Market power of Chinese companies Beijing takes on tech companies

Status: 23.06.2021 12:18 p.m.

Numerous large and valuable tech companies have emerged in China in recent years. The government did its best to promote the rise. In the meantime, however, the feel-good phase is over.

By Steffen Wurzel, ARD-Studio Shanghai A small coffee shop in Shanghai’s Jing’an business district. The shop is popular, a take-away coffee costs the equivalent of two euros, a bargain for this location. The fact that shopkeeper Wu Jialing is still worth it is because he can sell a lot of coffee within a short period of time. Customers pay by smartphone. You simply scan the QR code that is hanging next to the coffee machine. “Paying by app is incredibly fast,” says the shop owner. Serving the cash register, looking for change, washing your hands after contacting the cash register and cash – all of this is eliminated. Correspondingly more sales are possible.

Revolutionized dealing with money

The payment apps Alipay and WeChat-Pay have revolutionized the way money is handled in China within a few years. Instead of struggling with the mostly old-fashioned, complicated and sluggish state banks, most Chinese people now fully rely on the smartphone apps of the domestic fintech companies Ant and Tencent to handle their everyday financial transactions.

It is no longer just about cashless payments. The Alipay app can now also be used to take care of investments, insurance and old-age provision. That too weakens the role of the state banks. “In the area of ​​finance, China has developed from a very backward place to a global pioneer in terms of fintech,” explains Martin Chorzempa of the Peterson Institute for International Economics in Washington. Not only in the financial technology sector have new, powerful large corporations emerged in the country in recent years. There was also a start-up boom in other tech areas, financed partly by state and partly private venture capital.

Government rethinking corporate relationships

Whether online shopping, social media or delivery services: For years, companies such as Alibaba, Bytedance and Meituan have been able to rely on political and sometimes financial support from the government. But in the past few months the climate has changed, says Duncan Clark, head of the management consultancy BDA in the Chinese capital Beijing. “It seems that the government in China is rethinking its relationship with the big tech companies.”

Obviously, some of the big tech companies have grown too big too quickly for the communist leadership – and above all too powerful. The fact that cartel and supervisory authorities are taking action against the market power of large corporations such as Google, Amazon or Facebook is also true in Europe and the USA. But: “What makes the matter special in China are the outstanding position of the Communist Party and the tensions that exist again and again in China: Tensions between the large state corporations supervised by the CP on the one hand and the private sector on the other.” explains Clark.

Ant IPO stopped

These tensions became apparent in China over the past year. In several cases, the state and party leadership slowed down the emerging private companies. Ant, the parent company of the payment and financial services app Alipay, wanted to go public last November, for example. It would have been the largest IPO in world economic history. With him, the Chinese fintech company Ant would have collected around 30 billion euros. But two days before the equity debut in Hong Kong and Shanghai, the government surprisingly stopped the IPO. Ant does not meet certain regulations, it was announced. Further details: none. But in the following weeks it became clear that the cancellation of the Ant IPO probably came from the very top. China’s state and party leadership was apparently bothered by statements by Ant boss Ma Yun, alias Jack Ma, who said in a speech in Shanghai shortly before the planned IPO: “As far as the financial sector is concerned, we are still beginners in China. We do have Big banks – they are like big rivers. But what we mainly need are small lakes, ponds, streams and smaller rivers. ”

Open criticism crosses a red line

China’s financial system, previously dominated by large state banks, harbors risks, Ma criticized. That is unhealthy. A statement that many experts would endorse, but from the point of view of the communist leadership, the previously ubiquitous model manager had crossed a red line with his open criticism of the state banks.

The IPO of his fintech company Ant burst. Ma himself had to withdraw to a large extent from the public.

Several company directors resigned

“At first it was thought that this was all about Jack Ma because he was so open about himself, and about his company Ant,” says management consultant Clark, who has also written a book about the rise of Jack Ma. “But since then we have seen much more extensive crackdown by the authorities against large tech companies in China.”

