Poem costs Meituan CEO $3.3b, and his firm $35b

HONG KONG • It took just 28 Chinese characters on an obscure social media platform to ignite a controversy that has rattled the country's tech industry.

Meituan chief executive Wang Xing lost US$2.5 billion (S$3.3 billion) of his wealth after he posted on Sunday verses from a millennium-old poem about the misguided attempts of China's first emperor to quash dissent.

Mr Wang, a usually plain-speaking engineer who enjoys literary classics, later scrubbed his post and explained he was really calling out the short-sightedness of his own industry, trying to clarify there was no implied criticism of the government. But the damage was done: Meituan shed US$26 billion (S$35 billion) over two days, the biggest loser in a broader tech rout.

The seemingly extreme reaction to Mr Wang's post underscores how much markets remain on edge months after Beijing launched a crackdown against the twin pillars of Mr Jack Ma's Internet empire - Alibaba Group Holding and Ant Group. While far more succinct, Mr Wang's utterances recalled Mr Ma's own ill-timed comments in a public forum, which torpedoed Ant's US$35 billion initial public offering before igniting a wide-ranging campaign to rein in the country's increasingly powerful - and vocal - corporate chieftains.

Tellingly, most of the resultant frenzy of online speculation centred on Meituan's - and Mr Wang's - fate. Regulators had only just chosen the gig-economy giant as the subject of their second major investigation after fining Alibaba US$2.8 billion for alleged monopolistic behaviour.

While evocative, the poem offered far from conclusive evidence of Mr Wang's intentions or thinking. Part of it read: "Before the ashes turned cold, rebellion had arisen east of the mountains." Yet it was his timing that may rankle officials already examining issues from worker compensation and benefits to its competitive tactics.

Regardless of Mr Wang's motivations, regulators have Meituan in their sights. He is one of a handful of entrepreneurs considered successors to industry pioneers like Mr Ma, and also one of their fiercest rivals. The 42-year-old entrepreneur raised a record US$10 billion last month to develop promising technologies to spearhead an aggressive expansion into online groceries. He still owns about 11 per cent of Meituan, a stake worth about US$18.4 billion, according to the Bloomberg Billionaires Index. That means his fortune has shrunk by some US$15 billion from a peak in February.

Over the past six months, China's antitrust watchdog has rolled out a plethora of laws giving it greater oversight of the Internet sphere, wary of the influence companies like Alibaba and Meituan wield over many facets of Chinese life. Beijing is said to be exploring ways to further curtail their control of valuable personal data and media. But among the Internet giants, it is Meituan, the world's largest food delivery service, that perhaps has come under heaviest public scrutiny during the pandemic.

Even before Mr Wang's post, state media had run exposes describing the plight of Meituan's delivery drivers. The deaths of several delivery personnel in the rush to meet deadlines drew accusations of exploitation and sparked a debate about the treatment of gig-economy contract employees.

The criticism did not stop at Meituan's core business. Its community commerce arm was among a handful of operators penalised in March for excessive subsidies, alongside units of Pinduoduo and car-hailing giant Didi Chuxing. In January, it closed its crowd-sourced health insurance service after regulators tightened scrutiny over online insurance. The Shanghai Consumer Council chimed in this week, blasting Meituan for a broken refunds system and misleading content on its mobile app.

What happens next is a subject of intense debate. While Mr Ma, after a period of enforced hibernation, is once again showing up in public, many of his compatriots have been careful to maintain a low profile because of the volatile environment.

"Whether they mean to or not, any implied criticism of the regulation of their respective industries is not helpful to them or their shareholders," said Mr Gary Dugan, chief executive of the asset management firm Global CIO Office in Singapore. "Any investor in single stock names in China at present would hope that they do less social media philosophising about the future and just focus on managing their businesses."

BLOOMBERG