Going global: key for getting rich – Rupert Hoogewerf

Rupert Hoogewerf

The 2023 Hurun China rich list sees changes, and Rupert Hoogewerf, the Hurun Report chairman and chief researcher, sees efforts to go global as a key factor for growing riches, he tells Reuters. PDD’s Temu, ByteDance’s short-video platform TikTok, and ultra-fast fashion brand Shein he sees as examples.

Reuters:

The founder of PDD Holdings saw his wealth swell by US$13.8 billion (S$18.8 billion) in a year, as a slowing global economy drove more shoppers to the Chinese company’s discount e-commerce platforms Temu and Pinduoduo, an annual rich list showed on Tuesday.

Mr Colin Huang, who founded PDD in 2015 and stepped down as chief executive in 2020, was the fastest riser in 2023’s Hurun Rich List, leaping seven places to be ranked China’s third-richest man, with a US$37.2 billion fortune. It also marked the first time he had broken into the top three ranking.

The growth of his fortune reflects the changing e-commerce landscape both in China, where consumer confidence remains low after three years of Covid-19 curbs, and abroad, where shopping platforms such as Temu and Shein are gaining steam. PDD did not immediately respond to a request for comment.

Billionaire Jack Ma, founder of rival Alibaba, which is currently going through a restructuring and working to fend off competition from the likes of PDD, fell one place from 2022 to the 10th spot.

The number of Alibaba shareholders on the list, which ranks China’s wealthiest people with a minimum net worth of 5 billion yuan (S$952.4 million), fell from 18 in 2022 to 12 this year.

Mr Richard Liu, who founded e-commerce giant JD.com, saw his wealth, and that of his wife Zhang Zetian, fall by US$6.2 billion since 2022 to US$8.26 billion, according to Hurun’s list.

JD.com’s shares fell to a record low earlier in October after banks cut its price targets, citing a weaker-than-expected recovery in consumer spending.

“Going global has been one of the key sources of growth this year,” said Mr Rupert Hoogewerf, Hurun Report chairman and chief researcher, citing PDD’s Temu, ByteDance’s short-video platform TikTok and ultra-fast fashion brand Shein as examples.

The founder of bottled water brand Nongfu Spring, Mr Zhong Shanshan, retained his first place on the list for the third year running, with a US$62 billion fortune; while Mr Pony Ma, founder of social media and gaming giant Tencent, was second, with US$38.6 billion.

More in Reuters.

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How the Chinaccelerator exported its China strategy to other emerging economies – William Bao Bean

 

William Bao Bean

The SOSV Chinaccelerator has been a successful Shanghai-based VC in China for a decade. Managing director William Bao Bean, explains to Russel Flannery of Forbes how they re-invented themselves and started to export their China strategy to other emerging economies as Orbit startups and stopped investing in China.

Forbes:

Flannery: What was behind the change with Chinaaccelerator and Orbit?

Bean: Orbit Startups is a rebranding and re-focusing of Chinaccelerator and MOX, which was another program based in Taiwan. Our parent organization SOSV is very much focused on a sustainability mission, which includes global emerging frontier markets where we can leverage our know-how and capital to drive economic independence. As part of sustainability, SOSV is also centered on health and climate, which of course also have lots of applications in emerging markets.

We’re a lot different than VCs that break up the world by geography, such as Europe or India. We think tech is global, and view the world in terms of vertical strengths. We all invest through our fund SOSV, but we have Orbit, which focuses on the Internet and software, HAX for hardware and IndieBio for biotech. We want the best innovation from all around the world. Often times, that’s in Silicon Valley or London, but sometimes it’s in Jakarta or Lagos.

Flannery: What happened in China?

Bean: By 2018 and 2019, Alibaba and Tencent controlled a lot of the startup ecosystem, which is why we diversified out of China. The Orbit program hasn’t invested in China in three years.

