Some of China’s richest industrialists have watched as $87 billion of their personal wealth has evaporated amid Beijing’s regulatory crackdown, according to calculations by the Financial Times.
The FT looked at the two dozen Chinese billionaires tracked by Bloomberg, finding that their combined net worth has fallen 16% since the Chinese government began its campaign against Didi Chuxing at the end of June.
Among the hardest hit has been Colin Huang, founder of the e-commerce site Pinduoduo, who has lost a third of his wealth – worth $15.6 billion. Pinduoduo’s stock has lost some 27% of its value since the beginning of July.
“We’ve seen a realignment of wealth creation,” Rupert Hoogewerf, chief researcher at the China-focused outfit Hurun Report, told the FT.
Alibaba founder Jack Ma has been spared some of the worst losses recently, but that is in part because his fortune was crimped by an earlier crackdown on Ant Group, Alibaba‘s financial arm, last November. Since the beginning of July, Ma has lost $2.6 billion, but the losses total $13 billion since November.
Still, some Chinese tycoons have benefited from the regulatory assault. Zhong Shanshan of water bottler Nongfu Spring has become China’s richest man at $72 billion in net worth, up $5 billion since the end of June. Likewise, China’s leading industrialists in the auto and renewables sectors have seen their wealth multiply in the last couple of months.
The biggest losses have come from Chinese billionaires in the tech industry. However, some billionaires in other sectors, such as real estate and healthcare, have also been hit.
The brutal work schedule known as the “996” has been blamed for making work-life balance impossible, causing unnecessary stress, and even killing workers at some of China’s leading tech companies.
This unwritten rule of many Chinese workplaces has been championed by tech leaders and denounced by workers and activists for years. Here’s what you need to know about the infamous “996.”
What is 996 work culture?
The “996,” a work schedule which encourages or coerces employees to work from 9 a.m. to 9 p.m., six days a week, is common among Chinese tech companies and startups. Though the practice is technically prohibited by Chinese law, many companies still enforce the hours informally or formally.
“Working overtime is now normal,” a blogger on Weibo, a Chinese social media platform similar to Twitter, said. “What’s even more scary is that so many young people are already used to this and don’t dare to protest because they know even if they do, it will be useless.”
‘We can’t help but ask – is it really worth it to exchange our lives for money’? How does 996 affect Chinese workers?
Furor over the “996” was reignited in December, 2019, after a 22-year-old working at Pinduoduo, an e-commerce company, collapsed and died on the streets of Urumqi, China, after leaving work at 1:30 a.m. The woman was seen in China as another victim of an extreme culture of overworking, and outrage flared on Chinese social media.
TikTok’s parent company was planning on taking some parts of its business public, the Wall Street Journal reports, but those efforts ground to a halt after Chinese regulators advised the company to focus on potential data security risks.
China had only just kicked off a more aggressive affront to Big Tech when Ma’s October listing plans were caught in the thicket. It didn’t help that Ma very publicly scoffed at how China regulates the financial sector.
What followed was a very public crackdown of Ma when the government yanked his IPO before it could even take off.
Chinese billionaire Jack Ma is “lying low right now” after the Alibaba and Ant Group founder had a whirlwind year that led to a pulled multi-billion-dollar IPO and a heavier regulatory crackdown.
Alibaba co-founder Joe Tsai told CNBC Tuesday that Ma is “fine” and “doing very very well.” Tsai said he talks to him every day and said Ma has taken up painting.
Tsai did say it was important to separate what is going on with Ma and what’s happening with Alibaba at the moment. The executive also pushed back on the notion that Ma has “an enormous amount of power,” given the fact that the billionaire left Alibaba in 2019.
Ma’s Ant Group was once lauded as a disruptor in the booming fintech industry, and the company enjoyed massive growth thanks to little regulatory oversight in China.
The fintech company was poised to launch a $35 billion initial public offering in the fall of 2020 until Ma publicly criticized the nation’s lending methods and financial system at a conference. Chinese authorities stepped in and pulled the IPO, and reports later surfaced that Chinese President Xi Jinping personally instructed authorities to look into Ant following Ma’s comments.
Ant’s pulled IPO coincided with China’s new anticompetitive rules to rein in its homegrown tech companies. China also fined Alibaba $2.8 billion in April over concerns that it was abusing its dominant position in the online market.
The company said it “accepts the penalty with sincerity.”
