How to Judge Management in China- When Saying Less is More
Case Study: Pinduoduo’s Silent Execution vs. MeiDong’s Grand Speeches
Happy Spring Festival!
Today, we say goodbye to the Year of the Dragon—a year of bold, dramatic moves, where big risks and fiery ambition ruled the stage. And now? We slither into the Year of the Snake, where it’s less about charging forward and more about waiting for the perfect moment to strike.
If you believe in Chinese folklore, the Snake is the ultimate strategist—calm, calculated, and always ten steps ahead. While the Dragon makes grand entrances and breathes fire, the Snake watches, plans, and waits until the moment is just right.
So what does this mean for the year ahead? Maybe it’s time to be smarter, not louder. Think before you leap. Observe before you act. And if you do make a move, make sure it counts. After all, the Snake wastes no energy on unnecessary bites.
This is my free Spring Festival article—no paywall for this one! And as unbelievable as you might think, this article is not about DeepSeek.
Feel free to share my article with anybody who might like it. I appreciate it.
Wishing you all a Happy Chinese New Year and a joyful Spring Festival!
Why Some CEOs Lecture While Others Just Win
As I wrote in one of my latest articles, one of the biggest concerns investors have with Pinduoduo is that they give away absolutely nothing. No strategic plans, no key metrics, no capital allocation roadmap—just the bare minimum. They don’t do distractions, they don’t entertain outside noise, and they sure as hell don’t tell competitors what’s coming next. On the rare occasions they make public statements, it’s to acknowledge their own mistakes—things that offer no competitive edge to rivals. This level of secrecy is frustrating for investors but makes perfect sense from a business standpoint. Why reveal anything when the results speak for themselves?
Now, this brings me to the rather amusing contrast that prompted me to write this follow-up. I keep getting pitched the same stock: China MeiDong Auto Holdings 1268.HK. Even with the stock crashing from HK$40 to HK$2, this friend of mine keeps pushing it like he’s in the wrong profession and should have been a salesperson. His level of persistence is just unreal—out of this world. And here’s the kicker: the company’s management style is the polar opposite of Pinduoduo’s.
Let’s talk about the CEO, Ye Tao. He has a master’s degree from MIT, so clearly he’s intelligent—no argument there. And investors love to praise his detailed, insightful annual reports. That’s all fine. But here’s the part that leaves me scratching my head: he loves to lecture. You know, like a Bond villain who just can't resist explaining his entire master plan—ensuring that when 007 inevitably escapes the bulletproof death trap, he knows exactly how to dismantle it.
Rabbits, Turtles, and Running Circles Around Competitors
In MeiDong’s 2020 annual report, Ye Tao famously used an analogy of rabbits and turtles to explain his inventory turnover strategy:
Rabbits are popular and we have an 80% chance of selling them within a month. Turtles are less popular, with only a 20% chance of selling. Over time, the inventory is dominated by slow-selling Turtles. Rabbits move in and out of inventory at a crisp speed, while Turtles crawl out—well, like turtles.
Ah, yes. The ancient business wisdom of pet store economics.
It’s a fun analogy. It explains how he supposedly runs circles around competitors like Yongda 3669.HK by maintaining a high inventory turnover and better cash flow management. There’s also a lot in the reports about daily/weekly sales quotas instead of monthly ones to keep pressure on sales teams. Investors love this kind of storytelling—it makes them feel like they’re getting an inside look at how the business works.
But here’s the thing: this isn’t a patentable business strategy. It’s not some proprietary technology that can’t be replicated. It’s not like TSMC announcing a breakthrough in nanometer-scale chipmaking—where you can brag and lecture because your competitors physically can’t catch up. This is basic business execution, and last I checked, operational efficiency wasn’t protected by intellectual property law. It’s basic operational efficiency—useful, yes, but not some hidden edge that others can’t copy. And yet, they spell it all out in annual reports, practically handing their competitors the playbook.
Which makes me wonder: is the competition really so dumb that they can’t or won’t copy it? Or is what MeiDong is doing not actually that brilliant after all?
The Porsche Dealership Blunder
And then there’s the Porsche dealership acquisition. At the end of 2021 and early 2022, MeiDong spent RMB 3.7 billion to acquire seven Porsche dealerships, a sum that now exceeds the company's entire market cap.
