What is Alibaba’s founder Jack Ma up to?

Celebrity entrepreneur Jack Ma is one of those proverbial old soldiers who might fade away momentarily but never really die.

After keeping clear of public engagements for three years for rubbing up the Chinese regulators the wrong way, the best-known capitalist from the Red Dragon seems to be making a comeback of sorts.

Late last year, he purchased shares worth $50 million in Alibaba Group Holding, a New York Stock Exchange-listed e-commerce giant that he cofounded in 1999.

The move, aimed at supporting his “flailing enterprise”, surprised many because it was his first purchase of Alibaba shares in the last eight years.

“I think it’s more about the cheap valuation of Alibaba,” Willer Chen, associate director at Hong Kong-based institutional advisory firm Forsyth Barr Asia, tells TRT World.

While the share purchase value doesn’t amount to much given the company is worth nearly $184 billion as of this writing, the transaction carried a symbolic meaning. It showed investors that Ma was still in the game and willing to take up a bolder role within the company.

“Even though he’s been backstage for a while, he still has power in terms of critical decision-making for Alibaba, such as its restructuring last year,” says Chen, while referring to the company's earlier plan to spin off its cloud business.

Ma stepped down as CEO and chairman of the company years ago and retains no executive role anymore. He isn’t even on the board of the company although he remains a major shareholder with a stake of 3.7 percent.

The Bloomberg Billionaires Index puts his current net worth at $30 billion, which makes him the 49th richest person on the planet.

The surprise purchase of shares by Ma did bring some respite to the company, which has seen its market value vanish by almost 77 percent since October 2020. Its share price rose 7.3 percent in a day as investors cheered Ma’s decision to increase his stake in Alibaba.

But one-off share price surges are unlikely to turn the corner for a company that held history’s largest stock market floatation in 2014.

“It’s helpful, nevertheless, that Jack and (company chairman) Joe Tsai pledge their commitment to Alibaba to help restore confidence (and) project an image of stability. But it’s not yet having the desired effect,” says Duncan Clark, chairman of Beijing-based investment advisory firm BDA, while speaking to TRT World.

“Investors are burned by all the harsh regulations of the past few years, not to mention weak consumer spending post-Covid and the US-China tension.”

Clark, who’s the author of the book Alibaba: The House That Jack Ma Built, believes the former tour guide from Hangzhou has been “allowed a little more visibility” in the recent past after a few years of “almost complete” obscurity.

“But his words are, I think, very tightly supervised by the government. There’s clearly no warm relationship between President Xi and Jack Ma or other leading private-sector leaders,” says Clark, who also served as an adviser to Alibaba during the dot-com boom in the late 1990s.

Stepping on the dragon’s tail

Most of Ma’s current troubles seem to have originated in 2020 when he made a scathing speech criticising the regulatory overreach in China. He accused the state-owned lenders, which dominate the Chinese banking sector, of having a pawnshop mentality. By that, he meant the old-school banking that centres around collateral-based lending.

In contrast, the Ant Group in which he controlled the largest shareholding at the time operated, among other businesses, a credit service catering to the collateral-poor clientele. Ma said China’s big financial groups often “shunned” innovative firms and individuals.

Regulators in most other markets would’ve taken such criticism in their stride. But the harsh words by arguably the most recognisable face of the Chinese economy ruffled too many feathers in China.

The state came down hard on Ma and suspended the soon-to-be-held initial public offering (IPO) of Ant Group.

If the Chinese regulators had not cancelled it at the eleventh hour, the IPO would’ve fetched $37 billion and become the largest ever listing in history.

As a result, the total value of Ant Group would’ve been $316 billion, making the Chinese fintech company the world’s most valuable bank.

The official reason for the swift action against Ant Group right before its IPO was to ensure financial stability – something the Chinese government decided in 2017 was a matter of national security.

A report in the Financial Times quoted an expert at the time who said the Chinese authorities put a stop to the IPO as they sought to increase capital requirements for online lenders.

In simple words, it meant Ant Group would have to come up with substantial funds of its own to protect its borrowers from possible losses. The draft regulations showed Ant Group would need another $20 billion in capital reserves to back its existing loan book.

