How did Jack Ma find Alibaba

The missing Alibaba founder: where's Jack Ma?

For two months now, more and more people in China and the rest of the world have been asking themselves: Where is Jack Ma? At the beginning of November, the Chinese state and party leadership summoned the charismatic founder of the Internet giant Alibaba to show him that in China, the state and party leadership always has the final say - no matter how many billions of dollars someone is on Has account. In a speech in Shanghai on October 24th, Jack Ma denounced the Chinese authorities as old-fashioned and backward and called for more regulatory freedom for fintech companies such as the Ant Group.

Ma got the short straw back then and the record IPO of Alibaba fintech subsidiary Ant Group with a volume of $ 37 billion was postponed practically at the last second. Since then it has become quiet about the communicative Jack Ma; his social media accounts are also silent. His last post on the Weibo platform is from October 17th. In November he was sawed off as a juror on the Chinese TV show Africa's Business Heroes and replaced at short notice.

Meanwhile, Chinese regulators continue to crack down on Jack Ma's ramified business empire. The former English teacher owns more than four percent of the online giant Alibaba, which in turn owns a third of the Ant Group.

But where is he? Are the Chinese authorities holding the billionaire somewhere against his will or is he under house arrest for going too far with his verbal attacks against financial regulators and state banks?

"I think he was told to keep a low profile," said Duncan Clark, head of the tech consulting firm BDA China in Beijing. "This is a rather unusual situation, more related to the sheer size of Ant and the sensitivities of financial regulation," said Clark.

Got to know the limits of criticism: Yuwen Deng

The party has the longer leverage

DW columnist Yuwen Deng knows what it means to mess with the government in Beijing. In 2018 he published an article in the "New York Times" entitled "Seven Tips for Xi Jinping", in which he called for democratic reforms in China and then lost his job as an editor for the medium "Study Times". He is now doing research at Nottingham University in England.

"Beijing wants to take stricter action against the monopoly of some fintech providers in order to limit their capital power and restore the authority of the supervisory authority," explains Deng. This serves the risk management, because the regulation so far has been rather inadequate and the expansion of China's fintech industry in the past has hardly been manageable. Beijing also wants to ensure that no tech giant like Alibaba dares to challenge the party's power in the future. "So Beijing also thinks politically," emphasizes Deng.

In China it happens again and again that prominent entrepreneurs disappear from the scene. Often they end up in prison for long prison terms. In 2010, for example, the formerly richest man in China and founder of the Gome electronics chain, Huang Guangyu, was sentenced to 14 years in prison for corruption. Guo Guangchang, whose company conglomerate Fosun International works closely with the German vaccine developer BioNTech, also disappeared for some time in 2015.

Last year, billionaire real estate tycoon Ren Zhiqiang was arrested for criticizing China's response to the coronavirus. In September he was sentenced to 18 years in prison. And on Thursday, state television reported that the former head of the China Development Bank, Hu Huaibang, has been sentenced for life for bribery.

No wonder that many of the super-rich in the Middle Kingdom apparently keep the well-known Chinese proverb in mind: "A man is afraid of becoming famous, like a pig is afraid of getting fat." This seems to be the case - in contrast to Jack Ma - The founder of the Internet company Tencent, Ma Huateng, must be strictly adhered to: He is media-shy and avoids public appearances.

Guesswork on Ma's whereabouts

Shaun Rein runs the management consultancy China Market Research Group in Shanghai and is in regular contact with Alibaba managers and people from Jack Ma's environment. Nobody mentioned to him that the billionaire was in legal trouble.

"They kicked his ass, he learned his lesson and that's why he has been quiet for the past two months," Rein is quoted by the AP news agency as saying. "Some of his friends told me they couldn't believe how stupid he was."

Anything but public reluctance: Jack Ma on stage at Alibaba's 10th birthday

In any case, it was risky to attack top-level Chinese decision-makers head-on in his speech at the end of October. In addition to representatives from financial regulators, China’s Vice President Wang Qishan was among the audience at the economic conference in Shanghai.

Ma denounced an outdated "pawnshop mentality" in China's regulators that hampered fintech innovation. He appealed to financial regulators to encourage unconventional approaches to make it easier for entrepreneurs and young people to borrow. "Tomorrow's race is going to be Be the race of innovation, not regulatory possibilities, "Ma was quoted by the Hong Kong newspaper" Apple Daily ".

With this attack, Ma has obviously gone a decisive step too far. Because for years there has been fear among decision-makers in Beijing that the gigantic debt bubble of companies and private households in the Middle Kingdom could burst at some point. Largely unregulated consumer loans that a fintech company like Ant Group provides online with a few clicks - that's the stuff that Chinese financial regulators' nightmares are made of. In any case, according to information from the business magazine "Caixin", Vice President Wang warned at the conference in Shanghai that although new technologies improve efficiency, they "increase financial risks."

Will be more strictly regulated in the future: the billion dollar loan business of the Ant Group

Beijing crisis management

Beijing apparently fears that rising debt in China could trigger a financial crisis and has great respect for the fact that international rating agencies could downgrade the creditworthiness of Chinese government bonds. It wasn't until mid-November that corporate bonds from the aluminum group Hongqiao had to digest a downgrade.

China's regulators are tightening the reins accordingly. On the last weekend in December, top executives from Ant Group faced China's central bank and were asked to "rigorously correct" "mistakes" in Ant Group's credit, insurance and asset management services, regardless of whether Jack Ma volunteered to join has withdrawn his house in Hangzhou, just under 200 kilometers southwest of Shanghai, or is under house arrest there: State pressure against his previously uncontrolled corporate empire is likely to increase further.