The world of Chinese fintech has been thoroughly shaken in the past half year, be it the last-minute suspension of Ant Group’s IPO, the record fine for Alibaba or investigations into Meituan and Tencent.
Zhang Yiming, the founder and CEO of Chinese tech unicorn ByteDance Ltd, parent company of tik-tok has become the latest Chinese billionaire to continue the trend of stepping down in an increasingly tough and uncertain regulatory environment for Chinese fintechs.
Zhang said that he will step down and move to a new role by the end of 2021 because he lacks “social skills to be an ideal manager” and preferred focusing on “long-term strategy”.
The surprise move leading to a major leadership change at the decade-old tech giant is a clear signal of Beijing tightening the screw of China’s booming tech sector.
Chinese regulators levied fines, including on ByteDance last month, for allegedly flouting monopoly rules and issued strict warnings to Chinese fortune makers in digital sector about their responsibilities to society and keep low profile.
For many years, Beijing encouraged the technology firms to grow but official scrutiny of their platforms has stepped up in recent years as they have ventured into financial services.
The People’s Bank of China recently expressed concerns about functioning of internet platforms and said some financial services were running without licences, and there are serious rule violations in areas such as regulatory arbitrage, unfair competition and damaging consumers” interests.
Dr. Lerong Lu, Assistant professor in international financial law at the King’s College London at an online talk Friday said “We can see a shift in the approach of Chinese regulators from being innovation and entrepreneurship friendly earlier to stricter regulatory environment now.
Pointing out to the growing influence of Chinese fintech giants as against the state owned traditional financial institutions like banks, he said, it may involve both a strong message by regulators to powerful private companies and their billionaire leaders to keep a low profile and an attempt to prevent risks in financial markets.
Zhang said he will be replaced by Liang Rubo, ByteDance’s head of human resources and co-founder.
Dr. Lu said, Zhang may operate the business from behind the scenes and might have found this a safe strategy for business to survive longer in such kind of business climate.
Other observers say, while Beijing may think it important form their standpoint, it may cause a damage to China’s tech ecosystem over the longer term.
Resignation of Zhang, 38, who is one of China’s wealthiest entrepreneurs follows a similar pattern of Big Tech CEOs stepping back at the peak of their career.
He has net worth of USD 35.6 billion as of 2020, according to Forbes.
In 2019, founder of China’s largest e-commerce platform Alibaba Group Holding, Jack Ma resigned from his role as executive chairman at the age of 55 with a net worth at the time of US$45 billion according to Forbes.
Pinduoduo founder Colin Huang announced in March that, at the age of 41, he was stepping down as chairman of the e-commerce upstart with a net worth of US$46.8 billion at the time according to Forbes.
Since then, Jack Ma and his e-commerce giant Ant Group came under severe scrutiny from the regulators including suspension of IPO of Ant group in November last year and a record fine of USD 2.78 billion slapped by antitrust regulators last month for indulging in a monopolistic act of abusing its dominant market position.
In recent years, the State Administration for Market Regulation (SAMR) —China’s antitrust watchdog—has placed a number of tech giants under review, including Ma’s Alibaba and service-on-demand leader Meituan.
While regulators have yet to single Bytedance out from its peers, the start-up was included on a list of tech firms the SAMR warned to correct anti-competitive behavior in April.
ByteDance hit the global headlines after its main video app TikTok ran into trouble in India and the US.
TikTok, which was hugely popular in India, was part of over 267 Chinese Apps banned in India.
ByteDance projected USD six billion loss due to the ban on TikTok in India.
During his presidency, Donald Trump constantly attacked ByteDance, accusing TikTok of being a threat to US national security.
US politicians and officials had expressed concerns about users” personal data being passed to the Chinese government.
TikTok denied accusations that it shared user data.