Beijing continues to put heavy pressure on Jack Ma, this time through a warning sent by the central bank to Annette Group, Alibaba-owned fintech giant, which is responding with a 7.1% fall in Hong Kong.
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The bank (People’s Bank of China) summoned Annette Group executives over the weekend for a reprimand call in which it ordered the correction of the material failures in the company’s conduct. According to a statement issued by the regulator, the bank required the company to present a plan that includes a schedule for implementing the required amendments – in the field of credit, insurance, and asset management services.
The regulator noted in a statement that Ant Group is not operating in the required mechanism of corporate governance, violating the regulator’s requirements and exploiting its power to harm the competition and interests of consumers.
Last Thursday, Alibaba shares fell 8.1% in Hong Kong and later 13.3% on Wall Street after Beijing announced the opening of an investigation against the company, alleging conduct monopolyIstic. At the center of the investigation is the practice that requires merchants to choose one of the platforms on which they sell their wares – “to choose one of the two”. According to Alibaba rules, the traders in its platform are required to sign an exclusivity package with it, in a way that prevents them from operating and selling on the platform of a competing company.
Already on the day of the announcement of the investigation, it was reported in the media that the regulators plan to meet later with the management of Annette Group, the largest fintech company in the world.
The decision by the Chinese authorities to curb the Chinese trade giant was made public in early November this year, following the surprise announcement of the cancellation of Annette Group’s planned huge IPO, which was to take place simultaneously in Hong Kong and Shanghai.
A few days before the IPO, Jack Ma was summoned to meetings with Chinese regulators, which were in fact warning and reprimand calls. Representatives of the government made it clear to Ma, among other things, that they intend to introduce severe means of supervision over Annette Group, similar to the customary supervision of banks in China.
Chinese regulators have expressed concern that the company’s growing power will excessively affect the entire financial system (Lant has about 1.3 billion users, most of them in China). Although it is not known exactly what was said at the said meetings, the message to Ma was clear, and he was forced to announce a “freeze on the issue” and postpone it to a later date – so far no new deadline has been announced.
The next stage came a few days later. On November 10 this year, China announced its intention to adopt new regulations aimed at curbing the power of major Internet and fintech companies, including Alibaba, its Annette Group, major competitors Tencent and JD.com, and other groups.
The new 22-page bill was published by the State Committee for Market Regulation in the field of technology.