No longer the Jack Ma we once knew
Previously seen eating sushi in Japan, sailing on a yacht in Spain and watching a Muay Thai match in Thailand, Jack Ma was thought to be preparing to retire. But his sudden return to his base in Hangzhou has sparked people's interest in what the move signals.
The news of Ma's return to China came out on 27 March. The next day, Alibaba Group announced that it will split into six major subsidiaries, with each raising its own funds and seeking its own opportunities for listing, in the largest restructuring of Alibaba in its 24-year history.
According to Bloomberg, this move will enable each of Alibaba's businesses, including e-commerce, media and cloud computing, to operate more independently, laying the foundation for future spin-offs and listings.
The Chinese government had previously criticised the monopolistic behaviour and disorderly expansion of capital in the internet platform economy sector. Reports suggest that Alibaba's restructuring means that the company's duties and decision-making power will be decentralised, a move that is likely to gain support from government regulatory agencies.
According to a letter to all employees from Alibaba Group Chairman and CEO Zhang Yong, Zhang will serve as CEO of Alibaba Cloud Intelligence Group, and the Taobao Tmall Commerce Group will be headed by Alibaba Group co-founder Trudy Dai. The Local Services Group will be headed by Yu Yongfu, while Wan Lin will continue to head Cainiao Smart Logistics Group. The Global Digital Commerce Group and the Digital Media and Entertainment Group will be headed by Jiang Fan and Fan Luyuan respectively.
Brief market boost with Jack Ma's return
It is unclear whether Ma's return to China is related to this major announcement. He was recently "caught in the wild" by netizens while travelling through the Wenyi Road Tunnel in Hangzhou, Zhejiang. Chinastarmarket.cn later reported Ma's return on 27 March.
A video uploaded by Chinese netizens shows Ma talking as he sits in a Toyota Coaster with Zhang Yong and Alibaba's executive vice-president Shao Xiaofeng.
As many netizens debated the authenticity of the video, Hong Kong media outlet South China Morning Post, which is owned by Alibaba, confirmed on Monday afternoon that Ma had returned to China several days earlier. According to the report, Ma met with teachers and students as he visited the Hangzhou Yungu School, which he founded in 2017. He also briefly stopped in Hong Kong to meet with friends and visit the Art Basel fair before coming back to China.
Alibaba-funded Yungu Education also uploaded a video and an article on their WeChat public account, featuring Ma having a discussion with school leaders on the challenges and opportunities that new technological changes such as ChatGPT and artificial intelligence (AI) bring to education.
Ma said that technologies such as ChatGPT have brought challenges to education, but this is just the beginning of the AI era. He noted, "We should use artificial intelligence to solve problems, rather than being controlled by it. Although humans cannot match machines in terms of physical and mental abilities, machines only have a 'chip', while humans have a 'heart'."
Ma further said that teaching is his favourite job and he hopes to teach again one day, having previously taught English. According to the Yungu article, Ma made an in-depth tour of the school during his visit.
Yungu School is a private school founded by Alibaba partners, and Ma is one of the seven board members.
... the Chinese government is currently trying to restore confidence in Chinese private enterprises, and investors would naturally be interested in what would entail with Ma's return as he is a representative figure of private enterprises.
While Ma did not go to Alibaba's headquarters and did not announce any business plans, investors were still encouraged by the news of his return to China, which showed in its stock performance. Alibaba's stock price in Hong Kong rose by 5.5% on 27 March, boosting other internet sector companies such as Shanghai Golden Bridge, Insigma Technology and Hundsun Technologies.
It is easy to see why the media rushed to report on Ma's return to China after all his travels: the Chinese government is currently trying to restore confidence in Chinese private enterprises, and investors would naturally be interested in what would entail with Ma's return as he is a representative figure of private enterprises.
Ma's return aimed at placating private enterprises?
After Ma's public criticism of Chinese banks and regulatory agencies at the Bund Forum in Shanghai in 2020, Ant Group's Hong Kong and Shanghai IPOs were halted. Regulatory agencies also investigated Alibaba for alleged monopolistic practices, eventually imposing a heavy penalty of 18.2 billion RMB (US$2.8 billion).
Subsequently, the Chinese government also launched a regulatory crackdown on other private enterprises, from the technology and gaming industries to education and real estate, and tightened control across the board. Meanwhile, the Covid-19 pandemic also dealt a severe blow to private enterprises.
The once-mighty giants saw their stock prices plunge by more than 50%.
This was when Ma also toned down his outspoken personality and gradually faded from the public eye. But over the past year, the Financial Times and South China Morning Post have made several reports on Jack Ma being "spotted" in places such as Japan and Thailand.