What we’re doing today is applying to startups outside of China what we learned during China’s incredible 20-year ramp up. We started in 2017-18 in Southeast Asia, and then India, Pakistan and Bangladesh. Two years ago it was sub-Saharan Africa, and then last year we had the Middle East and Latin America. So we’re bringing what we learned in China, Indonesia and India to global emerging markets and tech entrepreneurs eager to an economic transformation similar to what happened in China. A lot of what raised 800 million people out of poverty in China was driven by technology. We’re bringing the best practices, the tips and tricks, and the models that we learned in China to entrepreneurs all across the world…

Flannery: What’ve you applied from your China experience?

Bean: Digitizing mom and pop shops is a big area, and a common theme in Pakistan, Sub- Saharan Africa, the Middle East and Latin America. The challenge that you see across all of those regions is that they have many little shops — many with a history of three-four generations. There’s not much logistics, supply or financing. There’s a lot of walking, We’ve invested in Dastgyr in Pakistan, MarketForce in sub saharan africa, Suplio in Latin America. First, we fix their physical supply chain and cut middlemen. They get 30 to 70% more cash in their pocket at the end of every month.

After we fix their physical supply chain, there’s some real opportunities in digital services. The person in the local neighborhood knows the local community and customers have a sense of trust. And we’ve seen that in China and Indonesia. It’s the same opportunity. You bring technology that’s putting much more money into people’s pockets by bringing efficiency. It’s almost like water. It’s impossible to stop. In Pakistan, for instance, we invested in 24SEVEN , which is bringing digitalization to retail.

More in Forbes.

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How China’s rich saw their capital shrink – Rupert Hoogewerf

 

China’s rich have become one of the major casualties at the 2022 Hurun Rich List, including Tencent’s CEO Ma Huateng, who lost 52 billion US dollars from last year’s listing, although China’s billionaires still top the list. Hurun chief researcher Rupert Hoogewerf gives an overview of the damage to the VOA.

VOA:

According to the 2022 list, which Hurun released last week, the tech billionaires in China who were hit hard last year included Ma Huateng, founder and CEO of China’s internet conglomerate Tencent. Ma saw his wealth drop to $52 billion, as he slumped to the slot of the fourth-richest billionaire in China and a ranking of number 28 globally. Jack Ma ranked fifth among Chinese billionaires. This was the first time that the two entrepreneurs had not been in China’s top three slots since 2015.

And China shed 160 billionaires in 2021, accounting for half the world’s total of 337 list laggards who are now mere multimillionaires.

“China’s billionaires have been hit hard in the past year, with nine of the top 10 biggest wealth shrinkages and 160 drop-offs,” said Rupert Hoogewerf, Hurun Report chairman and chief researcher. He added that many of China’s biggest companies have lost as much as half their value, the steepest drop in value since the global financial crisis in 2008.

Hoogewerf said that e-commerce platforms, real estate, education, generic drugs and vaping were the hardest-hit sectors. COVID control measures, tensions with the United States, anti-monopoly regulations and China’s recently introduced push for common prosperity were behind the declines, he added.

More at the VOA.

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US and China continue to dominate Hurun global unicorns 2021 – Rupert Hoogewerf

 

Rupert Hoogewerf

The US and China continue to lead the Hurun global unicorn list for 2021, says chief researcher of the report, Rupert Hoogewerf, although China is slightly behind the US, according to the Free Malaysia Today. “With its flagship TikTok closing in on 3 billion daily users, [ByteDance] has now grown to become a serious challenger to Facebook,” the report said.

The Free Malaysia Today:

China fell further behind the US in the number of startups valued at more than US$1 billion, according to a report published today by China-based researchers. However, the two countries continue to dominate the worldwide list of “unicorns”, as the highly valued unlisted companies are called.

The Global Unicorn Index 2021, compiled by Shanghai’s Hurun Research Institute, showed that Chinese unicorns accounted for 301, or 28%, of 1,058 unicorns worldwide, as of the end of November.

In all, 42 countries had at least one unicorn. Collectively, the companies were worth US$3.7 trillion.

Some 74 new Chinese unicorns were added to the list, compared with 254 in the US, which had 487, or 46%, of the global total. Despite the slower growth in China, the two countries together accounted for nearly three-quarters of the world’s unicorns.

