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Huge blow for Chinese tech moguls: they lose $ 80bn in 2021

(Bloomberg) – It’s been a record year for China’s internet moguls, but not in the way most would have expected.

The 10 richest tech moguls in the country lost $ 80 billion in combined net worth in 2021according to the Bloomberg Billionaires Index, amid fierce measures by Chinese regulators. The drop represents nearly a quarter of their total wealth and is the biggest in a year since 2012, when the index started tracking the world’s richest people.

Pinduoduo founder Colin Huang has lost the most this year: $ 42.9 billion. (Photo by VCG / VCG via Getty Images)

Pinduoduo founder Colin Huang has lost the most this year: $ 42.9 billion, or two-thirds of his fortune, after shares in the e-commerce platform plummeted nearly 70%.

Jack Ma of Alibaba Group Holding., Who has been keeping a low profile since authorities cracked down on his sprawling business empire, has seen his net worth fall by about $ 13 billion.

Few people better embody this year’s wealth roller coaster than Didi Global founder Cheng Wei.

In the weeks leading up to Didi’s US IPO in June, investors seized shares in the secondary market, raising the private transportation giant’s valuation to $ 95 billion and raising the value of the stake. from founder Cheng to $ 6.7 billion.

The euphoria was short-lived. Shares of the Beijing-based company have plunged more than 60% since Chinese authorities announced an investigation and asked it to delist from the New York Stock Exchange, leaving Cheng’s fortune at $ 1,700. millions.

Increased antitrust scrutiny by Chinese regulators has become increasingly common since the surprising stoppage of Ant Group Co.’s initial public offering last year. Tech companies such as Alibaba, Tencent Holdings, Meituan and Pinduoduo have seen their once-high valuations downgraded after being fined for reasons ranging from monopolistic practices to tampering with market orders or underreporting deals.

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‘Better days’

China is also paying more attention to the so-called VIE structure, a loophole long used by the country’s tech industry to circumvent some government restrictions and raise capital from foreign investors.

Uncertainty prevails even after China introduced extensive regulations regulating sales of shares abroad by domestic companies, threatening to increase scrutiny over foreign IPOs that have been conducted virtually uncontrollably for two decades.

At the same time, the US Securities Market Commission announced this month his definitive plan for a new law that forces Chinese companies to open their books to American scrutiny or risk being thrown off the New York Stock Exchange and Nasdaq within three years. This could mean that hundreds of Chinese companies will be delisted from the US markets and will be listed again in Hong Kong or mainland China.

“The best days for China’s tech sector are behind us for now,” said Chen Zhiwu, director of the Asia Global Institute at the University of Hong Kong. “Without access to US capital markets, the story of China’s tech sector would have been very different.”

This photo taken on April 23, 2018 shows CEO of Bytedance Zhang Yiming speaking during the 1st Digital China Summit in Fuzhou, in China's eastern Fujian province. - The Chinese billionaire CEO of Bytedance, the makers of video app TikTok, on May 20, 2021, said he will leave the role because he lacks managerial skills and preferred

ByteDance founder Zhang Yiming is one of the few Chinese internet moguls who has seen his fortune grow this year, earning $ 19.5 billion (Photo by STR / AFP) / China OUT (Photo by STR / AFP via Getty Images)

ByteDance founder Zhang Yiming is one of the few Chinese internet moguls who has seen his fortune grow this year, earning $ 19.5 billion. based on the valuation in a SoftBank Group Corp. report this year. This is in part because it keeps TikTok’s parent company a closed company, insulated from market turmoil. But Zhang has also struggled to keep a low profile during regulatory measures. In May, he announced that he was stepping down from his CEO role and resigned from the board of directors last month.

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Many tech executives have taken similar steps. Su Hua, co-founder of live streaming app Kuaishou Technology, stepped down as CEO in November, just nine months after the company’s Hong Kong IPO. In September, JD.com Inc. appointed a new president, saying that President Richard Liu will focus on long-term strategies.

Charitable donations

Even with the loss of personal wealth, some Chinese tech billionaires have increased their philanthropy in response to President Xi Jinping’s warnings about “common prosperity” to address social inequality. Xiaomi Corp.’s Lei Jun and Meituan’s Wang Xing have donated stakes of $ 2.2 billion and $ 2.3 billion, respectively, to charities, helping in part to reduce their fortunes.

As of the end of August, Chinese billionaires had donated at least $ 5 billion to charities in 2021, 20% more than the previous year’s total national donations, according to data compiled by Bloomberg News.

With iconic tech billionaires like Jack Ma retreating from public prominence, the industry needs to reshape its core strategy for new growth going forward, HKU’s Chen said.

“I believe that the good days will return at some point after an examination of conscience and a reassessment of what prompted the golden days of the past two decades,” Chen said.

Original Note:

China’s Tech Moguls See $80 Billion of Wealth Evaporate in 2021

©2021 Bloomberg L.P.

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