- Tram Ho
Bloomberg reported that Chinese authorities have forced Alibaba’s online financial empire Ant Group back to its roots as a provider of financial services. This move is considered by experts to stifle Ant’s growth in the most profitable businesses such as consumer lending or asset management.
A statement from the Central Bank of China said on Sunday that, last week, officials at the agency met with leaders in Ant and talked about “revamping” loans and insurance. and corporate financial management services. Although not directly asking the company to split up, the central bank representative stressed that Ant needed to “understand the need for a complete overhaul of its business” and that they “had to come up with a roadmap. do it as soon as possible. ”
The aforementioned decree clearly shows the serious threats to the expansion of Jack Ma’s online financial empire. Over the past 17 years, Ant has rapidly grown from an e-wallet operation to a financial services ecosystem.
Alibaba’s main businesses include online payment, insurance, lending, and asset management.
Before the government intervenes, Ant is preparing for a record IPO with the expectation to be valued at over $ 300 billion. The Hangzhou-based company now needs to set up a separate financial company to ensure sufficient capital and protection of personal data, the central bank said.
“This is the culmination of a set of rules and directions for Ant’s future work,” said Zhang Xiaoxi, an analyst at Gavekal Dragonomics, a company that says, “I don’t see any clear signs of Ant’s work yet. They are a giant in the financial world and any split scheme needs to be considered with extreme caution. ”
Authorities also criticized Ant for “below average” corporate governance, disregarding regulatory requirements and engaging in arbitrage operations. The central bank said Ant has used its dominance to eliminate competitors, harming the interests of hundreds of millions of consumers.
Last week, China also stepped up surveillance of the “pillar” of billionaire Jack Ma’s empire when it began an investigation into monopoly allegations with Alibaba Group. The company’s shares fell the most in history after the announcement was released.
An unnamed official from the local market regulation watchdog in Zhejiang province said an on-site investigation was conducted in Alibaba on Thursday, according to a local media source. was completed that day.
For its part, Ant said in a statement on Sunday that it would form a special team to create proposals and set a specific timetable for a group overhaul. They are also committed to keeping users and financial partners operational, while increasing risk control.
The whole empire shook violently
The pressure on Jack Ma and his giant empires from the Chinese government is believed to be at the heart of a broader effort to curb the growing influence of emerging Internet giants. floating in the water.
Once hailed as the engine of economic prosperity and a symbol of the country’s technological prowess, empires like Alibaba, Tencent and other tycoons are now under scrutiny after attracting hundreds of millions users and influences almost every aspect of everyday life in China.
In early December, when the government tightened its scrutiny like never before with Ant, a source revealed to Bloomberg that Jack Ma was even asked not to leave the country. Alibaba has seen $ 200 billion in market price evaporate since November, shortly after the news of Ant’s IPO was suspended.
Alibaba shares fell the most in history in the midst of bad news.
Currently, Ant’s top executives are believed to be part of a special force responsible for interacting almost daily with the watchdog. Meanwhile, regulators, including the Insurance Regulatory Commission and the Bank of China, are considering which businesses Ant should give up control to halt the risks it poses. economy. It seems that so far the authorities have not decided whether to establish different lines of activity for Ant, separate online and offline services, or pursue a completely different direction.
“Ant’s growth potential will be limited by focusing again on payments services,” said Shujin Chen, head of financial research at Hong Kong-based Jefferies Financial Group. In mainland China, the online payments industry is now saturated and Ant’s market share has almost reached its limit.
Source : Genk