Record penalty for Ma’s Alibaba marks tumultuous trajectory for founder

BEIJING (Reuters) – Ever seemingly untouchable, Alibaba founder Jack Ma has endured a tumultuous run in which his Chinese e-commerce giant was fined 18 billion yuan ($ 2.75 billion) on Saturday, resolving a major uncertainty. even while others persist. for himself and his business empire.

The reversal of fortune for 56-year-old Ma, who has practically disappeared from sight since an October speech devastating China’s regulatory system, has been striking to an entrepreneur whose transformation of China’s trade – and his relentless optimism – commanded cult-like reverence.

Ma, who retired from Alibaba in 2019 but is emerging grandly in the corporate psyche and in the eyes of investors, had enjoyed pushing boundaries with bold statements, taking pride of place even as most Chinese colleagues turned their heads to kept down.

Friends in high places, as well as proud of Alibaba’s success, had protected Ma, sources say.

That was until his speech in Shanghai sparked a backlash that led to the breaking down of a $ 37 billion IPO for Alibaba to financial technology partner Ant Group, as well as a crackdown by authorities on the e-commerce giant itself and the wider ‘ platform economy ‘. it continues to resound.

Ant, whose rapid growth and freewheeling lending has raised concerns about regulatory financial risks, remains subject to a forced restructuring that is expected to curb some of its most profitable businesses and lower its valuation.

“Entrepreneurship must be disruptive. But being provocative to the government has its limits, ”said Duncan Clark, chairman of Beijing-based tech consultancy BDA China and author of a book on Alibaba and Ma.

Saturday’s settlement, he said, “should draw a line” under the issue for Alibaba.]

“But no line has been drawn for Ant and Jack yet,” he said.

Alibaba declined to comment on Ma, and his foundation did not immediately respond to a request for comment on Sunday.

Noticeable ABSENCE

Ma’s absence from the public became conspicuous until he showed up for the first time in three months in late January and spoke to a group of teachers via video, causing Alibaba shares to skyrocket. He kept going extremely low.

“He plays a lot of golf and improves his handicap,” said one person who knows him.

Ma, a former English teacher, co-founded Alibaba from a shared apartment in the eastern city of Hangzhou in 1999, eventually building a behemoth spanning e-commerce, financial services, cloud computing and even supermarkets, making him the most famous is a businessman from China.

He was also the richest in China until the crisis pushed him back to fourth on the Hurun Global Rich List published in March, although Ma and his family’s net worth still grew 22% to 360 last year, according to the list. billion yuan.

As of July last year, he owned 4.8% of Alibaba.

In 2018, the official newspaper revealed that Ma was a member of the Communist Party, debunking the public assumption that he was politically unattached.

‘ARROGANCE DISCOUNT’

Ma has often been described in Chinese media as a source of national pride and even a legend. His worldwide fame made him an almost diplomatic figure. Numerous books have been published on the founding of Alibaba and Ma’s business tactics.

Ma-isms like “Today is tough, tomorrow will be worse, but the day after tomorrow will be sunshine” are common in Chinese business circles. In Hangzhou, small firms are known to set up altars decorated with images of Ma to bring good luck.

But in February, Ma was dropped from a list of Chinese entrepreneurial leaders published by state media.

Franklin Chu, president of Sage Capital in Rye, New York, noted that Alibaba shares are trading at a 30% discount from their 52-week high.

“I call this the ‘Jack Ma arrogance discount,’ combined with the recent round of China-bashing from Washington,” he said.

Alibaba, he said, “must work hard to restore an accommodative relationship with its regulatory handlers.”

Since retiring from the company, Ma has sought to focus on philanthropy and education, including his charity, the Jack Ma Foundation, and two schools in Hangzhou.

Ma was an active participant in the conference, appearing at least 12 times in 2019 before the COVID-19 pandemic started. In March 2020, he opened a Twitter account – the platform has been blocked in China – that mainly tweeted about his foundation’s COVID-19 prevention efforts. The last tweet was on October 10.

“It is crucial for Chinese entrepreneurs to be calm. Don’t speak casually. And don’t say anything wrong, ”said Edward Chen, chairman of Shanghai-based fintech consultancy China Rising Group, in a video post on social media.

“Caution in word and deed is the number 1 priority so that Chinese entrepreneurs can live longer.”

($ 1 = 6.5522 Chinese yuan renminbi)