How China Won the Car Industry

Summary

Podcast Summary: "How China Won the Car Industry"

Podcast: What's Your Problem?
Host: Jacob Goldstein
Guest: Michael Dunn, CEO of Dunn Insights
Date: July 23, 2026

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Episode Overview

This episode explores how China transformed from a peripheral player to the world leader in the car industry. Host Jacob Goldstein interviews Michael Dunn—an expert with firsthand experience in the Chinese auto sector since 1990—to uncover the drivers behind China’s meteoric rise, the strategic choices powering its dominance, the implications for America, and the lessons the U.S. might draw from China’s industrial strategy. The conversation covers history, policy, technology, trade dynamics, national security, and the future of mobility.

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Key Discussion Points & Insights

1. China's Global Auto Triumph: Where Things Stand Now

• Chinese Carmakers Take the Lead

  • Xiaomi, previously known for phones, now produces stylish, well-engineered electric cars (e.g., the XU7 and YU7) starting at ~$32,000.
  • BYD, China's leading EV maker, releases innovative high-end models like the Yangwang U8, featuring abilities such as rotating in place and limited amphibious driving.
    • "[The car] rotated 180 degrees... turned on its axis. Unbelievable." – Michael Dunn (06:10)
  • Chinese cars are not just about low price—many rivals are now considered world-class in design, innovation, and features.

• Exports Boom

  • In just five years, China’s auto exports exploded from 1 million to 12 million vehicles per year—doubling Japan’s peak, dwarfing the U.S.
    • "China now accounts for almost 40% of global automotive production." – Michael Dunn (30:23)

2. A Brief History: China’s Car Industry Transformation

• Starting Point: 1990s Obscurity

  • Private car ownership was for the elite; domestic cars were outdated copies.
    • "Pitiful, just pitiful... The rear view mirror was assembled facing outward because the person making it had never driven." – Michael Dunn (07:51, 12:04)
  • Deng Xiaoping, inspired by Japan/US, tied national growth and sovereignty to building a self-sufficient auto sector.

• Strategic Joint Ventures

  • Foreign carmakers could access the Chinese market—but only by partnering with Chinese firms and handing over at least 50% ownership.
    • "We'll invite automakers to come in, but there's a caveat... China will always hold 50% or more." – Michael Dunn (10:20)
  • VW and GM (Buick in particular) thrived; foreign brands dominated symbolic, high-profit segments in the 2000s.
  • By the 2010s, China was the largest auto market—yet mostly making foreign-branded cars.

3. Pivot to Electric Vehicles (EVs): China’s Gamechanger

• Motivations for Change

  • National frustration that despite scale, China lacked true homegrown car brands and depended heavily on imported oil.
    • "Every time we learn to make a better engine, Audi or BMW makes an even better one. What can we do to change the game?" – Michael Dunn (14:19)

• Early Visionaries

  • Wang Gang (ex-Audi), later Minister of Science & Tech, advocated (in a secret 2000 white paper) for an all-in national pivot to EVs.
    • "[He] wrote a white paper and said, the future for China is electric and here's how to get there." – Michael Dunn (16:00)
  • The “Made in China 2025” plan (early 2010s) threw immense resources behind battery and EV tech to leapfrog the West.

• Painful, Subsidized Growth

  • For most of the 2010s, Chinese consumers were skeptical—EVs had limited range, little prestige, and were seen as “double losers” (no status, unreliable).
    • "For most of the 2010s, that policy really struggles." – Michael Dunn (19:10)
  • Government spent subsidies at a scale comparable to oil imports, risking economic strain.

4. Tesla’s Arrival: The Catalyst Moment

• Red Carpet for Musk

  • Unlike others, Tesla was allowed to wholly own its China factory.
    • "You can have 100% ownership, no joint venture. You're in charge." – Michael Dunn (21:21)
  • Tesla’s Shanghai plant went live late 2019/early 2020, just as COVID hit—but demand exploded anyway.
  • Tesla’s mix of style, over-the-air updates, and tech flipped consumer perception overnight, serving as a “template” for local upstarts.

• Instant Knowledge Transfer & Local Response

  • “As soon as Tesla sets up operations in China, everything it knows will... leak to Chinese automakers... overnight.” – Michael Dunn (22:00)
  • By 2023, local brands had leapfrogged, becoming global competitors.

5. The 2023 Shanghai Auto Show: Symbolic Tipping Point

[Timestamps: 23:58–26:37]

• The moment global industry figures realized the reversal—Chinese brands center stage, foreign automakers relegated.
  • "'It is a shock. Wow. The Chinese have taken over... it's the end of the foreign automakers in China.'" – Michael Dunn quoting Klaus Meyer, ex-Mercedes China chief (24:20)
  • Marked the arrival of a confident, innovative Chinese car industry.

6. Why Can’t You Buy Chinese Cars in the U.S.?

[Timestamps: 31:45–33:31]

• Strict 100%+ tariffs and technical regulations (esp. data privacy/security) keep Chinese cars out of the U.S.
  • "If a vehicle features any Chinese hardware or software... it cannot legally be registered here." – Michael Dunn (32:02)
• Ostensibly about national security (data, surveillance risks), but also a protectionist shield for domestic players.

7. The Broader War: EVs, Gas Cars, and Subsidies

• China’s Play is Not Just EVs
  • Only half of exports are electric; Chinese competitiveness (and threat) spans all categories.
    • "They're competitive across the board now." – Michael Dunn (34:30)
• Chinese Subsidies: Unprecedented Scale & Aggression
  • U.S. subsidies pale in comparison to the industrial might, low-interest loans, and land/energy advantages China supplies home industry.
    • "Subsidy doesn't begin to describe the ferocity with which the Chinese government will say, 'That's a national objective. We're going to win.'" – Michael Dunn (36:05)

8. National Security: Why Car Industry Still Matters for America

[Timestamps: 37:28–39:44]

• Car manufacturing capability underpins military logistics, cutting-edge technology, and battery/AI innovation essential for future defense.
  • "If we forfeit the capabilities of having our own auto industry, we suddenly become very vulnerable to China in terms of our own national defense." – Michael Dunn (38:37)
• Battery manufacturing (70% controlled by China) is a strategic “chokepoint” for both industry and war.

9. Lessons and Strategic Debate: Should We Even Compete?

• Short-Term Cheap Cars vs. Long-Term Vulnerability

  • Accepting cheap Chinese cars risks killing U.S. industry (and future innovation) for fleeting consumer benefit.
    • "It's a short term gain for the United States at the expense of our long term viability… If America just outsources... innovation in my company stops." – Michael Dunn (37:28, 47:17)

• How Should the U.S. Respond?

  • Launch a national campaign: public must see cars/auto industry as core to liberty, prosperity, defense.
  • Focus future U.S. efforts on the “West Coast” auto industry—tech, software, autonomy (Tesla, Waymo, Uber) rather than old-line Detroit manufacturing.
    • "The heart of the car is software and the computer. This is where the west coast thrives." – Michael Dunn (42:50)
  • Whoever wins autonomy will win the global car industry; U.S. still has a lead (e.g., Waymo).

