This week’s podcast is about my discussion with Abel Deng, the CEO of Huawei Thailand. And about how the next generation of digital infrastructure is developing in SE Asia.
Here is my new book:
- Moats and Marathons (Part 1): How to Build and Measure Competitive Advantage in Digital Businesses Kindle Edition
- Huawei Is Going to Beat Trump with Human Resources, Not Technology (Pt 1 of 3)
- Huawei’s Employee Stock Ownership Plan (ESOP) is “Meritocracy Plus Partnership” at Scale in China Tech. (Pt 2 of 3)
From the Concept Library, concepts for this article are:
- Role of the State
- Economies of Scale
- SMILE Marathon: Sustained Innovation
From the Company Library, companies for this article are:
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Welcome, welcome everybody. My name is Jeff Towson and this is Tech Strategy. And the topic for today, Huawei’s four big Thailand projects. My interview with CEO Abel Dung. I was over at the Huawei headquarters last week. I had a really fascinating and real fun talk with their Thailand CEO, Abel Dung. I really learned a lot about what’s going on, one with Huawei, which is always interesting, but two also, sort of the next generation of digital infrastructure in Thailand, which is really a good proxy for what’s going to happen in Southeast Asia. So I thought it ended up being kind of a real nice heads up on what’s coming next. Because usually, I mean, the infrastructure, digital infrastructure, telco, that generally comes first and then the companies take advantage of that and build on it. So I thought that was kind of a nice sort of look down the road and I thought I would talk about what I learned in the visit. The big qualifier here is this is really my opinion. This is my assessment. This is kind of what I’m gleaning and I’m thinking. That is not the same thing as what Huawei thinks. It is not the same thing as what Abel Dunn thinks. So I’m only speaking for myself here. None of this is coming from them. And they very well may disagree with me. I’m sure they’re gonna disagree with points and say, yeah, you’re off there, whatever. So anyways, this is all my opinion, not them, just me. Little housekeeping stuff. My book is out the link is in the show notes. There was some issue with some of the graphics being a bit blurry I think that’s been fixed now We redid it checked it kind of went through reuploaded if not now then in the next day So if you have any issues with that, let me know but it should automatically correct itself If you have an ebook if it doesn’t you might have to go to Kindle and say automatically up down Usually Kindle automatically uploads or downloads newer versions. But there is a toggle you have to turn it on. So anyways if you have any issue with that at all just send me a note. I’m easy to reach on LinkedIn. I’m easy to reach on Twitter things like that. Other issue that someone had brought up was shipping prices of the physical book the paperback to Thailand. Yeah that’s kind of crazy because this is on Amazon. It’s on Amazon everywhere. Ebook is pretty good. Well not China because Amazon doesn’t cover China. But the shipping costs to Thailand for the paperback were pretty crazy. So I’ve been calling local publishers, printers, and see if I can find some solution here. If you have any suggestions on that, please let me know. It will be really easy just to hand the PDF off to someone here and handle it that way. Anyways, that’s it for that. Standard disclaimer, nothing in this podcast or my writing on the website is investment advice. The numbers and information from me and any guests may be incorrect or wrong. The views and opinions expressed may be… no longer relevant and accurate. Overall, investing is risky. This is not investment advice. Do your own research. And with that, let’s get into the topic. So first thing, as always, there’s a couple concepts for today. When I generally, these are all kind of, in my opinion, related to Huawei. This is pretty much how I view Huawei. There’s sort of three concepts that are in the show notes that I focus on. First one, economies of scale. Second one is innovation marathon, sustained innovation, one of the sort of digital marathons, the smile marathons, that’s the I, the I stands for, in smile stands for sustained innovation. And then the third one is the role of the state. And you know, when I sort of take apart what’s going on with this company, which is a bit hard because it’s private, it’s hard to get some information on it. Other information they’re pretty open with, which is kind of nice for a private company. But those are generally the three ideas I think about. Economies of scale, I mean, you know, they are at heart and foundationally a telecommunications equipment designer, manufacturer, distributor, and so on. And that’s a global game. I mean, there aren’t telco manufacturers country by country. There aren’t even region by region. There’s three now, let’s say five in the past that. service all the mobile carriers and fixed line, you know, telco companies around the world. This is a global game, and in the global game scale matters. How much revenue? How much can you spend on your sales force? How much can you spend specifically in two areas that matter? Well, originally it was mostly about manufacturing. If you had a larger manufacturing base, you got some scale economies and you were cheaper, and that’s how a lot of Chinese manufacturers sort