this rise in turn confirms the judgment of the investment bank. Market participants will feel that “it is so” and have more confidence.
In particular, for institutional investors, there is an additional pressure: others are making money, and if they miss out, they may face capital withdrawal. So even if they are skeptical about the market, they may be forced to participate and become part of the price increase.
This is why narratives in the financial market are particularly prone to extremes. Because there will be a self-reinforcing cycle between narratives, actions and results, like a booster. As long as you push lightly, your beliefs will be shaken, and as long as there is a small spiral, the butterfly effect will form.
So what should we do in the face of popular narratives in the capital market? Here are three reminders:
First, when a narrative appears, you can use the three elements we just mentioned, namely, relevance, higher repetition, and self-reinforcing mechanism, to judge whether it can become popular and achieve an impact on asset prices.
Second, always remember that narratives are built on imagination, and asset prices under popular narratives are very fragile. So be extra cautious when participating in narrative-driven transactions. Because in the era of social media, narratives spread too quickly. By the time you see a lot of relevant information, the price reaction may have already been in place. At this time, the risk of chasing high is particularly high.
Third, it is particularly important to remind you of the narrative trading risks in my country’s A-share market. Starting from 2021, under the uncertainties of great power games, geopolitical tensions, and insufficient demand, the market began to pin its hopes on policy stimulus. This expectation of policy has formed a new narrative logic. However, trading “policy narratives” is often very risky. There are two reasons:
First, policy narratives often reflect consistent expectations. The more popular the narrative, the more consistent the expectations, and the faster the price adjustment. If you don’t lay out in advance, it’s difficult to make a profit in chasing highs. Second, driven by social media, policy narratives are prone to a “fire-fighting effect” – information dissemination and price changes form a strong feedback, pushing investor sentiment to extremes, and asset prices quickly forming bubbles. Of course, negative feedback can also easily make investors extremely pessimistic and bubbles burst quickly.
For investors, this means that if you don’t enter and exit early, trading policy narratives, losses are a high probability event.
More than 100 years ago, Le Bon mentioned in his book The Crowd that narratives containing various concepts, feelings, emotions and beliefs are as contagious as microorganisms among the masses. The capital market over the past 100 years has repeatedly proved that humans will overestimate the firmness of “self-beliefs” and underestimate the brainwashing power of popular narratives. In this era of social media, we must both recognize the power of narratives and learn to stay awake in the vortex of narratives.
Yearning
After talking about “narratives”, the second keyword I want to give is “yearning”.
Why “yearning”? Because in today’s Chinese market, a new phenomenon is becoming more and more obvious: the so-called “grass planting economy”. In the past two years, it seems that everything you do is “grass planting”: going to Harbin to check in is grass planting, buying a road bike is grass planting, and drinking a cup of a certain brand of milk tea is also grass planting.
If you think about it carefully, you will find that the needs that are “grass planting” are not the so-called “rigid needs”. When there is no “rigid demand”, the desire to consume needs to be stimulated – “seed” means sowing seeds to cultivate and stimulate; “grass” means desire and yearning.
Behind this phenomenon, it actually reflects that the values of the consumer market are changing in direction: as society changes from scarcity to abundance or even surplus, the values of the consumer market will change from “materialism” to “post-materialism”.
What does it mean? In the 20 years after World War II, European and American countries entered an affluent society, that is, a society where production and manufacturing capabilities far exceed the basic production needs of human society. Once basic materials are no longer scarce, demand will hardly be driven by practicality and functionality, but will be driven by non-material feelings such as whether it is beautiful enough, unique enough, and fully expressive enough. This is the change from “materialistic values” to “post-materialistic values”, corresponding to the upgrade of needs from “eating and clothing” to “respect and self-realization” in Maslow’s needs theory.
Today in China, the per capita GDP has long crossed the threshold of 10,000 US dollars, and about 43% of adults have an annual income level exceeding the global “middle-income standard” of 10,000 US dollars. As of 2023, more than 56% of China’s population was born after 1980, and the “post-90s” and “post-00s” have gradually become the main force in the consumer goods market. In other words, China has entered a relatively abundant era, and the consumer market has gradually been dominated by people who advocate “post-materialist values”.