• Broader Cultural Lessons

  • "[China] doesn't change for anybody... We have to learn to compete when we're not the biggest, and have to pursue a 'mission' like the Manhattan Project or Sputnik moment." – Michael Dunn (47:36, 48:33)

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Memorable Moments & Notable Quotes

• BYD's Spinning Car:
  "[I] just hit a button and the car rotated 180 degrees... Unbelievable." – Michael Dunn, 06:08

• Chinese Production Numbers:
  "This year it'll be 12 million [cars exported]. That's unprecedented in the history of the automobile." – Michael Dunn, 30:01

• Tesla’s Learning Effect:
  "As soon as Tesla sets up... everything it knows will... leak to two Chinese automakers... overnight." – Michael Dunn, 22:00

• On American Complacency:
  "We don't see... where is the Chinese car here?" – Michael Dunn, 30:53
  "I would say Detroit won't play the leading role if we hope to compete against China. We need the brains... of West coast companies." – Michael Dunn, 43:36

• Data & Security Concerns:
  "A mobile car that's vacuuming up massive amounts of data... definitely could be weaponized, and we shouldn't be naive about that possibility." – Michael Dunn, 33:02

• Subsidy Ferocity:
  "Subsidy doesn't begin to describe the ferocity..." – Michael Dunn, 36:05

• Innovation & Manufacturing:
  "...when I outsource, that innovation in my company stops." – Michael Dunn, 47:17

• China's Enduring Worldview:
  "Chinese people see foreigners as either gods or barbarians, never as equals... In my early years foreigners were gods. Now... barbarians." – Michael Dunn, 56:43

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Timestamps for Key Segments

• [03:52] – Xiaomi, BYD, and high-end Chinese car capabilities
• [07:21] – The pitiful state of Chinese cars in the 1990s
• [10:20] – Deng Xiaoping’s joint-venture strategy
• [14:19] – The quest for indigenous car brands, shift to EVs
• [16:00] – Wang Gang’s secret white paper & EV vision
• [19:10] – Subsidy struggles and consumer skepticism
• [21:21] – Tesla gets the “China red carpet”
• [23:58] – The 2023 Shanghai Auto Show: tipping point for foreign carmakers
• [30:01] – Explosive export growth: China vs. Japan, U.S.
• [32:02] – Tariffs and the U.S. blockade on Chinese cars
• [36:05] – Chinese subsidies vs. U.S. subsidies
• [38:37] – Car industry’s role in national defense
• [42:50] – The auto industry’s future on America’s West Coast
• [47:17] – The cost of outsourcing innovation
• [56:43] – Chinese attitudes toward foreigners

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Lightning Round Highlights

[Timestamps: 52:41–58:02]

• Chinese cars often have karaoke apps; Michael’s favorite song: a classic love song by Teresa Teng (“How deeply do I love you? As deep as the fullest moon.”)
• Driving in China: “Absolute chaos... New York looks like a kindergarten compared to China.”
• Literary favorites: Tang dynasty poet Li Bai, Lu Xun (20th-century social critic).
• Observing generational shift: Younger Chinese (“lie down” generation) appear less driven, potentially changing the country’s drive for dominance.

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Lessons & Takeaways

• The “Chinese car miracle” grew out of deliberate, state-driven policy aimed at national strength and self-reliance—embracing joint ventures to soak up foreign expertise, then ruthlessly pivoting to new technologies (EVs) to leapfrog the West.
• Tesla’s presence in China was a decisive catalyst, accelerating local R&D, consumer acceptance, and innovation.
• U.S. policy to block Chinese cars from the domestic market has put off difficult choices but cannot stop the global spread forever.
• America’s long-term competitive edge must come from leadership in software, AI, and autonomy—not old-school manufacturing muscle alone.
• Innovation requires retaining industrial capacity onshore; outsourcing lessons have made China the world’s manufacturing powerhouse.
• Ultimately, the U.S. needs a “mission” to revive and modernize its car industry, learning from China’s ruthless focus and state-market synergy.

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This summary captures the episode’s essential arguments, quotable moments, and unique flavor, offering a deep, accessible insight for those interested in cars, geopolitics, and the forces shaping our technological future.

Transcript

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[Jacob Goldstein]

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[Jacob Goldstein]

Pushkin over the past few years, there's

[Producer/Interviewer]

been this just incredible transformation in the Chinese car industry.

[Jacob Goldstein]

And this transformation has been basically invisible

[Producer/Interviewer]

to those of us in the United States because the US has essentially banned Chinese cars.

[Jacob Goldstein]

What's happened is this. Chinese carmakers spent decades as sort of

[Producer/Interviewer]

marginal players in the global car industry.

[Jacob Goldstein]

But now, kind of all of a sudden, Chinese carmakers are the biggest car

[Producer/Interviewer]

exporters in the world by far.

[Jacob Goldstein]

And they're not just selling cheap cars. They're selling some of the best cars

[Producer/Interviewer]

on the planet to buyers in countries around the world.

[Jacob Goldstein]

I'm Jacob Goldstein, and this is what's yous Problem?

[Producer/Interviewer]

My guest today is Michael Dunn. He's the CEO of Dunn Insights, a company that consults on the future of cars. Michael grew up in Detroit. He studied Chinese at the University of Michigan, and he's been consulting to the Chinese car industry since 1990.

[Jacob Goldstein]

If I were doing our usual, you know, problem framing for this episode, I'd say something like, Michael's problem is this. How can the United States catch up

[Producer/Interviewer]

with the Chinese auto industry.

[Jacob Goldstein]

And we do talk about that later in the show. And we talk about why, in Michael's view, having a robust auto industry is

[Producer/Interviewer]

just essential for the United States.

[Jacob Goldstein]

But to be honest, largely, I wanted

[Producer/Interviewer]

to talk to Michael because I'm really

[Jacob Goldstein]

curious about how this happened, about how

[Producer/Interviewer]

China suddenly emerged with this world beating auto industry. And Michael was a great person to

[Jacob Goldstein]

tell the story because he was there to see it. But honestly, to a large extent, I was just curious about how all this happened, about how China suddenly emerged with

[Producer/Interviewer]

this world beating auto industry.

[Jacob Goldstein]

And Michael was a great person to tell the story because he was there

[Producer/Interviewer]

to see this transformation.

[Jacob Goldstein]

To start, I wanted to get a

[Producer/Interviewer]

sense of where things stand today, where we are now.

[Jacob Goldstein]

So I asked Michael to tell me

[Producer/Interviewer]

about a few of the leading Chinese carmakers.

[Michael Dunn]

First one to know is a company called Xiaomi. Xiaomi in Chinese, of course means millet, as in rice millet. What kind of name is that? You're showing up in your millet. What? So there's some history there. Mao Zedong famously said, rifles and rice millets, that's the People's Liberation Army. And so as a tribute, this founder, Lei Jun, who's the CEO and founder of Xiaomi, one of the biggest handset makers in the world.

[Jacob Goldstein]

Phone makers.

[Michael Dunn]

Yeah, phone makers. Five years ago said, we're going into cars and Today they manufacture two models, the XU7 and YU7, that look like a hybrid of a Porsche and a Tesla Model 3. Beautifully designed. He recruited the best designers out of Germany. It's got a battery powered vehicle, really good looking, and it starts at like $32,000. It's a total unbelievable shocker. Jim Farley at Ford drives one.

[Jacob Goldstein]

Wait, Jim Farley, the CEO of Ford drives a Chinese car? A Chinese car that, by the way, you basically can't get in America.

