Why is the Chinese government controlling big technology companies owned by Billionaire Jack Ma?
Everything was fine for Ali Baba's company from the first sale of shares in the Hong Kong and Shanghai stock markets in November 2020 at a cost of US $ 34.4 billion.
But at the last minute, Chinese financial regulators suspended the operation because of "concerns about competition" in the market.
That is, they cut off the electricity, turned off the music, and sent the guests home.
The result was that the authorities demanded restructuring of China's largest trading and digital company, and Jack Ma, who had previously been a symbol of entrepreneurial success in the country, was out of the public eye for several months.
An unexpected decision led to a major international impact. But what perhaps few thought at the time was that it was just the beginning of the government's decision to regulate major technology companies.
President Xi Jinping recently defended his campaign to place more control over companies in the technology sector at a meeting of the Communist Party of China's Communist Party, according to official press reports.
Its goal, said the Chinese leader, is to "prevent the expansion of unconventional capital" technology companies.
He also gave a clear warning: he would intensify his investigations into these companies.
"The implementation of all these principles is absolutely essential to improve the social market economy and promote normal prosperity," Xi said.
The concept of "normal prosperity" has become a new emblem of the government, stating that it is important to redistribute wealth in China and encourage greater competition between companies.
Fallen
Following the suspension of Alibaba's shareholding program, the government imposed restrictions on other technological improvements in various areas such as e-commerce, transportation, software for banking services, video games or online education companies
The largest online trading company, Alibaba (which is also part of the empire founded by Jack Ma) was fined $ 2.8 billion in April, the largest in the country's history, after an investigation revealed that the company "misused its position. major in the market. "
Other dignitaries who have been part of this new wave of government-imposed restrictions are: Tencent (internet conglomerate), Meituan (food distribution), Pinduoduo (online business), Didi (equivalent to Uber), Full Truck Alliance (transportation and distribution) ), Kanzhun (employment), online education companies like Personal Education Services or Training after primary and secondary education.
In three separate public statements, Alibaba, Didi and Meituan have stated that they will cooperate with the authorities.
One of the last known cases was that of the manufacturer of the electric car BYD. The company planned to sell shares of its chip repair unit, but the transaction was suspended due to "investigation by regulatory authorities."
Although each case is different, the arguments used by Beijing to justify its decisions are twofold: control the monopoly and "protect the security" of the information user.
In this context, a law was recently passed that may require the suspension or cancellation of programs that are "illegal" dealing with "sensitive" personal data
What are the plans for 2025?
The Chinese government has unveiled a five-year plan outlining strict rules throughout its economy.
The BBC's Singapore Business correspondent Peter Hoskins explains that the new law goes far beyond the technology sector, including things like national security and trade monopoly.
The Beijing Plan states in a document that laws will be strengthened in "key areas" such as science and technological innovation, culture and education.
According to the government, this new approach will put in place new regulations that will include areas such as "Internet finance, counterfeit intelligence, data and computer technology."
China seems to be moving very fast, at least from offensive controls against tech industry leaders in recent months, it has been noted.
