$1.5 Trillion USD Green Investment Gap, Competition vs. China Industrial Policy and Electric Vehicle Manufacturing Viability with Gita Sjahrir - E413

Gita Sjahrir, Head of Investment at BNI Ventures, and Jeremy Au talked about three main themes:

1. $1.5 Trillion USD Green Investment Gap: Jeremy and Gita agreed with Bain & Company’s report that Southeast Asia is "woefully off track" on green investments to reduce emissions and needs new policies and financial mechanisms to help bridge the gap. They discussed the significant costs associated with transitioning to green energy, e.g. retiring a single coal-fired power plant would cost over several hundred million dollars. They discussed Indonesia's ambitious goal and challenging execution to shift to a zero-carbon electricity grid by 2060, serving a population with a current GDP per capita of around $5,000 USD. They also discussed how high interest rates negatively impact renewable energy investments, vs. the prior era of zero interest rate policy (ZIRP).

2. Electric Vehicle Manufacturing Viability: Southeast Asia is the 7th largest automotive manufacturing hub globally, producing approximately 3.5 million vehicles in 2021, led by Thailand (1.6 million vehicles), followed by Indonesia, Malaysia, and Vietnam. They debated the feasibility of transitioning these capabilities to EV manufacturing, noting the significant challenges in creating a fully functional EV manufacturing ecosystem. They also touched on Indonesia's strategy to leverage their asset of having the world's largest nickel reserves to foster a complete battery supply chain.

3. Competition vs. China Industrial Policy: Jeremy and Gita covered China's formidable manufacturing policy stack (land rights, subsidies, education, worker rights, currency) for their nexus of steel, solar, nuclear, manufacturing, semiconductor and EV industries. They discussed the new Chinese approach to export not just goods, but also their manufacturing value chains, into Southeast Asian markets, and the appropriate competition vs. partnership by local manufacturers. They also debated how startups like Sleek and Dat Bike should position themselves strategically in terms of production vs. sales vs. fundraising.

Jeremy and Gita also talked about public health benefits from decreased air pollution, upcoming market consolidation in the EV industry, and the necessity of a multi-decade policy approach in solving sustainable energy transition challenges.

Supported by Grain

Grain is an online restaurant that serves healthy yet tasty meals on demand and catering. They are backed by investors, including The Lo and Behold Group, Tee Yih Jia, Openspace and CentoVentures. Their meals are thoughtfully created by chefs with wholesome ingredients. For the month of April, Grain teamed up with Hjh Maimunah to bring you a quirky yet delightful experience for the first ever Michelin-inspired catering in Singapore. Learn more at www.grain.com.sg. If you ever need to feed your teams of family, go check out Grain.

(01:47) Jeremy Au:

Hey, morning, Gita.

(01:49) Gita Sjahrir:

Morning, how are you?

(01:50) Jeremy Au:

Good. We're going to talk about one of our favorite topics that we've been discussing recently, which is about green investments and electric vehicles. Obviously, we both have a soft spot for this. For myself, I've been a big supporter. I've built a social enterprise consulting for a lot of different nonprofits in Singapore and Southeast Asia. I've been thinking about the green policies for like a dozen years since undergrad. How about you Gita? What's your track record on this?

(02:12) Gita Sjahrir:

Yeah, actually I started my career in carbon markets circa 2005. So back then, carbon markets were very wild west and it's still wild west until today. So it's been very interesting just seeing the growth and the entire evolution of it. Also, I started my career with a power company too, almost 20 years ago, and back then, we were exploring renewable energy, and today, the Asia region, especially Southeast Asia, definitely is still thinking a lot and exploring. The execution is a different question.

(02:45) Jeremy Au:

And the reason why we're sharing our records here a little bit is because we're going to be very frank about what we think about the space here. And so the first report that we have is that the global management consultancy, Bain & Company, my old employer recently wrote, and it was declared that Southeast Asia is woefully off track on green investments to reduce emissions. So Gita, what do you think?

