The Chinese government has demanded that the founder of Alibaba, Jack Ma, reduce his business operations. This means that Ma will have to significantly scale back the operations of his fintech company Ant Group. As a result, it has been suggested that Ant Group could return to being a mere payment provider, rather than a comprehensive financial service that offers investments, savings and insurance products.
China’s Central Bank had already stated that Ant Group’s offering of these services was illegal and that steps must be taken to rectify the situation. However, as these investment services were Ant Group’s most lucrative divisions, it looks like extra measures have had to be imposed to ensure their complete removal.
So far Ant Group has said that it would fully implement the requirements made by the Central Bank. This means that Ma’s company will have to work hard to get back on track to being one of China’s most profitable financial firms.
Jack Ma has grown to become one of China’s richest people, but this hasn’t enamoured him with the country’s government. Recently there have been a number of attempts made by the Chinese government to limit the wealth and power of Ma.
Alibaba was placed under investigation over Christmas when it was felt that it was in breach of anti-monopoly regulation. This caused the share value in the ecommerce giant to plummet by as much as 8% on the Hong Kong stock exchange.
Ant Group has also suffered from interference by the Chinese authorities earlier this year. The IPO of Ant Group was halted at the last minute when the government accused the company of breaking financial regulations. The flotation of Ant Group was expected to be worth $37 billion.
The crackdowns have widely been seen as being the Chinese government’s response to some of Jack Ma’s more controversial speeches. The businessman made no secret of his distaste for excessive governmental regulation in a speech in October. This speech also saw Jack Ma making a call for there to be less state interference in banking.
Such outspoken comments were widely seen as being an outright attack on the Chinese government. The authorities have shown that they will show no mercy on any public figure who makes such comments. While Jack Ma is one of the nation’s most influential entrepreneurs, it seems that he could be the latest to fall foul of the Chinese Communist Party.
It all sets up a fascinating battle between Jack Ma and Pony Ma – the two wealthiest men in China. Jack Ma had previously held the accolade of being China’s richest businessman. But the government-led crackdown has wiped over $10 from Ma’s fortune. Pony Ma is now the richest person in China, and his rival tech brand Tencent could also be a beneficiary of the government’s battles with Jack Ma.
In other news, a warning against complacency on global economy from IMF Chief has been issued.
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