In China’s collapsing economy, Pinduoduo’s reclusive billionaire has managed to rake in $15 billion

CHina’s economic headwinds and a sweeping crackdown on private companies have battered the fortunes of many tech billionaires, but one mogul has managed to stay ahead of its competitors and raked in a whopping $15 billion this year from his company’s low-cost products .

Colin Zheng Huang, the reclusive billionaire and founder of discount e-commerce site Pinduoduo, is now worth $26 billion. Huang is currently the fourth richest person in China forbes‘ Real-time billionaire tracker, ahead of fellow e-commerce tycoons Jack Ma of Alibaba and Richard Liu of JD.com.

Huang made headway as shares in the 42-year-old’s Nasdaq-listed company rallied much faster than its peers. Pinduoduo’s shares are up 200% from a March low as China’s regulatory crackdown, audit with the US and the company’s worrying business outlook shook investor confidence. But the unfavorable economic conditions later proved to be a boon for Huang, who resigned as chairman of Pinduoduo last year and is keeping a low profile but continues to derive his wealth from his 28 percent stake in the company.

As the Chinese economy is in a downturn, more and more consumers are migrating to Pinduoduo to buy cheaper goods. Estelle Zhang, a 34-year-old who works at a bank branch in Beijing, says she now uses Pinduoduo more than before. Zhang recently bought 2kg of lemons on Pinduoduo for less than $3, which is cheaper than local supermarkets.

Led by CEO Chen Lei, Pinduoduo is investing more to put farmers in direct contact with buyers, an area China’s policymakers are strongly supporting, according to Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities. The company beat market expectations, reporting a 65% year-on-year increase in third-quarter revenue to 35.5 billion yuan ($5 billion).

“Platforms that sell value-for-money products are benefiting from the current environment,” said Shawn Yang, a Shenzhen-based managing director of research firm Blue Lotus Capital Advisors. “And Pinduoduo has also made a lot of tweaks – like integrating more short video feeds into its main app – to attract users.”

Yang says the gloomy economic conditions for Pinduoduo could continue to be in Pinduoduo’s favor over the next two quarters as it would take time for an economic recovery to kick in. Speculation has mounted that China may further ease its Covid-related restrictions after protests against the strict measures erupted over the weekend, and officials are now vowing to speed up vaccinating the elderly – a move widely seen as crucial for the reopening of Covid restrictions is considered.

Another major drag on the economy — namely the real estate industry — received further financial support after authorities announced they would relax funding rules for developers. Earlier this month, Chinese regulators unveiled a sweeping package of measures aimed at bolstering the struggling real estate industry and boosting the fortunes of female real estate billionaires Yang Huiyan and Wu Yajun.

MORE FROM FORBESChinese real estate magnates gain nearly $4 billion after Beijing surprised the market with widespread support

Pinduoduo, meanwhile, said some factors behind the current high pace of growth are unsustainable. Speaking to analysts Monday, executives said some projects originally planned for last quarter fell short of execution, resulting in a cut in expenses and subsequently a 546% increase in profits to $1.5 billion compared to the same period a year ago.

“The profitability is partly due to such a timing,” Liu Jun, vice president of finance at Pinduoduo, said at the analyst conference. “We will continue to increase investment, particularly to support agriculture and manufacturing through technology. And this may cause fluctuations in our future profitability and the Q3 level will not continue.”

At the same time, Pinduoduo is looking to overseas markets for future growth. The company launched shopping platform Temu in the US in September, selling discounted products in a direct challenge to Amazon and Chinese billionaire Chris Xu’s Shein. Executives say the expansion is still in the early stages, but Temu is the most downloaded shopping app in America as of November, according to analytics firm Sensor Tower.

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