of. rose up in the 1990s, early 2000s, but then, you know, more or less the game shifted to one of who can spend more on research and development. And you outspend your competitors year after year, you flooded into R&D, you got to be good at it, of course, and then you, you know, you generate 3G and then you create 4G, then you do 5G. And it’s this ongoing technology progress. So economies of scale sort of originally played out in manufacturing, then it became a manufacturing plus R&D story, which are largely fixed costs. So the bigger player had an economies of scale advantage. And then it’s also a bit about culture and effectiveness of your sales force. That tends to be the big stuff. So that would be kind of one. The other, the second concept for today, these are all in the concept library on the webpage. would be the innovation marathon, the sustained innovation. You know, my standard thing is there are certain operational dimensions where you can create a fairly sustainable advantage in the digital area like machine learning, innovation, rate of learning, ecosystem, orchestration, things like that, which is what SMILE stands for. I mean, this is a tech company, so they’re in the innovation business, not unlike SpaceX and Tesla and all of that. When you’ve got 197,000 plus employees and the vast majority of them are engineers, and pretty much everything you build product-wise is probably gonna be obsolete in five to seven years, you’re always just sort of continually innovating and creating, that’s the nature of the game. It’s a heck of a lot easier to make candy bars. They can last for decades and longer, but nobody wants to buy 3G routers in most countries now. Well, I shouldn’t say no. There’s still some 2G floating around, 3G floating around, but most of it’s fading away. So that’s the second, just sort of doing that. And then the third one is role of the state, which telecommunications, ICT, information and communications technology, has over time become highly political, highly sensitive. Maybe political is not the right word. Governments care. You know, it used to be just phone lines, that was one thing, and then it became wireless mobile networks. Then it became voice plus data, and now, you know, it’s pretty much everything runs on the networks and banks, military, you know, infrastructure, national security, power grids, I mean, everything’s running on this stuff. So, you know, rightly it has become a much more politically focused market, and certain governments have very, you know. there’s a big role of the state. If British Telecom wants to hire Huawei to do their equipment, which they did, the UK government can step in and say, no, no, no, we want a Western telecom manufacturer, which they did. And it was strange because it was over a 12-month period, they basically changed their mind. 12 months earlier, British Telecom and the UK government were okay with this, and then 12 months later, they kind of changed their mind. which I don’t think British Telecom like very much. So I mean, there is some political aspects to this. I think it’s a lot more granular than people talk about. You know, it’s one thing to be doing the core network underneath the financial system, which is arguably politically sensitive, as opposed to random base stations and batteries for typical public networks in the middle of nowhere. Not much going on sensitivity wise with battery packs. And you can say the same thing about, let’s say from China, they have a certain opinion on this as well about what companies they want doing certain parts of their infrastructure. And generally they want the most sensitive parts, whether it’s cloud, core network, to be done by Chinese companies. India has a very sort of similar opinion. They want some of that local, Germany, the UK, definitely. The US has a strong opinion on this, although ironically they’re the country without. a national company that does this. They have to call up Ericsson and Nokia for the most part, which is kind of a weird quirk of history. Anyways, think about that. You think about telecommunications equipment, then you can think about consumer devices, smartphones, power, digital power, battery packs, modular power, enterprise business, cloud, AI, you know, Huawei is in all of those businesses. And there’s various dimensions to this and… You know, some it’s a big deal, some it’s not at all. Anyways, those are generally the three dimensions I’m looking at. I think Huawei’s a good example of all of those. Okay, so with that, let me get into, you know, just sort of, I had a great experience. I’ve done this for several years. I’ve kind of gone out to Shenzhen multiple times. I’ve interviewed their chairman and, you know, their chief marketing officer. And I’m actually going to Sri Lanka in two weeks. And I think I’m gonna stop by and see the Huawei people in Sri Lanka. and see what they’re doing. And you really can learn a lot. It’s, you know, I’ve been writing about this company for, must be 10 years. You know, back before all of the US-China stuff erupted, you know, this was a very important company back in 2010, 2011. There’s a lot of people, we spent a lot of time looking at this company, looking at its background. A lot of important stuff going on. Okay, so, you know, go out there. meet the staff, staff are always highly professional. But really the questions in the front of my mind was, look, what are they focused