(03:06) Gita Sjahrir:

To be fair, though, if you even look at a lot of countries, if you look at Australia, if you look at the US, the majority of their energy is still from fossil fuel. It's just that transition for them is going to cost so much more and we'll just have to be more aggressive than Southeast Asia. There's so much hope for Southeast Asia to transition energy simply because for developed markets, it's a lot harder.

So my current work, also advising the coordinating Ministry of Maritime and Investment Affairs, part of it was to help with the Just Energy Transition Partnership, or JETPI, which is the alliance of GFAN's countries financing some of Indonesia's initiative to help us transition to zero carbon electricity grid by before 2060. Again, a lot of the conversations about that were actually about how hard it is for defense countries to completely transition themselves without it costing an incredible amount, whereas, for Indonesia, it's still in the realm of some possibility, but again, it's also very expensive because we're not just talking about building renewable energy, we're also talking about the early retirement of coal-fired power plants, which you have to pay money for. People sometimes underestimate how much that costs because one power plant, if you pay for early retirement, that in itself is already several hundred million dollars. And you're talking about a country where the GDP per capita is still around $5000.

Therefore, energy transition, basically questions about how do you create a more sustainable future is never a one-shot deal or requires only one big solution. It actually requires multiple solutions working together holistically.

(04:42) Jeremy Au:

Yeah. This reminds me, I'm a proud energiest. I'm a card-carrying person in support of more energy consumption because, if you look at Southeast Asia, like you said, we have a low GDP per capita across the region. And a lot of that growth requires energy. You need energy to run manufacturing to create jobs, to have the internet. And there's a one-to-one match between the growth that we need to have for us to lift millions of people out of poverty and energy consumption. And so, this report did a great job because they're saying that energy consumption across the region is expected to grow 40% across this decade, but, if we continue on this current trajectory, then the region will overshoot their 2030 pledges by 32%. At a very high level, if you think about it, it's saying, the tricky part is that when we do green investment, even though we are way short of the, so the way that I think about it is that, the green investment that we need to do is not just like you said, to substitute our supposedly current base, but actually is to keep up with the increased consumption over time.

And so Bain kind of said, "Hey, we need 1.5 trillion in this decade, which is way, way, way, way, way more than what's actually available. And it goes back to it. It's like, where does the money come from? Because that money is being diverted. We talked about it. You care about healthcare a lot. We care about education. There are so many different things to spend it on. And the awkward reality is that we've talked about it, but carbon emissions, it was high externality things which goes to the rest of the world, but if you put a dollar in healthcare, you know where that goes. You put a dollar into substituting between your current energy solution and a green energy solution. Actually, there's not much difference, honestly, you still get the energy that you want from the output system in both systems. It's just that there's less negative externality that ripples out to the world. And that's the fundamental crux is that the only way this is really solved is if we get cheap capital, I would say I'll substitute for that to bring it in.

(06:19) Gita Sjahrir:

You're 100% correct on that in the sense that when it comes to investing, again, it goes back to risk-return profile and then the timeline. So as investors, we often think that way, and the problem becomes what if the timeline is just a lot longer or even the risk-return profile is simply not that amazing for the fund or for the investor. For example, it just seems like on paper that the returns don't take the box or don't make the cut for them, and that is a reality for a lot of types of green investments. It doesn't mean it's not worth it, quote-unquote, but it just depends on how you also define what's worth it for the portfolio.

And that is where blended finance, for example, can be one of the drivers for that because you do need, again, when we say differences at risk-return profiles, then perhaps one of those types of financing that you need is not necessarily the traditional banks or the traditional financiers, but other types. Perhaps it's philanthropy or grants, or even other types of financing, but either way, the problem is very real. No one's saying that you shouldn't. You should. But again, how do you then package the deal itself? How do you create and manage expectations with your financiers? And that becomes very complicated very quickly because humans also tend to think quite short-term.

