Poetic Blossoming Costs Founder of Chinese Super App Meituan $ 2 Billion

For Chinese tech entrepreneur Wang Xing, posting an ancient poem to social media late in the evening may have turned out to be a $ 2.1 billion mistake.

Shares of Meituan, China’s largest food delivery platform, fell about 14% in Hong Kong last week after its founder shared four stanzas written 1,000 years ago by poet Zhang Jie. . Investors were quick to interpret Wang’s nod to the poem, which was originally a criticism of a Tang Dynasty emperor, as a veiled attack on Chinese President Xi Jinping.

As the session closed on Monday, Wang’s personal fortune had fallen from $ 2.1 billion to $ 18.8 billion as a result of the post.

The episode underscored the cold that hit China’s tech sector. Rival Alibaba, whose founder Jack Ma has largely disappeared from public view since last year, was fined a record $ 2.8 billion last month for abusing its dominant market position. Ma’s fintech unit Ant Group’s initial $ 37 billion public offering, believed to be the world’s largest, was crushed by authorities at the last minute in November.

Online commentators quickly drew parallels between Meituan, who also faces an antitrust probe, and Ma’s troubles. The crackdown on Ma’s empire follows public criticism by the internet billionaire of Chinese regulators and state banks.

Meituan faces a fine of up to 11.5 billion rmb ($ 1.8 billion) if regulators believe he has engaged in anti-monopoly practices.

Wang, whom Chinese state media dubbed “the entrepreneurial poet,” had become known for his daily social media thoughts on topics ranging from praise of sweet potatoes to the health of legendary American investor Charlie Munger.

These ruminations have stopped since Wang offered an explanation for publishing the poem, titled “Pits to Burn Books.” The poem mocked the actions of China’s first emperor, who attempted to suppress dissent among intellectuals by burning books, to have his dynasty overthrown by non-intellectuals. Before taking control of China in 1945, Mao Zedong wrote the same poem comparing himself to these revolutionaries.

Poems have been a way for dissidents throughout Chinese history to express their displeasure, although Wang claimed his post simply referred to Meituan’s e-commerce rivals.

But Meituan’s chief executive has a history of run-ins with Chinese regulators.

Fanfou, the Twitter-like platform on which he posted the poem this month, was started by Wang in 2007. The platform gained a reputation for its free-wheeling exchange of ideas before the authorities did not feel uncomfortable and took it offline in 2009.

Fanfou later reappeared in a censored format but is only accessible to a small group of early adopters.

After Fanfou was targeted by regulators, Wang told a Chinese reporter that he hoped to avoid similar problems in the future. “You can’t make a mistake and not learn a lesson,” he said. “Even if you think you understand, the rules are always changing.” He later admitted he was not good at government relations.

Competitors described Wang, who was educated in the United States, as confident and determined. The subordinates say they are curious, direct and work shoulder to shoulder among the employees of Meituan. At a press conference in 2011, he showed a Meituan bank account containing $ 62 million to prove the group was solvent.

“He’s like Jeff Bezos, very product-focused and pragmatic,” said Li Chengdong, general manager of the Haitun e-commerce think tank. “He’s a workaholic, he doesn’t really like life very much.”

Wang’s penchant for experimentation is evident in Meituan. The company started out as an imitator of the Groupon coupon site, but now offers everything from movie tickets to payouts.

“They debate ideas and the executives are disciplined to kill the businesses that don’t work,” said a person close to the company. “They know what it looks like when it works.”

The review comes as Meituan invests heavily in expanding its grocery delivery business, pushing it to a loss of RMB 2.2 billion in the fourth quarter. The company raised $ 10 billion in debt and equity last month.

A possible antitrust fine may not be the biggest challenge for Meituan, which is also criticized for its treatment of its roughly 1.5 million passengers who deliver meals to Chinese cities.

Like its US counterpart Uber, Meituan does not directly employ cyclists or provide them with benefits. Chinese media reports have drawn attention to the heavy fines passengers receive for late deliveries and other infractions. Last month, a senior labor official in Beijing went undercover as a Meituan driver and earned just Rmb 41 for a 12-hour delivery service.

Robin Zhu, an analyst at the Bernstein brokerage, pointed to a trial conducted by the city of Nanjing that required full-time delivery drivers to receive benefits such as social insurance. Any attempt to roll out such a program nationwide would hit Meituan’s cost structure, Zhu said.

Wang appeared to be taking action to appease regulators, telling investors in March that Meituan could start breaking out of its delivery fee structure to help “the regulator.” . . better understand the mechanism ”.

He also tried to solve Meituan’s problems by opening his personal checkbook. In recent weeks, Wang has donated 50 million rmb to his former college in his home province of Fujian and made a large donation to his alma mater, China’s prestigious Tsinghua University.

“We will play by the rules. We will do our best to be a good corporate citizen, ”Wang said in March.

Additional reporting by Nian Liu in Beijing

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