Jack Ma's Empire of Business and Power- Volume I-From Alibaba's Open Sesame -BK24

 

Jack Ma’s Empire of Business and Power

-From Alibaba's Open Sesame to an Unfinished Farewell

Fang Tianliang

Translated from the revised Chinese edition BK24

Forty-nine chapters, with chronology, key figures and sources

Contents

Prologue: The Old Man Nobody Recognised

Part One: A Hangzhou Youth Nobody Rated

Chapter 1: The Unofficial Guide of West Lake

Chapter 2: Three Attempts at the Gaokao

Chapter 3: Four Years at Teachers College, Six Years a Teacher

Chapter 4: Haibo Translation Agency: Losing Money for the First Time

Chapter 5: First Sight of the Internet

Chapter 6: The Eighteen of Lakeside Gardens

Chapter 7: From B2B to C2C: The Birth of Taobao

Chapter 8: Alipay: Solving a Problem of Trust

Chapter 9: Going Public: Capital’s Moment of Glory, and Its Price

Chapter 10: Chief Education Officer

Part Two: The Architecture of an Empire

Chapter 11: How Payment Became Finance

Chapter 12: A Business Built on Leverage

Chapter 13: Film, Media and Entertainment: Crossing Further Afield

Chapter 14: “Choose One of Two”: The Question of Platform Power

Chapter 15: 996: A Social Debate About Work

Chapter 16: From “Daddy Ma” to Capitalist

Chapter 17: Hupan University

Chapter 18: A Global Stage for One Man

Chapter 19: What the Summit Looked Like

Part Three: The Timeline of the Collapse

Chapter 20: Shanghai, 24 October 2020

Chapter 21: The Eve of the Listing

Chapter 22: Nine Days Later

Chapter 23: Why Was Ant’s Listing Halted?

Chapter 24: The Missing Three Months

Chapter 25: 2021: The Year of Dismantling

Chapter 26: Three Years Through the Storm

Chapter 27: How Much Wealth Was Really Lost?

Chapter 28: The Three Layers of the Fall

Part Four: The Many Causes of the Fall

Chapter 29: The Immediate Cause: Those Twenty Minutes

Chapter 30: The Business-Model Cause: The Growth Ceiling

Chapter 31: The Financial Cause: Who Bears the Risk?

Chapter 32: The Data Cause: Who Owns Credit?

Chapter 33: The Public-Opinion Cause: The Shattering of a Myth

Chapter 34: The Personality Cause: The Price of Being a Communicator

Chapter 35: The Governance Cause: One Man’s Company

Chapter 36: The Cause in the Times: The End of a Cycle

Chapter 37: Business and Power: A Course With No Textbook

Chapter 38: The International Dimension: One Man’s Diplomacy

Chapter 39: It May Not Have Been Any Single Straw

Part Five: After the Exit

Chapter 40: Three Years of Wandering

Chapter 41: March 2023: He’s Back

Chapter 42: 17 February 2025: The Front Row

Chapter 43: Reconciliation With AI

Chapter 44: The Weather Has Changed – Is the Roof Mended?

Chapter 45: A Man Who No Longer Speaks

Chapter 46: After Jack Ma, Will There Be Another?

Chapter 47: What He Left Behind

Chapter 48: The Silent Library

Chapter 49: Jack Ma and Traditional Wisdom: Knowing When to Advance, but Can He Let Go?

Epilogue: Jack Ma Within an Era

Appendix One: A Chronology of Jack Ma’s Life

Appendix Two: Key Figures

Appendix Three: Principal Sources

Appendix Four: A Note on the Boundaries of This Biography

 

Prologue: The Old Man Nobody Recognised

Some time around 2023, a photograph began quietly making its way around the Chinese internet.

It showed a street, or perhaps a campus, in a city somewhere outside China. A slight, grey-haired man in a white baseball cap and casual clothes stood holding a cup of coffee, gazing at something in the distance. Two or three companions were with him. There were no bodyguards, no motorcade of black cars, no scrum of photographers with long lenses. When a tourist recognised him and asked for a picture, nobody stepped in to stop it. He simply smiled and obliged, hands folded in front of him, his manner reserved and gentle – like any elderly Chinese man taking a stroll in a foreign country.

Many internet users took the man in the photograph to be Jack Ma. The precise place, date and circumstances of the picture cannot yet be verified.

A decade or so earlier, such a picture would have been almost unthinkable. In those years, wherever Jack Ma appeared, he was the undisputed centre of attention. He was always surrounded by security guards, assistants and reporters, and an ordinary passer-by would have struggled to get anywhere near him for a photograph. His every move was amplified, repeated and dissected, drawing the gaze of millions across China’s public sphere. In that era the nickname Ma Baba – “Daddy Ma”, the affectionate tag Chinese netizens gave the man who had made online shopping and digital payment part of everyday life – amounted to something like a social consensus. He was the model of the underdog made good, the most concrete image ordinary people had of wealth and success.

From the autumn of 2020 onwards, he became a man who almost never appeared at all. He turned up in Dutch greenhouses and on Spanish agricultural test farms, on the streets of Japan and Thailand, at university lecterns in Hong Kong and Tokyo. Some read this new life as a retreat to the countryside; some as a flight abroad; others as the founder of a vast business empire passively acknowledging that the times had turned against him. Whichever reading one prefers, it is a world away from the Jack Ma who rang the bell at the New York Stock Exchange, or who swapped jokes with presidents and tycoons at Davos.

This book is about that gulf – where it came from, and what it really means.

One thing should be made clear at the outset: Jack Ma has not “fallen on hard times”. By the mid-2020s, public rich lists still ranked him as a wealthy entrepreneur, though estimates of his fortune rose and fell with the markets and with the methods used to calculate them. He remained a partner within the Alibaba system, with a measure of symbolic influence, and his work in education, philanthropy and agriculture never stopped. Compared with entrepreneurs who have genuinely sunk into debt crises, been placed under investigation or been pursued for repayment, he is in a far safer position.

What actually changed were three other things: his control over his company, his voice in public life, and the way society judges the name “Jack Ma”. It was the simultaneous shift in all three that produced the visible, palpable sense of a “fall from the summit”.

To understand that shift, we have to go back further. We need to understand why he succeeded; what Alibaba and Alipay actually changed; how an entrepreneur turned from the pioneer of an industry into a public symbol; and what happens when the power held by a business organisation begins to approach certain limits.

This book does not set out to portray him simply as a hero, nor as a villain. The first would be mythmaking; the second, venting. Neither helps us understand a real, complicated human being – a man of enormous ability and obvious limitations – or the very particular era in which he lived.

In Chinese Jianghu, literally “rivers and lakes”. In the martial-arts novels of Jin Yong, the jianghu is the world beyond the imperial court – a world of rival schools, masters and disciples, loyalties and feuds, with codes of its own. Yet the jianghu is never truly independent; the power of the court can reach into it at any moment. Ma was devoted to Jin Yong all his life, took the name of one of his sword masters as his nickname, and ran Alibaba rather like a martial-arts school. His story is, in a sense, the story of a man of the jianghu and the court.

This book, then, is not only about one man’s success and failure. Through Ma’s life it explores three connected questions. First, how far can a person’s talent, hard work and courage change his destiny? Second, when commercial power collides with highly concentrated political power, how are the lawful rights and interests of companies, investors and ordinary people protected? Third, can the traditional Chinese ideas of contentment, knowing when to stop, guarding one’s tongue and withdrawing once the work is done help modern people think afresh about wealth, power and the value of a life?

The book broadly follows that order: first the story, then the institutions behind the story, and finally a reflection on how a person faces success and loss. The three do not always appear in the same chapter, but they run through the whole.

The story begins in Hangzhou. On 10 September 1964, a boy was born to an ordinary family on the shores of the West Lake.

 

Part One: A Hangzhou Youth Nobody Rated

 

Chapter 1: The Unofficial Guide of West Lake

Hangzhou, 10 September 1964. An ordinary household near the West Lake – the city’s famous scenic lake, celebrated by poets for more than a thousand years – welcomed a baby boy. His parents named him Ma Yun, a name that would later attract jokes, because to Chinese ears it sounds rather more like a girl’s name. He was the middle child, with an elder brother and a younger sister.

The most widely repeated account of his childhood is that he was a hopeless student. That is not entirely wrong, but nor is it accurate. Closer to the truth is that he was spectacularly lopsided – lopsided to an almost extreme degree.

His English stood head and shoulders above that of his classmates. His mathematics, which would later become the stuff of legend, lay at the opposite extreme. When he first sat the gaokao – China’s national university entrance examination, a single set of papers that largely decides a young person’s future – in 1982, he scored one mark in maths. He would go on to tell this story as a joke in countless speeches, and it became the Chinese-speaking world’s most famous piece of evidence that a lopsided talent can still succeed.

But the examination came later. Before he was a boy who had failed the gaokao, he was a boy by the West Lake.

In the late 1970s, China was just being swept up in the whirlwind of “reform and opening up” – the policy, launched under Deng Xiaoping, that ended Mao-era isolation and began to reconnect the country with the world economy. As the doors opened, tourists from around the world began pouring into Hangzhou, the great majority drawn by the West Lake. The city had few hotels licensed to receive foreigners and no mature service industry to speak of. A teenager who could speak English was a rare commodity.

Ma discovered something that would shape the rest of his life: he could talk to foreigners, and they were willing to talk to him.

He began cycling every day to the lakeside and to the entrances of the tourist hotels, striking up conversations with foreign visitors and offering to show them round Hangzhou for nothing. “My English is good,” he would later say, “all because I was an unofficial guide.” There is a kind of grassroots honesty in that remark. His English did not come from classrooms or textbooks; it was ground out of real conversations, and out of persistence after one rebuff after another.

He also bought a small pocket radio and practised his listening by tuning in to foreign broadcasts – not an entirely risk-free activity at the time, but the teenage Ma evidently had few qualms. What he wanted was simple: to master English, because to him English was a window on the outside world. At a time when his peers were being told, in a popular saying of the day, that “if you master maths, physics and chemistry, you can go anywhere under heaven without fear”, there was clearly something a little different going on in this boy’s head.

In the years just before, “listening to enemy stations” – Voice of America, the BBC and the like – could bring serious political trouble. By the late 1970s the controls had loosened considerably, but tuning in to foreign broadcasts was still not an ordinary thing to do. A teenager’s curiosity about the outside world carried, in those days, a faint whiff of risk.

One day in 1979 or 1980, the habit brought him the most important chance encounter of his life.

Sources differ slightly on the exact year. Chinese-language material from the Jack Ma Foundation and Newcastle University dates it to 1980, when the Morley family were in Hangzhou on a tour organised by the Australia–China Friendship Society, and Ma approached Ken Morley’s elder son, David. Ma’s own recollections, on various occasions, give slightly different ages and years. What is certain is that this lakeside conversation began a cross-border friendship that would last more than twenty years.

Ken Morley came from Newcastle, New South Wales. He and Ma became pen-friends – which, in the days before email, meant writing a letter by hand every so often, posting it, and waiting a long time for the reply. The Morleys treated the young Chinese man as one of the family. According to some Chinese-language accounts, while Ma was studying at Hangzhou Teachers College, the Morleys sent him money from time to time, about 200 Australian dollars in all over a little more than two years; this detail cannot yet be verified. For a poor student at the time, even a sum like that was no small thing.

In 1985, Ken Morley invited Ma to spend the summer holidays in Australia. It was his first trip abroad.

The journey’s impact on him was decisive. He spent twenty-nine days in Newcastle, and he would return to those days again and again: “Those twenty-nine days in Newcastle were critical in my life. Without those twenty-nine days, I would never have come to think the way I do today.”

Behind those words lies the collapse and rebuilding of a worldview. The world he had read about in textbooks since childhood was not the world he now saw with his own eyes. On a foreign street, a young Chinese man realised that the world was not as the books described it – that there was another way of living, another way of thinking. That kind of shock is hard to explain by argument, but it surfaces in every major choice a person makes afterwards.

In February 2017, through the Jack Ma Foundation, Ma donated 20 million US dollars (about 26.4 million Australian dollars) to the University of Newcastle in Australia to establish the Ma & Morley Scholarship, for students who “want to see the world for themselves, to experience it and to think about it”. It was the largest single gift in the university’s history. The key word for the scholarship, he said, was gratitude. Ken Morley had died in 2004 and did not live to see it. According to figures published by the programme, by June 2026 the scholarship had supported 254 recipients, 169 of whom had travelled from Australia to study in China.

If Jack Ma’s early education could be summed up in a sentence, it would not be the classrooms of Hangzhou or the gaokao examination hall. It would be those clumsy conversations by the West Lake, and the shock of twenty-nine days in Newcastle.

It was a highly unusual path to adulthood. His core strength was not the ability to pass exams but the ability to connect with people; the knowledge he acquired was not systematic but situational, carrying the warmth of real encounters. That ability would later allow him to lead people who understood technology and finance far better than he did. And precisely because it was, at heart, a judgement about people, it would later – in another, far more complicated arena – become his weakness.

 

Chapter 2: Three Attempts at the Gaokao

In 1982, at the age of eighteen, Jack Ma walked into the gaokao examination hall for the first time.

The examination had been restored only five years earlier. For more than a decade before 1977, university places had been allocated largely by recommendation, and family background and political reliability counted for more than examination results. Once the gaokao returned, a single set of papers gave countless children from ordinary families, for the first time in years, a route to change their lives on their own merits. Ma’s generation was among the very first to benefit.

On his application form he had put down Peking University, the most prestigious in the country. Today the choice sounds like a joke, but Ma clearly did not think so at the time. His English was good enough to lead him into a misjudgement: that if his foreign language was strong enough, his other weaknesses could be ignored.

He scored one mark in maths.