[Michael Dunn]

Right? That's just sacrilegious. As a native of Detroit, he's crossed a line. What is he doing?

[Jacob Goldstein]

What is he doing?

[Michael Dunn]

He went to China, he saw one and he said, I need to drive that thing to figure out just how good they are and why they're better than we are. And so he drove one, at least for six months. He may still have it. Said he didn't want to give it up.

[Jacob Goldstein]

Is it right that there's a high end Chinese car that can rotate 360 degrees in place and operate in the water like a boat for short distances? Is that true?

[Michael Dunn]

This is not science fiction. That's absolutely right. Byd, which is China's Leading EV maker recently launched a high end brand to compete against Range Rover. And it's called the Yangwang or Look up or aspire. The Yangwang U8. I've been in one here in California. Drove into a parking lot, got to a dead end. You know, the kind where you have cars parked on the right and left. How do I back out of here? No, no backing out. Just hit a button and the car rotated 180 degrees.

[Jacob Goldstein]

It turns on its axis.

[Michael Dunn]

Yeah, right, like in place. It spin, spinned around and then I'm facing outward. Unbelievable. I haven't had the courage to go in the water with one yet.

[Jacob Goldstein]

You didn't just drive into the Pacific Ocean and see what happens.

[Michael Dunn]

Someone else can do that test. But the point is that Chinese automakers have really come up in terms of their capabilities, their R and D, their innovation. They're not just delivering affordable vehicles, they're delivering world class products that have all the latest features. So this is what keeps the boardrooms in Stuttgart and Nagoya and Detroit up at night. This is real. This is existential, as Jim Farley said.

[Jacob Goldstein]

So I want to talk a lot more about what's happening now and how carmakers in the US and elsewhere, and for that matter, policymakers in the US and elsewhere are responding and should respond. But I want to spend some time talking about how China got here. And I'm particularly interested to talk with you because as I understand it, you first went. Was it in 1990, you first went to China and worked with the car industry in 1990, is that true?

[Michael Dunn]

That's right. Days after graduating from Michigan with a degree in Chinese, I got a $3,000 grant to start a company in China. 3,000 bucks. So I bought an airline ticket, an Apple computer and I was gone.

[Jacob Goldstein]

Went a little farther in 1990 than it goes today. And so what, Tell me about the car industry as you encountered it there in 1990. What was going on with Chinese cars at the time?

[Michael Dunn]

Pitiful, just pitiful. You wouldn't like. Okay, first of all, I got there and I announced I'm here to help American companies sell cars to the Chinese. And my Chinese friends on the ground said, well, that's ridiculous because nobody here owns a private car. We don't manufacture our own cars. We don't have the incomes. What are you doing here?

[Jacob Goldstein]

Yeah, I mean, China was a profoundly poorer country at that time. Right. The economic rise of China over those 35 years has been maybe unprecedented in the history of the world. Certainly like nothing else over that time. Yeah.

[Michael Dunn]

Give a Little color to it. So the very first car I did ride in was called the Shanghai 760. It was powder blue, bench seats, no seat belts, big steering wheel. And I thought, wow, this reminds me of something from my earliest childhood in the 1960s. Well, it turns out the Shanghai 760 is a replica of a Russian car that was a copy of a German car from 1955.

[Jacob Goldstein]

Wow. And that's what they were still making in China in 1990.

[Michael Dunn]

That's right. Only a few thousand of them and only for senior party officials, or in my case, the president of the university where I was studying in China got one to be driven around in. That was it one car in the whole? Basically.

[Jacob Goldstein]

So it was an extremely high status thing to have a car that was built on a 40 year old car at that time.

[Michael Dunn]

Extraordinary. You drive in a car, you ride in a car more often. You are elite. And the common person in China has no hope of riding in a car, let alone owning one. Now, China looked around. Deng Xiaoping was a leader and he's a very pragmatic guy. He famously said, I don't care if the cat is black or white, if it catches a mouse, it's a good cat.

[Jacob Goldstein]

This is him pivoting from socialism to

[Michael Dunn]

capitalism in so many words without saying it. Without saying the word capitalism. Yeah, let's just be, let's just be smarter as a nation. So how did, what did he set out to do? He said, the way we're going to get richer. He traveled to Japan and the United States and he saw these two economies are booming, very wealthy, and they both have powerful auto industries. We want that too. So how do we get one? We have nothing. We have no capital, no know how, no management expertise, no technology, no market. How do we get going? So he said we'll devise a strategy called the joint venture strategy. We'll invite automakers from around the world to come into China and they'll have access to potentially the biggest market in the world. But there's a caveat. We, China will always hold 50% or more of those companies that are investing in. So they have to joint venture and they have to give 50% ownership to a Chinese partner.

[Jacob Goldstein]

How does that fit with this country where essentially nobody can afford a car? Like, what is the incentive for automakers to come in if nobody can afford a car?

[Michael Dunn]

Anyway, it was all about this enticing picture of the future. We're not there yet, but look what happened with Japan, look what happened with Korea. China's opening up and Reforming, and we're going to allow some profit making. You guys come in and the first one is going to have access to the biggest potential market in the world. It's all a promise of the future.

[Jacob Goldstein]

I've heard you talk about what it was like at Chinese car factories at that time. When you went in, what was it like?

[Michael Dunn]

Wow. Early days, I was at a company called Cherry, which today is China's leading exporter, ships of more than a million cars around the world, including to Europe, uk, Australia. But at that time, the manager said, I want you to walk the line with us. We have real quality issues. And I said, what kind of quality issues? He goes, well, so people here are so unfamiliar with cars that, for example, you see that rear view mirror on that car? Tell me what's wrong with it? And I looked closely and I look, oh, okay. The rear view mirror was assembled facing outward.

[Jacob Goldstein]

So you looked at it. If you were driving, you wouldn't see the mirror.

[Michael Dunn]

No, you don't see the mirror. The mirror is in the correct location, but it's facing outward because the person

[Jacob Goldstein]

making it has never driven, probably has never been in a car.

[Michael Dunn]

No clue.

[Jacob Goldstein]

No clue.

[Michael Dunn]

So that's one small example of the kinds of quality issues they had. How to assemble a car when we've never driven one. We don't know what that looks like.

[Jacob Goldstein]

So, okay, so Deng Xiaoping sets up these rules. We're gonna build a car industry using foreign know how. By having foreign companies come in and do joint ventures.

[Michael Dunn]

Exactly.

[Jacob Goldstein]

And that in fact happens. Lots of companies do it.

[Ben Moore]

Right.

[Jacob Goldstein]

Volkswagen does it. Audi becomes the high status car in China. What's the big inflection point after that? Like, obviously, China's economy grows. People get cars. People around China are driving Audis. And there's a GM brand, right? Is it Buick that's big in China?

[Michael Dunn]

Yeah, sensationally popular. Just everyone wants a Buick.

[Jacob Goldstein]

And we're talking like turn of the century.

[Producer/Interviewer]

Now.

