
Asia-Pacific is home to a rise in new self-made billionaires - pseudolus
https://www.bloomberg.com/news/articles/2019-02-08/american-dominance-in-tech-wealth-creation-upended-by-asian-wave
======
cromwellian
Count me skeptical about of some of these 'self-made' billionaires. Pinduoduo
for example, as with many Chinese companies, has been accused of falsifying
revenues to pump stock prices. Yes, this stuff happens in the US as well (we
all remember Enron and Theranos), but to what extent, are the statements of
these companies transparent and well-audited, and regulated by government
differs by region.

And Bitmain? Is it tech wealth creation to sell pick-axes to desperate miners
looking for a gold rush? This looks to me like instead, a zero-sum trade,
wherein someone got rich, and everyone else was left holding the bag for a
device that would be worthless in a few months.

Of all of those on the list, DJI looks like the most legit, self-made success
story, producing a very high quality, Apple-like experience in innovative
drone devices, devices now used extensively by the film industry.

~~~
xkcd-sucks
Xiaomi is another one, their build quality is good and they make a whole bunch
of actually useful non "tech" things like escooters, air filters, vaccuums. I
don't know if they're shady with finances or data collection though

~~~
sanxiyn
Xiaomi doesn't really make air filters and vacuums, they are made by their
partners. Xiaomi is providing retail service to those partners. Xiaomi also
provides partners other services, like pooling purchases to lower price and
pooling loans to lower rate.

One financial analysis of Xiaomi I read (it's in Korean, I couldn't find
anything in English) is that it is in part a lending company funded by float
from manufacturing partners. Xiaomi has a personal loan product which grew by
100x in two years to ~1 billion. Liquidity comes from delay between retail
sale to partner payment.

~~~
baybal2
To begin with, money in China are super duper cheap to begin with. I guess,
even "super duper cheap" was not enough for Xiaomi

~~~
sanxiyn
Isn't interest rate much higher in China compared to US?

~~~
baybal2
Nominally, yes... the "street rates" are completely random, and if you manage
to qualify for any government endorsement, state banks will be ready to
bamboozle any amount money on you.

------
jorblumesea
I often wonder how much of this is because of China's government sponsored
espionage and theft. It's a pretty clear pattern of APT hacks and then somehow
a Chinese startup is making "huge strides" in advanced metamaterials
manufacturing. Then they are subsidized with cheap (basically free) government
loans which undercuts the market.

If the Chinese government steals trade secrets for its business and rigs the
market in their favor, is that really "self made"?

Perhaps the title should be "party cadres and sons of the politically
connected get richer".

~~~
A2017U1
Do you truly believe they are the only country on Earth committing corporate
espionage?

Everyone is doing it, but in Western democracies you have to hide the fact
because voters on all sides frown upon such cheating. Especially stealing from
your closest allies who send their troops to die in your pointless wars.

The reality is China doesn't care about getting caught. Just like India shrugs
off rescinding billion dollar pharmaceutical patents and starts exporting the
generics around the world for huge profits despite never contributing a cent
to R&D.

~~~
jorblumesea
No, I don't think that at all. I just see it as ridiculous to pretend these
are "self made" entrepreneurs or innovators in the slightest.

More like, Knighted by the Party?

------
threatofrain
I think it's not good to frame wealth creation in terms of billionaires.

~~~
rdiddly
Came here to say that. Compared to making everybody richer, making one guy a
billionaire is easy. It costs $1 billion. Even giving each Chinese person $1
would cost more than that.

Edit: Which is not to be all "America Yay!" and "China Boo!" like some high
school rivalry. America's legendary wealth inequality objectively demonstrates
that it, too, leans closer to "making one guy a billionaire" than it does to
"giving everybody a dollar."

~~~
samatman
The median personal income in the United States is roughly 31,000 dollars.

So more like giving everyone 85 dollars a day, than one.

------
TonyBagODonuts
Spending months outside of Beijing in multiple island cities and seeing the
empty buildings and 90% built infrastructure everywhere I don't doubt China
will always be poised to userp American dominance, never actually do it, but
always close.

