> I think it is a complete misreading to point to protectionism as the reason for Chinese success, but having a big unified domestic market for consumers along with massive saving rates and capital controls probably does help.
Capital controls are protectionist measures, but anyway, no.
> Okay, what is the limiting factor?
Let's look at which countries have a significant local software industry compared to population size.
- China
- US
- Korea
- You can argue for Japan and India but that's already starting to stretch.
- Yup, effectively no where else. Even in an "out of the way" place like Myanmar everyone uses Meta, with a nice little genocide to show for it. Sure, in Vietnam they use Zalo, and other places have a few other local players. But most of the famous US tech apps are dominant.
Is the EU the outlier here? No. Everywhere else US tech dominates. Meta, Netflix, Apple, Google, Uber, Spotify, Microsoft, Match Group, Paypal, Amazon, and on and on. They don't just dominate the EU, they dominate the world.
Except for the countries I named above, where at least some of the markets that US big tech competes in, instead have bigger local players. And even there, guess what?
Their market share is almost 1:1 linearly correlated to the degree of protectionism in those countries, all the way from China, then Korea, then India/Japan, and then everywhere else! Who woulda thought!
Why does Korea have much less US tech dominance than, say, Germany? Despite German companies theoretically having a big advantage: the German public is 100x more privacy conscious than the Korean one, and much less trusting of US companies.
I can tell you that it's not less regulations; Korea's GDPR is much more onerous than the EU's and so are investment regulations. On every single regulatory aspect, German software startups have it easier. But they were never protected. US tech was allowed to waltz in, dump their products - that's what they did, it's hilarious how now China "dumping" EVs and solar is suddenly an issue when it's exactly the strategy that US tech continues to this day; the AI companies are doing it right now! And the Korean companies were protected. Both by the rules burden, that local companies had to deal with too, along with intentional protectionism.
When it comes to solar and EVs, we all understand that a foreign country dumping their goods kills local industry. It's the exact same with software.
But then half of HN has millions on the bank exactly thanks to the above - this is where all those fat SV salaries have come from - so I do get the lack of desire to understand it.
Are the solar panels and EVs 'dumped' or are they just actually cheaper to produce? I would argue its the latter. Sure there is some state investment in the supply chain, so it is in Europe. Sure the are EV subsidies and green energy subsidies, but so does Europe have them.
Fundamentally BYD cars are cheaper because China has localized the complete supply Chain or has very good raw materials import and local refinement capability. BYD invested themselves and spend 20-25 years vertically integrating while European companies put out huge dividend and miss major technology trends.
The EV market in China was hyper competitive with a huge number of competitors and the subsidies were strategically phased out to turn the industry competitive rather then relaying on protection.
The idea that China has enough money do 'dump' products in literally ever sector that people accuse it of 'dumping' AND at the same time have enough money for massive infrastructure programs at home seems like coping to me.
I largely agree with you on this. I mentioned it because of the irony when compared to US big tech, where it's never mentioned while being their entire playbook - and as you're pointing out, in reality a much better example than Chinese EVs. The whole Silicon Valley VC model (hi YC!) where we talk about "burning VC cash" - this is literally a euphemism for dumping. Subsidizing goods to make them artificially cheap, far below cost, to gain market share, establish a near-monopoly and then raise prices. Dumping at scale. Amazon, Uber, now OpenAI. The only answer to that is protectionism.
Great, you can cross Spotify off the list then or something.
> Uber is irrelevant in many places in the EU due to protectionism.
Thanks for another great example that proves the point :) Though I think there are markets where Uber Eats dominates even when Uber Taxi doesn't. Could be wrong.
> Their market share is almost 1:1 linearly correlated to the degree of protectionism in those countries
Seems like you actually believe this. I think our starting points on reality are different enough that we are not going to have a productive conversation, I wish you and other Europeans the best of luck in your protectionism-led growth strategy. Make sure to not discuss it with any pesky macroeconomists who might lead you astray. take care
Capital controls are protectionist measures, but anyway, no.
> Okay, what is the limiting factor?
Let's look at which countries have a significant local software industry compared to population size.
- China
- US
- Korea
- You can argue for Japan and India but that's already starting to stretch.
- Yup, effectively no where else. Even in an "out of the way" place like Myanmar everyone uses Meta, with a nice little genocide to show for it. Sure, in Vietnam they use Zalo, and other places have a few other local players. But most of the famous US tech apps are dominant.
Is the EU the outlier here? No. Everywhere else US tech dominates. Meta, Netflix, Apple, Google, Uber, Spotify, Microsoft, Match Group, Paypal, Amazon, and on and on. They don't just dominate the EU, they dominate the world.
Except for the countries I named above, where at least some of the markets that US big tech competes in, instead have bigger local players. And even there, guess what?
Their market share is almost 1:1 linearly correlated to the degree of protectionism in those countries, all the way from China, then Korea, then India/Japan, and then everywhere else! Who woulda thought!
Why does Korea have much less US tech dominance than, say, Germany? Despite German companies theoretically having a big advantage: the German public is 100x more privacy conscious than the Korean one, and much less trusting of US companies.
I can tell you that it's not less regulations; Korea's GDPR is much more onerous than the EU's and so are investment regulations. On every single regulatory aspect, German software startups have it easier. But they were never protected. US tech was allowed to waltz in, dump their products - that's what they did, it's hilarious how now China "dumping" EVs and solar is suddenly an issue when it's exactly the strategy that US tech continues to this day; the AI companies are doing it right now! And the Korean companies were protected. Both by the rules burden, that local companies had to deal with too, along with intentional protectionism.
When it comes to solar and EVs, we all understand that a foreign country dumping their goods kills local industry. It's the exact same with software.
But then half of HN has millions on the bank exactly thanks to the above - this is where all those fat SV salaries have come from - so I do get the lack of desire to understand it.