India, which added 33 companies to the list, for a total of 54, ranked third.

“The US and China continue to dominate, with three-quarters of the world’s known unicorns, despite representing only a quarter of the world’s population,” said Rupert Hoogewerf, chairman and chief researcher for the report.

But Hoogewerf added: “The rest of the world is playing catch-up, growing their share of the world’s unicorns from 17% two years ago to 26% this year.”

ByteDance, the parent of video app developer TikTok and Chinese sister app Douyin, was the most valuable unicorn on the list, with its valuation surging to US$350 billion, up from US$270 billion at the end of March last year.

“With its flagship TikTok closing in on 3 billion daily users, [ByteDance] has now grown to become a serious challenger to Facebook,” the report said.

Valued at US$150 billion, online financial service provider Ant Group fell to second place after Chinese regulators blocked its listing last year and ordered a revamp of its payment and lending businesses. The moves were part of Beijing’s antimonopoly investigation into parent company Alibaba Group Holding…

Hurun called 2021 the most successful year for startups, backed by the presence of an entrepreneurship ecosystem comprising affluent business people, world-class universities and, more importantly, venture capitalists.

“The role of investors is evolving to mentorship and scale-up opportunities, rather than just providers of cash,” said Hoogewerf. “The world’s leading unicorn investors are building ecosystems with their portfolio, [which is] hugely attractive to the world’s fastest-growing startups.”

Sequoia led the ranks of US investors, which also included Tiger Fund, Accel and Goldman Sachs. All of these more than doubled their investments in the 2021 unicorn list compared with last year.

SoftBank of Japan, Tencent of China and Temasek Holdings of Singapore were among active Asian investors.

The unicorn list also saw 201 companies removed from the ranking: Of those, 137 went public, 25 were acquired and 39 saw their valuations fell below US$1 billion. Some of the biggest decliners in value included Katerra, a US construction company, and Ucar, a Chinese ride-sharing company.

“For every successful unicorn you see, there are thousands of failed companies, as well as a new generation of future unicorns coming through,” said Hoogewerf.

More at the Free Malaysia Today.

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China’s wave of regulatory change – Ashley Dudarenok

 

Ashley Dudarenok

Marketing expert Ashley Dudarenok looks at the wave of regulatory changes hitting industries and especially tech firms at her vlog. “China tries to set up a more sustainable digital ecosystem,” she explains

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India is still tougher to invest in compared to China – William Bao Bean

 

William Bao Bean

Some investors have been suggesting that the latest political changes in China have made India an easier place to invest. VC veteran William Bao Bean, with major experience in both countries, disagrees, he tells in the South China Morning Post. He believes the government’s efforts to break the duopoly of Tencent and Alibaba makes China for him even more attractive.

The South China Morning Post:

William Bao Bean, general partner at SOSV Chinaaccelerator, a Shanghai-based firm that helps investors in China and India, said India is not an easy place to access for foreign investors. “India is very hard to invest in for foreigners, in terms of tax rates and regulation,” Bean said. “In fact, it remains harder for foreigners to invest in India than it is to invest in China.”

Bean said his capital exposure in China accounted for roughly 25 per cent of his portfolio over the past three or four years. “Now, with the recent changes. I’m actually looking to increase my exposure to China,” said Bean, pointing out that China’s antitrust drive is breaking the duopoly of Alibaba and Tencent, opening the way to more competition and investment opportunities.

Bean said regulatory change has always been part of China’s market environment and investors need to adapt. The current change in China also comes as the market has matured, with 71 per cent of the population already connected to the internet compared with 50 per cent in India, according to government data.

More in the South China Morning Post.

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How Xi Jinping’s rules will benefit the tech sector – Shaun Rein

 

Shaun Rein

China’s crackdown on tech firms is in the longer run benefiting consumers and the industry itself, says business analyst Shaun Rein about the governmental efforts to curtail free-wheeling companies.