~~~
agumonkey
just saw a documentary about their international parternship efforts (middle
asia, africa and bits of Europe like portugal and greece) .. it seems they
might take the lead (unless large economic implosion)

------
RA_Fisher
Sure but China inflated its currency, that's a redistribution to asset
holders. The acomplishments are admirable all the same, but the accelerated
climb is probably boosted by inflation. I predict a correction in next year's
list.

~~~
BenoitEssiambre
It's not really a redistribution to asset holders. These people get about the
same in the long run. It's more like the removal of a subsidy on government
paper. This promotes private asset creation.

[https://medium.com/@b.essiambre/the-world-deserves-a-pay-
rai...](https://medium.com/@b.essiambre/the-world-deserves-a-pay-
raise-302f25efd82a)

There is no reason for a correction if they continue running a sufficiently
inflationary monetary policy.

~~~
RA_Fisher
That's a great article! I read about 3/4 and I'll come back for the rest. Your
arguement is the ying to my yang.

Where I depart is: wages adjust much more slowly than assets. Wages are
negotiated over long spans of time vs. liquid assets. Wage holders think
they're negotiating for real value X but it's eroded. Just look at baby
boomers. Their wage flows are ~ fixed. Sure many get the benefit of asset
appreciation but the ones that don't (get word) are crushed.

~~~
RA_Fisher
The assertion that the gov has the equilibrium interest rate (price of money)
set too high is unsubstantiated in the article. We've just been through
quantitative easing, so it seems unlikely we're above equilibrium. If only
we'd let the market choose!

~~~
BenoitEssiambre
The natural rate is hard to measure so this is a difficult one to answer. And
right now, in the US, my argument probably no longer holds that well (I wrote
the post a while back). It looks like the uncertainty surrounding the
aftermath of the 2008 crisis finally dissipated and unprecedented government
deficit spending has pushed the equilibrium up, making it easier to follow for
the Fed. This means there is enough private investment to keep the economy
running well and people employed.

Europe and Japan are still very problematic however.

The simple fact that people, businesses and banks hoard cash and government
bonds instead of doing sufficient investment to keep people employed is strong
evidence to me that the returns on government paper is above market. Excess
reserves are high into these parts of the world.

A more widely recognized sign is that they keep undershooting their inflation
target.

For arguments from real economists, look around these parts
[https://www.davidbeckworth.com/popular](https://www.davidbeckworth.com/popular),
[https://worthwhile.typepad.com/worthwhile_canadian_initi/nic...](https://worthwhile.typepad.com/worthwhile_canadian_initi/nick-
rowe/) or
[https://faculty.insead.edu/fatas/](https://faculty.insead.edu/fatas/)

One thing you can't rely on is the fact that central bank rates are zero in
the problematic places. Zero is a high, above market rate when the equilibrium
is negative. As I tried to emphasize in my medium post, negative rates can be
quite normal and natural. If marginal private assets don't have a positive
real rate on a risk adjusted, liquidity adjusted basis, the government
shouldn't provide an artificial substitute. If they do, it puts a gridlock in
large parts of the economy.

------
roenxi
It'd be interesting to be able to compare America and China through the lens
of capitalism; at the moment I don't think China is transparent enough to
really come up with anything meaningful.

America is a lot less capitalist than it once was [0, 1] total government
spending has gone from 10% GDP around the 1930 great depression (so, 9 private
dollars for every public dollar) to about 30% post 1950 including State &
Local government (2 private dollars per public dollar). I'm not sure how to
interpret it, but spending on military also seems to have plummeted since the
60s as a % of spending. The military spending was where the research for
things like the internet was done, so that might be meaningful. It seems very
reasonable that the impacts of research and tax impacts on savings play out
over 20-30 year timeframes (low risk capital investment pays itself back over
~15-20 years which sets up a natural cadence).

As the world becomes competitive for the first time since the end of the cold
war, issues of how to generate new wealth very rapidly become important.
America won't be able to harvest resources from foreign climes (eg, the Middle
East) as freely now that China is starting to move beyond its boarders; to say
nothing of potential changes in India or other Asian countries.

[0] [http://metrocosm.com/history-of-us-taxes/](http://metrocosm.com/history-
of-us-taxes/) [1]
[https://www.usgovernmentspending.com/breakdown_1930USpt_20ps...](https://www.usgovernmentspending.com/breakdown_1930USpt_20ps5n)

~~~
Spooky23
That’s why undermining US foreign policy is a big BRIC priority.

The era of stupid we are in now will have dramatic impact on the rest of this
century.