on? What’s the most important thing for Thailand in terms of next generation digital infrastructure, which is what a company like Huawei would be doing. And then what companies is that going to possibly give rise to? You didn’t have YouTube before you had 4G. You needed more bandwidth and data before you could do companies like that. you didn’t have Uber and such before you had GSM and geo-positioning within smartphones and Tide, and you couldn’t do any of those things. So every sort of generation of infrastructure usually gives a new breed of digital companies, more or less. So, and then I thought that would be a good proxy for what we’re gonna see in Southeast Asia. Now my standard explanation for Huawei, and this is again, this is my take, this is not. You know, they have a great phrase they use, which is ubiquitous connectivity, pervasive intelligence. You’ll see this on all their brochures and stuff. And that’s a pretty great phrase. One, that’s some good vocabulary for a Chinese company. Ubiquitous connectivity, that’s a good phrase. Pervasive intelligence, that’s some good adjectives, really. But the basic idea is like, you know, it used to be your house connected to my house by the phone line. and then my house connected with that building and hotel by the phone line. That was pretty much it. And then we all got smartphones, so suddenly everybody was connected to everybody. And every building was connected to every building. Well, now it’s gonna be everything is connected to absolutely everything. There’s gonna be sensors and IoT devices and cameras, smart homes, smart shoes, smart underwear. Smart underwear is a real thing. It’s got AI and semiconductors and it connects. everything’s gonna connect to absolutely everything. Your shoes, to your house, your car, to the street, to the street lights, to the sidewalks, everything. It’s just gonna be ubiquitous and then across all of that connected world, you’re gonna have pervasive intelligence because that world connects to the cloud. The cloud is getting much smarter, AI building, and really it’s AI plus cloud is what you wanna think about. Or the better way to think about it is AI plus cloud plus 5G. because that sort of pushes that all out into the system. The low latency, the incredible speed of 5G, which really is incredible. It makes all that computational power and increasing intelligence that’s gonna be up in the cloud and distributed computation, it makes that more accessible. Now some things you’re gonna do down in local devices like cars. So there’s edge computing, there’s 5G, there’s cloud plus AI, that all kind of fits together. But that’s kind of, I think, what we’re gonna see. And, you know, Huawei’s a position against this. They’re sort of, you know, their standard pitch is they are the end-to-end solution provider. There’s some companies that do cloud, Amazon, Microsoft, Google, Tencent, Alibaba, Huawei. There’s some companies that just do the connectivity piece. Ericsson, Nokia. And really Huawei are the big three. And Huawei really does dwarf Ericsson and Nokia. I mean, even their telco business is twice as big by revenue. And then when you add in your other businesses, you’re talking four to five times bigger than each of them. Much bigger, but that’s sort of the connectivity piece. ZTE is in there as well, but obviously much, much smaller. And then you move down to smart devices, smartphones, things like that. Well, then you get a laundry list of Samsung, Apple, many, many others. Okay, now they’re playing end-to-end solutions. We can provide the whole solution, which in certain cases like public cloud is not that compelling of a pitch. As a regular dude walking around with a smartphone, I don’t need an end-to-end solution necessarily. But if I’m a large bank, yeah, that type of pitch is gonna matter. We have to have devices in our. teller’s hands, in our employees’ hands, we have to have our own secure network connectivity, we have to have a lot of AI, we’ve got to make the whole thing secure. So you can see things like financial services, they would go for something like that much more, it makes a lot more sense, the end-to-end solution, the integrated solution. The other industry among others that people talk about is transportation, because 5G has such a low latency. You know, you can’t fly a drone a mile away from your phone with 4G because there’s gaps in the connectivity or there’s a bit of a latency. Well, that’s a problem when you’re shooting a drone across rooftops. But if you have blazing fast 5G with no latency issues, then you can control the drone just staring at your screen. So a lot of that transportation, whether it’s cars on the street, trains, fleets of drones circling around factories, continually scanning for… you know, security, infrastructure, maintenance, things like that. You hear about that sector a lot. People also tend to talk a little bit about healthcare. Anyways, but the whole use cases idea for 5G is still being developed. People are still exploring and then within that you have the sort of end-to-end solution version of that, which would be Huawei’s pitch. Okay, I think that’s all real interesting. That’s been their story for the last couple years. really kind of a lot going on. And then when you take that to somewhere like Southeast Asia, Thailand, the whole competition question gets really interesting, which is always my primary interest. Because here we