[Jacob Goldstein]

2000 is where we are in 2000,

[Michael Dunn]

starting in the 2000s. So think about it. 2000, 2010, you go from less than a million cars a year sold in China to becoming by 2010 the largest car market in the world, far surpassing the United states. Buick, selling 80% of their worldwide sales, are now in China, making lots of money. The president of GM China at the time, I said, how is business? He said, we're making more money than God. So you got Chinese consumers loving. Buicks are building a ton of them, selling them faster than they can build them and making big profits on it. So all is good for Western auto. As you mentioned, Audi was super, BMW, Mercedes come in. It's a party for Western automakers. Yeah. And then, but for the people in Beijing, who, you know, Deng's successors. Yeah. They're looking around saying, wait a second, we're the largest market in the world. We produce more cars than anyone else. But where are the Chinese cars?

[Ben Moore]

What?

[Michael Dunn]

This is not acceptable. All this money going to the foreigners and the joint ventures. And oh, by the way, we now import $100 billion worth of oil a year.

[Ben Moore]

Yeah.

[Michael Dunn]

This is a problem. What are we going to do about it?

[Jacob Goldstein]

Just to be clear, why is it a problem to import $100 billion worth of oil every year? I mean, certainly they have a lot of exports. They have plenty of capital to buy the oil.

[Michael Dunn]

Yeah. They don't like the idea of being vulnerable to outsiders. This goes back hundreds of years in Chinese history. We don't want to be vulnerable in any way. And also Chinese, whenever possible, they don't like to spend money outside their own country. So they look around and they go, we're vulnerable on the oil front. We don't want to get into Mideast quagmires like the United States has done. Let's avoid that mistake. And then as a point of national pride, why is it that we can put rockets into orbit, but we have a nuclear bomb, but we don't have our own cars? This has got a little bit of a national embarrassment. And so the brightest minds in Beijing looked around and said, look, we've been playing a game of catch up with the west on internal combustion engines. Every time we learn to make a better engine, Audi or BMW or Toyota makes an even better engine. And Chinese consumers don't like Chinese brand. What can we do to change the game? So you know the answer.

[Jacob Goldstein]

EVs, electric vehicles.

[Michael Dunn]

Yes. And it didn't just suddenly come to them in 2010. Earlier on, in the year 2000, this is only known later on, it's a very important guy named Wang Gang Wang. Born in Northeast, humble beginnings, Northeast China in the Rust Belt. Goes to Germany, gets a PhD, goes to work for Audi in the 1990s, works there for eight years. In 2000, he comes back secretly and delivers a white paper to the State Council, the highest governing body in China. And he said, I've seen it. We're never going to catch up with the Germans or the other Westerners in gasoline. In 2000, he wrote a white paper and said, the future for China is electric and here's how to get there. Now at the time, everybody kind of the leaders in China said that's very, it's a brilliant take. But we have nothing, we have zero capability and a small market and we're just starting out. We'll tuck it, we'll put it aside, but good idea.

[Jacob Goldstein]

And EVs aren't a thing.

[Producer/Interviewer]

Right?

[Jacob Goldstein]

I mean at that point GM had tried an electric car that failed. Right. Tesla is not a company yet. Maybe in 2000.

[Michael Dunn]

Yeah, 2003 was only 2003 that they were founded. And you're right, GM tried that. EV1 didn't work out. They ended up collecting them and smashing them. So it wasn't a thing, it wasn't a moment in time. 2000. But in 2010, who's the minister of Science and Technology in China in 2010? Wang Gang. He's left Audi. He's the guy, he's the guy in charge. He goes, hey, by the way, I have an idea how we can make this pivot. Dusts off his old paper. Xi Jinping takes power, China's new leader. He looks around and he's a definitely, they call him redder than red. He wants China to win, he wants the Communist Party to win. And he loves anything that will give him leverage on that front. So he throws his weight behind this big new policy called made in China 2025. This is in a period from like 2011 to 2014.

[Jacob Goldstein]

So this is their forward looking. It's like Instead of a five year plan, it's a 10 or 15 year plan. Kind of.

[Michael Dunn]

Yes. Like with muscle. Like we're not fooling around, we're going. This is a pivot. But there's an opportunity to change the game. We are going to throw all kinds of funding behind the cultivation of our own independent auto industry built on batteries and electric vehicles.

[Jacob Goldstein]

Okay. So I mean, interestingly, there's a long history of governments trying to sort of steer their economies and it going quite badly.

[Michael Dunn]

Yes.

[Jacob Goldstein]

Not least in China in the middle of the 20th century. Right. Like the reason at some level that China got rich was they stopped doing that. You could argue.

[Michael Dunn]

Absolutely 100% agree. And so. And guess what? In the early years of this effort to throw tens of billions, even hundreds of billions of dollars behind electric vehicles, it falls completely flat. The Chinese consumer doesn't want two things. No electric, that's short range, it's unreliable. We heard about fires and they're not good looking. And two, they're not foreign. There's no prestige like Chinese electric car is a double loser. I don't want to go there. So for Most of the 2010s, that policy really struggles.

[Jacob Goldstein]

So what changed? Like, so in fact, it wasn't working. It's a classic example of like government policy not working, wasting money. Like, it could have ended that way. Right. I mean, it could have just been a thing they tried that didn't work.

[Michael Dunn]

It was very nearly that because by the end of the decade, they were spending as much on subsidies as they were on oil imports.

[Jacob Goldstein]

Wow. On subsidies for cars and batteries.

[Michael Dunn]

Right. It's like, please, consumer.

[Jacob Goldstein]

And this is 2020. This is the decade you're talking about.

[Michael Dunn]

This is 2019. I remember being with the CEO of a major Chinese automaker and I asked him, I said, what's the future of EVs? I know you guys been trying now for almost a decade. He said, never more than an ish here, 5, 10%. Chinese consumer doesn't want it. They're too complicated. What about charging? The batteries are shorter range. The government wants us to go in that direction. But he had joint ventures with Toyota and Honda. He said, we're making great products, we're making great profits. Consumers love the brand. We'll. We'll carve out part of our business for EVs, but it's more like compliance than enthusiasm.

[Jacob Goldstein]

So keep the government happy, basically.

[Michael Dunn]

Keep the government. Yep. We're trying our hardest. Yeah, we're really going for it. So what changes? And this is where China is probably China's secret superpower is. Where are most. Where are Apple iPhones built in the world?

[Jacob Goldstein]

Shenzhen, in China.

[Michael Dunn]

Yeah, in China. Right?

[Ben Moore]

Yeah.

[Michael Dunn]

So they look around, they go, we have the very best smartphone maker in the world manufacturing their products here. How do we get the best, very best E. Who is the. Oh, wait a second. There's this company out of California that's ripping it in the US and in Europe. Wildly popular, defying all expectations. And they seem to have changed consumers minds about what an electric vehicle can be. They can be sexy, they can be attractive, they can be fast.

[Jacob Goldstein]

You haven't said Tesla yet. I keep waiting for you to say Tesla. So they see Tesla.

[Michael Dunn]

Yes, they see Tesla and they go, you ever hear of China red carpet? Yeah, like they laid out the red carpet for Tesla. For the first time. They said Tesla. We'd love to have you come here to China to sell your cars, by the way. We want you to manufacture them here just like we want everyone else to manufacture them here. But we're going to sweeten the deal. You can have 100% ownership, no joint venture. You're in charge. You bring their manufacturing capabilities in, your suppliers in, and you run the show. And Elon Musk looks around and goes, that looks pretty sweet.

[Jacob Goldstein]

What's the catch?

