Two of China’s wealthiest tech tycoons saw their fortunes tumble this week after a consumer group criticized some of their business practices.
Shares of Pinduoduo dropped 9.1% on the news, wiping out roughly $4.3 billion of Huang Zheng’s net worth. The founder of the e-commerce is now worth $42.9 billion, according to Forbes Real-Time Billionaire List, making him China’s fourth-richest person.
Meituan’s founder Wang Xing saw his wealth drop $2.5 billion as investors sold down shares of the food-delivery company again on Tuesday. Meituan’s shares dropped another 5.3% on Tuesday, following a 7.1% decline a day earlier. Wang’s net worth currently sits at $19.5 billion.
A day earlier, the Shanghai Consumer Council said in a statement that it had summonsed both Pinduoduo and Meituan for meetings. The consumer advocacy group reprimanded Pinduoduo for its poor product quality, counterfeit products and after-sales service, among others. It also condemned Meituan for refunding issues, food delivery failures and misleading content on its platform.
The council’s statement came amid the Chinese government’s ongoing clampdown on the country’s largest tech companies.
Last week, Wang published and then deleted a post on social media site Fanfou that some saw as a subtle criticism of the Chinese government days. The chief executive officer shared a Tang dynasty poem about the burning of books by Qin Shi Huang, a Chinese emperor who led a campaign against intellectual discourse. The poem mocks Qin for seeing scholars as his biggest threat, but eventually his regime was instead overthrown by non-intellectuals.
Wang deleted the post within a few days later, and then issued a clarification. The 42-year-old said the poem served as a reminder that “the most dangerous antagonists are often not those expected.” He added that Meituan’s biggest competitor may seem to be Ele.me, but it could eventually be “companies and business models yet to be noticed” that shake up the food-delivery industry.
Meituan and Pinduoduo did not immediately respond to a comment for request.
In late April, Beijing’s anti-trust regulator officially launched an investigation into Meituan’s alleged monopolistic business practice of forcing merchants to “pick one from two.” The stock of the food-delivery giant has since then tumbled about 18%.
Some Chinese netizens on Weibo compared Wang’s poem post with the speech given by his rival Jack Ma at a high-profile financial forum in October 2020. The billionaire founder of e-commerce giant Alibaba slammed Beijing’s regulatory system at the time, saying Chinese banks had been operating with a “pawnshop” mentality.
The speech precipitated a crackdown by Chinese authorities on the e-commerce company, including an abrupt halt of affiliate Ant Group’s record $35 billion initial public offering and a highest-ever $2.8 billion anti-monopoly fine on Alibaba.