There are several versions of how that single mark came about. Ma himself explained it in 2017, at a leadership class for rural headteachers: candidates applying for English courses back then did not have their maths scores counted, so most simply filled in answers at random; he went in, began ticking boxes, filled the whole paper in a flurry – and guessed exactly one right. Some sources say the proportion of multiple-choice questions on the maths paper that year differed from the years either side, and the different versions are hard to reconcile fully. Yet another account has it that the examiner, seeing a paper crammed with working, awarded him one mark for effort.

Whichever is true, the conclusion is the same: he failed, and failed rather spectacularly.

After that he went looking for work, an episode he would tell again and again and which became some of the most effective material in his speeches. He and a cousin applied to be waiters at a hotel; the cousin got the job, and he was turned down for reasons to do with his looks. He pedalled a tricycle cart delivering books for a magazine publisher, earning one yuan a day. He tried a great many jobs, and most attempts ended in failure. Years later, speaking in English at a public event in the United States, he described it like this: he was rejected for more than thirty jobs; he applied to the police, and of five candidates four were taken – he was the only one who wasn’t; when KFC came to China, twenty-four people applied and twenty-three were hired. He was the one who wasn’t.

A little clarification is needed here, because this part of the story has been heavily embellished in the retelling.

The most widespread version is that “Jack Ma applied to KFC after leaving school and was rejected”. That version has an obvious problem with its timeline: KFC opened its first restaurant in mainland China, in Beijing, only in 1987, and Hangzhou’s first KFC did not open, on Renhe Road, until 1993. Ma himself has told the story many times, including to the American interviewer Charlie Rose, without giving a precise year. Another version that circulates holds that it happened after he had become a teacher, when he went along with his students to apply. Which is closer to the truth cannot yet be verified.

Equal caution is needed with the claim that he was “rejected by Harvard ten times”. Ma has said on several occasions that he applied to Harvard Business School ten times in a row and was turned down each time. But the claim rests on his own account alone; no third-party record has been found to corroborate it. These stories were embroidered layer upon layer as they spread, until they became a stock motivational script. Their real function was often not to record facts but to convey a feeling: a man rejected everywhere ends up succeeding.

Fortunately, even with every exaggeration stripped away, the real story of Ma’s early years is persuasive enough.

During his days hauling books for the magazine, he happened across a novel: Life (Rensheng), by Lu Yao, the story of a young man from the countryside torn between village and city, which had an enormous impact on Chinese youth in the 1980s. Ma later said the book stirred him deeply and made him feel he could not go on like this.

In 1983 he sat the gaokao a second time. He scored nineteen in maths – an eighteen-fold “improvement” on the year before, but still a fail.

In 1984 he went in a third time. Beforehand, a maths teacher told him: “Ma Yun, your maths is an utter shambles. If you ever pass, I’ll write my surname backwards.” On the morning of the maths paper, he kept reciting ten basic formulae, and once inside he tried each of them in turn on every question.

He passed his maths paper – sources give either seventy-nine or eighty-nine; the two figures coexist, and this book does not choose between them. But his total was still five marks short of the threshold for a full degree course.

Here fate smiled on him for the first time. That year, the English department of Hangzhou Teachers College had just been upgraded to offer full undergraduate degrees and had not filled its quota, so the college decided to promote several candidates with outstanding English scores from the lower, diploma-level track. And so Ma, with the marks of a diploma student, got onto a degree course.

Ma has always been candid about this. He has said many times that he was not naturally gifted, that it took him three attempts at the gaokao, and that he became an English teacher only because he had been bold enough to talk and practise – acting as a free guide to anyone he met by the West Lake. That frankness is part of his charm: he never hid the fact that he was not clever; he turned it into a source of persuasion.

But from this book’s point of view, here too lies the seed of an important blind spot in his later thinking. A man who attributes his own success to “daring to speak, daring to practise, never giving up” can easily come to believe that anyone can succeed if they work hard enough and hold on long enough. That belief was certainly true for him. But when he preached the same logic to millions of small merchants struggling on e-commerce platforms, or to young employees working until midnight every night, it could easily be heard as a form of arrogance.

In the autumn of 1984, twenty-year-old Jack Ma entered the foreign languages department of Hangzhou Teachers College. He could not have known that this arrangement – one he did not much like, another twist of fate after Life – would turn out to be the most important stop of his life.

 

Chapter 3: Four Years at Teachers College, Six Years a Teacher

Whenever Jack Ma talks about his years as a teacher, an unusual emotion creeps into his voice.

On 13 May 2018, at the 110th anniversary celebrations of Hangzhou Normal University – as the old teachers college had become – Ma returned to give a speech as an alumnus, class of 1988, English. “Four years at teachers college and six years as a teacher,” he said. “Those ten years made me who I am today. I will always remember that I trained as a teacher. Being able to become a teacher has been the greatest honour of my life.”

There is a telling detail in those words: he defines himself as a “teacher”, not as an “entrepreneur”.

At university he was transformed. For four consecutive years he ranked among the top five in his year in the foreign languages department. He served as president of the student union, and as chairman of the Hangzhou Students’ Federation. More importantly, he found what he was truly good at: speaking in public, organising events, bringing people together.

He also found love. Zhang Ying, a fellow student in the same department, would become his wife. Years later, in a piece titled “My Husband, Jack Ma”, she recalled her judgement at the time: Ma was not handsome, but he could get done many things that handsome men could not. Among them, she listed setting up Hangzhou’s first English corner, earning foreign currency as a guide to foreign tourists, and being named one of Hangzhou’s ten outstanding young teachers.

In 1988 Ma graduated and was assigned to the Hangzhou Institute of Electronic Engineering (now Hangzhou Dianzi University) as a lecturer in English and international trade. One story that circulates holds that he was the only one of more than five hundred graduates that year to be assigned a university teaching post; this cannot yet be verified.

“Assigned” is a word that may puzzle younger readers, and Western ones. In those days the state allocated university graduates to their jobs, and individuals had almost no choice. A post at a university, a state enterprise or a government office meant an “iron rice bowl”: a secure salary, housing provided by one’s work unit, free healthcare and a pension, very often for life. That is why, a few years later, Ma’s resignation looked to his family and colleagues like more than a change of job. He was giving up all the security the system could offer.

His classes were popular. Students loved his free-wheeling style, the jokes and metaphors that popped up at any moment; some even said that when he taught, students from other classes would drift in to listen. A video of one of his lessons later circulated online. In it, a young Ma with neatly parted hair gives the camera a thumbs-up and praises himself: “I’m rather suited to teaching. I teach very well – really brilliantly!” Today the self-praise seems a little comic, but at the time it was sincere.

Alongside his teaching, he made a name for himself in Hangzhou’s translation circles. He started the first English corner by the West Lake – an informal open-air gathering where anyone could come to practise speaking English. In 1995 he was named one of Hangzhou’s Ten Outstanding Young Teachers.

It was this period, too, that shaped his entire later philosophy of management and organisation.

He often used an analogy. His favourite kind of team, he said, was not the sworn brotherhood of Liu Bei, Guan Yu and Zhang Fei in the Peach Garden – the famous oath of loyalty from the classic novel Romance of the Three Kingdoms – but the pilgrim band from Journey to the West, the sixteenth-century novel in which the monk Tang Sanzang travels to India to fetch Buddhist scriptures with three supernatural disciples. The monk cannot fight and cannot defeat demons, but he has a strong sense of mission, clear goals and never gives up. Sun Wukong, the Monkey King, is the most capable, but arrogant about his talents, and the leader needs a way of handling him. Zhu Bajie, Pigsy, is lazy and a flatterer, yet he keeps the team cheerful. Sha Wujing, Sandy, never talks of ideals or the future; give him his share of the work and he gets on with it uncomplainingly.

Ma cast himself as the monk.

This was not modesty. He genuinely could not write code, build web pages, understand financial controls or design share incentives; he often joked that his maths was so poor he struggled even to read a balance sheet. But he could attract people far more expert than himself to work for him, and make them want to stay for the long haul. It was a kind of leadership hard to capture in a management textbook: it rested not on professional authority but on a sense of meaning, on trust, and on a gift for making complicated things sound simple.

That is why he later called himself Alibaba’s “Chief Education Officer”. His meetings often resembled open lectures; his internal talks were routinely transcribed by employees and passed around. He believed a good leader was a good teacher: the aim of a teacher is for the students to surpass him, and if a CEO cannot work as a teacher does – by making others succeed – the company will struggle.

This logic gave early Alibaba its cohesion. It also planted another seed: when an organisation’s authority rests for a long time on the words of its founder, it becomes very hard for that organisation ever truly to free itself from him. Later chapters will return to this at length.

By the mid-1990s, Ma had a thoroughly respectable life: a secure teaching post, a reputation in his field, a happy family and the promise of promotion from the college leadership.

Then he resigned.

 

Chapter 4: Haibo Translation Agency: Losing Money for the First Time

1992 was a turning point for China’s private economy. That spring, Deng Xiaoping toured Wuchang, Shenzhen, Zhuhai and Shanghai and gave a series of talks – later known as his “southern tour” speeches – insisting that reform and opening up must not waver. For two or three years before, economic reform had stalled and the future of private enterprise had looked uncertain. After the southern tour, large numbers of officials, teachers and researchers resigned to go into business – a wave known as xiahai, “jumping into the sea”.

It was in that same year – some sources say 1994 – that Ma, together with friends and a number of retired English teachers from the college, set up the Haibo Translation Agency, one of Hangzhou’s first professional translation firms.

His thinking was simple: take on some private translation work in his spare time and earn a little on the side. What he did not foresee was that it would be a business that lost money, steadily.

In its first month the agency took 700 yuan; the rent was 2,000. This was no fluke but the norm. For several years the agency spent more than it earned; friends and relatives mocked, and his partners began to waver.

Ma chose a path that looks, in hindsight, commercially astute, and that looked, at the time, distinctly undignified. He went to Yiwu – the vast wholesale market town in Zhejiang province that would become the world’s biggest hub for small manufactured goods – and to Guangzhou to buy stock, hauling sackfuls of cheap merchandise back to Hangzhou and selling them in the agency’s shopfront.

Gifts, flowers, clothes, knick-knacks: he sold everything. He once said, in a line that would be widely quoted: “My belief has always been that anyone who truly wants to make money must take money lightly.” But during those three years he did exactly the opposite. He took money very seriously indeed, because without it the agency would not survive.

For three full years, the agency kept itself alive on his sales of odds and ends. In 1995 it moved into profit, and it would go on to become one of the largest professional translation firms in Hangzhou, and indeed in Zhejiang province.

Running a small private business was not as simple then as it is now. The legal status of the private economy had been written into China’s constitution only in 1988. Many private businesses registered under the name of a state or collective unit to win trust and smooth their dealings with officialdom – a practice known as “wearing a red hat”. Bank loans were almost out of reach for such small concerns; start-up money came from one’s own savings and loans from family and friends. Haibo’s experience was typical of countless small businesses of the time: no access to finance, no credit record, and survival only by constantly finding cash.

But the era had another side too. The Yiwu market where Ma bought his stock was itself a product of reform. In 1982, amid controversy, Yiwu allowed farmers to set up stalls and trade; later the local government itself built the market, which grew into the largest centre for small manufactured goods in the country. Local officials willing to loosen the rules and give small traders a stage were also part of what that era gave Ma.

What the episode left behind was more than the seed of a later business empire. It left two more important things.

The first was Ma’s first-hand understanding of how China’s trade in small goods actually worked. The stalls he saw in Yiwu and Guangzhou, the wholesalers, the traders who would travel hundreds of kilometres for a price difference of a few pence: these formed the real background against which he later understood the idea of “small and medium-sized enterprises”. Alibaba’s mission – “to make it easy to do business anywhere” – was not a slogan conjured from thin air. Its prototype lay hidden in those days of lugging sacks of stock.

The second was his understanding of what it means to survive. The most important lesson the agency taught him was this: an organisation can go without profits for a long time, so long as it has cash flow; but once cash flow stops, even the noblest ideals vanish instantly. That insight ran through his entire career as a founder, and it explains his almost instinctive sensitivity, ever after, to the question of a “business model”.

Looking back, Haibo was the least remarkable of Ma’s three ventures. It had no internet, no investors, no scale of users, and for years it lost money. Yet it contained the embryo of almost every trait that would later define Alibaba: a leader short on skills but strong on will; a group of people who stayed because they believed; and a hard-headed realism that used odds and ends to keep an ideal alive.

 

Chapter 5: First Sight of the Internet

Early in 1995 (some sources say late 1994), Ma’s translation work earned him a trip to the United States.

Accounts of the trip’s purpose vary. One says he was sent by the Zhejiang provincial transport department to chase up a debt; another that he travelled with a business delegation. What is certain is that during the trip he went to Seattle and visited an internet company run by a friend.

In that room, he saw the internet for the first time.

At that point Ma knew almost nothing about computers. He later recalled that he had never so much as touched a keyboard. His friend invited him to search for something, and he typed in “Chinese beer”. The result: nothing at all.

That page of “no results” changed his life.

An idea took shape in his mind: if information about China and Chinese companies was a blank on the internet, then putting that information online was itself a business. He would later sum up his position at the time in a single phrase – roughly, “a blind man riding a blind beast: Jack Ma in cloth shoes”.

Back home, he set to work. He invited twenty-four friends to his house and explained what the internet was and what he intended to do. He talked for hours. In the end only one of them said: give it a go – and if it doesn’t work, get out quickly.

He scraped together some money – records put it at around 100,000 yuan, much of it raised by selling furniture from the Haibo agency and borrowing from relatives and friends. In April 1995, with his wife Zhang Ying and a fellow teacher, He Yibing, he founded China Pages (Zhongguo Huangye), which built web pages for Chinese companies and published their information online.

The pricing was this: one home page, with a 3,000-character introduction and a single photograph, for 20,000 yuan. In Hangzhou in 1995, almost nobody knew what the internet was. China Pages had to persuade a company to hand over 20,000 yuan to put its details on something it could neither see nor touch, and which nobody understood.

