Autocrats, Bloodbaths, and Shareholder Value

The more aggressive the narrative control, the less credible the leadership

TAL Ed has lost almost 75% of its market cap (about $14B) since June 23.
That’s quite some cliff. New Oriental lost almost 70% of its market cap (about $5B) in one day (June 23).
“I’m so rumbly in my tumbly.”*

Dictatorships are Fundamentally Different

In the middle of the China ed-tech goldrush a few years ago, I was the wet rag. Investing in China posed enormous risks but investing in Chinese education could not possibly end well without a quick exit plan. When I said that, a group of VIPKid investors told me the IPO was “only” 2–3 years away. It seemed like an oddly risky way to bet a few hundred million.

VIPKid, which raised $1.1B from VCs, announced that it’s closing its core business. Source: internal email.
Shanghai Dept. of Education notice ceasing English instruction for elementary school students and replacing it with Xi’s 14 thoughts.
Probably China’s largest English language company starting shutting down a week after the June 22nd announcement. English language instruction is being stopped in Shanghai schools and replaced with “Xi Jinping Thought” (seriously, there’s a book and app of his thoughts; curiously, he has only 14 thoughts). Source:
A trillion USD in losses is also too big to ignore.
Zhao Wei’s entire internet presence was scrubbed; her name was removed from all television series, films, short videos and promotional materials from platforms including Tencent Video, iQiyi and Youku. When feeling weak, the CCP’s narrative control is erratic and extreme; you really think they’re going to let foreigners teach their children? Source.
Increased narrative control is a sign of weakness; also, a sign that your investment is increasingly high-risk. Global Times is the CCP’s primary global propaganda vehicle. Source:
Anyone who’s studied the CCP knows that the CCP doesn’t care about China. Mao openly detested his own people, and Xi carries on the tradition. All Xi Jinping cares about is Xi Jinping. He only cares about the party and others as is necessary to deify himself. (The story: