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Colin Huang, Shanghai’s secretive internet king



From a rundown office tower in downtown Shanghai, wedding dresses are sold to the US, wristwatches are shipped to France and cheap trainers are sent to customers in the UK.

Dozens of websites and apps operate from the 23-floor Greenland business building, where employees sit in offices that are completely unmarked, apart from the words “Self Confidence” pasted to their glass doors.

One man is behind all these ventures, 40-year-old Colin Zheng Huang, the billionaire founder, chairman and controlling shareholder of one of this year’s biggest sensations, the online shopping app Pinduoduo, whose shares have risen by 261 per cent since January.

But alongside Pinduoduo, which is now worth $170bn, Mr Huang has set up a wide network of other ecommerce and gaming groups in Shanghai together with a tight-knit group of colleagues, making him the city’s undisputed internet king.

Some of these ventures are more famous outside China than Pinduoduo. One of the apps, Vova, is one of Europe’s most popular online shopping services, ranking in the top 10 shopping apps in France and Italy this past quarter, according to Sensor Tower.

Top shopping apps downloaded in France and Italy

The hub of ecommerce and gaming businesses at the Greenland building provided early employees for Pinduoduo, and helped the breakout business with its sales and marketing.

Pinduoduo previously told investors that Mr Huang founded, or was connected to, some of the companies, but in records registered with Chinese regulators they were owned by his associates.

Known as baishoutao, or “white gloves”, it is not uncommon for wealthy Chinese to ask friends or relatives to hold their shares in companies to lessen their personal risk and shield their holdings from public scrutiny.

Mr Huang has only occasionally held shares in his own name in China. Even at Pinduoduo, he signed over all his shares in its Chinese business ahead of the company’s 2018 initial public offering to Chen Lei, Pinduoduo’s chief executive, who he studied with at the University of Wisconsin-Madison.

Colin Huang was a student in the US with Chen Lei, Pinduoduo’s chief executive © Imgine China/Alamy

One apparent stand-in shareholder, a 69-year-old woman from a rural area of inner China known for its Goji berries, held a 90 per cent stake in several of the companies until the Financial Times asked about her identity.

Pinduoduo has told investors in its Nasdaq-listed shares little about the web of companies. Instead it calls Mr Huang a “serial entrepreneur” and says he founded “Xinyoudi Studio” in 2011. No company with that name has ever existed, although was once registered.

Chinese media have described Mr Huang as mysterious. It is not even known if he is married. The secrecy extends to Pinduoduo, where employees use nicknames and two former employees said it was rare to know their colleagues’ real names. 

Pinduoduo did not respond to a list of questions for comment.

Unmarked offices inside the Greenland building
Unmarked offices inside the Greenland building in Shanghai, where Pinduoduo employees use nicknames © Ryan McMorrow

Mr Huang was born in Hangzhou, the hometown of online shopping giant Alibaba. Both of his parents were factory workers and he studied computer science at Zhejiang University before heading to the US in 2002.

He joined Google and worked at Google China before striking out on his own, in the pursuit of both “making money” and “making me a little bit cooler”.

Cashing in his Google stock, he started Ouku, a consumer electronics website and sold it for $2.2m in 2010. His next venture, Leqee, was already under way, with Mr Chen and an Ouku intern registering the company with authorities in 2009 as its founding shareholders. Pinduoduo later told venture capitalists that Mr Huang “successfully founded” Leqee in 2009, according to documents seen by the FT. 

Leqee helped big brands run their shops on China’s biggest internet shopping platforms, Alibaba and It also became an informal holding group for the succession of new businesses set up in the Greenland building.

Two years later, the group set up another project, Lebbay, which was again owned on paper by Mr Chen and the now former intern. Using the skills Mr Huang learned at Google, Lebbay built a series of online shopping websites that aimed to get to the top of the search rankings for their offerings.

“Building one site only takes a week,” said a former manager, noting the websites’ funnelled orders into the same back end system for fulfilment. Mr Chen had run the operation, reporting to Mr Huang, the employee said. 

Another profitable foray began life a few floors above Lebbay. Under the name Shanghai Xunmeng, Mr Huang’s team developed online games such as Joyspade Texas Holdem Poker, targeting south-east Asian gamblers, and Girls X Battle, where players collect an army of girlfriends to fight for them. 

Mafia City, one of the hit games, on Xinyoudi's website
Mafia City, one of the hit games, on Xinyoudi’s website. Today, the developers writing its code work for a company Ms Gu set up in 2018, Shanghai Youta (Yotta Games). © Screenshot

Then Mr Huang landed on the idea that would become Pinduoduo. In 2015, he asked his team to build a “social ecommerce” venture. Called Pinhaohuo, shoppers got a better price if they could persuade a friend to buy the same product. The site started with selling fruit, and at one point Mr Huang redeployed 100 employees from Leqee to help out.