It's very hard. Even with healthcare, it's very hard to say. If you invest in nutrition, you'll see the benefit in 20 years when it reduces something by 50%. And a lot of people, when you think of it from a private sector perspective, that's very traditional and go in 20 years. I need to give my returns and I need to show the metrics by next quarter, but also if you look at, for example, leadership and democratic systems, they go well. What do I have to show come the next election cycle? In three to five years, what can I show? And that's a much harder conversation to have.

(08:11) Jeremy Au:

Yeah. This interacts with the interest rate policy when zero interest rates were there, then effectively it was like perfect blended finance in the sense that a dollar in a hundred years is the same as a dollar today. So in that case, everybody could fulfill a lot of those renewable energy pledges in that sense, because it felt like causing a couple to be low. And so, there'll be no cost to substitute for a lower return, renewable energy plants that have a higher cost structure historically, and are a little bit more unproven in our Southeast Asian requirements, which is cloudy. It has random stuff happening that needs maintenance. We don't have the engineering stack versus, tried and true coal, oil and gas and so forth. It's an interesting dynamic where now that we have high interest rates, the converse of that, then a lot of these renewable energy plants that have there, fundamentally stop looking like they make sense. And that's a tricky part.

It goes back to your rate of return versus interest rate versus alternative ways to install energy consumption. We should draw this out as a nice, beautiful formula. It's one of those crazy bots, you put the photos on a wall, cardboard, you put it, it's like, it all interacts. It just rates with, the rate of return.

(09:13) Gita Sjahrir:

I have that on the whiteboard at work. It makes you feel better.

(09:16) Jeremy Au:

So will electric vehicles save us, Gita?

(09:20) Gita Sjahrir:

No. Why? I love the transition. Oh boy, look, oh man. So there's a lot of EV startups coming out the last several years. A lot of it is because of public sector initiatives to drive up EV adoption, but also because Indonesia is focusing so much on downstream and industrialization trying to create the full value add chain for EVs. And that's why we're having this influx of EB deals.

(09:48) Jeremy Au:

Yeah. So it make sense at some level, which is that it's a much simpler thing to manufacture because it's just batteries. You don't have a lot of the internal stuff and we're obviously using a new supply chain that we have. So we have microchips representing all the little gadgets and switches and little do that. You have a console now, you just have a screen. There's a real reinvention of the supply chain. And there's a great article by Richard Hartung, a good friend of mine. He said Southeast Asia is actually the seventh largest automotive manufacturing hub worldwide and produced about 3.5 million vehicles in 2021. Thailand is the largest, producing 1.6 million vehicles, followed by Indonesia, Malaysia, and Vietnam. And so that's that, interest, I would say why there are EVs, is because it feels like Southeast Asia knows how to manufacture cars. So now you should be able to manufacture electric vehicles. There's a logic gap there, but that's interesting. Let's talk about the logic gap here because that's the crux of it. Why did you go first? Why is that logic gap? Because that is the logic parallel that we're making here.

(10:40) Gita Sjahrir:

First of all, this is not to bash EV or anything like that, because obviously, I do believe that industrialization and creating a full supply chain for Indonesia, for example, it's because we have the world's largest nickel reserves and we have all of these mineral reserves that we do want to have value add a chain to optimize on so that the country can be financially independent, and also finally get to a high-income country status. I completely understand the logic of that. And I also see that, as you said earlier, we're already manufacturing cars, so why not EVs? But the part where it starts getting very challenging is creating an EV production supply chain creating an entire ecosystem, and creating an entire ecosystem is simply way more challenging than a lot of people think.

