Billionaire founder of Temu becomes richest man in China

After a few moderately successful ventures in gaming and e-commerce, Colin Huang fell ill and retired. At one point, the young entrepreneur stayed home for a year, thinking about his next move.

The former Google engineer founded Pinduoduo, an e-commerce platform known for selling very cheap products with huge promotions, in 2015. He quickly climbed to the top of the list of the world’s richest people, with his net worth peaking at $71.5 billion in early 2021.

Like many so-called Covid billionaires, his fortune collapsed as quickly as it was made, falling 87 percent in about a year. Huang’s fall was particularly acute because the slowdown in the global pandemic coincided with China’s sudden crackdown on the country’s private sector.

Then something surprising happened: Huang’s PDD Holdings was back. Not as big as before, but stable, and its expansion outside China under the Temu brand helped counteract the country’s persistently weak economy.

As a result, Huang, now 44, became the richest person in China, according to the Bloomberg Billionaires Index. With a fortune of $48.6 billion, he replaces Zhong Shanshan, the country’s bottled water king, who has held the top spot since April 2021.

Huang’s meteoric rise has been fueled by changing Chinese buying habits after the country’s housing slump turned into a prolonged slowdown. He is also the first tech tycoon to top the wealth rankings in more than three years, after government pressure to keep companies private has squeezed rivals like Jack Ma’s Alibaba Group. Along the way, Huang has also sparked protests from suppliers for cutting prices and setting punishing work schedules for his employees.

“Ma and Jeff Bezos were corporate leaders in their moments, but times have changed and Huang is having great success with a different, lower-profile approach,” said Brock Silvers, a managing director at private equity firm Kaiyuan Capital.

PDD representatives did not respond to a request for comment.

Math prodigy

Unlike Ma, a former English teacher turned Alibaba founder, Huang represents a new generation of Chinese technology entrepreneurs who began their careers with global opportunities in mind.

At age 12, his extraordinary mathematical talent earned him a place at the elite Hangzhou Foreign Languages ​​School, where he was a classmate of children of China’s political and social elite. After graduating from Zhejiang University with a degree in computer science, he left China in 2002 to pursue a master’s degree at the University of Wisconsin.

Two years after graduation, he returned to help found Google China. He founded his first company in 2007, then sold it in 2010 to start a new one that helped companies promote themselves on websites like Alibaba’s Taobao or JD.com. When an ear infection forced him to retire in 2013, he came up with the idea for Pinduoduo.

PDD is “not about making Shanghai people feel like they are in Paris, but about making Anhui people have toilet paper and fresh fruit,” Huang said in an interview with Caijing magazine. “The goal is not to be cheap, but to make users feel like they got a good deal.”

It’s time for you

Huang has stayed out of the spotlight since stepping down as PDD’s CEO in 2020 and leaving the board as chairman in 2021 as Beijing cracked down on Chinese tech giants. (He said he was pursuing personal interests, researching food and life sciences, according to a shareholder letter.)

It was during this time that PDD – and his net worth – began to decline.

But Temu, PDD’s offering outside of China, has bolstered the company’s top line and sustained its rebound. After launching in September 2022, the company rocketed to the top of U.S. app stores, targeting inflation-weary Americans with cheap, unbranded products shipped directly from China. PDD reported about 248 billion yuan (45.9 billion Singapore dollars) in revenue last year, up 90 percent year-on-year.

“In this economic environment, people are obviously looking for great value for their money, people are looking for low prices,” said Neil Saunders, retail analyst at GlobalData Retail. “So it’s time for value retailers like Temu to shine.”

All of this, along with China’s retreat from Covid-Zero in December 2022, has sent PDD’s valuation soaring. In November, the company surpassed Alibaba for the first time to become China’s second-largest internet company, and the two rivals have been neck and neck ever since.

Hours of punishment

Still, the surge has drawn scrutiny at home and abroad. Even after an investigation into working conditions following an employee’s death in 2021, the PDD still requires employees to work from 11 a.m. to 11 p.m., six days a week, plus overtime. It’s a twist on the industry’s “996” culture that companies like ByteDance and Alibaba have abandoned amid regulatory scrutiny in Beijing.

Temu’s ultra-cheap offerings have also led to growing frustration among some merchants and third-party sellers who feel the e-commerce giant is increasingly squeezing more and more revenue out of them. The situation culminated in a series of public rallies this summer, when in one case hundreds of small suppliers shouted slogans outside Temu’s Guangzhou office to protest what they called unfair penalties levied by the company.

Elsewhere, small businesses in the U.S. have also seen Temu’s rapid growth. The company currently takes advantage of a loophole in trade law that allows for duty-free shipments of up to $800 to the U.S. by sending small packages from its warehouse in China to individual Americans. Lobbyists are pushing to lower the threshold to $10.

Still, PDD has engaged in aggressive promotional campaigns, including spending millions on a 30-second Super Bowl ad for Temu. It also has catchy banners on its Temu website, including “Shop Like a Billionaire.”

“Temu is focused on growth right now,” Saunders said. “Get people to the site, get them shopping. And if they become more addicted, maybe they’ll start to be more accepting if we raise the prices a little bit. So I think it’s the era of land grabs for Temu.” BLOOMBERG