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In this NetEase Finance interview in March 2010, Duan Yongping discussed his value investing principles, stressing that buying stocks means investing in a company’s future. He also shared management and life insights, advocating for focus and persistence over reckless expansion. He promoted a simple, pragmatic lifestyle, emphasizing that true wisdom lies in making thoughtful choices and seeking inner peace and satisfaction.

Host: Today’s guest is a figure who has consistently created remarkable achievements. As an entrepreneur, he single-handedly built two renowned brands: Xiaobawang and BBK. He then successfully transitioned into a highly regarded investor. Now, philanthropy plays a significant role in his life. He is Duan Yongping. Having relocated to the US, Duan Yongping has been active in investment and charitable giving in recent years. On February 28th, he and his wife donated $30 million to Renmin University of China, once again drawing media attention. Speaking to NetEase Finance, Duan Yongping shared his thoughts behind this donation.

Duan Yongping: It’s difficult to put into words, but I think it’s about creating a certain atmosphere, a certain environment. I feel our culture doesn’t fully grasp this kind of thing yet, especially since many people will question, “Why this cause and not that one?” Everyone involved in philanthropy has their own perspective and priorities. They see a need, they believe in a cause, they want to donate—so they do. They don't meticulously scrutinize every detail or search for the absolute most deserving cause. That would be incredibly inefficient. They’d never find the “most efficient” place to donate, but they’ll find what they believe is the right place. I think our current social culture doesn’t entirely accept this yet, though we’ve made huge strides. Compared to when Ding Lei and I donated to Zhejiang University back in 2006, the progress is remarkable.

Host: What suggestions do you have for improving the environment for charitable giving in China?

Duan Yongping: I think it mostly takes time. Gradually, people will understand. Of course, the media can play a big role in this. With more accurate reporting and guidance, public perception will shift, but this is a long-term process. Developed countries in Europe and North America have been at this for perhaps a century or two. We’ve only been at it for a decade or so, at most.

Host: So, with time, things will naturally improve?

Duan Yongping: Exactly. More and more people will understand.

Host: Besides his philanthropic work, Duan Yongping is also known in the US as an independent investor. Following his successful investments in NetEase and UHAL, his investment strategy has garnered widespread acclaim. Is it simply luck, or is it skillful investing? From a business leader to an investment giant, what are Duan Yongping’s investment secrets?

Duan Yongping: Investing is actually quite simple: you buy when you think something is undervalued. “Undervalued” isn’t about comparing the current stock price to its historical highs. It’s about determining what you believe its intrinsic value is. If you think it’s undervalued, you buy. I didn’t suddenly discover a company like GE. I’d been following GE for years. When its price plummeted, I felt it was ridiculously low. Sure, some people said it could go even lower, but I figured it was cheap enough, so I bought it. If it dropped further and I had the funds, I would have bought more. So, there’s not much more to it.

Host: You invested in GE after Warren Buffett. Were you influenced by him?

Duan Yongping: Strictly speaking, Buffett didn’t buy GE stock directly. He bought convertible bonds, which had much better terms than my investment. He was guaranteed an annual return of over 10%, and he also had the option to convert the bonds to stock if the price reached a certain level. We bought common stock, so it’s not a direct comparison.

Host: Did knowing about his investment influence your decision to invest in GE?

Duan Yongping: It did have some influence. I remember when Warren Buffett bought the convertible bonds, GE was trading around $21 or $22, roughly $20. When I bought, it was already below $10. Everyone was worried about GE going bankrupt. Based on my research, I was confident it wouldn’t. Buffett’s investment reinforced my belief. He clearly didn’t think it would go bankrupt either, because his bonds would have been worthless if it had. Of course, he had some priority as a bondholder, but still. His investment confirmed my own judgment. It was reassuring to have my opinion validated by someone I respect and trust.

Host: Can you share how profitable the GE investment was?

Duan Yongping: It did well.

Host: Besides GE, have you made any other significant investments?

Duan Yongping: There have been others, to varying degrees.

Host: Such as Yahoo, or Skyworth Digital?

Duan Yongping: Yes, we also bought some Skyworth, but that was a while ago, not recently.

Host: Warren Buffett’s value investing philosophy is a cornerstone of the investment world. What did Duan Yongping gain from having lunch and conversing with Buffett? Why was he particularly interested in Buffett’s mistakes? And what about Duan Yongping’s own investment failures?

