After a consumer group criticizes their businesses, the fortunes of Chinese tycoons plummet by $6.8 billion

Cambodia Compass report, 13th May -  After a consumer organization questioned some of their business practices, two of China's richest tech tycoons saw their fortunes plummet this week.

Pinduoduo's stock fell 9.1% in response to the news, wiping out Huang Zheng's net worth of $4.3 billion. According to Forbes Real-Time Billionaire List, the founder of e-commerce is now worth $42.9 billion, making him China's fourth richest individual.

On Tuesday, investors sold down shares of Meituan, causing its founder Wang Xing's fortune to plummet by $2.5 billion. Following a 7.1 percent decrease the day before, Meituan's stock fell another 5.3 percent on Tuesday. Wang's estimated net worth is $19.5 billion.

The Shanghai Consumer Council had issued a statement the day before, stating that it had summoned both Pinduoduo and Meituan for meetings. Pinduoduo was chastised by the consumer protection organization for its poor product quality, counterfeit goods, and after-sales operation, among other things. Meituan was also chastised for refunding problems, food delivery delays, and deceptive material on its website, according to the study.

The remark was made in the midst of the Chinese government's continuing crackdown on the country's largest tech firms.

Wang posted and then deleted a post on the social media platform Fanfou last week that some interpreted as a veiled criticism of the Chinese government. Qin Shi Huang, a Chinese emperor who led a movement against intellectual debate, wrote a poem about the burning of books during the Tang dynasty, which the chief executive officer shared. In the poem, Qin is mocked for seeing scholars as his greatest challenge, but his regime was ultimately overthrown by people who had never even read a novel.

After a few days, Wang took down the post and released an apology. The poem served as a reminder to the 42-year-old that "the most dangerous antagonists are always not those predicted," she said. He went on to say that while Ele.me might appear to be Meituan's biggest rival, the food-delivery industry may eventually be shaken up by "companies and business models yet to be found."

A request for comment from Meituan and Pinduoduo was not immediately answered.

Meituan's suspected monopolistic market practice of pressuring merchants to "take one from two" was officially investigated by Beijing's anti-trust regulator in late April. Since then, the food-delivery behemoth's stock has dropped nearly 18%.

On Weibo, some Chinese users compared Wang's poem post to his rival Jack Ma's speech at a high-profile financial forum in October 2020. At the time, Alibaba's billionaire founder, Jack Ma, blasted Beijing's regulatory regime, claiming that Chinese banks were operating with a "pawnshop" mindset.

The speech prompted a crackdown by Chinese authorities on Alibaba, which included an immediate halt to Ant Group's record $35 billion initial public offering and the largest-ever $2.8 billion anti-monopoly fine on the e-commerce giant.

Source: Cambodia Compass comprehensive arrangement

Editor: Malinda         Chief Editor: Sunnie         General in Chief/Executive Producer: Nicole

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