China’s richest man blasts tech giants and government inaction in rare rebuke

By Juliana Liu, CNN

Hong Kong (CNN) — China’s richest man has hit out at online shopping platforms, accusing them of starting price wars that have damaged a wide range of companies and industries as the country tackles an economic slump.

And in extremely rare remarks that have been largely censored by state media, Zhong Shanshan, founder of drinks company Nongfu Springs, also took aim at the Chinese government, saying it was “negligent” in failing to prevent the trend of cut-throat pricing.

It is very unusual for Chinese businesspeople to take public aim at the government and those who have done so have often faced repercussions.

Speaking on Tuesday during a visit to a county in eastern China, Zhong was widely quoted as taking direct aim at Pinduoduo, criticizing the popular e-commerce site owned by PDD Holdings for hurting businesses.

“Internet platforms have brought down (our) pricing system. In particular, Pinduoduo’s pricing system has done great harm to China’s brands and its industries,” he was quoted as saying by state-owned media outlet The Paper. “It is not just that bad money is driving out good money. It is an (entire) industry orientation, and pricing (has become) the industry orientation.”

Pinduoduo has seen huge growth in recent years in part because of its highly competitive pricing.

In further remarks from the same press conference that were not widely reported by state media, Zhong singled out the Chinese government for not doing more to stop the trend.

“The government has not intervened in this industry orientation, and I think the government has been negligent in its duty,” he added, according to a transcript published by Sina Technology and in multiple videos shared by news sites.

CNN has reached out to Nongfu Springs and PDD (PDD) for comment.

Penny pinching consumers

After Alibaba co-founder Jack Ma criticized China’s banks and financial regulators at a speech in November 2020, Ant Group, a financial affiliate of Alibaba also founded by Ma, was forced to pull its $37 billion IPO at the last minute. The tycoon then retreated from public life, and Beijing began a fierce crackdown on the tech sector.

Among the firms affected was Pinduoduo, founded in 2015 by Colin Huang. Just eight years old, the startup, which shares ownership with Temu, has successfully leveraged a shift in consumption patterns in the world’s second-largest economy.

As the Chinese economy slows and job prospects worsen, people are penny-pinching on everything from groceries to electronics and cars. Discounts and special deals are being offered across brands, including Western companies that primarily target premium markets. The impact has been far reaching.

Zhong’s remarks have come near the end of a tough year for the billionaire. Earlier this year, he faced a wave of attacks from nationalists who accused him of a lack of patriotism. That campaign hit the price of shares of his beverage company and damaged its sales.

Bloomberg reported the campaign wiped tens of billions from Nongfu’s market capitalization and, in August, cost Zhong his seat at the top of China’s rich list to Huang, who is still a shareholder in the company he started. But Zhong is now back at the top of the table, with a net worth of $52.2 billion, according to the Bloomberg Billionaires Index.

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