~~~
diogenescynic
Republicans will find a way to blame democrats.

------
rblion
What matters is durability and defensibility, not current market value which
is very speculative if you ask me.

When they produce something like Microsoft, Apple, Amazon, Google I'll
reconsider my position.

~~~
mrnobody_67
Tencent and Alibaba are like those... and in many ways better.

~~~
seanmcdirmid
They aren't international brands. Alibaba gets some traction outside of China
for those who want to buy cheap Chinese goods, while Tencent has bought some
foreign game companies, but otherwise no one outside of China really knows who
they are.

~~~
rblion
This is about my familiarity with them to be honest. Brands I am aware of but
haven't given a dollar to. Yet, I end up using Apple, Alphabet, Amazon,
Microsoft services/products every day in one way or another. I don't agree
with everything each of them does but I support them because I respect them.

~~~
thecleaner
Maybe Tencent and Alibaba dont need to focus more outside of China. China in
itself is a huge market. Also the reason we dont hear about these services is
that HN is largely representative of the English speaking part of the world -
a big part indeed but not the whole.

~~~
speedplane
In addition, I wouldn't be surprised if HN is blocked in China.

------
adventured
This is of course an exaggeration by Bloomberg.

Six of the ten richest people on earth are US tech billionaires.

Out of the 63 technology billionaires in the top 500 global richest that
Bloomberg tracks in their billionaires list, 32 are in the US. China has 13.

Here's the breakdown of technology billionaires in the Bloomberg top 500 rich
list by country (the list cuts off at $3.7b):

US 32, China 13, Germany 5, Canada 3, India 2, Japan 2, Australia 2, Brazil 1,
South Korea 1, France 1, Taiwan 1

(Eduardo Saverin gets listed for Brazil, I'd probably list him for Singapore
however)

Over time you realistically can't have a China with an economy the size of the
US (the two economies will be larger than $30 trillion each before China
reaches parity, assuming they ever do), without them having an enormous amount
of tech wealth. The two will likely represent ~45% of the entire global
economy in terms of output over the next few decades. In terms of
millionaires, it'll be closer to 75% of all millionaires on earth between the
two giants (the US by itself as of just a few years ago had about 45% of all
millionaires; I assume China has taken a few more points in that time). The
last problem the US has right now, is a concern about an upending of its tech
wealth creation. Most of China's tech wealth is entirely isolated
domestically, the US was never going to be allowed to own that market, and
can't own that market going forward. China's tech companies can't own the US
market and never will. It's the rest of the globe that is up for grabs, and
the US will always win that battle because the rich liberal world trusts China
drastically less than the US. So long as China retains its current system (as
opposed to resuming the Deng liberalization path), that will remain true.
Would I rather use business software from Salesforce (US) or Atlassian (AU) or
SAP (Germany), or China? Or nearly any cloud software for that matter. Among
the more liberal nations, that remains a very easy decision. China can't
compete outside of its borders in most circumstances when data,
speech/expression/social/media, privacy, etc. are involved.

Out of the top 100 software companies by sales in the world, the US currently
has 73 of them.

Here's a short list of US tech companies which have either been founded or
seen most of their growth over the last 10-15 years:

Facebook $477b, Salesforce $120b, Uber ~$80b-$120b, Airbnb ~$40b, Workday
$41b, ServiceNow $41b, Square $30b, Stripe $23b, Twitter $23b, Palo Alto
Networks $21b, Splunk $19b, Lyft $15b, Fortinet $14b, Pinterest $12b, Snap
$12b, GoDaddy $12b, Twilio $11b, Dropbox $10b, Ultimate Software $10b, Okta
$9b, Nutanix $9b, Zendesk $8b, DocuSign $8b, Grubhub $8b, Instacart $8b,
Qualtrics $8b, Coinbase $8b, Slack $7b, Zillow $7b, Github $7b (acq),
Proofpoint $6b, Zscaler $6b, Etsy $6b, Hubspot $6b, Tanium $6b, MuleSoft $6b
(acq), Pivotal $5b, LogMeIn $5b, MongoDB $5b, Robinhood $5b, Carvana $5b,
RealPage $5b, DoorDash $4b, Pure Storage $4b, Snowflake $4b, Alteryx $4b,
Houzz $4b, Medidata $4b, Anaplan $4b, Credit Karma $4b, Qualys $4b, CarGurus,
Box, Cloudera, DigitalOcean, Cloudflare, Stitch Fix, ZocDoc, Eventbrite,
SendGrid, Reddit, Zuora, SecureWorks, etc.

You could add dozens of companies to that list. You could also split off AWS,
YouTube, LinkedIn and Instagram as well, as large tech businesses whose growth
has soared over the last decade. Netflix was a still small $3b company just
ten years ago. Google has also seen the vast majority of its growth since
~2004-2005.

I don't see where there has been a slowdown or upending for the US in the last
10-15 years (which represents most of the China boom phase in terms of their
value creation). China's expansion has been heavily isolated to its own
territory when it comes to tech companies (Baidu, Tencent, Alibaba, Ctrip,
ByteDance, JD.com, Didi Chuxing, et al.), leaving the US free to continue
doing what it has been in tech for decades without having to actually compete
globally with China in most tech segments. Their tech expansion hasn't come at
the expense of the US in other words.

