Daybreak - Daybreak Special: Why crazy rich Asians are buying one way tickets out of China

Episode Date: July 4, 2024

More than 15,000 millionaires are most likely leave China for good this year, according to the latest report by Henley and Partners, a UK-based investment migration consultancy. This largely has to do with the fact that being a multi-millionaire in China is almost like living with a target on your back. Multiple cases of the wealthy disappearing, the most well-known of which was Alibaba's Jack Ma, are testament to this. Basically one can be rich but not too rich, especially when the Chinese economy is struggling with a slowdown. So if millionaires are not disappearing under mysterious circumstances, they are desperately trying to protect their assets at all costs.India too happens to be the third on the Henley list of top countries facing a millionaire exodus. It is expected to lose about 4,000 millionaires this year. But unlike China, this isn’t very concerning because this number has dropped since last year and also because India is also generating more millionaires than it is losing. In many ways, you could say, India stands today where China was 10 years ago. And that’s exactly why we need to understand what is happening in China. In this episode, Daybreak hosts Snigdha and Rahel speak to The Ken's Southeast Asia editor Brady NG about what's going on in our neighbourhood. Tune in.Brady’s book recommendation: House of Leaves  Mark Z. Danielewski  Artwork by Adhithi Priya RajagopalDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. If you were a multi-millionaire in China, you may feel like you are in the Hunger Games. And one of China's unusually vocal and outspoken tycoons, Jack Ma has reportedly not been seen in public for several weeks now. A Chinese investment bank has revealed that its billionaire founder has gone missing,

and that prompted shares in the firm to drop to a record low. China Renaissance hasn't been able to contact founder and chairman Baofan for several days. We don't have any firsthand knowledge on the situation with the Fosin chairman, so it's very important to emphasize we do not know what is happening in his case. He truly has vanished according to Saishin magazine. Basically, you can be rich, but not too rich. Because once you cross that threshold, suddenly you may have a target on your back.

And if you're not disappearing under mysterious circumstances, you are desperately trying to protect your assets at all costs. Because the Chinese Communist Party may be coming for you. You see, the communist government in China is big on something called common prosperity, which essentially points to some form of equal distribution of wealth. So under that program, the Uber rich are expected to pay it forward. And if you forget about the mysterious disappearances for a second, taking money from the rich and giving it to the poor almost sounds ideal, right?

Except, of course, for those who are rich. Which is probably why the latest report by Henley and Partners, which is an investment migration consultancy, says that more than 15,000 millionaires are likely to leave China for good this year. In fact, China is right on top of Henley's millionaire exodus list, which looks at the migration of high net worth individuals across the world. By the way, India is number three on that list. It's expected to lose about 4,000 millionaires this year.

But unlike China, this isn't very concerning, because this number has dropped since last year, and also because India is generating more millionaires than it is losing. So in many ways, you can't even could say India stands today where China was 10 years ago. And that is exactly why we need to understand what is happening in China. So, we went to Brady NG, the editor of the Ken's Southeast Asia edition, who's based out of Hong Kong. Welcome to the Friday special episode of Daybreak.

I'm Snigda and I'm Rahal. And once a week, Snigda and I come together to talk about things in business and tech that interests the both of us. And it won't just be us. Depending on what we're talking about, we'll also be bringing in a bunch of really interesting people onto the podcast. In today's episode, we talk about China's millionaire Exodus with Brady. Can you begin with telling us about what are the reasons why wealthy people choose to migrate from their home country? And why do firms like Henley, which help rich people migrate from one country to another, through investment opportunities, even exist in the first place? So various countries have investment schemes to attract wealthy people to emigrate to those countries. And these firms exist to make that process easier.

