Kevin Walmsley is the host of the “Inside China Business” on YouTube. He has lived in China since 2012 and founded Direct Equipment in Qingdao. Inside China Business provides insights, strategies, and life at the top of the world’s supply chains with an emphasis on business with and inside China. Recent videos cover topics such as China’s supply chain dominance, semiconductor bans, and the impact of Chinese carmakers and chipmakers.
This video discusses how China’s strategy involves heavily subsidizing small innovative companies to dominate industries, contrasting with Western countries’ subsidies to big corporations.
- In the West (United States and Europe), subsidies are often directed towards the biggest and richest companies, such as during the financial crisis in 2008 when large banks and financial institutions were bailed out.
- Western countries also provide rich subsidies to industries like automakers for building new factories.
- The recent Chips Act, where over $50 billion was offered to some of the biggest and richest companies like Intel and Taiwan Semiconductor in the hope of building new chip fabrication plants in the United States.
In contrast, the speaker highlighted China’s approach:
- China’s policy entails subsidizing small companies because big companies are seen as less innovative and slower.
- China’s strategy involves investing in numerous small companies. For instance, Intel might receive $8.5 billion in grants and $11 billion in loans, whereas China could invest that same amount in 2,000 companies.
- China identifies and supports “Little Giants” and “Single Champions,” small companies with potential or those already excelling in key technologies.
- Examples of successful Chinese companies benefiting from this approach include Grip M Advanced Materials, Ningbo Yong Sheen Optics, and ComNav, which have become leaders in their respective fields.
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