Jack Ma’s problems began when one of his big deals failed: Grupo Hormiga’s IPO.
Chinese mogul Jack Ma did not have a good end to the year.
Co-founder of Alibaba, one of the Asian nation’s largest business empires, has lost nearly $ 11 billion since late October, when authorities stepped up control of his company and other large technology conglomerates.
This year, Ma’s fortune reached 61.7 billion dollars and she became the richest person in China again.
However, its net worth fell to $ 50.9 billion, according to the Bloomberg Billionaires Index, which ranked it fourth in the world. ranking.
The businessman’s problems began when one of his big businesses failed: Hormiga Group IPO.
In early November, everything was ready for what would be the largest public offering in history, but things did not go as planned.
The operation was unexpectedly suspended after a last-minute questioning by Chinese regulators.
Some analysts have interpreted the event as an attempt by Beijing to control the growth of giants such as Ant Group and Ma himself, which tends to make awkward statements, according to BBC journalist Timothy McDonald in Singapore.
“Ma has gone from being a symbol of China’s potential and technological progress to a threat.”
The tycoon allegedly provoked the anger of the Chinese authorities when he publicly criticized the Chinese state-controlled bank, comparing it with “Pawn” who do not have an innovative vocation.
The power of digital finance
Since then, things have become more complicated for Grupo Hormiga, a conglomerate that has expanded rapidly in recent years.
The most popular ant service, Alipay, started as Alibaba’s payment platform.
Ma has publicly criticized the state-controlled bank in China, comparing it to “pawnshops” that have no vocation for innovation.
He kept the money of the buyers’ trust until they received the product they bought online.
Alipay has been instrumental in growing Alibaba. It is now more widely used in China than credit cards.
When the IPO was suspended, the Hong Kong Stock Exchange said this was due to the fact that the Hormiga Group “may not meet the standards for listing and transparency requirements” and suggested “recent changes” in the digital financing regulatory environment. it could have been an obstacle.
“It was a big deal. But I don’t think China will go for any business. They will not jeopardize their financial system for a business“says Drew Bernstein, director of Marcum Bernstein & Pinchuk, a company that advises Chinese companies.
Unfair competition?
A few days ago, the Central Bank of China ordered the reorganization of the Hormiga Group’s operations so as to “rectify” its lending, insurance and wealth management services.
According to the deputy governor of the People’s Bank of China, Pan Gongsheng, regulators are examining the “poor corporate governance of the Hormiga Group”, its defiance of certain regulations and its practices of conquering its competitors in order to avoid unfair competition.
The most popular ant service, Alipay, started as Alibaba’s payment platform.
The Hormiga Group said in a statement that it would set up a “rectification” working group and fully implement the regulatory requirements.
While some experts believe this new regulatory attack targets Ma, others see financial sector reform as a long-term political goal of the Beijing government, which goes beyond the businessman’s company.
Although the company operates as China’s largest payment provider, with more than 730 million monthly users on its Alipay service, the company’s credit practices appear to be of most concern to regulators.
I’m not alone
Although Jack Ma has been at the center of controversy, he is not the only one facing increased regulatory scrutiny.
The fintech sector seems to be in the sights of Chinese regulators.
Some companies are already adjusting their mode of operation, probably to anticipate possible new regulations in the sector.
For example, JD Digits, Tencent, Baidu and Lufax have stopped selling interest-bearing deposits on their platforms after authorities forced the Hormiga Group to do the same.
“I don’t think anyone is immune at this stage and certainly the principles with which the Hormiga Group connects its consumers with financial products is very similar to what Tencent does, ”adds Norris.
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