The disappearance of Jack Ma

Why the Party had to take down China's most popular entrepreneur

Where is Jack Ma? 

The founder of Alibaba and poster-boy of Chinese business continues to be missing months after making a speech deemed critical of the ruling Communist regime. Whilst sources close to the matter deny that he is being held against his will, what is certain is that Ma has tarnished his own status and reputation within China, with what maybe the most expensive speech in history.

In October last year Jack was on the verge of IPO’ing his latest venture, Ant Financial, a digital payments company. The IPO was highly anticipated, and expected to be the biggest listing of all time – not a bad achievement for someone already amongst the richest of the world.

Then, Jack gave the speech that changed his life.

The setting was the Shanghai Bund Finance Summit a few days before Ant’s IPO. “I’m basically retired at this point”, said Jack to the assembled executives, “So I thought I'd speak freely”. He certainly did. 

Ma used the platform to launch a series of astonishing broadsides against the current Chinese financial and business environment. In particular, he criticized the “lack of a financial system”, pointing out problems with unscrupulous Chinese companies that take on more and more debt, and banks that demand collateral like a pawnshop. 

He also hammered China’s ability to innovate without fear, as “to make risk-free innovation is to stifle innovation”.

Both of these threads have created enemies. President Xi has publicly stated the importance of innovation to the future economic well-being of China, and indeed it is one of the foundational pillars of the new Dual Circulation strategy. Xi being told by China’s number-one global entrepreneur that the system Xi built is not going to achieve the innovation that Xi wants was never going to go down well.

The criticism of the banking and financial system will have angered those within it, but this is perhaps missing the point. As Alexander Neill, my colleague at MetisAsia and noted China watcher points out, many will agree with his sentiments – indeed, what Ma said has been common currency in the talking shops of China for a number of years now – but “the Communist Party doesn’t like criticism that doesn’t spring from within.” For an entrepreneur to loudly announce the need to reform is very much a no-no.

What has happened to Jack since?

First, the $37 billion Ant IPO was cancelled – apparently on Xi’s personal orders – but that’s not all that Ma has lost. Bloomberg reports that over the last few months his wealth has dwindled by $11 billion, thanks to the increased scrutiny in his business holdings that the speech ignited. 

Second, Jack has disappeared.

There are reports that Ma has been detained by the authorities, but that is questionable, says Neill. “What is more likely is that someone from China’s hierarchy told him to calm down, and as such he’s hunkered down somewhere, pondering his next move.” 

There is also a chance that Ma’s tax and accounting records are now under enhanced scrutiny by the Chinese authorities as a result of his Shanghai speech. 

What is certain is that the campaign against Ma hasn’t yet concluded. An anti-trust probe into accusations that Alibaba is guilty of anti-competitive practices has been launched, and such is its sensitivity that the Chinese media has been ordered to censor news of the probe into Alibaba, according to reports.

Whilst this is terrible for Jack and Alibaba’s shareholders, the good news is that this is probably not the start of a Putin-style crackdown on the oligarchs. A leftist move against the entrepreneurs would damage the innovation economy that Xi has put so much store in. In addition, such a move would probably be signaled in one of the official media outlets, like Quishi, and none has been forthcoming, Neill suggested.

This does not mean that tycoons are a protected species. As Ma found out, action will be taken against you in some form or another if you cross the line, however powerful you are. 

The other big scalp in recent months has been the real estate tycoon Ren Zhiqiang, known as “Big Cannon Ren” by his 37 million followers on social media. Ren vanished just weeks after calling President Xi Jinping a "clown" over his handling of the COVID-19 outbreak. He resurfaced months later to be given an 18 year jail sentence after being found guilty in a Beijing court of corruption, bribery and embezzlement of public funds.

More clear cut was the case against Lai Xiaomin, formerly China’s top asset manager. Officials investigating allegations of sleaze and corruption discovered that he had over a hundred mistresses, many of whom he “employed” in the company, and when they raided his homes they found three tons of mouldy, ill-gotten cash. Lai was eventually sentenced to death for accepting $277 million in bribes.

President Xi and the Communist Party recognize the importance of the private sector in achieving their stated aim of becoming a (or the) world power by the centenary of the founding of the People’s Republic in 2049. They also know that one person – with the possible exception of Xi himself – can never be bigger than the Party. That message has now been hammered home. As for Jack, expect to see Mr Ma emerge at some point. Don’t, however, expect to hear him make another speech any day soon.