have, you know, we know who the competition is in Germany, in the UK, in the US. And we know who the competition is within China, mostly Chinese players at various levels of this. But in Southeast Asia and other places, we get both. You can have… Amazon Web Services here in Thailand, which they are. They’re pretty active in Southeast Asia. Google Cloud is also here, but we also have Huawei here. So you have sort of China-based companies and Western-based companies sort of going head-to-head to some degree in Southeast Asia in a way we don’t see in other markets. That’s pretty interesting. And most countries are pretty smart, so they play them off each other, which is the smart thing to do. you know smartphones of both types, 5G, AI capabilities. So that’s kind of an interesting dynamic to watch for. Generally speaking, I tend to be more optimistic about the Chinese companies in Southeast Asia, just because I think they have a very strategic interest in the region, and they have a massive home market. So I think they’re more willing to operate in this part of the world at a loss for a long time than say Microsoft. That’s just an opinion, but that I do tend to think that’s what happens regularly, but we’ll see. Could be surprised. Okay, so that’s kind of your basic background on Huawei. If you want to look on my webpage, I’ve put some links in the show notes for this on other Huawei articles. I’ve written quite a lot about this company. If you go read my one hour China book, one of the chapters has a ton on Huawei’s background. So anyways, there’s a lot there if you’re interested. Pretty fantastic company, really, across the board. I mean, it is a very, very… effective tech leader. Okay, now, so I sat down with Mr. Dung, very, very nice man. Fun, clever, everyone at Huawei’s clever, I mean, let’s not kid ourselves, but really enjoyable. And this is, you know, my two favorite activities in life are reading annual reports and talking with the management of tech companies. And then if I get an iced coffee while I’m doing it, that’s literally as happy as I get. So, you know, always fun for me. Okay, so sort of talked about his background a little bit. And I’ve put this in an article that just went out to the subscribers. I’ll do a public version of that and that’ll get broadcast a bit. But the basic background, interesting guy. I’ve been teaching in China for many, many years, going on tenures, lots of MBAs. And generally speaking, you meet a ton of very impressive people on a… All the time. It’s just all the time. If I have a class of 60 or 70 students at SEABs in Shanghai or Peking University, MBA, 40 or 50 of them, I’m like, man, there’s just some great young folks. I mean, they’re very driven, ambitious, yes, like scarily ambitious sometimes, very organized, it’s just a great group. Now, I mean… I’ve taught in the UK, at Cambridge, and in the US, and other places. So you do meet, you know, good people all over the place. But it doesn’t escape my attention that, you know, the MBAs I’ve had come through China have been a uniquely almost impressive group. And it’s not a small number. I mean, collectively, I’ve probably cut, I don’t know, three to five thousand students, MBA level there. So anyways. When he was talking with him, he kind of mentioned, he went to Tianjin for university, he went to Nankai University there, which is, he’s from Changsha, which is, or near Changsha, which is the provincial capital of Hunan. Hunan is spectacular. That whole region of China is just great. Chengdu is a really fun city now. Chongqing is nearby, spectacular. Hunan Changsha is close by. I mean it’s really a great part. If you go a little bit south you get into Yunnan which is starts to feel a little bit like Thailand, a very tropical Elephants. If you go way now the border, Xishuangbanan, that area, it kind of starts to look a lot like Thailand actually. So anyways, he’s from Zhuzhang, Hunan. He goes to Nankai University up in Tianjin. You know, a business major, business management, you know, my area. seven years there. And so my standard question, which is what I’ve asked the chairman of Huawei, which I’ve asked the chief marketing officer, my standard question is always like, how’d you end up with this company? You know, because that’s honestly what a lot of young people think. They want to know how’d you, how’d that happen? And you know, they always have good stories about joining Huawei and sure enough, he had a good story. Like, I mean, Guo Ping, the chairman, the rotating chairman of Huawei, I think he was the seventh employee of Huawei back in Shenzhen. And he had gone to the University of Shenzhen, moving down there, kind of looking for a job to get settled. And there was some issue where you had to have a permit to stay in the city. And the professor at the university said, we maybe can’t do this, but there’s a company nearby, you might be able to work with them and that might solve some permit issues. And that’s kind of how we ended up talking with Mr. Zhengfei, Ren Zhengfei, the founder of Huawei. That story maybe is not 100% right, but that’s kind of what I was told. Anyways, so I said the same thing, how did you do it? And he said, well, you know, I’m paraphrasing here, obviously. He said, you know, I was getting ready close to graduation, you know, sort of came up, maybe we should interview with Huawei, you know, sort of not last minute, but certainly not, you know, a