Current Affairs

What’s happening to Billionaires in China?

If there’s a common thread among some of China’s prolific billionaires such as Alibaba’s Jack Ma, and Tomorrow Group’s Xiao Jianhua, it’s not their immense wealth, but their troubles with the Chinese Communist Party. The Chinese government cracking down on big tech companies. And Alibaba founder Jack Ma hasn’t been seen in public for 2 months.

In late October 2020, China’s most recognizable businessman Jack Ma fell off the radar. After his negative comments about financial regulators. Were met by the sudden cancellation of the Ant Group IPO and an anti-monopoly probe into Alibaba. Despite his public reappearance almost three months later, his absence made some media outlets draw parallels with other billionaires who failed to toe the Chinese government’s line.

Billionaires Reaction

One who is never shy of the limelight, Ma and his Alibaba Group are household names domestically and abroad, mirroring China’s rise as an economic powerhouse. Since the founding of his e-commerce company Alibaba in 1999, Ma’s business empire now spans the financial technology, entertainment and media industries, including stakes in numerous companies outside China.

In 2014, Alibaba went public on the New York Stock Exchange and raised a then-record $25 billion. Besides his reputation as a prolific businessman. Ma is known at home as a philanthropist. Through his namesake foundation, Ma has donated to advance educational, environmental and philanthropic causes. In 2018, it was revealed that the flamboyant billionaire was a member of the Chinese Communist Party the same year he announced his retirement.

Despite his solid credentials, that wasn’t enough to shield Ma from the ire of regulators after he accused them of stifling innovation. His blunt comments, which went viral on social media, were seen as an attack on the country’s financial watchdogs, of which several were in attendance at the same summit in Shanghai.

Alibaba’s Jack Ma Comments on financial system

Labeling China’s financial system as “outdated” and too “risk-averse,” Ma called for a revamp of the financial system, from one with a “strong pawnshop mentality” to be “new, inclusive and universal.” 10 days after his fateful speech, the mega IPO of his sprawling financial empire, Ant Group, collapsed. Chinese regulators later announced an anti-monopoly probe into Alibaba Group and Ma and his executives were summoned for interviews.

Shortly after his public fallout, Ma failed to appear on his reality TV show, Africa’s Business Heroes, which he was supposed to judge.

Impact of China’s government on other billionaires

Ma isn’t the first business executive to have fallen from grace after run-ins with the Chinese government. In 2010, electronics billionaire Huang Guangyu, who was China’s richest businessman at one point, was jailed for 14 years on corruption charges. He was eventually released in the middle of 2020 after a decade behind bars.

Shortly after the ascension of President Xi Jinping in 2012. China launched its most far-reaching anti-corruption campaign. Which took aim at “tigers and flies,” or powerful bureaucrats and low-ranking officials. These include Xu Ming, once the country’s eighth richest man, who was arrested in 2012 on fraud charges and died in prison three years later.

A crackdown on the financial sector in 2015 ensnarled a string of senior executives at Chinese companies. Including two top executives from CITIC Securities, China’s biggest brokerage. Other executives who had unexplained disappearances, only to reemerge in the public eye again include the chairman of investment conglomerate Fosun International, Guo Guangchang, in 2015. And the billionaire founder of fashion brand Metersbonwe, Zhou Chengjian, a few months later.

In 2017, billionaire financier Xiao Jianhua was last seen at a luxury hotel in Hong Kong. And his fate remains unknown. Most recently, former property executive Ren Zhiqiang of Huayuan Group. Went missing after criticizing President Xi’s handling of the coronavirus pandemic. Sentenced to 18 years in prison for corruption.

Billionaires Arrests on corruption charges

In the eight years since China’s crackdown on corruption in 2012. More than 300,000 “tigers and flies” have been punished, according to state news agency Xinhua. The crackdown has occasionally caused jitters across the market. After Fosun’s Guo was reported missing. The company’s Hong Kong and Shanghai-listed shares plunged when trading resumed.

More than two years after the disappearance of billionaire Xiao Jianhua. Regulators seized control of nine firms affiliated with his company, Tomorrow Group, in 2020. Sending share prices of these companies tumbling. The shares of Ma’s Alibaba also fell after reports of the anti-monopoly probe into his company surfaced. Ma’s Ant Group ordered to restructure.

Alibaba’s Jack Ma Influence

Even though Ma has retired, he continues to wield considerable influence over his companies. His 50-second cameo reappearance at the start of 2021 failed to ease investor concerns. It is likely, then, that his uneasy relationship with Beijing will continue to cast a long shadow over Alibaba’s future. This includes his philanthropic efforts, which Ma has spoken publicly about. Ma quotes “When you have 1 billion dollars, that’s not your money. That’s the trust society gives on you. They believe you can manage the money, use the money better than the government, than the others. So I think today, I have the resources to do more things. With the money we have, with the influence we have, we should spend more time on the young people.”