INTRO: Jack Ma is one of the few men in
the entire world who have been able to create over $1 trillion worth of value in the market. He’s the
man behind some of the largest Chinese companies including Alibaba, the Ant Group, and Cainiao.
Hearing this, I don’t think you’d be surprised to hear that Jack was the richest man in China
not too long ago with a peak net worth of $61.2 billion. Over the past two years, however, his
net worth has tumbled nearly 50% to $32.3 billion. At first glance, it’s easy to dismiss this as the
side effects of a weak stock market or an economic downturn. But, if we take a closer look at Jack’s
story, we’ll see that this downfall was anything but natural. You see, the reason Jack Ma has been
getting destroyed is actually because he said some not so great things about the CCP or the
Chinese Communist Party. Obviously, the CCP wasn’t very happy about his perspectives, so they decided
to teach him a lesson. And if you thought Jack’s decline in net worth was already pretty bad, well
that’s the least of it. The CCP has gone ahead and demolished the valuations of all of his companies.
Take Alibaba for example. In October of 2020, Alibaba reached a peak valuation of $858 billion.
By March of 2022, however, Alibaba would shed 77% of this valuation crashing down to $206 billion.
That works out to a market cap loss of $652 billion and that’s just Alibaba. Moving onto
the Ant Group, this company was just about to IPO right before all of this drama unfolded.
And according to Forbes, it was realistic to estimate up to a $470 billion valuation. But,
once Jack shared his comments, Beijing would halt the IPO and essentially force Jack to hand over
the entire company to the CCP. It appears that Jack tried to stall this as much as possible,
but he eventually caved in all the way in late July. Today, Fidelity values the Ant Group at
just $70 billion which is $400 billion less than their projected IPO valuation.
If we add this market cap loss to the Alibaba’s market cap loss of $652 billion, we get a total
market cap loss of $1.05 trillion with a T. And that’s just Jack’s largest companies. If
we threw all of his other smaller companies into the mix, we’ll see that Jack has endured a market
cap loss of $1.1 to $1.2 trillion within the past 24 months. His losses alone are enough to create
the world’s 6th largest company. So, what in the world did Jack do to deserve such a punishment?
THE FATEFUL SPEECH:
Taking a look back, all of Jack’s problems can be traced back to one fateful speech on October 24,
2020 at the Bund Summit. Jack was well aware of the weight of what he was about to share,
so he started off with a little disclaimer. He asserted that his views are probably immature,
incorrect, and laughable. He also suggested that people should simply give him a listen and if he
doesn’t make any sense, they should forget about everything he said. With that out of the way,
Jack began discussing the role of China in the global economy. He argued that China had basically
become someone that fills in the gaps left by the west. For example, the west doesn’t want to take
on low paying manufacturing jobs, so China fills in the gap. Similarly, the west doesn’t want to
pollute their own ecosystems with factories, so China fills in the gap. Jack argued that instead
of filling in the gaps left behind by the west, China should look to fill in gaps in the future.
This way, China could stop being a follower and start becoming a leader. To most of us,
this probably seems like a fair thing to say. But, to the CCP, this comes of a criticism.
To them, Jack is essentially saying that the CCP is making China into a follower instead of
a leader. Moving onto Jack’s second point, he went onto discuss how we need to take responsibility
for the future. This part of the speech would’ve probably been if it wasn’t for this one
quote from President Xi Jinping. Apparently, the president told Jack “success does not have
to be with me.” I think it’s quite possible that President Jinping really did mean what he said,
but I don’t think he completed his full thought. I think the full thought goes something like this:
“success does not have to be with me, but control does”. By sharing just the first part,
I think Jack gave his peers and everyday Chinese a sense a freedom that the CCP was not a fan of. If
this statement didn’t push the CCP over the edge, the next part of Jack’s speech definitely did
as Jack would go onto to outrightly criticize the Chinese financial system.
He said that “Today’s financial system is a product of the industrial age.” In other words,
he was suggesting that China’s financial system was centuries behind. The nail in the coffin was
“We cannot regulate the future with yesterday’s means. There’s no systemic financial risks in
China because there’s no financial system in China. The risks are a lack of systems.”
By this point, Jack was already done for and it was probably best if stopped talking, but he would
go onto talk about the CCP’s least favorite word: Reform. “The new financial system is the direction
of the future. No matter whether we are happy or not, it will definitely rise. No matter whether we
do it or not, someone will do it. In the future, I believe that reform is a sacrifice and a price.”
After that statement, Jack almost sounds like a revolutionary. For obvious reasons, the CCP
is no fan of revolutionaries and they would make that crystal clear in the coming weeks and months.
THE AFTERMATH:
Shortly after Jack’s hero moment, he would be invited to a closed-door meeting with Chinese
financial regulators. As you would guess, this meeting wasn’t to go through his proposed changes.
