Jack Ma shows why China’s tycoons keep quiet
Jack Ma, the most famous businessman China has ever produced, is avoiding the spotlight. Friends say he is painting and practicing tai chi. Sometimes, he shares drawings with Masayoshi Son, the billionaire head of the Japanese conglomerate SoftBank.
The wider world glimpsed Jack Ma for the first time in months last week, during a virtual board meeting of the Russian Geographical Society. As President Vladimir V. Putin and others discussed Arctic affairs and leopard conservation, Jack Ma could be seen resting his head on one hand, looking deeply bored.
For Jack Ma — the charismatic entrepreneur who first showed, two decades ago, how China would shake the world in the internet age; whose face adorns shelves of admiring business books; who never met a crowd he couldn’t razzle-dazzle — it is a stark change of pace.
Under the Communist Party’s top leader, Xi Jinping, China has punished and shamed a series of tycoons who amassed enormous wealth and influence but were seen to overstep their bounds. Jack Ma and the crown jewels of his online empire, the e-retail titan Alibaba and the fintech giant Ant Group, are Beijing’s biggest targets yet, as officials start regulating the country’s powerful internet industry like never before.
American and European officials have been looking to rein in internet behemoths for years. But it is hard to imagine Western regulators bringing about a change in fortunes as significant as the one that has befallen Jack Ma. Xi has asserted broad control over China’s private sector, demanding commitment to the party and to social stability above profits.
Xiao Jianhua, once a trusted financial lieutenant to many Chinese elites, was snatched from a luxury Hong Kong hotel in 2017. Ye Jianming, an oil tycoon who sought connections in Washington, was detained, as was Wu Xiaohui, whose insurance company bought the Waldorf Astoria Hotel in Manhattan. Wu later went to prison. Lai Xiaomin, the former chairman of a financial firm, was executed this year.
“The general iron rule is that there should be no individual centers of power outside of the party,” said Richard McGregor, a senior fellow at the Lowy Institute and author of “The Party: The Secret World of China’s Communist Rulers.”
Beijing’s clampdown on tech is already rippling through boardrooms beyond Alibaba’s.
Ant Group’s chief executive, Simon Hu, resigned in March. A few days later, Colin Huang stepped down as chairman of Pinduoduo, the mobile bazaar he founded and took public within a few short years. Pinduoduo announced his resignation the same day it said it had attracted 788 million shoppers over the previous 12 months — a bigger number than Alibaba.
At a political meeting that month, Pony Ma, founder of the social media giant Tencent, proposed tougher rules for internet companies — or, as an official newspaper put it, “innovative methods of regulation and governance.”
Last week, China’s antitrust authority summoned 34 top internet companies to talk about new fair-competition rules. Within hours, they were discussing business changes and publicly pledging to stay in line.
“These new regulations are going to require internet platforms to look at how they innovate going forward, and the result is potentially less innovation,” said Gordon Orr, a nonexecutive board member at Meituan, the Chinese food delivery giant.
Even so, Alibaba and other internet titans have a status in China that could protect them from the most heavy-handed treatment. Officials have praised the titans’ economic contributions even as they tighten supervision. Xi wants China’s economy to be driven more by its own innovations than by those of fickle foreign powers.
That means it might be too soon to declare Jack Ma down for the count.
“His company is much more important to the success and functioning of the Chinese economy than any of the other entrepreneurs’,” McGregor said. “The government wants to continue to reap the benefits of his company — but on their terms. The government isn’t nationalizing Alibaba. It isn’t confiscating its assets. It’s simply narrowing the field in which it operates.”
Alibaba declined to comment.
Jack Ma is no neophyte at dealing with the authorities in China.
He worked briefly and unhappily at a government-run advertising agency before founding Alibaba in 1999. At the time, China was still getting used to the idea of powerful private entrepreneurs, and Jack Ma proved adept at charming government officials.
“Alibaba absolutely has the chance to grow into a world-class company,” Wang Guoping, then the Communist Party secretary of the eastern city of Hangzhou, where Alibaba is based, said in the 2000s. “What a world-class company needs most is a soul, a commander, a world-class businessman. Jack Ma, I believe, meets this standard.”
Jack Ma saw early on what success might bring with it in China, said Porter Erisman, an early Alibaba executive.
“There was only one person in the company who brought to our attention that one day we might face issues of being so big that we would come under pressure for having too much market power,” Erisman said. “And that was Jack.”
Jack Ma conveyed his concern at a staff meeting in the mid-2000s, Erisman said. At the time, he added, most Alibaba employees were “just trying to think, ‘How are we ever going to make money?’”
In 2011, Jack Ma got a taste of how his ambitions might rub shareholders and regulators the wrong way. He quietly took over Alibaba’s payment service, Alipay, angering one of Alibaba’s biggest investors, Yahoo. Jack Ma said the move had been necessary under new Chinese regulations. Alipay later became Ant Group.
“The Alipay transfer emboldened him,” said Duncan Clark, who has known Jack Ma since 1999 and is chairman of BDA China, a consulting firm. “He kind of got away with it.” NY Times
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