The Chinese government’s move to initiate an intense anti-trust probe into the Jack Ma-promoted Alibaba group and its affiliate Ant Financial has led to widespread speculation that the ruling Chinese Communist Party (CCP) was likely to nationalise these companies in case of discrepancies. While this will deal a big blow to the country’s business sentiments especially the private sector, many in India have raised concerns too as several domestic companies including the digital payments firm Paytm and food delivery major Zomato have substantial financial backing from Ant Financial.
In case Ma’s companies are nationalised—implying that the Chinese government takes control – the Chinese government would have also get direct access to the Indian business houses that have financial backing of Alibaba or Ant Financial.
“This is something to be deliberated upon as Jack Ma promoted companies have picked up substantial stake in many Indian companies. The nationalisation of Alibaba and Ant Financial are nationalised would give the Chinese government direct control in these Indian companies, many of which are data-driven,” an analyst on condition of
anonymity said.
Experts said that the Narendra Modi government may have to address this. Jack Ma owned companies have not only invested in Indian business houses but have stakes in firms across the world.
<strong>The move is a dampener</strong>
The move to launch a thorough investigation into Alibaba and Ant Financial could also act as a deterrent for many private as well as foreign companies to set up shop in China, even as the dragon ranked 31 in the ease of doing business index by the World Bank, analysts said. This would lead to slowing of investments at a time when Chinese
president Xi Jinping would hope for an increase in private sector expenditure to create jobs and livelihood.
“The move to launch investigations against Jack Ma owned companies may not have any direct bearing on global companies immediately as this is related more to the local Chinese businesses but this does create an environment of uncertainty and mistrust,” a senior executive engaged with a multinational company which also has presence in China, said.
The executive added that the clampdown on Alibaba and Ant Financial also shows that the government “is in total control and can act anytime.”
“CCP general secretary Xi Jinping unveiled plans at the end of October to move China to a state-controlled, ‘circular’ economy based on domestic demand, and away from the export-based model that has fuelled rapid growth since 1979, when late supreme leader Deng Xiaoping ushered in four decades of market-based economic policy,” Radio Free Asia noted in December.
“The stand-off, which has sparked rampant speculation about Mr Ma’s whereabouts, could become a defining moment for the future of private business in Mr Xi’s China,” the Financial Times wrote.
“The results of the showdown will say a lot about the sort of economy that China is developing. If Ant and Alibaba are crippled by regulators—or its founder is personally targeted by investigators—it will go down as a landmark moment in the party’s fickle relationship with China’s private sector even though Mr Ma is ironically a party
member himself,” the newspaper added.
Shakti Sinha, director, Atal Bihari Vajpayee Institute of Policy Research and International Studies, MS University said that Jack Ma episode would serve as a message to the business community.
"Though China has created a conducive business environment, it essentially needs managers and not entrepreneurs. If this can happen to Ma, who is no ordinary person, then this can happen to anybody. The larger message for businesses is that they need to exercise extreme caution,” Sinha told IndiaNarrative earlier.
<strong>The curious case of Jack Ma</strong>
Ma, the high profile business tycoon and once a poster boy of China, has been missing since October after he came down heavily on the regulators and highlighted the need to alter the financial regulation norms. He also said that the Chinese banks displayed "pawnshop mentality." Not only was the scheduled Ant Group’s much awaited and hyped initial public offering was stalled abruptly, an investigation into the dealings and financials of the companies are also underway.
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