Every day Ma went out and told people about the wonders of the internet. The more he talked, the more people thought he was a con man. He later summed the period up: “In 1995, when we did the internet, people thought we were swindlers; in 1997, when we proposed China Pages, people thought we were madmen.”

But he really did build something. According to the records, China Pages became profitable within three years, its turnover growing from nothing to several million yuan. At its lowest point the company had just 200 yuan in the bank, but it survived. It was an achievement hard to imagine today: with almost no internet infrastructure, no payment system and no logistics network, a five-person team sold a completely unfamiliar service to traditional Chinese businesses.

And then he lost it.

As it expanded, China Pages ran into an adversary it could not avoid: Hangzhou Telecom. At the time, China’s telecommunications network and internet access were a monopoly of the state-owned telecoms system. According to several biographies, once China Pages took off, Hangzhou Telecom launched a similar website of its own, and competed using the lines and resources it controlled. A private company with registered capital of just 20,000 yuan could hardly hold out for long against a state-owned telecoms firm whose registered capital ran to hundreds of millions.

In March 1996, China Pages formed a joint venture with Hangzhou Telecom: China Pages contributed assets valued at 600,000 yuan for 30 per cent, and Hangzhou Telecom put in 1.4 million yuan in cash for 70 per cent. (These figures come from later retrospective reports in the Chinese press, including The Paper; the joint-venture contract itself has not been made public.) The deal brought China Pages money and lines – and cost Ma control. The majority owner was a state-owned telecoms company, and it had the final say on how the business was run. The two sides drifted further apart, and in 1997 Ma left the company he had founded. Accounts differ on what became of his stake: some say he gave it to the employees who had started the business with him, others that he sold it.

It was the first time Ma learned at first hand that a private company’s fate depends on more than its products and its market. In an industry whose key resources were monopolised by the state, a private firm that wanted to grow often had to partner with a state-owned one – and once it did, control could slip away. This was no personal grudge. It was a structural situation shared by many private businesses of that era.

It was his second failed venture.

At the end of 1997, he accepted an invitation from the Ministry of Foreign Trade and Economic Cooperation – the central government department then responsible for China’s international trade – and went north to Beijing with a few colleagues. There, at the ministry’s China International Electronic Commerce Centre (reportedly through a subsidiary called Guofutong), he helped develop the ministry’s official website and an online market for Chinese goods. He worked there for more than a year, gaining exposure to real international trade and to the logic of business-to-business commerce.

The episode also shows that Ma’s career intersected with government from the very start. In late-1990s China, almost every large internet project involved government departments or state institutions; that a private entrepreneur could work on a ministry’s platform was itself an opportunity the reform era provided.

The value of the experience was not obvious at the time. But it gave Ma two things: hands-on experience of B2B operations, and an understanding of China’s foreign trade system. When, in 1999, he told eighteen people in a flat at Lakeside Gardens that he wanted to build an e-commerce site serving small and medium-sized businesses, he was not describing a concept. He was describing a business he had spent the previous thirteen months doing.

At the end of 1998, thirty-five-year-old Ma made a decision: to go back south, to Hangzhou.

According to some biographies, he turned down invitations from Sina and Yahoo; this cannot yet be verified. Following him from Beijing back to Hangzhou was a group of people who had given up other opportunities to do so.

 

Chapter 6: The Eighteen of Lakeside Gardens

20 February 1999: the fifth day of the Chinese New Year.

All of China was still steeped in the festive season, with homes decked in lanterns and decorations. But in an ordinary residential compound called Lakeside Gardens (Hupan Huayuan), in Hangzhou’s Xihu district, eighteen people were crammed into the sitting room of a flat for a heated, steaming meeting.

This was what would later be told and retold as the meeting of the “Eighteen Arhats” – the name, borrowed from the eighteen enlightened disciples of the Buddha familiar from Chinese temples, by which Alibaba’s founding group came to be known.

Among the eighteen were Ma’s wife Zhang Ying, his colleagues, students and friends. Between them they pooled 500,000 yuan – Alibaba’s entire capital. What did half a million yuan mean amid the Chinese internet boom of the time? At portals such as Sina, Sohu and NetEase, a single advertising contract could exceed that sum.

Ma was the star of the day. For several hours, he described to everyone something that did not yet exist. They were going to found an e-commerce company, he said, with three goals: first, to build a company that would last 102 years; second, to build a company that served China’s small and medium-sized businesses; and third, to build the world’s largest e-commerce company, one of the top ten websites in the world.

Most of those present did not really follow. One later said it felt as though he was promising pie in the sky. But they chose to believe him all the same.

Looking back years later, Ma said: “People talk about the eighteen as if they were extraordinary… What was extraordinary about those eighteen was their will and their belief. We were people who believed in believing. We believed in the future, so – and anyway we had nowhere else to go – we hung on, and hung on, and hung on.”

That aside – “we had nowhere else to go” – comes closer to the truth of the moment than any motivational speech. They had not chosen a more promising road. They had simply run out of other roads.

In March 1999, the Alibaba website went live.

The records differ slightly on the date: Baidu Baike and related sources give 10 March 1999; others give March, or 15 April 1999. What is certain is that Alibaba launched in the spring of 1999.

The name “Alibaba” came from One Thousand and One Nights. In the tale, “Open Sesame” is the spell that opens the cave of treasure. Ma’s meaning was plain: he wanted small businesses around the world to speak those words and open treasure caves of their own.

The company’s mission was set out in one sentence: “To make it easy to do business anywhere.”

Over the next twenty years the line was repeated endlessly – painted on walls, printed in the prospectus, woven into countless speeches. It carried force because, at the time, it was true. In 1999, China’s small and medium-sized businesses – especially the small factories and trading firms that sold abroad – faced a world of extreme opacity. They did not know where overseas buyers were, what the price ranges were or how to find customers. All they could do was attend the Canton Fair (China’s huge, long-established export trade fair in Guangzhou), wait for foreign trade companies to come calling, or pull strings to get introductions. The first thing Alibaba did was put these businesses’ information somewhere overseas buyers could see it.

Then a crucial figure appeared.

In 1999, Joe Tsai (Cai Chongxin) joined Alibaba. He had previously worked at a Swedish investment firm, had a background in law and finance, and had been educated abroad. He was the first member of Alibaba’s founding team with genuine professional expertise in finance and capital. He built Alibaba’s financial systems and took part in almost all of its important early fundraising.

One widely told detail has it that on his first visit to Lakeside Gardens, seeing the flat crammed with eighteen people all working in the most makeshift way imaginable, Tsai nonetheless decided to give up his well-paid job and join. Many people at the time thought the decision incomprehensible.

In October 1999, in a round led by Goldman Sachs, Alibaba raised its first 5 million US dollars. In January 2000, Masayoshi Son of Japan’s SoftBank invested 20 million US dollars.

Son’s name would be tightly entwined with Alibaba’s for the next twenty years. Around 2000, he met dozens of Chinese internet companies and in the end chose to bet on Ma. Years later he said that what he had invested in back then was not the business model but the light in the man’s eyes.

Both sums had one thing in common: they came from abroad. That was no accident. In late-1990s China there was almost no domestic venture capital; banks would not lend to an internet company with no assets and no profits; and the domestic stock market was closed to businesses of this kind. At the same time, direct foreign investment in internet information services was tightly restricted, and the movement of foreign currency in and out of the country was controlled.

So China’s internet industry worked out a special arrangement. The founders registered a holding company offshore, in the Cayman Islands or elsewhere, in which foreign investors bought shares. The offshore company set up a wholly foreign-owned enterprise in China. The domestic company that actually held the operating licences remained owned by Chinese founders, and a web of contracts transferred its control and profits to the offshore company. The structure came to be known as a “variable interest entity”, or VIE. Sina pioneered it when it listed in the United States in 2000; almost every Chinese internet company listed abroad has followed, Alibaba among them.

The VIE was a pragmatic invention for China’s institutional environment: it let foreign capital into restricted industries and gave Chinese companies the money they needed to grow. But it had an inherent weakness. What the foreign shareholders held was not equity in the Chinese operating business, but a bundle of contractual rights – and whether those contracts would always be upheld under Chinese law had never been clearly confirmed. More than a decade later, the Alipay affair would expose that weakness for the first time.

In July 2000, the international edition of Forbes put Ma on its cover. According to Chinese press reports, he was the first Chinese entrepreneur to receive that honour in fifty years. The cover story was headlined, in effect, “B2B for the Small Fry” – an apt description, since the Alibaba of the day did business with a crowd of small fry.

Back in Hangzhou, the group lived on a shoestring. Everyone was paid 500 yuan a month. Spending was watched closely; people walked wherever they could and rarely took taxis. One story that circulates: on one shopping trip they had bought too much to carry and had no choice but to take a cab. Standing at the roadside, they waved away a Santana – a Volkswagen saloon, then a relatively upmarket taxi – and waited until a Xiali came along, because the cheap little Xiali cost two yuan less per kilometre.

The detail stuck not because it shows poverty but because it rings true. A company later valued at hundreds of billions of dollars began with arithmetic like that.

 

Chapter 7: From B2B to C2C: The Birth of Taobao

Alibaba’s first business was B2B: matching buyers and sellers for trade between companies. It was a good business, and it grew at astonishing speed in the export boom that followed China’s entry into the World Trade Organization in 2001. In November 2007, Alibaba’s B2B arm listed on the main board of the Hong Kong Stock Exchange at an issue price of HK$13.50, with a market capitalisation of around HK$199.6 billion, making it one of China’s most valuable internet companies.

But in 2003, Ma had his eye on another market.

That year eBay, having bought the Chinese auction site EachNet (Yiqu), held around 80 per cent of China’s consumer-to-consumer market. eBay’s chief executive, Meg Whitman, declared publicly that China would be eBay’s biggest market in the future. To consolidate its dominance, eBay poured hundreds of millions of dollars into China, bought up the search-engine keyword “Taobao”, and even put up a billboard opposite Taobao’s offices that read: “Want treasure? Go to EachNet.” (The pun turns on the name Taobao, which means “hunting for treasure”.)

Against odds that heavily stacked, Ma decided to enter the C2C market. Many at the time thought he was overreaching himself.

In April 2003 he began assembling a team to prepare the Taobao project. The work was secret: the company could promise its staff nothing, except that their pay and benefits would not fall. On 10 May 2003, Taobao went live.

When he announced Taobao’s birth, Ma also announced a policy: Taobao would be free for three years, with no aim of making a profit. In 2005 it announced that it would stay free for another three years.

That policy is the key to understanding Taobao’s strategy. Under eBay’s model, sellers paid a fee on every transaction; Taobao was entirely free. For a fledgling platform desperate to sign up merchants and users, free was the most effective weapon there was. The policy is now widely regarded as one of the decisive factors in Taobao’s victory over eBay.

Ma had a famous metaphor for the battle. “eBay may be a shark in the ocean,” he told a Forbes reporter, “but I am a crocodile in the Yangtze River. If we fight in the ocean, I lose. But if we fight in the river, I win.”

The “river” was the set of peculiarities of the Chinese market: credit cards were not widespread, logistics infrastructure was underdeveloped, and basic trust between buyers and sellers was lacking. Getting Chinese people to dare to send money online to a total stranger required not a better auction site but an entirely new mechanism of trust.

eBay also made mistakes of its own. In 2004, to unify its global technology, it migrated EachNet onto its platform in the United States. According to EachNet’s founder Bo Shao, traffic halved on the day of the move; thereafter every change aimed at Chinese users had to go through head-office processes in America, and eBay’s responses lagged far behind Taobao’s. Nor did PayPal, on which eBay relied, suit the China of the day: credit cards were rare, foreign payment businesses faced many restrictions, and PayPal managed to launch a Chinese version, Beibao, through a local partner only in 2005, with limited effect.

It should be said clearly that there is no reliable evidence that Taobao received special support from the state in this contest; the two companies faced the same set of internet regulations. Taobao’s victory came mainly from its understanding of the local market, its free strategy, its instant-messaging tools, Alipay’s escrow and its team’s execution – and from its rival’s mistakes. The point is worth stressing, because it shows that in the Chinese market a private company really could beat a powerful multinational through innovation – at least in an era when regulation was relatively light and the industry was just beginning.

According to several biographies, in 2005 eBay approached SoftBank, an investor in Taobao, about buying the business. Taobao had reached a matter of life and death.

The turning point came from Yahoo. Masayoshi Son introduced Ma to Yahoo’s co-founder Jerry Yang, who told him: “We’re both Chinese – let’s do something together.” Yahoo then paid 1 billion US dollars in cash, plus the assets of Yahoo China, in exchange for about 40 per cent of Alibaba, becoming its largest shareholder.

Yang later revealed that Yahoo had 3 billion dollars on its books at the time; the billion it put into Alibaba was a third of the total. It was an enormous gamble, and both sides were gambling.

The result: in 2005 Taobao overtook eBay as number one in China’s C2C market, and by early 2006 it had close to 70 per cent of users. In December 2006, eBay announced a joint venture with Hong Kong’s TOM Online, handing its Chinese operations over to its partner – in effect withdrawing from the head-on contest.

The battle gave Ma a world-class reputation. It became a classic business case of “the ant taking on the elephant”, still studied to this day. Its real significance lay not in the defeat of eBay but in what it proved: that in the Chinese market, local understanding could sometimes overcome the overwhelming advantages of capital and global experience.

In 2008, Alibaba launched Tmall (originally called Taobao Mall), which gradually became a separate website. It lifted brand-name merchants out of Taobao’s vast bazaar and set stricter standards for entry and service. Taobao answered the question “Can I buy it?”; Tmall answered “Can I buy it with confidence?”

Driven by these two platforms, the way China consumed underwent a fundamental change.

