Simon Hu resigns as Ant Group CEO following regulatory crackdown

Colin Huang’s determination to resign as chairman wasn’t an entire shock. The 41-year-old entrepreneur already give up as CEO final summer season, and was anticipated to ultimately go away management at Pinduoduo altogether.

But his exit nonetheless got here quicker than anticipated, and during an uncertain time for a lot of of China’s web companies as Beijing works to rein within the sector.

“The abrupt resignation of Mr. Huang was a big negative surprise to investors,” wrote Nomura analysts Jialong Shi and Thomas Shen in a Thursday analysis observe. “Mr. Huang was widely regarded as the signature person of the company whose strong insight and leadership have been deemed by many investors as a key factor to the success” of Pinduoduo.

Shares in Pinduoduo (PDD) plummeted 7% in New York on Wednesday following Huang’s announcement.
Huang based Pinduoduo in 2015 and rapidly turned it right into a formidable e-commerce firm. It’s nonetheless a great distance from surpassing trade chief Alibaba in market share — it holds about 10% of the market, behind Alibaba’s 53% and competitor’s (JD) 19%, based on estimates by Guiyang-based Huachuang Securities. But the corporate is edging out its greatest competitor in at the least one vital means: It introduced Wednesday that it had almost 789 million lively customers in 2020, surpassing Alibaba’s 779 million.
And whereas it posted a $1.1 billion loss last year, the corporate can be nonetheless rising. It mentioned Wednesday that income for 2020 doubled over the prior yr to $9.2 billion. Its rise will be attributed to its success with folks in small cities and rural areas, markets that different e-commerce companies have largely missed out on through the years. Its grocery division additionally grew considerably in the course of the pandemic, taking part in a job in final yr’s enlargement.
Huang — who has a web value of about $53 billion, based on Bloomberg, and is China’s third richest particular person behind Nongfu Spring founder Zhong Shanshan and Tencent (TCEHY) founder Pony Ma — informed shareholders that he resigned as a result of he wished extra time to pursue different targets, together with his childhood dream of turning into a scientist or researcher.
“Although Pinduoduo is still a young company with a long runway for growth, it is about the right time to explore what’s next if we want the same quality and pace of growth in 10 years,” he wrote to them in a letter Wednesday. He additionally cited a want to permit “a new generation of leaders and managers” to “shape the Pinduoduo they aspire to build.” He stays the corporate’s largest shareholder.
It’s commonplace in China for entrepreneurs to depart firms, even once they’re of their prime. In 2018, Alibaba (BABA) co-founder Jack Ma introduced that he would resign as govt chairman and pursue extra work in philanthropy. He was 54 on the time. (Ma has not escaped scrutiny since his resignation and was questioned by regulators late final yr over Ant Group, the Alibaba monetary affiliate he helped to construct. Its excessive profile IPO was shelved afterward.)
Simon Hu resigns as Ant Group CEO following regulatory crackdownSimon Hu resigns as Ant Group CEO following regulatory crackdown

But Huang additionally leaves Pinduoduo in a considerably precarious place. Beijing has been cracking down on the tech sector for months, and its attain has once in a while prolonged to Pinduoduo.

Earlier this month, regulators fined Pinduoduo 1.5 million yuan ($230,000) over accusations that it bought meals on its platform at unreasonably low costs to edge out rivals.

Pinduoduo additionally recently faced backlash over allegations that it overworks its staff, together with from Chinese social media customers who referred to as out the deaths of two employees as emblematic of a difficult work tradition. The firm on the time mentioned it arrange a group to offer psychological counseling following the suicide of 1 employee.
On Monday, simply two days earlier than Huang mentioned he would step down, Chinese President Xi Jinping called on the country’s regulators to extend their scrutiny of the nation’s web and tech companies — notably people who have amassed plenty of consumer knowledge.
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