Colin Huang, the founder of fast-growing Chinese e-commerce giant Pinduoduo, has resigned as chairman.
In a shock move, the company announced on Wednesday that Huang stepped down from the board of directors to explore future growth ideas.
Pinduoduo listed on the technology-focused Nasdaq stock exchange in New York in July 2018, just three years after it was founded. At the time of the initial public offering, its shares were priced at $24.6. Today they’re trading at $160.9 and the company is valued at $197 billion.
The Shanghai company’s share price was down 7.6% in pre-market trading on Wednesday off the back of the news.
In a letter to shareholders, Huang said that Pinduoduo has “become a youth entering adolescence.”
“Observing its rapid transformation and growth, I’m both joyful and anxious. Pinduoduo will have its own growth journey regardless of whether I am nervous, excited, or frightened as its guardian,” he wrote. “I hope that my stepping down as chairman of the board will aid this young person into independent adulthood.”
Pinduoduo said Huang will “pursue research in the food and life sciences, disciplines where breakthroughs could drive the future of China’s largest agriculture platform.”
Chen Lei, who replaced Huang as Pinduoduo’s CEO last July, will now also serve as the company’s chairman.
Huang has entrusted the board to exercise his voting rights as a shareholder and pledged not to sell his shares for three years. Pinduoduo said the 1:10 voting rights attached to Huang’s shares have been removed.
Rival to Alibaba and JD
With more than 788 million users, Pinduoduo is a major rival to e-commerce giants such as Alibaba and JD.com. Its success is partly down to a “social shopping model” that encourages users to share links to items they purchase with friends and participate in group buying.
The company said that agriculture orders on Pinduoduo more than doubled to 270 billion yuan ($42 billion) in 2020 as Covid restrictions forced people to shop online.
“Improved efficiency in distribution and sales still does not fundamentally add value to agricultural products, nor inherently improve our health significantly,” Huang wrote in his letter to shareholders.
He added: “What can we do if we were to take a step further and go beyond efficiency improvements?”
As the founder of the company, Huang said he is “probably the most suitable person to take on this task by stepping out of the business and the comfort zone to embark on a journey of exploration.”
Huang noted that the journey would be “all the better” if it aligned with his personal interests.