 

Chapter 8: Alipay: Solving a Problem of Trust

If Taobao was Alibaba’s first engine, Alipay was the fuel system that kept it running.

On 18 October 2003, just five months after Taobao went live, Alibaba launched its own online payment solution: Alipay.

The problem Alipay set out to solve was very specific, and very Chinese. On Taobao, buyers and sellers did not know each other. If the buyer paid first, the seller might not send the goods; if the seller sent the goods first, the buyer might not pay. In a society where credit cards were not yet common and personal credit records barely existed, such a transaction simply could not happen.

Alipay’s solution was to introduce a third party. The buyer paid Alipay; Alipay told the seller to dispatch the goods; once the buyer confirmed receipt, Alipay released the money to the seller.

It was an extremely simple mechanism. Yet it was this mechanism that moved Chinese e-commerce from trading between acquaintances to trading between strangers. What it solved was not a technical problem but a problem of trust.

Ma had hesitated over it. He later said he had wavered for a long time over Alipay, because the idea was so far ahead of its time; but if they did not do it, they could not solve the problem of trusted payment, and e-commerce would have no future. He told his team something that would be quoted again and again: “If someone has to go to prison, I’ll go. If the banks won’t change, we’ll change the banks.”

When the line was dug up again in 2020, it read less like bravado than prophecy.

In this way Alipay rapidly locked in its position as the gateway for payment in Chinese e-commerce. In 2010 it introduced a simple “quick pay” linked to credit cards. In May 2011 it received a third-party payment licence from the People’s Bank of China, the country’s central bank – one of the first such licences issued.

But the process of obtaining that licence set off a storm that left a deep mark on Ma’s life.

What happened was this. In June 2009 and August 2010, ownership of Alipay was transferred in two stages from Alipay E-commerce Corp, a wholly owned subsidiary of Alibaba Group, to Zhejiang Alibaba E-commerce Co., Ltd – a domestic Chinese company controlled by Ma. The total consideration was about 330 million yuan.

In May 2011, Yahoo disclosed the transfers in a filing with the US Securities and Exchange Commission. Yahoo’s statement said that it and SoftBank had learned of the two transactions only on 31 March 2011, and that the transactions had been neither approved by Alibaba Group’s board and shareholders nor properly notified to them.

The news caused an uproar. Alibaba Group’s shareholders included Japan’s SoftBank and America’s Yahoo, and Alipay had been moved into a company personally controlled by Ma. Some called him a thief. The prevailing view was that the manoeuvre violated the law and the company’s articles of association, and offended against the spirit of contract and business ethics.

Alibaba’s explanation turned on a new regulation. In June 2010, the People’s Bank of China issued its Measures for the Administration of Payment Services Provided by Non-Financial Institutions, effective from 1 September that year. Institutions already in the payments business had to obtain a Payment Business Licence within a year or stop operating. The problem was that on foreign investment the measures said only one thing: the business scope of foreign-invested payment institutions, and the qualifications and shareholding ratios of their foreign investors, “shall be separately prescribed by the People’s Bank of China and submitted to the State Council for approval”. In other words, the rules set a deadline but did not tell a foreign-controlled payment company how to apply. And Alipay sat squarely within the Alibaba Group, whose shareholders included Yahoo and SoftBank.

Alibaba said that, to avoid uncertainty over its licence application, management had decided to move Alipay out of the VIE structure described in Chapter 6 and turn it into a domestic company; it also said that as early as a board meeting in July 2009, the transfer of 70 per cent of Alipay into a Chinese company had been discussed and confirmed with shareholders. Yahoo and SoftBank, for their part, said they had not known about the two transfers in advance. It is worth noting that the first transfer took place in June 2009, a full year before the new rules were published – a gap that critics later cited to question Alibaba’s explanation.

On 14 June 2011, Ma held a press conference. He opened by saying: “I never expected the media to misread the Alipay affair like this – to turn it into a question of integrity and the spirit of contract.” He insisted that it was purely a commercial negotiation that had nothing to do with the spirit of contract, and that it was “100 per cent legal, 100 per cent transparent”.

On 29 July 2011, Alibaba Group, Yahoo and SoftBank announced an agreement. Alipay’s holding company undertook to make a one-off cash payment to Alibaba Group on a future listing equal to 37.5 per cent of Alipay’s total market value at the IPO price, with a floor of 2 billion and a ceiling of 6 billion US dollars. Until Alipay listed, Alibaba would receive 49.9 per cent of its profits.

The agreement was adjusted twice more. Before Alibaba’s 2014 listing, the parties amended it so that Alibaba would receive 37.5 per cent of Ant Financial’s pre-tax profits; in February 2018, Alibaba announced that it would take a 33 per cent equity stake in Ant Financial in place of the profit share, a deal completed in September 2019.

The agreement was signed and the storm subsided. Ma always maintained afterwards that the move had been entirely right: had Alipay not been separated from Alibaba Group, it might never have obtained its licence, and there would have been no Ant Financial later on.

In terms of business outcomes, that judgement holds up. But procedurally, the affair left a question that was never really resolved: a company personally controlled by its founder had separated the most important asset with the greatest growth potential from a company jointly owned by outside shareholders – and had done so without the shareholders’ prior approval.

The episode deserves a full section in a biography not because it is a “stain” but because it reveals a recurring trait in Ma’s behaviour. When he believed something was strategically right and urgent, he would push it through outside the existing framework of rules, and plug the procedural gap afterwards with a compensation agreement.

For Western readers the affair has a more general lesson. In Britain or America, shareholders’ rights are protected mainly by a company’s articles, by contracts and by the courts. If a company’s core asset is moved without the consent of its board and shareholders, they can go to court, with a reasonably predictable result. In China, any business that requires a financial licence involves a third force: the regulator. Who receives a licence, what kind of company qualifies and how much of it foreigners may own often depend on administrative rules – which may be slow to appear. When shareholder rights, regulatory compliance and actual control collide, the outcome is often decided by who holds the licence and who can talk to the regulator. Yahoo and SoftBank held shares in an offshore holding company and relied on VIE contracts; the licence could be granted only to a domestic company, and the domestic company was controlled by Ma.

Seen this way, the Alipay affair exposed both a problem in Ma’s way of doing things and a gap in the system itself. Opaque rules gave the entrepreneur a reason to act outside them; and his acting outside them, in turn, deepened foreign investors’ doubts about the Chinese market.

That pattern saved Alipay in 2011. It also laid one of the distant causes of the storm of 2020.

 

Chapter 9: Going Public: Capital’s Moment of Glory, and Its Price

In 2012, Alibaba did something that shook the capital markets: it bought back roughly half of Yahoo’s stake for 7.6 billion US dollars.

This was a carefully planned battle for control. Yahoo held about 40 per cent of Alibaba and was nominally its largest shareholder, but Ma and Joe Tsai had always wanted to keep the company’s future in their own hands. After the buyback, Alibaba’s shareholding structure and board arrangements were reorganised and the founding team’s voice was secured.

On 19 September 2014, Alibaba listed on the New York Stock Exchange.

New York was not Alibaba’s first choice. In 2013 it held lengthy talks with Hong Kong Exchanges and Clearing, centred on the partnership system: under it, partners rather than shareholders in proportion to their holdings nominate most of the board, whereas Hong Kong’s listing rules at the time insisted on “one share, one vote”. Hong Kong would not change its rules for a single company; the talks collapsed in the autumn of 2013, and Alibaba turned to New York.

It was the largest initial public offering in history. Shares were priced at 68 dollars, initially raising about 21.8 billion dollars; after the underwriters exercised their over-allotment option, the total reached about 25 billion. On the first day the shares closed at 93.89 dollars, valuing the company at around 231 billion dollars – more than the combined market value of Amazon and eBay at the time.

At the IPO price, Ma’s stake in Alibaba was worth more than 13 billion dollars; he also sold some shares in the offering, realising about 867 million. The young man who had once hauled books for a magazine at a yuan a day had become the richest man in mainland China.

One detail of the listing would be told again and again. The bell for Alibaba was rung not by Ma, nor by any of the “Eighteen Arhats”, but by eight of Alibaba’s customers – online shop owners, a courier, Taobao users, a farmer and others.

Ma explained: “We chose them because, as you can see, they are all our customers. We at Alibaba have worked for fifteen years not so that we could stand on that stage, but so that they could stand there.”

As public relations, it was a triumph. It recast a Chinese company’s moment of glory on Wall Street as a story about ordinary people. It also conveyed Alibaba’s self-image precisely: we are not a company that sells things; we are a platform that lets ordinary people do business.

There is a detail here that Western investors often overlook. Anyone who bought Alibaba shares in New York was buying shares in a holding company registered in the Cayman Islands. Some of Alibaba’s licences in China can by law be held only by domestic companies, which the holding company controls through VIE agreements. Alibaba’s prospectus listed this as a risk factor: if the Chinese government found the agreements unlawful, investors’ interests could be seriously affected.

In 2018, Hong Kong Exchanges and Clearing changed its rules to allow companies with weighted voting rights to list. On 26 November 2019, Alibaba completed a secondary listing in Hong Kong, raising about 13 billion dollars – and so achieved, in another form, the Hong Kong listing it had failed to secure five years earlier.

By then Alibaba was no longer an e-commerce company but an entire ecosystem: an e-commerce division built around Taobao, Tmall, 1688, AliExpress and Lazada; a fintech division whose gateways were Alipay, Yu’e Bao and Huabei; cloud computing and big data carried by Alibaba Cloud; logistics with the Cainiao network as its backbone; and digital media and entertainment centred on Alibaba Pictures, Youku and Damai.

In the words of Alibaba’s 2014 prospectus, it was “an ecosystem-based company”. It did not sell goods directly; it provided infrastructure – technology, payments, logistics, marketing, data and finance – on which small businesses could trade.

In the 2018 financial year, Alibaba’s revenue grew by approximately 58 per cent year on year to 250.3 billion yuan. In the 2022 financial year, Alibaba’s global consumer businesses served about 1.31 billion annual active consumers over twelve months and generated gross merchandise volume of 8.317 trillion yuan. Alibaba served more than a billion consumers in China – an important milestone by its own definition.

At this scale, “to make it easy to do business anywhere” was no longer a slogan but a commitment on the scale of infrastructure. And infrastructure obeys a rule: once you become everyone’s infrastructure, you must accept everyone’s demands upon you.

That was something Ma did not foresee when the bell rang in 2014.

 

Chapter 10: Chief Education Officer

To understand how Ma could lead a company whose technology he did not understand, one has to understand the organisational culture he built.

Ma is a devotee of Jin Yong (Louis Cha), the Hong Kong novelist whose wuxia tales of martial-arts heroes, chivalry and secret sects have been read by hundreds of millions of Chinese. His admiration, in his own words, verges on obsession. In Alibaba’s offices, meeting rooms are named after places in Jin Yong’s novels – Bright Summit, the Bodhidharma Hall, Peach Blossom Island, the Hall of Arhats, the Gathering of Worthies Manor – and Ma’s office has displayed swords and other martial-arts props. Chen Wei, one of his biographers, once joked: “Hero Ma roams the martial world; he can’t be parted from the tools of his trade.”

In 2000, Ma met Jin Yong, who wrote him an inscription: “Kindred spirits for years; at first meeting, old friends.”

That same year, Ma wanted to host a “Sword Debate on the West Lake” – a gathering of internet figures on the lake’s shores to discuss the industry’s future, its name borrowed from the contests of swordsmanship in Jin Yong’s fiction. Alibaba was still a nobody, but it secured Jin Yong himself to chair the event. The heads of China’s major portals all came, the debate lent the Chinese internet world a romantic, martial-hero glamour, and Alibaba’s brand image rose sharply.

What Jin Yong’s world gave Ma was not just an aesthetic but a philosophy of organisation. Its heroes obey not institutions but righteousness; they seek not position but honour; the relationships that matter most are not between superiors and subordinates but between sworn brothers, master and disciple, true friends. Alibaba’s earliest team was bound together in just this way: they were there not for the wages but to do something great alongside this man.

In 2017, Ma made a short film, Gong Shou Dao, with a group of martial-arts film stars. Jet Li, Donnie Yen and others appeared without fees; Ma played himself – “Master Ma”. In the film, Master Ma, walking down a street, spots the words “Mount Hua” – the legendary seat of a martial-arts school – half-hidden among the foliage, and takes on one master after another, defeating Muay Thai, sumo, Mongolian wrestling and Wing Chun with his tai chi. At the end he is told that the sign actually says “Mount Hua Police Station”.

He also sang the film’s theme song, “Feng Qingyang”, as a duet with the pop star Faye Wong. The song – named after a reclusive sword master in Jin Yong’s fiction – echoes the Tang poet Li Bai’s “Ballad of the Knight-Errant”: when the deed is done, he brushes off his robe and departs, hiding both his person and his name.

Binding his personal image to symbols of traditional culture won him enormous goodwill in the 2010s. It made people feel that here was a man of sentiment and taste, not merely a money-making machine. But after 2020 the same habit would be read in a different light: an entrepreneur styling himself “grand master”, “chief instructor”, “sage” could, in certain contexts, be seen as overstepping.

At the organisational level, Ma’s most distinctive design was the Alibaba Partnership. In July 2010, to preserve the spirit of the founding team and the continuity of the company’s mission, Alibaba formally established a partnership system, named the “Lakeside Partners” in memory of the Lakeside Gardens flat where the company began.

In essence, the system gave some thirty-odd partners the right to nominate a majority of the board. It was not an ordinary shareholding arrangement but a structural design for corporate control. Its advantages were obvious: it guarded against the short-termism of professional managers and kept the company’s mission stable. So was its cost: it bound the company’s governance to the founding team for the long term, independent of the proportion of shares they held.

The system ran into a wall in Hong Kong – as the previous chapter described, that was why Alibaba went to New York. In the United States, the market accepted it as something akin to a dual-class share structure. That in itself was an achievement. On this point Ma really did go further than his Chinese contemporaries: what he designed was not a structure where one man decides, but one where “a group of people decide”.

