Many internet billionaires have seen their fortunes suffer as a result of the Chinese economy’s difficulties and a major attack on private businesses, but one tycoon has managed to remain ahead of rivals and make a record $15 billion this year because of his company’s affordable products.
The founder of the cheapest e-commerce firm Pinduoduo, the reclusive billionaire Colin Zheng Huang, is now value at $26 billion. According to Forbes’ real-time billionaire tracker, Huang is currently the fourth richest person in China, ahead of fellow e-commerce billionaires Jack Ma of Alibaba and Richard Liu of JD.com.
Huang made the achievements as the 42-year-Nasdaq-listed old’s company’s shares regained rather more quickly than those of its competitors.
Pinduoduo stock has increased 200% since its March low when investor confidence was severely shaken by China’s regulatory assault, the auditing dispute with the United States, and the company’s own unsettling business forecast.
Huang, who resigned as Pinduoduo chairman last year and maintains a low profile but continues to earn his riches from his 28% interest in the company, benefitted later from the bad economic conditions.
As the Chinese economy struggles, more and more shoppers are heading to Pinduoduo for lower rates of goods. 34-year-old bank employee Estelle Zhang reports she now uses Pinduoduo more regularly than she did in the past. Recently, Zhang paid less than $3 for 2kg of lemons at Pinduoduo, which is less expensive than at nearby stores.
According to Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities, Pinduoduo is investing more to connect farmers directly with customers under the direction of CEO Chen Lei, a sector that China’s policymakers fully urge.
In the third quarter, the company outperformed sales forecasts and reported revenues of 35.5 billion yuan ($5 billion), a 65% year-over-year increase. This marks the continuation of the previous quarter’s strong growth of 36%.
According to Shawn Yang, a managing director at research company Blue Lotus Capital Advisors with a Shenzhen base, “Platforms delivering value-for-money items are profiting from the current environment.” To draw people, Pinduoduo has also done a lot of optimization, such as adding additional short video feeds to its main app.
As per Yang, Pinduoduo may benefit from the current negative economic climate for the ensuing two quarters since any economic recovery would take time to materialize.
After protests against the harsh measures erupted over the weekend, there has been speculation that China may continue to reduce its covid-related restrictions. Officials have pledged to speed up elderly vaccination, which is usually viewed as critical to releasing from covid limits.
After officials stated they would loosen financing regulations for developers, the real estate sector, another significant drag on the economy, received further funding help. Yang Huiyan and Wu Yajun, two female billionaires in real estate, saw their fortunes increase earlier this month after Chinese regulators unveiled a comprehensive package of measures to support the struggling real estate sector.
In the meantime, Pinduoduo said that some of the causes of the current rate of rapid growth are not long-term. Executives stated on a Monday analyst call that some projects originally plan for the last quarter weren’t complete on time, which cause spending to be reduce and ultimately increase earnings by 546% to $1.5 billion from the same time last year.
So according to Liu Jun, vice president of finance at Pinduoduo, “profitability is partially attributable to such time gap” during the analyst call. “We will keep stepping up our investments, especially to assist the manufacturing and agricultural sectors through technology.
And as a result, our future profitability may see volatility, and the Q3 level won’t persist.
Pinduoduo is similarly banking on international markets for future expansion. In a clear reference to Amazon and Chinese billionaire Chris Xu’s Shein, the company launched the shopping site Temu in the United States in September. According to executives, the growth is still in its early stages, but Temu was the top download shopping app in America in November, per analytics company Sensor Tower.