It Could Happen Here - Temu: The Rise of China’s Worst Tech Giant

Episode Date: February 26, 2024

Mia and Gare examine the terrifying rise of Pinduoduo, the Chinese predecessor of Superbowl famous shopping app Temu, and its former CEO Colin Huang.See omnystudio.com/listener for privacy information.

Hi, I'm Ed Zitron, host of the Better Offline podcast, and we're kicking off our second season digging into tech's elite and how they've turned Silicon Valley into a playground for billionaires. From the chaotic world of generative AI to the destruction of Google search, Better Offline is your unvarnished and at times unhinged look at the underbelly of tech brought to you by an industry veteran with nothing to lose. Listen to Better Offline on the iHeartRadio app, Apple Podcasts, wherever else you get your podcasts from. On Thanksgiving Day, 1999, five-year-old Cuban boy Elian Gonzalez was found off the coast of Florida. And the question was,

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for those who listen to audiobooks while running errands or at the end of a busy day. From thought-provoking novels to powerful poetry, we'll explore the stories that shape our culture. Listen to Black Lit on the Black Effect Podcast Network, iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. AT&T, connecting changes everything. CallZone Media. everything. Call zone media.

Welcome to the Naked App. Oh, wow. Okay. We're just both doing the intro. All right. I wasn't doing the intro. I was saying that Wokeness has won the Super Bowl. Ah.

Because. Yeah. Okay. Okay. Hold on. This is my, this is, this is is my moment i've got the soapbox this is it could happen here everyone has the taylor swift conspiracy wrong taylor swift is completely uninvolved in the nfl's conspiracy to make sure patrick mahomes wins every fucking game

all of these fucking all these fucking boggin chuds or fucking johnny come late doesn't care about football fans real fans know that if you look at every fourth quarter of every fucking chiefs game before taylor should have got involved it looks exactly the same all right this is what could happen here we may or may not cut that i can't believe that the liberal taylor swift joe joe biden's puppet taylor swift and travis pfizer kelsey stole the super bowl from the good christian people of san francisco the only bastion of conservatism left in this country it is so incredibly funny like okay so it's so incredibly funny to me a that they're not mad at patrick mahomes and b that somehow okay the chiefs like imagine you're a chiefs fan right you have been for like 30 years what are the most racist you have been doing an action called and i quote the tomahawk chop

like you are the most racist person in your entire small town and then all of these fucking dipshits online all these fucking right-wing dipshits immediately like all of you guys are like fucking pussy woke libs and it's just like like imagine being that racist for that long only to be immediately tossed aside it it is kind of baffling that in like the country's national divorce over wokeness somehow the liberals get to keep football? Like, that's so bizarre that now football's seen as like a liberal cuck thing to enjoy among large swaths of Republicans. At least online Republicans. It's really funny. It's fascinating.

This is how we're going to beat them in the fucking Civil War because we're going to take the college campuses, which means that we're going to have the only watchable footballs these bastards are going to be reduced to watching fucking high school games like speaking speaking of watching football yeah so the thing this episode is actually about is if you watch the super

bowl or like god help you you've tried to use youtube without an ad blocker a thing i do not recommend at all uh you have seen ads for temu with its temu or temu temu temu okay yeah it has the absolute the absolutely dog shit oh good god yeah this this app this one this one, folks. This one's, I went insane and have been spiraling for like two weeks now writing this. So, you know, so it has the absolutely dog shit tagline, shop like a billionaire.

Wait, that's its tagline? Yeah. Whoa, that's weird. It's funny, the other thing is they only have one ad right they it's the same i did not i did every single bowl it's not just super bowl like it's not it's been on youtube for like ages but yeah so this begs the obvious question what on earth is this thing and the answer is that temu is the american version of a chinese shopping app called pin duo duo um you will hear people pronouncing it pin duo duo um that's because they're hacks and frauds so but i'm just gonna call it so the the the

company the parent company for both temu and pin dua dua changed their name to pdd so i'm just gonna call it that pd so yeah pdd is china's worst tech giant. They have worked multiple of their employees to death. They probably also use slave labor. Those are unrelated stories. So today, welcome to the abyss. This is the story of Tamu. I have stared into it, and now you motherfuckers are coming with me and staring into it some more. Well, it's more like we're listening into it, because it doesn't really have a visual.

No, no, you're staring into it. Okay. You will get visuals. to this bullshit i will i'll start hallucinating in my office yeah so time it was the american version of of pdd pdd it roughly translates to together more savings. Together. So it's like a co-op. Actually, it probably sells stuff from co-ops. Okay. So PDD is the second largest shopping app in China behind Alibaba.

