Speaker unverified: belief

Transcript context

…We'll end this with refrigeration and cold storage. I assume none of that is happening during the last mile. No. The way it works right now for all of the platforms is we actually took some deep dive into the warehousing because that is really where you're going to understand if this platform is doing it correctly or sustainably and can make it. They actually franchise out the warehouses, so you can go, for example, and become a Meituan CGP warehouse pick-up point. You need to have a certain number of capital. You need to have this building that fits requirements. You need to have cars or some type of vehicle that fits the requirements and this number of laborers. Then, you can go and become a franchisee of the system. I think to frame this, this is one of the areas that I'm personally really excited about seeing up close and in person when we can travel again because again, a lot of the content that we're seeing around this is reported on. It's not people that Rui and I talk to on a daily basis because they're usually in first or maybe second-tier cities, but this is really about digital penetration into rural China. It is also about micro-entrepreneurship. The community leaders who are taking a cut of the total sales within their community are essentially being contracted and get a nice partial salary every month for playing that role. It's a way for the large platform—you mentioned Pinduoduo, PDD, but also Alibaba and JD—of putting almost billions of U.S. dollars. Not almost. They are billions of dollars. Over billions of dollars into their own platforms or into their investments at a high level, too. What we talk about a lot on Tech Buzz is the whole trickle of consumption—what was that phrase, Rui? It's hard to translate, but consumption upgrade is when people in China talk about the first and second-tier cities increasing in their consumption and basically being developed economy consumers. Then, there's also the consumer "downgrade" which is when all the brands are now discovering that rural China is where it's at. Exactly. Is this race pouring billions of dollars into the tier three and tier four cities? Is that just because they're out of growth in tier one and tier two cities and this is where they need to go to grow? Why is there a capital battle going on there?…

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