Today’s Cache dissects big themes at the intersection of technology, business and policy.
Beijing has turned a man who founded one of the world’s most valuable ecommerce company to agricultural technology
Just a year ago, Alibaba’s founder Jack Ma had everything going him. Ma was gearing up for the Ant Group’s biggest share sale in history, which could potentially raise $34.4 billion and value the group at more than $310 billion. The earlier record was held by Saudi oil giant Aramco, which raised $29.4 billion when it made a share sale on the Riyadh exchange in December 2019.
Billionaire Ma had ultimate control over the Ant Group, and was due to handsomely profit from the firm’s record setting IPO. Until Beijing pulled the plug on the share sale.
Less than two days before listing, China’s market regulator suspended Ant Group from going ahead with its IPO. The decision came after the People’s Bank of China and three other financial regulators summoned Ma for questioning.
The country’s banking regulator then proposed new rules that mandated lenders to set aside more cash for loans they facilitate and keep more credit risk on their balance sheet.
Ma had criticised Beijing, a week ago, for being too risk averse.
At the time when Beijing suspended the share sale, Ant Group was already offering investment accounts, insurance and micro savings products, and credit scores to Chinese consumers. The Alipay app had over half a million daily active users, according to regulatory filings. The company was handling trillions of dollars in payments, and had posted $17 billion in revenue in the September ending quarter in 2020.
‘Wrecking ball’ reforms
And when China’s economic reform wrecking ball was set in motion, Ant took the first hit. It shocked investors and analysts across the globe. Some termed the move as Beijing’s way of telling who calls the shots in the country.
The move was followed with a $2.8 billion fine against Alibaba Group Holding for abusing its dominant market position over rivals and sellers on its ecommerce platform.
China’s State Administration for Market Regulation also asked the ecommerce giant to revamp its operations and submit a compliance report within three years.
Also read | China says to set governance rules for algorithms over next three years
In response, Alibaba said it accepted the penalty “with sincerity and will ensure its compliance with determination”.
Beyond the regulatory hurdles, Ma’s business empire faces a growing competition from newer rivals as consumer shopping preference shifts to browsing and targeted product searches.
But, during the last 12 months, the once high-flying billionaire was mostly out of sight until he was recently spotted in Europe, according to a report by SCMP, which had three published photos of Ma.
In two of them, he was seen wearing a white protective gown and holding flowerpots, and in the third he was wearing jeans and a hoodie and the caption said he was analysing technology by aluminium extrusion specialist BOAL Systems.
The paper noted that Ma was touring Dutch research institutions to pursue his interests in agriculture technology, and that he would continue visiting companies and research institutions in Europe that are involved in agricultural infrastructure and plant breeding.
A shift in Beijing’s economic policy has turned a man who founded one of the world’s most valuable ecommerce company to agricultural technology.
To get Today’s Cache delivered to your inbox, subscribe here.