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Curtailing tech firms makes the industry more sustainable – Shaun Rein

 

Shaun Rein

Investors got jittery when China’s government started a coordinated action to limit the power of its tech industry. But business analyst Shaun Rein saw how powerful companies made consumers and the government weary. Rein believes stricter oversight of the technology industry will make it more sustainable, with fairer competition that will benefit consumers, he tells AP.

AP:

Until recently, tech firms operated in a regulatory gray zone, with relative freedom to create their business models, demand that merchants and vendors sign exclusive contracts with their platforms and collect user data to better understand their customers.

After China introduced health monitoring and quarantine apps during the pandemic, it became clear that tech companies like e-commerce giant Alibaba and gaming company Tencent controlled huge amounts of data, said Shaun Rein, founder and managing director of China Market Research Group in Shanghai.

“I think it was in the last year and a half that you can start to see just how much power these technology companies have,” said Rein.

Alibaba Group Holding recently was fined a record $2.8 billion over antitrust violations. Other big tech companies have been fined or investigated for alleged anti-competitive behavior and lapses in financial disclosure.

“Two years ago Chinese consumers didn’t care, they thought the convenience of apps outweighed any negative benefits,” Rein said. “But now Chinese people are quite concerned about data privacy, because Alibaba and Tencent have so much data – even more data than the government.”

Rein believes stricter oversight of the technology industry will make it more sustainable, with fairer competition that will benefit consumers.

More in AP.

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In China social media and e-commerce are merging into one – Ashley Dudarenok

 

Ashley Dudarenok

The main difference with the rest of the world is that in China social media and e-commerce merged into platforms, says China marketing guru Ashley Dudarenok. When you want to dive into China, you have to pick your platform and realize they are different from what you are used to, she adds. Most likely you have to pick one of them.

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Exponential growth tech firms is over – Winston Ma

 

Winston Wenyan Ma

Alibaba and Tencent were high-profile casualties as the central government stepped in to regulate free-wheeling tech firms with growing financial clout. To the relief of consumers and smaller competitors, exponential growth in the tech industry is over, tells Winston Ma, former managing director of the sovereign wealth firm China Investment Corporation (CIC) in New York to Reuters.

Reuters, quoting Winston Ma:

“The blockbuster IPO of Ant Group last November – and its suspension — was the tipping point that urged all relevant Chinese regulators to step up supervision of the major internet platforms. Now the comprehensive framework is being put in place, before the major platforms becoming “too big to regulate”.

“In short, the age of “exponential growth in the wilderness” for internet finance – and all cyber barons in various sectors — is over.”

More in Reuters.

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Tencent/Warner deal offers opportunities to Chinese talents – Arnold Ma

 

Arnold Ma

Musical giants Tencent and Warner joined forces to support talents in their territories. Especially, Asian talent had little access to the Western markets and marketing guru Arnold Ma sees huge opportunities for Chinese talent, he tells at the state-owned CGTN.

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How Tencent is reinventing itself as a B2B platform – Matthew Brennan/Ashley Dudarenok

 

Matthew Brennan and Ashley Dudarenok

China’s digital landscape is changing fast. Internet watcher Matthew Brennan and marketing guru Ashley Dudarenok discuss how internet giant Tencent is reinventing itself as a B2B platform, and much more.

Matthew Brennan and Ashley Dudanenok are both speakers at the China Speakers Bureau. Do you need them at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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The Tencent 4.4b US$ investment is a good deal for Wanda Commercial – Ben Cavender

Ben Cavender

Real estate giant Wanda Commercial got a US$4.4 billion investment from Tencent, a major tech player. A move that is very smart for Wanda, says business analyst Ben Cavender, as it wants to get ready for a now successful IPO in Shanghai, according to Reuters.

Reuters:

The 34 billion yuan deal for a 14 percent stake in Wanda Commercial could also help the unit get back on track with a plan to relist in Shanghai after a bold and ultimately expensive decision to withdraw from the Hong Kong exchange in 2016.

“From Wanda’s perspective it seems a good deal. They’ve overextended with expansions and acquisitions over the last couple of years,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding that Wanda Commercial had now become a more “attractive mainland IPO candidate”.

