This is a rare public dialogue for Duan Yongping more than 20 years after his "retirement".
In the first episode of the third season of "Strategy," a professional investment program produced by Xueqiu, Xueqiu founder Fang Sanwen traveled halfway around the world to California, USA, to meet face-to-face with this legendary investor.
This conversation, which lasted for several hours, covered everything from his life experiences to corporate culture, from investment logic to his views on children's education; it was almost a complete review of his investment life.
In this interview, Duan Yongping mentioned "making mistakes" 10 times, "understanding" 12 times, and "difficult" 29 times . Behind these words lies his consistent way of thinking: "Buying stocks is buying companies," but as he said in the interview, "less than 1% of people can truly understand this statement."
The interview took place on October 16, 2025. The following is the complete, unedited transcript of the conversation.
Essential Quotes
Regarding core investment principles
"Buying stocks is buying a company."
"Investing is simple, but not easy."
"You must look at the company, you must understand the business, and you must understand the future cash flow."
"Most companies are not easy to understand."
"Buffett's margin of safety doesn't refer to cheapness; it refers to how well you understand the company."
"Cheap things can become even cheaper."
Regarding understanding and not understanding
"Do you understand? It's actually a gray area."
"Not understanding doesn't mean you can't make money."
The saying "Buying stocks is buying a company" is something that's remarkable if even 1% of people truly understand; putting it into practice is even harder.
On rationality and position holding
"If you're not satisfied, you should run away quickly, and it will no longer be in your hole. Otherwise, it doesn't make logical sense."
"If I only had that much money, I really wouldn't be able to keep it from being sold."
"It is very difficult to remain rational."
"The probability of making mistakes is actually about the same for everyone; it's just that some people don't repeat the same mistake."
"Over the past thirty years, the difference lies in the fewer mistakes I've made."
About visiting the company
"Understanding business is very important; without understanding business, it's very difficult to make investments."
"I come from a business background, so it's relatively easy for me to understand other people's businesses, but I don't understand too many businesses either."
"I think I know a lot about Apple, Tencent, and Moutai."
About corporate culture
The most important thing about a good culture is that it will eventually get back on the right track, guided by a guiding star, showing it what it should be doing. This isn't about business; discussing only business makes it easy to make mistakes.
"A company with a good culture is not one that never makes mistakes, but one that can eventually get back on the right track."
The wisdom of "not doing".
"People care about what we have done, but the reason we are who we are is largely because of the things we don't do."
01
Talk about personal experiences
Fang Sanwen: This user asked a particularly nonsensical question: How do you spend a typical day, like today?
Duan Yongping: Playing ball, sports.
Fang Sanwen: Is it like this every day?
Duan Yongping: Pretty much, just playing on different courts.
Fang Sanwen: The only changes are the location of the court and the playing partners?
Duan Yongping: Sometimes I have partners, sometimes I don't.
Fang Sanwen: A user named "Old Zhang the Bookworm" wants to ask you, what kind of environment did you grow up in? Does this environment have anything to do with your current personality and achievements?
Duan Yongping: I don't know about that. I was born in Nanchang. When I was about six years old, my parents and I were sent down to Anfu County, Jiangxi Province. We moved five or six times in Anfu County, always living in the countryside, before finally moving back to Shigang, which is near Nanchang. I definitely experienced hardship. I started middle school when I returned to Shigang, and I went to university from there. After graduating, I was assigned to Beijing, worked for a few years, and then got a master's degree. After that, I went to Guangdong, Foshan, Zhongshan, Dongguan, and finally came to live in California.
Fang Sanwen: I think this user might want to ask more detailed questions. Could you describe your family environment and what kind of education your parents gave you?
Duan Yongping: These things aren't really that meaningful. What help could my past experiences of fishing in any river possibly have for him? It's hard for me to explain. I have an older brother and a younger sister, and we all have different personalities. I don't really know how much help my parents actually provided.
Simply put, I think my parents have been really good to us, unlike many parents nowadays who are overly controlling and pressure their children. My parents don't seem to interfere much with me and don't have many demands, so I feel quite secure. I can make many decisions on my own. I've been used to making my own decisions since I was little, and I think that's probably largely due to my parents.
Fang Sanwen: You have complete freedom, and you think that's good, right?
Duan Yongping: Yes, I think my parents had complete trust in their children.
Fang Sanwen: Now that you are a parent, do you treat your children the same way?
Duan Yongping: Yes, I feel that I don't expect my children to do things I can't do myself. He wanted to play, and I wanted to play too back then. But I found that children are quite self-disciplined; they do their homework and behave as expected. It's important to teach them boundaries, what they can't do, and I think that's very important. It's not about constantly scolding them. I think it's crucial to give children a sense of security; without security, it's difficult for people to be rational.
Fang Sanwen: Setting boundaries and full trust?
Duan Yongping: Yes.
Fang Sanwen: Did you have any life goals during your childhood and adolescence?
Duan Yongping: I don't have any goals. I've never been ambitious. I think of myself as an ordinary person, and I'm happy as long as I can live a good life.
Fang Sanwen: So you could also describe the goal as living a good life?
Duan Yongping: I didn't even think that way. I'm not saying that I have to do something or achieve something. I really don't have that idea. I just do what I like to do, and that makes me happy.
Fang Sanwen: During your childhood and adolescence, was there anyone who described you in a way that made you different from others?
Duan Yongping: I remember when I was in middle school, a teacher said to me, "Duan Yongping, you can't be like them, not studying and just playing around." I don't know why that teacher said that. He probably thought I was a good student, and I was indeed a good student. Later, when I took the college entrance exam, I crammed and got in. Most people in our generation couldn't get into university, so that teacher was probably right, but I didn't let him down; I got into university.
Fang Sanwen: He thinks that you are at least better than others in terms of learning ability, so he has certain expectations of you?
Duan Yongping: It was a very strange thing. It was an English teacher, and my English was terrible. Why would she think I had a strong learning ability? I was completely baffled. I only started learning English after I went to university; I didn't study it at all in middle school. But that English teacher said I was different from other kids. When someone tells you you're different, you really do remember it.
Fang Sanwen: But at least it's an encouragement to you.
Duan Yongping: I just remember this incident. I don't think it's anything special. If you hadn't mentioned it, I would have forgotten about it long ago. But now that you've brought it up, I remember it.
Fang Sanwen: You majored in engineering for your undergraduate degree, and then you went on to pursue a master's degree in business. Did your interests change during this process?
Duan Yongping: Actually, no. First, I want to emphasize that I didn't study business; I studied econometrics, which is actually economics, but I consider it an engineering discipline—a very logical one. After graduating from university, I was assigned to the Beijing Electron Tube Factory, where I helped out in the cadre department for over six months. Later, I went to the education center and became an adult education teacher, teaching mathematics for over two years. Then I felt it wasn't very interesting, so I had the opportunity to take the postgraduate entrance exam and got into Renmin University, also wanting a change of pace. Because I wasn't that interested in the engineering subjects I studied. People are always exploring and trying to find what they like, and I think Renmin University was helpful to me.