Other prominent startup founders and tech billionaires resigned. For example, Zhang Yiming, the head of the TikTok parent company Bytedance, and Huang Zheng, who ran the emerging Chinese online shopping group Pinduoduo. The reasons for the resignations are unclear, but most industry observers believe government pressure played a role. “The Communist Party is profiting enormously from the consumption boom that all these tech companies have triggered in China,” Clark analyzes. “But this is not a one-way street. We see a certain double dependency between the CP and the tech companies: Both somehow need each other, but in the end the party says: ‘You need us more.'” It is becoming increasingly clear that China’s leadership is no longer allowing private tech companies to get away with as much as it has before. They too must submit to the Communist Party’s claim to leadership. Criticism will not be tolerated, however subtle it may be.

Lost 25 billion euros in one post

This was recently also experienced at the delivery service group Meituan, against which the antitrust authorities are investigating. Meituan boss Wang Xing posted a historical satirical text that is more than 1000 years old in early May. This text is about criticism of a former Chinese emperor. Some understood the post of the company boss and multi-billionaire as a hidden criticism of today’s rulers. The Meituan boss deleted the posted text, but Meituan’s stock market price plummeted by almost 15 percent, and the company lost around 25 billion euros in value in one fell swoop. The fact that Xing then donated around ten percent of his personal fortune, around 1.8 billion euros, to a charity is understood as an attempt at penance. “Many company bosses in China are currently examining how they can get rid of outstanding titles or even parts of their assets,” reports management consultant Clark. “It’s about behaving as inconspicuously as possible, no longer being the tallest tree in the forest. Because it is the first to be felled.”

【Lieyun.com Beijing】Reported on June 14 (by Yin Zixuan)

Quote: Pinduoduo has always been a classic case of fission marketing in the Internet field. Among them, the red envelope boost activity is probably one of Pinduoduo’s most well-known activities. Through the user’s promotion, the red envelope rewards are given to the users accordingly, allowing Pinduoduo to gain a large number of new users in a short period of time. Nowadays, Pinduoduo has multiple types of red envelope assistance activities on the main interface. This time, the author of this article has experienced the red envelope assistance activities, and also felt the hidden traps of Pinduoduo activities everywhere…

Last Thursday, Pinduoduo’s red envelope sharing boost link appeared in my family and friends group again.

Before opening this link, I never thought that my mood could be so ups and downs on this ordinary night. By the way, with my relatives and friends who helped me, my mood would also ups and downs.

How deep is the water shared by Pinduoduo Red Packets?

At least after the experience, I redefine the “fission marketing” of Pinduoduo.

1. Fission red envelopes: in Pinduoduo, points are not the smallest unit of RMB

   The story started on the afternoon of June 10th. A friend shared the Pinduoduo link in the group. After I refused to click on it, this friend tempted me with a treat after winning the prize.

   The verbal treat of this friend surnamed Liu is the root of all evil this night.

   So I downloaded Pinduoduo and entered the “Cash Carousel” event that this friend participated in through the sharing link-this is an event that Pinduoduo started as early as March. Just share the link and get help from friends. It is possible to get 500 yuan.

   After I assisted, I also won several lucky draw opportunities. The lucky draw showed that I can get 500 yuan reward, but I need to make up the 500 yuan through the turntable lottery. After receiving the red envelope through the turntable presented by the system several times, I will leave 500 yuan. A few cents are still needed for the withdrawal of yuan.

   Under the temptation of 500 yuan, I got involved.

   The first step is to invite your WeChat friends to help.

Every time you share the link to help your WeChat friends, you can get at least 0.01 yuan through the lottery, so it seems that you can finally achieve the amount of 500 yuan.

When I got 500 yuan to WeChat ahead of time by only 0.02 yuan, according to my previous experience, I only needed two friends to help me to achieve the goal. At this time, unexpected variables appeared.

