Jack Ma - The Disowned Son of a Socialist Regime

Jack Ma - The Disowned Son of a Socialist Regime

While the theories around the whereabouts of Jack Ma, the Chinese tycoon and founder of Alibaba group, were running wild, he was recently spotted playing golf at a resort tucked away in the Chinese island of Hainan. Jack Ma went missing soon after his daring show of defiance against the Chinese government during the Bund Summit in Shanghai last October. This appearance tamps down the rumours of him fleeing to Singapore or being locked up in a high-security jail. However, it doesn’t rule out the Chinese government’s mischievous hand behind his unofficial retirement from public life.

Who is Jack Ma?

The story of Jack Ma, the man who gave a new face to China’s digital economy almost single-handedly, has a humble beginning. A true rags-to-riches story that is nothing less than awe-inspiring. It starts from Hangzhou, located in the south-eastern part of China, during the rise of communist China and its isolation from the West.

Jack Ma’s parents were both traditional musicians-storytellers who could barely make ends meet. Raised with an elder brother and a younger sister, Jack Ma knew from a very young age that his only means to get ahead in life was through education. When tourism in Hangzhou began to flourish, Jack made the most of this opportunity. It has been a huge dream of his to learn English. For this, he would ride 27 km (17 miles) on his bicycle and work as a guide to English-speaking tourists for free. He became pen pals with a few, one of whom found his real name hard to pronounce and gave him the name Jack.

Jack applied to college after high school but failed the entrance exam twice. He had a hard time getting his way around mathematics. However, he didn’t give up. He made it to Hangzhou Teacher’s Institute on his third try. Jack Ma also recollects the bitter memory of applying to Harvard Business School at the World Economic Forum in 2016. He was rejected each time (ten times, to be precise!). After his applications for around 30 different odd jobs were turned down, Jack Ma was hired as an English teacher at a local university for a mere $12 monthly pay check.

In 1995, during a visit to the US, Ma was bewitched by the internet. He looked up beer and was surprised to learn that there was info available on the internet about beer from different countries but China. This got him thinking and led to the launch of China Pages. It caught the eyes of investors.

Despite never having written a line of code nor made one sale to a customer, Jack Ma founded Alibaba, a China-based business-to-business marketplace website, in 1999 with 17 friends in his apartment. The rest is history. Alibaba rose to prominence in a short space of time receiving worldwide attention and foreign investments. He also founded other major subsidiary companies like Taobao Marketplace, Alipay, Ali Mama, and Lynx that revolutionized the tech scene in China.

Jack Ma served as the executive chairman of Alibaba Group till he stepped down on September 10, 2019.

The run-in with regulators and the forced disappearance

In Sep 2020, CCP issued a set of guidelines to help the state manage the risks and challenges that come with an expanded private economy. This, however, was a huge blow to Chinese-owned tech firms. They were already desperately trying to paint themselves as independent of government control and scrambling for a place with their US counterparts. From 2019, the Chinese government had begun lodging officials inside of major technology companies, including Alibaba. Reports also speculated that Ant Financial might be forced to pass a large chunk of shares to the government putting an abrupt stop to its plans for further global expansion.

A month later, Jack Ma was invited to the Bund Summit in Shanghai. He found the summit, described as an ‘open, pragmatic and internationally influential financial high-end communication platform’ on their website, (quite misleadingly as we will soon find out), an opportunity to speak his mind. With an outstanding career that etched China’s place in the global tech industry, one would think he was eligible to do so.

“China’s finance is like those of other fledgling developing countries. We are the young, as it were, when it comes to the financial industry. We do not have a fully-fledged, completely functioning ecosystem”, he said. To tread carefully, he threw in some quotes by president Xi Jinping and continued.

“Regulations can be divided into two parts, namely monitoring and controlling, and they are entirely different matters. Monitoring is about watching and paying attention to your development, while controlling is performed only when something goes awry or is predicted to go awry. However, we now have a situation in which the controlling force is very strong, while the monitoring force is obviously inept.” It didn’t stop there.
He went on to call out on how Chinese banks impede the growth of businesses. He reminded that the pawnshop mentality based on collateral as practiced in China wouldn’t be able to keep up with the global demands over the next 30 years.

That stung.

The timing of the speech couldn’t have been worse. Wang Qishan, the current Vice President of the People’s Republic of China known widely as the president’s right-hand man had just called attention to the importance of ensuring that business doesn’t become the master of the state.

Jack Ma’s soft-spoken demeanour and humble words of introduction didn’t ease him out. The subtle yet strong attempt at chiding the regulators for curbing innovation in the country hadn’t gone well with the audience. He definitely crossed a line. To exacerbate the wound for the Chinese government, Jack Ma’s speech went viral on the internet. It was a political embarrassment. Jack Ma had to be put in place.