The problem was that this “group of people” always had Ma at its centre.

On 10 May 2013, Ma stepped down as chief executive of Alibaba Group, handing the post to Jonathan Lu (Lu Zhaoxi). On 10 September 2019, his fifty-fifth birthday, he stepped down as chairman of the board, succeeded by Daniel Zhang (Zhang Yong). He ended his farewell speech with an old saying: “The green mountains do not change, the clear waters flow on – we shall meet again.”

At Alibaba’s twentieth-anniversary gala, he also took the stage dressed as a rock star – black studded leather jacket, a wig of braids – to roars from the staff.

In Chinese tradition, Confucianism teaches the doctrine of the mean, and Taoism teaches that anything pushed to its extreme turns into its opposite. So some said that in stepping away in his prime, Ma showed great vision – withdrawing once the work was done, as the old saying has it. Others said his big mouth had got him into trouble. Still others said he had grown so powerful that he overshadowed the throne – the classic peril, in Chinese history, of the minister whose achievements outshine his sovereign’s – and had retired to save himself.

Of all these readings, the one closest to the truth may be this: he understood the business of stepping back more deeply than most entrepreneurs, but he badly underestimated another variable – the influence he had accumulated as a public figure, which went far beyond his role as an entrepreneur.

He thought he could hand over the chairmanship and settle down as a teacher and philanthropist.

Thirteen months later, on 24 October 2020, at the Bund Summit in Shanghai, he changed all that in twenty minutes.

 

Part Two: The Architecture of an Empire

 

Chapter 11: How Payment Became Finance

At first Alipay was merely a middleman holding money in escrow. But it was soon discovered to be sitting on something far more valuable: funds.

The money buyers paid to Alipay sat in its accounts for a while – between the seller dispatching the goods and the buyer confirming receipt. In accounting terms it was customer reserve funds; in practice, it formed an enormous pool of money. In 2004, Alipay was spun out of Alibaba Group as an independent third-party platform for online transactions.

By 30 June 2009, Alipay had 200 million active users. In 2010 it introduced “quick pay”, which let users link a bank card directly and pay with a single step, greatly improving the experience.

In June 2013, Yu’e Bao was launched.

It was one of the most influential product innovations in Ant Group’s history. The idea was simple. With a single tap, users could move the balance sitting in their Alipay account into Yu’e Bao (“leftover treasure”), where it earned the return of a money-market fund while remaining available at any moment for spending and transfers. For an ordinary Chinese saver, this was something entirely new: for the first time, money held as if in a current account could earn something close to the return on an investment product.

Little more than a year after launch, Yu’e Bao had more than 500 billion yuan under management, and its partner fund manager, Tianhong, shot up to become one of the largest fund companies in the country. It brought internet money-market funds into the daily lives of huge numbers of ordinary people – though it would be wrong to say that the Chinese had no notion of managing their money before.

Why could Yu’e Bao attract so much money in a single year? Technology and convenience were only half the reason; the other half was institutional. Chinese bank deposit rates were still controlled at the time, and a current account paid only about 0.35 per cent a year, while money-market funds could invest in the interbank market and for a while yielded more than 6 per cent. For the first time, ordinary savers found that moving their money from the bank into their phone could earn more than ten times as much. Much of what Yu’e Bao earned came from the gap left by interest-rate controls.

The banks reacted fast. In February 2014, Niu Wenxin, a commentator on CCTV’s securities channel, published an article calling Yu’e Bao a “vampire” sucking the blood of the banks and demanding that it be banned. The piece set off a fierce debate, with public opinion largely on Yu’e Bao’s side. The regulators did not ban it; they chose to watch, tolerate and then gradually impose limits. In October 2015 the People’s Bank of China lifted the cap on deposit rates; later, regulators imposed requirements on money-market funds’ size, liquidity and per-account limits, and Yu’e Bao’s yields fell back.

The episode shows that for a period in the 2010s, Chinese financial regulation genuinely gave internet companies a great deal of room for trial and error: “develop first, regulate later” was not an empty phrase. Part of the reason the later story seems such a sudden reversal is precisely this – the earlier tolerance led many people to assume that the room would always be there.

In October 2014, Zhejiang Alibaba E-commerce Co., Ltd was renamed Zhejiang Ant Small and Micro Financial Services Group – Ant Financial for short. Alibaba Group’s financial businesses, including Alipay and Yu’e Bao, were placed within it.

In 2020 the company was renamed Ant Group. By then its businesses included Alipay, Yu’e Bao, Zhaocaibao, Ant Fortune, Sesame Credit, Jiebei (“just borrow”), Huabei (“just spend”), Haoyibao, Xianghubao and more – covering almost the whole of retail finance: payments, credit, wealth management, insurance and credit scoring.

In a sense, Ant Group’s businesses touched many kinds of retail financial service; but it was not a single commercial bank operating under a traditional banking licence.

 

Chapter 12: A Business Built on Leverage

To understand what happened in 2020, one must first understand what Ant Group was really doing.

Ant’s most profitable business was not payments but micro-lending.

A few terms need explaining first. Huabei is a buy-now-pay-later consumer credit service that works much like a credit card: users shopping on Taobao or elsewhere can defer payment, repaying in full by the due date without interest, or in instalments for a fee. Jiebei is a small cash-loan service: users apply inside Alipay, the money arrives in their account, and interest accrues daily. Behind both stood Ant’s online micro-lending companies and their partner banks.

The figures disclosed in Ant Group’s 2020 prospectus show the scale of the business very clearly. By the end of June 2020, Alipay had 711 million monthly active users; the Alipay app served more than a billion users and more than 80 million merchants, and worked with more than 2,000 financial institutions, including about 100 banks, about 90 insurers and about 170 asset managers.

In the twelve months to 30 June 2020, total domestic payment volume through Alipay reached 118 trillion yuan.

The outstanding credit facilitated by its micro-lending technology platform stood at 2.15 trillion yuan, of which consumer credit made up about 1.73 trillion and loans to small and micro businesses about 421.7 billion. Between the first half of 2019 and the first half of 2020, about 500 million users obtained consumer credit through the platform – roughly 70 per cent of Alipay’s monthly active users – and about 20 million small business owners obtained loans.

For many young people and small traders with no credit card and no collateral, this was their first loan from a formal lender. The convenience was real, and it should not be erased by the controversies that followed.

Assets under management facilitated by its wealth-management technology platform reached 4.1 trillion yuan; annual premiums facilitated by its insurance technology platform came to 51.8 billion.

As for income: from 2017 to 2019, Ant Group’s revenue was 65.396 billion, 85.722 billion and 120.618 billion yuan respectively, a compound annual growth rate of about 35.8 per cent; net profit was 8.205 billion, 2.156 billion and 18.072 billion. In the first half of 2020, revenue was 72.528 billion and net profit 21.923 billion. The digital finance technology platform contributed 63.4 per cent of revenue in the first half of 2020.

These figures show a highly profitable company. But the more important question is: how did it make its money?

The prospectus is clear about it. Ant’s model worked like this: consumers and small business owners applied for loans through Alipay; Ant referred these borrowers to partner financial institutions, which provided the loans; and Ant charged those institutions a percentage as a technology service fee. As of 30 June 2020, about 98 per cent of the outstanding credit Ant had facilitated was either funded by financial institutions or had been securitised.

Two different arrangements were involved. One was joint lending: a partner bank supplied most of the money for a loan, an Ant micro-lending company supplied a small part, and Ant found the borrower, assessed the credit risk and managed the loan. The other was asset securitisation: a batch of loans already made was packaged into securities and sold to investors, so that the money came back early and could be lent again.

In other words, most of the loans Ant facilitated were not funded directly by Ant itself – though that did not mean it carried no capital, credit or other contractual risk at all. What it supplied were three things: traffic (the borrowers came from Alipay), data (it held the borrowers’ spending and credit records) and risk control (it decided, on the basis of that data, whether to lend).

It was a very clever design. It allowed Ant to leverage enormous scale on very little capital. At a traditional bank, lending is constrained by prudential measures such as capital adequacy ratios, and a bank cannot expand its risk assets without limit. Under Ant’s model, almost all the funds came from partner banks, and Ant’s main role was that of a technology service provider.

Capital adequacy is the core concept of bank regulation. For every loan it makes, a bank must set aside a proportion of its own capital to absorb losses if the borrower defaults. The rule comes from the internationally agreed Basel Accords, and its purpose is to stop banks from using a little capital to take on too much risk.

But here lay a crucial question – the one at the heart of the regulators’ later intervention: where did the risk go?

In some loan-facilitation arrangements, the bank bears most of the credit risk while the platform provides technology and customer acquisition; under different products and contracts, the risk is shared differently. In practice, though, Ant usually put up a small share of the funds in jointly funded loans, and it controlled the core of the credit decision. Who could borrow on Alipay, how much and at what rate: these judgements were made by Ant’s risk models. The banks had largely become suppliers of funds.

The hidden danger in this structure was that if the economy turned down and defaults rose, the banks would bear most of the losses, while Ant’s income model was closer to one of collecting steady intermediary fees. Risk and reward were asymmetrically distributed.

This was not a problem unique to Ant. It was common across China’s internet loan-facilitation industry. But Ant was simply too big. An outstanding credit balance of 2.15 trillion yuan approached the size of a medium-sized national bank, and there was no matching capital constraint behind it.

In fact, regulators had grown wary of the model as early as 2017. That year, “cash loans” and peer-to-peer (P2P) lending were growing wildly, with some platforms lending at very high rates to people who could not repay. In December 2017, the offices leading the national clean-up of internet-finance risks and P2P lending risks issued a notice on regulating “cash loan” business – known in the industry as Document No. 141 – which brought money that online micro-lenders raised through securitisation and similar means under leverage limits. Ant’s securitisation was curbed, and it shifted increasingly to joint lending. Over the next few years, thousands of P2P platforms collapsed or closed, and huge numbers of ordinary investors lost everything. That memory is an important background to the regulators’ particular wariness of internet finance.

There was a third thing, more important than leverage.

Data.

Through Alipay, Ant held the most essential personal information of hundreds of millions of Chinese citizens: income levels, spending habits, social connections, credit records, movements and locations. This data could be used for risk control, but in essence it was a kind of quasi-public infrastructure. Outside the existing personal credit reporting system, there now existed a credit-rating system controlled by a private company and covering hundreds of millions of people: Sesame Credit.

According to the Wall Street Journal, senior regulators had asked Ant to share its vast trove of consumer credit data with the central bank and the national credit reporting system, but Ant had responded with a kind of passive resistance.

In an area that any country would consider a matter of significance – control over financial data and credit infrastructure – a private company had acquired an enormous say. And before 2020, this was barely discussed in earnest.

 

Chapter 13: Film, Media and Entertainment: Crossing Further Afield

If e-commerce was Alibaba’s first pillar and fintech its second, entertainment and media were the third.

In 2014, Alibaba acquired ChinaVision Media and reorganised it as Alibaba Pictures. That same year it took stakes in Huayi Brothers and Youku Tudou. In 2015 it bought Hong Kong’s South China Morning Post for HK$2.06 billion. Thereafter it also invested in Mango Excellent Media, Damai and other companies, and held stakes in several mainstream financial-news and content platforms.

At the height of Ma’s era, Alibaba’s business map was summarised as six core segments, which can be simplified into three parts. First, the vertical e-commerce ecosystem: consumer online shopping, business-to-business trade, and the associated logistics and payments. Second, direct crossovers: Ant Financial was a crossover from e-commerce into finance; Alibaba Cloud, from e-commerce into big data and cloud services. Third, more distant crossovers: film and entertainment, other areas of digital life, and even offline private clubs.

At the time, this way of expanding was called an “ecosystem”. Its logic was that once you serve hundreds of millions of consumers and tens of millions of merchants, you can offer them everything – shopping, payment, investment, insurance, transport, food delivery, entertainment, health. You don’t need to be the best at each; you only need to keep users from leaving your system.

The logic worked commercially, and Alibaba rode it to one round of growth after another. But on two levels it crossed an invisible line.

The first was public opinion. A company that was at once a retail platform, a payment institution, a provider of credit scores and a shareholder in the media occupied too central a position in the chain of information. When Alibaba announced its purchase of the South China Morning Post in 2015, commentators worried that the Hong Kong English-language paper, known for its independent reporting, might change its stance; Alibaba said it hoped the paper would report on China more comprehensively. In China, the news media are regarded as the Party’s “mouthpiece”, and private capital controlling the media is sensitive in itself.

The second was the demonstration effect. Alibaba’s mode of expansion was imitated by every Chinese internet company that followed. Every platform that grew large tried to build its own closed ecosystem, starting from one service and rapidly replicating itself in every field it could reach. The whole industry entered a phase in which expansion of scale was the overriding goal, and the price of that expansion was compressed competition, reduced choice and weakened bargaining power for merchants and consumers.

After 2015, this model began to attract more and more controversy.

In March 2021, according to the Wall Street Journal, regulators asked Alibaba to sell some of its media assets, out of concern about its influence over public opinion. That October, a draft of the national market-access negative list issued by the National Development and Reform Commission stated explicitly that non-public capital may not engage in news gathering, editing or broadcasting, nor invest in or control news organisations. Alibaba subsequently reduced a number of its media-related holdings. In China, the boundaries within which capital may operate are ultimately drawn by political power, not by the market.

 

Chapter 14: “Choose One of Two”: The Question of Platform Power

Of all the controversies surrounding Alibaba, the most concrete, the most verifiable – and the one that ultimately led to the largest fine – was “choose one of two” (er xuan yi).

The phrase refers to a platform requiring merchants to open shops and join promotions only on its own platform, and not to trade on competing platforms at the same time.