The neglected gold coin option on the turntable appeared in the lottery. The lowest income of the lottery is no longer 0.01 yuan, but 1 gold coin. Correspondingly, 0.02 yuan becomes the goal that can be achieved by 20 gold coins. A few gold coins can be obtained.

However, as a science and technology reporter, it was a shameful thing to not get Pinduoduo wool and get a lap of Pinduoduo, so I decided to stick to it.

However, when there is only one gold coin, the gold coin has also changed-0.1 gold coin appeared, which means that it may take 9 times to share to get the final 0.9 gold coin.

I bite the bullet and continued this long process, which became even longer when there were only 0.2 gold coins left.

Only I can’t think of it. It is impossible to do without Pinduoduo. Another change has occurred. Users can only get diamonds through the lottery, and these 0.2 gold coins correspond to 20 diamonds.

It turned out that Pinduoduo was not engaged in user fission, but a penny fission, and the fission of the renminbi in the Internet field. It can be cracked into 10 gold coins, and then cracked into 1,000 diamonds, even diamonds counted with decimal points…

This raffle turntable is not a turntable, but a sieve.

At this time, I began to doubt myself in front of Pinduoduo for the first time. I realized that I might not be able to get Pinduoduo’s wool. After all, the Internet thinking of this app with a market value of hundreds of billions of dollars must be deeper than that of an ordinary Internet practitioner. .

But at this time, I am in a dilemma. If I don’t give up, will I encounter a deeper fission? But if I just give up, will I actually have walked the longest way and give up the simplest step?

At this time, I was surprised by Pinduoduo for the first time in my mind. Pinduoduo’s product managers must be masters who are well versed in economics, or at least well versed in how sunk cost theory should be applied to users.

And a video sent by a friend made me give up this struggle.

As early as April this year, a blogger named “Lan Xi” made an attempt. In the video, he collected 500+ friends to help, and successfully uncovered the final mystery of the “Cash Wheel” Veil, he entered the last step, that is, he can no longer draw the last gold coins or diamonds, he can only draw the “blessing scroll”.

The function of this item is to give you a blessing.

Yes, a blessing of “I wish you full luck and continue to draw cash”. The video owner still did not get the final cash reward after exhausting 500+ friends’ help.

1. Withdrawal steps of fission: you can withdraw cash ≠ withdraw in full immediately

   I decided to give up the big turntable gameplay, still a little unwilling in my heart. At this time, I saw another Pinduoduo Dragon Boat Festival event-“100 million shake cash event”.

   The two activities are very similar. The interface shows that the amount I can withdraw in the “100 million shake cash campaign” is 600. When I need to share the help of my WeChat friends, I added the shake and shake gameplay, and I can receive the pinduoduo gifts regularly. Red envelopes.

   This time, to my surprise, I easily reached the 600 yuan cash withdrawal amount.

   

   Is this the sincerity of Pinduoduo on the Dragon Boat Festival?

   At the same time I couldn’t believe it, I clicked withdraw with excitement. At this moment, I was completely stunned. Although it showed that I had a cash withdrawal of 600 yuan, I only withdrew 0.1 yuan, after paying 20% ​​of the tax. , I received 8 cents from Pinduoduo on my WeChat.

   

   Looking closely at the withdrawal interface, I realized once again that it turned out that Pinduoduo did not split the amount of red envelopes this time, but split the withdrawal steps.

   Although it says, “With only XX yuan, you can unlock 600 yuan withdraw.” However, 600 yuan cannot be taken out at once. Although the previous few assistances have received 600 yuan in cash, the cash withdrawal opportunities also need assistance.

   After withdrawing RMB 0.1, it takes three times of help from friends to be able to withdraw the second and third times. After four cash withdrawals, I successfully withdrew a cash amount of 1.63 yuan. At this point, the amount of assistance needed to unlock the next withdrawal opportunity has become ten times, and the time left until the 600 yuan red envelope expires (expires at 24 o’clock every night) is running out…

   

   Faced with such pervasive “fission thinking”, I can only clap and praise: It’s wonderful to be at home, you deserve to be the master of Internet fission, Pinduoduo.