Duan Yongping: I was very interested in learning about his mistakes, because both he and I have made our share. I wanted to understand which mistakes we could avoid—things we know are wrong, we shouldn’t do. It’s the same in business: you have to do the right things and do them well. “Doing the right things” refers to fundamental principles. He taught me things like not investing in things you don’t understand, not shorting stocks, and not using leverage. But when it comes to “doing things well,” you’re bound to make mistakes. For example, I might analyze a stock and think it looks great, but I might overlook something, or there might be issues with management… For instance, I once invested in a company…

Host: A fast-food company? Was it a fast-food chain?

Duan Yongping: The fast-food one barely counts, because my investment was tiny. Although it gets mentioned, it was only a little over a million dollars. For my investment scale, that’s insignificant. Whether I made or lost money on that, it wasn’t a big deal. I invested because I thought it had potential. I can use this as a prime example. When I bought the stock, the company had a cash flow of one dollar per share, per year. The stock price was just over a dollar, so it seemed like a no-brainer. I would have recouped my investment in just two years. But the company decided to expand aggressively, opening new stores, which cost money without generating corresponding revenue. Then they raised prices, and it all went downhill.

Host: What was the lesson learned?

Duan Yongping: I wouldn’t call it a major lesson. It was simply a misjudgment. I jumped in without sufficient understanding. But it wasn’t a huge setback, as it was more of a trial run. I was mainly interested in joining their board to see how US-listed companies operate. I’d always been on the outside looking in… I think truly understanding any company is difficult. Things can be deceptively simple. You think you understand, but there are always things you don’t know—what we call “we don’t know what we don’t know.” You think you know, but you don’t, and by the time you realize it, it’s often too late.

Host: Recently, Berkshire Hathaway, led by Warren Buffett, released its annual performance report. It showed that although they returned to profitability last year, they underperformed the market. What are your thoughts on this?

Duan Yongping: Did they really underperform? That’s just for one year, right? Yes. I don’t find much value in discussing such short-term fluctuations. It’s pointless. In the long run… I own Berkshire Hathaway stock myself. I bought some after having lunch with him and even got the certificate signed—a nice souvenir. The signature alone has been worth quite a few lunches.

Host: Last year, Zhao Danyang’s lunch with Buffett also caused a stir in China. Some people suggested that these kinds of lunches are less about gaining wisdom and more about personal marketing. What’s your take?

Duan Yongping: I don’t know about that. For me, it certainly wasn’t for marketing. The event itself isn't really about spending money; the proceeds go to a foundation. Since I have my own foundation and I donate every year anyway…

Host: I meant regarding Zhao Danyang.

Duan Yongping: I think even if it was partly for marketing for him, it wasn’t his primary intention. He genuinely wanted to learn. Whether it also had a marketing effect is secondary. I believe he did learn something valuable, and it was definitely worth it for him.

Host: Do you think the “wisdom” Zhao Danyang gained is applicable to China? Does China currently have an environment conducive to value investing?

Duan Yongping: Value investing is applicable everywhere, including China. If someone thinks it’s not, it just means they don’t understand investing yet. It will eventually be applicable because the principles are universal. The reason for buying stocks is the same worldwide: given enough time, the value will be reflected. Something without intrinsic value can’t command a price forever. But short-term fluctuations are possible. Especially since over 80% of people in the stock market lose money, regardless of whether it’s a bull or bear market, and most people don’t bother to learn. Look at Warren Buffett. It’s quite interesting. This isn’t the first time, and I’m sure it won’t be the last (depending on his lifespan), that during a major crisis, he might underperform the market for a period or even make mistakes. Then people say, “See, he’s old, he’s lost it.” And then later, everyone says, “Turns out he was right after all.” I’ve recently seen many articles starting to say, “Is Buffett still sharp? He was right all along.” I remember saying last year that within a year or two, many people would change their tune and say, “See, he’s still got it.” Because what he does has no logical flaws. For instance, if something worth ten dollars drops to five, he might buy it. If it drops to one dollar, it might look like he’s losing money. But when it goes back to ten dollars, he’s proven right. Those who didn’t buy at five dollars probably wouldn’t buy at one dollar either, because they don’t understand the principles, or maybe they only have enough money to buy at one dollar and sell at $1.20, so they still don’t make money.

Host: Last year, China’s economic recovery was significantly faster than many other countries. Have you considered investing back in China, for example, in the A-shares market?