Fang Sanwen: Do you think your university studies have a significant impact on your future life?
Duan Yongping: I think the most important thing in university is learning how to learn, how to study, and building confidence. When you encounter something you don't understand, you know you can learn it. This reduces your fear of the future; otherwise, you'd be afraid of everything. I've seen many people who can't even type on a smartphone, which I find very strange. I used to not know how to type either, but I learned quickly and developed a learning habit. I think graduate school is like changing careers; you gain different knowledge and your perspective changes a little. But the most important thing is leaving your old environment. Back then, we were poor students; you couldn't even afford to go out and see the world. I went to university, then changed jobs, and throughout this process, I was constantly learning, and of course, I endured a lot of hardship.
Fang Sanwen: Do you think the specific knowledge you've learned might not be that important?
Duan Yongping: Method and attitude do play a role, I think. Method and your confidence in learning are very important. When you encounter something, you're not afraid; you think about learning instead of feeling fear. I think many people are afraid. I asked my mother to learn how to use an iPad 20 years ago, and she definitely wouldn't learn now; my mother is already 100 years old. When she was in her 70s and 80s, I asked her to learn, and she resolutely refused, believing she couldn't learn it. Actually, it's very simple; it has nothing to do with age.
Fang Sanwen: After you graduated with your master's degree, you went south to Guangdong. How did you make that decision?
Duan Yongping: I could have stayed in Beijing; two companies wanted to hire me. Later, I happened to meet a company from Guangdong that was recruiting in Zhongguancun, so I went there. But things weren't going as well as I hoped, so I ended up moving to Zhongshan.
Fang Sanwen: Your decision to go south to Guangdong can be understood, to some extent, as a move to embrace the market.
Duan Yongping: No, we were actually at our wits' end, with no other options, so we just gave it a try. We were young then, and it's always good to try. I have a habit of leaving as soon as I encounter something that doesn't suit me. Beijing wasn't suitable for me; I wasn't comfortable there. I didn't know about Guangdong, but it wasn't reasonable for me to stay in a place I didn't want to be, so I had to leave. I even considered going to Hainan, but after learning about Hainan, I felt that Guangdong was better.
So I think if your decisions are based on a long-term perspective, on what you really want for your future, then the probability of making mistakes is lower. Many people ask, "What will you do for retirement if you go to Guangdong?" I say, "What do I care about retirement at my age? I need to go out and see what it's like." Of course, you might say, "I was lucky, I made the right choice." Actually, many of my decisions were because I felt uncomfortable with the environment and had to leave. Even after I arrived in Guangdong, I left my first job after only three months. I felt I had made the right choice, but entered the wrong door, so I left again. Then I went to Zhongshan, and later built Subor (小霸王), which did very well. However, due to its systemic problems, I felt it wasn't suitable, so I left again.
Fang Sanwen: Could you explain why this mechanism is inappropriate, and specifically what the problem is?
Duan Yongping: When we first started, we were told we would have shares. Initially, the big boss said it would be 30/70, then it changed to 20/80, and later to 10/90. When I recruited people, I made promises to the brothers, but in the end, I realized I couldn't keep those promises because the 10/90 split would eventually disappear. By 1994 and 1995, I felt it definitely wouldn't work, so I decided to quit.
Fang Sanwen: I understand that quitting may involve two parts: one is that you want equity incentives, and the other is that you want a good contractual relationship with him.
Duan Yongping: It's not about whether there were stock incentives or not, because there were from the beginning. Without a contract, you're not trustworthy; whatever you tell me is unreliable. Even if you get it once or twice, do you expect a third time? It's like scratching a bottle cap; if you scratch out "Thank you," do you keep scratching it? If you only scratch one of the two characters, you definitely won't continue. I felt I couldn't stay any longer after scratching that one character. I left 30 years ago, after leaving Subor to found BBK in Dongguan.
Fang Sanwen: When you founded BBK, did you have a very clear solution to problems similar to those of Subor?
Duan Yongping: The problem with Subor wasn't that it lacked a shareholding system, but that it failed to fulfill its promise. We never had that problem from the beginning. We were what we were, and everyone cooperated well. We meant what we said, so everyone felt comfortable and had a high level of trust in each other. I think even the original big boss regretted it.
Fang Sanwen: If you look back, under the original structure of Subor, was it possible to achieve a relatively ideal state of governance?
Duan Yongping: I don't know how to answer this question; in fact, there isn't one. I don't know how to achieve an ideal outcome because that's not my problem, it's someone else's. I didn't leave because of financial interests, but because of trust. Actually, my income was already very good at that time; I was financially independent. Profit sharing was still distributed then, but I didn't know what would happen in the future. Could it establish a shareholding system? Could it make you feel that its mechanism guarantees your rights? It's like when you see some companies giving dividends to shareholders as if it's a favor; I think that's unreasonable. Dividends to shareholders are what shareholders are entitled to, and dividends to employees are what employees are entitled to. Like when we give out bonuses, some people say "Thank you, boss." I say that's inappropriate because it's a bonus issued according to the contract; you don't need to thank me. Although everyone feels that they should thank someone when they receive money, the direction of that thanks is wrong.
Fang Sanwen: When you founded BBK, did you consciously try to create a corporate culture that you liked?
Duan Yongping: Corporate culture is closely related to the founder. You need to find people who agree with you and your culture. So our corporate culture is essentially about everyone agreeing with the culture and staying together. Those who don't agree will gradually be eliminated and leave. It's not like I wrote a piece of paper about corporate culture from the beginning and had everyone follow it step by step. Many aspects of our culture have evolved continuously during the growth process, including our "Don't Do List," which was added one item at a time. We learned through many painful lessons that something shouldn't be done, and then we stopped doing it. Since I left, and I haven't been CEO for over 20 years, our company is completely different now. We're very successful now. Back then, we were actually a very small company, but we were quite successful. We were quite successful even during the Little Tyrant era.
Fang Sanwen: The corporate culture you mentioned that has gradually formed over many years, could you briefly summarize it?
Duan Yongping: You see, we always talk about integrity, honesty, and user orientation. Our ideas are actually very simple and straightforward. Our vision is to be healthier and more sustainable. We don't do things that are unhealthy or unsustainable. It's all about a very ordinary mindset.
Fang Sanwen: A user said that you thought about the culture of integrity when you were a junior in college. Is that true?
Duan Yongping: During my junior year of college, I stumbled upon a quote by Drucker: "Doing the right thing and doing things right." It really struck me. It immediately brought the issue of right and wrong to the forefront. You realize that if you just spend five seconds thinking about something, you can save yourself a lot of trouble throughout your life. In our company, when we sit down to discuss whether a business deal is profitable, we always ask, "Is this the right thing to do?" If it feels wrong, we easily stop. If you only consider whether it's profitable, you'll find it very complicated; there are many things you don't know beforehand. But you might know some things are wrong very early on. Of course, it's okay if you only find out about things afterward; you just won't do them again.
