In this new video, L2 Founder Scott Galloway explains the Sino West formula, mentioned in our Digital IQ Index: Beauty | China. The term refers to an algorithm where a brand from the west goes makes an investment in a consumer market, and local brands watch and wait before competing. Galloway said this “watch and learn” phenomenon happens is nothing new and happens across all industries, but the Chinese government is prepared to support local businesses more than other brands have. That has led to many western brands wondering how they can preserve their gains, and Galloway believes the answer is digital. American and European brands could take advantage of their upper hand in digital instead of diving into as distribution and branding, which favor local brands.