Jack Ma‘s gaffe that China does not have a financial system touched a nerve with the Chinese Communist Party, causing the Ant Group’s IPO to hit the rocks and launching a series of anti-monopoly investigations against Ali (9988) (see table), one of the major black swan events of 2020. Many commentators have compared Ma’s fall to that of China’s former richest man Wang Jianlin, who was “punished” for his differences with the Communist Party leader’s economic philosophy and suffered severe damage to his family and career.
Wang Jianlin, chairman of Wanda Group, first overtook Li Ka-shing as the world’s richest Chinese in 2015 and has been on the Hurun 100 list of China’s richest people for three times, making him an instant sensation. At its peak, he owned more than 200 Wanda Plazas, 80 five-star hotels, 1,300 theaters worldwide, a British yacht company and two U.S. movie studios, including AMC, the nation’s largest theater chain.
He has been acquiring overseas assets since 2012, and according to insider media, his overseas investments amounted to 250 billion yuan in five years until 2017, in categories such as sports, entertainment and real estate. As his fortune rose, he boasted in public: “My own money, where I like to invest it is not in the hands of others!” and “Wanda into the industry, regardless of state-owned enterprises, central enterprises, have no chance to be the boss”, all touching the central nerve.
In 2017, the mainland targeted Wanda when the China Banking Regulatory Commission (now known as the China Banking and Insurance Regulatory Commission) took the initiative to ask banks to check Wanda’s credit and risk, and issued new guidelines to restrict overseas investments in real estate, hotels, cinemas, entertainment and sports clubs, resulting in strict control over the financing of six of Wanda’s overseas projects, with official media questioning Wanda’s “capital walk” and rumors circulating in China that major banks had suspended loans to Wanda’s overseas investments. The rumors spread in China that major banks had suspended loans for Wanda’s overseas investments.
Since then, Wang Jianlin has changed his tune, saying he wants to respond to the country’s call to put major investments in the country and sell off a large number of assets, including a 91% stake in its 13 cultural tourism city projects and 76 hotels for RMB 63.1 billion; he announced at Wanda’s annual meeting the following year that the group would gradually pay off all its overseas interest-bearing liabilities, saying that “selling half of its overseas assets would pay off all its debts.” Together with the sale of Wanda’s HK$2.1 billion Chicago property project in July this year, Wanda has now sold all of its overseas property projects.
Under Wuhan pneumonia, Wanda is still facing heavy debts, in addition to its own domestic commercial real estate hit, after the increase in online shopping penetration; its acquisition of the largest U.S. cinema chain AMC, affected by the epidemic repeatedly rumored bankruptcy, there are rumors that Wang Jianlin peak debt reached 400 billion yuan, Wanda film in the first half of the year even recorded a net loss of 1.5 billion yuan, production department nearly shut down.
His wealth has also shrunk significantly, falling to 5th place in the 2017 Hurun list of 100 richest people, with his fortune shrinking by $60 billion to $155 billion, and further shrinking by $10 billion to $110 billion this year, falling from 9th place last year to 30th. And Wang Jianlin since the central government on the beginning, turning a low profile, only to have his son Wang Sicong occasionally appear in the entertainment news.
Comment: Jack Ma is a fish out of water
In the end, Ma Yun, who is purely spirited, will repeat the mistake of Wang Jianlin, who is regarded as a “capitalist”? Current affairs commentator Liu Ruishao said, Ma Yun has joined the Communist Party in early years, last year even resigned as chairman of the board of directors of Ali, and reportedly Ma Yun last month even proposed to turn over part of the Ant Group business to the central government, but the central government is still not comfortable with him, continue to file a case to investigate Alibaba, it is estimated that there are other considerations behind the central government, such as worry about Ma Yun or have links with other political figures, so the central government intends to thwart Ma Yun, to ensure that he can not be linked to other political figures. The central government intends to hit Ma hard to ensure that he can not be linked to other politicians.
Asked what remedies Ma can take, Liu Ruishao said, since the central government chose to take legal action publicly, I believe Ali’s alleged monopoly behavior will definitely be incriminated, but only the degree of severity of the difference. He said that the outside world is now no way to deduce the official and Ma Yun discuss the conditions, but it is estimated that the central government has put forward a number of requirements to Ma Yun, depending on how much Ma Yun is willing to make concessions, compromise, but he said Ma Yun basically no bargaining space, described as “let people fish and meat”.
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