[Michael Dunn]

Ah, what's the catch? Well, it's never spoken, but it's understood that as soon as Tesla sets up operations in China, everything it knows will, one way or another leak to two Chinese automakers. And they are very quickly, we see five, six, seven companies sprout up. Like Xiaomi we talked about going, wow, that's a super, incredible car. I wonder if we can do that ourselves here. Oh, by the way, Tesla suppliers are just up the road. And I know them because they're, you know, they know so and so and so and so. And there's. Yeah, I talked to one supply chain executive at the time and I said, how long does that take, though? Like, how quickly? And he said, overnight. Overnight.

[Jacob Goldstein]

So overnight everybody knows everything. Overnight, everybody. China can make a Tesla if they want.

[Michael Dunn]

Yeah.

[Jacob Goldstein]

So when does Tesla set up in China?

[Michael Dunn]

It sets up in China. It goes into production at the very end of 2019. First weeks of 2020. Exactly when Covid's happening. So it was not an auspicious start. But against all odds, demand for Tesla in China explodes.

[Ben Moore]

Huh.

[Michael Dunn]

And it wasn't because it was electric necessarily. It was because it had all these over there update, new and cool features. And so it changed the Chinese consumer's mindset about, oh, what an electric vehicle could be like it did in the

[Jacob Goldstein]

U.S. tesla had the same effect in the U.S. on people.

[Michael Dunn]

Exactly. And this is. The Chinese government saw that, said, we can duplicate the Tesla effect here in China. They bet on it and it worked amazingly fast.

[Jacob Goldstein]

Right. Like, when I read about this, it seems like there's this key moment just, what, three years after Tesla sets up in China or so is it the Shanghai auto show in 2023? Like, tell me, why do people talk about that? Why is that such a big moment? And were you there?

[Michael Dunn]

I'll tell you what happened. I was set to meet my good friend Klaus Meyer, former managing director of Mercedes Benz in China. So we agreed we're going to meet at the Shanghai Auto show. Being German, he wants to be there on day one, early in the morning, I'm arriving the next day. So I'm back in the United States getting my passport together. I get a call from Klaus and I said, klaus, what's going on? Are you in China? And he said, it is a shock. Wow. Yeah. I said, what? Are you okay? I'm telling you, it is a Total shock. I cannot believe my eyes. So what's going on, Klaus? Are you okay? Yes. I'm at the Shanghai Auto show and the Chinese have taken over, so. Taken over it would be inconceivable in my mind. What do you mean taken over? No, I'm telling you, it's the end of the foreign automakers and in China. So what was he looking at? If you can imagine if you've been to the Chinese auto show, they're massive. Biggest auto shows in the world. Think football fields upon football as far as the eye can see. Just cars and people and more cars. And in the old for 20, 30 years, it would be Mercedes, BMW, Audi, Buick, Toyota, Honda, Hyundai taking center stage. And then if you had time, you might wander down a side hall and there's this pretty lame looking stand with a Chinese brand. And all of a sudden, in 2023, it's the opposite. The Chinese are center stage and the foreigners have been shunted aside. It's almost like through Covid, we went through some kind of crazy time machine. Chinese on the ascendancy, foreigners on their way out the door.

[Jacob Goldstein]

Did you fly in the next day? Did you? Yeah. What, what was it like? What'd you see?

[Michael Dunn]

Mostly I saw a confidence that I had never seen before out of the Chinese. One executive from BYD said to me, this is not the company that You've known for 20 years. We're a new thing now. And ever since that moment, I felt like the Chinese really, really getting comfortable and confident in their own capabilities.

[Jacob Goldstein]

We'll be back in just a minute.

[Producer/Interviewer]

This segment is brought to you by Walmart. Behind every small brand is someone with a dream. Today we're sitting down with one of the founders whose products you can discover at Walmart. His name is Ben Moore and he's the CEO of the Ugly Company. Based in the Central Valley in California.

[Jacob Goldstein]

The company sells dried fruit that comes

[Producer/Interviewer]

largely from produce that is too ugly to be sold fresh. Ben told me that he got the

[Jacob Goldstein]

idea to start the company when he

[Producer/Interviewer]

was driving a truck. And he often wound up transporting fruit that packing houses couldn't sell because it was blemished. Perfectly good fruit that just looked a little ugly and it was getting thrown out.

[Ben Moore]

And so I just was sat there thinking about what can we do with this fruit other than dump it out? Right. And I thought that there could be a brand solution there, which is where the name the Ugly Company came from was, you know, to get people excited about the sustainable nature of the fruit.

[Jacob Goldstein]

So I understand that at some point you went to this something called a Walmart open call event. Tell me what that is and why

[Producer/Interviewer]

it mattered for your business.

[Ben Moore]

Yeah, so Walmart Open call is Walmart's initiative to source from American manufacturers and small business like ours. We fly out and they're kind of sitting there a little bit starstruck. When you walk into the event, you're like, oh my goodness, like this really is an enormous event. And you know, just like anything else, hey, here's my PowerPoint, here's my products, here's my mission, here's what we're trying to solve and effectively like, hey, like, yeah, we want to create space for you in our slot. Here's a golden ticket. And it's, it's like a straight up Willy Wonka style golden ticket.

[Jacob Goldstein]

Literally a physical piece of paper that says you made it.

[Ben Moore]

Yep. You know, you've been selected. So there's like the full day of just craziness of like, oh my God, I'm, I'm now going to be at Walmart supplier, which is amazing. So yeah, we, you know, six months later launched in 190 Walmarts and now we've grown into nearly a thousand Walmarts since then in the last year and a half.

[Jacob Goldstein]

So how did getting onto the shelves

[Producer/Interviewer]

at Walmart affect your business?

[Ben Moore]

We hired an additional 20 people to work in our manufacturing facility just specifically for the Walmart demand that was created. So that's been great because our product sells really well in Walmart, whereas as a small brand it can be really tricky working with larger distributors and you know, trying to get your product even onto shelves and things like that. They have all their different applications where it's actually really efficient to market to Walmart customers through the Walmart apps of things. And so Walmart's helping us create demand via their platforms. Right. And so it's a huge deal for us.

[Jacob Goldstein]

Congratulations on all your success and I wish you more of it.

[Ben Moore]

I appreciate it. Thank you very much.

[Jacob Goldstein]

This segment was brought to you by Walmart.

[Producer/Interviewer]

Explore thousands of small brands online at Walmart.com or at your local Walmart store.

[Jacob Goldstein]

So let's talk about the role of Chinese automakers in the world today.

[Michael Dunn]

So China's rolling in Chinese cars. I know numbers are often hard to like. Yeah, give me some numbers, give me some numbers. So five years ago China exported a total of 1 million cars, which is about less than 5% of their total production. They're all geared up for selling in the China market. Okay, that was 1 million five years ago. This year it'll be 12 million. 12 million. That's unprecedented in the history of the automobile. Japan at Its peak was 6 million. China's already doubled that to 12 million.

[Jacob Goldstein]

How many cars does the U.S. export every year?

[Michael Dunn]

U.S. exports about at 1.

[Jacob Goldstein]

1 million.

[Ben Moore]

Yeah.

[Jacob Goldstein]

And how many does Japan export every year now?

[Michael Dunn]

Ish now about3.3 million.

[Jacob Goldstein]

And how many cars is China exporting this year?