long-term thing planned out way in advance. And what got his attention, according to him, was just the speed at which they operated. From first interview to second interview, I’m not sure how many he had, but to an offer was five days? And that can be shocking for people, but that is kinda how the company operates, everyone. You see that all over the place. So then he… goes down to Shenzhen, they do the cultural training, the cultural orientation, very important to Huawei. Two weeks, and sure enough, within two weeks, he’s on a plane to the Congo, and suddenly he’s in Kinshasa, working on building their mobile network, and that’s a pretty interesting two-week experience, I must imagine. So he ends up spending about 10 years in Africa, Congo. overseeing multiple countries, generally smaller, and let’s say more difficult, you know, less developed countries. Goes back to Shenzhen, sort of oversees a similar group of countries with that same sort of, either it’s smaller, which creates, has different challenges, or maybe it’s a more harsh environment, less development things. I mean, that’s very different than, let’s say, doing 4 or 5G in Hong Kong or Seoul. It does that and then 2019 is appointed CEO of Thailand and comes out here and You know really? Things look like their move and I sort of looked at you know recent announcements over the last couple years Which was really his time period. I mean they they’ve been building Thailand’s first 4g network, you know, that was 2014 to 2016 that was Huawei But really 2017, 2019, they start doing cloud, they start doing local data centers, establish Asian Academy for training incubation of companies working on the government cloud. And really, the 5G Thailand has been moving particularly fast. I wasn’t totally aware of that. I mean, when people talk about who’s really deploying 5G quickly, generally people point to South Korea. That’s pretty common, that they’re way out front, which is easier when you’ve got a small country. I mean, let’s not kid ourselves. And then China obviously is absolutely blazing with 5G, but it’s a pretty big country. And yeah, according to what I’ve been hearing, Thailand looks like it’s number three in Asia. That’s pretty impressive. And then there’s some other countries around the world that are moving pretty quick, but yeah, that was kind of interesting. So, and let’s say we could say this all. You know, they’ve had summits, the Cloud Connect, which was a couple months ago here in Bangkok, I went to the 5G Ecosystem Innovation Center. And then in 2021, the Huawei got the Digital International Corporation of the Year Award from the Thai Prime Minister, and it was Able who received the award from the Thai Prime Minister. So I mean, that’s pretty impressive stuff. So what are the sort of four big projects? that they’re working on and maybe is a decent proxy for the development of digital infrastructure in Thailand and Southeast Asia. And now this is me paraphrasing talks Abel has given or interviews he’s given in others, releases, things like that. So let’s call this my interpretation or my outsider’s assessment and or understanding of what they’re doing, which is not the same thing as what they would probably say. So, and again. This is not their opinion, this is my opinion, but this is sort of the outsider’s view from let’s say a close follower of the company, which would be myself. Now, the four things they seem to mention in talks, publications, things like that, are basically going big in 4G, cloud with local data centers, and that part’s important, digital power, and then digital talent, those four. Now the digital power one, I think that’s, we can sort of take that outside of the idea of what is the next generation of digital infrastructure, because that doesn’t directly drive that. It’s interesting business. But they, you know, they do have power projects. I wasn’t really that aware of this, but it’s been around for quite a long time. They’ve more recently put it into its own business unit. but they’ve been selling basically power products for a long time, and that makes sense because they’ve been putting base stations up around the world for decades. Well, they all have batteries. So there’s this idea of modular power. They’re sort of doing data centers as well. Well, again, data centers have, you know, significant power requirements. And then they also have what they call Smart Volt. photovoltaic, which is sort of, you know, the inverters when you put up a solar panel, the power comes in and then the inverter converts it into electricity, things like that. So you have this sort of, you know, expertise in batteries and then increasingly solar. And then all of that is becoming digital. So it starts to become digital power, smart power, as opposed to just like just basic power stuff. So we talked a bit about that and I’ve been reading about what they’re doing and that’s actually kind of you know, I wouldn’t put that as hey, this is gonna Give rise to a whole slew of new digital businesses. You know, it ain’t it’s not like 5g or something But it’s pretty neat. Um, you know, they They said they’ve been number one in market share for solar and solar inverters globally for quite a long time The number I read was 23 of the market very significant in Thailand, which makes sense because it’s a very hot, very sunny country, but the majority of people have solo houses. So you can put solar panels on