VALUE: After Hours (S07 E20): China’s Wild Capitalism and the Mag 7

During their recent episode, Taylor, Carlisle, and John Huber discussed China’s Wild Capitalism and the Mag 7. Here’s an excerpt from the episode:

Tobias: We were just talking China before we came on. Jake and I did a visit. John visited in 2018. We were talking about how China has been the wild west of startups and we’ve seen these giant companies come out of nowhere. And then, some of them have been surpassed by other giant companies out of China. We’re just wondering whether the West is immune to that violent capitalism that the Chinese are engaged in. What do you think of the Mag 7? Which is the most at risk from China or competition? Does Tesla fall in the Mag 7?

John: Yeah, I think Tesla’s in the Mag-7 still, right?

Jake: Yeah. You only get into the acronym if your price is going up. Eventually, if your price stops going up, you’re out of the acronym, we’ll make a new one.

Tobias: They snuck out. Netflix for a little while snuck in Nvidia.

Jake: Yeah. Netflix– [crosstalk]

Tobias: Netflix is back, baby.

Jake: [laughs]

John: Yeah, that’s a good question. I don’t know which one would be most vulnerable, but we were talking before you push the button. But it’s very competitive. I think that you guys have been there and I was there seven years ago now, which is like seems so long ago, because so much has changed since I was there. I was there right at the end of the Xi Jinping’s first term and then in the fall– I think it was the fall that year that he said like, “Things are going to be a little different around here and I’m going to be sticking around longer,” and things I think changed significantly after that.

But the one thing that probably hasn’t changed much is China is just so fast moving and fast paced and competitive. And with AI, it just seems like things are moving so fast and the competitive advantages might be totally different in the next decade or two than they were in the last decade where you had these walled gardens and network effects that are still extraordinarily valuable, but they might be–

You can see these companies shifting with their capital spending and their strategies. Everybody’s shifting to AI, but it’s uncertain to me who’s going to emerge as the winner there. But obviously, the existing incumbents have a lot of advantages. But yeah, it’s competitive, for sure.

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