Duan Yongping: From my perspective, investment isn’t heavily influenced by macroeconomic trends. You buy when you think something is cheap. Of course, short-term results might be affected by the overall market, but in the long run, the market’s impact on a company isn’t fundamental. It only determines your short-term profits. A company’s inherent quality isn’t determined by market conditions. So, for me, it doesn’t matter which market it’s in. The most important thing is whether I understand it and whether I think it’s cheap enough, with a sufficient margin of safety. If so, I might invest.

Host: What advice do you have for domestic investors?

Duan Yongping: There are quite a few good value investors in China. I’ve seen them, so I don’t think I have any advice to give. Value investors don’t need my advice, and if someone isn’t a value investor, my advice won’t be useful anyway. I’ve discussed this with many people who come to me to discuss or seek advice on investing. I tell them I’m not qualified to give advice, because Buffett has already said everything that needs to be said about value investing, and I can’t say it any better. So, if you don’t believe Buffett, there’s no point in coming to me. If you do believe Buffett, you don’t need to come to me. From a philosophical standpoint, talking to me won’t be very helpful. But when it comes to specifics, like individual stocks or companies, discussions can be mutually beneficial. I also learn in the process, so I often chat with friends. I think there are quite a few people in China already practicing value investing with a deep understanding. And these people, given enough time, will ultimately be the ones driving the majority of market gains. I believe at least half the market gains will come from value investors. Speculators might make some money in the short term, but if you look over 30 or 40 years, you’ll find that some of them fall by the wayside.

Host: Although you’ve moved to the US, BBK has continued to perform very well. Some say you’re a “shadow chairman.” What do you think of that?

Duan Yongping: I have very little involvement in product strategy. We focus on “doing the right things and doing things right.” I played a role in establishing the company’s early culture, defining what we shouldn’t do. For example, we emphasize fundamental principles like integrity. We call it “Benfen” (本分), which isn’t just lip service. It’s ingrained in our core values. If anyone finds anything we do that’s not “Benfen” or lacks integrity, we’ll stop it ourselves.

Host: BBK also launched the independent brand OPPO. Do these significant moves mean BBK is preparing for another major strategic shift?

Duan Yongping: These are done by two different divisions. Actually, we launched the OPPO brand much earlier than people think. We started designing the brand in 2000. The driving force was our long-term vision. When we went global, we knew we couldn’t use the BBK brand. We needed an international brand. So, we didn’t use Chinese designers. If we’d designed a Chinese-English brand ourselves, it would have been very awkward—we might have thought it was great, but foreigners wouldn’t be able to pronounce it or find it appealing. So, OPPO was designed by Europeans, with extensive voice testing done in different countries, including the website and everything else. It took a long time and a lot of money—probably two or three years—before we started making suitable products. It was mainly for export. Our OPPO products, like DVDs and Blu-ray players, sold very well in the US. We never talked about it domestically because we’re not comfortable boasting. Since you asked, our Blu-ray players have consistently received top ratings in the US, surpassing Sony, Panasonic, and even Pioneer. I’ve seen online comments dismissing this, saying it’s fabricated or hype. But we’ve never made a big deal about it. We’ve always said, “If you know, you know.” So, most of our customers in China are returnees from overseas.

Host: I’ve seen many interesting comments online, with some people not realizing the connection between OPPO and BBK.

Duan Yongping: They’re both related and unrelated. OPPO is a very independent company, even with a different shareholder structure.

Host: There seems to be some overlap in distribution channels?

Duan Yongping: There’s always going to be some overlap. Everyone sells through major retailers, so they end up being displayed together. It’s unavoidable. But they are also competitors. I think in the mobile phone market, BBK and OPPO are probably the fiercest competitors, but it’s a healthy competition, and any major conflicts are easily resolved. We don’t talk about it much because we want users to focus on the products themselves, not external factors. We don’t say things like, “We sell well in the US, so even foreigners are buying our stuff, you should too.” We don’t bring that up. If our products are good, consumers will naturally know. They’ll discover it through the product performance and design, which meets their needs. And so far, OPPO mobile phones have been performing quite well.

Host: About how many times a year do you return to China?

Duan Yongping: About once or twice.

Host: And how long do you usually stay?

Duan Yongping: Eight to ten days.

Host: You once said that BBK didn’t go public because it wasn’t short of funds. Will this stance change in the future?

Duan Yongping： There’s no change.

Host: It won’t change in the future either?

Duan Yongping： I don’t know about the future. The future is complex and hard to predict. Things might change at some point, but the reasons for those changes probably won’t be the same as before. We definitely won’t go public to raise money.