They introduce those investment opportunities to wealthy households and maybe help with a lot of the processes involved. As to why a wealthy household might do that, I can only. talk about the China context specifically, but it involves a lot of different threads. Basically, domestically, the economy is not doing so well. The stock market is in a slump. The real estate market is in a slump. And a lot of the things that wealthier individuals might invest in just simply aren't moving the way they want them to move. And I think, with the most recent figures that are coming out, the way to think about them is that this is an ongoing development. And those millionaires or billionaires who are leaving China have actually

paved their way over several years and just decided to kind of activate that plan recently. Right. So it's a very well thought out and long-term plan, you see. saying. It's not like a sudden thing that's happening. Yes, yes. So basically, based on my conversations with people who are thinking about doing this or have done this, they see several signals that kind of point to a situation where they just don't feel as secure, keeping all of their money within China. It's interesting you say that, Brady, you know, while, We were researching for this episode.

We read a lot about something called the Common Prosperity Program that's been around in China for a while now. But of course, we also read that she's been doubling down on it. Does that have a role to play here? You know, you spoke about signals. Do you think that is one of them? How would something like that affect, say, a millionaire or a billionaire in China? Yeah.

So when we say millionaire in this case, I think we need to be clear that we're thinking. about people whose wealth is in the hundreds of millions of dollars, not just seven figures. So they've got significant holdings, probably quite diversified. And as you mentioned, this common prosperity program sounds very scary, right? The name itself kind of brings up these associations with like wealth redistricting. And I think it's worth being clear that that's not the case here. Like there is this encouragement to make sure that people who make sure that people who make a lot of money, like to the tunes of millions of dollars a year, maybe give back to society a bit more.

But this is essentially a social welfare program. With that said, I think it's the execution that kind of spooks a lot of these millionaires and billionaires, where there are harsh rules about capping their income or even doing clawbacks and asking them to return money that they made from previous years. Wow. Really, I mean, you know, I just wanted to ask you, why does it even matter? because if you look at the report, it's about a little more than 13,000 millionaires moving out of China, right? And considering that China is the second most prosperous economy in the world, how does it matter if like 13,000 or so millionaires are moving away? That's a good question.

So even though the report that you referred to specifically mentions millionaires, this is actually an issue where the middle class is moving their assets. out of the country as well. So over the past few months, I would say even since the beginning of this year, if you, for example, visited a bank branch in Hong Kong, you would find very, very long lines of people from mainland China coming here to open accounts. And the purpose of this is to move at least a portion of their assets outside of mainland China. So, um, The millionaire exodus matters in the sense that that money from households that are worth hundreds of millions of dollars would have been invested within China but is moving into other jurisdictions. But the problem is actually much more severe and is associated with people who have less money as well. So Brady, let's give a face to these millionaires that we're talking about, right?

You just told us that these are really, really, really, really rich people. Can you give us a sense of, you know, what sort of industries that they're in the kind of businesses that they run? You know, who are they? So it runs the whole gamut. It's real estate, it's manufacturing, it's banking and finance, insurance, of course, tech and tech related as well. VCs are also in this group. It is extremely rare to talk with somebody who has significant assets in China and they don't at least think about moving away. Right.

So really, you know, just to give us a little bit of context about China itself, from what we know and what we've read about China is essentially a thing. savings-driven economy, right? That is mostly correct. At the same time, there's no shortage of appetite to make a lot of risky investments and try out new things. So even though there is this mindset to keep your money safe and not touch it for a while, there's also this drive to use. that to continually build your wealth.

So would it be fair to say that China is kind of less consumption-driven, you know, culturally speaking, than maybe the rest of the world? I don't think that's accurate. Even though there is this drive to make the Chinese economy a bit more consumption-based, I don't think there's a shortage of that either. If you think about all the travelers that have been a bit more consumption-based, I don't think there's a shortage of that, going to all sorts of countries and kind of became the backbone of the tourism sectors in these places. If you think about the long lines that form outside of stores that sell luxury goods

and most of the people there are from mainland China, all of that just shows that the common idea that Chinese people are less consumption-driven just isn't entirely accurate. it. Got it. But, you know, Brady, again, going back a little bit to the common prosperity program and how that kind of shapes society and the economy, right? Like, is leading, like, a really luxurious and lavish life considered to be, is like, is it looked down upon? I don't think it's looked down upon, but it becomes one of those things where it's easy, to point at you and say, hey, how did you make all of that money? How come the people around you didn't do that?