   When I decided to abandon the woolen wool altogether and draw an end to this night of Pinduoduo. My colleague Xiaoba, who helped me before, sent me an unexpected message: She was almost smashed by Pinduoduo.

   When I was puzzled, Xiao Ba said that after entering the Pinduoduo Boost interface, she received a pop-up window, indicating that she had a chance to get a free order.

   Specifically, in a batch of goods with a maximum amount of no more than 45 yuan, Xiaoba can purchase at will, and the official will eventually return the cash to her directly through WeChat.

   

   In the end, Xiao Ba bought a bull socket worth 43 yuan with free shipping. Before placing the order, the payment interface clearly stated “After confirming the receipt, the payment amount will be refunded.” However, the reminder of Pinduoduo after placing the order made Xiao Ba, who is also a technology reporter, feel that he has been hurt.

   This time the reminder clearly stated the steps to realize the cashback: 1. The payment application has been submitted, 2. The card has been checked in for 7 consecutive days, and the WeChat change will be obtained. 3. The payment will be received.

   

   Xiao Ba thought that he had banned the temptation of 500 yuan red envelopes, but he did not expect to fall into a shopping rebate. After Xiao Ba angrily refunded and uninstalled, I received another piece of bad news from my mother-“Huanhuo (lied) I bought something 7.9”.

   

   It turned out that while she spared no effort to help me today, she has also been wandering in the seductive city of Pinduoduo. In the end, my mother also received the information that the whole room was exempt, and spent 7.98 yuan to buy an air freshener. And because the amount was small, my mother decided not to refund.

   I don’t know if my mother can successfully get back the 7 yuan and 9 after signing in for seven consecutive days. I don’t know how many people like me end up “successful” under the fission of Pinduoduo, and how many people are with my mother. The same middle-aged woman contributed a few dollars to Pinduoduo under such circumstances.

2. Pinduoduo fission is its own shame

   During the whole process of Pinduoduo’s sway in Sex and the City, I have been thinking about a question. Is Pinduoduo suspected of breaking the law in this series of behaviors?

   When introspecting afterwards, I carefully looked at the rules of the “Cash Turntable” and found that it did not clearly mention that a penny is the lowest unit of measurement for RMB, and it also mentioned the existence of a “gold coin” item, although No specific conversion method is given; for 100 million yuan cash withdrawal activities, it just writes “You can withdraw XX yuan only if you miss XX yuan” instead of writing “You can withdraw in full”; as for shopping cashback activities, it is also I only wrote “WeChat change will be credited directly to the account” instead of writing clearly “After signing in seven days, the WeChat change will be credited directly to the account.”

   

   When I tried to contact customer service, I finally saw all the rules for several activities under “Guess you want to ask”. But these rules that were not stated clearly at the beginning inevitably misled me and guided my next series of behaviors.

   And there are not many people who are misled in this way. In black cat complaints, there are many complaints about similar Pinduoduo activities. There are other cash activities and some bargaining activities. They are all similar routines, which are fissioned when users think they are successful.

   

   

   

   Regarding the above experience, Yan Wenping, a senior partner of Beijing Dongwei (Chengdu) Law Firm, said that users participated in activities such as “100 million cash in cash”, “cash carousel”, and “bargain for free” on an e-commerce platform. From the perspective of the Civil Code of the People’s Republic of China, the user and the platform have established a contractual relationship. The main cause of disputes is the unclear agreement of the contract (rules) on the platform and the user’s ignorance of the activity rules. Infringement on users to a certain extent; from the perspective of the “Consumer Rights Protection Law of the People’s Republic of China”, different conditions and operating methods of the platform will infringe users’ right to know to varying degrees; from the “Advertising Law of the People’s Republic of China” 》From the perspective of the platform, some non-compliant practices of the platform may be suspected of deceiving and misleading consumers; of course, there are both psychological and opaque platform factors such as the use of users to take advantage of the platform, as well as users’ unfamiliarity with the rules and being unfamiliar with the rules. There are factors such as the use of rules and inducing factors, and there are even more factors such as the state’s inadequate supervision of this sector, but no matter what the reason is, the compliance operation of the platform is the general trend, otherwise the only waiting for the platform will be its own fruit.

