The narrow view about Chinese magnate Jack Ma’s disappearance is that it concerns Ma and the $600 billion Alibaba empire he manages. The broader view is a lot different.
The narrow view about Chinese magnate Jack Ma’s disappearance is that it concerns Ma and the $600 billion Alibaba empire he manages. The broader view is a lot different. It may represent a costly mistake, both in terms of business diplomacy and domestic politics, if the speculation about the communist hand behind his disappearance is true. And, much more.
But the question is whether the deft Chinese leadership, which checkmated several western leaders — even managing to divide them on several occasions — would be making this kind of mistake. Suppressing Ma would be bad for morale among the entrepreneur class in China. It would also discourage foreign investors who would see it as an increase in political uncertainties in China. The Chinese leadership may take that path only if the provocation is very high, and the risks of non-action for Beijing are much bigger than what is publicly known.
What stirred speculation is Ma’s absence from public view in the past two months, including his missing the final episode of a TV show on which he was to appear as a judge.
With the US blocking Chinese companies that have connections to the military — Huawei is one of them — Beijing needs the help of firms like Alibaba to make big overtures in the US and come away with precious new technologies. This is why some think the Chinese government wants to control Alibaba. It may even want to separate Ant Financial from Alibaba and bring it under its wings. Ma’s disappearance may be a sign of management resistance to this move. But again, the real picture is yet to emerge.
Many in China are not surprised at the turn of events, although no one knows for sure how to explain his absence from public view. It is tempting to think of it as Beijing’s handiwork to subdue the powerful businessman who, last October, questioned the Chinese system of controlling business enterprises.
What followed was the decision by the Shanghai and Hong Kong Stock Exchanges to cancel a massive $37 billion share float by Alibaba-backed Ant Financial. Last month, Beijing ordered an investigation into suspected monopolistic behaviour of the Alibaba group.
Several prominent businessmen in China have vanished over the years. Some of them have returned to tender public apologies over the State television about their supposed mistakes. Will this scenario be repeated in the case of the dynamo called Ma?
It is clear that Jack Ma can never go back to being Jack Ma again. He would surface, if at all, as a reduced business leader eager to placate every whim and fancy of China’s communist leaders. Last October, Ma described State-run Chinese banks as operating with a ‘pawnshop’ mentality, and complained that authorities were stifling innovation.
For more than two years, banks have been trying to protect their patch of green from predators such as Alibaba, Tencent, Baidu and JD.com who were using online platforms to become banks. The issue has divided the financial sector in many countries, and India may also see some bitterness along these lines. But China is different, because the government is the ultimate arbitrator of everything, including markets.
There are wheels within wheels, and Alibaba’s rivals, Tencent, Baidu and JD.com, would gladly ditch the leader to please authorities and grab crumbs of the market. The big four Chinese banks — Industrial and Commercial Bank of China (ICBC), Bank of China, Agricultural Bank of China (AgBank) and China Construction Bank (CCB) — are stuck in their traditional ways and too lazy to take bit advantage of the bad times that Alibaba is facing.
On his part, Ma did attempt to mend ways in November when he praised China’s digital climate, saying that it helped Alibaba to grow. This was opposite of his earlier complaint that the authorities were stifling innovation and competition.
Alibaba has a faithful constituency in tightly controlled China, and many in the Communist Party don’t like it. For starters, millions of businessmen — including thousands of goods manufacturers — are beholden to Ma and executives of Alibaba, who made it possible for them to emerge from the industrial dungeons of Changzhou, Ningbo and Dongguan to tap markets in European and US cities they had not heard of before. This is one reason behind the Chinese travel craze, which helped develop the economy, but also diluted the appeal of the country’s communist ideology.
At the same time, Alibaba has its political and diplomatic uses. Its face-recognition technology and associated cloud computing capability were allegedly used to identify and separate a section of Uighur Muslims of Xinjiang, whom the government views with suspicion. So, keep watching Ma space.
(The writer is author of Running With the Dragon: How India Should Do Business With China)