Yes, exactly. Got it, got it. Right. While we're on the subject of how Chinese people look at money, there's this term that's being used a lot, right, in the context of China for a while now, but more so, you know, during the pandemic and post the pandemic. It's a word, it's renology in English. I would try pronouncing the Chinese word, but I feel like I'm more.

going to embarrass myself terribly, so I'm going to leave that to you, Brady. But it essentially means finding ways to exit China and taking your wealth with you. Right. So during the pandemic, there were a lot of people, and I'm not just talking about rich people. There were a lot of people, middle class people, working class people, who started thinking about exiting China for a variety of different reasons, one of which was the strict COVID lockdown, right? There was a fair deal of like disillusionment with government policies with domestic politics. Brady, my question to you is whether you feel like, you know, the exodus of millionaires that we're seeing today, do you think that that is also a symptom of the same problem? Is it kind of an extension of this runology, quote unquote?

Yes, I think it is an extension, as you say, that that description definitely applies. So runology in Chinese would be run shret. And it's kind of like the study of run, which is meant to be like run, like run away. But run itself could mean lubrication. It could mean profits. It's just one of those linguistic quirks here. But to get back to your question, people have been or wealthy households. have been finding their ways to other countries for more than a decade.

And they look for ways to set themselves up in these new locations. But I think the thing that really causes people to worry is that even for transfers of assets that are for other purposes, there are lots of limits in place. So to give you an example, a few years ago, there was this advisor to the Chinese Central Bank who transferred a sum of money or tried to transfer a sum of money overseas. It was meant to be for a vacation,

to see some relatives, and the amount was something like $20,000, so a very luxurious trip, I guess. for his entire family. But that was blocked. And the bank said that he was too old and he didn't need that much money for a trip. So basically what I'm trying to say is

there's a set of rules that are written down and the execution isn't always matching up with that. And that's what worries people when they try to move their assets to other jurisdictions. Right. Brady also, you know, going back to the slowdown of China's economy over the last couple of years and how you said that is a factor, you know, when it comes to investments, like you mentioned real estate, right, which is one of the reasons why these people, rich people are moving out.

But is that really such a big factor in this whole exodus of millionaires? Because, you know, aren't these the kind of people who are. you've already accumulated a large amount of wealth. And isn't it more about, you know, the security of that wealth, especially in a country like China, for example, like for someone who's super rich, I think one of their top fears would be to lose that money, right? And that is a very real fear in China, no? Yeah, that's a good question.

I would say it's less about your wealth being taken away and more about your wealth being trapped in one place. And you mentioned the matter of economic growth and asked if it's a big factor. And when your assets to the tune of hundreds of million dollars are limited to one place where it seems like the growth isn't happening or it may take a while to revive and you have trouble making investments in other opportunities, that's a worrying issue.

Right. And Brady, we could talk logistics here, right? Like you said, it's hundreds of millions of dollars. And you know that getting money out of China isn't really the most straightforward thing, right? In fact, from what I read recently, Beijing actually limits the amount that a citizen can take every year to about $50,000 in foreign currency. And again, these are multi-millionaires that we're talking about, right? And when you're building a life overseas, that's not really a lot of money. So can we kind of talk about how the Uber rich actually move their assets out of China?

Sure. This is actually a fun one. Obviously, stable coins and crypto are one channel. It's very, very easy to turn your cash into digital assets and you have it in your own wallet, You're in control of it completely. But when you reach a new location, the difficulty is actually off-ramping and turning it back into cash. So this is one option, but there are some limits to that. I've seen people use savings insurance policies to move their assets abroad as well.

And the way that works is to basically come to, let's say, Hong Kong, buy or open a savings insurance policy, max it out, and then close it. Then you have cash that's in Hong Kong and you're able to move it to other places a bit more easily. And there have been some changes in the rules to make it more difficult to do that, but this is still one channel that people use. I've talked to individuals who use shadow banks in China. They're essentially money launderers. Oh. And this money ends up sometimes in the drug trade as well, as the Mexican cartels actually that operate in the U.S. source some raw materials from China. So based on that kind of relationship, the shadow banks often get linked up with them financially.