Let me give you a simple example. We don't do OEM manufacturing. This isn't a principle, because you can make money doing OEM, but I just feel we're not good at it. Once, Terry Gou was chatting with me, and he asked me about this. I said we have a list of things we don't do. He asked for an example, and I said we don't do OEM. He asked, "What do you mean?" I said, "If I were to do OEM, I couldn't compete with you, right?" He said that's true. But we've done very well with our brand, and our company isn't smaller than theirs. It's not that OEM is bad, it's just not suitable for us, so we stopped. Anyone who comes to us for OEM business, we simply don't do it.
Fang Sanwen: You have a set of values about right and wrong first, and then the methodology of how to do it comes later?
Duan Yongping: Yes. Because learning comes at a cost and has a curve; you might make mistakes. Mistakes made while doing the right thing and doing it right are acceptable. But the negative consequences of doing the wrong thing are unacceptable, because if you knew it was wrong, why did you do it? Of course, if you didn't know beforehand, then you can avoid doing it next time. Over decades, this accumulation will reduce many mistakes and prevent you from getting stuck in the same place.
Fang Sanwen: There was a user called "Learning Machine" who asked people who share the same values whether they are mainly cultivated or selected.
Duan Yongping: It was chosen.
Fang Sanwen: Are the outstanding talents in BBK not necessarily those you recognized when they first started working there, but rather those who were nurtured by you through long-term collaboration?
Duan Yongping: Most people are similar to me, just ordinary people. We share common values, and of course, we've all received a university education; our academic performance was decent, and everything else we've gained has been accumulated through gradual learning. However, shared values are extremely important. If we don't agree on values, we can't get anything done. If everyone is pursuing their own agenda, problems are bound to arise. When we went back to the company for our 30th anniversary celebration, many of our old colleagues were there, some even retired, and some were still working.
Fang Sanwen: According to you, doing the right thing and finding the right person, is the choice more important?
Duan Yongping: Finding the right people takes time. For example, you can divide the right people into two types: one is the wrong kind, whom you gradually eliminate; the other is people with both good and bad qualities, who, after identifying with your culture, will gradually follow you. So we always say that we have two kinds of people: those who share the same values and those who work in the same industry. They identify with you, even if they don't fully understand, but if you tell them to do something, they will do it. These people may sometimes make mistakes unintentionally, but they can always come back. People who stay for a long time will have this opportunity. Our agents, for example, have been doing very well over the years; everyone's identification with the culture is very strong.
02
Discussing business operations
Fang Sanwen: I have another question about the company's specific operations. For the BBK Electronics Group, a very significant change was its entry into the smartphone market. They had previously made other electronic products, including feature phones, before moving into smartphones – a major shift. It seems you initially disapproved of this decision-making process?
Duan Yongping: Yes.
Fang Sanwen: How did it become "doing it again" later?
Duan Yongping: Because they are the CEO, my approval or disapproval doesn't affect their decision-making. Everyone was desperate. We made telephones, and within a year or two, we became number one nationwide. Later, we felt that continuing in this market didn't seem to have much of a future. Then mobile phones came along, and Shen Wei felt we should make mobile phones. At that time, I thought we probably couldn't compete with Panasonic, Sony, Motorola, and others in the mobile phone market.
Fang Sanwen: These are things from the feature phone era?
Duan Yongping: The era of feature phones. Then he said, "No, Duan isn't like that." What finally convinced me was that mobile phones are actually highly personalized products. I originally thought they were like home appliances; if others were larger than us, it would be difficult for us to compete. I said, "If you think it's a highly personalized product, then we have an opportunity. We can differentiate ourselves, we can do things differently from others, and in some areas, we can do better than others." Plus, we have many years of experience in running a business. Our company's rule is that regardless of whether I object or not, the CEO's decisions are their decisions, and they bear the consequences. He can't say, "Duan objected, so I didn't do it, and I have no responsibility." I'm just acting as an advisor. Many people don't understand and think I'm the boss, but I haven't been in the company for a long time. Even when I was CEO, I didn't manage much; I let them make the decisions. So, the transition was smooth for them; delegating authority takes a long time.
Fang Sanwen: Was the shift from feature phones to smartphones a bigger decision?
Duan Yongping: That wasn't a decision, it was forced upon us. Feature phones weren't selling, and we almost went bankrupt because of them. Although we had made very good feature phones, smartphones came on very aggressively, and in an instant, they basically took over the market. We still had a lot of feature phones at that time, so during the 30th anniversary celebration, everyone was very emotional, saying we had weathered the storm. I even went back specifically because we had a lot of inventory. Our cash was being depleted very quickly. I remember we had seven or eight billion yuan in cash on hand, watching it drop, almost hitting rock bottom, and then it started to recover. Because smartphones had already come out, we only needed to release one or two generations of smartphones to recover. There was a year in between, from 2012 to 2013, when we lost a lot of money. When I went back, I said, if we're going to go bankrupt, let's not go bankrupt in a bad way. I've seen others go bankrupt, and afterwards, it's a complete mess. I said that won't do; we can't let our suppliers suffer losses, and we can't let our employees suffer losses either. Of course, I have some confidence in saying this, because I haven't touched this investment area at all. It's like our reserve force—it never went into action, and ultimately it didn't. So it's all good. Anyway, the brothers really lived up to expectations.
Fang Sanwen: In the process of transitioning from feature phones to smartphones, we actually faced a greater crisis than when we transitioned from making telephones to making mobile phones.
Duan Yongping: Because the scale was so large, I think we also made mistakes; we weren't sensitive enough. Since we did very well with feature phones, we actually had the risk tolerance, but we still lost quite a bit that time. We've made similar mistakes before, but on a smaller scale, so we recovered quite quickly.
Fang Sanwen: I didn't expect its sales to decline so drastically?
Duan Yongping: Yes. The price drop was too fast. Based on our past experience, we thought the price would drop gradually. We had been developing smartphones for a while and knew about this trend, but we still placed a lot of orders for feature phones, thinking there would be a process. We didn't expect it to happen so quickly, just like AI now.
Fang Sanwen: New technologies drive new products, and their adoption is happening faster than expected?
Duan Yongping: You could say that. The main thing is that the new products are indeed very good. They completely replaced the old products at once. And after smartphones came out, look how many things were replaced: cameras disappeared, and things like the electronic dictionaries, repeaters, and learning machines we made were basically replaced by mobile phones.
Fang Sanwen: Because smartphones are now a very large industry. Thinking back on some of my experiences, I remember seeing a Motorola phone called the 6188, which was actually a prototype of a smartphone; later there was the Nokia E71, which was also a prototype of a smartphone?
Duan Yongping: It was a terrible phone. I have a very deep impression of the Nokia phone they made. I was very excited when I got it, but I found it to be incredibly stupid to use. We used to be very used to Nokia phones, but they completely changed the interface. I couldn't use it at all. Imagine, as an engineering student, I struggled with it for ages and still didn't know how to use it. So it's not surprising at all that Nokia eventually went bankrupt. I think the company's culture must have rotted away.
Fang Sanwen: But I think it did take a step in that area after all, even though it didn't succeed in the end. Could we interpret it this way: perhaps some people in that company had some relatively correct judgments about the trends of the industry and products?