Alibaba is China's version of Amazon, basically. They're the second largest shopping app in China behind Alibaba. Alibaba is China's like version of Amazon. Basically, they are the second largest app. Alibaba reportedly has 860, 63 million users per year. That's a lot of users. Yeah, that's like that's multiple US's. PDD has been claiming that they have 740 million monthly users. It's unclear if that's exactly true but it's probably around there which again that is twice the entire population of the u.s so this is a fucking unbelievably massive company and to understand what what this what this company is and how it became probably the

worst of the chinese tech giants we have to go back to the very beginning. And the very beginning is this guy named Colin Huang. Huang is a weird guy. I don't know. He's, he's, he's, he's the Chinese version of the American tech bro. So he's,

you know, he's, he's a, he's a recognizable like asshole who started a giant company, but he's not exactly the same. So he, he, so he graduates from uh like college in china and in the early 2000s he goes to the university of wisconsin to get a master's degree in computer science which it like it should be illegal for anyone to get degrees in computer science uh terrible stuff zero out of ten no one should know how to use computers i can't

believe you believe in the statist legal system to prevent people from learning so find social sanctions we're going to make it morally illegal you're gonna get chased out by people with rocks on the street if you try to type something into a computer so okay so he he's at the university of wisconsin and while he's there he basically like posts his way into becoming the pro basically the protege of a chinese tech billionaire duan young ping this is an interesting relationship um duan is like is a very very influential chinese tech tech billionaire he gets every single article calls him the warren buffett of china i i don't fucking know but like you know for like for an exact example of like how big this guy is like vivo and like the one plus company that makes phones those are both like spin-offs of

like things that he built but yeah so you know so this is this is an interesting relationship for huang because and it's also interesting because like the the narrative around huang and pdd is that they're like these like hungry upstarts like clawing their way up from nothing and they can like go after alibaba and the Chinese like tech market wars because they're like they're ferocious they have like nothing to lose I'm like they're rich and fat Alibaba and like nah like this guy has had the backing of like a bunch of really powerful Chinese tech guys like from the absolute beginning another part of like the Huang lore is that duan like took him to this really famous dinner where warren buffett was offering if you donated like 620 000 a charity he would like eat dinner

with you and like talk with you about like finance stuff and so um Dwan like buys this thing to go eat dinner with Warren Buffett and brings Huang with him. And he, Huang, who's, who's, Huang's the, Huang's the founder of, uh, of PDD again. So he gives him credit for like this, this like financial wisdom that he got. Uh, here's, here's from an interview with, um, Sai Jin. This is a Chinese outlet. What Buffett said is actually very simple and can be understood by my mother perhaps what this meal meant most to me was that i realized the power of

simplicity and common sense human thoughts are easily polluted when you make a judgment on something you need to understand the backgrounds and facts after understanding it what you need is not wisdom but whether you have the courage to use reason when facing facts. Use common sense to judge. Common sense is obvious and easy to understand, but our various biases and personal interests formed due to growth and learning blind us. So this is like entrepreneurial bullshit, but you know, this is apparently, this is like a big formative like thing. It's like, ah, he like got the of Warren Buffett, and then he listened to it. It's just like, what?

The thing I think is more interesting is that he talks about what, in the same interview, what Dwan taught him. Dwan also taught me a common sense thing in business. Price fluctuates around value. The price will definitely fluctuate, but as long as your value increases, the final price will be close to the value. This common sense allows you to focus on increasing the intrinsic value of the company and not be overly concerned about price fluctuations in the capital market. And this to me is fascinating because the first half of that is like orthodox Marxist price theory.

Like in like in Marxist price theory, right? The whole thing about it is that price is determined by value the value of a commodity is determined by like the number the amount of labor hours socially necessary to produce it and eventually like price sort of like fluctuate you know price can change it's not price isn't like identical to uh like socially necessary like labor time but it like fluctuates around it and so that's like the first part of it which is the marxist thing except this is like china like modern like 2020s china so marxist value theory has been degraded to like make your company valuable and don't worry about stock prices and market fluctuations it'll work out in the end so true so true based based i mean the funny thing is this is actually better like market advice

than like most of the shit that like american ceos use but it's also oh god what what what has happened to my to my poor value theory my my beloved my beloved theory of how capitalism works has been turned into this weird tech bullshit. Tragedy. So, meanwhile, back in 2004, Duan convinces Huang to turn down a bunch of these jobs. So, he's like a computer

science graduate, right? And he's being headhunted by a bunch of the sort of mainstream tech companies at the time, like Oracle, Microsoft, and they want to give him like an enormous amount of money but his mentor is like no no no don't take this tech job take the silicon valley tech job join google and so he joins google and this is this is another like very famous thing he's like ah he wanted to join the like up-and-coming hungry tech startup but here's the thing so google he joins google in 2004 which is kind of early but google also goes public that year so you know this ends up working really well for him because he gets a bunch of stock options

those stock options are worth millions of dollars that's a lot of also some of the startup capital for like later companies he founds comes from that and huang really quickly like works his way up the ranks but he so he gets put in charge of like launching google in china and this is a fiasco does not work at all huang blames like too much oversight from people at the senior leadership of google which i can get but i mean it just doesn't work at all like he searches in 2006 by 2010 google has pulled out of china entirely like they're not they're not trying to push the the fucking search engine because nobody uses it so okay having having having like unbelievably bombed out of his first tech job he he he does the like entrepreneur thing he starts like a couple of these like shopping like online