[Michael Dunn]

12 million cars.

[Jacob Goldstein]

Wow.

[Michael Dunn]

It's their exporting as more than the United States makes now. We manufacture about 10 million cars. They're exporting 12 million in addition to their own market, which is like 25 million cars. So China now accounts for almost 40% of global automotive production. Almost half getting close to half of

[Jacob Goldstein]

all the cars made in the world are, are made in China. And a big chunk of those are exported. They're exporting more than everybody else combined. Certainly anybody else combined.

[Michael Dunn]

Yep. Exporting more than. And here we are in America and where I'm, I go to see executive, I make keynote talks around the country and everybody's like, yeah, okay, you are the boy who cried wolf. Because we don't see where, where is the Chinese car here. When I give these presentations, I put a map of the world up and I go, the map represents all countries. You see a globe. Yeah. And I have color coded and there's one country in white and everything else is red. And that gets people in the audience to go, wait a second, hold on. We are on an island. If you go to Mexico, uk, Australia, I was recently in Indonesia, South Africa. I visited Chinese cars. Chinese cars, Chinese cars pouring in. And so we're surrounded. And it seems like it's inevitable that they also enter the US market.

[Jacob Goldstein]

And so just to be clear, what's keeping them out? Is it just tariffs?

[Michael Dunn]

We have big tariffs in place, more than 100% on tariffs. That alone. Even though 100% sounds like a lot. Chinese auto manufacturers said 100% won't stop us.

[Jacob Goldstein]

100% doubles the price. You're paying a dollar in tax for every dollar of car you're buying.

[Michael Dunn]

Yes. And in an industry where the margins are already pretty thin, they're like, yeah, 100% tariff, that's not really going to stop us. So the Department of Commerce put in place a very strategic extra layer. And without going into a lot of detail, it essentially says if a vehicle features any Chinese hardware or software related to over the air updates or self driving, it cannot legally be registered here

[Jacob Goldstein]

in the US and is that, is there a security rationale for that?

[Michael Dunn]

There is, there is. There's Two components. One is to buy time for domestic industry, because if the Chinese come in, they just.

[Jacob Goldstein]

Yeah, it's, it's clearly protectionist at some level.

[Ben Moore]

Right?

[Jacob Goldstein]

Like it's plainly protectionist.

[Michael Dunn]

Yes.

[Jacob Goldstein]

Is the. Is there a valid security rationale alongside the protectionism?

[Michael Dunn]

Well, China has all kinds of mechanisms already in place in the United States for surveillance. And a mobile car that's vacuuming up massive amounts of data about people and locations and buildings definitely could be weaponized, and we shouldn't be naive about that possibility. So I personally feel like the Department of Commerce rules are appropriate given the tensions between the two countries today.

[Jacob Goldstein]

Let's talk about EVs in the U.S. right, because substantially all of what China is exporting to everyone in the world is electric vehicles. Great electric vehicles. But it seems like US Companies made a genuine effort to. To build electric vehicles. And you have pointed out that the big U.S. automakers combined, GM, Ford, Stellantis, which owns Chrysler, have written down something like $50 billion of investments they made into EVs because they just weren't that popular with American buyers. And so, I don't know, one could make different inferences from that. Like, maybe people in this country wouldn't want Chinese EVs because we don't want EVs. I don't know. Like, what do you. What do you make of. Of that fact?

[Michael Dunn]

Okay, so China's exports. I wanted to mention this important point. Of that 12 million that will go overseas this year, half of Those are not EVs.

[Jacob Goldstein]

Oh, interesting.

[Michael Dunn]

Okay, so what we're facing is not only a challenge on the EV front, which most people think, oh, China EVs, okay, we'll give them that game because we own gasoline. The trouble is, they're competitive across the board now. Okay, okay, so that's. One second. Just like China struggled to get its consumers to fall in love with EVs, so do we here in the United States. You know, last year, less than 10% of car sales in the United States were EVs. People just. We tend to drive long distances, big vehicles at high speeds, which is the antithesis of what an EV is ideal for. You want city commuting, short range and lower speeds. So that's, that's, that's a genuine sort of American exceptionalism problem. And I'm not an advocate of. I don't think EVs will take over the United States. I don't think they should. But there is a role to Play. I think 20, 25% of the market, in a normal market here in the United States. It makes sense for America.

[Jacob Goldstein]

I mean, we haven't talked about subsidies and the persistence of subsidies. Right? There were subsidies for EVs a few years ago. Now there are not. I mean, in terms of China in particular and the rise of their automakers and their persistence. Like, what is the story of subsidies there?

[Michael Dunn]

Huge.

[Jacob Goldstein]

Still.

[Michael Dunn]

Huge still. And it's not in people. When you. We need to invent a new word for subsidies when it comes to China, because here in the United States we had a $7,500 tax credit. That's a subsidy for EVs.

[Jacob Goldstein]

We had that for years for EVs,

[Michael Dunn]

right until the end of last year. Think of China. Imagine China as this massive manufacturing machine and it says, we want to dominate a given industry. How do we dominate that? We invest in enormous amounts of capacity. We throw all kinds of zero interest loans. You need free land. How about training for your employees, Energy at discounted. Whatever the tools necessary for us to dominate industry, we, the government of China, are ready to do that. We're going to win the auto industry just like we won solar panels, just like we won shipbuilding, just like we won steel and so on and so on. Today it's autos. So when Americans go, well, China has some subsidy. Subsidy doesn't begin to describe the ferocity with which the Chinese government will say, that's a national objective. We're going to win.

[Jacob Goldstein]

So do you even compete with that? Like there is the question of should we just let them have it if they're basically giving us cars at a discount? Like they want to spend their own money to give us cars cheaper than they would sell in a market without their intervention? Is there a universe where that's just like, good for us? Great, we'll take that and we'll make other things.

[Michael Dunn]

In no universe that I know of is it good for us. Okay, okay. Why? Because it's a short term gain for the United States at the expense of our long term viability as a competitive economy.

[Jacob Goldstein]

Why is a car industry essential? Is another way of asking the same question.

[Michael Dunn]

Why is the car industry essential? So the United States today has, in my view, two car industries that are operating in parallel. One is the old car industry out of Detroit. That brings capabilities in manufacturing that are really crucial to national defense and security and weapon systems. You need to have a basis of capabilities of manufacturing. So that brings. West coast is the second auto industry. That's your Tesla's, your Waymos, your Ubers, your tech companies. They're bringing software, AI chips to build the cars of the future. And if we forfeit the capabilities of having our own auto industry, we suddenly become very vulnerable to China in terms of our own national defense.

[Jacob Goldstein]

So you mean to have a kind of frontier military, you basically need to have a car industry. Is that the core argument you're making?

[Michael Dunn]

Yes, yes. The volume. That's where the volume comes from. That's where the ecosystems come from. Many of the components that define the future technologies in military applications are the same ones that go into cars. If we don't have those at home, we're extremely vulnerable to Chinese whims.

[Jacob Goldstein]

We haven't talked explicitly about batteries, but there is this interesting idea, right, that like batteries are sort of analogous to oil, right. In EVs, but they also are essential for drones, which of course we've heard a ton about, say in the Iran war. And so this notion that batteries are an essential frontier technology, that there's this kind of electric stack, right, that includes batteries, that includes permanent magnets made with a rare earths, right. That the EV is sort of the representative thing you make with this stack. But you also make drones, you also make missiles. Right.

