Bruised Chinese internet companies try to win over Beijing and investors
After suffering stock sell-offs this summer, China’s internet giants are struggling to regain favor with global authorities and investors as companies try to chart a course back to normalcy.
Shares of two major Chinese online retailers, Pinduoduo Inc. and JD.com Inc., have jumped about 20% or more this week, recouping some of their heavy losses since July, after companies reported healthy sales increase in the second quarter and highlighted their contributions to Chinese society. Their performance diverted some of the attention from Beijing’s growing regulatory crackdown, which has diverted many investors from the once-hot internet industry.
Pinduoduo, a fast-growing e-commerce player known for selling vegetables, groceries and basic necessities, on Tuesday reported net profit of $ 373.9 million for the three months ended June. This is the first net profit for the Shanghai-based company since its listing on the Nasdaq stock market about three years ago and is explained by an 89% increase in quarterly revenue to 13.6 billions of dollars.
The nearly six-year-old company said it would commit its second quarter profits and future profits totaling up to $ 1.5 billion equivalent to supporting farmers and rural communities by helping them to modernize using agricultural technology. Chen Lei, its chairman and CEO, said he would oversee the project, which requires majority shareholder approval.
A few days earlier, Tencent Holdings Ltd. said he would invest the equivalent of $ 7.7 billion to promote “common prosperity” in China. The video game and social media giant previously allocated a similar sum to fund research in areas such as science and carbon neutrality that are strategically important to Beijing. Common prosperity has become a popular slogan in China, used to describe President Xi Jinping’s desire for the people of the country to get rich together, instead of having the wealth concentrated among the upper echelons of the business world.