A few months later, Mr Huang’s gaming team created a second app applying the same group-buying model to an online marketplace, where any merchant could list their goods. It was named Pinduoduo and 20 key gaming employees shifted to focus on the venture, Mr Huang told local media.

“These were two different roads, Pinhaohuo was pushing to build warehouses and fulfilment, like a (akin to Amazon) for fresh produce, but the employees from the gaming company didn’t see it as viable,” said Mr Huang.

Pinduoduo’s business model quickly won out and swallowed the Pinhaohuo team. But the web of companies in the Greenland building were tangled tightly together. Lebbay was used to register Pinhaohuo’s social media accounts, which were key sales channels, and brought in a quarter of the combined company’s sales in 2016. Leqee was listed as Pinhaohuo’s operator on its website. Shanghai Xunmeng, the gaming arm, ran Pinduoduo.

When outside investors ploughed $50m into Pinduoduo in 2016, the ownership of the group of companies began to change. Xunmeng’s 90 per cent owner on paper, 69-year-old Gu Yanping from rural Ningxia province, transferred her stake to the entity that American investors buy into today. Pinduoduo later said in its prospectus that Xunmeng was “controlled by the Founder (Mr Huang) since its establishment.”

Ms Gu immediately set up a second company for the spun-out gaming assets. One early Pinduoduo investor acknowledged that the web of companies were tied to Mr Huang. “The other companies are just making a little money, they don’t have any impact,” the person said. With Pinduoduo “he wants to make a great company,” the investor said. 

“Every company has its own employees and has its own team, he has to be responsible to them, he can’t just shutter the companies,” the person added. 

How the FT traced the ownership of the ecommerce apps

This past year the gaming business has enjoyed sales of $489m, according to data from Sensor Tower. Together with Pinduoduo, it has moved to a gleaming new tower called the Shanghai Arch, where employees wearing anime costumes and bright blue wigs to match the characters in their games, write code a few floors beneath Pinduoduo’s fast-growing team.

The other ecommerce ventures remain in the Greenland building. But the lines between the companies are still blurred.

Six current and former employees at Vova and the other ecommerce sites told the FT that while they were recruited by Lebbay or Leqee, their paychecks came from the company Ms Gu set up in 2016 to take over the gaming assets being spun out of Pinduoduo. “It was always a mystery, they never told us why,” said Ice Chen, a former software developer for one of the sites.

After the FT asked two of the companies about Ms Gu’s identity this summer, she transferred almost her entire stake in both firms to a man, who has also set up an investment partnership for Pinduoduo this year, business records show.

Greenland building in downtown Shanghai
Greenland building in downtown Shanghai © Ryan McMorrow

It was the latest of a raft of share transfers Mr Huang and his acquaintances have made, with most carried out in the spring of 2018 as Pinduoduo prepared for its Nasdaq listing. 

The most consequential share transfer came in May 2018 when Mr Huang transferred majority ownership of Pinduoduo’s main Chinese operating entity, known as a variable interest entity, to Mr Chen.

Other Chinese tech executives, such as Pony Ma of Tencent or Richard Li of Baidu, have kept tight control of their onshore companies, which run their businesses and hold crucial licences. But Mr Huang holds no shares in Pinduoduo’s VIE. 

“Colin must really trust Chen Lei or it’s a scary situation, for both Colin and US investors,” said Jesse Fried, a corporate governance expert at Harvard Law School.

Additional reporting by Nian Liu in Beijing and Wang Xueqiao in Shanghai

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Emerging Markets

Hong Kong dropped from economic freedom index after crackdown




Hong Kong has been dropped from a prominent index of the world’s freest economies, underlining growing concerns over Beijing’s tightening grip on the Asian financial centre after it introduced a national security law last year.

The announcement from the Heritage Foundation, a conservative US think-tank, came as the majority of a group of 47 pro-democracy politicians were refused bail in a case that critics say shows the rapid decline of civic freedoms in the city.

The Heritage Foundation also dropped the Chinese special autonomous region of Macau, a casino hub and former Portuguese colony, from the rankings.

The foundation in recent years has been aligned with the administration of former US president Donald Trump.

“No doubt both Hong Kong and Macau . . . enjoy economic policies that in many respects offer their citizens more economic freedom than is available to the average citizen of China,” the Heritage Foundation said. “But developments in recent years have demonstrated unambiguously that those policies are ultimately controlled from Beijing.”

Beijing imposed the national security law on Hong Kong last year in response to anti-government protests that engulfed the city in 2019.