Fidelity’s implied valuation of Ant Group fell to $144 billion from $295 billion, according to the filing. Fidelity first invested in Ant Group in June 2018 at a valuation of $150 billion. The implied valuation represents a massive drop from last year’s expected IPO valuation of more than $310 billion.
Ant Group owns Alipay, a mobile payments app that handled $17 trillion worth of payment transactions last year and has seen explosive growth as it combines a number of financial offerings into a single app.
“Alibaba accepts the penalty with sincerity,” the company said in a statement regarding the record fine. Alibaba owns about a third of Ant Group.
A Reuters report from last month suggested that Jack Ma is in talks give up his stake in Ant Group, which could help lessen regulatory scrutiny by the Chinese government. But an Ant Group spokesperson issued a statement to the outlet, saying Ma’s exit “has never been the subject of discussions with anyone.”
Ant had ballooned into an independent force alongside the state-controlled Chinese bank system, and the halted listing came just after Ma brazenly and publicly criticized the nation’s banking rules. Simply put, he spoke out against the country’s lack of a traditional financial system and the large role that the Party plays in lending money, as Nikkei Asia reported.
But the government’s takedown of Ma may be indicative of a larger zeroing-in on billionaires in the country as an existing wealth gap grows wider, a gap that has been exacerbated by the pandemic.
Disdain for the Communist country’s affluent population has grown, as the New York Times reported, and the government is leaning into that anti-rich sentiment as it’s broken down the power constructs that Ma has built in the country.
A widening wealth gap in China
Communist China once embraced a more capitalist-friendly free market in the 1980s, and when it did, some citizens saw their wealth skyrocket, as Bloomberg reported in December. Solidified social classes emerged, making it easier for the wealthy to maintain and grow their fortunes – but also more difficult for lower-income people to get richer.
Today’s rising housing costs in China’s cities and a squeezed white-collar job market with lower pay presents problems for the country’s young and educated in securing financial stability, per the NYT report. Those woes have stirred an animosity of the wealthy in China – as Bloomberg reported, the children who were born into money now find themselves under the scornful eye of the nation’s leader.
Besides the US, China has the most billionaires out of every country in the world – 626 to be exact, according to Forbes. Beijing itself has more billionaires than any city in the world. But about 600 million of its 1.4 billion-strong population earn $150 a month or less, as the NYT notes.
Such economic disparities have caused political problems for the Chinese Communist Party, which strives to preserve an evenly distributed wealth system. And Ma, with his $50 billion in net worth, is among its targets.
With a widening wealth gap, and billionaires like Jack Ma exhibiting that their companies can grow into the powerhouses that they are, China is hell-bent on preventing “the disorderly expansion of capital,” as Chinese leadership said in December.
China is tightening its grip on its economy
China is singling out companies and figures across industries in its quest to rein in the economy, from Swedish retailer H&M to homegrown tech giants, which have largely enjoyed a lack of regulatory constraints.
China was hoping other tech giants would take it as a warning, and it looks like they have. About three dozen Chinese tech companies, including TikTok owner Bytedance, JD.com, and the Twitter-like Weibo, have vowed to adhere to China’s new anti-competitive laws, according to a report from the Wall Street Journal. They are also pledging to keep the party’s values at the forefront of their minds in hopes of escaping Ma’s fate.
The Ma-China debacle signals that turbulent times may lie ahead for innovation in China, as the Communist Party and its leaders demand that the country’s business community put patriotism above all else.
The government on Saturday said Alibaba had used anti-competitive practices in its online retail market.
The fine was equal to about 4% of Alibaba’s annual sales in China, according to Xinhua News, a quasi-state media outlet. Local news reports said the company would be required for three years to complete “self-inspection” reports that it would then submit to the watchdog.
“Alibaba accepts the penalty with sincerity and will ensure its compliance with determination,” the company said Saturday in a press release.
It added: “To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation.”
The company also published an open letter to customers, saying it had “fully cooperated” with the investigation.
“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said.
The 18 billion yuan fine was a record for China, surpassing the $975 million fine issued to Qualcomm in 2015, as Reuters reported at the time.
Alibaba will hold a conference call on Monday to discuss the penalty.
Crypto whiz kid Justin Sun has shot to fame in recent years for postponing a $4.6 million charity lunch with Warren Buffett, investing $10 million in GameStop during the buying frenzy, and losing out on a $69 million NFT during a Christie’s auction.
