Very interesting piece, I'm going to read your other one with Shao, but immediatly this makes me think of a common Marxist argument for the reasons regarding technological adoption. If you have abundant low cost labor there is no reason for firms to ever adopt labor saving technologies considering 1) they are costly 2) they are risky in the sense that gains in productivity may not translate to gains in profit 3) they are a liability, if you spend 200 million a quater on wages you can cut that tomorrow but you can't cut 200 million on tech that might be a fixed loss. It's a classic dynamic in the capitalist budget structure between the choice of spending on labor versus capital.
- VC funding: in US, b2b saas felt guaranteed to get funded if you had the right pedigree (this has mostly pivoted to AI, but still often under a b2b saas model)
- SWE are super expensive in US vs only moderately so in China (company i know of does their own ERP in-house with one or two SWE)
Robert Wu has a piece on “low-trust” in China that suggests that could be a factor as well
yeah these are great additional points. The low trust point is an interesting one too- i suppose the idea is that high trust is required for an enterprise to be willing to enter a long-term relationship with a SaaS firm.
Thanks very interesting, but I still don’t quite understand why enterprise software solutions isn’t a business opportunity in China. Don’t Chinese enterprise face workflow issues? How do they deal with it? It must be a nightmare!
Very interesting piece, I'm going to read your other one with Shao, but immediatly this makes me think of a common Marxist argument for the reasons regarding technological adoption. If you have abundant low cost labor there is no reason for firms to ever adopt labor saving technologies considering 1) they are costly 2) they are risky in the sense that gains in productivity may not translate to gains in profit 3) they are a liability, if you spend 200 million a quater on wages you can cut that tomorrow but you can't cut 200 million on tech that might be a fixed loss. It's a classic dynamic in the capitalist budget structure between the choice of spending on labor versus capital.
Two additional observations:
- VC funding: in US, b2b saas felt guaranteed to get funded if you had the right pedigree (this has mostly pivoted to AI, but still often under a b2b saas model)
- SWE are super expensive in US vs only moderately so in China (company i know of does their own ERP in-house with one or two SWE)
Robert Wu has a piece on “low-trust” in China that suggests that could be a factor as well
yeah these are great additional points. The low trust point is an interesting one too- i suppose the idea is that high trust is required for an enterprise to be willing to enter a long-term relationship with a SaaS firm.
Interesting article J5 Tan! LOL
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Thanks very interesting, but I still don’t quite understand why enterprise software solutions isn’t a business opportunity in China. Don’t Chinese enterprise face workflow issues? How do they deal with it? It must be a nightmare!