Chinese e-commerce giant Alibaba suddenly became a target for the Communist Party in a matter of weeks.
A leader in online sales on the Internet, the company founded by Jack Ma has now come under scrutiny by the Chinese Communist Party. At issue: Beijing suspects “monopoly practices”.
A version that Jack Ma declined, after the stock fell 8% in one month.
Much weightier for the company was when the Chinese authorities cancelled the launch on the stock market of a subsidiary of Alibaba earlier this year, an entry on the markets predicted as a historical record at $33.4 billion.
Would the Chinese government do anything to dismantle the e-commerce giant?
So-called “monopolistic” practices
In the e-commerce industry, Alibaba and Amazon are the industry leaders. One Chinese, the other American.
Alibaba founder and CEO Jack Ma last week denounced restrictive measures that could put his business at risk.
On December 24th, the Chinese government announced that it will conduct an investigation for “monopoly practices”, aimed “more particularly at the prohibition for sellers on Alibaba platforms to do business with other e-commerce sites”, reports the Geek Journal.
— Bloomberg Markets (@markets) December 28, 2020
The body of the Chinese Communist Party wants, among other things, to establish so-called rules of “good conduct”, in particular to prevent the sale of products “at prices below their cost, in order to distance the competition or to seek a position, monopoly”, reports the Chinese Communist Party’s newspaper, the South China Morning Post.
A declined IPO
This bad news comes just two months after the Chinese government canceled at the last minute the IPO of Ant Group, a subsidiary of Alibaba.
Ant Group’s IPO “was shaping up to be a world record, estimated at $ 34.4 billion (EUR 27.4 billion). In a press release, Ant Group said it would “quickly study the regulatory authorities’ requests and strictly comply with them,” published Le Point.
Since his last public address at a public dinner where Jack Ma criticized these regulations, he has not been seen again.
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Jack Ma’s fortune crumbles
The climax of this thorny episode for Alibaba: the fortune of its chairman, Jack Ma, collapsed by $3.6 billion, Forbes reports, on December 24, the day the investigation was announced.
The company’s shares in Hong Kong fell 8.1%, compared to 13.3% on the NASDAQ.
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