What does this mean for merchants? It means that the supply side must undergo a thorough structural transformation. Because material needs are mostly concrete, merchants can just meet the needs. Non-material needs are abstract concepts, which need to be stimulated in specific scenarios.
So, how to stimulate demand? This is about another important change behind the grass-growing economy: the change in the way trust is established.
Historian Niall Ferguson made an interesting observation: the previous society was a tower-shaped one, and influence was covered from top to bottom. Internet technology is like a “modern public square”. In this boundless square, you can easily find your own kind, and influence is increasingly inclined to penetrate in a “net structure”.
This change is reflected in marketing, which is the shift from authoritative endorsement to “person-to-person” marketing. For example, no expectant mother will easily believe the advice and endorsement of experts. She must keep “making strategies” from the beginning of pregnancy, and will definitely look for people with “similar tastes”. Because similar needs and familiar life scenes convey information that can make users feel more “secure”.
In fact, the essence of transactions is trust. It’s just that the way to build trust is different in different eras. In agricultural society, bartering is the exchange of goods, and trust must be built through word of mouth from neighbors. In the industrial age, goods are produced and sold on a large scale, and word of mouth is too inefficient. Brands began to increase awareness and build trust through large department stores and overwhelming advertising.
Today, with the penetration of digital platforms, an online community that is large enough to break through geographical and time constraints has gradually formed, making the oldest “community word-of-mouth” extremely efficient and accurate. In this sense, planting grass is essentially returning to the oldest form of transaction, but using modern technology and means to achieve the oldest and most fundamental way of building trust.
This change is reflected on major platforms, but the methods are different. For example, Taobao and Douyin are “expert planting grass” models, using the influence of KOL (key opinion leaders) for marketing. The ecology of Xiaohongshu is closer to what we said, using word-of-mouth to achieve trust building. Xiaohongshu is more like a “native planting grass community”, and the atmosphere of “autonomous community” driven by individual preferences and interests is stronger.
Here, users rarely unconsciously watch videos to kill time, but purposefully search for content, especially practical information related to life scenarios. The popular phrase “Xiaohongshu is used when in doubt” reflects that users regard it as a trusted life consultant. More importantly, the community carries not simple consumption decisions, but the pre-information of consumption decisions – people share life experiences, make strategies, express feelings, and build trust through high-frequency interactions. These are not cold transaction data, but living people and life scenes, which make the stimulation of demand more accurate, more efficient, and more people-oriented.
Looking deeper, the rise of the “grass-growing economy” actually reflects the changes in Chinese people’s attitudes and lifestyles, which is the social soil for the emergence of the “grass-growing economy”.
What does it mean? Since the Third Plenary Session of the Eleventh Central Committee, the Party has made two important judgments on the main contradictions in Chinese society: in 1981, it proposed to solve the “contradiction between the people’s growing material and cultural needs and backward social production”; in 2017, this judgment became “the contradiction between the people’s growing needs for a better life and unbalanced and inadequate development”.
From “material and cultural needs” to “needs for a better life”, the difference of just four words corresponds to the transformation of China’s economic structure from manufacturing to service, the change of thinking from “development is the hard truth” to “high-quality development”, and the transformation of consumption from material values to post-material values as we mentioned before.
“Material and cultural needs” are more reflected in the big consensus, such as having enough food and clothing, having a house and a car, and receiving education. But “needs for a better life” are different: although we all have cars, you like BMW, I like Weilai; you feel beautiful only when you check in at mountains and rivers, and I feel warm when I stay at home and play with cats.
What does this mean in business? It means that the previous large-scale, large-platform, large-category, and large-track business environment that collectively goes up is retreating, and it is replaced by a more refined, more thoughtful, smaller and more beautiful business ecology.
In the words of consumer observer Dr. Cao Hu, the lifestyle and life attitude of Chinese consumers now is “the era of whaling that needs to go to the sea has passed, and the era of picking shells on the seaside has just begun.” The “Bei” here comes from people’s yearning for a better life in their own minds. As Dr. Cao Hu said, this is the era of “consumer awakening” – commodities are not only “consumption”, but also the carrier and tool for people to pursue a lifestyle.
