Jack Ma is Xi’s Khodorskovsky and he will be made an example of

He should leave China now or risk his fortune and more

Jack Ma made a controversial speech on Oct 24

Jack Ma’s relentless drive got him to the spot of China’s 2nd richest man. His Alibaba empire, from which he is officially retired, reigns on the e-commerce and the payments sector in China and he had his sights on more with the Ant IPO. 

The Ant IPO was canceled, on November 3, the day of the US election. We’ve since learned that:

The object of Xi’s displeasure ? An Oct 24 speech in which Ma criticized every level of financial regulation worldwide, including China’s, and where he said that Chinese banks “operated with a pawn shop mentality”.

With this heavy handed intervention, Xi and the CCP are sending 2 signals at once:

  • the Chinese Communist Party remains the ultimate arbiter in all matters, public or private

  • Brash and outspoken is NOT the look we’re after in our oligarchs

Mikhail Khodorkovsky stands behind steel bars in a court in Moscow in this August 3rd, 2004 file photograph

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In 2003, Mikhail Khodorskovksy, then Russia’s richest man as chairman of the Yukos oil giant, spoke up in public about corruption in Russia. A few short months later he was arrested, his assets frozen and after 2 trials, spent close to 10 years in prison, including in the gulag. His crimes ? Mistaking Russia for a country ruled by law. As aptly put by Julia Ioffe in the New Yorker:

“Khodorkovsky didn’t understand the signals the Kremlin was sending: show fealty or leave. On February 20, 2003, at a business round-table with Putin, Khodorkovsky pointed to a questionable deal that had caught his attention as an oilman. He implied that Igor Sechin, an old friend of Putin’s who was also in the K.G.B., had enriched himself through the deal. When Khodorkovsky asked Putin to look into it, Putin snapped, “Yukos has excess reserves, and how did it get them?” The message was clear: you got yours, now stay out of the way as we get ours.”

Jack Ma is making the same mistake, misreading the signals and overestimating the Chinese Communist Party (CCP)’s appetite for change at its expense. China, like Russia, is NOT governed by the rule of law but rather by raw political power, willing to bend all rules and regulations to fit its needs. 

Ma should also ponder the fate of a less well known “disappeared” tycoon in 2017, who was grabbed in Hong Kong and whose empire was smashed to pieces earlier this year:

Xiao Jianhua was once a trusted financier to China’s ruling elite who came to represent an era of unbridled capitalism.

But three years ago, he was snatched from a Hong Kong luxury hotel and disappeared into Chinese custody. Now, the empire he built is being dismantled by the authorities in Beijing, as China sends a strong message that its era of debt-fueled excess is over.

On Friday, two regulators announced coordinated moves to seize companies worth hundreds of billions of dollars tied to Tomorrow Group, the umbrella company that Mr. Xiao controlled for more than two decades.”

Jack Ma is everything Xi Jinping cannot countenance: respected in the West, independent-minded and a true entrepreneur, not a party lackey. Ma should reflect on his billionaire’s countryman treatment and never forget Xi is a student of Putinism. Xi has spectacularly failed to properly manage the COVID-19 epidemic, whatever Chinese state media parrots. 

It’s also clear Xi is failing to rein in his rival clan’s, the Shanghai clique’s power. Xi thought that jailing a top member of the clique, Bo Xilai, would be enough to scare all of them into submission. He needs another example, another victim, and it could very well be Jack Ma. 

It can be argued that Russia is not China, that Mikhail Khodorskovsky was in fact a serial white collar criminal and Jack Ma is a real entrepreneur. All this is true. What’s also true is that China is in a difficult position and Xi needs to project power. Scuttling Ant’s IPO is the 1st step in what he could do to Ma to signal to all the other billionaires that the CCP remains the supreme political and economic steering committee in the world’s largest nation.