The boss of the Chinese tech giant Alibaba is crawling through the dust for the authorities. It is a signal that the private entrepreneurs in China must be closely aligned with Beijing.
Almost three weeks after the Chinese authorities blocked the IPO of the fintech giant Ant Group, the CEO of Alibaba, Ant’s parent group, baked hot cakes with the regime on Monday. According to Daniel Zhang, who succeeded founder Jack Ma in 2019, the tougher hold of communist rule in Beijing is “ well-timed and necessary. ” It was a clear attempt to pick up the pieces after the failed IPO.
Payment specialist Ant Group, the company behind the popular Alipay app, had planned an IPO on November 5 in Shanghai and Hong Kong. The operation would be good for the world’s largest IPO with more than $ 34 billion. Chinese investors were so excited that the number of subscribers to Ant Group’s stock, valued at $ 300 billion, was 870 times greater than the supply.
But two days before the IPO, the Chinese regulator unexpectedly pulled the plug on the project. Officially, it sounded that a number of “important issues” had surfaced about the “health of the financial sector.” That is why the authorities tightened up the rules for online lending in early November. Ant Group had just benefited from inadequate regulation for the sector.
“In order to ensure a more regular and healthier development of the Internet and the digital economy, the relevant government agencies are looking for insights about the policy and regulation of Internet platforms,” said Zhang. “And that is timely and necessary.” Alibaba’s CEO and Chairman of the Board said Monday at a meeting of the Chinese government.
Government control aids the sustainable and healthy development of the entire society.
Zhang expressed support for government control of the internet. “As a member of China’s digital economy, Alibaba is not only a participant and designer of this digital age but also a beneficiary,” he said. ‘Control not only allows companies to grow on their own, but also helps the sustainable and healthy development of society as a whole.’
The speech was a clear bow to the communist regime, following critical remarks from Alibaba founder Jack Ma. Ma had spit his gall on the Chinese financial sector in late October. “China does not run a financial systemic risk because the country does not have a system,” he said at the time. Ma also said that the regime is nipping innovation in the bud by mainly serving large companies – read: state-owned companies – instead of SMEs, the strength of Ant Group.
On a leash
The government veto against Ant Group’s IPO was a clear punishment for that unvarnished criticism. But it was also a warning that the Chinese government will not loosen its hold on business. Despite Alibaba’s success story, private entrepreneurs remain on a leash from Beijing. Ma has not yet responded publicly to the deletion of the lucrative IPO.
Under the leadership of President Xi Jinping, the Communist Party is once again all-powerful. At the end of last week, the Chinese authorities announced the creation of a committee to fight unfair competition. This was also seen as an illustration of the growing government pressure on tech giants such as Alibaba and Tencent, Ant Group’s main competitor.