But really, are these, sorry to interrupt, but are these mid-iners, these people, are they aware that their money is going into these channels, like being a youth? Probably not. Probably not. You got to think about it in terms of just demanding a service. All you care about is you put money. in within China and then US dollars come out in the US or in Australia wherever you go. So it doesn't matter what happens.

Yeah. So if I was a millionaire, I don't want to know. Yeah. Got it. Probably. Yeah. Okay. Yeah.

There are a few other ways. You may have heard this term called smurfing if you watch Breaking Bad. In this context, it actually means to get a group of people to carry the maximum amount of money that's allowed to leave China, and that's roughly 50,000 U.S. dollars, or it's equivalent. And then at your destination, they all come to you, take a fee, and you kind of rebuild your assets that way. I definitely have encountered people who buy high-value goods that are easily transportable, things like expensive art or really, really rare handbags, for example,

and then they basically sell them when they reach their destination. But this is a little more difficult to do. These are very illiquid goods. So most likely if you're a multimillionaire, you're exploring multiple channels at the same time. And I'm guessing if you're traveling with like more than a dozen airmears handbags, and that's going to raise a couple eyebrows. Most likely, yes. Do you have any interesting stories, really, that you remember about these kind of people that you met?

Yeah, actually, thinking back, not too long ago, I spoke with the spouse of a billionaire from China, and he was one of the people who was disappeared, basically. There was a time when ultra wealthy people kind of vanished from the public eye, and it turns out they were in detention, basically hashing out terms to pay back some taxes and figure out what type of actions they can take to get on the good side of regulators. And the interesting thing that I noticed in this conversation was how very, very few people within China really realize these individuals were kind of disappeared. And I think it's partly because most of these wealthy individuals don't really have a public profile.

They're not like, let's say, Elon Musk, who is very outspoken, constantly on social media. A lot of these people build their businesses. They work in the background. They're known within their industries. But it's not like their name is showing up in like the gossip rags or, anything like that. So that kind of stood out to me at the time. Right, but you also have very public figures like Jack Ma, who also kind of disappeared mysteriously. But I definitely think that's something we want to dive into in a little while as well. But I kind of want to take this to the

kind of like the next step of this migration process, right? Where are they going? Where are these Chinese millionaires actually going, right? Because the Hindi report says that the most popular destinations for millionaires worldwide are places like the UAE, the US, Singapore, Canada, Australia. Australia, right. But is there like a preferred destination for Chinese millionaires?

And what are the factors that kind of drive that decision for them? Yeah, good question. The preferences kind of shift from year to year. I would say the Singapore or I would say Singapore and the US are pretty,

consistently top picks. Singapore, just because it's still in Asia, it's a somewhat familiar environment. The language is that, right? The language as well. There are schools that teach Chinese, so their children can kind of continue to learn their mother tongue. There's actually an article on the ken that we published some time ago about family offices in Singapore and how a lot of these entities are actually set up by Chinese families. And because there was such a big influx, Singapore had to change some of the rules related to how family offices function and how active they need to be in terms of making investments locally. And I mentioned, that the US is also a top pick. And I think that's just because there are a lot of innovations

happening there. So if you're interested in investing in tech, that's the place to be. Yeah. It reminds me of all these movies and reality shows, right? Like, of course, the most famous being on crazy rich agents. And then there was this other reality show that I don't remember the name of, but it's literally about all these really rich Asian people and like the lives they lead, the parties and all the fancy stuff. It's called Bling Empire. Right. Exactly, exactly. So really even the US, right, like I was reading somewhere that, you know, a lot of real estate buyers are people from China who've come from China. Yeah, that's correct. Actually, It was, I think, during the Trump administration, a lot of Chinese applicants were seeking visas, investment visas in the U.S.

