Jakarta, CNBC Indonesia – The relationship between Alibaba Group founder Jack Ma and Chinese President Xi Jinping’s government, which is increasingly heating up, has often caused losses to Jack Ma and his company.
Analysts and experts warn that Jack Ma’s clash with the Xi Jinping government could hurt growth and create uncertainty over the future of Alibaba’s business.
“Investors are looking at Alibaba more closely after being attracted by its founder’s growth story and global profile,” said Rebecca Fannin, author of ‘Tech Titans of China’. CNBC International on Wednesday (3/2/2021).
“The current friction is a new reality for investors who may not have carefully considered how the company’s rise as a powerful technology giant could pose a threat to the status quo.”
Fannin believes Jack Ma’s dispute with Beijing will “subside” but will require “agility on the part of Alibaba to deal with government pressure, changing consumer needs in the digital economy, and investor concerns.”
Meanwhile Matthew Schopfer, head of research at Infusive, an asset manager investing in Alibaba, said that the recent concerns surrounding the technology giant “will prove to be a nuisance for long-term investors.”
“Alibaba is a prime example of China’s technological capabilities and we don’t expect the government to permanently damage business. In addition, higher regulations will only strengthen scale players like Alibaba,” said Schopfer.
“When we get to the other side of this regulatory barrier, we think the market will refocus on Alibaba and its platform as an essential part of the daily lives of Chinese consumers and the main beneficiaries of China’s growing spending power and increasing digitization of consumption.”
Xi Jinping’s dislike for Jack Ma started when the Alibaba founder publicly criticized the financial system regulators and state banks during a public discussion in Shanghai in October 2020.
One of China’s richest men called for reforms to a financial system that “stifles business innovation” and likens China’s current banking regulations to a “parent club”. Ma also said the Bank of China operates with a “pawnshop” mentality.
Of course the speech angered the Chinese government. His criticism was considered to be attacking the authorities of the Chinese Communist Party (CCP). The impact is a tough crackdown on Alibaba’s Fintech business, Ant Group.
Termination of Ant Group’s US $ 37 billion initial public offering (IPO) or the equivalent of Rp 518 trillion (assuming Rp.14,000 / US $) is Xi Jinping’s personal decision on Jack Ma’s comments. This information was revealed by a Chinese official whose identity was withheld to the Wall Street Journal in November 2020.
Now US-listed shares of Alibaba have been under pressure since Ant Group’s IPO withdrew, falling from a record high of US $ 317.14 on October 27 to US $ 254.50 at Tuesday’s close, a drop of almost 20%. But some analysts and investors remain bullish.
As well as ordering Chinese regulators to investigate and effectively stop offering Ant Group shares, Xi is also investigating Alibaba for the alleged monopoly.
The Chinese government suspended Ant Group’s IPO two days before the initial listing of its shares on the Hong Kong stock exchange and the Shanghai stock exchange. This decision came days after Jack Ma criticized the state bank and financial sector watchdog.
Most recently, Ma’s name was not officially included on the list of Chinese entrepreneurial leaders. This is the latest evidence of Xi’s dislike for Ma. This incident can also be interpreted as an insult to the entrepreneur.
In an article published by the Shanghai Securities News on Tuesday, Ma’s name was not on the list. In contrast, Ren Zhengfei of Huawei Technologies, Lei Jun of Xiaomi Corp, and Wang Chuanfu of BYD, an electric vehicle company, were praised for their contribution to China.
(Hi Hi)
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