It was actually to inform him that the Ant Group IPO would not be allowed to take place. In a last
ditch effort, Jack would try to bribe them with a stake in the Ant Group. Jack told them, “You can
take any of the platforms Ant has, as long as the country needs it.” But, the CCP was by no means
willing to let Jack go so easily. It was clear to them that they had to make an example out of Jack
to prevent other billionaries from stepping out of line. And that’s exactly what they would do.
After cancelling the Ant Group IPO, they would cancel all of his public appearances. They even
replaced him as a judge on his own talent show called “Africa’s Business Heroes”. That would be
like America’s Got Talent replacing Simon Cowell without his consent. Over the next few months,
Jack would completely disappear from the spotlight and this is why we got all those articles asking:
Where’s Jack. The official explanation is that Jack was simply laying low while things were hot,
but it’s very possible that Jack was detained or even tortured. Even if Jack wasn’t beaten,
there’s no questions that his companies were being beaten. On December 23, 2020,
China would launch an antitrust investigation into Alibaba for suspected monopolistic practices.
Around the same time, they would tell the Ant Group that they need to substantially reduce their
scope. They were instructed to stop pursuing the insurance and wealth management sectors
and simply stick to payment services. China would also move to make the Ant Group a state
owned operation. China would force existing shareholders to give up half of their equity to
6 outside shareholders. This included a 15% stake to Nanyang Commercial Bank,
5% to China Huarong Asset Management, and 10% to Cathay United Bank. A few months later,
China would hit Alibaba with a record $2.8 billion fine. They would also delete Alibaba’s internet
browser from the app store. Alibaba’s browser was the second most popular web browser in China
before it was deleted. While such moves were no doubt painful, most of the damage actually
came from how people perceived these moves. You see, customers nor investors want to be
associated with Chinese companies that aren’t friends with the CCP for obvious reasons. So,
they both started leaving in droves. I mean just look at what happened to Alibaba stock. The worst
part was that Jack’s actions didn’t just hurt his own companies but all Chinese companies.
Jack’s speech made it clear to the CCP that they had not only given Jack too much freedom,
but all billionaires too much freedom. So, they thought it was best to punish them all. And if you
don’t believe me, just take a look at the Nasdaq Golden Dragon China Index. This is an index of 30
of the strongest companies in China. And this index wasn’t down 20, 30, 40, or even 50%. It
was down 76% and we still don’t know if the bottom is in. Clearly, Jack has created quite a disaster.
DESTROYING HIS LEGACY: Once the initial damage had been dealt
to Jack’s companies, the CCP switched their focus to destroying his legacy. And the way they’ve
been accomplishing this is by stripping him of all of his positive associations. For example,
one of Jack’s contributions was creating a university called Hupan University in 2015.
The university was a business school focused on creating the next generation
of business leaders. Jack felt that this was China’s version of Harvard Business School
and there was no doubt that it was an extremely elite school.
After all, you needed to own a business that was pulling in at least $4.5 million in revenue per
year to even apply to the school. This school is no doubt one of Jack’s proudest contributions, but
the CCP has been actively trying to dismantle the entire thing. First of all, they forced the school
to suspend enrollments. Then, they removed Jack as president of the school. And finally, they forced
the institutions to drop the word “University” from its name. The new name of the institution
is the Hupan Innovation Center. All of these moves are clearly geared to discredit the institution as
much as possible. Also, Jack Ma was one of the main factors attracting students to the school,
and if he’s no longer associated with the school, why would anybody bother joining?
Jack’s goal was for Hupan to run for 300 years, but at this point, it’s not clear if Hupan will
last even 30 years. In the meantime, Alibaba has resorted to trying to bribe themselves back into
the CCP’s good graces. Late last year for example, Alibaba announced that they would make a $15.5
billion donation to China’s common prosperity fund. For perspective, this figure was equivalent
to ⅓ of their entire cash reserves. This just shows how desperate Alibaba is to get back on
the CCP’s good side. The CCP of course accepted the donation, but it doesn’t look like Alibaba
is in the green just yet. More likely than not, this is gonna be a several year journey for
Alibaba to slowly earn back their freedoms and Jack will have nothing to do with it.
JACK MA TODAY: Today, it seems like Jack has
more or less accepted. He rolled the dice with the CCP and the CCP has shown him who’s truly on top.
At this point, he’s still got plenty of money, but he’s lost everything that gave him purpose
whether that be his talent show or his university or even just control over his own companies.
The CCP basically told him, you went too far. We’ll let you keep your money, but you’re gonna
have to give up everything else. For a lot of you, this probably doesn’t seem that bad. I mean,
in the end, he does still have $30 billion, so things could definitely be a lot worse.
Looking forward, if Jack simply sticks to enjoying his wealth inside China,
he probably won’t have any further issues. If he tries to invest his money into a new business or
new endeavor, however, the CCP probably won’t be very happy. And they’ll likely start this
whole takedown process all over again, and this time they won’t leave him with any money either.
So, for his own good, it’s best if Jack sticks to private jets and mansions
instead of change and revolution, but that’s just what I think. If you were Jack, would you
have criticized the CCP? Comment that down below. Also, drop a like if you’re not a fan of the CCP.
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