Jack Ma shows why Chinese tycoons keep quiet

Jack Ma, the most famous businessman China has ever produced, avoids the spotlight. Friends say he paints and practices tai chi. Sometimes he shares drawings with Masayoshi Son, the billionaire head of the Japanese conglomerate SoftBank.

The wider world saw Mr. Ma for the first time in recent months last week during a virtual meeting of the board of the Russian Geographical Society. As President Vladimir V. Putin and others discussed Arctic affairs and the preservation of the leopard, Mr. Ma could be seen leaning his head to one side, looking deeply bored.

For Mr. Ma – the charismatic entrepreneur who first showed, two decades ago, how China will shake the world in the internet age; whose face adorns shelves of admirable business cards; who has never met a crowd he could not be dizzy-blind – it is a powerful change of pace.

Under the main leader of the Communist Party, Xi Jinping, China punished and shamed a number of tycoons who amassed enormous wealth and influence but were seen to be overstepping their bounds. Mr. Ma and the crown jewels of his online empire, the e-retail titan Alibaba and the fintech giant Ant Group, are Beijing’s biggest targets, as officials begin to regulate the country’s strong Internet industry like never before.

American and European officials have been looking for years to curb Internet monitors. But it is hard to imagine that Western regulators are bringing about a change in wealth as significant as the one that hit Mr Ma. Mr. Xi asserted broad control over the Chinese private sector, demanding commitment to the party and social stability over profits.

Xiao Jianhua, a former trusted financial lieutenant for many Chinese elites, was snatched from a luxury hotel in Hong Kong in 2017. Ye Jianming, an oil tycoon who sought connections in Washington, was detained, as was Wu Xiaohui, whose insurance company bought Waldorf. Astoria Hotel in Manhattan. Mr. Wu later went to prison. Lai Xiaomin, the former president of a financial firm, was executed this year.

“The general rule of thumb is that there should be no individual centers of power outside the party,” said Richard McGregor, a senior senior at the Lowy Institute and author of “The Party: The Secret World of China’s Communist Leaders.”

Beijing’s technology reduction is already taking place through boardrooms beyond Alibaba.

Ant Group chief executive Simon Hu resigned in March. A few days later, Colin Huang resigned as president of Pinduoduo, the mobile bazaar he set up and became public in a few years. Pinduoduo announced his resignation the same day he said he had attracted 788 million buyers in the past 12 months – more than Alibaba.

At a political meeting that month, Pony Ma, founder of social media giant Tencent, proposed tougher rules for Internet companies – or, as one official newspaper put it, “innovative methods of regulation and governance.”

Last week, China’s antitrust authority convened 34 top Internet companies to talk about the new rules of fair competition. Within hours, they were discussing business changes and publicly pledging to stay in line.

“These new regulations will require Internet platforms to look at how they innovate in the future, and the result is potentially less innovative,” said Gordon Orr, a non-executive board member at Meituan, the Chinese food delivery giant.

Even so, Alibaba and other titans on the Internet have a status in China that could protect them from the most difficult treatment. Officials praised the Titans’ economic contributions even as they tightened surveillance. Mr. Xi wants China’s economy to be driven more by its own innovations than by those of volatile foreign powers.

That means it may be too early to declare Jack Ma down for the account.

“His company is far more important to the success and operation of the Chinese economy than any of the other entrepreneurs,” said Mr McGregor. “The government wants to continue to reap the benefits of its company – but on their own terms. The government does not nationalize Alibaba. He does not confiscate his assets. It simply narrows the field in which it operates. ”

Alibaba declined to comment.

Mr. Ma is not a newcomer to relations with the Chinese authorities.

He worked briefly and unhappily for a government-run advertising agency before founding Alibaba in 1999. At the time, China was still accustomed to the idea of ​​strong private entrepreneurs, and Mr. Ma proved adept at charming government officials.

“Alibaba has an absolute chance to become a world-class company,” said Wang Guoping, then secretary of the Communist Party in the eastern city of Hangzhou, where Alibaba is located in the 2000s. “What it needs most is a World-class company is a soul, a commander, a world-class businessman. Jack Ma, I think, meets that standard. ”

Mr Ma has seen early success in China, said Porter Erisman, an early Alibaba executive.

“There was only one person in the company who informed us that one day we might face such big problems that we are under pressure because we have too much market power,” he said. Erisman. – And this was Jack.

Mr Ma expressed concern at a staff meeting in the mid-2000s, Mr Erisman said. At the time, he added, most Alibaba employees were “just trying to think, ‘How will we ever make money?’ ””

In 2011, Mr Ma felt that his ambitions could hurt shareholders and regulators in a wrong way. He quietly took over Alibaba’s payment service, Alipay, upsetting one of Alibaba’s largest investors, Yahoo. Mr Ma said the move was necessary under new Chinese regulations. Later, Alipay became Ant Group.

“Alipay’s transfer encouraged him,” said Duncan Clark, who has known Mr. Ma since 1999 and is chairman of BDA China, a consulting firm. “He kind of escaped.”

As Alibaba grew, Mr. Ma began to be courted by presidents and movie stars, but also by a wider crowd of fellow Chinese entrepreneurs. This “echo chamber” could have distorted Mr Ma’s ideas about himself and his position on the government, Mr Clark said.

Otherwise, he could have seen the writing on the wall, especially since Mr. Xi pushed private enterprises to work more closely with the state.

When Mr Ma resigned as chairman of Alibaba in 2019, a comment in the Communist Party’s official newspaper said: “There is no so-called Jack Ma era – only Jack Ma as part of this era.”

China’s leaders need the private sector to sustain economic growth. But they also do not want entrepreneurs to undermine the party’s dominance in society.

In October last year, as Ant was preparing to go public, Mr Ma spoke at a conference in Shanghai and criticized China’s financial regulators. He had long seen Ant as a vehicle for disrupting the country’s major state-owned banks. But there could hardly have been a less opportune time to understand. Officials stopped listing Ant’s actions shortly after.

In China, “it’s hard to say that the emperor doesn’t have clothes nowadays,” said Kellee S. Tsai, a political scientist at Hong Kong University of Science and Technology.

Mr. Ma has largely disappeared from his companies. In January, she appeared in an internal chat group to answer a business question, according to a person who saw the message but was not allowed to speak publicly. The employees later shared Mr. Ma’s message to reassure their nervous colleagues.

Recently, the Shanghai Hurun Report research group estimated that Mr. Ma was not, for the first time in three years, one of the richest people in China. The new no. 1 of the country was Zhong Shanshan, the discreet head of a giant bottled water and a pharmaceutical business.

When his water company went public last year, Mr. Zhong was so little known that Chinese news of his sudden fortune had to explain to readers how to pronounce the obscure Chinese character in his name.