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China’s tech tycoons lose $87bn of wealth after Beijing crackdown – Financial Times

Chinese business & finance updates

Beijing’s regulatory assault on China’s technology industry has lopped $87bn off the net worth of the sector’s wealthiest tycoons since the start of July, hitting the fortunes of magnates such as Tencent’s Pony Ma and Pinduoduo’s Colin Huang.

The combined net worth of the two dozen Chinese billionaires in tech and biotechnology whose holdings are tracked by Bloomberg has dropped 16 per cent since ride-hailing platform Didi Chuxing went public in the US at the end of June, according to Financial Times calculations.

The $4.4bn listing, which Didi launched despite private warnings from Chinese authorities to delay it due to data security concerns, has been followed by a regulatory firestorm. Beijing has sought to tighten its grip on an industry that has helped transform the world’s second-biggest economy, prompting a plunge in the share prices of China’s largest tech groups.

Huang, founder of ecommerce site Pinduoduo, has been the worst affected with paper losses of $15.6bn, or a third of his wealth. Pony Ma, founder of internet group Tencent, has lost more than $12bn or 22 per cent of his wealth. He is now ranked as China’s third-richest man behind Jack Ma, founder of rival company Alibaba.

Jack Ma’s fortunes have fallen $2.6bn over the same period but are down almost $13bn since authorities scrapped the initial public offering of Ant Group, the financial technology platform he controls, in November.

Line chart of Estimated net worth ($bn) showing Crackdown returns China's tech crown to Jack Ma

Founders of the country’s big tutoring companies have seen their wealth pummeled by China’s announcement last month that the groups would have to restructure to become non-profit organisations. Yu Minhong, founder of New Oriental Education, has seen the value of his 12 per cent stake in the tutoring company drop from $3bn to just $500m.

By contrast, billionaires that operate in sectors viewed by investors as less risky or even supported by Beijing have seen their fortunes rise in recent weeks.

Chart showing tech titans losing ground in China's rich list (by estimated net worth)

“We’ve seen a realignment of wealth creation,” said Rupert Hoogewerf, whose research company Hurun Report has chronicled the rise of Chinese billionaires in recent decades.

China has more than 1,000 billionaires, double that of five years ago thanks to the proliferation of successful tech groups, he added. But after the recent flurry of regulatory action, “the canny entrepreneurs are shifting focus”.

Among those to benefit are Zhong Shanshan, head of bottled water empire Nongfu Spring, who overtook Jack Ma and Pony Ma as the richest person in China last year. Zhong’s wealth stands at just over $72bn, up about $5bn since the end of June. He is about $24bn richer than Jack Ma.

China’s nine richest auto industry tycoons have been boosted by the country’s top leaders voicing support for the sector as it focuses on electric vehicles. They have added $22bn to their collective net worth since July.

The wealth of Wang Chuanfu, chair of BYD, a Berkshire Hathaway-backed carmaker and electric battery pioneer, has jumped by $4.4bn to more than $25bn, making him the country’s tenth-richest person.

Bar chart of Net wealth lost since Didi's IPO ($bn) showing China's biggest losers

The eight billionaires who dominate the fast-growing renewable energy sector also saw their net worth rise by a collective $13.6bn during the period.

Analysts say there is little reason to expect Beijing will ease up on tech tycoons — or falter in its support of automakers and renewable companies — in the second half of 2021.

Bruce Pang, head of research at investment bank China Renaissance, said investors and entrepreneurs were becoming far more attentive to the Communist party’s policy pronouncements.

He pointed to comments by President Xi Jinping in a speech last month to entrepreneurs that “thoughts and actions must be aligned with the analysis, judgment, decision-making and planning” of the party.

“That means that enterprises and entrepreneurs will have to keep a close eye on [the party’s] comments and moves,” Pang said.