Jack Ma, the billionaire tech tycoon who dared to defy China’s regulators

Jack Ma performed a Michael Jackson-themed dance routine for employees in 2017

Credit: AFP

“Sorry, really sorry,” stammers Jack Ma, the billionaire co-founder of Chinese internet giants Alibaba and Ant Group. “Sorry sir, policeman sir. A thousand apologies,” he says, addressing the group of police officers in front of him.

Ma, 56, isn’t in legal trouble – not of that kind, at least. The police officers are actors hired for an 18-minute kung fu movie starring Ma as the main character.  

Today, nearly three years after the bizarre film’s release, the apology scene has gone viral as social media users poke fun at Ma’s current predicament. 

Ma’s financial technology business, Ant, had been due to hold the world’s largest ever float on Thursday. The tech tycoon aimed to raise $35bn (£27bn) but saw his carefully laid plans destroyed when Shanghai’s stock market suspended the float with just 48 hours notice.

The move was made just a day after Ma was summoned by China’s central bank and three powerful watchdogs. In an extraordinary turn of events, authorities announced that they had belatedly discovered an array of shortcomings that, by some accounts, might require the sprawling Ant to be overhauled. 

The high-profile collapse of Ant’s float is a public humiliation for Ma. Had it gone ahead, it would have made Ma Asia’s richest person. Instead, the unconventional founder’s net worth fell by $3bn to $58bn.

Now China’s poster boy for entrepreneurialism finds himself caught in the glare of the Communist-run state. It is a public relations nightmare for Ma, a Communist Party member, whose rags-to-riches backstory has come to embody a self-confident generation of Chinese entrepreneurs ready to transform the world.

On Wechat so many postings of this clip of Jack Ma apologizing to the police after the IPO of Ant Group was suspended. Ma played a Kung Fu master in the movie.Also a lot of wisecracks about ant.Chinese remain ant people that can be crashed by the gov’t regardless of their wealth. pic.twitter.com/E2duJW4Jgj

— Li Yuan (@LiYuan6) November 3, 2020

Ma’s career has at times sounded something like a fairytale. Born in China in 1964, he cycled for miles every day to work as a tour guide so that he could practice his English. After school, Ma applied for more than 30 jobs, including working at a KFC restaurant, and was rejected from them all.

Instead, it was the internet which kickstarted his career. The ebullient founder started a series of internet businesses in the nineties which brought the young entrepreneur immediate success.

"The first time I used the internet, I touched on the keyboard and I find ‘well, this is something I believe, it is something that is going to change the world and change China,’" Ma once told CNN.

In 1999, he founded Alibaba, an e-commerce website which has since grown to yearly sales as high as $72bn. The site, which operates like other internet retail giants such as Amazon and eBay, grew to become China’s dominant e-commerce site and plays host to thousands of Chinese manufacturers and resellers.

At the head of the company, Ma has revelled in his success. The entrepreneur has crafted a public image as a renegade executive, once performing an elaborate dance routine and magic act while dressed as Michael Jackson in front of thousands of his employees.

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He has also taken pride in hosting annual group wedding ceremonies for couples who are employed at Alibaba. And he’s not shy of speaking about personal subjects. Last year, Ma urged his employees to have sex six times a week.

But continued success has never been guaranteed. Ma has retained a positive relationship with the Chinese government, although analysts have warned for years that it could fade away.

“Even if you are Jack Ma, you will only be as successful in the Chinese market as the CCP allows you to be,” says Grant Newsham, a senior fellow at the Center for Security Policy, who last year wrote that Ma could face government reprisals at any point.

“That’s always been the case with foreigners – though few will admit it. And it also applies to Chinese, even a supposedly self-made billionaire like Ma.”

In 2003, arch rival eBay attempted to acquire Alibaba for but Ma refused, instead selling a 40pc stake in the business to Yahoo for $1bn. The deal, then considered a risky bet on a fledgling Chinese business, later became one of Yahoo’s most important assets. It sold its remaining 11pc stake in Alibaba in 2019 for around $40bn.

Alibaba’s 2014 float in New York was a crowning moment for the business, a rare example of a Chinese technology giant which had seemingly charted a course through the tricky geopolitics of US-China relations.

Ma, however, wasn’t done yet. In 2010, Alibaba had spun out Ant, its collection of financial technology services including Alipay, a so-called “super app” which lets its customers send money, take out loans and invest in shares.

Today Ant Group, in which Ma is the largest shareholder, is the world-largest digital payments platform, claiming 731 million monthly users on the Alipay app.

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Alibaba’s founder had long been seen as a ceremonial figurehead for the e-commerce business. In recent years, however, he has taken a keen interest in the runnings of Ant, shepherding its rise and planned float.

But while Ma’s business acumen has helped him rise to the top of China’s technology scene, he has increasingly harboured tensions with China’s ruling Communist Party.

Although a member of the CCP himself, and largely given a free reign to build up his empire, Ma has been a vocal critic of Chinese technology and banking regulations.

Most recently, he attacked China’s creaking banks as “pawn shops” over their demands for collateral. He claimed the Basel accords, which determine how much capital banks must hold against unexpected losses, were “an old people’s club”. 

In October, he has blamed global regulators for focusing too much on risk, and criticised China’s own measures for stifling innovation. The remarks came after Vice President Wang Qishan called for a balance between financial innovation and strong regulations to prevent financial risks.

“It appeared that, intentionally or not, Ma was openly defying and criticising the Chinese government’s approach to financial regulation,” says Andrew Batson, China research director at Gavekal Research.

While China’s regulators warned that Ant’s aggressive lending could pose a systemic risk to China’s economy, Ma argued it was a “lack [of] financial ecosystem” that posed a threat to growth. 

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Clearly, those attacks did not go down well. “Jack Ma has made someone very cross,” wrote Richard Windsor, an independent analyst. “The last minute change… can only be interpreted as a move to remind Jack Ma who is really in charge.”

China’s regulators have had years to act on Ant’s rise. Its watchdogs have talked for nearly three years about tightening rules on capital requirements to force Ant to hold more cash to balance its huge loan book.

On Monday, Ma was called in to an extraordinary meeting with China’s four big financial regulators. Late Tuesday, just two days before Ant’s float, Shanghai’s stock exchange pulled the plug and suspended the listing. The float is now expected to be barred until Ant adopts new state regulations, still in draft form, forcing it to hold more collateral.

“The only answer I can come up with is that some in the CCP feel that Ma had gotten too big for his boots,” Windsor adds.

So far, Ant’s float has only been suspended, not cancelled altogether. That has given investors hope that the suspension will be lifted in the coming weeks rather than forcing Ant to return investor money.

Ma has been publicly humiliated, cut down by his government days before the world’s largest float. But that doesn’t mean his career is over, according to Abishur Prakash, the head of the Centre for Innovating the Future.

“For Ma, his standing isn’t likely to change because of the IPO situation,” he says. “From e-commerce to fintech, Jack Ma still controls companies that power China.”

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