How does the richest man of the most populous nation on the planet disappear? In October 2020, Jack Ma, a former English teacher and contemporary tech mogul, was China’s richest man. A billionaire many times over, Ma was held up as a visionary, an example of a rags-to-riches story which proved that the past 30 years of economic reforms in China were a success. By the evening of November 2, 2020, Ma had all but disappeared. Let’s start at the beginning.
Born in Hangzhou, Zhejiang, Ma became an English lecturer at the local university. He founded his first internet-based company in 1994, before co-founding the Alibaba group in 1999. Ma was always highly visible and flamboyant, performing Michael Jackson numbers while dressed as the artist at his company’s events. He was often photographed hobnobbing with global leaders and headlining major world gatherings. He also helped create Ant Group, which owns the much-used digital payment platform Alipay, and has interests in insurance, consumer lending and other highly lucrative businesses.
In October 2020, Ma was reported by the Financial Times as having given a speech at the annual People’s Bank of China financial markets forum. According to Wired magazine reports, at a gathering of Chinese elites on October 24, 2020, as the Ant Group was preparing for a dual listing in Shanghai and Hong Kong, Ma came onto the stage and gloated, “This is the largest listing ever priced in the history of the human race and the pricing happened in a place other than New York City.” The IPO would have been worth $ 37 billion.
What he added after this may account for his “disappearance”. Ma looked at the audience, which included the vice president of China, Wang Qishan, the head of the People’s Bank of China and other heavyweights from the financial sector, and stated that China’s financial system was operating “with a pawnshop mentality” and that the regulatory environment was trying to “use the way to manage a railway station to manage an airport.”
On November 2, along with the upper management of Ant Group, Ma was summoned and interviewed by regulators. As Wired notes, when the interview was made public by the China Securities Regulatory Commission, the Shanghai Stock Exchange decided to halt Ant’s IPO on November 3, two days before it was to be launched. By the end of the year, with Alibaba’s stock falling, Ma’s own wealth diminished by over $10 billion and he was soon replaced by Ma Huateng, founder of a rival tech firm, as the wealthiest Chinese person. In 2022, regulators would also fine Alibaba $2.8 billion for antitrust abuses. Since the cancellation of the IPO, Ma has rarely been seen in public. It’s now being reported that he has been living in Tokyo for the past six months.
Last week, Ma reduced his own voting rights from above 50 per cent to around 6.2 per cent in a company through which he owned shares in Alibaba. This reduction by Ma is reported to be the price set by the Chinese government to allow Ant Group to conduct the long-shelved IPO. Almost simultaneously, the Wall Street Journal reported, the Chinese government acquired a 1 per cent stake in a subsidiary of Alibaba and appointed a state official to the board of that entity.
China is poised at a critical moment. Its population is declining; for the past six years, more Chinese have died than have been born. It is facing trouble on its borders with neighbours like India. President Xi Jinping has been forced to backtrack on a flawed Covid policy (which this column has written about before). In these fraught times, the crackdown by the government on the country’s tech industry is both surprising and expected. The Chinese state does not want the fanning of criticism by either the heads of industry or common citizens. Many of the services that tech companies provide enable citizens to disperse their views. Hence, the state is doing its best to shut down critics.
Back to Jack Ma — it’s not like he is destitute now. With a net worth of $ 34 billion, he is China’s fifth wealthiest person, and the world’s 34th wealthiest person as per the Bloomberg Billionaires index. Ma’s absence from China also coincides with its harsh lockdown policies to cope with the pandemic. During these pandemic years, Ma has been sighted in Spain and the Netherlands, and has likely avoided both China’s harsh Covid-19 quarantine policies and tangling with the authorities. In November 2022, FT reported that Ma is living in Tokyo, where he has been spending his time painting and collecting art, while making frequent trips to the United States and Israel. Not a bad way to spend one’s time.
In capitalist societies, billionaires and rulers have symbiotic relationships. Each needs the other. While the former has vast riches, the latter has enormous power. Each sustains the other. What distinguishes various societies that subscribe to capitalism is the shades of the rule of law that regulators abide by. Independent regulators are essential for sustainable growth, even for billionaires, while pliable regulators can be used by rulers to bring down even the wealthiest of this group. So, as they climb the ladders of wealth, billionaires would do well to remember to back those rulers who enable regulators to be independent. Their failure to do so could come back to undo them when they least expect it — like when they announce their long-anticipated IPO.
The writer is a Senior Advocate at the Supreme Court