We're talking about countries also where the GDP per capita is under $10,000. And when the GDP per capita is under $10,000, even with the current scheme of increasing EV adoption by offering subsidies, et cetera, people will still most likely buy a motorcycle based on price. It's still pricey. You can argue that our middle, upper class, society is getting larger and it is, but the crux of it is still the mass will find purchasing an EV vehicle challenging. That's just the current reality and the numbers. EV adoption is still in the single digits right now, correct me if I'm wrong, for Indonesia. And it's just going to be uphill for a while because again, to go back to fundamentals, which is what's your GDP per capita, but there is more, and feel free to keep going, Jeremy.

(12:13) Jeremy Au:

So what is true is that there is a lot of shared understanding on the marketing of automobiles. And there's a lot of shared industrial interest policy-wise by governments around that because it's a manufacturing job. And so governments are basically saying, "Hey, I used to do internal combustion engine automobiles, and now I want to do electric vehicles." so that is shared. What's not shared is the ecosystem. I started talking about the supply chain is very different. So one way to think about it is that Germany is struggling with this transition right now. So obviously the US, for example, is getting a ton of subsidies through the Inflation Reduction Act, the IRA, to transition their existing automobiles. They're also planning to slap tariffs on Chinese EVs in the future because they want to protect that industry because they feel like they need to protect the industry to convert that. So the industrial policy is the same, but the awkward reality is that fundamental incumbents have to change and everybody is struggling with that issue right now. The Japanese manufacturers are struggling with that. And everybody in Southeast Asia. And so now to some extent, it's not just a competition of startups, but it's also a competition of the incumbents transforming as a transformation and competition at a governmental ecosystem, regional level. That's really difficult.

(13:21) Jeremy Au:

And so, where you and I are talking about is, from my perspective, am I bullish that electric vehicles will replace all internal combustion engines? For me, I would say yes. In a hundred years, it'd be a hundred percent adoption eventually, cost of drops, and so forth, technology gets better but the question is, which ecosystem will win? Is it the American system versus the Chinese system? And within those systems, can you capture value as a startup? Or will it be one of the existing quasi-incumbents that are there? And that's the tricky part because at the lowest level for you and I, we've seen a lot of electric vehicle decks and we've been swapping notes as well. And to some extent, the deck makes it seem like it's the company that is the key fulcrum, or competitor, but it's not right. It's one level higher, which is, are you even in the right country or do you have the right industrial policy? And that's a really difficult conversation to have.

(14:07) Gita Sjahrir:

Yeah. You can't change an entire industry necessarily, especially today, just because you're one company that's trying to do right. It really does depend on the timing. It really does depend on the country. Where are you located? Can your domestic market handle it? Or if you're not making it for the domestic market, then can you compete with other exporters? Let's say China. And so, what we're talking about is in Indonesia, if you are a player, so much of it is really realizing that China is also exporting a lot of their supply chain. Competition is not necessarily just in the finished product. It's in almost every part of the product. And like what you said with Germany and Japan, a lot of these transitions require a combination of private-sector funding and also public-sector policies. And the issue with countries that are still emerging markets and still young democracies is simply you're very new. So you're building policies almost in a reactive manner. You see a problem and then you try to build these policies because you're not as old and established and you've had the same policies going and the same infrastructure and systems that have been working. So you're physically making things as they go.

So you can see that in FinTech. A lot of new financial regulations in emerging markets, heck, even in developed markets, they have to struggle with things like social media and fintech, because these are new technologies and oftentimes, in the public sector, a lot of regulations take years to make so it makes sense that public and private sometimes end up not running along optimally because they're running at different speeds, and they're running with different visions and motives in mind. That's why when you're looking at an entire EV transition, it really does require so much more than just us as a venture capital really putting in the money. It has to be very holistic and has to be with the government. There have to be certain types of policies, and certain types of reforms. You may have to liberalize some parts of your economic regulations depending on what kind of market you are, depending on what kind of manufacturer you are, depending also on your GDP per capita and depending on how you look at your debt-to-GDP ratio. All of these just become very localized for your market, while also realizing that you have incredible competition too.

(16:19) Jeremy Au:

Yeah.