Host: Under what circumstances might that change?

Duan Yongping： For example, due to systemic issues, exit mechanisms, or perhaps some people getting older and no longer wanting or being able to work. They’ll need money. Our shares aren’t publicly traded. Some people might want to exit partially, or even completely. These are all possibilities. If the company has value that others recognize, they could buy it, or something like that. But that’s not happening now. At least within the next two or three, maybe five years, we probably won’t go public. It’s unlikely. But I can’t say what will happen beyond five years.

Host: You once said that becoming a Fortune 500 company was never your goal; you wanted to build the longest-lasting company. What do you envision BBK becoming in the future?

Duan Yongping： I’ve never had grand ambitions or ideals. I’ve always felt that the most important thing for us in making products is finding what people need and then fulfilling those needs. If you lose that passion, your company is nearing its end. I don’t think the ultimate scale of our company is something we pursue. I don’t want to be in the Fortune 500, and I’m not trying to beat anyone. We just want to make people happy. For example, seeing you use our product makes me happy, that’s all. Many people appreciate our products, so we’re doing quite well. Our company has a very weak pursuit of profit. We don’t make it our primary goal, or even a particularly important goal. We see it as a byproduct. When you do the right things, it’s actually quite difficult not to make money. But if you specifically chase profits, they’ll run faster than you, and you’ll never catch them. It’s much more pleasant to have profits chase after you.

Host: What are the biggest differences between being an entrepreneur and an investor? Which gives you the greatest sense of accomplishment?

Duan Yongping： There’s no fundamental difference. The biggest difference, if I had to name one, is that investing is perhaps more difficult because there are more uncertainties. It’s easier to make mistakes in investing. You’ll make mistakes in business too, but in business, I can generally see things more clearly.

Host: Because you’ve run businesses yourself, you probably understand things better.

Duan Yongping： It’s the same for everyone. When you’re running something yourself, you can see most things firsthand. In investing, if you find a company, you might not have a deep understanding of the people running it. Based on the information you have, you might think they’re good, everything looks good, you invest, and then you find out they’re not the kind of people you thought they were. This sometimes happens. But when opportunities arise, people don’t always have the patience to wait. For example, if I want to understand someone, I’d want to spend eight or ten years with them. But when you see an opportunity, you get excited, and it’s hard to say you’ll wait eight or ten years. Warren Buffett has that kind of patience. He says he generally doesn’t invest in newly listed companies or companies with only two or three years of history. He prefers companies with at least ten years of history so he can investigate them thoroughly. I’m getting better at that now, my mindset is improving.

Host: What are your plans for your future career?

Duan Yongping： I don’t have any specific plans. I’ve been an entrepreneur. Now I mainly do some investing. I don’t really consider investing a career; it’s more of a hobby.

Host: Do you plan to establish a company like Berkshire Hathaway, like Buffett?

Duan Yongping： I definitely won’t do that. I do manage some other people’s money, but I don’t want to make it a profession. Being a professional means having a lot of responsibilities. I’m doing quite well as it is. If you look at the growth of my returns over the years, overall, it’s not worse than what Warren Buffett has done, but that doesn’t mean I can always do it. And being a professional carries different responsibilities and requires different effort. I don’t want it to affect my life. So, whoever is willing to entrust their money to me… I’m not taking on any new money now. In the early days, when I was very interested, I was willing to manage anyone’s money. Now, I decline whenever I can.

Host: Who do you admire most?

Duan Yongping： Oh, I admire many people, but in different areas. If you’re talking about playing golf well, it’s Tiger Woods; if you’re talking about investing well, it’s Warren Buffett. So, I don’t have one single person I admire most.

Host: What do you think is your biggest flaw or weakness?

Duan Yongping： I’m alright. I don’t think I have any major flaws. I think everything’s normal. Even your weaknesses can sometimes be strengths.

Host: What’s your biggest extravagance?

Duan Yongping： That’s probably smoking.

Host: What are you most dissatisfied with about your appearance?

Duan Yongping： I’m okay with my appearance. Aren’t you? Haha. I think appearance only affects others, it doesn’t affect me much.

Host: What qualities do you like most in women?

Duan Yongping： Hmm, that’s an interesting question. I think it’s understanding.

Host: Among those still living, who do you despise the most?

Duan Yongping： I can’t think of anyone. Hmm… I can’t think of anyone I particularly hate or despise.