[Michael Dunn]

Batteries are, are the future engines.

[Jacob Goldstein]

And China is, is winning batteries by a lot. Right?

[Michael Dunn]

They're just killing it. Yeah, they're killing it. They, they own not only the ability to manufacture 70% of batteries worldwide.

[LinkedIn Hiring Pro Narrator]

Yeah.

[Michael Dunn]

But they also control the supply chain into those batteries, most importantly, the refining of the materials that go into the cells that make the batteries. So 90% of graphite today is processed in China. That's another choke point. We don't have those capabilities at home. So not only do we have to have the batteries, but we also have to develop our own. And how did we get here? It was just negligence, I think, on the part of American leadership at the government level and the corporate level. It was cheaper to manufacture. Regulatory point of view. It's easier to do it in China. We just blindly shipped so much to China and now we look and go, well, how did that happen? Okay guys, I mean there was a

[Jacob Goldstein]

lot of upside, right? Like there was a notion, if you go back 25 years, there was a notion like, oh, China will join the wto, they'll get richer, they'll democratize. We've never had a big, rich market based country that had an authoritarian regime. Right. I don't think that people were necessarily dumb at the time. It just didn't work out the way reasonable people thought it would work out. One might say, did you know all along? Was it obvious to you there's a

[Michael Dunn]

tendency in the west to underestimate China and its ambitions.

[Jacob Goldstein]

Yeah.

[Michael Dunn]

So what we hope to see was not what was real. And in the short term, China said, we'll take care of this for you. We'll manufacture it half the cost and ship it back to you. Your margins go up. Look at this. Beautiful.

[Ben Moore]

Yeah.

[Michael Dunn]

And we're all getting along until the point at which China said we might not need these guys anymore.

[Jacob Goldstein]

What should the US do about cars?

[Michael Dunn]

I would, I would. The starting point would be I'd have a national campaign and say, first of all, have everybody understand that cars and the car manufacturing industry and technology around future of cars is crucial to our independence and our way of life. So put that message out there. It may not resonate today, but over time I hope it would.

[Jacob Goldstein]

I feel like people love the domestic car industry. Right. I mean when you think of like mid 20th century meat and potatoes America, like GM was maybe the biggest company in the world. It was certainly the biggest manufacturer, the biggest car maker. Like that's like glory days America. Heartland, right?

[Michael Dunn]

Yes. Except that geographies. As time have to change.

[Jacob Goldstein]

Yeah.

[Michael Dunn]

I'd love to be enthusiastic and optimistic about Detroit's ability to pivot to this new era of chips and software and

[Jacob Goldstein]

AI software as they talk about the software defined vehicle. Right. This idea that new cars are like software with a car wrapped around it is the way to think of a car now.

[Producer/Interviewer]

Yeah.

[Michael Dunn]

Yes. Start with software and then wrap the metal and the glass and the rubber around it. The heart of the car is software and the computer. This is where the west coast thrives. So the new American auto industry must rise from the West. Yeah. That's where. If I were in charge of the US government in charge of that, I'd say throw all of our support behind your Teslas and Waymos and Ubers. Like logistics. Think of it as mobility. Less about the old business of hammering out a vehicle from a production line like Ford and gm.

[Jacob Goldstein]

First thing is get everybody to believe that we need a car industry and a new kind of car industry probably

[Producer/Interviewer]

in a new place.

[Jacob Goldstein]

The new place is going to be hard politically, but keep going.

[Michael Dunn]

But both of them have roles to play. I would say Detroit won't play the leading role if we hope to compete against China. We need the brains and the innovation and the risk taking a West coast company. So that's number one, geography. Second, autonomy. Autonomous cars, self driving cars. You've heard of the Tesla Cyber Cabs. Waymo's running in about a dozen cities around the United States. I was just in San Francisco. So autonomy. Whoever wins autonomy wins the new global auto industry.

[Jacob Goldstein]

We haven't talked about autonomy in China. Like, how is China doing on autonomous vehicles?

[Michael Dunn]

Comparable. In a few cities, you'll see autonomous cars running around. They're not as advanced as Waymo, but they're getting closer and closer. Yeah.

[Jacob Goldstein]

Okay, so we're all so. Not to be reductive or jingoistic, but we're a little bit ahead on autonomous

[Michael Dunn]

cars in the U.S. yes, we have some leadership still in autonomous cars.

[Jacob Goldstein]

Why is it so important? Why is autonomy so important in this particular context of this kind of great powers competition between the US and China is the notion that if the US gets to autonomous cars at scale everywhere in a way that we can sell around the world, et cetera, that's a way we could beat China. Because of course, someone would rather have a truly autonomous car than not. I mean, is that the core reason autonomy is.

[Michael Dunn]

That's the core reason that people. I was recently in Indonesia. Sales of new cars in Indonesia and Thailand are down in the last five years, like 40, 50%. And the economies aren't doing great. But even if they're holding even, you think they're going to sustain. People are opting for rideshare, the convenience of not owning a car and just having vehicles show up. In this case with drivers.

[Jacob Goldstein]

It's rather like a lot of people clustered in urban places where rideshare is particularly convenient and economical and having a car is less convenient and less economical.

[Michael Dunn]

That's it. Jakarta, 30 million people who. Owning a car is a pain. So you're seeing this trend, okay, younger people, don't need, don't value, don't want. There's inconveniences, expensive.

[Jacob Goldstein]

So if it's autonomous, you could have fewer cars by far. It would be profoundly cheaper to do ride sharing. That's the old dream of autonomous cars. We just sort of stopped talking about it because it's taken so long to get here.

[Michael Dunn]

It's taken so long. And today when I talk to people in the industry, they feel. They feel as though they've gone through that drought and then they're back up

[Jacob Goldstein]

and they're feeling five years away for the last 20 years. Problem.

[Michael Dunn]

Yeah.

[Jacob Goldstein]

So, okay, so one is get everybody excited about EVs. Two is win autonomy. Is that the whole list?

[Michael Dunn]

Jobs, jobs. Tens of thousands, hundreds of thousands of jobs. Where do those go? If we're not manufactured and related to jobs? There's this thing like when there's concentrations of manufacturing, you're learning as you go, you're innovating. And if you outsource that, that's one of the reasons why Elon Musk loves to vertically integrate. I mean, his whole company. He's trying to do everything in the. He's doing the supercharger station, he's doing the batteries, he's doing everything. Trying to do the AI rockets, doing everything. Why? He says, because when I outsource, that innovation in my company stops. Now I'm dependent on someone else to innovate. I love that insight. And so when, if America just outsources in order to have a cheaper end product for us, it's like, it's a little bit like the, the farmer who sells his land to buy stuff for his family. Eventually we're out of, we're not doing anything anymore. We're not learning, we're not innovating, we're just burning.

[Jacob Goldstein]

Is there some broader lesson the US can learn from China?

[Ben Moore]

Hmm.

