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Where's Jack Ma? The disappearance and fall from grace of China's richest man

Where's Jack Ma? The disappearance and fall from grace of China's richest man

Jack Ma was a happy man on the morning of October 24. Its second-largest creation, Ant Group, a financial services conglomerate founded in the late 1990s and driven to a dominant position in the Chinese tech ecosystem, was about to go public. The IPO, valued at more than $ 37 billion, was to be the largest ever known to man, even higher than that carried out by Aramco a few years earlier.

Who was and is the richest man in China must have felt gigantic. Untouchable. To the point of making a historical mistake.


That same day, in Shanghai, Ma delivered an explosive speech to the senior staff of the Chinese financial elite. The country's banking sector, a direct competitor to Ant Group, continued to work with the mentality of a "pawnshop", as exclusive and jealous in its territory as the old "gentlemen's clubs". Regulators were not helping. The government put too many sticks in the wheels. China should shed its regulation and spur free growth.

The morning of October 25 would no longer be so happy.


Since then and among many other misfortunes, Jack Ma has disappeared. No one has ever seen him in public again. His media silence reaches such a point that he has canceled his participation as a star jury in a reality television. The program in question, Africa’s Business Heroes, a kind of talent show in which aspiring successful entrepreneurs presented their business ideas to Ma, faced its end in January. Ma's conspicuous absence from promotional ads has sparked all sorts of speculation about his whereabouts.

The fall

You have reason to be concerned. Since he delivered the now-infamous speech, the Chinese authorities have stalled Ant Group's IPO, perhaps forever. Not only has Ma missed an opportunity to expand his net worth by more than $ 20 billion, but he has seen the stock market valuation of his other large company, Alibaba, drop 8%. The government is likely to cancel the IPO, a jug of cold water for the growth expectations of the largest fintech on the planet.

What is Ant?

The speech offers the perfect alibi, but Ma's problems with the Chinese authorities go back a long way. The main reason is the very nature of Ant Group. Originally founded as a spin-off of Alibaba to house Alipay, a PayPal-like buyer-seller mediation system that has achieved an absurdly dominant position (1 billion users) in the Chinese market, it grew and grew to become a ) a payment system and b) a financial service provider. Of credits and loans.

The regulator enters

 This is where the eyebrow of the Chinese authorities has arisen. Until his speech in Shanghai, Ma represented the paradigm of the Chinese economic model. The self-made man who raises a monopoly from nothing with the connivance of the government, in need of great financial and technological champions capable of competing in the international arena. China has for decades bypassed its own antitrust regulation to benefit its big tech companies. In the words of the FT:

"The Chinese government often tolerates monopolies, its domination that includes industries from shipping to communications. Previously, the laxity of the authorities had been interpreted as an expression of the conventional wisdom of the Communist Party: monopolies are more manageable domestically than a competitive and messy market; and at the same time, they are more competitive internationally. But the dizzying rise of Chinese big tech has made the government nervous, and sparked a reflection on its pro-monopoly attitudes."


As this Reuters report reveals, the speech caused great anger among the authorities, to the point that Xi Jinping himself gave the order to paralyze the IPO. Since then events have precipitated. In November the financial regulator distributed a draft on the future of "microloans." Companies like Ant should co-finance up to 30% of any loan they offer, bank guarantee included. Until then, only banks had an obligation to cover their loans with deposits. First stick.

At the end of December, the Central Bank of China announced the direct supervision of Ant Group's financial arm, in a "rectification" of the course taken by Ma that would integrate "its development into the country's overall development plan." Within days, Ant declared his intention to join a holding company more similar to a traditional "bank" to be subject to regulation in the sector.

Long battle

 In the blink of an eye Ma's dream has vanished. The idea of ​​an untethered financial revolution that will bypass Chinese banks has remained in ... A twist to make Ant less like a fintech and more like a bank. This is due to pressure from both banking institutions and the government. The former have for years lamented their "parasitic" nature; the second wants to create their own digital currency and is wary of Alipay's unprecedented market penetration in electronic payments.

A long battle in which Ma was the great piece to collect.

A change of scenery

Somehow, China is anticipating the problems that any technology monopoly poses for the authority of any state, especially one as jealous of its own power as the Chinese. In this sense, he may have taken the example of the United States, whose particular process of de-monopolization of the technology sector has just begun (with orders as spectacular as the one directed to Facebook to get rid of Instagram).

Ant's failed IPO and the mysterious disappearance of Jack Ma are only the most striking consequences of a perhaps momentous change in China's economic future.

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