Caixin
Apr 16, 2021 09:22 AM
CX DAILY

CX Daily: Rising Costs for Pinduoduo to Maintain Growth

Pinduoduo /

In Depth: Rising costs for Pinduoduo to maintain growth

Chinese e-commerce upstart Pinduoduo Inc. has been an investor darling for its eye-popping growth. But efforts to maintain such growth may be increasingly costly.

The Shanghai-based company, which debuted on the Nasdaq in 2018, has become a favorite stock for institutional investors, sitting among the top holdings in 54 institutions’ investment portfolios, according to market data provider Whale Wisdom. The company was also the biggest asset of leading private equity fund Hillhouse Capital Group and Greenwoods Asset Management Limited as of the end of 2020.

Pinduoduo has faced growing legal troubles over the years, mainly involving allegations of counterfeiting, and disputes with vendors. Tensions between the platform and its partner merchants are growing as many vendors complain that Pinduoduo is undermining their interests.

Coal /

China’s coal industry needs radical overhaul to meet carbon neutrality goal, research says

China’s coal industry faces a radical shakeup if the nation is to meet its pledge to be carbon neutral by 2060, with new research suggesting the world’s largest greenhouse gas emitter must shed a third of its coal-fired power capacity over the next decade.

The country must shut, retrofit or put into reserve capacity some 364 gigawatts (GW) of coal by 2030, a move equivalent to halving the amount of carbon dioxide emitted per unit of electricity generation, according to research by TransitionZero, a U.K.-based analytics provider.

President Xi to attend trilateral climate summit with France, Germany

FINANCE & ECONOMY

yiwu

A doll vendor at Yiwu’s small commodities market.

Yiwu /

Small businesses face frozen bank accounts in crackdown on telecom fraud and online gambling

Hundreds of exporters in Yiwu, a city in east China’s Zhejiang province that operates the world’s largest small goods market, complained that their bank cards have been frozen by the public security authorities, blocking exporters’ access to funds paid by their clients.

The card freeze is part of a nationwide “Card Breaking Campaign” under way since October 2020, an operation aimed at cracking down on illicit bank card transactions in a bid to combat telecommunications fraud and cross-border online gambling, according to an internal memo circulated online.

As the campaign deepened, Yiwu public security authorities found telecom fraud as criminal groups colluded with underground banks to launder money by disguising their illegal proceeds as payments for goods and transferring it to Yiwu exporters, according to the memo sent by the criminal investigation team of Yiwu Public Security Bureau to the public security authorities across the country.

Bonds /

After China Huarong’s bond rout, spotlight shifts to overseas financing unit

Amid this week’s rout of China Huarong Asset Management Co. Ltd.’s overseas bonds, attention has also turned to the state-owned bad-debt manager’s major Hong Kong financial arm that guarantees the lion’s share of the bonds.

Investors are watching whether China Huarong will restructure China Huarong International Holdings Ltd. and how the once high-profile financial conglomerate is going to repay its overseas bonds, analysts at investment bank China International Capital Corp. Ltd. wrote in a note (link in Chinese) Monday.

Hong Kong-based Huarong International is its parent’s most important overseas financing and investment vehicle and is also the guarantor of $22.3 billion in outstanding dollar bonds linked to China Huarong, analysts at Chinese firm CIB Research wrote in a note Monday. That accounts for 96% of China Huarong’s total outstanding overseas bonds worth $23.3 billion.

AMCs /

Great Wall offloads insurance unit as asset managers ordered to ‘get back to basics’

As the crisis at scandal-hit state-owned China Huarong Asset Management Co. Ltd. deepens, the country’s other top national asset management companies (AMCs) are busy shedding non-core assets as they respond to regulators’ calls to return to their original mission of dealing with bad debts in the financial system.

China Great Wall Asset Management Co. Ltd. put its 70% stake in Great Wall Changsheng Life Insurance Co. Ltd. up for sale, according to an announcement (link in Chinese) published Wednesday on the Shanghai United Assets and Equity Exchange. The shareholding comprises a 51% stake owned by the AMC itself and 19% held by Great Wall Guofu Real Estate Co. Ltd., one of its wholly-owned subsidiaries.

