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The title of the story in the Wall Street Journal on Tuesday is: “Ant Falls in Line as China Tightens Oversight” (behind paywall).
For those who don’t recognize the name, Ant Financial is the financial technology (fintech) arm of the great Communist Chinese company Alibaba, and it is run by Alibaba’s former CEO, billionaire Jack Ma. Last year, Ant Financial was right on the cusp of going public, at an estimated value of $300 Billion. Less than three days before that, the Communist Chinese government put a halt to it, claiming that the company was violating its laws. There was also the issue of the speech Mr. Ma gave, mocking and criticizing the Chinese financial regulators. We all know that Communists don’t have much of a sense of humor. Here is a selection of quotes from the article, describing the new way that Ant Financial will be doing business.
Ant representatives were summoned to a meeting Monday with four regulatory agencies that also included the country’s banking, securities and foreign-exchange overseers, the People’s Bank of China said. It said a “comprehensive, viable rectification plan” for Ant has been formulated under the regulators’ supervision over the past few months.
The directive follows an intense regulatory assault on Mr. Ma’s business empire that began with the suspension of its initial public offering in November.
…Ant, which owns the ubiquitous mobile payment and lifestyle app, Alipay, will have to correct what regulators called unfair competition in its payments business and improve its corporate governance. The Hangzhou-based company will have to reduce the liquidity risks of its investment products and shrink the assets under management of Yu’e Bar, its giant money-market mutual fund. Ant will also be required to break an “information monopoly” on the detailed consumer data it has collected, the central bank said. [this sounds to me like the Chinese government resents that a “private” company has more data on Chinese consumers than it does. Can’t have that.]
…In a statement, Ant said it “will spare no effort in implementing the rectification plan, ensuring that the operation and growth of our financial-related businesses are fully compliant.”
…”We will put our growth proactively within the national strategic context”, Ant said, adding that it will “strive to create societal value.”
…The regulators’ disclosure of Ant’s plan comes shortly after Ant’s sister company, Alibaba Group Holding Ltd., was fined the equivalent of $2.8 billion by China’s antitrust regulator, which accused the e-commerce giant of abusing its dominant market position to the detriment of rivals, merchants, and consumers. In addition to the record penalty, Alibaba agreed to undertake a comprehensive revamp of its operations and ensure its compliance with fair competition rules.
We have known for a while that Xi Jinping has been moving the Communist Chinese economy away from the “capitalist characteristics” initiated by Deng Xiaoping, and back toward the centrally-planned Communist style of economy. Many Communist Chinese companies from diverse industries have gone public on Western stock exchanges, and become very large. Papers like the Wall Street Journal have been slobbering over how wonderful the Chinese economy is, and how their home-grown companies have been expanding worldwide. Sometimes, I think that they lose sight of the incontrovertible fact that China is a Communist Country. This article may possibly open some eyes. Personally, I would never invest in any Chinese company, but I can’t control the mutual funds that do.Published in