Ep. 62: Real Pain for Chinese Real Estate Startups

Transcript:

(Y: Ying-Ying Lu; R: Rui Ma )

[00:00] R: Hey everyone! A couple of announcements before we begin today: first, we have a website! Our transcripts are still going up at pandaily.com/podcast, but if you want to keep better tabs on what we’re doing beyond just the podcast, such as our biweekly Extra Buzz newsletter, you’ll be able to see them at www.techbuzzchina.com!
Y: Speaking of Extra Buzz, as requested, we made public the first few newsletters so you can get a sense of how it is both different from but also complements the podcast. So if you were on the fence about subscribing, take a look and see for yourself what you’re missing out on! If you’re a journalist or student, email us for a special discount!

[00:46] R: OK, now, for the episode. We just did an audience audit for Tech Buzz and as far as we can tell, about 40% of our listeners are in the US, and about a third of those are in California, which means that about 12, 13% of you are like us, watching with horror as the number of infections and deaths from the virus climb. San Francisco and Los Angeles have now both declared a state of emergency. So, as much as you can, we hope you’re staying safe and healthy! Practice social distancing! Stay home and listen to more podcasts!
Y: If things get worse, and they very well might, a lot of what happened in China a month ago is probably going to show up here as well, and some of it is already happening, like Google and Microsoft offering six months free of enterprise conference tools, just like Alibaba, WeChat and numerous others did in China. Travel plans are already being affected, and maybe the next step, as we covered in the latest Extra Buzz, is more bold experimentation with service robots, especially those designed to disinfect.
R:One thing we haven’t covered, and which has been featured prominently in Chinese media, is what happens if you’re a real estate tech company and the whole country effectively grinds to a halt? We thought it’s a good time to highlight two leading players in two of the hottest subsectors in real estate tech, their stories, and how they’re faring now in times of crisis. One is Danke 蛋壳, a newly listed coliving company, and the other is UCommune, an almost-listed-but-didn’t-make-it coworking space. The WeWork of China. Without the Adam Neumann, though.
Y: Coliving and coworking … two formerly hottest and now possibly coldest sectors in China tech. We’ll also contrast them briefly with what’s happening here in the US and Europe, where coliving, at least, seems to be on the rise. As for coworking, well, WeWork has really brought a frost to the industry, but does that pessimism extend to the Chinese market? Let’s find out!

[03:05] R: Hi everyone! We are TechBuzz China by Pandaily, powered by the Sinica Podcast Network by SupChina!
Y: We are a biweekly podcast focused on giving you a peek into what’s buzzing within the tech community in China.
R: We uncover and contextualize unique insights, perspectives and takeaways on headline tech news that don’t always make it into English language coverage. So you can be smarter about the world of China tech. TechBuzz China is a part of Pandaily.com, an English language site that tells you “everything about China’s innovation.” I’m one of your two co-hosts, Rui Ma.
Y: And I’m your other co-host, Ying-Ying Lu. We’d like to acknowledge our partners DealStreetAsia and SupChina, creator of the Sinica Podcast Network! In addition to Tech Buzz, you can also find Sinica which covers current affairs, and the Caixin-Sinica Business Brief from China’s leading business magazine.
R: Again, if you want more China tech in your inbox, sign up for our new Extra Buzz newsletter at www.techbuzzchina.com for just $2 a month! E-mail us if you’re a student or want a group discount. Finally, as always, if you enjoyed listening to our podcast, please leave us a review on iTunes or whatever other platform you use. We’re at well over 100 reviews, but can you help us get to 200? Thanks everyone!

[04:50] Y: So, as we said, today’s episode is going to focus on real estate tech startups, because it’s a sector that’s been hit hard by the coronavirus. But also because real estate is big business in China. Economists think it accounts for 20 to 30% of China’s GDP, if you take into account its effects on other sectors. And there are many other sectors. The residential property market “directly impacts over 40 industries and highly correlates to domestic demand from steel to washing machines.”
R: In 2018, residentialprimary sales alone was almost $2Trn. That’s not counting commercial real estate or secondary sales or anything. So yeah, real estate is a huge part of the Chinese economy and looked upon as an indicator of the economy’s health. B
Y: Without going into too much detail, you’ll basically just have to take our word that because it plays such an important part of the economy, and is the source of so much personal wealth — something like two-thirds — that the government often steps in to influence the market one way or another. And the policies are often implemented differently at the local level, too, meaning that each city may have their own guidelines as to how much you need to down pay, or restrictions on buying multiple homes, or whatever.
R: You can read the links in our transcript for more details if you’d like, but basically, the end result is that there aren’t a whole lot of explicit innovations in the financing part of real estate, because it’s so carefully managed by the government, but it’s still a huge opportunity, so what you have are a lot of companies focused either on the matchmaking transaction itself, or the asset management thereafter, and most of these companies use technology to make some sort of honestly-not-that-complicated marketplace.