the roof, capture the energy, use the smart PV, convert it, store it, maybe sell it back to the grid. I think that’s doable here. And so it was kind of this discussion of, this has maybe been a B2B business for a while, but now you sell this to. offices, buildings, hotels, things like that. And now maybe it’s going to B2C. That’s kind of a nice idea. It’s pretty interesting. I’m gonna keep an eye on that. The big topic obviously is 5G. I mean, that’s kind of, you know, the telco network, the mobile networks, that’s obviously the big one. And you know, 5G deployment in Asia. It looks like Thailand’s in the top three, top four. The numbers I’d sort of… looked up were 20,000 base stations, 5G base stations deployed in Thailand. Four plus million users signed up for various services to use them. Yeah, those are pretty big numbers for a country of 60 plus million people, that’s interesting. But when you’re looking at sort of the race for 5G, okay, the number of people tend to look at is how many base stations deployed. And that’s actually kind of a big deal. Like people, you know, what’s the difference between 5G and 4G? 5G is much, much faster, obviously. Low latency, which as mentioned is important, but it doesn’t go through walls terribly well. It’s not like you can have one tower that just broadcasts into every building. No, I mean, you kind of have to have devices in sometimes every room. because it won’t go through the walls as well. So you end up putting these devices everywhere. I mean, it’s, you know, when people talk about, oh, how many base stations to play, keep in mind the structure is not the same as 4G. There’s a lot more devices that have to be deployed in a geographic area to get 5G coverage. But generally, okay, you look at the base stations deployed, you look at the number of subscribers using the service, but really that’s fine, that doesn’t. That’s not generally what I’m looking for. What I’m looking for is the degree of industry adoption and the number of sort of pilot programs and use cases being deployed. you know, how many manufacturing facilities are putting this in? you know, agriculture, things like that. It’s more of the industry adoption that is gonna change things as opposed to the fact that we can all watch videos much faster on our smartphones, right? So it’s that industry adoption question. And then the other thing is, okay, you’ve got these new capabilities. What kind of pilot programs are we seeing? What types of new use cases are people coming up with we haven’t seen before? Because that’s when this really gets interesting. in my opinion. And so I was kind of curious how this is happening in Thailand, what’s going on, and you know it’s going to be a major company like Huawei with this sort of technical ability, both in design, manufacturing, and deployment, but it’s also going to be cooperation and coordination with the government. And it looks like Thailand’s sort of firing on all cylinders, that’s as far as I can tell. You know there is a 5G committee chaired by the Prime Minister. Well, that does 30, I think the number was 30 to 40 pilot programs are being tried around the country. So, you’ve got sort of all the right pictures. And pilot program could be, let’s put 5G into a university hospital. Let’s put it into this type of manufacturing facility. Let’s do it in an automobile manufacturing facility, which is obviously a big deal in Thailand. All of these sort of projects are what I’m sort of trying to get more detail on. And I did ask, okay, what industries are showing the fastest adoption? And I kind of heard what I expected to hear, which was retail, e-commerce, obviously, financial services, not a big surprise, and then sort of internet cloud native companies, basically internet companies. Okay, I mean, we see that same pattern in a lot of countries when it comes to 5G. Okay, interesting stuff. That’s sort of, let’s call that the big next step. Second big project, or I guess this will be third big project, data centers, cloud. Obviously 5G connects to cloud. You know, you really want 5G plus cloud plus AI. I mean, that’s the equation you want. So, okay, interesting as I mentioned because cloud in Southeast Asia is this sort of, you know, competition, really development between. There is this competition aspect. Amazon Web Services, Google Play, Azure, Huawei, Tencent, Alibaba. Okay, but people aren’t really fighting for market share as much as everyone is fighting to expand the market. You know, it’s all about growing the pie more than taking share. I mean, trying to get all the businesses, especially SMEs, smaller companies, as well as large companies, moving their operations to the cloud. I mean, that’s really the… the big opportunity. So we’re not sort of at the, I mean, everyone likes to follow these numbers. Who’s got what market share? But really the thing is how fast is the whole pie growing? And then it’ll come down to a handful of players. Will it be six? Probably not. It’ll probably end up being three in Southeast Asia. But those three may vary a bit country by country. Now within that story of cloud plus AI. Okay, you can see that Huawei has one, it can pitch the cloud plus AI plus 5G because it’s got the end-to-end solution thing that could be compelling. The other differentiator you hear from them, among others, is local data centers, that they’re the only cloud provider that’s building local data centers in