In December 2020, China’s State Administration for Market Regulation (SAMR), the national competition and consumer-protection watchdog, opened an investigation under the Anti-Monopoly Law into Alibaba Group for abusing a dominant position in the market for online retail platform services in China.

The investigation concluded that since 2015 Alibaba had abused its dominant position in that market by imposing “choose one of two” requirements on merchants on its platforms, prohibiting them from opening shops or taking part in promotions on competing platforms; and that it had used its market power, platform rules, data, algorithms and other technical means to enforce those requirements through a range of rewards and penalties, so as to maintain and strengthen its market power and gain an unfair competitive advantage.

In the regulator’s words, Alibaba’s conduct had excluded and restricted competition in the Chinese market for online retail platform services, impeded the free flow of goods, services and resources, affected the innovative development of the platform economy, infringed the lawful rights and interests of merchants on its platforms, and harmed the interests of consumers.

On 10 April 2021, SAMR issued its penalty decision. It ordered Alibaba Group to cease the illegal conduct and fined it 4 per cent of its 2019 domestic sales of 455.712 billion yuan: 18.228 billion yuan in all. It also issued Alibaba with an Administrative Guidance Letter requiring comprehensive rectification – strictly fulfilling its responsibilities as a platform company, strengthening internal control and compliance, maintaining fair competition, and protecting the lawful rights of merchants and consumers – and to submit self-inspection compliance reports to SAMR for three consecutive years.

At 18.228 billion yuan, it was the largest fine in the history of Chinese anti-monopoly enforcement. Alibaba responded that it “sincerely accepts and resolutely complies”.

The investigation itself deserves Western readers’ attention. China’s Anti-Monopoly Law took effect in 2008, but for more than a decade it was scarcely applied to the big internet platforms. On 10 November 2020 – a week after Ant’s listing was suspended – SAMR published draft antitrust guidelines for the platform economy; on 24 December it opened its case against Alibaba; and less than four months later it issued its penalty.

Under Chinese law, a company dissatisfied with an administrative penalty may apply for administrative reconsideration or bring an administrative lawsuit. Alibaba did neither; it declared publicly that it “sincerely accepts and resolutely complies”. By contrast, the European Commission’s antitrust case over Google Shopping took seven years from opening to decision; Google appealed, and only in 2024, after hearings at the EU General Court and the Court of Justice, was the decision finally upheld. In China, companies rarely sue their regulators – especially when a penalty carries a clear political signal. For a company, the cost of winning such a case may be higher than the cost of losing it.

There are several readings of the penalty. One holds that it was a normal step in the evolution of law-based market regulation in China: antitrust in the platform economy is a problem the whole world faces, and the EU and the United States have taken similar action against big tech companies. Another holds that the timing and manner of the penalty sent signals that went beyond the technical bounds of antitrust.

Which is closer to the truth is hard to say with certainty. But one thing is clear: at the level of execution, the practice of “choose one of two” did exist, it did restrict competition, and it did harm the interests of merchants and consumers. Nor was it a problem the regulator invented. As early as 2017, JD.com had sued Tmall for abuse of a dominant position; at the end of 2023, the Beijing High People’s Court ruled at first instance that Alibaba should pay JD.com 1 billion yuan in damages. Rivals’ and merchants’ grievances went back a long way.

The question really worth asking is: why did Alibaba choose to do it?

The answer is that when a platform controls a near-monopoly gateway to online traffic, it has two possible strategies: keep merchants through innovation and service, or keep them through restrictive terms. The first is harder, slower and less certain; the second is faster, more certain and works more readily. In a system where GMV and growth rates are the key performance indicators, front-line teams will almost inevitably choose the second.

This is not a question of any individual’s morality but of an organisation’s incentive structure. Yet in the end it landed on Ma, because the entire empire bore his name.

On 30 August 2024, SAMR announced that Alibaba Group had completed its three years of rectification. According to the announcement, inspections and assessments showed that Alibaba had completely ended its “choose one of two” monopolistic conduct, strictly regulated its own business practices, conscientiously fulfilled its responsibilities as a platform, improved its compliance management systems, and achieved good results in its compliance rectification.

With that, an antitrust saga lasting more than three years came to a close.

 

Chapter 15: 996: A Social Debate About Work

If “choose one of two” was Alibaba’s entanglement at the commercial level, “996” was the heavy blow it suffered at the social level.

“996” refers to a working pattern of 9 a.m. to 9 p.m., six days a week.

Under Chinese law, working hours may not exceed eight hours a day; a 40-hour week has been the standard since a State Council regulation of 1995; and overtime is generally capped at 36 hours a month. Measured against the law, 996 plainly crossed the line. Yet in the internet industry it had long been an open secret, with enforcement all but absent.

On 11 April 2019, at an internal Alibaba gathering, Ma addressed the subject. “That companies like China’s BAT [Baidu, Alibaba and Tencent] today are able to do 996,” he said, “is, I think, a blessing earned by people like us.” He went on: “Personally, I think being able to do 996 is a huge blessing. Many companies and many people would like to do 996 and never get the chance. If you don’t do 996 when you’re young, when will you?” And: “In this world, every one of us wants to succeed, wants a good life, wants to be respected. Let me ask you: if you don’t put in more effort and time than others, how can you achieve the success you want?”

By the next day the remarks had spread across the entire internet, triggering an avalanche of criticism.

On 12 April, Ma offered an explanation on Weibo, China’s Twitter-like microblogging platform: “No company should, or can, force its employees to work 996. Alibaba has always advocated living seriously and working happily! But young people must understand for themselves that happiness is earned through struggle! I’m not defending 996, but I salute those who strive!”

The explanation did not calm public opinion; if anything it was read as a more sophisticated defence. Britain’s Financial Times commented that, although Ma had kept correcting himself across three statements on 996 – from the “blessing” theory, to “nobody should be forced”, to “self-improvement” – in the eyes of the Western media he had all but become a byword for the exploitative “996 boss”, and Alibaba almost a “high-tech sweatshop”.

The New York Times and other Western outlets reported Ma’s remarks and noted the criticism from China’s state media. A People’s Daily commentary said, in substance, that forcing staff to work 996 not only reflected managers’ arrogance but was also impractical and unfair.

CNN, Fast Company and others also ran prominent headlines criticising Ma for defending a culture of twelve-hour days, six days a week.

Why was the storm so severe?

Because it touched on a question Ma had never truly understood: the reasons for his own success.

Ma’s success came from his exceptional powers of expression, his extraordinary nerve, his precise grasp of the opportunities of his era – and from a set of historical conditions that cannot be replicated: China’s entry into the WTO, the spread of internet infrastructure, the explosion of the consumer market and a permissive regulatory environment. When he attributed everything to “working harder than others”, he pushed the countless people who had struggled under the same logic of effort and still failed into a position of moral inferiority.

A commentary on Shangguan News, the Shanghai news site, went to the heart of it at the time: “What is most worrying is that Jack Ma still seems unable to understand the causes and nature of his own success. There is no denying that he has exceptional intelligence, extraordinary courage and far-sighted vision. But what made Jack Ma also included the opportunities of the reform era, the groundwork laid by information technology, and the favour of Lady Luck. A blind faith that man can conquer heaven, and self-infatuation, will only leave the tycoons less and less able to see where their businesses and fortunes really came from. Insisting that ‘hard work brings success’ only oversimplifies life.”

One line in the commentary reads like a prelude to everything that happened two years later: “Who made whom, in the end? The tycoons ought to have some sense of that.”

In fact, the official media had given a hint earlier still. In September 2018, when Ma announced that he would step down as chairman the following year, a People’s Daily commentary – the Communist Party’s flagship newspaper – contained a sentence that would be quoted again and again: “There is no such thing as the era of Jack Ma – only Jack Ma within an era.”

At the time, Ma probably took it as a courtesy.

Two years later, in August 2021, the Supreme People’s Court and the Ministry of Human Resources and Social Security jointly published model cases on excessive overtime, declaring explicitly that “996” seriously violated the legal limits on extended working hours. The shift in the official line – from “blessing” to “illegal” – is itself a footnote to the change in Ma’s position.

 

Chapter 16: From “Daddy Ma” to Capitalist

In the space of a few years, Ma’s public image underwent a dramatic reversal. To understand it, one must trace several threads running at the same time.

The first was the discontent of small business owners.

Alibaba’s growth was, in essence, the shared growth of a platform and the participants in its ecosystem. In the early days, many small merchants on Taobao started from nothing with the platform’s help, and many genuinely made money. Some of them called Ma “Daddy Ma”, and there was sincere gratitude in the term.

But as the platform’s power swelled, things began to change. The cost of acquiring traffic kept rising; huge numbers of sellers were competing for limited exposure, and it became ever harder for small merchants to attract buyers on the strength of their products alone. Meanwhile, Tmall’s brand merchants were given more resources. Some small merchants felt that they had “made Alibaba, and Alibaba had pulled up the bridge once it had crossed the river”.

In the late 2010s, against a backdrop of slowing growth and falling consumer confidence, that feeling was amplified. As business grew harder, the platform’s commissions, advertising fees and allocation of traffic became the most obvious targets.

The second thread was a shift in public attitudes to the very rich.

From the early to the mid-2010s, Chinese public opinion was, on the whole, strongly enthusiastic about business success. The richest man was a role model; the target of ridicule was “My dad is Li Gang” – the catchphrase born in 2010 when a drunk-driving student who had hit two people tried to escape responsibility by invoking his father, a local police official, and which became shorthand for the arrogance of the privileged. Ma was not often the richest man in China, but he was the best talker, and the one who most embodied the underdog made good.

By the end of the decade, though, the economy had entered a downturn, and the pressures on young people – jobs, housing prices, the cost of living – were mounting. In that climate, a richest man who said “I have never touched money; I’m not interested in money”, and a boss who said “996 is a blessing”, were no longer amusing. They grated.

In September 2018, an online article claiming that China’s private economy had “completed its task of assisting the public economy and should gradually exit the stage” spread widely, causing widespread unease among private entrepreneurs. The official media stepped in to reject the idea, and on 1 November that year the top leader convened a symposium of private entrepreneurs, assuring them that they were “our own people”. That the authorities needed to reassure them so explicitly shows how widespread the anxiety had become.

Another line attributed to Ma circulated widely online: “Stupidity is worse than cancer. Cancer can be cured; stupidity can’t.” Its original source cannot yet be verified, but its circulation shows that, in the public mind, Ma’s style of speech had become associated with a certain condescension. In a rising tide, such quips are taken as humour; in a falling one, as arrogance.

The third thread was Ma’s own slowness to register the change.

He was a man who depended to an extreme degree on public speaking. He needed a stage, an audience, and the sight of their reaction afterwards. In a company’s start-up phase this trait is an enormous asset – it unites the team, persuades investors and educates the market. But once the company has become infrastructure and the public mood has turned, it becomes a liability.

On Weibo, on the question-and-answer site Zhihu and on the video platform Bilibili, the way people referred to Ma shifted from cloying adulation – “Daddy Ma this, Daddy Ma that” – to “evil capitalist”. The change did not happen overnight, but it did happen.

At the end of 2018, Ma’s identity acquired two intriguing footnotes. In November, the People’s Daily disclosed in a report that Ma was a member of the Chinese Communist Party – something few outsiders had known. Party membership is not unusual among Chinese private entrepreneurs; it is a form of political recognition, and it also means accepting Party discipline. In December, Ma was named one of the 100 “pioneers of reform” honoured by the authorities, as “an innovator of the digital economy”. Less than two years later, his situation had been transformed.

On 10 September 2019, at Alibaba’s twentieth-anniversary gala, Ma bade farewell to the chairmanship. He ended his speech: “The green mountains do not change, the clear waters flow on – we shall meet again.”

Thirteen months later, he gave his twenty-minute speech in Shanghai.

 

Chapter 17: Hupan University

In 2015, Ma joined fellow entrepreneurs and scholars – Liu Chuanzhi, Feng Lun, Guo Guangchang, Shi Yuzhu, Shen Guojun, Qian Yingyi, Cai Hongbin, Shao Xiaofeng and others – in founding Hupan University (“Lakeside University”), near Yuhu Bay on the West Lake in Hangzhou.

According to its official description, Hupan University was a public-interest, non-profit institution whose aim was to train a new generation of entrepreneurs with the entrepreneurial spirit of a new era of business civilisation; its target students were mainly founders whose businesses had been running for at least three years.

In reality, Hupan University was where Ma exported his business values. There he lectured China’s next generation of entrepreneurs, sharing his methods for thinking about business, organisations and the times. It was the place that cemented his status as a “godfather” among entrepreneurs, and the origin of the description of it as Ma’s own “Whampoa Military Academy” – a reference to the academy founded in 1924 that trained the officers who would later lead both the Nationalist and Communist armies.

The school’s existence fitted perfectly with Ma’s view of himself as a teacher. He once said that the happiest part of his working life had been his years as a teacher. Returning to the classroom after retirement seemed only natural.

But after 2020, Hupan University’s position quickly became sensitive.

In March 2021, Hupan University suspended its latest intake. The carved name at the school gate was removed, and the school renamed itself the “Hupan Research Centre for Innovation and Entrepreneurship”. It said the change was to avoid misunderstanding, since it was not an institution that awarded degrees within the national education system.

In May 2021, China’s Ministry of Education, together with the Ministry of Public Security, the Ministry of Civil Affairs, the State-owned Assets Supervision and Administration Commission and other departments – eight in all – issued the Opinions on Regulating the Registration and Use of the Names “University” and “College”. The document took direct aim at training bodies set up within companies, and at social organisations, that “misused the names ‘university’ and ‘college’” without approval to publicise themselves and recruit students, “causing public misunderstanding, disrupting the educational order and producing a bad influence”.

The document was widely seen as the formal response to the Hupan University affair. Staff at the Hupan Research Centre later said that the renamed institution was still holding classes.

In September 2025, according to Phoenix Tech, the Hupan centre published an admissions notice, recruiting again for the first time in four years, with essentially unchanged entry requirements.