(16:19) Gita Sjahrir:

That's all.

(16:20) Jeremy Au:

I like what you said, which is, you're not just competing with Chinese finished products as being exported across borders and maybe subject to tariffs or some level of customs duty, but also the fact is that China's exporting its value chain outside of China. So they're looking to partner or localize or basically set up local production lines that bypass export tariffs, but also satisfy local government requirements for jobs and ecosystem constituents. And to some extent, you're fighting against Chinese motorcycles, EVs, but also you're competing against what you would call, a rapper, you know, it's a Chinese guts, Chinese knowledge, working with Vietnamese engineers and jobs, and a rapper might be some local brand in that sense. But that's the crux for a lot of new-breed electronic vehicle startups, is that competition across multiple dimensions. So are you competing? Are you partnering? That's why we're starting to see a lot of startups now start to pivot and do a lot more. So definitely seeing a lot more partnerships come up as they adjust to that competitive reality.

(17:13) Gita Sjahrir:

Yeah. It's very easy to also paint everything with a very broad brush and then say, "Oh, is it better if we have only protectionist policies in order to grow your ecosystem?" And that really just depends, probably not necessarily also the best when it comes to transferring knowledge and, receiving more investments because the problem is, climate change is simply just an issue for the entire world. It's not an issue for just one country. The issue we’re looking at is that, is EV going to save us? That is one part of the equation, but it's really only one. There are a lot of other equations you need to question. For example, I started my career learning about carbon credits, circa 2005. And 19 years ago, that was the question that we all face, which is, okay, if it literally costs more and rewards less to keep a biodiverse forest than to take everything down and sell it, then what are the incentives? And this is hard. There's a lot of questions like, what about the value of nature-based solutions? What about blue carbon and its value? And so it's easy to think that only one sector can quote unquote save us, but the reality is it'll never be just that. And so again, the challenge for anyone, for any country is whether you you have an optimal public and private sector partnership where you optimally and holistically create solutions that are multifaceted and also multi-sectoral. And that is ridiculously hard in general, not just even for emerging markets. It's also hard for developed markets, as we can see.

(18:45) Jeremy Au:

Nobody has cracked it. And what's going to be interesting is, that the biggest success, and I don't think I predicted this when I was studying energy markets over a dozen years ago, is just how much the union between environmentalism, but also national security, and, economic industrialists, patriotism has created this? The solar cell industry moved and was effectively cloned and localized and honestly scaled by an order of magnitude from Germany to China. The truth is solar cells, in many parts of the world, is actually cheaper than local carbon-emitting forms of energy. So it's really tremendous. They're doing that. One prediction, I was chatting with you and I want to share is, that I just feel there's gonna be a glut soon of solar cells, and electric vehicles. Everybody's throwing money at building this electric vehicle thing. So you have the Chinese throwing it at their folks using subsidies, land control rights, and engineering. The Vietnamese are throwing money into this as well. The Americans are throwing money into this and it's only so many vehicles we're going to buy at a time. The same for solar cells as well to some extent and batteries. There's going to be a huge industrial overproduction glut at some point because nobody wants to let somebody else win the industry. So we're all going to build industrial capacity. And then, solar cells and motorbikes, electric motorbikes, and basic electric cars will become very cheap. It's going to become a price war.

(19:58) Gita Sjahrir: Yeah. It'll follow most things, which is consolidation.

(20:00) Jeremy Au:

This is the real issue, right? There's gonna be a price war soon. Then all consumers benefit.

(20:06) Gita Sjahrir:

Consolidation.

(20:07) Jeremy Au:

There's such a nice word, right?