Thailand. The first one was built in the Eastern Economic Corridor, the number two and number three, Bangkok, apparently. So that’s interesting, because that gets to this idea of, you know, sensitivity of cloud. Why would you want data to be localized? Well, I think we’re gonna see this in a lot of countries that they’re gonna start buying infrastructure from various vendors and partners, but they’re gonna want a lot of the data to be local. Keep it here under control of the local country, and especially for things like, let’s say, financial services. So I thought that was a very compelling thing. Why would that be better? Well, comfort by government, by industry, reliability, decreased latency, data consistency, compliance with various regulatory issues. I mean, there’ll probably be a lot about that. Anyway, so I thought that was interesting that that was the approach they took, but okay. So if you’re looking at cloud, you’re looking at data centers, that’s interesting. But the other… side of that coin is always developers, right? Who’s writing apps that run on this system? Cloud is a little bit like an operating system. You know, it’s not just about storing your data, it’s storing your data and then being able to do various things with it. Now I’ve talked about companies like Snowflake that are sort of sitting on top of the major cloud providers like, let’s say AWS, and providing a lot of those functionalities. So… It’s not going to be like all the functionality, all the apps, all the developers have to be tied to one cloud provider. It can be a mix like Huawei plus Snowflake or Google Cloud plus Snowflake, but then there’s going to be apps. So you always want to look at sort of the app developers and how they’re working with that community. 2021, they mentioned that they’ve started to sort of reach out. They’ve probably been doing this before. to developers in various groups to compete in competitions for app development 100 plus developer types participated in their program in 2021 and That brings me really to the fourth big project, which is really the one that cuts across all of these Which is you know, the story of a company like Huawei was, you know a equipment manufacturer Lots and lots of manufacturing capabilities, design, R&D, and then a very effective sales force that went globally, went global. You know, that was a lot of the story, and then it sort of became, okay, now it’s manufacturing plus software and services. More R&D, it wasn’t just dumb things we were producing in factories, they were smart and digital and connected. Okay, they kind of moved to there. But really, more and more, the story is about human capital. and digital talent. And we don’t just need machines and we don’t just need machines that run software. We need people that can develop applications and functions for these machines. So digital talent within Thailand is, that’s a big deal. And then it’s also this idea of the developer ecosystem, industry partnerships, university partnerships, across Thailand, Southeast Asia. Really, I mean, that human capital piece, the digital talent of Southeast Asia, it’s a big, big deal. And it kind of cuts across everything I just said. So, Huawei Thailand, 2,800 people. on their staff, you mentioned 80% are engineers, 85% are Thai nationals, that’s very important. And that’s actually not terribly new. You know, Huawei came to Thailand in 1999. And within a couple of years, they started doing various training programs for, you know, at that point, you’re deploying a lot of equipment, fixed line networks. Well, that means a lot of maintenance and servicing and training and things. So they, you know, they’ve been… training people in Thailand for almost close to 20 years now. But it’s become a much more important and complicated thing as you go into digital. And that’s probably in my mind when I look at the rate of development of digital infrastructure in Thailand versus Cambodia versus Malaysia versus Singapore versus Indonesia. The two factors I tend to focus on most as determining the rate of development, who’s gonna be fast, who’s gonna be slow. is the ability to work with the government, some sort of structure that works, which I think Thailand has, China definitely has, South Korea has it, but in other countries, it’s not quite clear how to get things done, how to move forward, regulations have to fit, have to make sense. So it’s that government plus industry piece. And then the other one is the sort of how much digital talent is there in the country? You know, we talk, is it very, very rare? Is it very hard to get people? Or have universities been churning out people in large numbers who are then going to work at leading companies like a Microsoft, like a Huawei, where they get really advanced training? You know, that’s kind of what I look for. Digital talent plus an effective sort of government industry collaboration in these things. And Huawei’s been doing some pretty compelling stuff here. I think they’re… They have the ACN Academy, which is based in Bangkok, but it’s really, there’s centers around Southeast Asia. They coordinate with the Ministry of Labor, Ministry of Commerce, things like that. There’s lots of partnerships with the universities. They provide certificates, but really they’re training people. And a decent number of those trainees probably end up joining Huawei. And I think the number I saw was 41,000 people have gone through