[07:02] Y: By the way, it’s not that people don’t end up using some fintech innovations to fund real estate transactions — they definitely did that with P2P lending, for example, but I personally wouldn’t do a startup that relied on algorithms to predict home prices and actually bought them, like an Opendoor or something, because the pricing is not purely market-driven, you have a lot of policy risk, and these policies can be adjusted quite frequently.
R: So that’s our simplistic explanation of why if you try to look up real estate tech startups in China, you’re going to see a ton of listing platforms and branded rental companies just like the one we’re going to talk about today, Danke 蛋壳, versus a somewhat more varied bunch in the US. In the case of Danke though, a branded apartment rental startup — which is increasingly being called co-living in the US — the market in China is actually quite a bit ahead of the rest of the world.
Y: If you think the company sounds familiar, you’re right, because we talked about it back in Tech Buzz Episode 20 a year and a half ago, when companies like Danke and Ziroom 自如 were accused of being behind the soaring rents in Beijing. TLDR; our conclusion was — they probably weren’t, not by just being in business anyway — because they represented such a small percentage of available inventory — something like 2% at the time. What we do know is that the government became very focused on juicing the rental market and increasing affordability — and the banks had special loans for renting that were pretty easy to get — and maybe some of these policies had unintended consequences.
R: I’d say we were right, because obviously, the rental startups continued to grow, but the rents didn’t. Danke, for example, roughly tripled for the first 9 months of 2019 versus one year earlier, and if they really were the culprits, then we wouldn’t have seen a decline in Beijing rents that year. But as with anything in real estate, it’s hard to be sure. So many factors go into housing prices, and as we’ve said, in China, the situation is especially convoluted.

[09:14] Y: So what exactly is the market opportunity everyone is chasing? Well, according to research, in 2018, about 200mm people lived in rented housing in China, and the market size was about a quarter of a trillion dollars, of which Tier 1 and 2 cities make up two-thirds. In the next five years, growth is expected to be around 10% annually, because another 170mm people are expected to move into the cities in the next decade.
R: There are other tailwinds at work. Buying a home is unaffordable for more and more people. According to state media, the ratio of average home price to average income is over 50 in first-tier cities and 30 to 40 in third and fourth-tier cities. Third-tier cities and below, remember, is considered “rural China.” We’re not talking about Beijing and Shanghai here. No wonder then that the average age of first-time home purchasers has crept up to 35. And 35, I’m guessing, is probably with a lot of help from the parents, too.
Y: So there you go, super expensive housing prices and just a whole lot of people needing housing is driving the rental market in China. It’s an opportunity anyone could see. Which is why we saw so many long term rental startups pop up beginning a few years ago, and apparently there are 2,000 long term rental companies in operation today. One of the earliest is Ziroom 自如, which was incubated inside of a real estate listing company Lianjia 链家 back in 2011, and officially spun off in 2016. Ziroom, by the way, has now raised over a billion dollars from the likes of Tencent, Sequoia, and Warburg Pincus.
R: They’re obviously not the only ones because there are now not just one, but two US-listed long term rental startups that went public recently. One, you already know, is Danke, which is now roughly a $2Bn market cap company, but there was actually another one that got to the public markets just a little bit earlier, Qingke 青客, ticker QK, which has a market cap of about half a billion dollars and focuses on the lower-end of the market, that is, apartments under $300 a month.

