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China's Business Crackdown: The Rise and Fall of Jack Ma

Tuesday, August 02, 2022 03:14 PM | Kyle Depontes
China's Business Crackdown: The Rise and Fall of Jack Ma

Tensions have risen in China thanks to slumping employment numbers and Covid outbreaks of the past few months - all of which have nearly pushed the Chinese economy into a contraction. On July 28, members of China's Politburo, the country’s top decision-making body, met to discuss a plan to tackle the outstanding problems.

While a report by Bloomberg revealed that General Secretary Xi Xinpeng and the other Politburo members were pushing local governments to take action to "stabilize employment and prices,” China's central government locked down more than one million residents in Wuhan as late as last week.

In a statement released by Beijing, Xi also reaffirmed his administration's Zero Covid policy and said China could achieve “the best outcome” for economic growth by adhering to the lockdowns, mass testing, and strict movement curbs that have been hallmarks of life in Shanghai and other major cities for much of this year.

While some have accused Xi of using his zero-Covid policy as a coverup to crack down on political dissension ahead of elections in the second half of 2022, where Xi stands to gain a third five-year term, it's clear that the Communist Party is taking greater steps to increase its control over every aspect of China's economy.

Case in point is Jack Ma, once China's wealthiest person, who was recently sighted touring European restaurants and learning about sustainable agriculture in one of his first trips outside China since he criticized top party leaders in October 2020. The billionaire, who has only been sighted twice in public since his controversial comments, appears to have finally conceded defeat in his battle with the CCP and is ready to relinquish major parts of his business empire.

Who is Jack Ma?

Born in 1966 in Hangzhou, China, Ma attended Hangzhou University and worked as an English teacher before getting involved with the Internet and website development in the mid 90s.

After a brief stint with the department of the Ministry of Foreign Trade and Economic Cooperation, Ma quit and founded Alibaba in 1999 with 17 other team members. The company would go onto become one of the world's largest retailers and e-commerce companies. Alibaba has often been referred to as the "Amazon" of China.

In September 2014, Alibaba raised more than $25 billion in an IPO on the New York Stock Exchange, catapulting Ma's net worth to nearly $22 billion and making him the richest man in China.

Today, Alibaba Group acts as a holding company for nine major subsidiaries:, Taobao Marketplace, Tmall, eTao, Alibaba Cloud Computing, Juhuasuan,,, and Alipay. The company provides a number of major services, including web portals for all stages of the sales cycle, electronic payment services, shopping search engines, and cloud computing.

Although Ma no longer has any official position within Alibaba, his net worth has ballooned to more than $37 billion as of March 2022.

Controversial Comments

Throughout the 2010s, Ma held a number of key positions within Alibaba. In May 2013, he stepped down as the CEO to become Executive Chairman of the corporation.

Although Ma announced in 2018 that he would leave his position as Executive Chairman to focus on philanthropy, dismissing rumors that he was being forced out by the Chinese Communist Party, he was at this time still revered not only within his company, but in the eyes of the Chinese public at large.

Ma seemed to live a charmed life - he played a kung fu master in a 2017 short film filled with Chinese movie stars, he sang with Faye Wong, a Chinese pop star, and painted with Zeng Fanzhi, one of China’s top artists. Many entrepreneurs viewed Ma as a success story and someone to emulate. But that all changed in October 2020, during a speech at the Bund Financial Summit in Shanghai.

At the summit, Ma criticized the Chinese banking system for being too dependent on collateral and urged the development of a revamped credit-system to spur future investment. In one notorious line, Ma said traditional banks were operating "with a pawnshop mentality."

“Today’s banks still have a pawnshop mentality,” said Ma. “Mortgages and guarantees are for a pawnshop, but if we go to extremes in relying solely on collateral assets, certain enterprises will pledge all of their assets, and the pressure [for them] is enormous.”


While Ma's comments may seem benign, they set off a series of central government actions that severely curtailed the e-commerce titan's business empire.

The first sign of trouble occurred in early November, when Chinese regulators killed the IPO for Ant Group, a fintech spinoff of Alibaba that was set to become the biggest initial public offering (IPO) in history at $35 billion.

Ma reportedly lost around $3 billion after the deal went south, and Ant's reputation was further tarnished after company leaders were summoned by central bank authorities and told that Ant’s online lending business would face tighter scrutiny.

In October, Ma officially stepped down from the board of Alibaba, ending his tenure with the company he founded. But then events took a strange turn. Ma was reported missing after he failed to appear as a judge on a talent show he created.

For the next three months, Ma did not appear in any public or private functions, leading to speculation that he was laying low following a Chinese crackdown on his businesses, or that he had simply been disappeared along with the dozens of other high-profile Chinese who had run afoul of the Communist party.

Finally, on January 20, the 56 year old was seen on a video meeting interacting with 100 local teachers, relieving fears that he had been killed by authorities.

A Losing Battle

Since that time, Ma has faced increasing scrutiny from the Chinese government and has only been spotted in public twice, which is why his recent visit to the Netherlands has caused such a stir in the media.

The news comes at the same timeas Ma's announcement that he will sever ties with Ant Group. Although Ma does not hold an official position within the company, he does own just over 50% of the company's shares, which will have to be divested or transferred to other executives.

While the exit of a founder is usually bad news for an early-stage company, it's widely agreed upon that Ma's exit will smooth the way for Ant's future IPO. With Ma in Beijing's crosshairs, progress toward a stock listing would have been a an arduous process.

Uncoupling from China

With his influence on Alibaba and Ant over, the business tycoon is now mostly free to sail around the world on his superyacht and enjoy his fortune, but many wonder if he would rather be back home managing the companies he founded.

However Ma's story ends up, the Chinese government's actions make it clear that any business or entrepreneur operating in the country can be crushed at a moment's notice.

But the CCP's actions have come at a price. Hundreds of major companies are now exiting Chinese markets, with Airbnb and Jeep recently announcing they are moving existing operations out of the country.

Citi's Asia macro team also recently travelled to London and found a “surprisingly low level” of investor interest in Chinese assets.

Fred Hu, founder of the investment firm Primavera Capital Group in Hong Kong seemed to reflect the broader market sentiment when he said, "You can either have absolute control or you can have a dynamic, innovative economy. But it’s doubtful you can have both.”

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