some degree of training with the Academy. Not sure if that’s just Thailand, but that could be a lot of SMEs. It could be individuals. The other big lever that got my attention was the 5G EIC Ecosystem Innovation Center, which is so, you know, this is in coordination with the Digital Economy Promotion Agency, I believe is the name. But this is, again, training, but also incubating small companies, getting them hooked up and again, developing. talent in the country. And it was both of those are pretty compelling. That’s kind of what I’m keeping an eye on, which brings me, so let’s say that’s a decent proxy for what’s gonna happen in digital infrastructure in Southeast Asia. The other question I started with, so this will be the last question is, okay, so what digital businesses should we pay paying attention to such that this infrastructure, they may give rise to these types of companies? Well, the nice thing about this is you can always just look to China. You can just kind of see what’s happening there and copy it. And what are we seeing in China? We are seeing a whole host of AI companies. That’s really what we’re seeing. We’re seeing companies taking advantage of fairly dramatic increases in computing power that can now be connected to in the cloud with fairly lightning fast speed. So it’s sort of AI first companies, computationally intensive companies. Second to that, there’s some interesting stuff floating around about transportation, trains, things like that. Virtual reality or augmented reality, gaming is actually quite interesting because if you have a smartphone, let’s say in China and you’ve got 5G, you can basically put on a virtual reality headset. And I’ve tried this and you’re sitting on the subway and it plugs into your phone and the connection is so fast you can do VR gaming while you’re sitting on the metro. So that kind of lightning speed, I think we’re gonna see that whole AR, VR, metaverse go right into people’s phones using 5G and then, you know. All the players you expect would take advantage of that. The gaming companies, the e-commerce companies, the media and entertainment companies. So I’m mostly looking for those players to move first. After all of those, I’d be looking at financial services and banks to really start deploying probably private networks that allow them to do things they couldn’t do before. Privacy, securities are such big issues for them. So that’s my short list, but as always, at best, I’ll be 50% right, because 50% of it’s always a surprise. There’s always stuff nobody, at least I don’t see coming. Nobody saw bike sharing coming, nobody saw digital retail coffee shops coming. I mean, it’s always surprises all over the place, which is great. So if I get it 50% right, I’ll feel pretty good about myself. Anyways, that’s basically the content for today. The three ideas take away, economies of scale, sustained innovation as a digital marathon, and then role of the state. And all of those are listed under the concept library. You can read other stuff about them. As for me, it’s just been another good week in Thailand, been working like crazy, writing almost all day long. I’ve got this second book done now. So that’s just been cleaned up, that’ll go out shortly. And then quite a lot of talks coming up from working on that. Yeah, but it’s eight, eight in the morning till about 11 at night. I’m reading and writing almost without break for a week or two. So I’m kind of mentally getting tired. That wears me down a little bit. But I always feel pretty good about it. So that’s fine. Let’s see, fun stuff. The Spider-Man movie. That was a really good movie. Holy cow. It was shockingly good for a movie about, you know, Spider-Man and people in tights and Green Goblin. The funny thing about the part that kind of surprised me, I guess, was it’s kind of an emotional film and I got choked up a couple times and then I’m like, why am I getting choked up about a superhero movie with people in tights? You know, it’s such a ridiculous thing to get choked up about. But there was anyways, great movie. I was kind of getting, I mean I’m a huge like Avengers Marvel fan. I grew up reading all this stuff in comic books and you know so I’m just happy as can be that now these little comic books I used to read as a kid are like the biggest entertainment properties on the planet. That’s really funny. But yeah, it’s, I was kind of disappointed in phase four, we’ll call Marvel, you know, Cinematic Universe phase four. It really has, I think in my opinion, it sucked. Like, Avengers Endgame was great, that was all good. And then it was like Black Widow and Shang-Chi. They were all like at best mediocre. And this is like, I was getting kinda down on it. And this is like, okay, this was a great one. Like, so I was, looks like Marvel is back with that. Yeah, I highly recommend it if you haven’t seen it. But don’t, don’t listen to any spoilers. because there are big spoilers. If you go online and look, it’ll ruin the movie for you. So don’t do it, because there’s kind of some big ones. Anyways, that was pretty good. OK, I think that’s it for me. Hope everyone is doing well, and thank everyone at Huawei for inviting me out. That was spectacular. So much fun. I just have such a good time talking with people about all this stuff. I really enjoyed it. So thank you to everyone there. But that’s it from me, everyone. Stay safe and I will talk to you next week. Bye bye.