Duan Yongping: There's no problem with the product trend; everyone can see it. But its culture is very important.
Fang Sanwen: They don't have that ability?
Duan Yongping: They focused too much on market share and business, and not enough on users, which is why they missed out on such a big opportunity, and then missed out again. Actually, when Android came out, Google approached Nokia, hoping they would switch to Android, but they refused. They wanted to hold onto their own technology, and in the end, they killed themselves. So there's nothing they can do about it.
Fang Sanwen: At least Motorola and Nokia were once very well-known companies, and they were very experienced in management.
Duan Yongping: Management can't save a company; they have problems with strategy and culture.
Fang Sanwen: I remember you used to admire Panasonic's management style. Has your opinion changed since then?
Duan Yongping: Panasonic is quite a powerful company, but I think Japanese culture is not easy to understand. I first approached Panasonic, wanting to collaborate on a mobile phone project. Chen Mingyong, Shen Wei, and I went to Panasonic, meeting with section chiefs, department heads, and finally President Nakamura. They asked about our purpose, and I explained that we weren't entirely confident in ourselves at the time. We were unsure about the technology, the source of funding, and what the future held. We felt that collaborating with a larger company might offer a better chance. I told them that with our capabilities, a collaboration could very well allow us to reach the top three in the Chinese market within two years, or even the top two within three years.
But no one ever asked me why I thought that way. So when I left Panasonic, I knew they didn't trust me at all. Panasonic was very bureaucratic in this respect. Even when I met the president, he told me, "When I'm making a decision, I think about what Mr. Matsushita would think if he were standing behind me." I thought to myself, "It's over." Because Mr. Matsushita is long gone.
Steve Jobs told Tim Cook, "As CEO, you make the decisions. Don't think about what I, Steve Jobs, will do." That's the right approach. I tell everyone the same thing: they are CEOs, they make the decisions. They absolutely shouldn't think about what I, Steve Jobs, will do. If they did, we would have been finished long ago, not waiting until today. So I think Panasonic's culture definitely has a problem.
Fang Sanwen: It may be that it places too much importance on its past system and achievements?
Duan Yongping: I don't know about that. I haven't paid attention to what happened; I just felt that something was wrong. Especially when a president told me that he was thinking about what the old president was thinking when making decisions, I felt they were carrying a heavy burden. Because your eyes are supposed to be on the users, while their eyes are on the rearview mirror. Given enough time, problems are bound to arise.
Fang Sanwen: According to your description, you first established a very good authorization mechanism, allowing your partners to make their own decisions very early on, and then you withdrew very early on. This kind of business management arrangement seems to be uncommon among entrepreneurs.
Duan Yongping: What does this have to do with me? I'm not your typical entrepreneur. I don't care what others want to do. If I want to play ball, others can play ball anywhere. The most important thing is that they're doing a better job than me; I think they're more motivated than I am. I feel I've done everything I should have done, and I have other things I enjoy, so why should I stay in that place? Besides, I trust them a lot, and I think that's very important. I'm not afraid of them making mistakes.
Fang Sanwen: But many of the entrepreneurs I see want to stay on the front lines forever?
Duan Yongping: This has nothing to do with me, and I don't care what they think.
Fang Sanwen: A user named "Lubianbianzou" asked, "If the founder or boss leaves the company, how can he determine if it's time for him to leave or if the conditions are right?"
Duan Yongping: He feels he can leave when he feels he can, but it's difficult; not many people can do that. What's the difficulty? It's that he doesn't want to. If he wanted to, he could always find a way. This is actually undeniable; I don't think there's anything to discuss about it. Some people enjoy doing this, and I prefer my brothers to do it. I think it's really a choice. If you don't choose it but want to envy my life, and you also want to enjoy your life, that's impossible. Some people like working, but I genuinely don't.
Fang Sanwen: On the one hand, I think that being dedicated and working all the time is a good quality; but at the same time, we cannot deny that as people get older, their abilities will decline. So, generally speaking, do we still have to acknowledge that a person's contribution to a company, even the founder's contribution, is only phased?
Duan Yongping: I don't think you can think that way. I don't think it makes sense. Buffett is over 90 years old, and he's doing very well; he just retired. I don't know why he retired; maybe his health isn't as good as it used to be. I visited him a couple of years ago, and he showed us around his office—he led a whole group of us for over 50 minutes—so at that time his health was quite good. I don't know about recently, but I saw him at the shareholders' meeting, and he seemed okay. He probably felt it was time to hand over the reins. Buffett is a particularly typical example; he just loves doing this, and he's been doing it all along.
Why do you insist on retiring just because of age? I don't think age is necessarily an obstacle, but you need to have a realistic self-assessment. If you can't remember anything, making decisions will be a blur. Of course, if it's your own company and you're willing, then no one else can really say anything. Actually, when I was CEO, they already had a lot of autonomy, so it was natural for me to hand it over to them. I'm rarely in the office; I'm either playing sports or something.
03
Talking about investment
Fang Sanwen: A user named "Yigenbai" asked, what was the opportunity that led to your first exposure to stock investment?
Duan Yongping: Does this even need a catalyst? Everyone knows about stocks. After I retired and moved here, I couldn't play ball 24/7, and I wasn't going to look for a job. Then I thought, investment seems related to business and companies, so I started researching it. I bought a lot of books, including books on charts and graphs, but I couldn't understand them. How come I, with an engineering background, can't understand these charts, while they can draw such conclusions?
Later, after reading Buffett's work—actually, I didn't read anything else, just the phrase "Buying stocks is buying companies"—I suddenly understood. That one sentence was enough. Because the rest is about how you analyze a company, which isn't something Buffett can teach. If you don't understand businesses, explaining theories to you is pointless. But since I come from a business background, understanding other people's businesses is relatively easier for me. However, I don't understand too many businesses; I've only understood a few over the years. I think understanding business is crucial; without it, investing is very difficult.
Fang Sanwen: If you had to summarize your investment philosophy in one sentence, would it be that buying stocks is buying companies?
Duan Yongping: Yes. But the next sentence is, you need to understand the company, which is very difficult. Why is investing said to be simple but not easy? It's simple because you must look at the company, you must understand the business, and you must understand the future cash flow; it's difficult because it's hard to do that, and most companies are not easy to understand.
Fang Sanwen: I remember Buffett or Munger saying that if you were to invest your whole life and had a punching machine that punched 20 holes, would you have used up your investment limit?
Duan Yongping: I don't think so yet.
Fang Sanwen: 20 holes, how many do you think you've punched by now?
Duan Yongping: I can count on my fingers the relatively large investments I've made. The earliest was NetEase, then Yahoo, which I think was partly an attempt to buy Alibaba. Later, it was Apple. My stake in Berkshire Hathaway wasn't large, but Apple was significant, and Moutai was also quite substantial. Tencent is still doing fairly well for me. I did invest in General Electric during the 2008 financial crisis, but I can't recall the exact amount. However, after they changed CEOs, I quickly withdrew. Looking back now, I wouldn't have invested in General Electric; their business model wasn't good. I wasn't at that level of understanding back then.