   Just last month, Pinduoduo released its financial report for the first quarter of 2021. The financial report showed that Pinduoduo’s revenue in the first quarter was 22.17 billion yuan, a year-on-year increase of 239%; as of March 31, 2021, Pinduoduo’s annual active buyer The number reached 823.8 million, a net increase of 195.7 million over the same period last year, which allowed Pinduoduo to surpass Alibaba to become the number one e-commerce company.

   Under such a large volume, there can be such a rapid growth. Behind the scenes, fission marketing can be said to be indispensable. With the sudden emergence of Pinduoduo in recent years, many of its old and new activities (bargaining, group joining, etc.) have blown up the entire network, causing widespread in various circles. discuss.

   Pinduoduo’s simple, rude and effective product methods and operating strategies are a classic case of Internet marketing, and it has brought many imitators. And my friends around me are willing to participate in such red envelope sharing activities because she and the people around her have indeed been rewarded by Pinduoduo after they brought new users to Pinduoduo.

   However, Pinduoduo is now not only fissioning users, but also their own shame.

   If it is true, as Huang Zheng repeatedly emphasized on the day of listing: “Pingduoduo is mostly based on luck. This is driven by deep-seated forces. It is very similar to the driving force of Shenzhen’s reform and opening up 30 or 40 years ago. We are blossoming on it. People who do what they do will explode.”

   So Pinduoduo shouldn’t treat these deep-seated forces in this way. Even under this treatment, the bottom-level forces are still bringing them growth.

Huang Zheng, founder of Pinduoduo (left) and Wang Xing, founder of Meituan – Photo: Bloomberg/Getty Images. Huang Zheng, founder and CEO of e-commerce firm Pinduoduo, and Wang Xing, founder and CEO of food delivery platform Meituan, have seen their fortunes plummet after being criticized by an activist group for consumers. According to Forbes, the share price of this Pinduoduo 11/5 fell more than 9%, “blowing” $ 4.3 billion from Huang Zheng’s assets. The founder of Pinduoduo is currently worth $42.9 billion according to Forbes’ real-time statistics, making him the 4th richest person in China. Meanwhile, Wang Xing’s fortune fell by $2.5 billion as investors continued to sell off Meituan shares in the May 11 session. The share price fell another 5.3% after falling 7.1% in the previous session. Wang is currently worth $19.5 billion. A day earlier, the Shanghai Consumer Council said it had convened both Pinduoduo and Meituan. The organization criticized Pinduoduo for its poor quality goods, rampant counterfeiting on the company’s e-commerce platform, and poor after-sales service. The organization also condemned Meituan for issues with refunds, failed food deliveries and misleading content on the company’s platform. The statement of the Shanghai Consumer Council comes as the Chinese government is tightening control of the country’s largest technology firms. Last week, Wang was also criticized after posting a poem of a Tang poem allegedly intended to criticize the Chinese government on the social network Fanfou. The poem titled The Book of the Dead (Book Burning Pit) by poet Zhang Jie, written at the end of the Tang Dynasty, condemns Qin Shi Huang’s act of burning books to control people’s thoughts and suppress the mind. awake. The poem is meant to mock Qin Shi Huang for seeing academia as the greatest threat, but his reign was eventually overthrown by non-intellectuals. A few days later, Wang deleted the post, explaining that the poem was just a reminder that “the most dangerous enemies are often the ones we least expect”. The 42-year-old CEO also added that Meituan’s biggest rival appears to be Ele.me but is in fact “unnoticed companies and business models that are disrupting the food delivery industry”. Late last month, Beijing’s anti-trust authority officially launched an investigation into Meituan’s alleged request for sellers to be allowed only the Meituan platform or another competitor. Since then, the company’s stock price has fallen by nearly 18 percent. On Weibo, many Chinese netizens compared Wang’s posting of the poem to Jack Ma’s speech criticizing the financial management system in October 2020. The co-founder of Alibaba at the time even said bluntly that Chinese banks operate like “pawn shops”. Jack Ma’s speech is said to spark a series of strong moves by Chinese authorities against Alibaba as well as its subsidiary Ant Group. Ant’s “big” IPO was suspended a few days later. And Alibaba was fined a record $2.8 billion for monopolies last month.

