Pinduoduo founder Colin Huang has suffered $27 billion in losses — the biggest decrease in wealth in the world this year.
Huang founded Pinduoduo, also known as PDD, a Chinese technology platform centered on agriculture. PDD was the largest platform of its kind in China, connecting rural farmers with distributors and consumers on its interactive website. By 2019, roughly 12 million farmers were working with PDD to connect directly with its users.
PDD plummeted in value after China’s President Xi Jinping tightened his grip on the country’s private sector companies. The crackdown has had the most dramatic effect on internet platforms like Alibaba and Tencent.
Pinduoduo takes huge hit after President Xi cracks down on tech
But PDD has taken the biggest hit of them all, with the company’s market value going from $178 billion to $125 billion. Huang owns 28% of PDD and has grown his company into an e-commerce superpower over the last six years.
PDD’s growth had taken place at an astounding rate. In March of this year, the company announced that it had reached 788 million active users, surpassing competitor Alibaba’s 779 million user base. Huang had simultaneously stepped down as chairman of the board after previously leaving his CEO title in July of 2020.
“The departure had an air of inevitability about it in light of Huang’s resignation as CEO last July,” Robin Zhu, a Bernstein analyst, said. “But the timing came as a surprise, and skeptics will note that the China internet sector is 0-for-1 when iconic founders leave the building.”
“I hope that my stepping down as the Chairman of the Board will aid this young person into independent adulthood,” Huang said in a letter to shareholders, speaking metaphorically about the life of the company. “Though I can no longer become a true scientist myself, I would feel very lucky and blessed if I have the chance to become a research assistant to a future, possibly great, scientist.”
Huang is now worth $35 billion after losing $27 million with PDD’s stock value crash. The loss represents the biggest drop in the 500 members of the Bloomberg Billionaires Index.
Evergrande Chairman Hui Ka Yan also loses billions in wealth
The China Evergrande Group’s Chairman Hui Ka Yan has also recently lost $16 billion in wealth due to the real estate group’s debt crisis.
Evergrande shares fell 4% as focus there shifts to Thursday when the company is due to make bond interest payments, amidst its deep liquidity problems. This has led to widespread speculation that a potential Evergrande default could affect the world’s second-largest economy and possibly lead to a “house of cards” event, similar to the one the Lehman Brothers collapse led to in 2008.
The crisis has been brewing at Evergrande, China’s second-largest real estate company, for months and the company had warned that it was facing a liquidity crunch that has left it without money to pay off its debt obligations, which cumulatively stand at over $300 billion, equivalent to 2% of China’s GDP.