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BEIJING (AP) – China’s best-known entrepreneur, e-commerce billionaire Jack Ma, has made his fortune by taking big risks.
The former English teacher founded the Alibaba Group in 1999, when China had few internet users. The Alipay online payment service was launched five years later, before regulators said such businesses would be permitted. The two long shots have grown to dominate their industries.
Ma’s latest ploy backfired after calling regulators too conservative in an Oct. 24 speech and urging them to be more innovative. They put an end to the impending debut of Ant Group, an online financing platform from Alipay. Alibaba’s share price fell, possibly costing Ma his status as China’s richest tycoon.
Since then, the normally talkative Ma has stayed away from the public, canceled a TV appearance, and avoided social media. It sparked speculation on what could happen to Ma, the world’s biggest business celebrity in China and a symbol of its tech boom.
“The Jack Ma era is over,” wrote a blogger as Yueyue Talks Technology. “It’s too late to say goodbye.”
Spokesmen for Alibaba and Ant did not answer questions about why Ma did not appear in public.
Some see Ma’s hardship as a warning from the ruling Communist Party that even a very successful entrepreneur cannot publicly challenge regulators. But financial experts said President Xi Jinping’s government was already worried about Alibaba’s dominance in retail. As for Ant, regulators feared it would increase the financial risks that the ruling party saw as one of the biggest threats to China’s economic growth.
Shaun Rein, a business consultant in Shanghai who said he has met with Alibaba executives and people who know Ma, said none of them reported that the billionaire was in legal trouble.
“They spanked him. He has learned his lesson, and that is why he has been silent for the past two months, ”said Rein, founder of the China Market Research Group. “Some of his friends told me they couldn’t believe how stupid he was.
Ma, 56, resigned as Alibaba chairman in 2019 but is part of the Alibaba partnership, a 36-member group with the right to appoint a majority of its board. He is one of the biggest shareholders.
Ma angered regulators with his speech at a trade conference in Shanghai attended by some of the regulators he criticized. Chinese Vice President Wang Qishan was also in the audience.
Ma complained that regulators had an old “pawnshop mentality” and were hindering innovation, according to Chinese media. He urged them to support unconventional approaches to make borrowing easier for entrepreneurs and young people.
“Tomorrow’s race will be a race for innovation, not for regulatory ability,” Ma said, according to Hong Kong’s Apple Daily.
This clashed with the ruling party’s marathon campaign to reduce rising debt, which raised fears of a possible financial crisis and led international rating agencies to downgrade Beijing’s credit rating for government borrowing. . At the same event in Shanghai, Wang warned that new technologies improve efficiency but “magnify financial risks,” according to business magazine Caixin.
On November 3, regulators suspended Ant’s debut in the market. It would have been the biggest of 2020, raising some $ 37 billion.
The CEO of Alibaba later praised regulators in a possible attempt to mend the relationship. But Ma didn’t say anything. The last post on her social media account Sina Weibo was on October 17.
Hong Kong-traded shares of the Alibaba group have fallen 19% since October. Ma’s fortune, which earlier peaked above $ 60 billion, fell by more than $ 10 billion.
Alibaba, headquartered in Hangzhou, Ma’s hometown, southwest of Shanghai, was founded to connect Chinese exporters with Western retailers. The company has expanded into online retail, entertainment and other areas.
Its financial arm, Yu’ebao, launched in 2013, has attracted millions of customers in a market dominated by state-owned banks that focus on serving government industries. In 2017, Yu’ebao was the world’s largest money market fund with 1.2 trillion yuan ($ 170 billion) in assets, competing with state banks for deposits.
Ant Group was ordered to overhaul its business before its market debut could go ahead.
The central bank said on December 28 that it had asked Ant to focus on its online payments business. This suggested that the company may be forced to scale back its ambitions and new initiatives, which would hurt its attractiveness to investors.
Ma and Alibaba are not the only targets in the tech industry of regulators.
The ruling party has said tackling monopoly, especially in online industries, is a priority.
Executives at Alibaba and five other tech giants, including Tencent, operator of the WeChat messaging service, and online retailer JD.com were warned by regulators last month not to try to ward off new ones. competitors in their markets, according to the government.
Hong Kong stock traders are talking about Ma’s disappearance from social media, but doubt Alibaba or Ant will be affected, said Kenny Wen of securities firm Everbright Sun Hung Kai.
“The key point that will affect the development of these companies is the latest anti-trust regulations,” Wen said. “Jack Ma has already left management, and it does not affect the way the company operates.”
Alibaba’s anti-monopoly investigation announced in December targets its policy that bars sellers and other business partners from dealing with competitors.
Foreign investors have been shocked, but Chinese businessmen are “quite happy” with the crackdown, Rein said.
“A lot of people saw Alibaba and Tencent as monopolies and stifling competition,” he said.
Ma’s notoriety is unusual in a society where popular wisdom warns: “A man is afraid of becoming famous like a pig is afraid of getting fat.” Others, like Ma Huateng, founder of Tencent, who has no connection with Jack Ma, are known to avoid reporters and public appearances.
Jack Ma wears a leather jacket, sunglasses and a wig to perform rock songs at the annual Alibaba employee festival in Hangzhou.
Ma, who jokes that his oversized head and angular features make him look like the main character of “ET the Extraterrestrial,” has acted as an informal overseas business envoy. He met President Donald Trump in January 2017 and promised to create jobs in the United States.
Ma’s success has earned her a reputation for being politically well connected. But this is not the first time that Alibaba has been hurt by its outspokenness.
In 2015, then-vice president Joe Tsai criticized a government report that Alibaba had failed to prevent counterfeits from entering its sales platforms. The government responded by attacking Alibaba in state media and publishing complaints about counterfeit and low-quality products.
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AP researcher Yu Bing in Beijing and AP Business Zen Soo writer in Hong Kong contributed.
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