SINGAPORE—Chinese e-commerce company

Pinduoduo Inc.’s

PDD -10.01{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436}

founder and chairman,

Colin Huang,

stepped down from the company on Wednesday, even as the five-year-old company overtook

Alibaba Group Holding Ltd.

BABA 1.93{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436}

to become the country’s largest e-commerce company by annual active buyers.

Mr. Huang, 41 years old, is resigning as China’s powerful internet sector comes under growing government scrutiny. His resignation follows another departure from a major company in the sector: Financial-tech giant Ant Group Co.’s Chief Executive

Simon Hu

stepped down earlier this month.

In a letter to shareholders, Mr. Huang said he was stepping down to pursue personal interests in life sciences. He is in talks with Chinese universities to set up research labs on biotechnology, a person familiar with the matter said. For his next step, he will study biotechnology at these labs, the person said.

Mr. Huang said that the board approved his resignation as the chairman on Wednesday. Chief Executive Officer Chen Lei will take on the additional role of chairman of the Nasdaq-listed company.

Shares of Pinduoduo dropped after the announcement. They were down around 11{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436} midmorning Wednesday.

In 2020, Pinduoduo had 788.4 million annual active buyers, users who bought at least one item last year, up 35{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436} from a year earlier. It marked the first time Shanghai-based Pinduoduo exceeded Alibaba’s 779 million annual active buyers.

The company released its October-December results Wednesday. Pinduoduo’s quarterly revenue rose 146{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436} year over year to around $4 billion.

Mr. Huang, who stepped down as Pinduoduo’s CEO in July, remains the largest shareholder in the company. He pledged to extend the lockup period for his shares by three more years, according to the letter.

The supervoting rights attached to his shares were removed when he relinquished executive responsibilities, and Mr. Huang said he would entrust the voting rights of these shares to the board.

Mr. Huang, in the letter, said that the pandemic has accelerated Pinduoduo’s improvements to its operations and helped groom a new generation of leaders. “It is time to let them shape the Pinduoduo they aspire to build,” he said.

Beijing in recent months has been moving to rein in China’s powerful internet sector including e-commerce companies. Among the hardest hit has been Alibaba, which is under antitrust probe; its fintech affiliate Ant, whose initial public offering was canceled in November; and its founder

Jack Ma.

After Jack Ma criticized Chinese regulators, Beijing scuttled the initial public offering of his fintech giant Ant and he largely disappeared from public view. WSJ looks at recent videos of the billionaire to show how he got himself into trouble.

This month, Chinese regulators fined Pinduoduo, alongside several other e-commerce companies, alleging anticompetitive practices.

Mr. Huang, a former Google engineer, founded the Shanghai-based company in 2015. The company is backed by social-media giant

Tencent Holdings Ltd.

TCEHY -1.85{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436}

and venture investor Sequoia Capital China.

Since leaving the CEO position, Mr. Huang had been moving away from Pinduoduo’s day-to-day operations, a person familiar with the matter said.

Mr. Chen, a data scientist who studied at the University of Wisconsin-Madison, has been closely involved in strategic and operational decisions as a member of the founding team.

China’s Internet Sector Under Pressure

Write to Keith Zhai at [email protected]

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