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BEIJING – When Alibaba founder Jack Ma criticized the Chinese financial system during a speech at a high-profile forum in October, industry watchers braced themselves.
Ant Group, the fintech titan also founded by Ma, was days away from hitting a record $ 37 billion.
During the Bund Summit in Shanghai on October 24, the quirky billionaire, who usually speaks out spontaneously, launched a devastating attack on China’s banks and financial institutions. Reading the prepared comments, he said they operated with a “pawn shop mentality” of requiring collateral before agreeing to loan money.
It set in motion a series of now-familiar events, including the withdrawal of Ant’s initial public offering, the investigation of the company by financial regulators and, most recently, speculation as to whether Mr. Ma has been detained.
While industry insiders and observers say the potential backlash makes the tech billionaire unlikely to have been arrested, the bigger question left is the ramifications of Ant.
Ma has not been seen in public since he delivered that fateful 20-minute speech at the Bund Summit in late October.
His fighting words also ushered in a downward trend in Alibaba’s stock prices, losing about $ 218.5 billion in market value, or about $ 10.9 billion for every minute of Ma’s prayer.
And in President Xi Jinping’s China, where open dissent, much less criticism, is frowned upon, rumors abound that Ma, a member of the Communist Party, has been detained in the style of billionaire Ren Zhiqiang.
Ren, a real estate mogul, disappeared last year after writing a supposedly critical essay on Xi. He was later released into police custody and was sentenced to 18 years in prison for corruption.
The rumor mill picked up after Ma did not appear on the finale of his own show, Africa’s Business Heroes, where he is a judge. His profile has also been removed from the program’s website.
But an executive in charge of government relations at a financial services company said Ma was unlikely to have been detained.
“He’s probably lying right now, as you would, trying to calculate his next move,” said the executive, who declined to be named to openly discuss the industry.
“We were all surprised when (the government) stopped the IPO. But acting personally against Jack Ma is really something completely different because he is such a public figure.”
But his fame could always work against him, said Professor Jeffrey Wasserstrom of the University of California at Irvine, who specializes in Chinese history.
“(Fame) might provide a bit of protection, but in an authoritarian system where the leader is the center of a cult of personality, fame and popularity can make someone more vulnerable to attack,” he told The Straits Times.
Given the narrow flow of information coming out of Zhongnanhai, the central government offices, there is no clarity on how the founder of Alibaba is viewed within Xi’s inner circle, said Professor Wasserstrom.
Since its founding in a Hangzhou apartment more than two decades ago to help Chinese companies sell internationally, the company has grown into one of China’s largest tech giants.
Between Ant and Alibaba, their businesses cover almost every facet of China’s daily life: e-commerce, food delivery, electronic payments, and even transportation services.
Even the contact tracing apps used during the coronavirus outbreak are hosted on the Alipay app.
Ma has argued throughout that the conglomerate is a technology company and that Ant, the financial services spin-off, should be viewed as a technology company and therefore should not be subject to the same kind of regulatory scrutiny as companies. usual financial institutions.
This was not well received in Beijing: the central bank and the banking, insurance, securities and currency regulators summoned Ma and Ant executives for a reprimand on November 2 last year.
The next day, the Shanghai Stock Exchange abruptly pulled Ant’s long-awaited debut, sparking shocks across the financial world. This prompted the firm to later stop its double listing in Hong Kong scheduled for November 5.
On Christmas Eve last year, Alibaba, which runs the popular e-commerce website Taobao and TMall, confirmed that it was being investigated by Chinese antitrust authorities for antitrust violations.
“Alibaba will actively cooperate with regulators in the investigation. The company’s business operations remain normal,” the group said in a statement.
The group did not respond to multiple requests for interviews from ST.
Yet industry watchers say this has long been done – similar antitrust laws already exist in Europe.
China’s Antitrust Law was first introduced in 2008, but it only began to be seriously enforced last year when the Antitrust Commission investigated Ant Group’s payments arm, Alipay, and Tencent’s WeChat Pay.
Moving forward, there is a high probability that more tech companies will come under scrutiny as regulators begin to enforce the rules, said Associate Professor Angela Zhang, director of the Chinese Law Center at the University of Hong Kong.
As for Alibaba, the company will likely be asked to stop monopolistic practices, such as asking vendors to choose between themselves or rival WeChat Pay, and penalizing merchants who don’t sell exclusively on its platform.
“The Chinese antitrust regulator is unlikely to impose structural solutions like the dissolution of Alibaba. I don’t see a strong legal basis for the regulator to do that,” Associate Professor Zhang told ST.
“Furthermore, structural remedies would cause the company too much pain and erode investor confidence in Chinese technology companies.”
They are also likely to be subject to a large fine, up to 10 percent of last year’s revenue, overshadowing the 500,000 yuan fine imposed on them last year for failing to seek regulatory approval and for misleading prices and promotions.
And while Alibaba is no longer tied to Ma’s personal fortune (he left the board in 2019), it has majority control of financial firm Ant.
“Unfortunately, all there is now is speculation, right? We live in an era where anything can happen, so we can only wait and see (what happens to Jack Ma),” said the financial executive.
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