The signal sent by this episode went far beyond the renaming of a training institution. In China’s institutional tradition, education has long been seen as a public function. An organisation led personally by an entrepreneur, with the goal of training “a new generation of entrepreneurs”, would – however legitimate its original intentions – provoke an instinctive unease at the level of the power structure.

The unease was not imaginary. In September 2020, the General Office of the Communist Party’s Central Committee issued its Opinions on Strengthening United Front Work in the Private Economy in the New Era, calling for stronger ideological and political guidance of private-sector figures by the Party, and for stronger organisation among private entrepreneurs. Within that framework, a “university” founded, taught and run by entrepreneurs themselves, choosing its own students and gathering some of the most influential private businesspeople in China, could be seen – even without any political intent – as a network outside the Party’s organisational system. Whether Hupan’s suspension was directly connected to this, the authorities have never said.

For an empire to hold at once vast wealth, a huge industrial ecosystem, wide social influence and its own system for training entrepreneurs: taken together, these four things amount to a degree of concentration the system finds hard to tolerate.

The fate of Hupan University was a clear sign that this concentration was beginning to be dismantled.

 

Chapter 18: A Global Stage for One Man

In the mid-2010s, Ma held a status extremely rare among Chinese entrepreneurs: he was seen as a bridge between China and the world.

On 9 January 2017, he met Donald Trump, then not yet inaugurated as US president, at Trump Tower in New York. Afterwards Trump told reporters: “We just had a great meeting. Jack and I are going to do some great things.” He also called Ma “a great, great entrepreneur – one of the best in the world”, and said “he loves this country and he loves China”.

In the meeting, Ma discussed ideas for helping American small businesses and agriculture, particularly small businesses in the Midwest, by using Alibaba’s platforms to sell American farm produce and services to China and Asia. Afterwards, Alibaba said it expected to create a million jobs in the United States through its platforms.

The meeting drew enormous attention around the world. During his campaign Trump had repeatedly threatened steep tariffs on Chinese goods, and after his election he had taken a telephone call from Taiwan’s leader; the outlook for Sino-American relations was unclear. For a Chinese entrepreneur to call on the new president before his inauguration, and to make a major pledge about American jobs, carried a symbolic weight that went far beyond business.

At home, some analysts believe, the meeting also left a latent problem: China’s official diplomatic apparatus was then preparing a meeting between the two heads of state, and the limelight Ma seized in the American media was not entirely in step with the rhythm of official diplomacy.

In 2018, Ma’s activities at the World Economic Forum in Davos marked the peak of his international prestige. According to the Financial Times, he chatted happily with political and business leaders from around the world at the forum. He then hosted a lavish dinner, with Bill Gates on his left and Sweden’s prime minister, Stefan Löfven, on his right. According to some reports, three presidents and five prime ministers attended, along with the heads of international bodies including the director-general of the WTO.

Once the dinner became public, it caught the attention of media around the world. Some called it Ma’s “private head-of-state diplomacy”. By contrast, the official delegation China had sent to Davos received nothing like the same attention.

In September 2018, in an interview with the official Xinhua news agency, Ma announced that he was abandoning his pledge to “create a million jobs for America”, citing trade friction between China and the US. If trade relations between China and the US were good, he said, a million or two million jobs could be created on both sides; but if they were bad, ten million jobs would be destroyed.

The turnaround itself was honest – the pledge had always looked more like a diplomatic gesture than an executable business plan. But it also exposed a problem: when you cast yourself as someone who can mediate between nations, you must bear the political consequences.

Another, subtler but more important change was taking place at the same time.

In the reinterpretations that followed 2020, every appearance Ma had made on the international stage – every banquet, every handshake with a foreign leader – was re-examined within a different frame. His well-known line that Alibaba would “fall in love with governments, but never marry them” sounded like a witticism in the 2010s; in the 2020s it was read as a self-justification about keeping one’s distance.

An entrepreneur can wield great international influence. But in any country, when a private citizen appears on the world stage no longer as a businessman but as someone who can represent a kind of national image, that influence turns from an asset into a burden.

 

Chapter 19: What the Summit Looked Like

Before describing the collapse, it is worth sketching the summit once more, because only by seeing that height clearly can one understand the fall that followed.

In 2019, Alibaba was the largest retail business in China and one of the largest in the world. Measured by GMV, it was the world’s biggest retail commerce company. It served hundreds of millions of Chinese consumers and tens of millions of merchants, and its platforms were home to millions of young entrepreneurs.

Its cloud: Alibaba Cloud was China’s largest public cloud provider; in the 2020 financial year (to 31 March 2020), its revenue passed 40 billion yuan for the first time.

Its logistics: Cainiao Network, founded in 2013, had become a data and logistics platform linking many courier companies, underpinning the flow of tens of billions of e-commerce parcels a year.

Its payments: Alipay served more than a billion users and 80 million merchants. In the twelve months to June 2020, domestic payment volume on Alipay reached 118 trillion yuan.

Its founder: Ma was a UN Sustainable Development Goals Advocate, co-chair of the UN Secretary-General’s High-level Panel on Digital Cooperation, a member of the World Economic Forum’s board of trustees, chairman of the China Entrepreneur Club and president of the Zhejiang Chamber of Commerce. He had received honorary doctorates from a number of universities, including the University of Hong Kong, Tel Aviv University and the Hong Kong University of Science and Technology.

In November 2019, gross merchandise value recorded during Alibaba’s “Double Eleven” – the Singles’ Day shopping festival on 11 November, now the world’s largest shopping event – reached approximately 268.4 billion yuan, compared with approximately 213.5 billion yuan in 2018.

On 31 December 2019, Alibaba’s market value stood at around 570 billion dollars, placing it among the top ten companies in the world. And in the company’s own narrative, everything was still described as “just beginning”.

On the evening of 10 September 2019, when he stepped down as chairman, Ma stood on the stage of the Hangzhou Olympic Sports Centre and spoke to the tens of thousands of employees below. He hoped, he said, that Alibaba would live for 102 years – spanning three centuries.

The mood in the arena was jubilant. Nobody knew that a year later the company would face the harshest round of regulation in Chinese business history, and that the man on stage would all but vanish from public view for the next three years.

 

Part Three: The Timeline of the Collapse

 

Chapter 20: Shanghai, 24 October 2020

Shanghai, 24 October 2020: a crisp, clear autumn day.

The second Bund Summit, organised by the China Finance 40 Forum – an influential think tank of senior economists and financial officials – and other bodies, was under way. It was one of the highest-level annual gatherings in Chinese finance. China’s Vice-President, Wang Qishan – a former anti-corruption chief and one of the most senior figures in the country’s leadership, widely seen as a close ally of Xi Jinping – delivered an address by video, stressing the need to balance financial innovation with the prevention of risk. Yi Gang, then governor of the People’s Bank of China, and other financial officials also took part in the summit’s proceedings.

Then Jack Ma took the stage.

He spoke for about twenty minutes. It was a speech that would later be studied over and over, parsed line by line. Its core can be summed up in a few arguments.

First, he argued that China’s financial system was not yet mature. Chinese finance was still “in its youth”, he said; and China’s problem was not systemic financial risk but “the risk of lacking a system”.

Second, he criticised the banks’ “pawnshop mentality”. “We must get rid of the pawnshop mentality in today’s finance,” he said, “and rely on the development of credit systems. Today’s banks still carry on the pawnshop mentality. Collateral and guarantees are a huge pit. Banks like lending to good companies, to companies that don’t need money – lending desperately – and the result is that many good companies are turned into bad ones.”

Third, he criticised the regulatory mindset. The Basel Accords, he said, were rather like “an old people’s club”, designed to solve the problems of ageing financial systems, whereas China’s problem was precisely that its financial system was not yet mature. “We cannot manage an airport the way we manage a railway station,” he said, and “we cannot manage the future with yesterday’s methods.” Innovation without risk, he said, was the killing of innovation; and trying to reduce risk to zero was the greatest risk of all.

Fourth, he spoke about policymaking. What China needed were policy experts, he said – practitioners who did things well but did not necessarily talk well. Making policy was a technical craft; now there were more and more policies, with the result that nobody could get anything done.

The reaction in the hall was mixed. According to a number of media accounts, his remarks left the officials present squirming in their seats.

At the time, many understood this as a candid and courageous critique of the industry. In hindsight, the problem was not whether his views had merit – criticisms of banks’ preference for collateral, or of regulation lagging behind innovation, were nothing new in professional circles and had a good deal of validity. The problem lay with the speaker, the setting and the timing.

The speaker was the controlling figure behind a fintech company preparing to go public, whose valuation was swinging sharply as regulatory expectations shifted.

The setting was a conference hosted by China’s most senior financial think tank, which a sitting vice-president of the country had just addressed.

The timing was a moment when Ant Group’s listing had already been approved for registration by the securities regulator and was about to be priced, with just twelve days to go before its shares were due to begin trading on 5 November.

Some analysts argued that Ma’s criticism stood in open contrast to the address Wang Qishan had just delivered, and was therefore seen as a challenge to the authority of the very top. That interpretation cannot be proved.

Two events from the month before the speech were rarely connected with Ma at the time. In September 2020, the property tycoon Ren Zhiqiang was sentenced to eighteen years in prison on charges including corruption, bribery and embezzlement of public funds; earlier, he had sharply criticised the top leader’s handling of the Covid-19 outbreak in an essay that circulated online. In the same month, the Party’s General Office issued its opinions on united front work in the private economy, calling for stronger ideological and political guidance of private entrepreneurs. Neither event was directly connected with Ma’s speech. But together they sketch the political climate of that autumn: the space for public criticism was narrowing, and the political demands on private entrepreneurs were rising.

The speech was later dubbed, half in jest, “the most expensive speech in history”.

 

Chapter 21: The Eve of the Listing

Before the speech, Ant Group’s listing had already reached its final stage.

On 21 October 2020, the China Securities Regulatory Commission approved the registration of Ant Group’s initial public offering on the STAR Market. The STAR Market is a board of the Shanghai Stock Exchange set up in 2019 for technology and innovation companies, and it pioneered a “registration system”: instead of the regulator approving each listing case by case, listings are reviewed by the exchange on the basis of disclosure and then registered by the CSRC. Ant’s decision to list simultaneously on the STAR Market and in Hong Kong was seen as a landmark of China’s capital-market reform.

On 26 October 2020, Ant Group published its H-share offering in Hong Kong. The H shares were priced at HK$80 each, with 1,670,706,000 H shares on offer (subject to the over-allotment option), of which 41,768,000 were in the Hong Kong public offering and 1,628,938,000 in the international offering. At the same time, Ant offered the same number of A shares on the STAR Market, at 68.8 yuan each.

It was widely expected to be the largest initial public offering in history, raising about 34 billion US dollars before any over-allotment. More than 5.15 million accounts subscribed for Ant’s shares in the online retail offering on the mainland, a record.

Many small retail investors and internet entrepreneurs saw Ma as a symbol of reform – just two years earlier he had been officially honoured as a “pioneer of reform” and “an innovator of the digital economy” – and were brimming with confidence that Ant’s listing would let them “make a killing”. Ant Group’s market value after listing was expected to exceed 2.1 trillion yuan.

The listing mattered to far more people than Ma. More than 5.15 million retail accounts had subscribed for A shares, and large numbers of small investors had applied in Hong Kong; tens of thousands of Ant employees held shares and were waiting for years of work to pay off; and a host of early investors and funds were waiting to exit. When the listing was suspended, subscription money was returned, so retail investors lost mainly an opportunity; how employees and long-term shareholders had fared would become clear only years later.

In the West, by contrast, the media were broadly sceptical about whether an institution like Ant could keep going as it was. Analyses at the time in the Wall Street Journal and elsewhere pointed out that Ant offered a channel of finance that was more efficient and more attractive than the banking system – but that its regulatory environment was uncertain.

At the time these analyses were dismissed as the idle commentary of outsiders. A few days later, they turned out to be prophecy.

 

Chapter 22: Nine Days Later

The timeline runs as follows.

24 October: Ma gives his speech at the Bund Summit in Shanghai.

2 November: The People’s Bank of China, the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC) and the State Administration of Foreign Exchange summon Ant Group’s controlling figure Jack Ma, its chairman Eric Jing (Jing Xiandong) and its president Simon Hu (Hu Xiaoming) for a “regulatory interview” – a formal summons in which officials admonish a company’s leadership. The same day, the CBIRC website shows that it has drafted, with the central bank and other departments, the Interim Measures for the Administration of Online Micro-Lending Business (Draft for Comment), and is seeking public comment. The draft stipulates that in any single jointly funded loan, a micro-lending company operating online must contribute no less than 30 per cent of the funds.

3 November: The Shanghai Stock Exchange issues its Decision on Suspending the STAR Market Listing of Ant Group Co., Ltd. The decision states that Ant Group had applied to list on the STAR Market on 5 November 2020; that the company’s controlling figure, chairman and president had recently been jointly summoned for a regulatory interview by the relevant authorities, and that the company had reported changes in the fintech regulatory environment and other material matters; and that these material matters might cause the company not to meet the conditions for issuance and listing or the requirements for information disclosure. In accordance with Article 26 of the Administrative Measures for the Registration of Initial Public Offerings on the STAR Market (Trial), Article 60 of the Exchange’s Rules for the Review of Stock Issuance and Listing on the STAR Market, and other provisions, and having consulted the sponsor, it had decided to suspend the listing. The same day, Ant Group announced that it was suspending its listing in Hong Kong as well.

A CSRC spokesman then stated that the suspension of Ant’s STAR Market listing was a decision taken by the Shanghai exchange in accordance with law and regulation; that the regulatory interview by the financial authorities and recent changes in the fintech regulatory environment might have a major impact on Ant’s business structure and profit model, and constituted a material matter arising before listing; and that the CSRC supported the exchange’s decision, while maintaining communication and coordination with Hong Kong’s Securities and Futures Commission and the securities regulators of some major overseas markets.