[Michael Dunn]

One of the lessons is for years the United States has been hopeful that China would change, come around, be more like us. So one of the lessons is we better put that aside. China doesn't change for anybody. So if our hope is China is going to collapse or come around, it'd be a democracy in the short term or be a good trading partner ally. Let's dismiss that fantasy. It's not happening. Okay, Number two, we have to maybe have to get comfortable with the idea that another country is bigger than we are, their industries are bigger than ours. We're not necessarily the world leader in stuff, okay? So we have to be smarter, we have to work harder, we have to be more innovative. And third, probably the most important one, I should have made it first, is at a certain point, if we look at the Manhattan Project or the United States after Pearl harbor or the Sputnik moment, there has to be a mission that brings us all together in saying, you know what? Our future is genuinely at risk. Our future is genuinely in jeopardy if we don't act together to pursue a national mission. This is what China does really well. The government set out the mission Made in China in 2025. We will lead in next generation technologies. We'll dominate, we'll use it as leverage against other countries. The US should learn from that.

[Producer/Interviewer]

We'll be back in a minute with the lightning round. You probably think of Walmart as the

[Jacob Goldstein]

store that carries just about everything under

[Producer/Interviewer]

the sun and maybe not as the place to discover small brands. Well, two things can be true at the same time, because Walmart is home to thousands of small brands founded by people who had an idea, took a chance, and built something of their own. Behind everyone is a real story and a lot of hard work. So why not take a little time to recognize all the people building small brands across the country and support everything they're creating? Walmart is proud to give those brands a place on its shelves and online. It's never been easier to find and support small brands. So take a look at Walmart. You might come across something new, something unexpected, or a brand whose story speaks to you. You never know what you're missing until you look. Discover thousands of small [e-mail] Running a

[LinkedIn Hiring Pro Narrator]

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[Ben Moore]

This is Becca and Tonya from Scrubbing in with Becca Tilly and Tonya. Rad.

[Becca or Tonya]

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[Ben Moore]

Oh, so we're doing that today?

[Becca or Tonya]

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[Ben Moore]

You're definitely not alone there.

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[Ben Moore]

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[Jacob Goldstein]

Let's finish with a lightning round.

[Michael Dunn]

Okay.

[Jacob Goldstein]

It's going to be a little silly. Just so you know. I understand that Chinese cars typically have a karaoke app installed. And so I'm curious, do you have a go to car karaoke song?

[Michael Dunn]

It would be a famous song by Dunle. China is probably China's most famous singer. A woman, actually, she's Taiwanese, but the Chinese love her too. And it would be, well, I don't want to break.

[Jacob Goldstein]

Give me a line. You have to sing a line. Sorry. It's the rule. Fantastic.

[Michael Dunn]

Thank you.

[Jacob Goldstein]

What. What does that mean, by the way?

[Michael Dunn]

You ask. You ask me how deeply do I love you?

[Jacob Goldstein]

What's the answer?

[Michael Dunn]

As deep as the fullest moon.

[Jacob Goldstein]

Lovely. What's one thing that's different about driving in China compared to driving in the U.S. chaos.

[Michael Dunn]

Absolute chaos. So think of it as like a road rally and cars coming wrong direction. Lanes not respected. Cars coming into your lane, you going into their lanes. In fact, when I first.

[Jacob Goldstein]

New York, baby. Come to New York and drive.

[Michael Dunn]

New York looks like a kindergarten compared to China. Like, whoa. So when I first came back to the United States, I'm driving around here, and I would. In. In Asia, when you pass a car, as soon as you get your nose ahead of it, you just start easing into that lane. You just start, like, nosing into that lane. And they go, yeah, okay. And they. They kind of allow you to. And. Or not.

[Jacob Goldstein]

It's.

[Ben Moore]

It's.

[Michael Dunn]

It's. It's sort of to be full contact. Yeah, full contact. So in here, in California, I did that a couple times. People are on the horn like, you, what are you doing?

[Jacob Goldstein]

Not cool, bro.

[Ben Moore]

Yeah.

[Michael Dunn]

Everything is so tight and chaotic there. So many cars, so much congestion that you got. You got to bring your game. So when people would visit me in China, they're like, oh, my God, get me out of this car as soon as you can. This is terrifying.

[Jacob Goldstein]

So you mentioned that you studied Chinese in college. I'm curious, do you have a favorite Chinese author? I don't know. Fiction, poetry, whatever.

[Michael Dunn]

It would probably be. So favorites would be the Tang Dynasty poets and the most famous one is Li Bai. So in fact that's the thing that drew me to China initially is I studied ancient Chinese poetry from that era, which was around 1100, 11, 1300. Phenomenal poet, just phenomenal. And I'm not, I'm not into poetry per se, but the way they put characters together made you feel, it made you feel something exceptional. So Li Bai would be at the top of that list. And then more recently in the 20th century was a guy named Lu Xun who's every Chinese knows he was lived in the early part of the century and he had really perceptive takes on where China was historically and what, what's what made China different and maybe what China needed to do to really join the world. So his, one of his most famous lines was Chinese people see foreigners as either gods or barbarians, never as equals. This is profound. This is really, really helpful to understand where the Chinese are coming from. So in my early years foreigners were gods. Now we're tending to be seen as the barbarians, never as equals. And this is important because if China is going to integrate with the world, its view is it should be in charge. It's not joining an American LED system or a Western. No China in charge.

[Jacob Goldstein]

So you've talked about these sort of big macro changes that you've seen in the decades you've been going to China. I'm curious, is there anything on the more subtle end something that's changed in a kind of less obvious or small but still interesting way?

[Michael Dunn]

Generation, generational change. The younger people I meet now, they tend to be single children, one child policy, they tend to be more affluent and they tend to be less driven than their parents. So almost entitled. So it's fascinating to see the hunger and the ambition and now this next generation looks like, yeah, they have this thing called the lie down phenomenon in China. Like the younger people going, why am I going to work six days a week, 9am tonight? What's the point? Do I need to be doing this?

[Jacob Goldstein]

So that's maybe that means we have a shot at catching China.

[Michael Dunn]

Maybe. But then Jack Ma comes out, Alibaba guy goes, don't listen to that, that's garbage. We need to keep working hard. So there's a tension there in the society. Where is it going to go?

[Jacob Goldstein]

Thanks for your time. It was great to talk with you.

[Michael Dunn]

Fabulous conversation.

[Jacob Goldstein]

Thank you.

[Producer/Interviewer]

Michael Dunn is the CEO of Dunn Insights. Please let us know what you think

[Jacob Goldstein]

of the show, what you want to hear more of, what you want to hear less of. Particular guest ideas. You can email us at problemushkin fm.

[Producer/Interviewer]

I read all the emails.

[Jacob Goldstein]

You can also find me on x or on LinkedIn.

[Producer/Interviewer]

Really do appreciate all the messages that we get.

[Jacob Goldstein]

Today's show was produced by Gabriel Hunter

[Producer/Interviewer]

Chang and Trina Menino.

[Jacob Goldstein]

It was engineered by Hans Dale she and edited by Lydia Jean Kot. I'm Jacob Goldstein and we'll be back

[Producer/Interviewer]

next week with another episode of what's yous Problem? When you think about discovering small brands, what store pops into your mind? Well, it should be Walmart. Seriously, Walmart has thousands of small brands and they're all in one place. Just go online or in store, discover and shop. It could not be easier. Every one of these brands has a real story and real people behind it. They're true American success stories and you can find them all at Walmart. Discover thousands of small [e-mail] today.

[Jacob Goldstein]

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