Some in the business sector believe that Ma's prolonged stay overseas shows that China's technology industry is still under a cloud of suspicion. A Reuters report on 27 March cited Chinese entrepreneurs and investors as saying that while the Chinese government recently said that it will continue to support the private sector economy, they still see Ma's decision to stay overseas as a factor contributing to the lack of confidence in the China market.
Now, Ma is back in China and has been active in Hangzhou. Many comments and analyses assess that this is reassuring for private enterprises that have been hit hard by regulatory storms and the pandemic, as it may indicate a change in the Chinese government's attitude towards private enterprises.
Zhang Zihua, Chief Investment Officer of Beijing Yunyi Asset Management, told Reuters that Ma's return "boosts the sentiment of the broader platform and internet industry... because that means the new top leadership has been re-examining the position and the importance of the platform companies in China's economic development." He expects that China's previous restrictive policies on platforms and the internet sector will be adjusted.
Some analysts also believe that the Chinese government hopes to restore the confidence of the business community in the Chinese market through Ma's return. Reuters cited five sources with knowledge of the matter that Chinese Premier Li Qiang has been trying to persuade Ma to return to China since the end of last year, including through business associates close to Ma while he was living in Japan.
Whether or not this is true, restoring the confidence of private enterprises is indeed a key task of China's new leadership based on Li's recent statements.
On 13 March, at his first press conference after taking office, Li spoke at length to appease private entrepreneurs, declaring that the Chinese government supports the private sector economy. He stated, "Our commitment in this regard is unequivocal and steadfast."
On 27 March at the China Development Forum in Beijing, Li expressed his gratitude to multinational company executives and other attendees, praising their contributions to China's development.
Even if he chooses to go back to China now, he is an outsider to both Alibaba and Ant Group, and there is no need to read too much into the positive impact of his return.
Jack Ma now an outsider in private enterprise world?
Although many people see Ma's return as a sign of spring for private enterprises, there are also views that he is now an outsider in the private sector after being out of the public eye for two years.
On 27 March, a technology column under Tencent published a commentary stating that since retiring four years ago, Jack Ma has drifted away from Alibaba and towards agriculture and education. Even if he chooses to go back to China now, he is an outsider to both Alibaba and Ant Group, and there is no need to read too much into the positive impact of his return.
Indeed, the news of Ma's return only briefly boosted Alibaba's stock price. After rising 5% at around noon on 27 March, Alibaba's stock price partially lost its gains by the afternoon, and by Monday's close, Alibaba's Hong Kong stock price was slightly down by 0.06%.
Ant Group had mostly weaned itself off Jack Ma. Two months before Ma's return, he gave up control of Ant Group, whose management members also no longer serve as Alibaba partners, cementing the separation from shareholder Alibaba Group.
On the other hand, there are questions over whether Ma's return is directly linked to the Chinese government's easing of regulations on private enterprises. Lu Xiaomeng, director of political risk consultancy Eurasia Group, told The Wall Street Journal that Ma's return to China does not necessarily mean that uncertainty has been fully cleared.
She believes that "Ma's return jibes well with Beijing's economic-recovery narrative... But the [Communist Party's] structural influence over the daily operation of companies entails long-term political risk."
Liu Zongyuan, a researcher at the Council on Foreign Relations, also said that "confidence in the Chinese economy and support [or welcome] for Jack Ma's return are two different things". She believes that Ma's return to China is not the most important thing. Instead, "the most important thing is how his return can [or cannot] enhance confidence".
... this "outsider" who once did not hesitate to talk about the Chinese financial system may no longer be able to represent private enterprises to criticise China's financial regulatory agencies after his return. Even if he can muster his ability to speak freely, the impact of his comments may be limited.
According to Reuters, although the Chinese authorities have sent friendly signals to private enterprises, some companies still complain behind closed doors that the Chinese government lacks new support policies and new regulatory frameworks.
Asia analyst Fraser Howie said that although there are signs that the Chinese government has eased monitoring, the laws and institutions set up to control the private sector have not changed. He said, "It doesn't matter at all to private business because he is already beaten. The state won, Jack has lost control, power, wealth and it's not coming back."
Ma's influence declined and may only be seen as an "outsider" to Alibaba or Ant Group. However, given the attention on his return, people may still be hoping that this icon can play a key role in the private sector. Because in the face of uncertain recovery, private enterprises urgently need reassurance, and Ma, being one of the best-known Chinese entrepreneurs, is the best person to do so.
However, this "outsider" who once did not hesitate to talk about the Chinese financial system may no longer be able to represent private enterprises to criticise China's financial regulatory agencies after his return. Even if he can muster his ability to speak freely, the impact of his comments may be limited.
This article was first published in Lianhe Zaobao as "马云云游各国后回国".