shopping companies they do like fine and he sells them but they don't like do incredible and so okay so this is the part that a lot of the accounts of him leave out like the sort of like fawning accounts leave out is the next thing that he does which is he sets up this like really shitty game studio and they make like a bunch of like absolutely unbelievably weird and horny uh mobile games so they make like mafia city joy spade texas hold'em poker um they have this game called girl x battle that is like you you assemble a harem of girlfriends and then have them fight other people and stuff like absolutely have you played any of these oh no absolutely not i refuse i think i've actually seen mafia city ads before

but it's like like it's the absolute most dog shit like bargain basement i guess they're kind of pre-gacha games i was just wondering how far your dedication to research went here but not far enough look here's the thing my dedication to research went exactly far enough that i refused to install any of these apps for reasons that we'll get into next episode i was like absolutely not in fact this doing this research actually caused me to uninstall chow bus which is like a chinese food delivery app because i realized that it was constantly running in the background to like to drive up it's like uh user engagement metrics that's that is completely fair although if you were even more dedicated you could have bought a burner phone to download all these apps onto and test it on that so there you that's true but i no i i refuse to

let that shit connect to my internet like under no circumstances you can go to a starbucks you can go to a see i'm just throwing out options here i look i probably could have done this but no absolutely not actually well it's actually really hard to download the chinese uh version of this for reasons that we'll get into next episode all right all right but okay so like he's running this shitty game company and he has a genuinely brilliant and terrible insight which is that he he sees how addictive like mobile gaming and how addictive like microtransactions are and he goes oh shit what if i put this in a shopping app except that because that's the reasonable way to explain it but like the thing he actually did was like why are okay so his actual thought

process was why are we not selling games games are all like advertised to men right like these the apps that he's making are like weird horny stuff for guys why are we not making games for women which is reasonable but then his follow-up was uh effectively woman be shopping and he was like so true we'll make a shopping thing it's just like we'll make a we'll make we'll make an app that makes shopping into a game and so and one of the things he's also been doing one of the like the kind of like search engine optimization scams where like he just keeps making different shopping like shopping websites and hoping that one of them will like climb in the search rankings but eventually he hits on a

like a combination of using the like dog shit like addictive mobile gamification stuff from his mobile games in a like in an online shopping app and he hits on that as the idea for a new shopping app and this is what turns into pdd now do you know what didn't turn into pdd and is in fact better oh hopefully these ads that are not for taboo we better not get a fucking taboo ad hopefully i it's actually possible it's oh god well careful what you wish for. Hey, I'm Jack Peace Thomas, the host of a brand new Black Effect original series, Black Lit,

the podcast for diving deep into the rich world of Black literature. I'm Jack Peace Thomas, and I'm inviting you to join me and a vibrant community of literary enthusiasts dedicated to protecting and celebrating our stories. Black Lit is for the page turners, for those who listen to audiobooks while commuting or running errands, for those who find themselves seeking solace, wisdom, and refuge between the chapters. From thought-provoking novels to powerful poetry,

we'll explore the stories that shape our culture. Together, we'll dissect classics and contemporary works while uncovering the stories of the brilliant writers behind them. Black Lit is here to amplify the voices of Black writers and to bring their words to life. Listen to Black Lit on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hi, I'm Ed Zitron, host of the Better Offline podcast, and we're kicking off our second season digging into how tech's elite has turned Silicon Valley into a playground for billionaires.

From the chaotic world of generative AI to the destruction of Google search, Better Offline is your unvarnished and at times unhinged look at the underbelly of tech from an industry veteran with nothing to lose. This season, I'm going to be joined by everyone from Nobel-winning economists to leading journalists in the field, and I'll be digging into why the products you love keep getting worse and naming and shaming those responsible.

Don't get me wrong, though. I love technology. I just hate the people in charge and want them to get back to building things that actually do things to help real people. I swear to God things can change if we're loud enough. So join me every week to understand what's happening in the tech industry and what could be done to make things better. Listen to Better Offline on the iHeartRadio app, Apple Podcasts, wherever else you get your podcasts. Check out betteroffline.com.

Hola mi gente, it's Honey German, and I'm bringing you Gracias, Come Again, the podcast where we dive deep into the world of Latin culture, musica, peliculas, and entertainment with some of the biggest names in the game. If you love hearing real conversations with your favorite Latin celebrities, artists, and culture shifters,

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Don't miss out on the fun, el té caliente, and life stories. Join me for Gracias Come Again, a podcast by Honey German, where we get into todo lo actual y viral. Listen to Gracias Come Again on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. wherever you get your podcast and we're back so pdd doesn't start in the way that normal tech app things do which is to say that pdd starts as an online fruit vendor now okay if you know anything like a like a farmer's market online like what yeah okay so so if you know anything about how like amazon worked right so amazon goes from books to a bunch of stuff to food pdd does this backwards they start in food now this is very weird and the reason this works and the reason that pdd starts as a marketplace for rural farmers to sell fruits and vegetables like directly to consumers is because unfortunately of the structure of the chinese agricultural market which we have

