As China’s economy grows, the country creates a lot of self-made billionaires. However, many billionaires cannot maintain the wealth they have fought so hard to get.
According to Forbes, Colin Huang, the founder of Pinduoduo Inc, a Chinese e-commerce platform, has lost more money than anyone else in the world in 2021.
Huang founded Pinduoduo in 2015, owning 28% of the company. He quickly turned it into an e-commerce behemoth by pioneering community purchasing.
Since 2020, Chinese regulators have been waging a campaign to rein in the tech sector as they worry the field is growing too fast. Since then, the share values of Chinese listed tech companies have plummeted, including Pinduoduo.
Huang’s fortune has decreased 64% by 40.2 billion dollars as Pinduoduo’s shares fell by about the same amount. Now his fortune is 22.4 billion dollars.
The company was further rocked by Huang, who quit his role as chief executive officer in 2020 and stepped down as chairman last March.
As Reuters reported, on March 18, Pinduoduo lost 27% of its market capitalization, closing at 42.6 dollars, after losing 67% in 2021.
Besides cracking down on the tech sector, the Chinese government also is tightening down on online education. They claim that the rise in after-school internet tutoring puts students under too much stress.
Beijing has banned online courses for elementary school students. Therefore, Chinese online education companies closed their operation. In that context, Larry Xiangdong Chen, the CEO of GSX Techedu, shut down his pre-school education business for children aged 3 to 8.
As Forbes reported, last March, Chen saw his hedge fund Archegos Capital collapse when it failed to meet margin calls.
While Chen was hurt by the collapse of the Archegos Capital hedge fund, the U.S. Securities and Exchange Commission investigated GSX after some U.S. Investors complained about the company’s fraud.
Carson Block of Muddy Waters Capital reported in May 2020 that they estimated 70% to 80% of the company’s users were fake.
Similarly, Andrew Left of investment research firm Citron Research indicated in April of the same year that he believed up to 70% of GSX revenue figures were faked.
Chen owns 43.5% of GSX’s shares outstanding, and his net worth peaked at 15.85 billion dollars on January 27, 2021. But now, his fortune is 250 million dollars.
Less fortunate than the above two billionaires, the Jewelry Queen struggles to pay 300 million dollars after watching her enterprise of sweating tears collapse.
In 1995, she opened Neoglory Jewelry, a low-cost accessories manufacturer. Later, her enterprise expanded over the borders, with Neoglory Jewelry making the name the world’s largest in costume and fashion jewelry. Chinese then know of Zhou as the Queen of Jewelry.
Zhou ventured into other fields, from financial investment to the Internet and real estate. Her enterprise set foot in nearly all sectors. Yiwu World Trade Center, luxury Shangri-La Yiwu hotels, and other well-known landmark building projects materialized thanks to her.
The group’s property development unit went public on the Shenzhen Stock Exchange as ST Xinguang through a back-door offering in April 2016. Its market capitalization was 19.02 billion yuan, 2.8 billion dollars at the time.
It had more than 40 shareholding companies and nearly 100 holding subsidiaries with total assets of 12 billion dollars.
In March 2018, Zhou was ranked No.28 on the Hurun Global Self-Made Rich List. Having 3.6 billion dollars, she became the wealthiest woman in Zhejiang province.
Half a year later, the Shenzhen Stock Exchange issued a 330 million dollar debt default concern letter to Neoglory Group.
In April 2019, a court declared that Neoglory could not repay a due debt, has insufficient assets for repaying all its obligations, and is insolvent.
Many of the group’s subsidiaries went bankrupt and reorganized one after another. All assets were liquidated in the end, and many international debts were outstanding.
As the Wall Street Journal noted, the downfall of Neoglory was a reckoning for bold expansion in unfamiliar sectors while being unaware of strategic mistakes.
According to Mustang Finance, as of June 2, ST Xinguang’s market value was only 95 million dollars. It was a shrinkage of 97% compared to the peak of 4 billion dollars when the company was still in its heyday.