In China’s Collapsing Economy, Pinduoduo’s Reclusive Billionaire Founder Manages to Make $15 Billion

CHina’s economic headwinds and extensive pressure on private companies have rattled the fortunes of many tech billionaires, but one mogul has managed to stay ahead of its competitors, making $15 billion this year with his company’s low-cost products.

Colin Zheng Huang, the reclusive billionaire founder of discount e-commerce site Pinduoduo, is currently worth $26 billion. Huang is currently the fourth richest person in China. forbesReal-time billionaire follower ahead of fellow e-commerce magnates Jack Ma from Alibaba and Richard Liu of

Huang made progress as shares of the 42-year-old Nasdaq-listed company recovered much faster than their peers. Shares of Pinduoduo are up 200% since a March low, when China’s regulatory pressure, oversight dispute with the US and the company’s own alarming business outlook upset investor confidence. But the unfavorable economic conditions later proved to be a boon for Huang, who resigned as president of Pinduoduo last year and is low-profile, but continues to make his fortune from his 28% stake in the company.

With the Chinese economy mired in a slump, more and more consumers are migrating to Pinduoduo for cheaper goods. Estelle Zhang, 34, who works at a bank branch in Beijing, says she uses Pinduoduo more often than before. Zhang recently bought 2kg of lemons at Pinduoduo for less than $3 from local supermarkets.

According to Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities, Pinduoduo, led by CEO Chen Lei, is investing more in direct engagement with farmers and shoppers, an area that China’s policymakers eagerly support. The company exceeded market expectations, reaching 35.5 billion yuan ($5 billion) in revenues in the third quarter, up 65% year-on-year, and posting rapid quarterly growth after sales rose 36% in the previous period.

“Places that sell value-for-money products are taking advantage of the current environment,” says Shawn Yang, Shenzhen-based managing director of research firm Blue Lotus Capital Advisors. “Also, Pinduoduo has made many optimizations to attract users, such as including more short video feeds in its main app.”

Yang says dismal economic conditions may continue to favor Pinduoduo over the next two quarters, as any economic recovery will take time to begin. With authorities now promising to speed up vaccination of the elderly, this is a step widely seen as crucial to reopening from covid restrictions.

Another major hurdle to the economy, namely the real estate sector, received more funding after authorities said they would relax funding rules for developers. Earlier this month, Chinese regulators announced a comprehensive package of measures aimed at bolstering the ailing real estate industry and boosting the fortunes of female real estate billionaires Yang Huiyan and Wu Yajun.

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Meanwhile, Pinduoduo said some factors behind the current high growth rate are not sustainable. In an analyst interview on Monday, executives said some projects originally planned for the last quarter were not implemented on time, resulting in a reduction in expenses, then driving profits to $1.5 billion, up 546% from the same period a year ago.

“The profitability is partly due to this kind of time skip,” said Liu Jun, Pinduoduo’s vice president of finance. “We will continue to invest in supporting the agriculture and manufacturing industry with technology without slowing down. This could cause fluctuations in our future profitability and the Q3 level will not continue.”

At the same time, Pinduoduo is betting on overseas markets for future growth. The company launched its shopping platform Temu in the US in September and directly challenged Amazon and Chinese billionaire Chris Xu’s Shein by selling discounted products. Executives said the expansion is still at an early stage, but Temu was the most downloaded shopping app in America in November, according to analytics firm Sensor Tower.

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