to talk about a little bit so something i talked about oh god i don't know how many years ago this was now um but like a while back i did an episode about this company that poisons like 300 000 babies by making poison milk in china and one of the things that was a bastard's episode one of the things i talked about in that episode was how the chinese agricultural market is incredibly fragmented um we don't have time to do a full history of rural de-collectivization here but the upshot of it is that it results in a lot of farmers working really small plots of land who are forced to sell their goods to a series of middlemen who make the actual profits and because these farmers have like a tiny amount of land to grow stuff on or they have like two cows right

they don't have the financial leverage to negotiate with like the middleman. The middleman can just set prices on them. And the product of this is you have a really, really fragmented market where there's just like all of these like unbelievably large numbers of these really small sellers. And part of, you know, and this locks

all these people into middlemen. The middleman can set the prices. The middleman set the prices incredibly low and they're locked in because they don't have another distribution method because the only thing they can do is sell to these like agricultural middlemen companies the the companies like above them like your grocery companies or like actual milk company who packages the milk they love this stuff because it means that they don't have to like pay the farmers they can just buy like the goods directly they don't have to deal with like

employment stuff they don't have to deal with quality control too because they can pass that on to the middlemen now something else we talked about in our anti-work lying flat episodes like three years ago is that china has these like far like rural influencers that was it was like a huge wave of these people that sort of like emerged. You might actually have seen, you've seen the videos of just like someone in rural China, like cutting wood or something. Oh yeah. Totally. Totally.

Yeah. So those, those things were like, okay. The U S catches up with stuff on the Chinese internet, like usually several years after it like happened there. And that makes sense yeah and the next thing in line after the original sort of rural influencer waves was these like was this wave

of like farmer influencers and these people they're using a like a different uh chinese like it's like another it's like another tiktok clone basically and they're doing the thing that they're doing is okay so you you know you have your regular influencer who's trying to sell you like the image of rural life right and then you have the farmer influencers who are trying to sell you the image of rural life and also their potatoes and this is this is like the marketing strategy this is this is this is how you can skip the middlemen and like actually sell your fruit is by becoming an influencer which it's so cursed it's so cursed i hate it so much that is kind of dystopian it's just the the constant the constant performance yeah but the problem is

that the alternative to it is even worse because pdd realizes this and they're looking at these markets and they're like hold on these farmers are already selling their goods for like next next to nothing if we come in pay them a bit better use our text or like our tech money to our tech startup money because they have an enormous amount of tech startup money if we use that tech startup money to give them rebates we can do things that like you know we cannot charge them commission right and if if we can do this we can turn around and sell these fruits for like zero dollars. Zero dollars is a slight exaggeration, but they're selling these fruits for an unbelievably cheap. Like we are talking 10 mangoes for a dollar and 39 cents.

Which is like a steal. Outrageous, right? And, you know, this is incredibly successful. What they're doing basically is a giant version of the Amazon gambit, right? They're eating shit and taking losses to sell all of this stuff. Although they're losing less money than you'd think. Like the actual price of these goods is already so low.

And we're going to come back to that too, because that's an aspect of what's so messed up about this whole thing. But, you know, so they eat shit that takes some losses, but they really, really quickly build market share. So this is a very, very smart, smart strategy because it's not just in,

in the sort of rural market. China has a shit ton of like small and medium sized producers that make a whole bunch of things or like guy with one factory person doing like craft production stuff. And PDD's plan is to pull together all of these sellers like this this whole all all of these people from different markets into just one giant like one giant like market that they control now importantly unlike amazon and this is unlike alibaba too because alibaba works on a fairly similar model to well okay in a lot of ways it's a similar model to amazon's not identical but

unlike those two companies pdd doesn't run their own logistics network it's all it's all third party like the shipping and all that shit is done by is done through third-party logistics stuff so like they're shipping companies they don't own warehouses like that stuff you know what they do instead is they use the shipping companies and warehouses that were developed in like the earlier parts of the Chinese tech boom. And they're able to just use that infrastructure to, you know, to ship all their stuff around. And this means that the company is extremely lean in the sense that like, they don't have a lot of physical assets, like they don't, and this means they don't have to

deal with labor costs or like the logistics problems of actually having to like you know i'm actually having employees packing boxes or making things they're just an app it's it's well they're like the original model of uber in some sense right where like you don't like uber doesn't fucking own or wasn't supposed to be owning cars i mean i guess uber is a bad example because they were trying to do the automated car thing but that was a fiasco but you know the thing that pdd makes is just an app but it's it's an incredibly addictive app like it's it's a shopping gotcha game which is like maybe the worst sentence in the history of the human language and this was like this was around the time like i want to say like 10 ish years ago give or take a few years where like microtransactions were becoming massive like all like it took over

gaming it took over so many parts of just being online it took over apps like it just it just infected everything and we luckily kind of pushed back on some some elements of that not all of it but like there was definitely some some degree of like oh well we are simply not going to be buying all of these games if it's just full of micro micro transaction bullshit and then fortnite took over and we're back in hell again but whatever actually it's it's pretty funny um china kind of recently the chinese government like did a crackdown on like loot boxes and stuff because they were some of some of the some of the regulations they put in place are nuts but some of it was like you can't sell loop you can't sell

