In the eyes of Chinese regulators and authorities, correcting behavior and pointing the right path for technology firms is equally important.
“Words do not cost money to buy,” perhaps Jack Ma, the founder of Alibaba, forgot this proverb while standing on the conference stage on October 24 in Shanghai. Here, he criticized the regulatory system that hinders innovation and must reform to spur growth. His “straight like a horse” speech, according to Reuters sources, was the source of a series of unprecedented events with Alibaba and Ant Group.
Outraged at being “slapped,” the Trou Quoc authorities and authorities decided to restrain Jack Ma’s empire, starting with the cancellation of the historic IPO of Ant Group in Shanghai and Hong Kong when only 2 days left. Two sources close to said that they were confused to learn about the tone of the speech that Jack Ma wanted to convey, even though Jack Ma himself did not realize the impact of his words.
They suggested that the 56-year-old boss should calm down due to the conference attended by some of China’s highest-ranking financial officials, but he refused and believed he could say anything he wanted.
This is miscalculation.
One source described Jack Ma’s speech that day as “punching the face” of officials. The regulator began to compile reports on Ant’s use of digital financial products, report public responses to Jack Ma’s speech and submit to senior figures, including the Owner. Chinese Nationality Xi Jinping. Apparently the report showed negative public response to Jack Ma.
After that, the leaders became more concerned and requested a thorough investigation of Ant Group’s business activities, leading to the cancellation of the IPO. Jack Ma could have pocketed at least $ 27 billion if the IPO went well.
Most recently, China announced an antitrust investigation against Alibaba. This is the first antitrust investigation into a large Chinese technology company. According to the Financial Times, the investigation marks the most drastic action by the authorities to handle the growing power of the country’s technology firms. Scott Yu, an antitrust expert at law firm Zhong Lun, thinks the worst case scenario is that Alibaba could be fined up to 10% of 2019 revenue.
Jack Ma, a former English teacher, is a national pride for his successes. Jack Ma is one of the pioneers of the Chinese Internet, building e-commerce empire Alibaba and fintech giant Ant.
One of the Chinese government’s goals this year is to strengthen the financial sector and tighten regulations and supervision to prevent systemic risks in the economy affected by disease. Prior to Jack Ma’s speech, the authorities gradually increased their follow-up to Ant, a thriving technology platform with financial services but not tied down by expensive banking procedures.
According to Reuters, the speech on October 24 was just a drop of water, sparking a great escalation. The regulator acted faster after receiving handwritten instructions from officials, including Deputy Prime Minister Liu He, President Xi Jinping’s trusted economic advisor. They quickly announced new rules for microfinance that directly affected Ant. Then, Jack Ma and two other Ant leaders were summoned to a rare meeting with 4 authorities.
Since September, Alibaba’s market capitalization has flown $ 140 billion, or 17%. Jack Ma also disappeared from the public eye. According to a Bloomberg source, this is a warning that Beijing has lost patience with the outsized power of the tech giants, increasingly seen as a threat to the financial and political stability that President Xi. Can Binh attaches great importance to.
Once seen as the driving force for economic prosperity and a symbol of the country’s technological power, Alibaba’s Jack Ma, Tencent’s Ma Huateng … now become a suspect after having hundreds of millions of users and influencing enjoy almost every aspect of life. Rana Mitter, professor of Chinese politics at Oxford University, said: “The Chinese ruling party wants to make it clear that Ma cannot have more power than the government. But they also want to show that China is a good place to do business, which means the Party has to show entrepreneurs can succeed.
Jack Ma’s empire is in crisis. Senior managers become part of the “task force” that has almost daily contact with the supervisor. Meanwhile, regulators such as the Banking and Insurance Regulatory Commission are considering which part of the business Ant Group should relinquish to prevent risks to the economy. Recent regulatory changes have narrowed the door for Ant’s pre-2020 IPO.
According to Andrew Polk, co-founder of economic research firm Trivium China, the Chinese government wants to remind the next generation of entrepreneurs: “You can be rich, own a powerful company, but play by our rules. “.
According to Nina Xiang, founder of traditional China Money Network, China’s antitrust effort is like a parent teaching a child to behave inappropriately. It has elements of national economic policy, partly intended to “regulate behavior”, maintain market order and encourage strategic innovation. What drives regulators to redirect may not be because the abuse of monopoly has worsened in recent times, but because technology firms have gone in the wrong direction. In the eyes of antitrust agencies and the Government, regulating behavior and pointing the right path for technology firms are equally important.
Du Lam (Synthetic)
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