So we see that although the overall consumer market has been sluggish in recent years, the demand for quality and personalized consumption is growing. From the perspective of income, China already has 29 cities with a total population of 230 million people with a per capita GDP of more than US$20,000. These people often benchmark the consumption concept of the same income level in Japan and South Korea, and pursue a life with aesthetic tonality. In addition, there are hundreds of millions of young people living in low-tier cities with slightly lower incomes but not low consumption concepts. They are also willing to watch and appreciate a better life – they can’t reach it physically, but they yearn for it in their hearts.
As long as the heart yearns for it, potential demand will be stimulated. What supports future products and brands is not only the satisfaction of functions, but also complex and profound emotional resonance, value recognition, and people’s yearning, pursuit and recognition for a better life. Finding yearning and stimulating demand in the ordinary details of ordinary people’s lives is something that Chinese companies and entrepreneurs can still do and are capable of doing well.
Going overseas
After talking about “yearning”, the third keyword I want to give is “going overseas”.
When it comes to going overseas, many people think it is a big word and it is the business of big companies. But in fact, going overseas is a very broad concept, which can be said to be related to everyone: Do you know anyone who does export? Do you know SHEIN and AliExpress? This is product going overseas. Do you have friends who invest in Nasdaq index ETF through fund platforms? This is capital going overseas. Has the company sent you or your colleagues to work overseas? This is called human resources going overseas. Have you played “Black Myth: Wukong”? This is called cultural going overseas.
It can be said that going overseas is the process of China’s “things”, “money” and “people” going out of the country, looking for global markets, and expanding new living space. Specifically, it can be divided into eight modes:
Products going overseas means exporting goods to overseas markets; services going overseas means setting up service networks overseas; IP going overseas means exporting cultural IP and patents; production capacity going overseas means building factories overseas and transferring production capacity; capital going overseas means companies acquiring overseas companies; funds going overseas means investing in overseas securities markets; manpower going overseas means starting a business or finding employment overseas; and models going overseas means replicating domestic operating models overseas. I put detailed explanations and examples of these eight modes in the manuscript, and interested students can learn more about them.
In the past 10 years, the overseas model of Chinese companies is undergoing an important transformation. On the one hand, the growth of traditional products going overseas has slowed down and is approaching the ceiling; on the other hand, the momentum of production capacity going overseas, capital going overseas, and services going overseas is stronger, especially IP going overseas (including intellectual property rights and cultural and entertainment services), with a growth rate of more than 20%.
This transformation actually reflects the trajectory of China’s economic development: in terms of material, we have gone from exporting agricultural products to processing trade and then to independent brands; in terms of money, we have gone from mainly overseas mergers and acquisitions in the early days to more and more greenfield investment (capacity going overseas) in recent years; in terms of people, we have gone from labor export to technical personnel dispatch to global entrepreneurship. This is a microcosm of China’s industrial structure upgrading.
So why has the topic of going overseas suddenly become particularly urgent in the past two years?
When I looked at the data of listed companies this year, I realized what “the duck knows first when the spring river water is warm” means – starting from 2021, the growth rate of overseas revenue of A-share listed companies has greatly exceeded the growth of domestic revenue. For example, in the construction machinery industry, domestic revenue fell by about 20% year-on-year in 2022, but the growth rate of overseas revenue was as high as 60%.
In other words, companies are already using external demand to make up for the lack of domestic demand. This is why China’s exports have been particularly strong in the past few years: from 2021 to 2023, the annualized growth rate of export value was 9%.
But there are always two sides to a coin: strong exports are a good thing, but too strong exports can sometimes be a problem, because they will be accused of impacting related industries in other countries, causing trade frictions and even political conflicts.
Behind these frictions and conflicts, the so-called “Samuelson Trap” is actually reflected.
