There are 1000 Chinese labs. They are involuting, they cannot coordinate and the state won't let them coordinate because the state wants domination, not actual profits for anybody. So the market forces are allowed to dominate.
Because of the basic huge recession going on in China, you can't actually make money in China doing China things. So they gotta gird up their export stuff and try to export. That entails strong relations with American companies, American PR, English stuff, etc.
If you want an essay about this from a VC, read this one
What a strange way to put it. Market forces are a good thing in a market economy. Only someone who secretly wants or hopes for monopolies would you say something to the contrary (a VC).
The party has done something about enormous involution in solar panels, for example (<a href="https://www.csis.org/analysis/chinas-solar-industry-upheaval-effects-will-be-global" rel="nofollow">https://www.csis.org/analysis/chinas-solar-industry-upheaval...) and previously steel. They're planning something for cars. They don't on LLM because of the newness and the wish for preeminence.
China has a different perspective on it, they believe that there is such a thing as harmful competition and they are willing to step in to stop it.
Enshittification and related problems can be a result of market forces just as much as they can be a result of monopoly/duopoly or a small cartel. Excess competition sometimes results in all firms scraping the barrel to squeeze out pennies, especially with technology (such as large online marketplaces) making pricing more transparent.
Marx actually predicted that ever-intensifying competition would destroy markets through overproduction, although he did not use the term involution.
Price wars are good even if they lead to more bad products on the market. If quality is important people will pay more for it and ignore the bad ones, if not then everybody saves some money.
The reason it doesn't work like that IRL is centralized marketplaces. If the winning strategy on Alibaba is low prices, bad quality and botted reviews to compensate then every seller has to do it to survive, because they can't get buyers outside the platform. That's not excess competition. It's a lack of competition just on a different level.
> The reason it doesn't work like that IRL is centralized marketplaces.
Well yes, that’s why I mentioned those specifically. But even if the marketplaces were split up, someone could create an aggregator to comparison shop and the same effects would apply. The problem for producers is that the Internet erases information asymmetry.
It’s also not just affecting low end goods, it’s a constant pressure on everyone, which is why many formerly upscale brands are seeing the same problems. It’s also a general problem with public companies, as large shareholders demand constant growth, as well as many private companies owned by PE where brands are stripped for short-term profits.
My experience is that the best low cost mid-tier products right now are coming from fronts like Vevor and Fanttik who do sourcing from noname factories in China. I’m not sure if their position is sustainable; it’s not like they have much of a moat. (I guess Fanttik has a team that adds some slick design to their otherwise utilitarian items.) If that model holds up then maybe that’s the future, but I suspect that they just have a temporary advantage thanks to a dual presence and connections in both the US and China.
Pouring 100% of your tech optimism, and probably portfolio, into a product that some say is about to get Wile E Coyote flattened by market dynamics would probably inspire serious market skepticism.
I'd call it overcapacity instead. A lot of investment without capital discipline making sure there is actually return of investment leading to too much supply.
Not that OpenAI, Anthropic or SpaceX aren't doing the same.
At the 1000 foot level, this is just another part of the Chinese master plan that's been playing out for decades now. The master plan seems to be: train far more engineering and stem graduates than anyone else, let them loose in a dog eat dog capitalist garden and fertilise the garden with sprinkling government money. Hoped for outcome: their innovation will let China eat the world.
For comparison around 50% of China's graduates are in STEM, vs 20% in the USA. With China has a larger population the final outcome is: USA feeds their innovation pipeline with 800k new STEM graduates per year compared to China feeding its pipeline with 4M to 5M per year. In addition the Chinese government outspends the USA government on subsiding innovation in STEM by about 2 to 1 and the USA's subsidy rate has been shrinking since the Regan era. However, there is a caveat: USA private investment brings the total spend in both countries back to parity.
It seems the Chinese plan is working. The STEM garden is overstaffed. It produces far more than China can absorb internally, so they are forced to export their ideas and wares to the world. After decades of persistence China has become the worlds manufacturing powerhouse and now drives the development of 5G/6G, batteries, cars, and solar. China builds about 1000 large ships a year. The USA builds 5 to 8.
