Alibaba founder Jack Ma took on Chinese state leaders and lost. Leading his dismantling is the president of the regulator who has seen other fintechs go under in China.
Jack Ma has tangled with opponents in China who are too powerful even for a tech billionaire and well-connected entrepreneur. They stopped Ant Group's already approved IPO last fall and Ma disappeared from the scene for months after breaking the camel’s back by criticizing Chinese financial regulation and state-owned banks.
Ma's criticism came directly at one man in particular: Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission (CBIRC) and former head of China Construction Bank (CCB), the largest state-owned financial institution in the Middle Kingdom.
Peer-to-peer lending in China is dead
The «Financial Times» (behind paywall) describes Guo as the man who brought down Ma and an extension of President Xi Jinping who distrusts the private business sector because it poses a threat to the power of the Chinese Communist Party.
The distrust also applies to the once flourishing fintech industry in China, especially since it allows money to flow outside of state control. Peer-to-peer lending, once booming in China, is now virtually nonexistent. Guo is responsible for imposing so many regulatory burdens on this sector, which ultimately led to its rapid decline.
Never Used a Fintech Product Before
Guo is generally a skeptic of China's digital finance revolution and said at a 2017 press conference that he had never used a fintech product. The business model in place and initially signed off for listing would have allowed Ant to apply less stringent regulatory rules than the powerful state-owned banks.
This poses a fundamental conflict because it would have allowed Ant to dictate its terms to the state. But now the state wants to impose its rules on the fintech, which would have raised over $35 billion with its IPO. For example, the payment business is to be spun off because it allegedly holds a dominant position in the market.
Jack Ma Today: A No-Name
Around 700 million people in China and more than 80 million traders use Alipay regularly. Too risky for Guo, who wants to prevent fintechs from becoming «too big to fail» – a systemic risk to China's economy. Furthermore, the regulator criticized the profiteering of fintechs like Ant, and that they prevent fair competition.
Ma's dismantling is taking place comprehensively. The «Shanghai Securities News», which belongs to the state news agency «Xinhua», published a list of the most renowned Chinese entrepreneurs and tech pioneers and Ma's name was nowhere to be found.
