Jack Ma shows why Chinese tycoons are silent, IT News, ET CIO
The whole world saw Ma for the first time in months last week, during a virtual board meeting of the Russian Geographical Society. As President Vladimir Putin and others discussed arctic affairs and leopard conservation, Ma could be seen resting her head on one hand, looking deeply bored.
For Ma – the charismatic entrepreneur who first showed two decades ago how China would shake up the world in the Internet age; whose face adorns shelves of admiring business books; who’s never met a crowd they couldn’t dazzle – it’s a radical change of pace.
Under the leadership of the main Communist Party leader, Xi Jinping, China has punished and humiliated a series of tycoons who amassed enormous wealth and influence but were seen to overstep their limits. Ma and the crown jewels of his online empire, e-commerce titan Alibaba and fintech giant Ant Group, are Beijing’s biggest targets to date, as officials begin to regulate the powerful internet industry of the country like never before.
American and European officials have been seeking to subdue the internet giants for years. But it’s hard to imagine Western regulators causing such a big change in fortunes as the one that happened to Ma. Xi asserted broad control over the Chinese private sector, demanding commitment to the party and social stability across the board. above profits.
Xiao Jianhua, once a trusted financial lieutenant for many Chinese elites, was wrested from a luxury hotel in Hong Kong in 2017. Ye Jianming, an oil mogul who was seeking connections in Washington, was arrested, as was Wu Xiaohui, whose insurance company bought the Waldorf. Astoria Hotel in Manhattan. Wu later went to jail. Lai Xiaomin, the former chairman of a financial company, was executed this year.
“The general rule of thumb is that there should be no individual center of power outside the party,” said Richard McGregor, senior researcher at the Lowy Institute and author of “The Party: The Secret World of Chinese Communist Leaders” .
Beijing’s crackdown on tech is already reverberating in conference rooms beyond Alibaba.
Ant Group chief executive Simon Hu resigned in March. A few days later, Colin Huang resigned as president of Pinduoduo, the mobile bazaar he founded and made public in a few years. Pinduoduo announced his resignation the same day he said he had attracted 788 million buyers in the previous 12 months – a larger number than Alibaba.
At a policy meeting this month, Pony Ma, founder of social media giant Tencent, proposed tougher rules for internet businesses – or, as an official newspaper put it, “innovative methods of regulation. and governance ”.
Last week, China’s antitrust authority summoned 34 major internet companies to talk about new fair competition rules. Within hours, they were discussing business changes and publicly committing to stay online.
“These new regulations are going to force internet platforms to consider how they innovate in the future, and the result is potentially less innovation,” said Gordon Orr, a non-executive board member of Meituan, the giant. Chinese food delivery.
Even so, Alibaba and other internet titans have a status in China that could protect them from the harshest treatment. Officials have praised the titans’ economic contributions even as they tighten surveillance. Xi wants the Chinese economy to be driven more by its own innovations than by those of fickle foreign powers.
This means that it may be too early to declare Jack Ma abandoned for the count.
“His business is much more important to the success and functioning of the Chinese economy than any of the other entrepreneurs,” McGregor said. “The government wants to continue enjoying the benefits of its business – but on their terms. The government is not nationalizing Alibaba. It does not confiscate its assets. It is simply a question of restricting the field in which it operates. “
Alibaba declined to comment.
Ma is not new to dealing with the Chinese authorities.
He worked briefly and unfortunately in a government advertising agency before founding Alibaba in 1999. At the time, China was still getting used to the idea of powerful private entrepreneurs, and Ma was adept at it. the charm of officials.
“Alibaba is absolutely fortunate to become a world-class enterprise,” said Wang Guoping, then secretary of the Communist Party in the eastern city of Hangzhou, where Alibaba is based, in the 2000s. “Which is a world-class enterprise needs most is a soul, a commander, a world class businessman. Jack Ma, I believe, meets this standard. “
Ma saw early on what success could bring to China, said Porter Erisman, one of Alibaba’s early executives.
“There was only one person in the company who told us that one day we might be faced with such big problems that we would be under pressure to have too much market power,” said Erisman. “And that was Jack.
Ma raised her concern at a staff meeting in the mid-2000s, Erisman said. At the time, he added, most Alibaba employees “were just trying to think, ‘How are we ever going to make any money? “”
In 2011, Ma got a taste of how her ambitions might rub shareholders and regulators the wrong way. He quietly took over Alibaba’s payment service, Alipay, angering one of Alibaba’s biggest investors, Yahoo. Ma said this decision was necessary under the new Chinese regulations. Alipay later became the Ant Group.
“The transfer of Alipay has emboldened him,” said Duncan Clark, who has known Ma since 1999 and is chairman of BDA China, a consultancy firm. “He sort of got away with it.”
As Alibaba grew, Ma began to be courted by presidents and movie stars, but also by a larger coterie of other Chinese entrepreneurs. This “echo chamber” may have distorted Ma’s ideas about himself and his position with the government, Clark said.
He might otherwise have seen the writing on the wall, especially as Xi pushed private companies to work more closely with the state.
When Ma stepped down as president of Alibaba in 2019, a comment in the Communist Party’s official gazette said, “There is no so-called Jack Ma era – only Jack Ma within this era. “
Chinese leaders need the private sector to support economic growth. But they also don’t want entrepreneurs to undermine the party’s dominance in society.
In October, as Ant was preparing to go public, Ma spoke at a conference in Shanghai and criticized Chinese financial regulators. He had long viewed Ant as a way to disrupt the country’s major state banks. But there could hardly be a less opportune time to insist on this point. Officials halted trading in Ant’s shares shortly thereafter.
In China, “it’s hard to say that the emperor doesn’t have clothes these days,” said Kellee Tsai, a political scientist at the Hong Kong University of Science and Technology.
Ma has also largely disappeared from view within her companies. In January, he appeared in an internal discussion group to answer a business question, according to a person who saw the post but was not authorized to speak publicly. The employees then shared Ma’s message to reassure their nervous coworkers.
Recently, the Shanghai Hurun Report research group estimated that Ma was not, for the first time in three years, one of the three richest people in China. The country’s new No.1 was Zhong Shanshan, the low-key boss of a bottled water giant and a pharmaceutical company.
When his water company went public last year, Zhong was so little known that Chinese reports of his sudden wealth must have taught readers how to pronounce an obscure Chinese character in his name.