Fang Sanwen: Let's count the holes first. Does Google count as one hole?
Duan Yongping: Google doesn't really count. I've never really placed a heavy bet on Google.
Fang Sanwen: Does Pinduoduo count?
Duan Yongping: Pinduoduo could be considered. Pinduoduo is quite special because I invested in it in its early stages, during its initial startup phase. So the amount I invested was actually very small, but the profits were substantial. Strictly speaking, it doesn't really count, because I didn't invest based on a clear understanding; I invested rather haphazardly.
Fang Sanwen: If we can't think of any other holes, it sounds like we haven't finished drilling 10 holes yet.
Duan Yongping: About 10 holes, so I still have a long time to invest, because I need to make 20.
Fang Sanwen: Among investors in the global secondary market, there are probably very few who dare to say that they haven't used up all 20 slots of their quota?
Duan Yongping: I don't know, it depends on your definition. Reaching 20 points is something some people never achieve in their entire lives; they've never heavily invested in any company, their highest investment was only 5%. Even very famous investors, like Peter Lynch, who traded over 2000 stocks in his lifetime, must have been very busy, hence his premature graying and early retirement, even earlier than mine. I don't know if he's still investing now, but I guess he is, managing his own investments. I've probably touched many stocks as well. I've also bought Shenhua, but not that I bought it; I still own Shenhua shares, just a small percentage. I have a relatively large position in Moutai. I usually tell people I only hold three stocks: Apple, Tencent, and Moutai, which is pretty much true.
Fang Sanwen: The general conclusion is that these 20 holes were not used up?
Duan Yongping: It depends on your definition of Confucius. Buffett has touched more than 20 stocks, but the ones he actually holds significant positions in, the ones he's talking about, are actually not many.
Fang Sanwen: Is there any hole that you felt you weren't entirely satisfied with after it was drilled?
Duan Yongping: That won't happen. If you're not satisfied, you should just sell it. It's no longer in your possession. Otherwise, it wouldn't make sense logically. You can't keep a stock just because you don't like it. It's not like a child. If you don't like a stock, you can vote with your feet.
Fang Sanwen: Let's go into more detail. You just said that it's easy to understand the concept that "buying stocks is buying a company," but it's not easy to understand a specific company.
Duan Yongping: Understanding the concept is not easy, understanding this statement is extremely difficult. I think among the users on Xueqiu (a Chinese investment platform), if even 1% truly understand this statement, that's remarkable; putting it into practice is even harder. But those who can't even do it can still make money.
Fang Sanwen: It's not necessarily that he doesn't understand; he might just not understand it that way.
Duan Yongping: That's exactly what I mean. Once you understand it, you won't be influenced by the market. If you're still watching the market every day, checking the dynamics, and looking at past performance... even KOL, I see them talking about the market all day long, they just don't understand. See when I talk about the market, when I say on Xueqiu, "It's going to go up today" or "It's going to go down tomorrow." But not understanding doesn't mean you won't make money. Investing is very interesting. If you buy a stock with your eyes closed and hold it, out of 100 people, 50 will actually make money, and those 50 can come out and talk about it. But getting them to repeat it isn't so easy. I can teach everyone a way to make money: buy the S&P 500 index. You'll eventually make money, but that doesn't mean you understand it. However, if you actually do it, it means you do understand it.
Fang Sanwen: It's still very difficult to understand a company. How do you determine if you understand a company? Let's take NetEase as an example. How do you determine if you understand it?
Duan Yongping: I come from a game industry background. I talked to their game team and found them to be a group of people who are very passionate about games and genuinely dedicated—that's the first point. Secondly, I thought their business model made a lot of sense, especially since their cash reserves were higher than their market capitalization at the time. As a venture capitalist, it was easy for me to buy in. Plus, there was a specific opportunity at the time; the stock was so low that everyone was panicking, thinking they were going to fail. I felt they had a high probability of making money, and since I had some cash on hand, I went all in on NetEase. It increased 20-fold in six months.
Do you think I understand? If I did, I should buy the entire NetEase. So, I understand this stuff—I don't really know what it means, but I roughly feel they can make money, and I don't think my investment risk is particularly high. Why haven't you sold after holding on for so long and making so much money? The problem is, that amount of money isn't that much for me, so I can think about things rationally. If I only had that much money, I might also sell, so staying rational is a difficult thing.
Fang Sanwen: Your assessment of NetEase seems to include two parts. One is your assessment of the gaming business itself, and whether you believe it can make money.
Duan Yongping: Of course, I come from a game industry, I know games very well.
Fang Sanwen: Second, the judgment of its pricing, for example, its stock price is very low, possibly lower than its net cash holdings. Is this actually what Buffett calls the margin of safety?
Duan Yongping: Buffett's margin of safety doesn't refer to that. The margin of safety refers to how well you understand the company, that's my understanding. It's not about how cheap it is; cheap things can become even cheaper. At the time, I just felt they had a chance to make money, but I didn't know how much they could make. If I had known they could make this much money today, I would have bought more even if I had waited a little longer, and I wouldn't have sold. I ended up selling anyway, so it shows that I didn't actually understand it that well.
Fang Sanwen: According to you, understanding and not understanding are actually in a gray area, not a clear standard, is that right?
Duan Yongping: I don't know either, but people who ask around definitely don't understand. So, do people who don't ask understand? You could say it's a gray area. At least I've made over 100 times my initial investment. Do you think I understand or not? I have my reasons for selling, my logic for selling, and I actually made quite a bit more because I had other very good investment opportunities.
Fang Sanwen: Let's talk about another target – Apple Inc. A user named "Lilian78" asked, 15 years ago, Apple was a hardware company, but now its profits are half hardware and half software. Its business model has changed. Did you have this judgment when you bought it?
Duan Yongping: I bought it in 2011, and it was already very clear at that time.
Fang Sanwen: At that time, were you able to judge that similar platform businesses and software businesses would generate more profits?
Duan Yongping: I'm in this industry, how could I not know? That's not called judgment, it's something you can see.
Fang Sanwen: Fish in a bucket?
Duan Yongping: I wouldn't say that, but it's at least a big player in the market. We're in this business ourselves, so of course I can see it.
Fang Sanwen: It seems you also have an opinion on Apple's corporate culture, right?
Duan Yongping: Yes, I think their corporate culture is very good.
Fang Sanwen: Why do you think its corporate culture is so good?
Duan Yongping: I think they've done a great job with their user-centric approach. They're not a very business-oriented company; they care a lot about making good products, about user experience, about how to improve, and they think very far ahead. So, they won't make anything that doesn't provide value to users, or a product that doesn't offer enough value, no matter how popular it is. We had a debate before about whether Apple would release a large-screen phone. I said they definitely would, but we waited three years for it to come out. How could I know they would release a large-screen phone?
Fang Sanwen: Because large screens are a user demand.
Duan Yongping: Yes, we're in this industry, and we've even released large-screen displays. So I knew users would definitely want large screens, but I didn't expect them to hold out for three years.
Fang Sanwen: I'm also very confused about this matter.