But as the article says, this comes at a cost. The intense competition makes life in China's dog eat dog STEM garden brutal. I guess that's the price a nation has gotta pay for world domination.
amelius · · focus · HN ↗
Any ideas?
curuinor · · focus · HN ↗
Because of the basic huge recession going on in China, you can't actually make money in China doing China things. So they gotta gird up their export stuff and try to export. That entails strong relations with American companies, American PR, English stuff, etc.
If you want an essay about this from a VC, read this one
<a href="https://earnedintuition.substack.com/p/involution-without-export-is-wasted" rel="nofollow">https://earnedintuition.substack.com/p/involution-without-ex...
dabedee · · focus · HN ↗
curuinor · · focus · HN ↗
ajkjk · · focus · HN ↗
iamnothere · · focus · HN ↗
Enshittification and related problems can be a result of market forces just as much as they can be a result of monopoly/duopoly or a small cartel. Excess competition sometimes results in all firms scraping the barrel to squeeze out pennies, especially with technology (such as large online marketplaces) making pricing more transparent.
Marx actually predicted that ever-intensifying competition would destroy markets through overproduction, although he did not use the term involution.
tancop · · focus · HN ↗
The reason it doesn't work like that IRL is centralized marketplaces. If the winning strategy on Alibaba is low prices, bad quality and botted reviews to compensate then every seller has to do it to survive, because they can't get buyers outside the platform. That's not excess competition. It's a lack of competition just on a different level.
iamnothere · · focus · HN ↗
Well yes, that’s why I mentioned those specifically. But even if the marketplaces were split up, someone could create an aggregator to comparison shop and the same effects would apply. The problem for producers is that the Internet erases information asymmetry.
It’s also not just affecting low end goods, it’s a constant pressure on everyone, which is why many formerly upscale brands are seeing the same problems. It’s also a general problem with public companies, as large shareholders demand constant growth, as well as many private companies owned by PE where brands are stripped for short-term profits.
My experience is that the best low cost mid-tier products right now are coming from fronts like Vevor and Fanttik who do sourcing from noname factories in China. I’m not sure if their position is sustainable; it’s not like they have much of a moat. (I guess Fanttik has a team that adds some slick design to their otherwise utilitarian items.) If that model holds up then maybe that’s the future, but I suspect that they just have a temporary advantage thanks to a dual presence and connections in both the US and China.
DrewADesign · · focus · HN ↗
thrawa8387336 · · focus · HN ↗
curuinor · · focus · HN ↗
3371 · · focus · HN ↗
luke5441 · · focus · HN ↗
Not that OpenAI, Anthropic or SpaceX aren't doing the same.
googaar · · focus · HN ↗
bilbo0s · · focus · HN ↗
Do you do business in China?
I'm curious what you mean by this? Because in my experience, you can only do business in China by doing "China" things.
I'd be interested in picking your brain as to how you get around those issues?
curuinor · · focus · HN ↗
I'm talking like, getting 100x, VC sized returns. Of course you can sell widgets in China, it's a major world economy.
watwut · · focus · HN ↗
That is how actual capitalist market should work and what anti-monopoly legislation should ensure.
rstuart4133 · · focus · HN ↗
For comparison around 50% of China's graduates are in STEM, vs 20% in the USA. With China has a larger population the final outcome is: USA feeds their innovation pipeline with 800k new STEM graduates per year compared to China feeding its pipeline with 4M to 5M per year. In addition the Chinese government outspends the USA government on subsiding innovation in STEM by about 2 to 1 and the USA's subsidy rate has been shrinking since the Regan era. However, there is a caveat: USA private investment brings the total spend in both countries back to parity.
It seems the Chinese plan is working. The STEM garden is overstaffed. It produces far more than China can absorb internally, so they are forced to export their ideas and wares to the world. After decades of persistence China has become the worlds manufacturing powerhouse and now drives the development of 5G/6G, batteries, cars, and solar. China builds about 1000 large ships a year. The USA builds 5 to 8.
But as the article says, this comes at a cost. The intense competition makes life in China's dog eat dog STEM garden brutal. I guess that's the price a nation has gotta pay for world domination.