China's richest man criticizes tech giants and government failures

China's richest man criticizes tech giants and government failures

China's richest person has spoken out against online shopping platforms, accusing them of initiating price competitions that have hurt a wide range of companies and industries as the country struggles with an economic slowdown.

Criticism of Pinduoduo and the government

In extremely rare remarks largely censored by state media, Zhong Shanshan, founder of beverage company Nongfu Springs, also took aim at the Chinese government, calling it "negligent" for failing to stop the trend of aggressive price wars.

It is unusual for Chinese business owners to publicly criticize the government, and those who do often face consequences. During a visit to a region of eastern China, Zhong was widely quoted. He directly criticized Pinduoduo, the popular e-commerce platform owned by PDD Holdings, accusing it of harming companies.

Price decline and its effects

"Internet platforms have undermined our pricing system. In particular, Pinduoduo's pricing system has caused great damage to Chinese brands and industries," he was quoted as saying by state media The Paper. "It's not just that bad money drives out good money. It's an entire industry orientation, and pricing has become the industry orientation."

Pinduoduo has experienced tremendous growth in recent years, partly due to its competitive pricing. In further remarks from the same news conference that were not widely reported by state media, Zhong criticized the government for not doing more to stop the trend.

Economic pressure on consumers

Following Alibaba co-founder Jack Ma's criticism of China's banks and financial regulators in November 2020, Ant Group, a financial subsidiary of Alibaba, was forced to withdraw its $37 billion IPO at the last minute. Ma then withdrew from public life while Beijing began a crackdown on the tech sector.

Among the companies affected was Pinduoduo, founded in 2015 by Colin Huang. In just eight years, the Temu-owned startup has successfully capitalized on a shift in consumer habits in the world's second-largest economy.

Price pressure on the market

As China's economy grows slower and job prospects dim, people are spending less on everything from food to electronics to cars. Discounts and special offers are offered across all brands, including Western companies that primarily target premium markets. The effects are far-reaching.

Zhong's comments come at the end of a difficult year for the billionaire. Earlier this year he faced a wave of attacks from nationalists who accused him of a lack of patriotism. This campaign hurt his beverage company's stock price and hurt his sales.

Bloomberg reported that the campaign wiped out hundreds of billions of Jing on Nongfu's market capitalization and Zhong lost his spot at the top of China's richest list in August to Huang, who still holds shares in the company he founded. But Zhong has now reclaimed the top spot, with a fortune of $52.2 billion, according to the Bloomberg Billionaires Index.