The stake will be bought from existing investors who had been part of the $4.4 billion buyout fund created for Wanda Commercial’s delisting in 2016. Those investors had been promised up to 12 percent annual interest if it failed to relist in Shanghai within two years.

The Shanghai IPO has, however, been held up by mainland regulatory measures to tighten liquidity in the real estate sector. Wanda said in a statement that with its new investors it was looking to take the unit public “as soon as possible”.

The Tencent-led group includes major retailer Suning Commerce Group 002024.SZ, e-commerce firm JD.com Inc JD.O and rival developer Sunac China 1918.HK, which bought some of Wanda’s theme park assets last year.

“The tech companies are seen as the darlings of China’s emergence as a global superpower. So, reputation-wise I think this is a good move for Wanda,” Cavender said.

More in Reuters.

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The retail ecosystem: China’s biggest change – Ashley Dudarenok

 

Ashley Dudarenok

China’s biggest change over the past two years has been the development of its retail ecosystem, says marketing veteran Ashley Dudarenok at her vlog. Not only by thinking it out, but by implementing a change that has affected retail profoundly.

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The splintering of the global internet – Kaiser Kuo

 

Kaiser Kuo

China veteran Kaiser Kuo discusses the relations between the US and China, and here focuses on the splintering of the internet, at a wide-ranging interview at the Wire China. “I also think we need to recognize that our worries are more about us than they are about China. We have in this country a real problem with surveillance capitalism, as it’s been called,” says Kaiser Kuo.

Wire China:

Given that first narrative switch you described — the now-accepted idea that technology has not led to a more open political system in China — many people talk about the splintering of the global internet. Do you think a splintering is inevitable?

To some extent, we have to recognize that there has already been a splintering when it comes to a lot of popular services on the internet. A lot of that owes to China’s very severe regime of internet censorship. But I worry about the United States accepting this as a norm and simply going along with it and imposing these same types of objectionable ideas that run so counter to our core values. I think the impact of it is not so much economic as it is moral, and it would be a betrayal of our values to embrace this. I think we should all be working to have a more open internet rather than acquiescing, and proactively helping it toward this other outcome — a splintered, fragmented, and decoupled internet.

I also think we need to recognize that our worries are more about us than they are about China. We have in this country a real problem with surveillance capitalism, as it’s been called. Our concerns over Chinese tech have been amplified in large measures by our worries about how American tech companies are treating our data, and following our every click online and targeting us with greater and greater precision.

Let me put it this way: the Trump administration and its moves against companies like Tencent’s WeChat and Bytedance’s TikTok were clearly never about national security. They were never about data privacy. We’ve seen that now. It’s clear, at least to me, that they were about this broader project of suppressing China’s technology prowess, and were very much of a piece with what we’ve done with Huawei. There are important differences between them, of course. And I think from a national security point of view, you could certainly make a stronger case for Huawei being of concern. But when you look at WeChat, which has users only in the single digit millions in the United States, almost all of them are either Americans with strong connections to China or are Chinese nationals or ethnic Chinese. That national security case is very weak. With TikTok, it’s almost laughable.

The WeChat and TikTok ban is a good example of how many American lawmakers view the U.S.-China tech competition as a zero-sum game. Are there areas where you could imagine productive cooperation in technology between the two countries?

I think if you look back over the last 30 years, cooperation in technology has been fantastically fruitful. Let’s start with immigration policy. The Trump administration is going after H-1B visas and trying to restrict the ability of ethnically Chinese scientists, researchers or technologists to participate in research in the United States. All these things are shooting ourselves in the foot and surrendering, or deliberately blowing up, what is probably the single greatest advantage that this country has had in technology. You only have to look at the great companies of Silicon Valley, Seattle, or Boston, and look at a list of the surnames to realize what kind of contribution is being made by people who the Trump administration’s Department of Justice is targeting through its China initiative, that Homeland Security is trying to prevent from entering this country, and that the Trump administration is attempting to demonize. Part of productive technology cooperation would be stopping this utterly feckless policy and reversing it. We can do that and still protect American national security interests if we put a little more trust into the natural immune system of an open society.

More at the Wire China.

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