gambling the children yeah yeah and this caused like although it's funny because they're kind of walking it back now because it hurt their gaming market so much they're like well shit okay we have to we need those kids gambling yeah like that's how we that's the only way to make money um yeah but you know but but pdds like brilliance are sort of like the the absolutely evil shit that they realized is like we can just we can just do this for shopping and so like the moment you log in right there's like these flash deals and there's these group deals and this is the thing that the group deals are the thing that that pdd is based around so the way it works is you get these flash deals and there's these group deals. And this is the thing that the group deals are the thing that, that PDD is based around. So the way it works is you,

you get these group deals and so you, you get a link and you send it to people. And the more people click on the link to buy the thing, the cheaper it becomes. So, and then you send the links over WeChat, which is the curve, like catch all Chinese messenger,

like social media app that everyone uses to like talk to their boomer parents. And so the thing to their boomer parents. And so the thing that your boomer parents are doing is they're sending these shopping links to each other. And, you know, and the, the,

the more like the more people click on these links, the cheaper, the good becomes. So when it was, the more people are buying it, the more people you rope into buying stuff from this app, the cheaper it is. And the more deals you get,

you get things like, they'll just like give you like quote-unquote free money if you spend enough money in like in in basically like in the same way that like microtransaction works right where it's like you know in a game it's like if you play the x number of games will give you like in-game currency whereas this is just like we'll literally give you money we like send things to you god that sounds like hell it's awful it's so bad and very importantly right it's this giant loop that it not only gets people to spend money but it gets people to bring their friends in because you have to bring your friends in to get the group deal so everything gets

cheaper and cheaper and the tactics they use are absolutely wild they get in trouble in 2021 for this promotion called bargain for free goods where you'd get a link and the claim was that if enough people clicked it, you would get the good for free. And so this guy tried to do it, but he couldn't. He could only get it to 0.9% of the cost so he sued them for false advertising and the

claim got thrown out, but the company had to pay him money. So this is the kind of shit that they're doing um we chat actually like blocked their links for a while because you know because like some enormous portion of messages suddenly were just like these people sending these spam links to like every single person they know trying to get them to buy like a fucking toothbrush so that your toothbrushes can be cheaper right but eventually we chat kind of like

you know we chat gives up and they start like allying more with pdd i mean there's a whole there's a whole complicated story i'm not going to get into here about like the like china's really really ferocious like tech company wars because like in the u.s you know like our tech monopolies are relatively stable right like they've sort of portioned up the internet into and like distribution and stuff into just like basically like local monopolies right like like google is like the only search engine company there's there's basically no competition there right like there's some competition in terms of social media but even then it's like and it's not like the chinese version where it's like unbelievably ferocious competition um sometimes they cooperate but yeah you know it's it's really fierce and pdd

you know the thing that they do right is they they pair this app stuff with direct to consumer sales and pdd is really the pioneers of this um she in and okay so i i she in is that fucking fast fashion clothing company i i learned today that he is actually pronounced she in because the name of the thing is she in like sh e she and then she's like she's in yeah yeah i hate it so much i'm so sad i i mean i feel slightly better because like i kept trying to read it in chinese it's like this doesn't fucking make any sense like it's just baffling it doesn't and it's like oh no it's because it's in english yeah but pdd is the precursor of shein's like strategy right like they're they're the originators of this except they're you know they're, they're the originators of this,

except they're, you know, they're what they're doing. Basically it's, it's a fact it's kind of like drop shipping, but you know, the sales are being pushed by these, these sort of gamified app stuff. And this means that they have this like real time supply management system

that tells producers like, like they, they can like, they go down and like tell their sellers sellers what to produce more of based on app sales. So the way it works is you start off with a small number of things and then you get ads to push

those fucking toothbrushes or whatever. And then as sales ramp up, you ramp up productions you can ship people more toothbrushes. Now, do you know who else will ship you toothbrushes that will probably be better quality than the PDD toothbrushes? Oh no, we can guarantee all of our sponsors have only the top quality toothbrushes.

That is what we call the cool zone guarantee. Go to Toothbrush.com and put in the keyword Mia for 10% off on your top of the line toothbrush. Please don't do this. Hey, I'm Jack Peace Thomas, the host of a brand new Black Effect original series, Black Lit, the podcast for diving deep into the rich world of Black literature. I'm Jack Peace Thomas,

and I'm inviting you to join me in a vibrant community of literary enthusiasts dedicated to protecting and celebrating our stories. Black Lit is for the page turners, for those who listen to audiobooks while commuting or running errands, for those who find themselves seeking solace, wisdom, and refuge between the chapters. From thought-provoking novels to powerful poetry, we'll explore the stories that Thank you. Black writers and to bring their words to life. Listen to Black Lit on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hi, I'm Ed Zitron, host of the Better Offline podcast, and we're kicking off our second season digging into how tech's elite has turned Silicon Valley into a playground for billionaires.

