On November 3, 2020, I was thinking that the most significant event that day might be the Chinese government’s decision to cancel the IPO of Jack Ma’s Ant Group Co., and not the U.S. presidential election. Mr. Ma had given a speech in late October in which he very publicly criticized Chinese government regulators. The speech did not go over well, and Ant Group’s IPO was cancelled, reportedly by President Xi Jinping himself. In any case, Donald Trump fairly quickly put my original thought aside. Still, the cancellation of Ant Group’s IPO was, and still is, a big deal.
The matter came up again last week when Jack Ma went to China to talk to a school in Hangzhou, the hometown of Alibaba (another of his companies), and it was announced that Alibaba Group Holding Ltd, the e-commerce empire Mr. Ma built up, was going to split up into six parts. Articles talked about how Alibaba was getting too big to manage and how investors didn’t know how to value a company with so many unrelated businesses (not unlike the conglomerates of the 1970s and 1980s in the United States). The articles said the smaller companies would be more nimble, and growth would be easier. All of which may be true but is irrelevant.
By splitting Alibaba into six parts, Jack Ma is making it smaller – and, more importantly, less powerful. Jack Ma got too big. He got slapped down, as did a lot of other big companies in China. He figured out who was the boss, and he is breaking Alibaba into six parts to show President Xi, and the CCP, that he understands. So now the CCP is letting him back. Because he does help the Chinese economy – as long as he understands who is the ultimate boss.
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1 For example, private tutoring services were shut down, maybe because of a fear that they might get too powerful by becoming too important to rising parents.
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