(20:08) Gita Sjahrir:

Yeah, and consolidation. I was trying to sound more friendly, but when you're looking at EV, other than just what you said earlier, competing with, not just trying Chinese finished products, but also the supply chain is always questioning as the market grows, as in GDP per capita rises. That means you're going to have a new wealth class, you're going to have new people joining the middle-upper class, and then you're going to have different problems with that different consumer appetite. You as a founder, or you as a company, can you adjust to that market? Again, your only job in life is product-market fit. Your only job is ensuring that your market buys your product for more than what you spend on it. It's literally just Business 101. So the question will become as it keeps going. Can you continuously adjust to that new market? Because in the end, it might be a price war, but as per usual, it does mean that with more sophisticated consumers, they will ask for more sophisticated things. They will have different needs. They will look for different things. And so the question will just be, then how do you leverage that? How do you become a different player?

(21:16) Jeremy Au:

This sector is really good for people who are entrepreneurial but not necessarily the rewards may not go to entrepreneurs in the sense that if you're looking at this there's a lot of growth. So if you're entrepreneurial, you're willing to be an executive, you're willing to figure out partnerships. This is an exciting way to save the world and honestly make money and change customer behavior. And Southeast Asia is well-primed to adopt it more over the next 50 years. I just think that to create a pure-play startup competing with incumbents who are busy aggressively transforming the industrial ecosystems, it requires you to be a lot savvier, a lot more cunning, I would say, about what this process is going to be.

(21:52) Gita Sjahrir:

Yes. I also don't want to discount the real environmental effect of this. As in, if we even think about the idea of having low emission zones in Jakarta and anyone who lives here understands the air pollution problem, then you would realize that maybe it is nice to have a lot of electric vehicles in Jakarta, in the market, because at least, in these low-emission zones where only EV vehicles, for example, can be there for certain amounts of time, I can breathe better. Those are real public health benefits that you can put a value on. You can know how much it affects people, but again, the question becomes, you as a player, how are you going to position yourself so that you're not just having a hope for how big the market is globally, but also you yourself knowing that your competitor is not domestic, but it's the rest of the world?

(22:40) Jeremy Au:

Yeah, and that's a tricky part because it's underweight on how much America is throwing money into the existing automobile manufacturers to transform, but also its people are underweight, how much China is pushing manufacturers to move their manufacturing value chain overseas. And that's really interesting because we previously talked about how TikTok, the algorithm is banned for export, but China is totally okay with EV manufacturing overseas. And so it's part of the industrial policy and I don't think it's necessarily a win-lose China thing. I don't think so, but you just have to realize that if you're competing, that's the gravity that's happening.

(23:15) Gita Sjahrir:

Yeah, correct. I don't necessarily think the entire market is just going to be taken over by one player, but that's also not very realistic. It's possible that several players might be the dominant ones, but again, as a new player, just understand, like what you said, the gravity of the situation.

(23:34) Jeremy Au:

Yeah. And the Chinese manufacturers are not China. It's also multiple players within China and they're fighting each other to the death. They want to cut deals with local players before you cut a deal with their competitor in China, who's also moving the stuff out. Sometimes in the media, it makes it like the US, or China, as if it's one specific player, but when you look at the US, we know there's Ford, there's GM, there's multiple players, and they're competing with each other. And so even though the Chinese industrial export policy is that we want to move the value chain overall outside, we don't want to veto it. We want to encourage it, but conversely, if you're savvy, there are multiple partnerships to be built with the right player at the right time who wants to move that chain.

(24:07) Gita Sjahrir:

Yeah. When you're looking again at these questions, as you said, so China's they're exporting. It's a value chain, but then the US is having protectionist policies. This is why you can't really swipe with a broad brush that you should only do protectionist policies or you should only do this because each country will just have different national policies and different visions and goals. And so as a founder, you need to understand the macros. You need to understand what is going on in your region and also what market you are making things for. And that requires, as we talked about in a previous episode, the importance of having a public policy person. If you are building things that rely a lot on public policy, which is lots of stuff.

So if you're doing FinTech, if you're doing EV, if you're doing solar, those are all very reliant on public policy. So at what stage in your business do you think it's wise to start having a public policy specialist?

