Welcome to the China Insider podcast presented by EqualOcean, I am your host Yuan. Today I'm here to talk about Jack Ma, China's most famous entrepreneur. When will he return to his hometown Hangzhou, China?
A photo of Jack Ma meeting the Morley family in Australia on February 19th went viral in China, stirring up speculation about Jack Ma's return to his hometown of Hangzhou. The Morley family played an instrumental role in Jack Ma's life, having met him in 1980 when he was just 15 years old and practicing English at the West Lake in Hangzhou. Ma went on to visit the Morleys in Australia in 1985, which completely transformed his perspective of the world. This experience undoubtedly played a role in Ma's later success in founding the Alibaba Group. To show his gratitude, Jack Ma donated USD 26 million in 2017 to establish "The Ma & Morley Scholarship Program" at the University of Newcastle, Australia.
As Jack Ma's recent activities spark discussions on his potential return to mainland China, the timing couldn't be more interesting with China's "Two Sessions" annual political meetings on the horizon and a new central government about to be formed. But when is the right time for Jack Ma to return?
According to some media in China, Ma's recent meeting with the Morley family in Australia highlights his ability to repay kindness, earning him positive comments online. As someone who cherishes his reputation, influenced by the spirit of chivalry in Chinese martial arts novels, Ma giving up his material wealth may not be a big problem, but bearing a bad reputation he should be difficult to accept. It's worth noting that in January 2023, the voting structure of the Ant Group was adjusted, removing Jack Ma as its actual controller, which could indicate that Jack Ma is not too concerned about his personal interests. However, to ensure a smooth transition back to China, a clear understanding of what Ma can and cannot do upon his return is necessary.
For over 2,000 years, China's feudal society has had a strict social hierarchy, with four classes of people: "Shi, Nong, Gong, Shang" (scholars, peasants, craftsmen, merchants), with merchants being at the bottom of the list. This view has persisted to modern times, with the belief that wealthy merchants often seek political benefits for self-preservation and the pursuit of greater profits through bribing government officials. This led to corruption and public discontent, which feudal dynasties have been defensive-minded towards, causing many wealthy merchants to meet a disastrous end.
However, Jack Ma and Alibaba have made significant contributions to China's development and are recognized by both the government and the public. In 2018, Ma was selected as one of the 100 outstanding entrepreneurs in China recognized by the government. But despite Alibaba's success, it has faced criticism for various issues such as Alibaba's e-commerce business Tmall forcing sellers to "Er Xuan Yi " (choose one out of two), Alibaba's investment department coercing startups to accept its investment, and Alibaba spending a lot of money on PR to smear its competitors. While Jack Ma may not be aware of these issues, they do exist.
During my visit to Hangzhou in October 2018, I met with a friend who worked in Alibaba's PR department. He was quite frank with me, saying that in Hangzhou, there's nothing Alibaba can't do. It's no secret that in China, building strong relationships with various parties is key to growing a successful business. This is something that Jack Ma is well-versed in, and it's one of the reasons why Alibaba has become the giant it is today. However, as the company grew, some of those relationships became a burden, and there have been instances of unclear official-business relationships. For example, in August 2021, Zhou Jiangyong, the Communist Party secretary of Hangzhou was arrested, and it's widely believed that he and Alibaba have close ties. In fact, Ant Group, the company founded by Jack Ma, had invested in Zhou Jiangyong's brother's company.
It's worth noting that historically, China has been a society built on Guanxi, a term used in Chinese culture to describe an individual's social network of mutually beneficial personal and business relationships. In order to build a successful company, one must establish mutually beneficial agreements with various stakeholders, including local governments. Jack Ma's ability to handle Guanxi has undoubtedly played a crucial role in Alibaba's success. However, as we've seen with Jack Ma and other successful entrepreneurs, such as the recently investigated founder of China Renaissance, Bao Fan, Guanxi can also lead to challenges and struggles.
It's important to note that if Jack Ma returns to China, he is not likely to face any personal safety risks or legal issues. In fact, less than two months after the 20th CCP Congress, on December 18th, 2022, the new Zhejiang Party Secretary visited Alibaba, indicating that the issues concerning Alibaba and Jack Ma have been resolved. However, it's unlikely that Alibaba will regain its past position in the industry or that Jack Ma will return to a specific management position at Alibaba. It's time for the outside world to accept that Alibaba won't return to its previous high growth and huge profits, and the opportunity for Alibaba to become a trillion-dollar company has been lost.
China's historical tradition and the attributes of the ruling CCP have determined that China won't follow the path of the U.S. free market economy, but will instead favor a social market economy. Singapore and Germany are the two countries that China is learning from. Singapore emphasizes the care of the general public and elite rule, while Germany focuses on manufacturing industry development and the creation of "hidden champions" in various fields. The Chinese government aims to strike a better balance between economic development and social equity.
It's almost a given that Jack Ma will return to China in the first half of 2023. Once he's back, he'll have two major directions to explore: XiaXiang ("going to the countryside") and Chuhai ("going international"). The former refers to the revitalization of China's countryside, which is crucial to closing the wealth gap in the country. Jack Ma has already done a lot in this area, and I believe he can make a greater contribution going forward. Meanwhile, Chinese companies, including Alibaba, are actively expanding their international businesses. Jack Ma is the most famous Chinese entrepreneur globally, and one of the few who can speak clearly to the rest of the world about Chinese entrepreneurship and innovation.
It'll be exciting to see what Jack Ma does once he's back in mainland China. That's all for today's episode, thank you for listening to the China Insider podcast. I am Yuan, see you next time.