What is the “Samuelson Trap”? Nobel Prize winner in Economics Samuelson proposed in 2004: If China stays in relatively low-end labor-intensive industries, it will be beneficial to the United States; but if China makes progress in industries where the United States has a comparative advantage, the United States will be harmed. The larger the economic scale of the catch-up, the greater the loss to the United States.
Now, as China’s strength in high-end industries becomes stronger and stronger, it begins to touch the comparative advantages of Europe and the United States, and this theory is becoming a reality. For example: In 2002, the global photovoltaic industry was still dominated by European, American and Japanese companies, and Chinese companies accounted for only 1% of the share. 20 years later, what is the proportion today? China accounts for 90% of the world’s production capacity and more than 50% of the export share. What does this mean for many European, American and Japanese companies? Bankruptcy and liquidation. In 2023, more than 100 photovoltaic companies in the United States will go bankrupt. In 2024, leading companies like SunPower will also be closed.
Another example is new energy vehicles. In 2023, one out of every four new energy vehicles exported worldwide will come from China. In August 2024, BYD has become the new energy vehicle company with the highest market share in the world. This has put tremendous pressure on the automobile industry in Europe and the United States, so much so that the CEO of Ford Motor publicly called out: “Don’t worry about Huawei and Tiktok, save the American automobile industry first.”
Then the question is: In the case of mutual dependence and mutual competition, how can we protect the fundamental interests of China and Chinese companies while responding to the concerns of European and American countries about trade imbalances?
History may give us some inspiration. In 1987, US congressmen smashed a Toshiba radio in front of the White House. Why? Because at that time, Japan’s high-tech industries such as automobiles and electronics developed too fast and exported a large number of them to the United States, which caused a strong backlash from the United States. How did Japan respond later? From product exports to production capacity exports
For example, Toyota began to invest in building factories in the United States, expand local production, and launch new models suitable for the US market. Through these measures, Toyota’s sales in the United States increased instead of decreasing: from 900,000 vehicles in 1988 to 2007, it increased from 2.62 million vehicles. More importantly, Japanese companies have gained overseas living space and maintained rapid growth in this way. From the 1980s to today, Toyota’s overseas sales, revenue and profits have increased by 4 times, 25 times and 2,437 times respectively.
In recent years, China’s photovoltaic industry has actually survived by exporting production capacity overseas. Since 2011, Europe and the United States have launched “anti-dumping and countervailing investigations” on Chinese photovoltaic products, significantly increasing tariffs, causing China’s photovoltaic industry to suffer heavy losses. In 2012, the net asset return rate of leading enterprise JA Solar Technology fell by 36% year-on-year, and the world’s largest photovoltaic company Suntech Power went bankrupt and reorganized in 2013.
But Chinese companies quickly adjusted their strategies. More than 20 companies, including Longi Green Energy, JinkoSolar, and Trina Solar, began to deploy production capacity in Southeast Asia and export to the United States via a detour. This strategy was very successful: by the end of 2023, 80% of the photovoltaic cell modules imported by the United States came from Southeast Asia, and more than 80% of the production capacity in Southeast Asia came from Chinese companies. So when the United States announced a 50% tariff on Chinese photovoltaic products in 2024, Chinese companies were already “indifferent.”
Of course, the game is still going on. The United States has begun to launch an investigation into Southeast Asian imports, which means that Chinese companies must explore more diversified overseas routes and even consider building factories directly in the United States.
Photovoltaics is only a small aspect of the game between major powers. In the next ten years, industries such as new energy vehicles, semiconductors, and mechanical equipment will all face a deteriorating global trade environment. Therefore, Chinese manufacturers also need to respond quickly and promote the transformation from product exports to production capacity exports to achieve mutual benefit and reciprocity. While boosting the local economy overseas, they will optimize their balance sheets and ultimately enhance their global competitiveness.
Finally, let’s talk about what advantages Chinese companies have in going overseas at the moment? I think the two most critical capabilities of China are: super supply chain and digital capabilities.