[11:36] Y: The story of every one of these startups — and there are many of them — is that they solve a simple problem. As a homeowner, it’s annoying to have to deal with tenants moving in and out all the time. As a tenant, you have to spend so much time and money looking for a place. These platforms sign long-term contracts with owners and provide tenants with a branded, uniform experience, all offered through an app. What’s not to love?
R: Initially, there was a lot of love. As we mentioned in Episode 20, my cousin and multiple Pandaily employees, including founder Kevin, were happy customers of Ziroom and their competitors. But then, controversy after controversy began to surface, and the coronavirus has brought with it fresh problems. Overall, the media has a pretty bleak view of the integrity of the operators.
Y: It all started with stories of the presence of formaldehyde in their units, often because not enough time had been allowed to pass between renovation and move-in. Formaldehyde is very poisonous to humans, and exposure can result in things like respiratory difficulties or asphyxiation. It’s also suspected to be a carcinogen.
R: In one now infamous case, a senior manager at Alibaba died from leukemia, and it was widely speculated that he fell ill because his Ziroom apartment exceeded the legal limit for formaldehyde. It didn’t help the situation when an investigative reporter went to check on some new Danke 蛋壳 apartments for rent and found that only half a month had passed since renovation, which is a big no-no. When they confronted the salesperson, the salesperson was supposed to have said: “the company is so big now, for sure we have enough money to pay for one dead person.”

[13:42]Y: Suddenly, the entire industry went from being hailed as innovators building the next big thing to being universally despised. And since then it’s pretty much been a downward spiral for the industry. The companies are tricksters and cheaters, the media likes to emphasize. They pretend that they are a professional and transparent marketplace, but actually, they’re just out to screw you.
R: One such trick, which is super elementary, is posting fake ads of places that are too-good-to-be-true to lure in traffic. It got to be annoying enough that 58, a listing service kind of like the Craigslist of China, repeatedly had their lawyers send cease and desist letters. The Beijing government also warned Danke because their number of consumer complaints was so high — all sorts of shady behavior mostly revolving around deliberately hiding contract terms from tenants and slapping them with surprise costs.
Y: What really got the companies a really bad reputation though, are stories of the companies applying for debt without you knowing. OK, so remember we said that the government had all these policies to grow the rental market and that one of the instruments was this kind of loan you can get for your rent? Well, apparently some companies were applying for it on tenants’ behalf without them even realizing it.
R: Right, so you thought you signed a lease, but it was actually a loan, and the rental startup got all of the money in a lump sum upfront, while the rent you thought you were paying quarterly were actually installments on a loan in your name, one that would affect your credit if you defaulted. Obviously not legal, but you’d have to prove that you were misdirected, because you did sign all those papers after all. Lesson learned: read what you’re signing very carefully.

[15:3602] Y: Presumably though, most companies were still going by the book and the loans were made with the tenant’s knowledge. Again, if you read the prospectus, the companies are very open about this, because it’s a key part of their business model — Qingke had about 65% of their leases be paid via this type of installment program, and Danke was at about 68%, down from 91% a few years ago.
R: Now why would so many people be getting this type of loan? Well, if you were paying attention, recall earlier we had just said that you were paying rent … quarterly? Well, that’s how it works in China. You pay rent either annually, every half year, or every quarter. And of course the longer period you picked, the more of a discount you got on the monthly rate.
Y: But imagine that you’re a normal twenty-something who’s renting one room in a three-bedroom apartment because you can’t afford to live on your own and because it’s a hassle to find roommates, all problems Danke solves for you. Well, you probably can’t afford to pay so many months upfront, which leaves you with the only monthly payment option — get it financed.
R: Not a scary thing, because the financial institutions should be legit. But the fear was that the rental companies would use that loan to fund their operating costs and expansion plans, and if things went south for the rental platform, consumers would still be on the hook for a loan that the startup has already used up and can no longer refund. I mean, yes, they’re supposed to, contractually, but if Danke went bankrupt, what are you going to do?

[17:16] Y: These concerns aren’t crazy. They’re totally valid and we’ve seen them play out in other industries. If you’ve been listening to Tech Buzz for a while, you’ll remember that until regulations kicked in, digital wallets in China could hold your money for a short while before transferring it to merchants, and there were no real rules as to how they needed to keep the money safe. And then we all saw what happened with the deposits from bike-sharing app users. They were used as working capital to fund growth and once the companies began to collapse, well, most users will never see that money again.
R: So if you’re a pessimist, you’ll be like the folks who think that rental startups are even worse than P2P lending platforms when it came to their ability to “blow up” the financial infrastructure. If you’re an optimist, you’d probably point to the 100% repayment that Qingke touts and say that any problems are the result of people borrowing from loan sharks, not regular banks with their reasonable interest rates. Either way, the problem might resolve itself soon — the government has said that for this sector, it will require rent financing to be less than 30% of revenues by 2022. Meanwhile, just hope your particular long term rental company doesn’t blow up before then.

