China’s best-known entrepreneur, e-commerce billionaire Jack Ma is still missing. The tycoon, his peers — especially those who have escaped China — feared would end up either in jail or dead due to the Communist Party’s discomfort with him.
The former English teacher founded Alibaba Group in 1999 when China hardly had internet users. He launched online payments service Alipay five years later before regulators said such businesses would be allowed. The long shots grew to dominate the respective market segments.
Jack Ma hurts Chinese powers-that-be
His trouble began when he called regulators too conservative in a 24 October speech at a business conference in Shanghai attended by some of the regulators he was criticizing as well as Chinese Vice President Wang Qishan. While he urged them to be more innovative, they halted the impending stock market debut of Ant Group, an online finance platform that grew out of Alipay. Alibaba‘s share price sank, possibly costing Jack Ma his status as China’s richest tycoon.
Jack Ma complained regulators had an antique “pawnshop mentality” and were hampering innovation, according to Chinese media. He appealed to them to support unconventional approaches to make it easier for entrepreneurs and young people to borrow.
“The race tomorrow will be a race of innovation, not regulatory capabilities,” Ma said, according to the Hong Kong newspaper Apple Daily.
That clashed with the ruling party’s marathon campaign to reduce surging debt that has prompted fears about a possible financial crisis and led international rating agencies to cut Beijing’s credit rating for government borrowing. At the same event in Shanghai, Wang warned new technologies of improved efficiency but “amplified financial risks”, according to the business magazine Caixin.
Ever since, the usually loquacious Jack Ma has evaded big public appearances. He cancelled a scheduled appearance on television. He avoided social media. That has prompted a flurry of speculation about what might happen to Jack Ma, China’s biggest global business celebrity, a symbol of its tech boom and a living example of no-risk-no-gain. Neither Alibaba nor Ant has clarified why Jack Ma is hiding.
On 3 November, regulators suspended Ant’s market debut. It would have been 2020’s biggest, raising some $ 37 billion.
Alibaba’s CEO later praised regulators in a possible attempt to repair relations. But Ma said nothing. The last posting on his Sina Weibo social media account is dated 17 October.
China watchers say this is a warning from the ruling Communist Party. “Even a wildly successful entrepreneur cannot publicly defy regulators,” one of them said. But finance experts say the Xi Jinping government has been uneasy about Alibaba’s dominance in retailing.
Even Ant is a problem in Beijing’s scheme of things. It may add to financial risks seen by the ruling party as one of the biggest threats to China’s economic growth.
Shaun Rein, a business consultant in Shanghai who said he meets Alibaba managers and people who know Ma, said none of them reports the billionaire is in legal trouble. “They spanked him. He’s learned his lesson, and that’s why he’s been quiet for the past two months,” said Rein, founder of China Market Research Group. “Some of his friends told me they can’t believe how stupid he was.”
Jack Ma, 56, stepped down as Alibaba’s chairman in 2019 but is part of the Alibaba Partnership, a 36-member group with the right to nominate a majority of its board of directors. He is one of the biggest shareholders.
Alibaba Group shares traded in Hong Kong have fallen 19% since October. Ma’s fortune, which peaked earlier above $60 billion, fell by more than $10 billion.
Alibaba, headquartered in the hometown of Jack Ma, Hangzhou, southwest of Shanghai, was founded to connect Chinese exporters with Western retailers. The company has expanded into online consumer retailing, entertainment and other areas.
Its finance arm, Yu’ebao, launched in 2013, attracted millions of customers in a market dominated by state-owned banks that focus on serving government industries. By 2017, Yu’ebao was the world’s biggest money market fund with 1.2 trillion yuan ($170 billion) in assets, competing with state banks for deposits.
Ant Group has been ordered to overhaul its business before its market debut can go ahead.
The central bank said December 28 it told Ant to focus on its online payments business. That suggested the company might be required to scale back its ambitions and new initiatives, which would hurt its appeal to investors.
Ma and Alibaba aren’t regulators’ only tech industry targets.
The ruling party has declared anti-monopoly enforcement, especially in online industries, a priority.
Executives of Alibaba and five other tech giants including Tencent, operator of the WeChat messaging service, and online retailer JD[dot]com were warned by regulators last month not to try to keep new competitors out of their markets, according to the government.
Stock traders in Hong Kong talk 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 how these companies develop is the latest anti-trust regulations,” said Wen. “Jack Ma has already stepped down from management, and this does not affect the operation of the company.”
The anti-monopoly investigation of Alibaba announced in December targets its policy that prohibits vendors and other business partners from dealing with its competitors.
Foreign investors were rattled, but Chinese businesspeople are “quite happy” with the crackdown, said Rein.
“A lot of people saw Alibaba and Tencent as monopolies and stifling competition,” he said.
The high profile of Jack Ma is unusual in a society where folk wisdom warns, “A man fears getting famous like a pig fears getting fat.” Others such as Tencent founder Ma Huateng, who is no relation to Jack Ma, are known for avoiding reporters and public appearances.
Jack Ma dresses up in a leather jacket, sunglasses and wig to perform rock songs at Alibaba’s annual employee festival in a Hangzhou.
Jack Ma has been an informal business envoy abroad. He jokes that his oversized head and angular features make him look like the title character in ET the Extraterrestrial. He met President Donald Trump in January 2017 and promised to create US jobs.
His success has earned Jack Ma a reputation as being politically well-connected. But this isn’t the first time Alibaba has been hurt by its outspokenness.
In 2015, then-deputy chairman Joe Tsai criticized a government report that said Alibaba failed to keep counterfeits off its sales platforms. The government responded by attacking Alibaba in state media and publicizing complaints about fake and shoddy goods.
In 2020, outspoken property tycoon Ren ‘The Cannon’ Zhiqiang had written in a scathing essay that China’s leader, Xi Jinping, was a power-hungry “clown”. He had said the ruling Communist Party’s strict limits on free speech had exacerbated the coronavirus epidemic. In March last year, Ren went missing.
Throughout last year, there were similar reports of doctors missing, detained or jailed and those that just vanished after exposing the dubious conduct of Beijing in handling the Covid-19 pandemic.
Will Jack Ma meet the same fate?