Duan Yongping: I was never confused. I knew they made a mistake. Tim Cook made a huge mistake here; he's a bit like Nakamura. Jobs said this was the best, so they disdained to do it. Actually, they had been researching it for a long time; they had all the large screens in the lab, but they just didn't push it. Of course, they might have felt the performance wasn't good enough, or something else, I don't know. Anyway, they finally pushed it.
Let me give you another example. In the beginning, they said they were going to make iTV, which is a television. I remember when we were playing basketball, they confidently told me they would definitely make it; they'd even seen the samples. I said they definitely wouldn't. They asked me why, and I said, "What can they do?" I said the same thing to people in my company, because we also make televisions. They later cancelled it. Then Liu Zuohu came in, and they tried again, and then cancelled it again. I said, "What happened, Liu Zuohu? I told you back then why we don't make televisions," but he insisted on trying again. Chen Mingyong even made him try, just like I made Chen Mingyong try before. After trying it, he felt it was indeed wrong because the product couldn't offer anything of significant value.
Over a decade ago, everyone was talking about Apple releasing an Apple Car and an electric car. I said they would never make an electric car. Many people said it was impossible; they were already working on it. I said they couldn't make it, not because of technical issues, but because of what they could actually do with it. Such a large car, the value Apple could offer would be very limited. What price would it be priced at? Would it have enough differentiation? This is where I understand Apple better than most people. If they really released an Apple Car, I would be happy; I would love to see what they could do with it, but I just didn't think they could. Until recently, I met the owner of an Apple store in New York. He told me that their store had been closed for three years, changed once—to prepare for selling an Apple Car—but then changed back. I said, "So you actually knew a long time ago that you wouldn't sell an Apple Car; they knew at least a year or two in advance, but Apple didn't announce it." Hearing that they had actually worked on an Apple Car was beyond my imagination; I thought they were just researching it. See, it's just as I said. This is their culture; when they find that a product can't add enough value to users, they stop. They don't do things just for profit. If they were just looking to make a business, they could easily make cars; and no one could do it better. But ultimately, I don't know what will happen to them. That's my understanding. I think this company has a pretty good culture, though there are many companies with good cultures.
Fang Sanwen: But it may also make mistakes, for example, the example you just mentioned, that it made large-screen phones for three years but didn't make them, and then almost made the Apple car?
Duan Yongping: The most important thing about a good culture is that it will eventually return to the right path, guided by a North Star, showing it what it should be doing. It's not about business; discussing only business makes it easy to make mistakes.
Fang Sanwen: If you have a good culture, you can't completely avoid making mistakes, but the probability of making mistakes being corrected is probably greater than if you don't have a good culture.
Duan Yongping: The probability of making mistakes is actually about the same for everyone; it's just a matter of whether you continue to make them, and whether you have a "don't do" list. Over the past thirty years, we've made fewer mistakes than others. Look at what I wrote on Xueqiu (a Chinese investment platform); people care about what we've done, but the reason we are who we are is largely because of the things we don't do. Because we know something isn't right for us, we don't do it. Not doing it reduces the number of mistakes we make, and increases the probability of doing the right thing. It's actually a small difference, but over thirty years, it can make a huge difference.
Fang Sanwen: What do you think of Apple's current price?
Duan Yongping: Not cheap.
Fang Sanwen: Even in terms of return on investment, it's impossible to have high expectations.
Duan Yongping: Yes. It also depends on the user's opportunity cost. If they're willing to deposit their money in a bank for a little over 1%, then they might as well buy an Apple product. But if they can earn over 10% a year, then there might not be any need to buy an Apple product. As for whether Apple will ultimately succeed, I don't really know. Of course, it has always been very strong, with so many users. Where will AI ultimately be applied? Won't it still be on mobile phones? Apple could potentially double, triple, or even triple its value in the future, but I don't know. It's not that it's definitely going to fail, but it's not cheap.
Fang Sanwen: You also bought shares in General Electric in 2008, and your opinion of it has changed somewhat since then. Was this change in opinion mainly due to its business model or its corporate culture?
Duan Yongping: I used to think it was the corporate culture that mattered. I've never really understood their business model, but I used to like their corporate culture. They emphasized that while times change, the only thing that remains constant is integrity. But later, when I looked at their website, I couldn't find that phrase anymore. The moment I couldn't find that phrase, I decided to sell. I felt they no longer emphasized that, and I genuinely couldn't understand their business model. I've bought and sold too many companies. Initially, it was because of Jack Welch's influence; I thought his company was amazing. Later, I realized that nobody is truly amazing.
Fang Sanwen: Have you already demystified Jack Welch?
Duan Yongping: It's not really true, I don't know much about it. Luckily, I sold it. When I sold it, the market value was over 400 billion yuan, now it's probably less than that. Imagine if I exchanged it for Apple, what a difference that would make. I held it for probably two or three years, not too long.
Fang Sanwen: But this transaction also made money?
Duan Yongping: Making mistakes can sometimes make you money. I think that was a mistake, and I wouldn't have bought it today.
Fang Sanwen: Even if you make money, you can't deny that it was a mistake?
Duan Yongping: It was certainly a mistake because it didn't conform to my later decision to meet the two filters of corporate culture and business model.
Fang Sanwen: You should still hold Occidental Petroleum shares. You're saying this is copying Buffett's homework?
Duan Yongping: Yes, but there's a historical element to this. I was influenced by a friend who bought oil and gas index futures. He told me the index was plummeting, and oil prices couldn't keep falling like that indefinitely. I asked him how closely the index correlated with actual oil and gas prices, and he said 99 points. I thought that was great, so I bought it and held it long-term. But later, when I asked him again, "What kind of correlation are you talking about?" he said, "Every single day." I realized, 99% every single day—that's a huge difference. I definitely couldn't hold it long-term now; the time erosion would be enormous, so I sold it. I actually invested a lot of money back then, about 100 million US dollars, but I lost over 10 million.
You need to correct your mistakes immediately. I sold everything, and after selling it all, I lost over 10 million, just over 10 million. But there's this little quirk: oil is really hard to deal with. After seeing Buffett buy Occidental Petroleum, I had an idea. This is actually a very interesting way to buy oil—buy an oil field and store it underground. It won't deteriorate over time. So I bought some and held it, maybe for 20 years. I think the price of oil will definitely be different after 20 years. I don't know that much about oil, so my investment isn't very high. But when people on Xueqiu (a Chinese investment platform) saw me say this, they took it very seriously. If you want to follow me and invest 100%, that's your business; it has nothing to do with me. My investment is a very small percentage.
Fang Sanwen: Many users have their own understanding, saying that their understanding of specific companies is limited. However, they acknowledge that some people have a good understanding of companies, and that kind of investment method is called "copying homework." Do you think copying homework is a sustainable investment method?
Duan Yongping: It's difficult because when you copy someone's homework, you're lagging behind. Copying Buffett's homework is fine; his stuff is transparent. But how can you copy mine? I don't disclose my holdings. You have no idea how much I buy or how little; your proportions won't keep up. I might buy something just to force myself to look more closely. If you follow suit and see that Duan has bought it, you go all in, and that's a mistake. So I think it's very difficult. If you don't understand the company, it's indeed very difficult. If you don't understand the company, it's best not to touch it. I'm very conservative; in the A-share market, I only bought Kweichow Moutai.