[18:36] Y: Those were all before the coronavirus though and known problems with the industry. The problem now is that new scandals have emerged. Stories are surfacing where Danke announced to the landlord that they will not be transferring February’s rent because of impact from the virus, but then goes ahead and collects, or has collected, in the case of people who prepaid, rent from the tenant side. So they’re pocketing one month’s rent.
R: Worse than that, the landlord is pissed, and asks to terminate the contract, and tells the tenant to leave. Poor tenant … can you imagine having paid your rent like a good person, and then not knowing if you’ll be homeless, especially in these crazy times with the virus floating around everywhere? I mean, Danke has come out and said that was a misunderstanding … but wow, these days, with everyone trying to be helpful, do you really not want to make mistakes that benefit only yourself.
Y: The app still sports a 4.7 rating on iTunes, though, and Ziroom a 4.8, so whatever the complaints, seems like they’re still a minority. For the companies, getting occupancy rates up — Danke is still below 90% — is really important. Operating losses have also widened for Danke, whose rental costs have increased as a percentage of income, and Qingke isn’t faring any better, so they definitely haven’t figured it out. As Qingke’s CEO said — it’s more important to survive now than to thrive. I’m paraphrasing here, but it sounds dire.

[20:16] R: OK, enough about coliving companies, what about coworking spaces? Actually, less than a month before Danke went public, China’s largest coworking space Ucommune filed to go public at the very end of December 2019. It made some headlines at the time because this was a few months after the whole WeWork fiasco, and UCommune was basically a WeWork clone.
Y: It also made headlines because its international underwriters dropped out, leaving it only with domestic investment banks Haitong Securities and China Renaissance as the co-leads. But like, was it that bad? Or was this just unfortunate collateral damage from WeWork? Is Mao Daqing 毛大庆, its founder and CEO, basically a smooth-talking, tequila-drinking shaman like his one-time pal Adam Neumann?
R: Mao really has said that Adam was his “good friend of many years” in one interview, by the way, and never mentioned it again, which is probably smart on his part, although that was probably less because he realized Adam was crazy and more because Adam sued him for trademark infringement in 2017. UCommune, you see, began its life under a different name — Urwork.
Y: Honestly, it’s very hard to see any substantive difference between WeWork and Urwork, I mean, UCommune. They basically both rent out desks and offices to small and medium businesses — startups and freelancers — as well as larger corporations. UCommune did emphasize their asset-light model, which was almost a quarter of the space they were managing, and which they were trying to grow because they were operationally profitable there. As the name suggests, they were either doing profit sharing or only taking management fees and not signing any actual leases.

[22:06] R: To give you an idea of the scale of the two companies, as of filing, UCommune has over 600,000 members, about 100,000 more than WeWork. But it only had 197 locations, a little more than a third of WeWork’s over 500, meaning, presumably, that each location was much bigger. Pandaily is actually located in a UCommune, and I’d say it feels about right that these places feel bigger than WeWorks. But again, in general, there’s just a lot more larger buildings available in China. Google any skyline of a major city to see for yourself.
Y: On the operating front, it was less-loss making than WeWork, who pretty much had a close to negative 100% operating margin. I mean, OK, it was more like -90% for the first six months of 2019, but UCommune is a bit better at -64%. And furthermore, its losses were decreasing, on a percentage basis anyway. In 2017, it was still losing two dollars for every one dollar of revenue. So, still very ugly — China likes to call these “bleeding balance sheets” — but bleeding less.
R: Would it have gotten to profitability eventually? I mean, maybe. It’s not wholly impossible, but how long would it have taken to get there? And was there enough hot money in China to keep up with UCommune’s blistering pace of fundraising? Because let’s be serious here, sure UCommune was known for its spaces, especially after it subsequently acquired a bunch of its competitors, but what it was also known for, was its ability to fundraise.
Y: Ucommune raised four rounds of funding every year from its inception in 2015 to 2017, then a record six in 2018, and two last year in 2019. Now that’s called high-frequency fundraising, 19 rounds of fundraising in 4 years totally nearly 600mm dollars, meaning an average of 2.5 months in between each round. If you’re their lawyer, you could probably build a firm just servicing this one client.

