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Chinese tech moguls lose $ 80 billion in 2021

It has been a record year for China’s internet moguls, but not in the way that most would have expected.

The 10 richest tech moguls in the country lost $ 80 billion in combined net worth in 2021, according to the Bloomberg Billionaires Index, amid crackdown by Chinese regulators. The drop represents nearly a quarter of their total wealth and is the biggest in a year since 2012, when the index began tracking the world’s richest people.

The founder of Pinduoduo Inc., Colin Huang, is the one who has lost the most this year: $ 42.9 billion, or two-thirds of his fortune, after the shares of the e-commerce platform plummeted almost 70%.

Jack Ma, the Alibaba Group Holding Ltd., which has been keeping a low profile since authorities cracked down on its sprawling business empire, has seen its net worth fall by about $ 13 billion.

Few people better embody this year’s roller coaster of wealth than the founder of Didi Global Inc., Cheng Wei.

In the weeks leading up to the IPO of Didi In the United States in June, investors seized shares in the secondary market, raising the private transportation giant’s valuation to $ 95 billion and raising the value of founder Cheng’s stake to $ 6.7 billion.

The euphoria was short-lived. Shares of the Beijing-based company have plunged more than 60% since Chinese authorities announced an investigation and asked it to delist from the New York Stock Exchange, leaving Cheng’s fortune at US $. 1,700 million.

Increased antitrust scrutiny by Chinese regulators has become increasingly common since the surprising stoppage of Ant Group Co.’s initial public offering last year.

Tech companies such as Alibaba, Tencent Holdings Ltd., Meituan and Pinduoduo have seen their once-high valuations downgraded after being fined for reasons ranging from monopolistic practices to tampering with market orders or under-reporting of deals.

‘Better days’

China is also paying more attention to the so-called VIE structure, a loophole long used by the country’s tech industry to circumvent some government restrictions and raise capital from foreign investors.

Uncertainty prevails even after China will introduce a broad regulation that regulates the sales of shares abroad by companies in the country, threatening to increase the scrutiny over foreign IPOs that have been carried out practically without control for two decades.

At the same time, the U.S. Securities and Exchange Commission this month announced its final plan for a new law that forces Chinese companies to open their books to American scrutiny or risk being evicted from the New York Stock Exchange and the Nasdaq within three years. This could mean that hundreds of Chinese companies will no longer be listed on the US markets and will go back to doing so in Hong Kong or mainland China.

The best days for China’s tech sector are behind us for now“, He said Chen Zhiwu, Director of the Asia Global Institute at the University of Hong Kong. “Without access to US capital markets, the story of China’s tech sector would have been very different. “

The founder of ByteDance Ltd.Zhang Yiming is one of the few Chinese internet moguls who has seen his fortune grow this year, earning $ 19.5 billion according to a valuation in a SoftBank Group Corp. report this year. This is partly because it keeps TikTok’s parent company a closed company, insulated from market turmoil.

But Zhang has also struggled to keep a low profile during regulatory measures. In May, he announced that he was stepping down from his CEO role and resigned from the board of directors last month.

Many tech executives have taken similar steps. Su Hua, a co-founder of live streaming app Kuaishou Technology, stepped down as CEO in November, just nine months after the company’s Hong Kong IPO. In September, JD.com Inc. appointed a new president, saying that President Richard Liu will focus on long-term strategies.

Charitable donations

Even with the loss of personal wealth, some Chinese tech billionaires have increased their philanthropy in response to President Xi Jinping’s warnings about the “common prosperity”To address social inequality. Lei Jun of Xiaomi Corp. and Wang Xing of Meituan have donated stakes of $ 2.2 billion and $ 2.3 billion, respectively, to charities, helping in part to reduce their fortunes.

As of the end of August, Chinese billionaires had donated at least $ 5 billion to charities in 2021, 20% more than the previous year’s total national donations, according to data compiled by Bloomberg News.

Featuring iconic tech billionaires like Jack Ma Retreating from public prominence, the industry needs to reshape its core strategy for new growth in the future, HKU’s Chen said.

I believe the good days will return at some point after an examination of conscience and a reassessment of what fueled the golden days of the last two decades.Chen said.

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