~~~
starpucks
Can someone list the numbers adjusted for inflation? Because these days it
seems billions are so common for companies whereas just ten years ago a ten
billion dollar company was “super big”. Where did all this wealth come from?
Who lost in the zero sum game ?

~~~
jpatokal
Wealth is not a zero sum game, but more importantly, valuations are not actual
money -- they're just what the company would cost _if_ you bought the whole
thing at the same price as the last investment. If a company has a down round,
billions may be wiped off the valuation, but actual losses suffered by
previous investors are a small fraction of that.

~~~
starpucks
Right but I just meant doesn’t true wealth have to be injected at some point ?
Like at some point someone actually needs to mine new resources and inject the
resources into the economy ? I don’t really see the last ten years, countries
having mined a 100x increase (non inflation adjusted) in raw goods..?

So that leaves the investment. Then others are investing in all these tech
companies.. it is a cyclic dependency graph if you trace through the millions
of nodes (assuming you get through the offshore accounts which I presume
function as sinks). Then ... these companies are getting huge valuations
because everyone else is investing more and more into them? Including
themselves investing into themselves ?? When does the buck stop? Doesn’t this
wealth need to be backed up ultimately by some gold bars ? Even if it’s fiat
and fractional reserve .. so someone’s trust rating is ultimately taking a
hit? Is the us printing this money out of thin air on the back of it’s huge
credit ? I know the economy is too complex to be boiled down like this but
where are these 100x increases in billions coming from ultimately? People
credit ratings summed over millions of people ?

I never took any Econ courses so admittedly my Econ is terrible.

------
mevile
Is this a contest where we should be rooting for a side or something? What's
the significance of this? Is this some kind of national pride thing where I
should be rooting for my home country to win? I'm happy for people that found
success for what they've accomplished regardless of where they live. Good for
them.

~~~
whatshisface
> _Is this some kind of national pride thing where I should be rooting for my
> home country to win?_

What happens if Xi Jinping decides that he wants something that you do not
want? He will not let you vote if one day his foreign policy goals involve
nice Americans.

~~~
logicchains
Just like the Chinese got no chance to vote on America's unilateral sanctions
against Iran, but are still subjected to them.

~~~
rgbrenner
Iran was under UN sanctions at the time Meng violated those sanctions. China
is on the UN security council, and as a permanent member, they have a veto.
They did get a vote, and they voted yes.

Are you somehow not aware of this? They were a founding member of the UN, and
have been on the Security Council since it's beginning. They have abstained or
voted yes on every UN action that involves the SC (international peace and
security).

Meng violated additional US laws... which she is only subject to because she
was operating in the US. Just as a US citizen is subject to Chinese laws when
operating in China. Surely you're not suggesting that foreigners should be
allowed to go into another country and violate their laws without consequence.

~~~
tacon
Are you somehow not aware of this?

The PRC became a permanent member of the Security Council (with a veto) only
since 1971. Taiwan was the permanent member from 1945-1971.

------
11thEarlOfMar
An AirBnb IPO may tip it back towards the US.

Or Pinterest, Palantir, Uber, Lyft, Slack, Postmates, Asana, Casper.

Not really sure it should all be cast as a competition, but the wealth
creation engine of the US is alive and well.

~~~
ulfw
Matress Casper is a Tech company now?

~~~
xkcd-sucks
High growth data driven mattress sales is as much tech as high growth data
driven taxi rides