▲On April 6, Yeedi, a brand of Cobos, signed a strategic cooperation agreement with Pinduoduo, and Pinduoduo’s “10 billion subsidies” and “limited time spike” will be tilted towards a large range of Cobos products. (Photographed by Li Lin)

In recent years, service-oriented home robots have gradually become a new fashion. Since its establishment, Cobos has been committed to bringing advanced products and high-quality services to users and their families. As an outstanding representative of “China’s intelligent manufacturing”, Cobos has successively exported “China-made” to more than 60 countries and regions with its top R&D team and advanced intelligent manufacturing technology.

According to data from Pinduoduo, since Cobos moved in last year, its products have sold nearly 100 million yuan on the platform. Li Gang, the head of the China region of Cobos, said, “Pinduoduo’s 790 million consumers cannot be ignored, and the platform has become the largest incremental market in the small home appliance industry, and it is also the e-commerce company that we will comprehensively deploy in the future. platform.”

It is reported that Yeedi’s official flagship store, which has recently settled on the platform, quickly won the favor of users due to its extremely high cost performance and thoughtful after-sales guarantee.

The “Double 100” after-sales policy of “100-day free trial” and “100-day purchase and refund” is a unique benefit provided by Pinduoduo users. During the event, during the 100 days from the consumer’s purchase, if there is a price reduction, it will be refunded at the difference, that is, the purchase is the lowest price; and if during this period, the user feels that the product does not meet the requirements, they can apply for a refund at any time , That is, from the original 7 days for unreasonable returns and exchanges, it has been extended to 100 days. It is understood that the “Double 100” after-sales policy will continue until the end of June this year.

Among them, the K600 sweeping robot is one of the main products of the store. With the support of the “10 billion subsidy”, it will be reduced by 481 yuan for a limited time, and the coupon can be purchased at only 518 yuan. At present, nearly 63,000 users have expressed their desire to buy. . For consumers who have already purchased, “clean sweep”, “large suction” and “no excessive noise” have become their common comments on the product.

▲ “Sweeping is very clean”, “big suction” and “no excessive noise” have become consumers’ common comments on the product.

At the same time, according to the content of the product reviews, the reasons why users buy this sweeping and washing 3-in-1 “artifact” are mainly divided into two categories: one is that young people buy it to be “lazy”, start it before get off work, and complete the correction when returning from work. The cleaning of pet hair; the other is bought for home use, which can effectively reduce the burden of parents’ housework.

In order to provide consumers with a better shopping experience, Pinduoduo also launched an upgrade of the home appliance service system, and formulated genuine invoices, home delivery, 48-hour delivery, and free shipping for the service quality of “Duoduoduo Appliances” merchants. , 7 days no reason to return and installment 7 service standards. The handling of issues such as logistics, surface consistency, installation, quality, return and exchange, maintenance, personal injury, and invoices requires a “user-oriented” principle to be resolved.

The person in charge of Duoduo Electrical Appliances said, “The platform relies on its own big data advantages, through continuous insights into users’ precise needs for electrical appliances, to judge the latest consumer trends, and subsidize the goods consumers need. Genuine products are low-priced and after-sales are guaranteed. It is our unchanging commitment to users.”