The measures are part of a clampdown on civil and political freedoms guaranteed to the city for 50 years following its handover from the UK to China in 1997. Authorities are targeting anyone viewed as disloyal to the Chinese government in politics, education and the media.

The Hong Kong government has long taken pride in studies showing its economy to be one of the most liberal in the world, with the city marketing itself as an international business haven given its low tax rates and open port.

The Heritage Foundation last year replaced Hong Kong at the top of its “Index of Economic Freedom” with Singapore, toppling it from a position it had held for 25 years, but still included the territory in the rankings in second place.

The Hong Kong government said it was ‘dismayed’ by the Heritage Foundation’s decision and said it was “politically biased”.

The case against the 47 pro-democracy lawmakers and activists has been seen as a test of whether the city’s legal system can withstand pressure from Beijing.

Authorities charged the group with subversion, alleging they aimed to topple the government by staging an unofficial primary vote to select candidates to run for election to the city’s legislature. Subversion is punishable with up to life imprisonment under the national security law.

The bail hearings, presided over by a judge appointed to oversee national security cases, entered their fourth day on Thursday.

Victor So, the judge overseeing the case, only granted bail to 15 out of 47 defendants under harsh conditions, but the prosecution immediately appealed the ruling, returning them to custody until the appeal hearing takes place. 

On top of the usual bail conditions, the court ordered the defendants to not participate in elections or make any public political statements.

Sessions have often stretched late into the evening, including one that continued until 3am before the defendants were hauled back before the court the next day. At least one defendant collapsed inside the courtroom and six others were sent to hospital for treatment.

As they exited the court, some defendants shouted: “Political criminals are not guilty, Hong Kongers will not die!”

Simon Young, a law professor at the University of Hong Kong, said the treatment of the defendants was “most unsatisfactory”. Jerome Cohen, a Chinese law expert at New York University, said the way the hearing was conducted “makes a farce of procedural fairness”.

Some of the defendants have faced multiple trials simultaneously and were forced to shuffle between courtrooms.

The defendants’ lawyers said on Tuesday their clients had not bathed in three days, forcing the judge to delay the hearing to allow them to wash.

Hong Kong has tight restrictions on reporting the substance of bail hearings.

Hundreds of supporters have queued each day in an attempt to watch the proceedings in person. Many held placards and chanted banned political slogans, risking prosecution under the security law.

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Pakistan’s finance minister ousted in surprise defeat for Imran Khan




Pakistan’s prime minister Imran Khan suffered a major political setback on Wednesday, when his finance minister was defeated in a contest for a seat in the country’s senate.

Khan must now appoint a successor to the cabinet post by June 11 under Pakistani law. The surprise defeat of finance minister Abdul Hafeez Shaikh, a respected economist and former world bank official who led the country’s negotiations with the IMF for a $6bn loan, comes amid an escalating campaign by main opposition parties to have the prime minister removed from office.

Elected officials vote to fill vacated seats in the senate every three years. Following the result, the government announced it would “take a vote of confidence in parliament” to prove that the prime minister retained a majority of support.

Business leaders have warned that Shaikh’s departure creates uncertainty over the future of Pakistan’s fiscal policies as the country battles the pandemic’s fallout on the economy.

“Right now, it was essential to give a message of confidence to a range of stake holders within and outside Pakistan on the state of our economy. Now, people will be left asking questions,” the president of a private Pakistani bank told the Financial Times.

An 11-party opposition alliance, the Pakistan Democratic Movement (PDM), has accused Khan of using the powerful military to tip the 2018 election result in his favour — which leaders from the prime minister’s party have denied — and for failing to revive the moribund economy.

The PDM has announced a March 26 deadline for Khan to step down or face widespread opposition protests.

Though some opposition leaders have said they plan to follow up Wednesday’s defeat with a vote of no confidence against Khan, analysts said it was too early to predict his downfall ahead of the end of his five-year term in 2023.

“It’s a major upset for Imran Khan and his PTI (Pakistan Justice Party),” said Huma Baqai, a political commentator at the University of Karachi. “The government from hereon will face further pressure as the opposition continues to step up its campaign.”

The vote count suggested a break in Khan’s PTI party, with as many as 16 party members either voting for the finance minister’s opponent, former prime minister Yusuf Raza Gilani, or spoiling their ballots.

Shaikh’s defeat “will not automatically lead to the prime minister’s downfall. Some PTI members clearly changed sides [for this vote]. But it will be much harder for them to agree to removing the prime minister,” an opposition leader told the FT.

Faisal Javed, a PTI leader, claimed some representatives had been bribed by the opposition. “There has been a major corruption. There has been horse-trading. People have been sold,” he told the local ARY news channel on Wednesday. Opposition leaders have denied this.

