Let's move on to big topic, big country,

China.

You spent 10 days there over the past

summer. What was your experience? What

did you see? What made an impression?

What did you do?

>> I'd been about six times before, so this

is like my seventh trip. One thing that

was different, my daughter is Asian

studies major, as you were.

>> Yeah. [laughter]

>> And she spent the summer in Hong Kong.

So we picked her up and then we toured

six cities in 10 days. [snorts] And my

objective with this trip, in the past

trips, it was mostly just to meet with

entrepreneurs and founders and mutual

sharing of information, that kind of

thing. This time I was more interested

in just kind of being eyes wide open and

learning. And so we took two of the

highspeed trains, you know, just as an

experience set. I got a tour of the Xiai

factory with their new car, the SU7, and

was trying to get a feel for what's kind

of most recent there. And we, you know,

went to Shenzhen overnight city, which

has gone from, I think, less than

100,000 people in 1980 to 20 million

people just to see the scale and scope

of the whole thing. There's a lot of

rhetoric in the US about what is or

isn't happening in China [snorts] and I

just wanted to have a better feel for it

and and we're making policy decisions

that are going to impact, you know, the

global footprint and god forbid, you

know, end up in a World War II kind of

situation. So anyway, I just wanted a

better understanding. I was aided by the

fact that Dan Wong shared his book

Breakneck with me right before I left

and I read it while I was there which

was interesting and then it came out and

of course it ended up on the bestseller

list but I think China's misperceived in

a lot of ways.

>> What are some of those misperceptions?

The biggest one is that people who have

a rudimentary understanding

of

what is happening there

use this word communism to infer a lot

of other things. And one of the things

that's inferred by communism is top-down

state-run system. and they think they

think of Russia and they assume well

that'll always lead to bad capital

allocation, no innovation because they

have this picture of in their mind of

these brick buildings like with snow all

around them and not much happening.

>> And the reality there is just far far

different from that. I think Dan

[snorts] Wong did a great job of

explaining how the country puts out this

five-year plan, but then the provinces,

which are they're a lot bigger than a US

state, but they're the equivalent, like

it's how the country segmented, they

compete with each other. And [snorts]

the effective mayor of the province, if

he if he does well, has a chance to move

up in the system, which is not a reality

in the US system. But what that leads to

is just a massive amount of competition.

>> What are the metrics by which they're

being judged? Do you have any idea on a

province level?

>> Is it some equivalent of GDP? It's not

the right term, but

>> I'm guessing probably like we could go

talk to AI and get a better answer

[laughter] than I have right now, but

yeah, I would think that's part of it.

Prosperity, employment,

>> those kind of things. By the way, this

provincial competition has also led to

overbuild of buildings. Like, it's not

always positive. You know, bridges that

aren't used,

>> ghost cities.

>> Go cities. Yes. But you end up with

hyper competition. So the I think the

thing that a lot of people in Silicon

Valley love about capitalism is this

notion of the invisible hand and

competition that leads to innovation and

best practice and the winners rise up

and they're better for it. That is

happening there. And if you read about

the solar industry or the EV industry or

now the the robotics industry, they have

hundreds [snorts] of different companies

competing in these fields and it's

brutal competition. And as a result of

that, they're ending up with very

innovative companies, which once again,

I think people wouldn't prescribe to

being possible in [snorts] a communist,

you know, world and remarkable

execution from a industrial standpoint.

So the price points of the products that

that will be sold around the globe are

well below anything that could be done

in the US. How do you go about getting a

tour of Xiaomi factory? I would think

that they would be very closed about

that. What's in it for them? And how do

they

>> I don't know if you saw this going

around the internet yesterday, but they

shipped a car to this YouTuber.

>> Oh, yeah. I saw it.

>> Brilliant. And he did like a 15. That's

the SU7. That's the factory I went to.

As I mentioned, I'd been there before.

So I met Le Jun who's the founder of

Xiai in 2005 when he was chairman of

Joyo which was a e-commerce company that

Amazon bought. So he's been around a

while.

>> Yeah.

>> He has evolved into the best thing I

could say is like he's the Steve Jobs of

China right now.

>> When he quit doing yo-yo and he had this

other company as well, he declared 10

years ago he was going to build a

smartphone. just out of the blue, I'm

going to build a smartphone. He didn't

have any smartphone experience, but Xiai

is now the third largest manufacturer of

handsets in the globe. And about four or

five years ago,

>> at about the exact same time, Apple

hinted they were interested in building

a car. He said, "I'm going to build a

car."

>> Well, not only did he say, "I'm going to

build a car," but that was a response to

sanctions, right? It was an emergency as

I I listened to one of well I listened

to the translation of even though my

Chinese is decent but it's not as good

as it once was his I think it was 2024

>> that's it

>> companywide address where he talked

about the sanctions coming in saying

what if we couldn't make phones what

would we do

>> that talk is unbelievable and it it's

translated on YouTube and I would

encourage people to watch from about

minute 30 to about an hour

which is where he talks about his

process for designing the car. I don't

know if you saw that part. I did.

>> But it's crazy. He says he put a note on

any car in his parking lot that he had

never drove. And he would ask each

employee to give them three positives,

three negatives, and loan him the car.

Said he drove 200 of his employees cars.

When you hear that kind of stuff, you're

like, "Wow, I wonder if anyone at Apple

did that." I mean, it's just such a kind

of bottom up just ground truth way to

start the process. But even still, even

if you did that, like a bunch of people

could do that. How do you have the

wherewithal to build a factory? He'd

never built a factory before. I've been

in other car factories here in the US.

It was phenomenal. Anyway, back to your

question. Why I could get in is I I knew

late June from way back.

>> What does the process look like? Are

there a bunch of clearances and you have

to get the okay from the provincial?

>> I don't think we went through the whole

factory, but no, I mean, they're a

public company. I think they're

interested in

>> being well understood.

>> Yeah.

>> Which I think hints at why they enabled

this. I think they had to send a car to

this guy,

>> the YouTuber.

>> Yeah.

>> And by the way, the president of Ford

went over there about 6 months before I

did. went on the same tour. So, they let

him go there and he had an SU7 shipped

to to Michigan and he drove it for

several weeks and he's talked about how

incredible it is.