Chinese tech tycoon loses $87 billion in wealth after Beijing crackdown

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China Business and Finance Update

Since the beginning of July, Beijing’s regulatory crackdown on China’s technology industry has reduced the net worth of the industry’s richest tycoons by US$87 billion, thereby hitting the wealth of giants such as Tencent’s Ma Huateng and Pinduoduo’s Huang Kelin.

According to calculations by the Financial Times, since the ride-hailing platform Didi Chuxing went public in the United States at the end of June, the total net assets of 22 Chinese technology and biotech billionaires tracked by Bloomberg have fallen by 16%.

The company’s $4.4 billion listing Despite private warning Due to data security issues, the Chinese authorities postponed the plan, which subsequently triggered a regulatory storm. Beijing’s attempt to strengthen its control of an industry that helped transform the world’s second-largest economy has caused the stock price of China’s largest technology group to plummet.

Founder Huang E-commerce website PinduoduoIt was the most affected, with a book loss of US$15.6 billion, accounting for one-third of its wealth. Ma Huateng, the founder of the Internet group Tencent, lost more than $12 billion, accounting for 22% of his wealth. He is now the third richest person in China after competitor Alibaba founder Jack Ma.

During the same period, Jack Ma’s wealth fell by US$2.6 billion, but since the authorities cancelled the initial public offering of the financial technology platform Ant Group he controls in November last year, his wealth has fallen by nearly US$13 billion.

China announced last month that these groups must be reorganized into non-profit organizations, and the founders of China’s large tuition companies have seen their wealth suffer.The value of 12% equity in the tutoring company held by Yu Minhong, the founder of New Oriental Education, has shrunk From 3 billion US dollars to only 500 million US dollars.

In contrast, billionaires operating in industries that investors believe are less risky or even supported by Beijing have seen their wealth increase in recent weeks.

“We have seen a readjustment in wealth creation,” said Rupert Hurun, whose research firm Hurun Report has documented the rise of Chinese billionaires in recent decades.

The chart shows that the tech giants have lost their position in the list of China's richest people (based on estimated net assets)

He added that due to the proliferation of successful technology groups, China has more than 1,000 billionaires, twice the number five years ago. But after a series of recent regulatory actions, “savvy entrepreneurs are turning their attention.”

Beneficiaries include Zhong ShanshanHead of Nongfu Spring, Bottled Water Empire, Surpassed Ma Yun and Xiao Ma Became the richest man in China last year. Zhong’s wealth is slightly more than US$72 billion, an increase of approximately US$5 billion since the end of June. He is about 24 billion US dollars richer than Jack Ma.

China’s nine wealthiest auto industry tycoons expressed support for the country’s top leader Department Because it focuses on electric vehicles. Since July, their collective net assets have increased by $22 billion. The fortune of BYD Chairman Wang Chuanfu, an automaker and electric battery pioneer supported by Berkshire Hathaway, jumped by US$4.4 billion to more than US$25 billion, making him the tenth richest person in China.

The histogram of net wealth loss since Didi’s IPO (in billions of dollars) shows China’s biggest loser

During this period, the net worth of the eight billionaires who dominated the fast-growing renewable energy industry also increased by $13.6 billion.

Analysts said that there is no reason to expect Beijing to relax its support for tech giants in the second half of 2021 — or waver in its support for automakers and renewable energy companies.

Bruce Pang, research director of investment bank Huaxing Capital, said that investors and entrepreneurs are paying more and more attention to the Communist Party’s policy statement.

He pointed out that President Xi Jinping pointed out in his speech to entrepreneurs last month that “thoughts and actions must be consistent with the party’s analysis, judgment, decision-making, and plans.”

“This means that companies and entrepreneurs will have to pay close attention to [the party’s] Comments and actions,” Pang said.

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