China’s richest man slammed online shopping platforms, calling them price warring starters that damaged a wide range of companies and industries as the country tries to quell an economic slump.
And in remarkably rare comments that have been largely blacked out of state media, Zhong Shanshan, who heads drinks company Nongfu Springs, also targeted the Chinese government, which he said “laid down the ball” and showed “negligence” in failing to stop the cutthroat pricing trend.
It’s extremely unusual for Chinese businesspeople to publicly criticize the government, and those who have done so have often suffered accordingly.
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 experienced phenomenal growth in recent years partly because it has offered extremely competitive pricing.
However, in other statements from the same press conference that did not receive wide media coverage in state outlets, Zhong specifically named the Chinese government for failing to do more to reverse 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.
BBC News 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 at the last minute to cancel its $37 billion IPO.
The tycoon then disappeared from public life, and Beijing launched a fierce crackdown on the tech sector.
Among the companies 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 comments are near the end of a tough year for the billionaire.
Earlier in the year, he came under a wave of attacks from nationalists who accused him of lacking 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.