Let’s talk about super supply chain first. Let’s look at SHEIN, an international fast fashion e-commerce platform, which ships 1 billion pieces a year, and it only takes 7-15 days from customer order to delivery. Such a huge order volume will be instantly dispersed to thousands of factories in the Pearl River Delta. After digital transformation, these factories have greatly accelerated their response speed, and the inventory level can be reduced from 40%-50% of traditional clothing brands to single digits. SHEIN supply chain is a microcosm of “China’s super supply chain”. Not only is it large in scale, but more importantly, it has formed a strong “connectivity”, like a huge spider web, with close cooperation between upstream and downstream of the industrial chain, and it can respond immediately when there is market demand.
Let’s talk about digital capabilities. This may be a bit abstract, let me give you an example: Now if a person has no overseas operation experience, no overseas channels, not strong funds, and even does not understand English very well, can he go overseas? In the digital age, it really can. For example, in TEMU’s full hosting model, you only need to send the goods to the domestic warehouse, and the subsequent pricing, marketing promotion, customer service, cross-border logistics and other links are all completed by the platform. Behind this is the support of China’s strong digital infrastructure and digital human capital.
With these two capabilities, we have seen many new species, such as “borderless enterprises”. What is a borderless enterprise? For example, there is a company called “Zhiou Furniture” in Zhengzhou, Henan. It is not well-known in China, but it is the number one in the furniture category of Amazon, with annual sales of more than 6 billion yuan. Its products are 100% sold to Europe and the United States, and all marketing is on overseas mainstream social platforms. Local people are used to create local content, and logistics and warehousing are also completely international.
This is a borderless enterprise, and it is also a new species of enterprise that has emerged in the past 20 years. There are already many borderless enterprises in China. Their common characteristics are: they are young and have achieved a significant increase in international revenue within a few years of their establishment. Unlike traditional companies that first go local and then go international, these companies are often still unknown in China, but the international market is already extremely eye-catching.
Why can they do this?
Two reasons: a well-developed supply chain, a high degree of digitization, and the ability to adopt a lighter and more flexible organizational method to complete large-scale collaboration.
You see, isn’t this the two major capabilities of China that we mentioned earlier? In other words, in areas where the global market is large enough and China’s supply chain has comparative advantages, there is still an opportunity to use the global market as an arena and grow borderless enterprises.
Our research found that to become a successful borderless enterprise, four characteristics are required: make full use of digital infrastructure, try to take root in a domestic industrial supply chain, focus on a premium market segment, and build an international team.
In addition to “borderless enterprises”, many consumer brands actually have very good opportunities to go overseas.
Why? First, the probability of geopolitical friction is relatively low; second, China’s supply chain has great advantages; third, the digital marketing model is easy to replicate overseas – so, based on China’s super supply chain, building a global consumer brand may be an opportunity.
In addition, the current overseas ecology is not just about seeing “dragons flying and phoenixes dancing”, but “dragons and ants, each with their own scenery”. This means that even individuals or small teams can actually find their own place in this overseas ecology, such as selling professional skills services, technical support, logistics services, payment services, legal services, financial services, localization services, etc. An old story says that during the American gold rush, the most profitable people were those who sold shovels. The logic is actually the same.
It’s the same old saying: the rules of the game have changed, so either quit the game or figure out the new rules and get back on track.
The super supply chain advantage plus digital capabilities are actually reshaping the globalization path of Chinese companies. This road is destined to be bumpy, but for those well-prepared, visionary and patient companies and individuals, opportunities will always exist.
Conclusion
Okay, let’s stop here for today’s interpretation.
Where will the money come from in 2024-2025? The three keywords I give today are narrative, yearning, and going overseas. They are changing people’s growth expectations, changing the way of investment, consumption and marketing, and also changing the strategy and direction of enterprises-behind each “big word” is the ebb and flow of huge amounts of funds.
After all, money never sleeps.
In the first and fourth years of the “Where Does Money Come From” series, I told you, “Don’t walk behind me, because I may not lead the way; don’t walk in front of me, because I may not follow; please walk beside me and be my friend.”
In the sixth year, I still hold this hope –
Walk beside me, we will always walk together, share the same story, and write the same story.
Share joys and sorrows.
Written and narrated by: Xiang Shuai
Mind map: Moses Mind Map Studio