Sun is the boss of Tron and BitTorrent, the 28th and 63rd biggest cryptocurrencies with a combined market capitalization of more than $5 billion.
Here are eight things to know about the 30-year-old tech entrepreneur:
A protégé of Alibaba founder Jack Ma
Justin Sun is a protégé of Alibaba founder and executive chairman Jack Ma. Sun’s oldest photo on Instagram shows him receiving a certificate from Ma. “Inspired by the best to shape the future for the better,” the caption reads.
Sun was the youngest member of the inaugural class at Hupan University, a Chinese business school founded by Ma in 2015, according to the South China Morning Post. Ma recruited 30 students who he believed could revolutionize the Chinese business world. Sun wrote his thesis on the blockchain industry, titling it “The Birth of a Decentralized Internet,” SCMP said. He graduated from Hupan in 2018.
Sun joined Ripple Labs as a chief representative and adviser in Greater China at the end of 2013, according to his LinkedIn page. He worked at the cryptocurrency startup — which has received backing from Google Ventures, Andreessen Horowitz, and other blue-chip investors — for just over two years. Sun also founded Callme or Peiwo, China’s largest voice live-streaming app, in 2013.
In July 2017, Sun founded the Tron Foundation, a blockchain company with its own cryptocurrency that is “dedicated to building the infrastructure for a truly decentralized Internet,” his LinkedIn page states. Less than a year later, Tron acquired BitTorrent, a peer-to-peer file-sharing service, for around $126 million, according to TechCrunch. Sun currently serves as CEO of Peiwo, Tron, and BitTorrent, now known as Rainberry.
Sun planned to use his meal with Buffett to convert the notorious skeptic of bitcoin and other cryptocurrencies into a true believer. Buffett has said Bitcoin has “no unique value” and will ultimately become worthless, and derided it as a “delusion” and “rat poison squared.”
Sun executed a full-court press on Buffett during their dinner in January 2020. He invited eToro founder and CEO Yoni Assia, Litecoin creator Charlie Lee, and other crypto advocates to dine with them. He also gave Buffett a smartphone loaded with bitcoin and Tron, although Buffett later said he doesn’t own any cryptocurrencies.
A controversial figure
After Sun announced he was rescheduling his lunch with Buffett, Chinese news outlet Caixin reported he was being held in China over accusations of illegal fundraising, gambling, money laundering, and pornography activities, citing a report by the 21st Century Business Herald.
Sun dismissed the allegations on Weibo and said he was being treated for kidney stones. “The illegal network fundraising was not true,” he wrote in Mandarin, adding that Tron “actively cooperated” with authorities to comply with regulatory requirements. He added that Tron complied with laws and regulations in Singapore, where it’s located, and the money-laundering allegation was “not true.”
A meme-stock fan
Sun invested $10 million in GameStop and $1 million in each of AMC and the iShares Silver Trust during the meme-stock frenzy in January 2021. He told Bloomberg that the Wall Street Bets movement represented a “paradigm shift” in finance, and suggested memes are the new fundamentals for the next generation of investors.
A NFT proponent
Sun was the runner up in the record-breaking Christie’s auction of a $69 million non-fungible token (NFT) in March 2021. He tried to bid $70 million for the digital artwork after he was outbid with 20 seconds to go, but his offer wasn’t received by Christie’s systems.
Chinese seniors are lining up at banks across the country after rumors swirled online that reclusive billionaire Jack Ma was giving away pieces of his fortune, UPI reported,
Many began lining up at banks across Fuzhou, in the Jiangxi Province, after a WeChat group claimed that Ma was giving away 200 Chinese yuan – the equivalent of $30 – to anyone 60 or older who could show proof of age.
The gift was said to be in honor of Lunar New Year, which began on February 11 and is observed until February 17. During that time, the country generally shuts down, and gifts of money are exchanged in special red envelopes meant to bring prosperity in the new year.
But authorities warned seniors not to trust rumors about a potential gift, and the Fuzhou Municipal Public Security Bureau issued an emergency notice warning citizens of a possible scam.
Ma has in the past offered special deals and promotions during Lunar New Year, largely through Alibaba and its subsidiary companies. In 2014, Ma’s Alibaba issued 99,999 online coupons to users via WeChat, worth around 990,000 yuan, or $153,000. In 2016, Alipay, the mobile payment branch of Alibaba, gave away US$120 million in a TV promotion. And in 2018, Alibaba offered a “digital red envelope” AR game, paying out around US$820 million to customers.