[24:25] R: Do Chinese people love investing in coworking? Actually, not nearly as much as they love co-living. All this happened because of one person, founder and CEO Mao Daqing 毛大庆, who is, in many ways, the very opposite of Adam Neumann. At least on paper. I mean, I’ve never met him or spent any private time with him, but he does not sound like a party boy.
Y: Well, to start off, he is not a boy. Mao Daqing is a decade older than Adam Neumann, and wears a closely-cropped haircut versus Adam’s long luscious locks. He doesn’t come from a real estate family per se, but his grandfather was a famous architect, and as a child, he went on many field trips visiting buildings his grandpa had helped design. But more importantly, he had impeccable timing. He has spent his entire career in the Chinese real estate industry, but he began back in 1992, as a new architecture graduate.
R: This is super significant because China’s economic reform only began roughly 14 years earlier, in 1978, and accelerated beginning in the early 90s. In fact, 1992 is literally when privatizations began to accelerate — most of China is state-owned before this — and obviously, real estate is one of the very large opportunities. So when we say Mao has been in Chinese real estate for a few decades … we really mean that he’s virtually been there from the very beginning of the industry.
Y: Of course, there are a few real estate companies that did start earlier than 1992, like Vanke 万科 in 1984, but a lot of the companies, Country Garden 碧桂园集团, Wantong 万通, Evergrande 恒大地产, etc. were founded in the mid 90s. And while Mao worked as an architect for the first 8 years, by 2000 he had transitioned over to managing development projects.

[26:28] R: In 2002 he went to CapitaLand, a Singapore-based real estate company, one of the largest in Asia. If you’ve ever been in a Raffles City shopping center or Ascott apartment you’ve been in one of their properties. But it was his gig as senior vice president in Vanke beginning in 2009 that most people know him for. Vanke is, after all, a $50Bn market cap company and the largest in China. My first job in China was real estate investing for Morgan Stanley, and let me just tell you, you cannot avoid Vanke. They are everywhere.
Y: And Vanke assigned Mao to manage the Beijing office and commercial real estate. And Wang Shi 王石, the Vanke CEO, was said to be his mentor. A very big deal. So that’s why Mao was able to get immediate funding for his coworking space idea even though most of his real estate friends supposedly poo-poo’ed on the idea itself.
R: I mean, it honestly didn’t make that much sense in the Chinese context. Yeah, by this time, WeWork had been in operation for 5 years and had made a name for itself, and there were experiments bubbling up all over the world, but China, as is the case much of the time, is just an entirely different beast.

[27:48] Y: When the central government had started pushing their 双创 or “Innovation & Entrepreneurship for All” agenda in earnest in late 2014 at the Summer Davos, local governments responded quickly. Whole innovation departments were set up and the goal was to just get as many startups up and running as possible.
R: It was crazy. I was in the middle of it because I was constantly being asked to “give advice,” since the fund I worked for at the time had a top-ranked accelerator program in Silicon Valley. But basically what I saw most governments do was — they promised to forgive taxes for a few years and offered deeply discounted or subsidized office space. There was also funding available, but it was often administered by investment funds or structured as a co-investment with contingencies, so it wasn’t totally free money, but it wasn’t that hard to get. For a while anyway.
Y: Anyway, around this time is when you saw a ton of coworking spaces come onto the market. Except that they weren’t all called coworking spaces, many masqueraded as “incubators.” The government wants you to help create startups, ie incubate them, not just house them. So because of this very unified push towards entrepreneurship by the government, which we’ve mentioned in quite a few Tech Buzz episodes now, the number of incubators soared from basically negligible to over 4,000 by early 2016, in just one year’s time.
R: But basically, many of these incubators were pretty much co-working spaces that charged by the desk, run by people who had no idea what they were doing. So while it seemed like there was both “not enough startups” and also “too many incubators with empty desks” when Mao started, these things quickly changed. Simplifying a bit, the incubators died, and the number of startups grew.

