Pinduoduo, a popular Chinese tech firm, has decided to give its full profit for the last quarter for rural development projects. It has taken this decision following the Chinese government’s pressure for wealth redistribution.
The Chinese e-commerce firm pledged to donate a sum of $372 million, its last quarter profit. The firm will give the amount for development works in agricultural and rural areas in China.
Pinduoduo CEO and chairman, Chen Lei, said it would donate $1.5 billion for rural development works in China. And the Pinduoduo CEO said they would invest this amount patiently. Moreover, he is interested in overseeing the project to acknowledge the right utilization of the funding.
A Significant Decision by the Chinese E-Commerce Firm
It is a major decision by Pinduoduo, which enjoys a special place on the Nasdaq listed companies. Moreover, it revealed its profit as a public company for the first time in the June quarter.
Since its listing on Nasdaq, Pinduoduo, three years ago, it has not paid a dividend. But still, it has seen the tripling of its stock, due to which its shareholders enjoy handsome returns.
Pinduoduo’s stock witnessed a hike of 22% in New York on Tuesday following its revelation of earnings. Pinduoduo has made this move after a similar pledge by the internet and gaming company, Tencent, last week.
Tencent decided to donate $7.7 billion to achieve Beijing’s goal of “common prosperity” for the Chinese people. Besides, the company agreed to support rising income for the poor. Moreover, it also decided to work to address educational inequality and other social issues.
Rising Pressure on Rich Citizens and Businesses in China
Chinese President Xi Jinping used the phrase “common prosperity” while pushing his initiatives for wealth redistribution. In the midst of the last century, Chairman Mao Zedong used the phrase to ensure equality among rural people.
Currently, Xi’s efforts for wealth redistribution put more pressure on the richest citizens and businesses in China. It is because Beijing continues to strengthen its region in the private sector by imposing stricter regulations.
Pinduoduo has also highlighted its efforts to offer support for government social issues. Moreover, it also indicated a commendation from the government regarding contributions to alleviate poverty in China.
Pinduoduo’s decision has come after days of the government’s decision to launch a probe into the relationship between local governments and businesses in Hangzhou.