(25:02) Jeremy Au:

Yeah. And it's interesting because like you said, if you're doing SaaS or fast fashion and you probably are not facing a massive amount of industrial policy in the sectors. And so the need for you to be thoughtful. Yeah, or textile manufacturing, maybe as well. There are different angles of what that looks like.

(25:19) Gita Sjahrir:

But, yes. Yes.

(25:20) Jeremy Au:

Yeah. And it's interesting because we saw the Apple car died, but then now we have to XiaoMi and the Huawei are coming out. It's interesting.

(25:26) Gita Sjahrir:

Yeah. Definitely. It'll be a long time. It'll be great just to see how the entire industry starts growing and thriving and which ways they take turns, but as you say, you also have to be more savvy, especially if you're a new company or you're a new founder, or you're just someone new in the ecosystem, learn where your region is, what are, what is your region doing in terms of policies, and maybe consider that if you're in a region where you may not have the economic power in your domestic market to really play and just feed that. Then maybe you need to collaborate more or maybe that means you need to think of other ways to work together with larger players.

(26:05) Jeremy Au:

Yeah. It's a hundred percent spot on, which is that it goes back to your call is there’s a lot of local approaches to differentiate and cover a niche in the overall ecosystem, and these just have to be aware that you replace the entire ecosystem and you'd be aware of the public policy aspects of it.

(26:20) Gita Sjahrir:

Also replacing an entire ecosystem is hard.

(26:22) Jeremy Au:

Yeah. On that note when you think about the future about this ecosystem within Southeast Asia, do you have any predictions or things that you can think about?

(26:32) Gita Sjahrir:

Yeah. For Southeast Asia, there's a lot of information already on how EVs will boom, especially EV adoption. It's just that the timeline might be longer than people think, and a lot of it has to go back down to fundamentals, which is your GDP per capita. How much can people spend in certain markets? For example, Indonesia, where there's just a lot more two-wheel EV adoption.

That's possible simply because that's currently what the majority is. It's two-wheel vehicles, but again, goes back to you always need to know your market need and your market needs even if it's a country that is growing from lower income to a high-income country, that means they still will be price sensitive, and the question becomes oh, but EV, you don't need to keep buying gas, but this is still consumer psychology. It is very hard to actually make people think in a longer-term when it comes to certain types of spending.

If on overall, the EV just is a much higher price from the get-go, even with subsidies, unless that subsidy really does make a difference and makes it on par, then, it is a harder argument. So again, just know the market that you're in, know the reality of it and not just always make stuff for the next, oh, this will be good in five years, but also think about how is it going to add value at least in the next several years. And then, gear the infrastructure and the entire ecosystem of your company to be able to be flexible enough to move with that market as the market moves up in terms of GDP per capita.

(28:02) Jeremy Au:

For myself, to wrap up the episode, my prediction is that the winning Southeast Asian companies will be hybrids of all the various knowledge of Chinese, America, and Southeast Asia and local insights. And you look at DatBike in Vietnam, you look at Sleek EV, both of them basically using and localizing in Thailand or Vietnam. They're using Chinese pieces. They are assembling using local labor. A lot of their founders are US-educated. There's going to be an interesting mind meld. And what I'm trying to say here is that my prediction is that the Chinese are obviously going to look at it from a Chinese lens and Americans are going to look at it from an American lens. The media is going to portray it as a country level, but the winning strategy for a Southeast Asian founder or entrepreneurial team or startup is to say "Hey, forget about all this hate and all the headlines," like I said, how do we nail what Gita just said, which is the lowest cost price at the most awesome experience in the easiest way to buy, and you just beg, borrow, steal all the various pieces in whatever form or fashion, regardless of headline or patriotism, whatever it is. And then that probably will end up being the winning combination.

On that note, see you, Gita.

(29:03) Gita Sjahrir:

Yeah. Thank you. I'll see you soon.