From the chaotic world of generative AI to the destruction of Google search, Better Offline is your unvarnished and at times unhinged look at the underbelly of tech from an industry veteran with nothing to lose. This season, I'm going to be joined by everyone from Nobel-winning economists to leading journalists in the field, and I'll be digging into why the products you love keep getting worse and naming and shaming those responsible. Don't get me wrong, though. I love technology. I just hate the people Thank you. Apple Podcasts, wherever else you get yourifters, this is the podcast for you. We're talking real conversations with our Latin stars, from actors and artists to musicians and creators, sharing their stories, struggles, and successes. You know it's going to be filled with chisme laughs

and all the vibes that you love. Each week, we'll explore everything from music and pop culture to deeper topics like identity, community, and breaking down barriers in all sorts of industries. Don't miss out on the fun, el té caliente, and life stories. Join me for Gracias Come Again, a podcast by Honey German, where we get into todo lo actual y viral. Listen to Gracias Come Again on the iHeartRadio app, Apple Podcasts, or wherever you get your

podcasts. you get your podcast so all right vdd just it takes rural china by storm sure it sounds convenient like yeah yeah for some people and it's really really cheap is the thing right and the thing about rural China is you're dealing with a level of poverty that like is like almost unimaginable it's not unimaginable in the US but it's

like unbelievable like it's something that like we don't really have it in the same way because okay so like an example of the kind of stuff we're dealing with right like so china's gdp per capita in like the 60s was lower than haiti's right this is an unbelievably poor country and there are there are places in rural China that are still like basically not quite that poor, but are like unbelievably poor in ways that like, you know, we're talking about people who are like people who are doing kind of well in these regions are making $700 a month. Like that's like on a good month, right?

They're making $700 a month, which is that's $8,400 a hundred dollars a year and that's that's that's if you have 12 good months right if you have normal months it's more like six thousand dollars a year and so you know and when when you're in a place where people are using stuff like this and again that's someone who like has a job full-time is making like six thousand dollars year. And so people use PDD to shop because it's incredibly cheap and it's also addictive. And when I say cheap, like we're talking like $2 for a pair of jeans cheap. Right.

And like, that's, that's also like cheap and you want to, it's like unbelievably low prices. I mean, this, this kind of, this kind of reminds me a little bit of that recent Tucker Carlson, Russia is great, actually, media stunt.

Oh, yeah. Look, all of these groceries only cost $100 in American currency. And it's like, yeah, because they're getting paid like $200 a week. Like, they're not taking home very much money. So all of the costs like slide very differently like you can't just compare this one to one yeah although the the thing i will say about about pdd is that their their process their prices are unbelievably low by chinese standards like they're this is also why they look so low by american standards too is that these are these are low by chinese

standards right because they're so low by chinese standards like people people buy stuff from it the cost of this is that the stuff they're selling is really cheap i mean the other cost is the the unbelievable exploitation of the chinese working class but you know we'll get to that we'll get to that next episode the the main cost of the stuff being cheap is that the stuff they buy like sucks ass like literally this is something the ceo talks about is that their gambit is that okay we'll ship you 10 mangoes for for like a dollar 39 two of them will be rotten but you that means you still get eight mangoes that is still an unbelievable deal like that's the thing and like you know the stuff that they get like sucks here's from the chinese media outlet sixth tone which has

done a lot of good coverage of pdd they they used to be better they're like the kind of like lefty like state media outlet um they used to be better and then their staff got run out because they they went they walked too close to the line so but here's here's what here's they've done a lot of they well because the most of the PDD coverage came from before their people got run out. So quote, following the IPO, a number of purchasers, a purchase is allegedly bought from PDD.

We're shared online, including a hairdryer that broke out in flames after it was switched on. And a power bake. Hey, that also happens in America. Don't worry. I know you're like, I know you're like,

oh, I'm missing out on all these great deals, all these great products. Not true. This can also happen in America. Don't worry, folks. That's true. I know you're like, I know you're like, oh, I'm missing out on all these great deals, all these great products. Not true. This can also happen in the States. Yep. There's another one where they had a power bank and someone ordered it and it came

and it was just four AAA batteries in a container. That's funny. That's good. That's a good bit. That's pretty good. But I mean, you know, there's stuff like like one of one like sixth time was interviewing people in real areas you bought stuff and they

were like yeah i bought i bought a fishing rod for like two bucks it was broken i bought a pair of shoes and it literally fell apart after three days so like i have complicated feelings on this because i think there is a place for gambling in purchases. If, for example, on Amazon, if every fourth product you bought there was a completely defective, purposefully lower quality version, I think that would be a net good for the world. We would have less people using Amazon, and you would kind of get slightly punished so i think this actually could be a good thing if used correctly where we would we purposely sabotage every like fourth person who buys anything online but the problem is that people fucking love gambling like that that that's that's just gonna make people do more because now there's more of a downside for trying

to get your fucking deal so i mean mean this is the thing right like you're rolling the dice every time every time you take it you order like an electric generator online and they send you a double a oh my god it'd be so funny well i mean now hey you too can now shop on temu you too can experience getting shipped just fucking bullshit you order some nice hawaiian coffee and they send you some like chamomile oh god devastating so this this whole thing of you buy stuff that sucks or doesn't work and the fact that pdd starts in rural china means that like initially there's this like real class element about how you who uses pdd it's seen as like the site for poor and gullible people who don't yeah care about quality yeah it's like it's

the place for lower class people shop yeah sure yeah and why that stops being true kind of because everyone starts using it but comma the other problem they have is that it is absolutely rife with counterfeit products um right after they go public in 2018, there's like a Chinese state investigation into the sale of their counterfeit products. And PDD's response is like, well, we're just a marketplace. Anyone can sell on it. How are we supposed to control who makes counterfeit stuff? Sure. This is actually like it gets to a kind of like cultural thing where, you know, this is one of the things that happens in rural China.

