From an ancient poem to the fear of Chinese tech CEOs

A thousand-year-old poem has cost the giant Meituan tens of billions of dollars in market capitalization.

Meituan is China’s largest food delivery app. (Photo: QZ) A big storm hit after Meituan founder and CEO Wang Xing posted a poem from the Tang Dynasty on social media last week. The article on the Fanfou website has since been deleted, but Meituan confirmed it contains the poem “The Book Burning Pit” by author Zhang Jie written more than 1,100 years ago to satirize Qin Shi Huang. According to historical records, Qin Shi Huang quelled dissent in the country by digging huge holes, burning books not approved by the government, and burying scholars to prevent people from condemning him. Some comments on social media suggested that Wang may have posted the poem to implicitly criticize the Chinese government, which is holding back the country’s largest technology firms. Others compared the post to Alibaba founder Jack Ma’s speech last year, when he smacked China’s central banks and financial regulators for using outdated methods. Jack Ma’s speech seems to have angered the authorities. Ant Group’s historic IPO was also suspended at the last minute. Meituan and many other “big players” such as Alibaba and Tencent have been fined or investigated and monitored for several months now for violating monopoly or affecting consumer rights. The poem, which is more than 1,100 years old, further reveals the predicament that awaits companies like Meituan. Meituan stock fell 13% from May 6 to May 11, wiping out nearly $30 billion in market capitalization. Currently, the stock recovered slightly, gaining 2.5% at the close of the session on May 12. CEO Wang later posted an explanation, saying that the poem was about Meituan’s competitors. “The Qin Dynasty was afraid of scholars, but Liu Bang and Xiang Yu – the people who overthrew the Qin Dynasty – were not educated. That reminds me that the most dangerous enemies are not the people expected. Alibaba focused on JD.com and then Pinduoduo surpassed in terms of users. Similarly, Ele.me is seen as Meituan’s biggest competitor, but what really shocks the entire industry might be a certain business, business model that hasn’t caught our eye yet.” In April, Meituan and dozens of other companies were warned when Alibaba received a record $2.8 billion fine. Chinese authorities said Alibaba was fined for behaving like a monopolist. They also tell businesses that if they don’t address monopolistic behavior, they will be similarly punished. Later, China’s State Market Regulation Authority opened an antitrust investigation against Meituan for “exclusive trading arrangements”. The company was summoned by many agencies, including the Shanghai authorities, about the interests of customers. According to analysts Fitch Ratings, regulatory risks with China’s internet sector tend to escalate. The agency has not ruled out any fines with other companies after what happened to Alibaba. One netizen commented: “The poem is very suggestive. Wang Xing posted it at a critical period of the Big Tech crackdown. This is clearly inappropriate action. Wang may mean his rivals, but investors don’t think so. This is a very sensitive moment.” Du Lam (According to CNN)