Where is Jack Ma, the world asks. The billionaire entrepreneur from China has been MIA for the past two months. Ma’s absence comes right after his skirmishes with the government. N13 looks at the events, before and after Ma’s vanishing act.
Some say he is missing; some say he is simply lying low. But Chinese billionaire and entrepreneur Jack Ma’s absence from the public sphere has been continuing a mystery, particularly considering his recent run-in with the Chinese government.
For starters, Jack Ma is the founder of Alibaba, the largest B2B e-commerce marketplace in the world. In 2014, he also founded the Ant Group, which owns the digital payment platform Alipay. Alibaba had a blockbuster initial public offering (IPO) in 2014. It was the largest in history at that time, raising $22 billion. Following suit, the Ant Group too was preparing for an IPO in November, with a reported valuation of $200-300 billion. The IPO would have taken it to the league of the biggest US banks, like Goldman Sachs.
Only that it didn’t.
Just 48 hours for the trading to begin, the IPO was halted. Government authorities said the glitch was due to the changes introduced to the financial technology regulatory environment. Many didn’t buy it though. Several analysts and media reports suggested the IPO was scuttled because some of Ma’s comments at an event in October didn’t go down well with the authorities.
So, what did Ma say?
The Jack Ma controversy
If you’re not a regular on China affairs, you may not know this: much of the banking sector in China is controlled by the state. The sector, hence, is strictly regulated. It was into this environment that companies such as Ant Group and Tencent stepped in. Ma apparently found the regulations obsolete and throttling technological and financial innovation.
“We shouldn’t use the way to manage a train station to regulate an airport…We cannot regulate the future with yesterday’s means,” he reportedly said at an event, criticising the regulatory system in China. “It is impossible for the pawnshop mentality to support the financial demand of global development over the next 30 years,” he added.
Almost a week passed. China introduced new regulations for online lending and to prevent internet monopolies. On the one side, it startled investors. Chinese tech stocks nosedived. On the other side, Ma, along with a few other top executives, was summoned to the office of the financial regulators. The new regulations disqualified Ant Group from going public.
The government mouthpiece Economic Daily justified the move. Suspending the group’s listing was to better protect the rights and interests of financial consumers, it wrote. The newspaper, without outrightly naming Ant Group, even hinted that the company had changed its name from Ant Financial to Ant Technology to escape the audits of a financial institution.
The snowballing effect
Soon, officials of six internet giants – Alibaba, Tencent, JD.com, Meituan, Pinduoduo and Didi Chuxing – were summoned by the State Administration for Market Regulation (SAMR). The body told them that it was tightening regulations on the business practice of ‘group buying.’ The practice allowed groups of people in the same community to order online goods in bulk at cheap prices. According to SAMR, this had led to the dumping of goods at cheap prices and hurt employment in other sectors.
On December 23, 2020, the authorities launched an antitrust investigation into Alibaba (at which Ma is still the biggest shareholder. He holds more than 8 per cent) and Tencent. The probe was to examine alleged monopolistic behaviour, according to the administration. It said it was looking into the practice of the company demanding its merchants to sign agreements that stopped them from selling products on Alibaba’s rival platforms.
Around the same time, Ant Group officials were separately summoned by the financial regulators. According to the People’s Bank of China, the country’s central bank, the meeting was to ‘guide’ the Ant Group to implement financial supervision and regulate its services.
Government-run newspapers suggested that the investigation was required to improve the socialist market economy and to promote high-quality development. “This investigation does not mean that the country’s attitude towards the encouragement and support of the platform economy has changed,” read an editorial in People’s Daily.
On 28 December, officials asked Ant Group to scale back its operations and focus on payment services alone instead of insurance and wealth management, alleging that its corporate governance was not sound. The government wanted the group to ‘strictly rectify illegal credit, insurance and wealth management financial activities.” Experts note that those were Ant’s fastest-growing divisions with solid profits.
Giving things a more cryptic turn, Bloomberg reported that the Chinese government has asked Jack Ma to not leave the country. However, his name has not featured in the national database of people banned from leaving the country.
Then what happened to Ma?
Jack Ma has always been vocal about his opinions, some of them that could irk those in power. But ever since the controversies erupted he has gone silent. His last public appearance was at a live-streamed event on 31 October. He was to appear in November as one of the judges for the finale of a gameshow he launched – Africa’s Business Heroes. But Ma never turned up. Alibaba’s statement cited a scheduling conflict. But Ma did not participate in the Shanghai Zhejiang Chamber of Commerce meeting either, where he has been a regular since 2016.