where you know well this is one of the things that happens in rural china this happens in a lot of places where like almost everyone is wearing like clothes that are like knockoff brand stuff because it's just the cheapest clothes and like that's that's the kind of clothes that's being made that you can afford if you're you know like you're you're you're trying to sort of make it and like in rural china so you get like you know you have like entire villages where you walk in and everyone's wearing like like nikki and like a dietist or something like it's like nice and this stuff gets really wild really fast so here's from that that saijing interview with colin huang again uh so here's here's uh kaijin it's a chinese media outlet so they're they're interviewer one of the best selling products on pdd is a bottle of aphrodisiac priced at 27.8 yuan that is like three almost four dollars with a total of 4.7 million orders sold

do you think this medicine might be real? Here's the CEO. First of all, medicines or healthcare products sold on PDD's platform must have national certification marks. Secondly, the gross profit margin of healthcare products is already extremely high, just like facial masks. Do you think the 200-yon facial mask is useful? So, again, again, what is happening here is that like they have sold like 1.4.7 billion orders of of like a fake aphrodisiac and when the ceo is asked about his response is like well but who can really say if any health products work like that is a pretty funny bit i mean it sucks that people the poor people are losing money but well i to be fair to be fair pretty funny i i if i if you are trying to like buy an aphrodisiac i don't really care sure sure yeah but like you know so part of it like

there's something like fake hack medicines this is like the chinese version of the american like grift like right wing grift like supplement market yeah yeah yeah it's the brain pills to help your libido or whatever yeah but this also gets a lot darker um one of there's one of the stories that kind of like made the rounds chinese social media that sixth tone reports on is that people found pdd like advertising like sleep medicine as date rape drugs yeah fucking bleak there's like fuck and that's the thing there's like no fucking content moderation on this right so people just do that shit and it it really sucks but on the other hand none of the constant bad press like stop pdd's rise right and now it

is time to leave colin huang behind so until until about 2020 pdd's rise was synonymous with its ceo colin huang but in mid 2020 huang resigned as the ceo and kind of like exited public life effectively like not entirely but kind of like he like took he like he resigned as ceo and then 2021 he resigns as like uh chairman of the board and he's like you know he's doing this like philanthropic stuff instead and he's you know he's doing his like post ceo life thing right and we've never gotten a good answer as to why he stepped down. But I have a theory and I think my theory is pretty good and also it goes into have I, Garrison, have I

explained to you the thing about, I don't remember if I've done it on this show, talked about the Chinese payday loan app thing? I don't think so. Okay, so alright, we are now going to do we're going to close this episode out on one of the most absolutely insane moments of Chinese internet history.

So, okay, one of the things that happens in the Chinese tech market in the late 2010s and early 2020s is this mass proliferation of app-based payday loans. This is one of the worst things I have ever seen. is one of the worst things I have ever seen. What effectively happens is that around like 2014, 2015, a bunch of Chinese tech companies, especially like delivery companies, like sort of like China's version of Grubhub and DoorDash and Alibaba, they're like Amazon equivalent gets in it too. And these people realize that they can start their own payment platforms. So basically like all these companies are making their own version of PayPal. But then they realize that they can use these platforms to give out payday loans so that you can in one app, take out a payday loan to order delivery.

Or you can in one app, take out a payday loan to buy shit from Amazon with the payday loan. Tencent gets in on it so you can buy micro transactions with your payday loans. This, as you might expect, transactions with your payday loans. This, as you might expect, spirals out of control immediately. The interest rates on these loans are enormous and this means that they make an unbelievable amount of money. And so, apps just start shoveling these loans in

people's faces the moment they log on to apps. But the thing is, this doesn't stop with just the big shopping apps, right? By 2019, it's not just you know like when i say this is going to apps right like you're fucking like imagine if twitter was trying to offer you payday loans like that's the midpoint of this that that might happen that might actually happen based maybe based on the plans for the twitter to become the banking app yeah well that's actually the funny thing so so elon musk really really likes china and part of the reason for this is that you know a bunch of tesla factories are in xinjiang um part of the

reason for this like he's trying to like recreate the like we chat environment but everyone doesn't like it yeah right like people don't actually like it but the thing is the other thing that he really loves is the number of hours that you can get people to work in china that you can't really in the u.s so we'll get to that fucking next episode but you know okay so like your your fucking twitter is trying to sell you payday apps but then it gets the point where your fucking flashlight app is trying to sell you, trying to get you to take out payday loans. Like your like photo app, like every fucking app on your phone is trying to sell you payday loans. That sounds incredibly annoying. This is one of these things, right?