If you had your eyes open in China in 2021, it was already obvious that electric vehicles were the future. And as a German, it pains me to say this, but German electric cars are... meh - to put it mildly. The market was shifting towards domestic EVs at breakneck speed. So why spend billions on Porsche dealerships when the future was clearly heading in a different direction? This wasn’t 2010, when luxury ICE vehicles still had a long runway. It was 2021—by then, everyone in China knew where things were going. And yet, they pulled the trigger on a massive acquisition that now looks... well, as strategically sound as buying Blockbuster stock in 2010.
So here we have a CEO who loves to lecture competitors on how he’s running circles around them, while simultaneously making a multi-billion RMB bet on a declining segment. It’s like loudly explaining to your poker table that every second hand you bluff—and then going all-in.
Pinduoduo: No Words, Just Results
Now let’s go back to Pinduoduo. No lectures, no analogies, no hand-holding investors through their business model. They don’t need to tell anyone how they surpassed JD in market share. They don’t need to explain how their market cap overtook Alibaba’s. They just execute. And now? They’re quietly expanding into Amazon’s home turf in the U.S., making life miserable for Temu’s competitors without ever needing to brag about it.
So, the question is: who do you prefer?
The talkative CEO who explains every detail of his strategy while making obvious fumbles? Or the silent management team that gives away nothing but delivers undeniable results?
Am I saying that MeiDong stock is a bad investment? Oh no, not at all. They’ve come down hard enough that any positive development might double the stock price from these low levels. But in the long run, why would you buy a company that just invested more than its current market cap in what is essentially the equivalent of a Nokia phone dealership license just after the iPhone came out?
When Talking Actually Makes Sense
There are times when laying your entire playbook on the table is the smartest move you can make. Counterintuitive as it may sound, this applies when you’re in a well-protected oligopoly—where the number of competitors is so small that the game isn’t about winning new customers but about not shooting yourself in the foot.
Take the DRAM industry, where only three giants—Micron, Samsung, and SK Hynix—duke it out. The nightmare scenario? A price war. If one player gets too ambitious, trying to grab market share by undercutting prices, the others have no choice but to retaliate. Prices spiral down, profits evaporate, and at the end of the bloodbath, the market share hasn’t even changed. Everyone cut prices in the same way, so no one actually gained anything—except maybe a newfound appreciation for self-inflicted wounds.
This is classic game theory, the business world’s version of the Prisoner’s Dilemma. Everyone would be better off sitting still and behaving. And that’s exactly what these companies aim for—not in smoke-filled backrooms with whispered agreements (that would be illegal) but out in the open, through a well-choreographed corporate dance.
Instead of discussing prices directly (a no-go under antitrust laws), they signal their moves through public statements, earnings calls, and capital expenditure plans. Micron announces it’s investing X billion in new fabs? Samsung nods and adjusts. SK Hynix keeps its supply in check? The others follow suit. This careful balancing act ensures that no one upsets the status quo and, most importantly, that prices stay comfortably high.
Conclusion
If a management says nothing, that doesn’t necessarily mean they have to hide something—it might just be the smartest strategic move. Companies like Pinduoduo understand that revealing too much only helps competitors, while real value lies in execution, not exposition.
At the end of the day, the market rewards results, not grand speeches. Some CEOs prefer to let numbers do the talking, while others enjoy explaining their genius—even as they walk straight into strategic missteps. Investors have to decide: do you want a storyteller or a silent executor? Because history tends to favor the latter.
Disclaimer:
The information in this article is for informational purposes only and reflects my personal opinions. I am not a licensed financial advisor, and nothing here should be considered investment advice or a recommendation to buy or sell any securities.
If I discuss a stock positively, it does not mean I own it. If I do own it, I may not update my views and could sell the stock without notice. Investing carries risks, and you should conduct your own research and due diligence before making any financial decisions. My views are meant to provide perspective, not investment guidance.
It’s wild how some companies think a clever analogy or a well-crafted annual report is a substitute for actual execution.
"Talk depletes us. Talking and doing fight for the same resources. Research shows that while goal visualization is important, after a certain point our mind begins to confuse it with actual progress. The same goes for verbalization. Even talking aloud to ourselves while we work through difficult problems has been shown to significantly decrease insight and breakthroughs. After spending so much time thinking, explaining, and talking about a task, we start to feel that we’ve gotten closer to achieving it."
- Ryan Holiday, Ego Is the Enemy