And the term was to invest at the time, I think, half a million dollars in a venture that would hire some number of people. I think it was roughly 10. And that visa program still exists. It's very, very popular Chinese applicants, or I should say, Chinese grantees are definitely the highest share under that program. It's interesting you say that, considering that, you know, during the Trump administration and now to a certain degree with Biden, the U.S. relationship with China has been pretty strained, right? Especially in terms of, like, Chinese imports, things like that. Has that had an effect on, like, you know, millionaire migration and, you know, millionaires kind of moving to the U.S., particularly, you know, to take part in this kind of

massive innovation that's happening there? So the trade war is specifically targeting certain companies in China, and it's meant to maintain the interests of American countries. companies that work in those sectors. But when it comes to individuals moving their money, and if they intend to invest within the U.S., there is no downside to letting them in. So, again, we need to remember that these are people who are moving not just millions of dollars, but potentially tens or hundreds of millions of dollars over at a time. And so, to close the door on that doesn't really make sense.

Yeah, yeah. You got it. Again, Brady, coming back to Hong Kong where you are, you know, like 15 or 20 years ago, a lot of rich Chinese people were moving there, right? What was happening then? And now it's Singapore is like the most preferred destination. So what's the dynamic there? Yeah, so I think we need to kind of define what Hong Kong.

and Singapore mean to wealthy people who decide to land in either of those places. So Hong Kong conventionally is really an investment hub. So this is where you look for somebody who can help with your financial portfolio, basically which stocks, which bonds, which mutual funds, which mutual funds to buy. So Singapore is really more of a destination for wealth management. So think of things like retirement plans, estate planning, general accounting assistance, maybe even figuring out what types of philanthropic acts to kind of take part in. So these two places had different functions for wealthy people. And that is still mostly the case, except if you walk through what's essentially the billionaire's row in Hong Kong,

you'll find that a lot of the villas that were bought by Chinese households over the past 10 years or so, haven't really been inhabited in a while. They're just kind of left there. So you can tell that just by observing movements here, Hong Kong is becoming less attractive to Uber wealthy people. Again, coming back to the crackdown on wealthy people, right? Like, this is not the first time that we're seeing this happen. No, it happened in 2021 and it was focused on tech companies.

and then you talked about the real estate sector, you know, suffering. That is also this is one of the reasons why. Is there some kind of a pattern here? Is it like a cyclical thing? I think so far what we could say is observable is that it ripples through different sectors within China. So there was a time when movie stars and movies, very, very high profile influencers were targeted.

And then there was a time where financiers and real estate moguls were being called in for chats with regulators. And then eventually we saw how the tech sector was being squeezed. And right now we see how, again, some financiers are dealing with some fallout of this. So I think the way to think about it is the regulators tend to sweep through clusters of people who work in the same space and try to figure out what are the rules, what are the actions to kind of set up here. So a little while ago Brady who spoke about billionaires disappearing and that is, I mean, fascinating, terrifying, you know, all sorts of things, right? I really want us to unpack that. And to do that, I kind of want to start out with what happened back in November 2020. So at the time, the Ant Group, which runs AliPay, China's primary online payment system,

it was all set to go public. Right. And this was going to be the biggest IPO ever. So it was a really, really big deal. And around the time, Jack Ma, who we all know, Alibaba founder, and he's one of the highest, the biggest shareholders of AliPay, he delivers the speech in Shanghai. Okay. And in this speech, he was kind of critical of the Chinese regulator.

and of the banking sector. And then promptly after that, the AN Group IPO is called off and Jack Ma disappears. And then he goes on to reappear only three years later in March 2023. What's with that, really? Like, what's going on there? Okay. So as you said, Jack Ma gave this very bombastic speech. It was at a finance summit in Shanghai.

and basically he said a few things and upset the powers that be, let's just say. After that, rumors started to swirl. There were people who were tracking his private jet to see if maybe he had left the country, and there were rumors that maybe his jet was just flying around to throw off anybody who might have thought to do that. The answer here is nobody really knows where he was. But the takeaway here is that when a high-profile entrepreneur steps out of line and actually tries to instigate some change in the system, scary things can happen. Jack Mottie. Jack Mott, Just one example.