That like, okay, like as bad as like American apps are, right? Like as bad as like the version of capitalism that we have in in the American app ecosystem like the wildest shit is always going on in the Chinese tech market which is like even more insane than the American tech market. So and this is like we don't actually have this here and I've been trying to figure out why it never happened here I think it has to do with partially with banking regulation and partially with like the fact that like the actual american payday loan companies don't want other companies to like cut in on their business so i think that's what's happening but like in china it's literally like and this is happening in like like like 2019 2020 2021 that this stuff is happening so you know and it's in all and this this gets i mean it turns into just a fucking nightmare because you know obviously like this turns into this giant wave of people who got it in over their heads and can't pay their loans back because they took out a payday loan with

30% interest. And also, and this is one of the fun things, companies just straight up lie about their interest rates. Like there's a lot of examples of companies saying we have a 9% interest rate. And then, you know, in the contract, it says 9% interest rate. And then when they try to get you to pay it back, it's like 30%, right? Like this is like, you know, and sometimes they're, they're even there, you know, you're getting up to like a hundred, 200% interest. Like these are like organized crime levels of interest. And you know, like all the, like the tech giants are all into it. Alibaba isn't quite as big into

it as like some of the other companies, but like they're doing it like they absolutely are doing the payday loan shit. And I mentioned Alibaba here because in late 2020, Jack Ma, who's the founder of Alibaba, just like disappears. He's just gone for like several months. Nobody nobody knows where he is. And then he reappears in like 2021, but he's not doing tech CEO stuff anymore. years in like 2021 but he's not doing tech ceo stuff anymore he's doing like weird public education tours in like rural china and this causes like a huge um a huge like kind of thing in the american press because what they're reading it as and they're kind of right is that there's just in 2021 there's this enormous raft of financial regulations on tech companies

and this gets interpreted as like a crackdown on tech companies that like the ccp is trying to bring the tech giants in line like they've disappeared jack ma and you know one of and this is something something that a story that gets lost in this in the american press is that like one of the big things they're trying to do is stop is stop all these fucking companies from turning their apps into payday loan factories and you know like i'm i'm not like a ccp fan like it is well known like it's like my dislike of of the ccp is so large that like a not insignificant number of people in the U S think I work for the CIA. Right.

But like, this is like those fucking tech companies were, they were like, they were like, like on the edge of completely annihilating the Chinese economy. They were very, they got very, very close to just like reducing like enormous swaths of the entire Chinese

population. It's like pure app based debt peonage, it was a fucking disaster. And this is part, this is a big part of why this, like, tech crackdown came in, because the CCP was like, holy shit, if you guys do this, like, you're actually going to, like, you're going to fucking nuke the Chinese economy. Like, we cannot allow every single fucking app to be a payday loan, like, service. economy like we cannot allow every single fucking app to be a payday loan like service and things i mean it's still not great now but things have gotten a lot less bad in the in the payday loan like thing since then but you know again like it it it had to get bad enough that your flashlight was trying to get you to take out a payday loan for the ccp to actually like go after their like tech giant darlings and i think what happened is that i i i think what happened is that colin huang like saw which way the wind was blowing

and he was like okay there's gonna be a giant crackdown now now to its credit this is the only time i will give pdd credit for anything PDD actually didn't do the payday loan shit. I think because Colin Huang was smart enough to be like, this is a fucking terrible idea. If we try to get our rural customer base hooked on payday loans, all these people are going to just be completely broke in nine months. So PDD doesn't do it. nine months so pdd doesn't do it but he takes this moment like he picks 20 like july 2020 which is like a couple months before jack ma disappears and he just fucking notes and he's like i'm out and yeah like things you know and he he picked a good time and this meant that like you know he never really faced any consequences for you know he he wasn't really caught up in the crackdown he

he got out fine and you know he he picked he picked the right time to do it and pdd's future in america was still ahead of it but when the chinese media began to uncover the dark side of pdd in 2021 colin kuang was nowhere to be found and that is what we're covering tomorrow we haven't even gotten to the bad stuff yet haven't even got to temu proper yeah well the thing about temu and we will get to temu next episode but temu's like a 2022 thing right so it's really recent it's only been around for like two years which means that if we're going to talk about this 90 if it is going to be pdd because pdd is like nine years old but yeah tune in tomorrow for a bunch of absolutely harrowing shit yeah this is this is this is it could happen here we love to do so exciting i love learning about about new harrowing shit. You can find sources for It Could Happen Here updated monthly at coolzonemedia.com slash sources.

Thanks for listening. Hi, I'm Ed Zitron, host of the Better Offline podcast. And we're kicking off our second season digging into tech's elite and how they've turned Silicon Valley into a playground for billionaires. From the chaotic world of generative AI to the destruction of Google search, Better Offline is your unvarnished and at times unhinged look at the underbelly of tech brought to you by an industry veteran with nothing to lose.

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