China raps its most successful retailer’s knuckles – for honesty

Jack Ma, the world’s most successful retailer and possibly China’s most successful businessperson ever, was brutally shown on November 4 how the country really works.

The Shanghai Stock Exchange said in a statement that Ma, who  founded Alibaba, had been called in for “supervisory interviews” over his planned $37 bn flotation  of Ant Group. The summons followed his public complaint that the Basel Rules, the world’s international banking supervision framework, “are like an old people’s club . . . we can’t use yesterday’s methods to regulate the future”

“This material event may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements,” the Shanghai Exchange said, “Our exchange has decided to postpone the listing of your company.”

The instruction is thought by many to have come from the very top of the Chinese government, potentially from President Xi Jinping himself.

Though the exchange cited “other major issues”, including changes in “the financial technology regulatory environment”, Ma’#s real offence seems to be using the language of almost all Western financial managers wanting to get quoted in a country where only the government decides who gets publicised.

The decision slows down the growth of Ant, widely expected to have achieved a valuation of $300 bn:  about the same as JP Morgan Chase. Ant had taken just 16 years to develop from a payments app invented by Ma’s Alibaba platform.

While Western corporate strategists fantasise about digital retailers dominating the universe, Ma really has managed to create a financial outcrop of his retail business. Ant had about half of all China’s third-party payments market in the first quarter of 2020.

Westerners fear its arrival on their turf, while China’s government is happy to trim its wings if it wants to get too big. The lesson seems clear: no-one in China, except Xi, is too big to be told to fail.