Fang Sanwen: Do you think buying index stocks is better than copying homework?
Duan Yongping: I think if you want to buy, you can't just say you should buy an index, because there are many kinds of indices, and not all of them are worth buying. The index that Buffett is talking about is actually the S&P 500 index, but it's not all indices. There may be thousands of indices, or the Nasdaq 100 index is also an option.
Fang Sanwen: There was a user named "Charming New Stock Market Sandstorm" who asked, what was the reason or what kind of thinking made you consider investing in a company like Nvidia, which seems to be in a highly volatile industry?
Duan Yongping: I used to think it was highly volatile, but later I realized they are indeed very powerful, and their ecosystems are incredibly strong. Look at the collaborations between Nvidia and OpenAI, and between AMD and OpenAI; you can see how powerful Nvidia is. Nvidia invested 100 billion, but it was in exchange for chips and shares; AMD is like, "I give you chips, I give you shares, I beg you to use me." Now everyone wants to use other chips because they fear Nvidia's monopoly—they're too expensive, costing a lot of money. In this arms race among these major companies, to catch up in AI, you have to buy chips. So everyone desperately hopes another company will emerge, because once semiconductors become homogenized, prices will drop immediately. But that's impossible. So Nvidia is truly powerful. I've also watched many of Huang Renxun's videos; I admire him greatly. What he said more than ten years ago is the same as what he says today. He foresaw it long ago and has been working in that direction ever since. So now you have to consider that what he's saying now still reflects his belief in the future. So I think it's worth investing a little and seeing how it goes. I think you should at least get involved in AI and not miss out. It seems a bit inappropriate to have missed out entirely.
Fang Sanwen: Do you think AI is something in demand, and that companies like Nvidia have a certain degree of sustainable competitiveness in this industry?
Duan Yongping: At least for now, that's still my opinion.
Fang Sanwen: If it's homogeneous and lacks sustainability, you wouldn't consider investing in it?
Duan Yongping: Of course not. I used to think that semiconductors were very difficult to work with, so I wouldn't lose money on Intel because I had never touched it before, and I had never invested in semiconductors before. This was also a very important reason why I missed out on Nvidia. Actually, I saw it a long time ago, but I didn't pay attention to it until AI took off in the last two years. Before, I thought it was just something that was occasionally hyped up, but now I feel that it's not just hype. If you pay close attention, it's very interesting. This company is really quite interesting.
Fang Sanwen: Perhaps you are also interested in companies like TSMC?
Duan Yongping: I've known about TSMC for a long time, because we used to get our chips from UMC. TSMC doesn't directly supply chips; it's a foundry. It just processes chips for others. More than 30 years ago, I told UMC that they couldn't compete with TSMC in chip manufacturing because TSMC focused solely on that. At that time, UMC was doing foundry work, making its own chips, and developing all sorts of other products. I said that in the long run, they couldn't beat them. Unfortunately, my prediction came true. Look at the world of difference between TSMC and UMC now. I haven't seen anything particularly impressive about UMC's foundry work. Now we don't hear anything about them anymore; we don't know what they're doing.
So I've known about them for a long time, but I didn't understand this industry. I thought they were very asset-heavy. But now I realize that in the way semiconductor AI is taking off, it seems no one can escape TSMC; it's eliminating everyone else. Before, we had to go to Samsung, and even IBM was very powerful in the early days. Intel also made a lot of chips, but now these companies all go to TSMC for foundry services. I think this is quite interesting, so I bought some, but recently the price has risen ridiculously. Ridiculous as it may be, it's not that expensive. If future development really goes as Huang Renxun predicted, then the current price makes sense.
Fang Sanwen: Is that why your investment in these companies is limited?
Duan Yongping: It wasn't like when I invested in Apple. When I invested in Apple, the highest point was over 90%, I just kept buying and buying and buying, buying every time it dropped. Of course, I've sold some now, because I sell some calls and such. Sometimes the price goes up and then it goes up and then it goes up and then it goes up and then it goes up, so I can buy some other things.
Fang Sanwen: Extending our perspective from companies like Nvidia and TSMC, business innovation, especially technological advancements, creates many new businesses and uncovers new demands. It also disrupts some old businesses. Innovation typically requires a high level of skill from companies, and even some luck; those who succeed through innovation are the lucky ones. There are also companies in industries that don't require as much innovation. Between these two, which do you prefer?
Duan Yongping: I tend to believe I can understand it, and I tend to believe that the future profits it generates will match my investment opportunity cost. Look, I also buy Moutai. The key to Moutai's success is that it shouldn't change. The worst thing is a new CEO coming along and making changes here and there. So far, things have been alright; they haven't strayed far from their core principles. Don't change the 53-degree Feitian Moutai formula. That's an advantage for state-owned enterprises. I've heard that some private companies, like Lao Gan Ma—I don't know if it's true—have had their sons change the formula as soon as they took over. That's something Moutai wouldn't dare do; it's very dangerous. Why change it if it's perfectly fine? Innovation is about meeting user needs. Change only if it's necessary; don't change if it's not.
The tech industry must innovate because new things will emerge and meet more user needs; if you don't change, you'll die. Moutai's flavor is already established; changing it would be crazy, definitely not the right thing to do. Even Coca-Cola changes its flavor occasionally, but the original flavor must be preserved; it only adds new ingredients for health or other reasons.
Fang Sanwen: From the perspective of understanding, is it more difficult to understand a company that needs to innovate?
Duan Yongping: Actually, understanding Moutai isn't easy either. Everyone is different. Look at how many people don't understand Moutai, and how many people don't understand Apple. I don't understand Nvidia either, nor Google. Actually, I've always liked Google, but I just couldn't understand it. Now I understand it a little better. But then I start to worry: to what extent will the search business be replaced by AI? Like ChatGPT, including Gemini itself, how much search will it replace? I don't know. But overall, I think this company is pretty good, so I bought some shares recently.
Fang Sanwen: It's actually quite difficult to understand things that don't change or things that are innovative.
Duan Yongping: Of course, it's difficult to understand anything, but nothing is more difficult than golf.
Fang Sanwen: Has your opinion of Tesla changed over the years?
Duan Yongping: There hasn't been any fundamental change. I do think Elon Musk is a remarkable person; he has many ideas, and they are indeed very advanced. However, I find investing in him quite difficult. From a personal perspective, I don't particularly like his character. Investing in him is essentially making friends with him, and I don't want to be friends with him, even if he offered me money. So I don't particularly like this aspect of his business, but I do recognize that he is indeed impressive.
Fang Sanwen: What do you think of his business?
Duan Yongping: The electric vehicle business won't be too good; it will be very tiring because there's very little differentiation. But Tesla's electric vehicles have achieved differentiation. I think the business of most electric vehicles will be very tough, but Tesla has indeed done well overall. You see, it has fewer models, right? The products are very similar, but the volume is very large, so its costs will be relatively low, and it is very likely to make money.
