a) Delivery
Since 2025, Alibaba used massive subsidies to compete with Meituan.
b) Micro-loan facilitation
In 2025, the industry faced regulatory crackdown on high fees or high APR, while Alibaba’s Ant Group operates at lower APR segment.
c) OTA
Trip.com (previously CTrip), the leader in China OTA, is targeted by regulators recently for antitrust issues.
d) PDD
In e-commerce, the industry faced some scrutiny and PDD is being probed.
In his book The Most Important Thing Illuminated, Howard Marks wrote this –
Our goal isn’t to find good assets, but good buys. Thus, it’s not what you buy; it’s what you pay for it.
Obviously there is merit to this. Warren Buffett 1.0 could agree with Howard Marks here.
But clearly this contradicts with Charlie Munger and Warren Buffett 2.0, who are willing to pay fair price for good assets.
The “fallacy”, if any, could origin from Marks’ expertise in distressed debts.
A huge difference between equity and debt is that debt doesn’t have unlimited upside.
Debt’s blue sky scenario is limited – receive full payment in interests and face value. Thus price is extremely important.
Equity could have “unlimited” upside for a good company. These good assets have unlimited upside, which makes paying fair price a good deal.
That unlimited upside makes the additional 10% or 20% discount in entry price less relevant.
1/ Drug prices
China used volume-based procurement to lower drug prices by 50-90%.
Trump in May 2025 signed EO seeking to cut drug prices by 59% and 90%.
2/ Housing
In China, “houses are for living in, not for speculation” has been the guideline till 2023.
Trump last week (Jan 7) said US to ban large investors from buying homes.
3/ Personal loan interest rate
China asked several funding sources to lower interest rates – banking (Apr 2025) capped at 24%, consumer finance companies average 20% (Oct 2025), micro lenders 4x LPR or ~12% now (Dec 2025).
Trump called for 1-year 10% interest cap on personal loans on Jan 10.
Please see previous post on Old economy is new and new economy is old.
Here is another reason why this happened.
In the era of AI, robots and space, the TAM is beyond human beings.
The electricity is not only consumed by human, but will also by AI agents and robots.
Robots and AI agents will be the “new population” in physical and virtual forms.
Robots and AI agents will have their own identity, wallet, etc.; robots will need additional space to house.
If we will become multi-planet, we will be building a lot more, which will require a lot of manufacturing capacity, materials, power etc.
Thus, old can become new.
Meanwhile, the human being population may not increase that much.
Those human consumption categories will not increase with the “new population”.
Consumer internet probably won’t have dramatically increased TAM, as the ultimate demand comes from human beings.
Thus, new can become old.
Some will keep being “old”.
E.g. Robots and AI agents will not consume alcohol/baijiu.
Part of the previous “old economy”, such as industrials (e.g. heavy manufacturing), material (e.g. mining), utilities (e.g. electricity) are becoming the new “new economy” due to AI and related investments.
Indeed, AI isn’t just an app-layer story; it’s a capex + physics story.
They’re on the critical path of AI expansion, and they’re supply-constrained enough to earn economic rents.
Meanwhile, part of the previous “new economy” is becoming old, like software, e-commerce etc.
Software is less scarce, with AI-assisted coding and commoditized building blocks
E-commerce matured in many markets. China is the prime example. China’s gov reported e-commerce (physical goods) growth has been below 10% for 4 consecutive years since 2022.
I am recently reading Howard Marks’ The Most Important Thing and come across the section describing the credit cycle.
Why the worst credit is issued at the best of times?
Because bad news is scarce and when financial institutions compete for market share by lowering lending standards or required returns.
Typically when there is more capital available to companies or individuals, you have lower return on capital when they invest.
Then when something bad happens, the cost of capital can shoot up and become higher than the return of capital generated by the previous projects.
These projects can’t sustain in the new environment and thus are destroying capital.
———
This is also true in valuation and VC returns.
The worst VC deals are made during the best of times!
Remember the 2020-21 era? Not hard to destroy some capital if you invest in a SaaS company with 40x P/S during that time.
Read more on SaaS P/S here – The previous 40x P/S sector was SaaS
Cloud and SaaS received premium valuation from 2020 to 2021.
The outperformance started in 2016 and lasted 5-6 years. Watch that outperformance here: https://cloudindex.bvp.com/
Back then, “rule of 40” is the king of valuation metrics, which means “um of revenue growth and profit margin should equal 40%+”. The higher the better of course.
While market fluctuates, you can find the P/S or revenue multiple in the past.
Here, you see that in 2016 companies at rule of 40 receives ~6-7x current year revenue multiple.
Here, you see that in 2020 companies at rule of 40 receives 17x LTM revenue, or 12.8x forward revenue.
During this 2020-21 period, it’s normal to see 30-40x P/S for hot SaaS companies. I remembered Shopify was 40x P/S.
Looks at these charts from here – the evidence of 30-40x P/S glory days.
We all know what happened next.
That multiple fell back to ~6x for the regression line in 2022, with Fed raising interest rates. See here for the chart.
The multiple has stabilized afterwards, from 2022 till now.
Currently, the valuation (forward revenue multiple) is ~4-5x for 2nd and 3rd quantile companies followed by BVP, including the names like Salesforce, Hubspot, Workday, Nutanix, etc.
BVP has introduced the new the Rule of X to give growth more credit btw.
I think some bubble is brewing now, with AI model companies or even chip companies.
However, investors keeps dancing, expecting that Trump will appoint new Fed Chair this year and the new chair won’t raise rates. Trump wants lower rates, not higher.
Maybe we should see another around of crazy valuation first.
And if SaaS outperformed 5-6 years (2016-2021), maybe AI-related stuff should outperform till 2027/28.
Interestingly, the two things give me similar feeling.
VPN is needed when people in HK use services like ChatGPT.
另纸签 is needed when Chinese people are entering Vietnam.
The usage of VPN in HK for ChatGPT started when US doesn’t want to recognize Hong Kong as special and treat it more like mainland China.
The usage of 另纸签 started when Vietnam doesn’t want to recognize the map on a Chinese passport.
Sometimes you feel the moves are a bit “childish”, but also “smart” in managing tensions.
In the smartphone era, Google’s Android and Qualcom chips is a powerful solution for many hardware makers.
Nvidia looks to resemble that status alone in self-driving, with this announcement. The Alpamayo + Thor combo provide self-driving software + chip for cars.
More than that, it looks that Nvidia might also do that in robots.
Obviously, Tesla would be the Apple of this era.
Btw, Nvidia’s evaluation data set includes lidar data https://huggingface.co/datasets/nvidia/PhysicalAI-Autonomous-Vehicles-NuRec
This dataset has a total of 1727 hours of driving recorded from planned data-collection drives in 25 countries and 2500+ cities. The data captures diverse traffic, weather conditions, obstacles, and pedestrians in the environment. It consists of 310,895 clips that are each 20 seconds long. The sensor data includes multi-camera and LiDAR coverage for all clips, and radar coverage for 163,850 clips.
To build a brand,
1/ need to find who you are first – define the mission/spirit or whatever value you want to express, then build the product, not the other way around
2/ need to do things that convey the value, not just talk about the value