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Jack Ma, the founder of the Alibaba platform, is not likely to have a good holiday season. On December 24, 2020, the Chinese authorities launched an investigation against the e-commerce giant for “suspicion of monopolistic practices”. This announcement caused an 8% drop in Alibaba shares on the Hong Kong Stock Exchange.
This investigation, carried out by the State Administration for Market Regulation, prompted market analysts to react. “There is clearly an escalation of coordinated efforts to hinder Jack Ma’s empire, which symbolized the new Chinese entities too big to fail” observed Dong Ximiao, a specialist from the Institute of Finance of Zhongguancun, the counterpart of Silicon Valley in China.
Indeed, the authorities seem to make it a point of honor to control the activities of the group, which last week was fined 500,000 yuan – or 62,000 euros – for failing to report an acquisition. While the authorities this time did not specify the reason for the investigation, apart from a mysterious “exclusivity agreement”, Alibaba “promised to actively cooperate with the regulators in the investigation.”
In addition to the investigation against the parent company, the regulators announced that they have contacted Ant Group, Alibaba’s sister company in which Jack Ma is the main shareholder, for “supervision” issues. Just like Alibaba, the subsidiary said in a statement that it would “quickly study the requests of the regulatory authorities and comply strictly”.
Last November, the Chinese authorities had already suspended Ant Group’s IPO. However, the company’s IPO promised to be a world record, with a booty of 34.4 billion dollars.
These repeated sanctions caused astonishment and provoked numerous comments. “The subliminal political message is that no company or individual has the right to challenge the Communist Party, no matter how big or small,” Richard McGregor, a journalist from the Lowy Institute in Sydney, told AFP.
The Chinese government is indeed worried about the incursion of technology groups into the online lending sector, where they are freeing themselves from certain prudential rules imposed on state-owned banks. At a state council meeting last week chaired by Xi Jinping, the leaders called for “strong opposition to monopolies.”
These concerns were echoed by the media, which closely monitors the financial actions of Alibaba and its rival Tencent. The People’s Daily, an organ of the Communist Party of China, wrote on December 24 that the investigation against Alibaba “is an important step for our country to strengthen anti-monopolistic supervision in the Internet sector and to promote the long-term healthy development of the digital economy”.
Read also > E-COMMERCE : HOW ALIBABA IMPOSES OUR LUXURY BRANDS IN CHINA
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Jack Ma, the founder of the Alibaba platform, is not likely to have a good holiday season. On December 24, 2020, the Chinese authorities launched an investigation against the e-commerce giant for “suspicion of monopolistic practices”. This announcement caused an 8% drop in Alibaba’s shares on the Hong Kong Stock Exchange.
This investigation, carried out by the State Administration for Market Regulation, prompted market analysts to react. “There is clearly an escalation of coordinated efforts to hinder Jack Ma’s empire, which symbolized the new Chinese entities too big to fail” observed Dong Ximiao, a specialist from the Institute of Finance of Zhongguancun, the counterpart of Silicon Valley in China.
Indeed, the authorities seem to make it a point of honor to control the activities of the group, which last week was fined 500,000 yuan – or 62,000 euros – for failing to report an acquisition. While the authorities this time did not specify the reason for the investigation, apart from a mysterious “exclusivity agreement”, Alibaba “promised to actively cooperate with the regulators in the investigation.”
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Jack Ma, the founder of the Alibaba platform, is not likely to have a good holiday season. On December 24, 2020, the Chinese authorities launched an investigation against the e-commerce giant for “suspicion of monopolistic practices”. This announcement caused an 8% drop in Alibaba’s shares on the Hong Kong Stock Exchange.
This investigation, carried out by the State Administration for Market Regulation, prompted market analysts to react. “There is clearly an escalation of coordinated efforts to hinder Jack Ma’s empire, which symbolized the new Chinese entities too big to fail” observed Dong Ximiao, a specialist from the Institute of Finance of Zhongguancun, the counterpart of Silicon Valley in China.
Indeed, the authorities seem to make it a point of honor to control the activities of the group, which last week was fined 500,000 yuan – or 62,000 euros – for failing to report an acquisition. While the authorities this time did not specify the reason for the investigation, apart from a mysterious “exclusivity agreement”, Alibaba “promised to actively cooperate with the regulators in the investigation.”
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