We saw how a financier was kidnapped from Hong Kong. He was staying at the Four Seasons Hotel and basically grabbed and wheeled out on a wheelchair and taken back to the mainland where he was kept for some time. Separately, there are other billionaires who are still missing, such as a high-profile banker called Balfan, whose client actually included Alibaba. So even though the circle of targets is small relatively, it's very concentrated in terms of targeting people of extreme wealth. Right.

You know what's really bizarre, you know, with all of that, is if you compare that to how most of the world looks at millionaires and billionaires, right? They're generally idolized. they put on a pedestal. In countries like India. Very often they're seen as huge political assets. And suddenly you're seeing millionaires and billionaires be vulnerable, right? Like suddenly it's almost like they have a target on their back in countries like China,

which is just so strange and kind of almost unsettling to think about because it's... Yeah, because like, you know, generally, like especially in a country like India, you would think... I mean, not like, you know, billionaires haven't been held. accountable. There have been so many cases, millioners and billionaires, like, running away from the country and all of that happening because of tax evasion. But generally we do see them as like untouchable, right? Yeah, exactly. That power, right? It's weird to think of them as not powerless, but yeah. But I'm curious to know how then do people working in finance, working in tech, you know, how do these people kind of align their strategy?

and their businesses to kind of fall in line with the Chinese vision of the economy, right? Yeah, this is actually an interesting question because at least based on my conversations with private equity investors, some of the ways they might think about potential investments in other markets don't really apply in China. I remember one particular investor who told me his entire thesis is based on ideas that he lifts out of state publications. And he kind of described it as reading the best tea leaves and hoping that it's the lowest risk. So it's a little different from, say, how you would do it in Silicon Valley, for example. really, you know, considering that, you know, the economy has been slowing down, we've touched on that multiple times by now, doesn't it make sense for the Chinese government to try and encourage these millionaires to stay instead of like, you know, scaring them away out of the country? So, as I mentioned before, the path to an exodus is paved years before somebody activates it. You can kind of think of it as a backup plan if condoms.

within China seem to unfavorable. So the party obviously knows that people has these plans, right? And the goal here isn't exactly to redirect wealth back into party coffers. The point here is to kind of flex and make sure everybody knows who's boss. and it just so happens. Yeah, it just so happens the language of that is monetary. And once companies and their leaders... Like hit them where it hurts the most sort of thing, right?

Exactly. So once these people fall in line, that objective is done here. And, you know, if they choose to head overseas, well, you know, that's their choice. And so the idea that the state can maybe try to convince people to stay within the country doesn't entirely make sense. Like that ship has sailed because those plans to head overseas are already set there. So really does that also mean like, you know, then this focus on the return to equality and common prosperity. is it so important for the Chinese government, you know, to show the population that it does not matter that it has, if it has bad economic outcomes? Is that like more acceptable?

You know what I'm saying? Like culture and society over economic health? The objective is to kind of develop what they call an olive-shaped economy where the top. representing the super wealthy people is very, very tapered, and the bottom, meaning impoverished people, is also very, very tapered. And the middle class forms like the biggest share, right? So it's supposed to kind of be like, you know, as I mentioned, the shape of an olive. So when you keep that objective in mind and kind of understand that the state thinks in a really,

really long timeline in terms of how its plans play out, not just years, but potentially a decade plus. I think the objective kind of overlooks like the immediate outcomes, like this, this, this, the situation that we observe where you have a cluster of millionaires heading overseas. So there's this tension between kind of trying to limit that exodus from happening and also trying to take care of everybody who's in the middle class. Okay, really, you know, can we contrast this with like not many years ago when, you know, companies were growing and like they were encouraging like big paychecks to, you know, for getting top talent.

Now it's the opposite, right? Like through these pre-tax policies, they're literally taking away, like people are being asked to give up their bonuses. In some cases, they're even being asked to return their salaries, like from previous years. Can you talk about that a little bit?