When you grow too big for your boots

Jack Ma was summoned by the Chinese authorities on November 2, 2020 as Beijing initiated investigations into the operations of Ant Group Co. and Alibaba Group Holding Ltd. The much anticipated $37 billion IPO of Alibaba’s fintech arm Ant Financial was nipped despite having received permission earlier. Although regulators cited ‘changes to the financial technology regulatory environment and other major issues’ as the reason, that didn’t stop the media or the public from figuring out what was going on.

An investigation was ordered into the alleged monopolistic practices in Alibaba. The company was to strictly adhere to the new anti-monopoly rules and Ant Group was asked to scale down its operations. This all came at a huge cost for Jack Ma. Shares in Alibaba plummeted down by a whopping 8% and his net worth dropped by 2 billion.

Jack Ma was sacked from the final episode of a business talent contest he had been hosting. He was replaced by another Alibaba executive, even his picture removed from the gallery of judges. Whether voluntarily or succumbing to orders from the authorities, he had had his wings clipped and was to be away from the public eye for the next three months. His last public appearance was on 20 January 2021, when he spoke via video link to a group of rural teachers at the annual Rural Teacher Initiative.

Takeaway

Jack Ma enjoyed a self-made tech mogul status in China, similar to Elon Musk and Bill Gates in the US. For long, he was protected and projected by the government. He is still a member of the Chinese Communist Party.

His quirky and inspirational public appearances across global platforms and philanthropy initiatives were seen by the government as perfect opportunities to project CCP’s progressive visions. Jack Ma Foundation’s work towards improving education, the environment, and public health was received with arms wide open. He was seen along with top leaders frequently in the public and was elevated to the status of an unofficial ambassador for the country. When Jack Ma met the then American president Donald Trump in January 2017, he promised to bring a million jobs to the US to which Trump replied in the positive.

However, Ma had his share of critics. He was a strong proponent of China’s strict “996” work culture. The defence of the bloodsucking convention practiced in the tech sector manipulating the concessions granted by the government invited carping disapprovals. Han Fuling, a professor at Beijing’s Central University of Finance and Economics, observed that Ma’s opinions “were full of ignorance and arrogance about finance!” There were also apprehensions about the way Alibaba monopolized the e-commerce industry in China and the company’s poor treatment of workers. Ant’s model of originating unsecured loans to individuals that accounted for nearly a fifth of the country’s outstanding short-term consumer debt as of June 2020 was also a cause of concern for regulators. Interestingly, none of this led to any serious repercussions for Ma.

All is well in the People’s Republic of China until you cross with the government. Xi is the boss and any remark that challenges his authority or the government’s will not be taken lightly. Especially when the Chinese government is moving towards an economic downturn allegedly due to the incompetence of the financial system. The mounting debts in China that have been slowing down the GDP growth had already drawn global attention. And let’s not delve into the country’s increasingly strained international alliances.

Was this really the right time to call out on the government’s financial policies! Clearly not. If there was anything to learn from what happened to Ren Zhiqiang, the outspoken ex-real estate tycoon, and Cai Xia, a former teacher of democratic politics at the Central Party School of the Chinese Communist Party, recently, it was that loyalty takes precedence over stardom, money, and prowess in a communist regime.

What happened to Ren Zhiqiang and Cai Xia?

Ren Zhiqiang, the former chairman of the Hua Yuan Property Company, was not just a real estate mogul. Being the son of a ministry official, he was an insider of the party who had close ties with senior party leaders. This essentially meant his criticisms had far more political ramifications. Ren had always been subtly critical of the government, he was widely known as the big cannon. He took it further in an essay he wrote in Feb 2020 indirectly criticizing the president’s poor handling of the coronavirus pandemic:

“I too am curiously and conscientiously studying [the] speech… what I saw …[was] not an emperor standing there exhibiting his ‘new clothes’, but a clown who stripped naked and insisted on continuing being emperor.” He added that the situation was worsened by the lack of free press and freedom of speech in the country. On 12 March, he went missing. Soon he was found “guilty of corruption, bribery and embezzlement of public funds” and sentenced to 18 years in jail. Oddly, he was said to have voluntarily confessed to all charges and didn’t appeal against the verdict.

Like Ren, Cai, a retired teacher at the party school and the grand-daughter of a revolutionary fighter, also hails from a ‘solid red’ background. In a leaked online recording, she argues that the first step to save the party would be to dethrone Xi. She called him a mafia boss” who turned the party into his personal tool. As a disciplinary action, she was ousted from the party and deprived of her retirement benefits.

You will find many more examples of crackdowns in the Chinese regime featuring journalists, movie stars, entrepreneurs, and even laymen who dared to voice their opinions on Weibo. Some make it to global media, some are taken care of inconspicuously. Any hint of defiance is rooted out.

What does the future hold for Jack Ma?

Jack Ma didn’t become a billionaire overnight. There is a long story of rejections, perseverance, and acumen behind his success. Although he is leading a life dedicated to philanthropy and teaching now, he has made contributions for a lifetime to the global tech sector during his stint at the helm of Alibaba. Hopefully, his fall-out with the regulators resolves soon and he takes the stage again with a bang.

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