Chris, your second global focusing question is also most interesting to me. In a globally connected world of sovereign ambition to create national champions. how should nations think about a competitive policy response?
I would be interested to hear your experience on how different emerging nations are creating absolute advantages (sharks and draw bridges) for their champion’s moats with policies on effective tax rates, financing, regulations, and protectionism.
It is the central question and I see different paths brewing:
For those who have been at it a long time, they have long learned that being and acting like a "local champion" remains important. Having said that, I have no advice for Starbucks based on what I heard about Luckin or say BWM based on what I heard on BYD and Xiomi. Their brands are simply viewed differently in our generation versus the next ones. Brand relevance remains as true - maybe more so - in all our lives. It has to be re-earned now, especially as true local champions are significantly competitive.
For those newer, if you spent the hands dirty work of being on the ground; building reputation and regulatory relationships; answering local questions of need - effectively being the local champion (or one of them) that may be a moat. This idea of being a holding company of local champions - in a way what Grab was - may be a path i.e. great brand, centralized admin and AI/tech stack but each country is attuned to the market, hires locals, invests locally etc. Then again you are a moat as long as the country thinks of and treats you as such.
JV of course is tried and true - with mixed batting averages (partnerships are hard; devil in details both for the short term an obligations of future ownership etc.)
On creating absolutely advantages it is pretty much as I have written. It is just hard. China has their own playbook because they are strategically committed to having the best advanced manufacturing operation not only at the lowest cost overall and in everything, but specifically on energy and more specifically electricity. All kinds of new innovation in robotics, AI and energy will change this field - but at the moment THEIR answer is the best way to compete is to compete with these very hard to take on structural moats.
I was just with some outstanding manufacturing tech companies in America and it is hopeful for the American market. Needless to say, being a local champion here is proving as true as elsewhere. There are bills right now in Congress that may re-imagine what it means to do robotics say in America if you are an outsider.
But over there is not only a lead in China, but an ability to move faster with less opposition and much more efficient regulatory obligations (especially in, say, health).
To my earlier post, we may be in a world of parallel paths. Not isolationist per se, but for a time we do have needs from each other (China in export markets; a broader sense of stability and we the same).
Does that mean the rest of the world will be forced to choose? I hear that all the time in America and especially in DC. All I know is that nations don't want to choose, but rather hedge. If some combination of THEIR local champions and other markets - and there is innovation and great product coming from everywhere - and both America and China would ensure they aren't over reliant on anyone, that would be ideal. The challenge is say an India can do this easier than a smaller country.
Amazing days. Thanks for the thoughtful questions as always.
Chris, your second global focusing question is also most interesting to me. In a globally connected world of sovereign ambition to create national champions. how should nations think about a competitive policy response?
I would be interested to hear your experience on how different emerging nations are creating absolute advantages (sharks and draw bridges) for their champion’s moats with policies on effective tax rates, financing, regulations, and protectionism.
Great insights!
Thank you
It is the central question and I see different paths brewing:
For those who have been at it a long time, they have long learned that being and acting like a "local champion" remains important. Having said that, I have no advice for Starbucks based on what I heard about Luckin or say BWM based on what I heard on BYD and Xiomi. Their brands are simply viewed differently in our generation versus the next ones. Brand relevance remains as true - maybe more so - in all our lives. It has to be re-earned now, especially as true local champions are significantly competitive.
For those newer, if you spent the hands dirty work of being on the ground; building reputation and regulatory relationships; answering local questions of need - effectively being the local champion (or one of them) that may be a moat. This idea of being a holding company of local champions - in a way what Grab was - may be a path i.e. great brand, centralized admin and AI/tech stack but each country is attuned to the market, hires locals, invests locally etc. Then again you are a moat as long as the country thinks of and treats you as such.
JV of course is tried and true - with mixed batting averages (partnerships are hard; devil in details both for the short term an obligations of future ownership etc.)
On creating absolutely advantages it is pretty much as I have written. It is just hard. China has their own playbook because they are strategically committed to having the best advanced manufacturing operation not only at the lowest cost overall and in everything, but specifically on energy and more specifically electricity. All kinds of new innovation in robotics, AI and energy will change this field - but at the moment THEIR answer is the best way to compete is to compete with these very hard to take on structural moats.
I was just with some outstanding manufacturing tech companies in America and it is hopeful for the American market. Needless to say, being a local champion here is proving as true as elsewhere. There are bills right now in Congress that may re-imagine what it means to do robotics say in America if you are an outsider.
But over there is not only a lead in China, but an ability to move faster with less opposition and much more efficient regulatory obligations (especially in, say, health).
To my earlier post, we may be in a world of parallel paths. Not isolationist per se, but for a time we do have needs from each other (China in export markets; a broader sense of stability and we the same).
Does that mean the rest of the world will be forced to choose? I hear that all the time in America and especially in DC. All I know is that nations don't want to choose, but rather hedge. If some combination of THEIR local champions and other markets - and there is innovation and great product coming from everywhere - and both America and China would ensure they aren't over reliant on anyone, that would be ideal. The challenge is say an India can do this easier than a smaller country.
Amazing days. Thanks for the thoughtful questions as always.
Great post - TY Chris!!!!
thanks for reading, John. If you see other moats let us know!
Good insights. Thought-provoking. Thanks, Chris!