[29:46]Y: But not everyone took that circuitous route. Some entrepreneurs went straight to coworking. Why? Well if you read the founder interviews, they’re all quite honest about it — usually it was because they visited a WeWork location, typically on a trip to the US. WeWork was getting quite a bit of press, was already a unicorn, and was also beginning to expand internationally around this time, so people were thinking, hey this could work in China.
R: One of those was my friend Randy who started a coworking space called Woo Space in Beijing around this time, funded by Matrix China and others, which he eventually sold to UCommune. Randy is a smart guy, and he grew Woo Space to a few dozen locations, but he was a Chinese-American born after 1990, which meant that he was born when Mao started working. And most teams were tech folks, not real estate, which is frankly pretty odd, but whatever, it was a small bubble.
Y: Yeah, it’s really difficult to make an argument that you were going to find a more experienced team than this one. The closest might have been SOHO 3Q, which was a division of Soho, another famous Chinese real estate company. That was also started after the founder visited a WeWork. Adam Neumann, inspiring entrepreneurs everywhere. In fact, Mao worked out of a 3Q space before he formally opened up Ucommune. Not a nice move.
R: Was it worth pissing off his friend at SOHO? Maybe if UCommune has “made it,” but so far, it hasn’t. As Mao himself has openly admitted, I am translating roughly here: “we are far from figuring out our its business model nor do we know if we can continue to grow and provide value for society.” Ouch. They really don’t know what they’re doing. Is there anything they’re good at?
Y: Well, the coronavirus, which has seriously disrupted going to the office, has made Mao even more focused on getting to even more of an asset-light model. So, more services, more profit sharing, less long term, inflexible leases. He’s also doing what he does best, which is fundraising, except this time from the government. Along with others, he’s calling for the government to establish a $1-3Bn dollar fund that can loan emergency funds to “rental startups,” which include both co-living and co-working ones.

[32:28] R: OK, quick summary for the real estate rental tech startup industry in China, which is really not a ton of tech, and mostly real estate. So both co-living and co-working. Let’s go. First, co-living. We didn’t mention this earlier, but in the US, we saw it cited that Cushman Wakefield was projecting 10,000 beds in 3 years. I couldn’t find the number in the actual report but it did give a count of the top 9 funded companies in the space, and that was just 4006 beds. Entirely insufficient to service the potential market, by the way, which is the 20mm people under the age of 30 in the US who have student loan debt.
Y: In comparison, Danke operates over 400,000 beds in 13 cities across China. And that’s just one company. So, let’s just safely say that China is way, way ahead in co-living and if you’re an entrepreneur in this space, you should go take a look at what people are trying there. The competition is stiff — 2000 companies in the space apparently — so I think you might find some interesting ideas.

[33:38] R: But things you probably don’t want to copy would be poisonous building materials or false advertising. And given that there isn’t as much of a rental loan market here where people take out a loan to pay their rent every month instead of every quarter or even more infrequently, maybe the unit economics don’t make sense. Even with a majority of their tenants paying upfront with loan proceeds, the Chinese startups are still very far away from profitability, and don’t look to be closing the gap at all.
Y: So co-living might be an opportunity but not really, but co-working is probably definitely not an opportunity, as both WeWork and Urwork, I mean, UCommune, have shown. That is, unless you forego leases altogether and only provide services like design and management for a fraction of the upside.
R: Which basically makes you a property management company. Is that tech? I don’t think so. But what do I know? The leading coworking CEO in China, Mao Daqing, who’s been in the real estate industry for the past 28 years, basically from when it started, thinks that’s the way to go. I mean, I think the whole space is a bit delusional but at least Mao seems less delusional than Adam Neumann. No mention of elevating the world’s consciousness in his prospectus.
Y: Plus, let’s give the guy some credit, he has actually narrowed losses even though that is basically a result of him pivoting the business to services. And we know he made at least one good investment — he invested in Danke’s Series A in 2017. As for whether or not the government will step in and help out — the co-living companies need it more than co-working because of the rental loans, but maybe all rental startups get a boost.

[35:30] R: OK, that’s all for this week folks! Thanks for listening. Have any questions? Email us! We really enjoyed putting this together, and we are always open to any comments or suggestions. You can find us on twitter at thepandaily, at techbuzzchina, and my personal Twitter account is RUIMA.
Y: And my Twitter is spelled GINYGINY. Tech Buzz China by Pandaily is powered by the Sinica Podcast Network on SupChina. Pandaily.com is an English language site that tells you “everything about China’s innovation.” Our producers are Caiwei Chen and Kaiser Kuo. Thank you for listening!