The electoral college for the senate consists of members from legislatures of Pakistan’s four provinces as well as the lower house of parliament in Islamabad known as the national assembly.

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Australia’s treasurer warns global stimulus threatens financial stability




Australia has warned that unprecedented global stimulus efforts during the coronavirus pandemic are creating financial stability risks that will only intensify when interest rates inevitably rise.

Canberra has also defended tough new foreign investment rules that have led to a collapse in Chinese investment, arguing the number of proposed deals motivated by strategic, rather than purely commercial gain, was increasing.

Josh Frydenberg, Australia’s treasurer, said the Pacific nation was in a strong economic position as its net debt to gross domestic product was about half that of other advanced economies, even as it begins unwinding fiscal stimulus.

“There is no doubt elevated debt levels will create challenges for many countries. While global interest rates are low those debt levels can be serviceable — but there will be a time when the monetary policy settings change,” he told the Financial Times.

Frydenberg’s comments on the risks posed by global stimulus followed a similar warning delivered last week by Peter Costello, a close political ally and former Australia treasurer.

Australia will be among the first advanced economies to taper off Covid-19 fiscal stimulus with the closure of its A$90bn (US$70bn) JobKeeper wage subsidy scheme this month.

Canberra has argued that the recovery is already under way, citing a fall in unemployment to 6.4 per cent in January and a 3.3 per cent economic expansion in the three months to September last year.

Frydenberg, who counts Margaret Thatcher and Ronald Reagan among his role models, said the government’s A$250bn stimulus was required to stabilise the economy during the pandemic. But he said JobKeeper, which supported 3.6m workers at its peak, was no longer needed as the recovery could be supported by tax cuts, which were announced last year.

Asked if he thought the economic policies of Thatcher and Reagan were still relevant, he said: “[Reagan and Thatcher] achieved a lot when they were in office and they were committed to lower taxes. They were committed to cutting regulation and that’s certainly what I’ve been committed to as well.”

But trade unions and businesses that are still suffering as a result of border closures and restrictions, particularly in the tourism and entertainment sectors, have warned that the scheme’s closure will dent the economy.

“JobKeeper should be extended for those businesses that are still affected by coronavirus. [Through] no fault of their own, they are suffering that downturn,” said Sally McManus, secretary of the Australian Council of Trade Unions, last week. “And we say that because that will save jobs.”

Josh Frydenberg, Australia’s treasurer, is a rising star in the country’s conservative government and is tipped as a future prime minister © AP

Frydenberg, who was the architect of foreign investment rules aimed at countering rising Chinese influence, said he made no apologies for putting “national interest” at the heart of Australia’s investment policies.

Chinese investment fell 61 per cent last year to A$1bn, down from A$2.6bn in 2019 and a peak in 2016 of A$16.5bn, data showed. Frydenberg was instrumental in blocking two potential deals: China Mengniu’s A$600m bid for Japan-owned Lion Dairy and China State Construction Engineering Corp’s A$300m bid for Probuild, a South Africa-owned construction company.

“We absolutely reserve the right to make decisions around foreign investment based on national interest and having put in place an explicit national security test allows us to do that,” he said.

“Increasingly we’ve seen foreign investment proposals that have been motivated not by purely commercial gains but more strategic ones. When those foreign investment proposals potentially compromise the national interest, then we reserve the right to say no.”

Frydenberg said Australia was not alone in tightening its rules, noting that other countries shared Canberra’s views on national sovereignty and foreign investment.

“Obviously we have had some challenges with China,” he said when asked about Beijing’s imposition of trade sanctions on a range of Australia’s exports following Canberra’s call last year for an inquiry into the origins of Covid-19 in Wuhan.

Frydenberg insisted that Australian ministers were prepared to sit down with their Chinese counterparts to discuss the bilateral relationship but only on a “no conditions attached” basis.

“It is a mutually beneficial trading relationship — we supply the bulk of their iron ore and that iron ore has helped underpin their economic growth,” he said.

Frydenberg is a rising star in Australia’s conservative government and is tipped as a future prime minister.

Last week, he shot to global attention following several days of negotiation with Facebook’s Mark Zuckerberg over the social media company’s decision to block news on its platforms in Australia in response to a law forcing it to pay news publishers.

On Friday, Facebook “refriended Australia” and returned news to its Australian platform following amendments that may make it easier for the company to avoid the toughest elements of the law.

“Trying to negotiate with these guys is a bit like playing chess against a chess master,” said Frydenberg, who joked that he spoke to Zuckerberg more than his own wife last week.

“The reality is they are massive companies with huge balance sheets and global reach. If this was easy other countries would have done it [made Big Tech pay for news] long ago.” 

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