Ma let loose a torrent of criticism, which resulted in the regulator announcing the new rules. The IPO was mothballed as Chinese regulators kickstarted a wider crackdown on fintech companies.

Clark says Ma’s flying-too-close-to-the-sun part came in the form of his ambition to disrupt the financial sector in China. The same financial sector lies at the core of the Chinese economy as it lets state-owned enterprises receive subsidised access to capital by channelling savings from consumers at low rates of interest to the state, he says.

“Ant Group was awakening consumer awareness of the greater possibilities for them to access higher rates of return than traditional bank deposits. From the government’s perspective, the disruption was so fast it was destabilising the financial system… Alibaba through Ant was the biggest threat and Jack the symbol,” Clark says.

Once bitten, never shy

In his seminal book, Clark sheds light on the mercurial nature of Ma as he dealt with the aftermath of the 2014 IPO of Alibaba, which raised $25 billion in the second-biggest listing to date.

The shares were oversubscribed and the price shot through the roof. It made the Chinese firm more valuable than Walmart, Coca-Cola or Amazon as the total value of its shares reached nearly $300 billion within no time.

But the euphoria fizzled out months later as its stock price dropped like a stone.

Clark writes that the rout was triggered by a public dispute between Alibaba and a Chinese government agency, highlighting the widening gulf between Beijing and Ma.

In January 2015, China’s business and licensing authority released a report that accused Alibaba of selling counterfeit goods and its employees of taking bribes from vendors to boost their rankings, he writes.

Furious, Alibaba came out swinging at the government body. One of its official social media accounts even named and shamed one specific official of the licensing authority.

“Director Liu Hongliang! You’re breaking the rules, stop being a crooked referee!” The company deleted the post a few hours later.

The cost of public sparring was steep. By September 2015, the value of Alibaba’s shares sank by almost $150 billion from its November 2014 peak – an unprecedented drop that Bloomberg termed “the world’s biggest destruction of market value.”

Such audacity raised questions over Ma’s intentions as China is known as a place where discussions between the government and companies are typically conducted in private.

A 2022 research paper authored by nine researchers from the School of Psychology at Northwest Normal University tried to answer this question using Carl Jung's analytical psychology.

Titled “The ‘Teacher’ and Martial Arts: A Psychobiographical Analysis of Jack Ma as a Business Change Agent,” the research paper says Ma wanted to resist the system through the power of just one person and one company. “It's like ants arrogantly want to shake a big tree,” it said.

Using psychobiographical tools of research, the authors assert that Ma's childhood humiliation experience is the main source of his “martial arts complex”.

The paper recounts a story from Ma’s school days when his classmates mocked his grandfather for being a baochang, a manager of the old social management system with a negative image in Chinese media. They bullied Ma, who put up a fight and received a “bloody hole” in his head.

Ma loved reading martial arts novels from childhood because, in the world of chivalry and justice, he could… “pay debts of gratitude and revenge with pleasure”, says the paper

“If someone bullied or annoyed him, no matter how strong the other person was, Jack Ma would immediately rush to compete with them… we can see that Jack Ma was rebellious, stubborn, unconcerned about safety, and extremely aggressive,” it says.

The assertive nature of Ma puts him in direct confrontation with a state structure that wields significant influence in nearly all spheres of public life.

Independent economist and author George Magnus tells TRT World that the Chinese Communist Party “can’t accommodate” the likes of Ma- or Bill Gates-type celebrities with great wealth and, therefore, power or influence.

“You must embrace and be subordinate to party goals, objectives and structures in your life and in your business,” he says, adding that powerful entrepreneurs represent alternate sources of legitimacy and potential threat.

Ma has conspicuously stayed in his lane for the last three years. A Bloomberg report noted last week that his increased public activity has spurred speculation that he may play a bigger role in his company.

Is it likely that Ma might once again become a symbol, this time of a renewed commitment by the government to growth, employment, and the private sector?

Clark of investment advisory firm BDA doesn’t think so. “It’s hard to see anything so dramatic.”