The sale is part of Great Wall AMC’s efforts to comply with regulatory requirements to go back to basics, sources close to the asset manager told Caixin.

Banking /

China to stress test all 4,024 of its banks

China’s central bank plans to expand its stress test regime to all of the country’s 4,024 banks (link in Chinese) this year to better prevent risks to the financial system, according to a central bank publication.

The People’s Bank of China (PBOC) aims to better identify high-risk banks and systemic risks through the stress tests, thus improving the effectiveness of risk monitoring and early warning systems, according to an article (link in Chinese) published earlier this week by China Finance, a magazine overseen by the PBOC.

Quick hits /

PBOC refrains from adding more liquidity as cash needs grow

Fisher: Why westerners are wrong about China’s debt — again

BUSINESS & TECH

Tencent Music

Liang Zhu, Tencent Music's new CEO.

Music /

Tencent Music chairman resigns amid China’s anti-monopoly crackdown

Tencent Music Entertainment Group, China’s leading online music provider, announced a major shuffle in its top ranks, touched off by the departure of its long-serving chairman, as the company repositions itself following past accusations of monopolistic behavior.

The series of moves will see Tong Tao Sang, who also goes by Dowson Tong, step down as the company’s chairman, a position he has held since 2016. He will be replaced by Cussion Kar Shun Pang, the company’s current CEO who has been in that position since 2016, according to the company’s Wednesday announcement.

The CEO position will be taken over by Liang Zhu, a vice president who oversaw the popular QQ social media platform at the music company’s parent, internet giant Tencent Holdings Ltd.

Antitrust /

Meituan, ByteDance pledge to comply with China’s antitrust laws

Meituan, ByteDance Ltd. and JD.com Inc. were among 12 Chinese tech giants that issued pledges to obey antitrust laws, a day after Beijing gave the companies a month to conduct internal reviews and comply with government guidelines.

Pinduoduo Inc., Baidu Inc. and Sina Weibo were also among firms that published their commitments in a statement (link in Chinese) on the website of State Administration for Market Regulation. The antitrust watchdog had summoned 34 companies to a meeting on Tuesday, ordering them to rectify their excesses and issue pledges to operate legally.

Logistics /

Trucker slashes own wrist after being stopped for overweight load

A dramatic act of self-harm by a truck driver who was stopped at a weigh station in Guangdong for carrying an overweight load has cast a spotlight on the pressures such workers face for the second time within a week.

Zhao Hongjun, a driver from Shandong, publicly slit his wrist and needed 14 stitches and hospital treatment after staff tried to fine him 500 yuan ($76.50) for driving a truck over the weight limit.

Chinese truckers have long complained of arbitrary or excessive fines for perceived infractions of traffic rules. The incident came a week after Jin Deqiang, a 50-year-old driver from North China’s Hebei province, was fined 2,000 yuan for using his vehicle without a functioning global positioning device. He later killed himself by drinking pesticide at a vehicle inspection site.

Corruption /

Trio of top officials at state steel firm fall under graft probe

Three top officials at the state-owned Kunming Iron and Steel Holding Co. Ltd. have fallen under corruption investigations, a provincial graft-buster in Southwest China said Wednesday.

Du Lujun, the company’s chairman and Communist Party chief, is being probed for alleged “serious violations of (party) discipline and law,” a phrase that usually indicates corruption, said the statement by Yunnan province branch of the Central Commission for Discipline Inspection (CCDI).

Li Ping, vice president and a member of the Communist Party committee, and the company’s Vice President He Zhijun, have surrendered to police amid similar allegations, according to separate statements released by Yunnan CCDI the same day.

Quick hits /

TSMC boosts capacity, sales targets as chip crunch persists

Chinese universities change tack after tech programs fail to lure students

Global aluminum prices driven up by prospect of shorter China supply and high demand

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