Like, what changed? So ever since the 1980s, I want to say, there's been this idea with, in the Chinese government that some people will get rich, much richer than others, and the rest of the society will just kind of have to accept that for at least some time. And this idea was first put forward when China's economy was opening up and there was like the beginning of rapid growth. So I think what we're seeing right now is we're getting to the point where that idea has run its course. And the state is trying to very heavy-handedly change that course right now by squeezing people who are a bit wealthier, whose incomes are much higher than your average white college.

worker basically. Got it. But Brady also connected to this question itself, like, you know, talking about all these big companies. What does it mean for outsiders, you know, who are conducting business in China, like these big MNCs, you know, are they scaling down? Are they being like super careful? How are they dealing with this?

Yeah. Some of the MNCs that operate in China are kind of being very careful. some offices have actually been rated. So an example would be like Bain and Company. Their staff had to answer some questions when regulators and security personnel showed up. Other than that, I've heard stories from people who are based in the U.S. or EU or Hong Kong who need to travel to China for business and their employers. provide them with burner phones and burner laptops just to be careful about what type of data

is being carried into the country physically, just in case they encounter those similar raids. So a lot of these companies are trying to navigate these changing rules or the change in the execution of these regulations. Brady, thank you so much for joining us and finding the time. But before you go, like, some fun questions. Sure. Since you're living in Hong Kong, I've, you know, seen so many Wong Carvai movies. And, like, I watched that, you know, the last Anthony Bodeen show, and it was in Hong Kong.

And I remember it was Wongarva's cinematographer, right, who shot that episode. Tell us a little bit about food in Hong Kong. It's so exciting. Oh, food in Hong Kong. So there's this saying that for Cantonese cuisine, which is Hong Kong cuisine, let's see, what is the saying? Let me look it up. Hold on just a second.

Okay. Yeah, so there's this saying about Cantonese cuisine where people will eat everything that has four legs unless it's a table, anything with wings. except for an airplane and anything that swims except for like a submarine. So basically, you know, we eat everything and we figure out a way to make it taste good no matter what. So I think that kind of describes like the range of food that's in Hong Kong. So if we visit Hong Kong ever, us or our listeners, what's the first thing that you think we should go and try? And where? First thing.

I mean, it's not one thing, but I normally take people to dim sum, like a good dim sum old school place where it's still like old ladies kind of pushing little trolleys out and you pick all the little dishes that you want. You know, that reminds me of Calcutta because there's a big Chinese population in Calcutta, right, in places like Tangra and Tiretti Bazaar. And you have to go there early in the most. morning and they're like these old women with their breakfast cards selling selling like sui and timsims and bows it's so nice i hope our listeners have like a snack it's because they're going to need one for this but really we've started doing this thing on the show where we ask our guests for a recommendation and there's no rules here it can be a show it can be a book it can be a movie it can be absolutely anything at all what's your recommendation

Hmm. Okay. This is very, very difficult. What's the first thing that comes to mind? Yeah. So I'm going to just talk about my favorite book. So it's called House of Leaves. Oh. It's written by an author called Mark Z. Daniel Levsky. And depending on your perspective, it's either a horror story or a love story. And without giving anything... All love stories are horror stories. That may be true. And without giving away anything about the plot, House of Leaves is a book about a tattoo artist

who finds a manuscript written by a blind researcher who watched a documentary about a house whose dimensions on the outside are smaller than the space you find on the inside. So there's a lot of weird things going on here. And it's just one of those cult classics where you kind of need to solve a lot of puzzles along the way. And I love it. I think I remember picking this book up a couple of years ago.

and I just couldn't comprehend it. And you know, sometimes it takes time and then you have to pick up that book again but I never did it. Yeah, it's a massive book. I think it's more than 800 pages. Yeah.

The way it's printed is also really strange. You'll know if you kind of flip through it physically. Yeah. All right. Thank you so much, really, for joining us. Thank you. Thank you. Daybreak is produced

from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by Rahal Philipos and I, Sinkda Sharma, and it was edited by Rajiv Sien. Also a huge shout out to Aditi and Khabriya and the rest of our fantastic design team here at the Ken for the amazing artwork that they make for every Friday special episode of Daybreak.