Is Jack Ma behind bars already?
Or, is he lying low?
Is he taking his usual year-end break as sources close to him say?
Or is he simply sipping a cocktail at some far off island away from all the cacophony?
We don’t know.
But as Ma continues to abscond, his position as China’s wealthiest man has been overthrown. According to The Guardian, the crackdown on his business activities wiped more than $10 billion from his fortune. Pony Ma, CEO and chairman of Tencent is now China’s wealthiest man. Ma figures second with around $49 billion, according to the Bloomberg billionaires index.
Things haven’t been good with Alibaba too. Its stock has fallen 34 per cent since the controversy in October, with a spillover effect on other tech companies. Stocks of Tencent, JD.com and Meituan too have fallen by about 2 per cent.
Meanwhile, it is not just the government who has turned against Ma. A poster boy of Chinese innovation, technology and business, Ma was sort of a celebrity till recently. But lately comments below his previous Weibo posts have acquired an increasingly negative tone. Villain, evil capitalist, bloodsucking ghost, they call him.
But, who really is Jack Ma and how did he build his empire?
Jack Ma, Alibaba and Ant Group
It’s a typical rags-to-riches story. Jack Ma – originally Ma Yun – grew up poor. He flunked his university entrance exams twice, was rejected by Harvard ten times, was refused several jobs including one at KFC and set up two companies that bit the dust. Later, he became an English teacher making $12 a month.
In 1999, he founded Alibaba, a portal that allowed exporters to post product listings which customers could buy directly. The story is that Ma came up with the name while sitting in a coffee shop. Like the story from the Arabian Nights, Alibaba opened the doors to a treasure trove for Ma. The company’s growth was fast and exponential. It raised $5 million from Goldman Sachs and $20 million from Softbank the same year. Alibaba became the largest e-commerce platform in China boasting millions of users and taking over the online retail sector.
In 2005, Yahoo purchased a 40 per cent stake at the company for $1 billion. This became instrumental for the company in beating eBay in China. Alibaba’s IPO in 2014 was the largest in the history of the New York Stock Exchange. Yahoo made $10 billion from its investment in the company. Ma became the richest person in China. Reports pinned his worth around $25 billion then. By July 2020, his net worth was over $48 billion. The number of billionaires in China is more than those in the US and India combined. Ma became the most high-profile among them.
Then came Ant Group in 2014 which went on to become the country’s biggest digital payments platform. Its offerings included not just investment and insurance services, but even dating profiles! It has offered unsecured loans to more than 500 million people since its inception through two micro-lending platforms: Huabei and Jiebei. According to Bloomberg Quint, Ant has underwritten about $259 billion in consumer loans and 422 billion yuan in small business loans for about 100 banks and other financial institutions. The Economist calls Jack Ma the most recognisable face of Chinese capitalism today.
Jack Ma Lite
Teacher, philanthropist, entrepreneur — reads Jack Ma’s Twitter profile (he follows zero handles). But Ma has been more than that. He has been effervescent. He regularly performed at the company’s annual entertainment events, sometimes dressed as a punk rockstar! Wherever he went, he drew hordes of listeners. He has been a regular speaker at the World Economic Forum.
In 2015, a painting Jack Ma created with artist Zeng Fanzhi sold at a Sotheby’s auction for $5.4 million, reported the New York Times.
2016: Jack Ma became the first big shot from China whom Donald Trump met after becoming the US President.
2017: Jack Ma played a Kung Fu master in a short film.
2019: On his 55th birthday, Jack Ma stepped down as Alibaba’s chairman. In his flamboyant farewell party at an 80,000-seat stadium, he made a blitzkrieg performance on stage with other executives.
Not the first
While Ma’s vanishing act has sent ripples across the globe, he isn’t the first Chinese business tycoon to face the wrath of the government. Wu Xiaohui, founder of Anbang insurance was sentenced to 18 years in prison in 2018 for fraud and abuse of power.
In March 2020, Ren Zhiqiang, the real estate mogul who wrote a blog criticising China’s response to the Covid-19 pandemic and calling president Xi Jin Ping a clown, went missing. He was convicted for corruption in September and sent to 18 years in prison.
Is Ma next in line?