I wrote about Tesla on my blog a long time ago. I used to really like Tesla; you can see my license plate says "We love Tesla." Later, after seeing what happened with Musk, I started to dislike him a bit. Plus, after buying one of their cars, I found many things about their service and other aspects that I wasn't satisfied with, so I sold my stock. Of course, that was a mistake; I probably should have kept it, but I felt it was difficult, really difficult. I don't really like him that much, but I respect him. I think he's done many remarkable things, especially SpaceX—that's incredible, very impressive, and Starlink is also amazing. I don't know about electric cars; I think they're just so-so. I don't really like Tesla cars, but I like Starlink; I'm a customer. And look at SpaceX, I think it's truly impressive. Musk is a brilliant person. Undoubtedly, he's far more impressive than me, but that doesn't mean I have to like him.
Fang Sanwen: Buffett said not to invest in four-wheeled businesses. Do you think electric vehicles or the intelligent driving that everyone is working on now will change the nature of four-wheeled businesses?
Duan Yongping: It's difficult. Electric cars are simpler than gasoline cars; they're just electric motors, and they can be made in almost any shape. Ultimately, price competition will inevitably intensify. Of course, if you really fight until only one or two brands remain, they might reach an agreement, and you can still make money. As for autonomous driving, if everyone tries to develop it independently, it's actually very exhausting. I don't know, I'm not in this industry, but I think that in the future everyone might use Google's solutions, or solutions from a few other companies, and then everyone will be homogenized. Everyone's products will be similar, and you'll end up earning an average profit. It's not that there's no money to be made, but without good differentiation, it's difficult to achieve high profits.
If everyone's going to get involved, I don't know how far it will go, but it will definitely be a race to the bottom before anyone can make money. Right now, I don't know how many companies are making electric vehicles, just like when we were making game consoles, maybe hundreds. In the end, only a few will survive the race, and those few will be profitable, while the hundreds will all go bankrupt. So most of the electric vehicles you see now will die, I'm sure of that. I don't know who will survive.
Fang Sanwen: You generally believe that whether it's electric or intelligent, it hasn't changed the fundamental characteristics of this industry?
Duan Yongping: I don't know if electric vehicles can truly save energy and be environmentally friendly. I've never really figured this out, because from a macro and long-term perspective, batteries themselves aren't very environmentally friendly, so I'm not very clear on the electricity production process. Of course, if solar energy is used very effectively, electric vehicles might become truly beneficial; if humanity achieves nuclear fusion power generation in the future, then it will certainly be meaningful, but I haven't studied that in depth. If that's the case, then gasoline cars will be out of a job, and their market will be in dire straits. However, electric vehicles will continue to compete, and their differentiation will be smaller than that of gasoline cars.
Fang Sanwen: Is it impossible to change the highly competitive nature of this industry?
Duan Yongping: Competition in the automotive industry isn't as fierce as in the solar silicon wafer industry, nor is it as fierce as in the airline industry. Airlines operate on a simple route, like A to B. If you offer 100 yuan, I'll sell for 100 yuan at most; there's no differentiation. Ultimately, it's about monopolizing routes. Of course, you can't truly monopolize a route, because the government will always allocate a couple more routes for competition. The same applies to the automotive industry.
Fang Sanwen: Now, companies like Tesla are spending a lot of energy on another business, which is humanoid robots. Do you think this has commercial value?
Duan Yongping: If you had a few robots in your home, you wouldn't even need to hire a nanny, which would be great, right? They could also provide emotional value, wouldn't it? Whether it's achievable or not, some people think it's definitely possible, so they gamble on it. I generally wouldn't. I think unless I truly understand it and it's truly achievable, I don't quite understand why humanoid robots are necessary. Because robots don't need to be humanoid; whether they are humanoid or not isn't important. Why would a cooking robot look like a nanny? Of course, if it can achieve this without any cost, then perhaps it makes sense, because humans have advantages. Two legs make walking much more flexible; if you had four wheels, there are many places you might not be able to go. But whether you need a head, I don't know. I imagine it's unnecessary. You can have four limbs, you can have eight limbs, you can have many hands.
Fang Sanwen: Let me ask another question about the oldest company—Berkshire Hathaway. Buffett has just retired. It used to be a company that has been built on a foundation of longevity. There are still many people who hold its stock. A user named "Jiangpan Chuyue Chuzhaoren" asked, "Now that Buffett has retired, can Berkshire Hathaway continue to be a company that has been built on a foundation of longevity?"
Duan Yongping: Then he probably doesn't understand the company at all. First, all the companies Buffett bought are still around; second, the successor inherits his culture, and they are all striving to find companies with good future cash flow—that won't change. As for the successor's competence, Buffett makes mistakes, but the people he chooses won't be too bad. His culture won't change; they're not a speculative company. Holding Berkshire Hathaway is definitely better than just buying any mutual fund. What good options do you have? If you don't understand investing, you should buy companies like Berkshire Hathaway, or the S&P 500 index—that's definitely better than buying a fund. You know who they are, you know their history. Buying this might be better than Blackstone or others; in the long run, its returns are likely to be higher.
Fang Sanwen: Do you think there's a high probability that Buffett's company will maintain its previous advantages?
Duan Yongping: I think their methods and their way of thinking are sound. As for whether they can outperform the S&P 500, I don't know. I've specifically talked to Buffett about this. I asked him if he thought he could outperform the S&P 500 in the future. He said it was very difficult, but he thought he might be able to outperform it by a small margin. He just enjoys doing this; otherwise, he would just buy the S&P 500 and ignore it completely. So their opportunity cost is the S&P 500. Therefore, they will only act when they feel they can outperform the S&P 500; otherwise, they won't do it at all, or they will just buy the S&P 500.
It's a simple thing, and this is how I think: if one day I really decide to stop investing, or if I pass it on to my children and find that one of them doesn't understand investing—and you can't really help someone who doesn't understand—I'll just buy them the S&P 500 index or Berkshire Hathaway. A friend of mine passed away, and his children told me that he had bought half of his portfolio in the S&P 500 and half in Berkshire Hathaway. That's perfect, that's a good arrangement. Then they don't have to worry about it anymore. They don't care what the market does; they can just live their own lives because the S&P 500 pays dividends, and the dividends from the other half of the stocks are enough for them. They just hold onto the Berkshire Hathaway, which saves them a lot of trouble.
Fang Sanwen: Let me ask you about another company that everyone is more concerned about – Pinduoduo. You previously said that you had venture capital investment in it, and recently you have increased your investment. Is it still venture capital now?
Duan Yongping: Yes, but I know a little more now. I actually sold a large portion of my portfolio and then bought it all back. I think this company is somewhat interesting, but it's risky, so I wouldn't recommend it to others.
Fang Sanwen: You said you bought it back and felt you understood it a little better. What part of it did you feel you understood better?
Duan Yongping: The money they've made is there for all to see; you can see it in their financial statements. If they can maintain this business, it's very cheap. The problem is, I don't know if they can really maintain it, or what factors might affect it. But I trust their entire culture and their whole team.