On 10 November, SAMR published draft antitrust guidelines for the platform economy. In little more than a week, new rules on both financial regulation and competition had arrived one after another.

On 5 November, the day trading was due to begin, nothing happened.

On 3 November, the Economic Daily, a state-owned national newspaper, published a commentary headlined “Suspension of Ant Group’s Listing Shows Firm Resolve to Protect Investors’ Interests”. The suspension, it said, was intended precisely to better protect the rights of financial consumers, the interests of investors and the long-term healthy development of the capital market. “Ant Group’s most urgent task is to carry out rectification promptly and in earnest, as required by the regulators.”

One sentence in the commentary is worth remembering: “It sends a clear signal to the market: under the registration system, every link of the capital market has sound market rules and stern means of supervision. All market participants must respect the rules and hold them in awe – and nobody is an exception.”

The planned dual-market flotation, expected to raise tens of billions of US dollars, was halted before trading began.

This was the most immediate watershed of the whole affair. Before it, Ma was the most successful exemplar of China’s private economy; after it, he became the protagonist of a different story.

That is the public procedure and the officially stated reasons. On how the decision was actually made, there is another layer of account, from media investigations.

In November 2020, Reuters reported, citing people familiar with the matter, that after Ma’s speech the General Office of the State Council – China’s cabinet – compiled a report on public reaction to it and passed it to senior leaders, including Xi Jinping; other agencies submitted reports on how Huabei encouraged the young and the low-paid to borrow. A few days later, the Wall Street Journal reported, citing Chinese officials with knowledge of the matter, that Xi personally decided to halt Ant’s listing. All these reports rest on anonymous sources; the Chinese authorities have never confirmed or denied them, and Ant declined to comment. They cannot be weighed equally with published regulatory documents, but they are clues that no account of this history can ignore.

The “regulatory interview” also deserves a word for readers unfamiliar with China. It is an informal tool much used by Chinese regulators: officials summon a company’s leaders, point out problems and set requirements. There is usually no published record, and no statutory procedure or right of reply – yet it often carries more weight than a formal penalty. The direct basis for suspending Ant’s listing was just such an interview: the exchange’s decision stated that the suspension was due to the company’s controlling figure and others having been “jointly summoned for a regulatory interview”, and to changes in the fintech regulatory environment.

 

Chapter 23: Why Was Ant’s Listing Halted?

On the evidence of the regulators’ published documents, Ant Group had three specific, technical problems. They were real problems; even without the speech, they would sooner or later have had to be resolved.

The first was leverage and the bearing of risk.

As we have seen, about 98 per cent of the 2.15 trillion yuan in outstanding credit facilitated by Ant was funded by partner financial institutions or had been securitised. This meant that, however central Ant’s role in risk control and credit decisions, the share of funds it provided directly was relatively low – though the precise allocation of risk depended on its cooperation agreements, guarantee arrangements, securitisation structures and regulatory requirements.

The draft Interim Measures for the Administration of Online Micro-Lending Business, however, required that in any single jointly funded loan, a micro-lending company operating online must contribute no less than 30 per cent. That requirement would sharply reduce Ant’s capital efficiency: the same capital could now support a far smaller volume of lending.

Seasoned financial analysts judged at the time that the sharp rise in the required funding share was likely to cut the capital efficiency of the business significantly – but that the funding share in joint loans could not be converted directly into a single leverage multiple, still less simply equated with a Basel capital adequacy ratio. In other words, the essence of the regulation was this: if you are doing what a bank does, you must be constrained by capital as a bank is.

The second was data and credit reporting.

In a regulatory interview on 26 December 2020, the financial authorities listed the problems they had identified: an unsound corporate governance mechanism; a weak sense of the law, contempt for regulatory and compliance requirements, and illegal regulatory arbitrage; using its dominant market position to exclude competitors; and damaging the lawful rights of consumers, leading to consumer complaints.

The authorities set Ant five requirements for rectification: first, return to its roots in payments, improve the transparency of transactions and strictly prohibit unfair competition; second, conduct personal credit-reporting business only with a licence and in compliance with the law, and protect the privacy of personal data; third, establish a financial holding company in accordance with the law, strictly implement regulatory requirements, and ensure adequate capital and compliant related-party transactions; fourth, improve corporate governance and rigorously rectify irregular credit, insurance and wealth-management activities in line with prudential requirements; and fifth, conduct securities and fund business lawfully, strengthen the governance of its securities entities and carry out asset securitisation in compliance with the rules.

In essence, these five requirements turned a “technology company” back into a “financial holding company”. And that recasting struck at the very heart of Ant’s valuation. Its valuation reflected investors’ expectations of technology-led growth. A financial-holding-company framework would require greater attention to capital requirements and regulated financial risks, potentially altering the valuation; no single price-earnings multiple captures that adjustment.

The third was corporate governance and the structure of control.

The seeds of this had been planted with the transfer of Alipay’s ownership in 2011. A governance structure in which one controlling figure could decide the fate of a company’s core assets was, in the regulators’ eyes, a clear point of risk. This problem would be fundamentally resolved in 2023, as described below.

One rule that already existed is often overlooked. In September 2020, the People’s Bank of China issued its Trial Measures for the Supervision and Administration of Financial Holding Companies, effective from 1 November, requiring companies that controlled two or more types of financial institution to apply to establish a financial holding company and to meet capital and related-party requirements. Ant clearly fell within its scope. In other words, on the eve of Ant’s listing the relevant rules had already been published; they simply had not yet been applied to particular companies.

Beyond these three problems lay a broader backdrop. The Politburo meeting of 11 December 2020, and the Central Economic Work Conference that followed – the annual meeting at which the leadership sets economic priorities – called explicitly for “strengthening anti-monopoly work and preventing the disorderly expansion of capital”. That came more than a month after Ant’s listing was halted. It shows that the Ant affair was not an isolated regulatory action but the opening of a much larger shift in policy.

A comment that circulated in financial circles at the time put it more bluntly: in China, finance naturally enjoys barriers to entry, and much of the time it is the regulators who hand you your living. “If you are arbitraging on the one hand and cursing on the other, there will obviously be people who can’t stomach it.”

The remark captures a popular view, but it explains only half the story.

How, then, should the halt be judged? This book believes two questions must be kept apart.

The first is whether Ant’s business needed tighter regulation. The answer is yes. A platform that facilitated more than two trillion yuan in loans while putting up only a small fraction of the money would attract regulators’ attention in any country; consumer protection, capital requirements and the use of data are all legitimate public concerns.

The second is how the regulation was carried out. Here the answer is far more complicated. The new rules appeared, as a draft for comment, only three days before the listing; the direct basis for the suspension was an interview with no public record; reports that the top leader personally decided the matter have never been officially addressed; and the millions of investors affected had no channel through which to challenge the decision itself. In a market with a mature rule of law, even if the final conclusion were the same, regulators would normally have to publish their rules in advance, give the company time to make its case and to rectify, and allow judicial review.

Ant’s problems were real. But the way they were handled showed every entrepreneur and investor doing business in China that a company already approved for registration and about to list could be halted within two days, by a process that could not be questioned. The cost of that unpredictability went far beyond one company.

 

Chapter 24: The Missing Three Months

After 3 November, Jack Ma disappeared.

Strictly speaking, he had not been seen in public since the speech of 24 October. His last public appearance was at the Bund Summit in Shanghai. For the next three months, nobody saw him.

For the founder of a world-famous company, silence on that scale was an event in itself. The international media began asking where he had gone; there was even a quip doing the rounds that “even the richest man in the world is looking for the richest man in China”. Alibaba’s share price fell steadily on news of the antitrust investigation.

According to Bloomberg at the end of December 2020, Ma’s personal net worth had shrunk by nearly 11 billion dollars in the roughly two months since late October. And that was only the beginning.

Even his own television show changed. In November 2020, when the final of Africa’s Business Heroes – a contest on which he was due to sit as a judge – was broadcast, he did not appear; an Alibaba executive took his place on the panel.

On 20 January 2021, Ma reappeared – once.

Reuters reported the appearance. That day he took part in an online ceremony for a hundred rural teachers; the video also included footage shot on 10 January of him visiting a primary school with colleagues in Tonglu county, near Hangzhou.

It was his first public appearance since Ant’s IPO had been halted. The setting he chose was precise: not a business event, not a finance conference, not Davos, but a charitable occasion about rural teachers. The choice itself carried a message – what he would talk about now was education and philanthropy, not business and finance.

For some time afterwards, the Jack Ma Foundation’s Rural Teacher Award ceremonies were one of the few ways in which he showed himself to the outside world. Spliced into the videos were clips of him visiting village schools with colleagues from the foundation.

In a sense, this was how he handled the crisis: using the most low-key occasions and the most harmless causes to let everyone know he was still there, that he was all right – while saying nothing that might stir controversy.

Some analysts believed that by doing this he was, on the one hand, signalling to those in power that he would henceforth be humble and change his ways; and on the other, protecting himself – because while the storm had not yet passed, any show of prominence was asking for trouble.

Later his life took a different shape. From the autumn of 2021, he turned up in the Netherlands, Spain, Japan and Thailand, looking at greenhouses, breeding technology and agricultural research institutes. An entrepreneur who had once stood at the centre of the world stage began appearing in the news as an agricultural fact-finder.

 

Chapter 25: 2021: The Year of Dismantling

From the spring of 2021 onwards, everything surrounding Ma and Alibaba was systematically dismantled.

On 10 April, SAMR imposed its administrative penalty of 18.228 billion yuan on Alibaba.

On 12 April, the People’s Bank of China, the CBIRC, the CSRC, the State Administration of Foreign Exchange and other financial regulators once again jointly summoned Ant Group. Answering reporters’ questions on behalf of the four bodies, Pan Gongsheng – then a deputy governor of the central bank – said the main purpose of the interview was “to require Ant Group to face squarely the serious problems in its financial business activities and the seriousness of the rectification work”. The interview set out the main elements of the rectification plan: severing the improper links between Alipay and other financial products such as Huabei and Jiebei; correcting the illegal practice of embedding credit business in the payment process; conducting personal credit reporting only under licence; applying to establish the whole of Ant Group as a financial holding company; controlling high leverage and the contagion of risk; and actively reducing the balance of Yu’e Bao.

In May came the renaming of Hupan University and the document from the Ministry of Education and seven other bodies.

In the same period, the official media published articles criticising platform companies. Sina Finance, The Paper and other outlets ran a stream of reports and commentaries accusing the tech giants of using sophisticated algorithms to push credit at the people least able to withstand risk, luring the young and the low-paid into consumerism and leaving them heavily in debt. As early as November 2020, Guo Wuping, head of the CBIRC’s consumer protection bureau, had written an article on Huabei, pointing out that it was basically the same as a bank credit card but that its instalment fees were higher than banks’ – inconsistent with its claim to offer inclusive finance. “In reality,” he wrote, “it is ‘universal but not beneficial’.”

Together these voices formed a complete climate of opinion. It came not from one department but from a whole system. With the official media leading and social media following close behind, the public’s verdict on Ma completed its final reversal.

The crackdown of 2021 was not aimed at Alibaba alone. In July, the ride-hailing company Didi, just two days after listing in New York, was placed under cybersecurity review, and its app was pulled from stores; the same month, private after-school tutoring companies were ordered to become non-profits, and an industry worth hundreds of billions of yuan shrank almost overnight. In August, a meeting of the Party’s Central Financial and Economic Affairs Commission put forward “common prosperity”; in September, Alibaba pledged 100 billion yuan by 2025 to support it.

The effects of this run of policies on ordinary people were concrete. Investors in Chinese tech stocks – including many ordinary Westerners holding them indirectly through pension and index funds – suffered heavy losses within a year; large numbers of tutoring-industry employees lost their jobs; and the internet giants that young graduates aspired to join began to cut hiring. Many of the policies had defensible aims: data security, lighter burdens on schoolchildren, curbs on platform power. But the speed and manner in which they arrived made it very hard for companies and investors to judge their risks in advance. Unpredictability itself became a cost.

Thereafter Ma no longer appeared at entrepreneurs’ club events or national-level forums, and several public roles he had held passed to others.

Something else happened in 2021 that the outside world would learn of only four years later.

In April 2025, the International Consortium of Investigative Journalists (ICIJ), together with Le Monde and Radio France, published an investigation. Drawing on a transcript in French court records, it reported that in the spring of 2021 Ma had telephoned a Chinese-born businessman under arrest in France – identified by the ICIJ, at its source’s request, only as “H.” – to pass on the Chinese authorities’ wish that he return. According to the record, Ma said that the authorities had asked him to intervene – “They said I’m the only one who can persuade you to return” – and warned that if he did not go back, the consequences would be serious. H. said he would think about it, but did not return. Ma did not respond to the ICIJ’s requests for comment, and the Chinese authorities have offered no explanation.

The report rests on court records rather than rumour, but it is still a single-source investigation; its contents have not been the subject of any court’s findings of fact, and this book cannot independently verify them. Its significance is the angle it offers: in 2021, Ma may have been not only an object of regulation but also someone required to serve state power. If the report is accurate, it says a great deal about an entrepreneur’s position at the time – he had lost not only the freedom to speak, but perhaps also the freedom to refuse.

That year, the frequency with which the name “Jack Ma” appeared on the Chinese internet dropped sharply.

 

Chapter 26: Three Years Through the Storm

From 2022 to 2024, Alibaba spent three years living alongside its regulators.

In 2022, Alibaba’s share price languished near its lows. The company faced pressure on several fronts: the compliance costs of antitrust rectification; weak consumer spending as economic growth slowed; fierce attacks by competitors in China’s smaller cities and towns; and the valuation discount that came with regulatory uncertainty. In March, Alibaba announced that it was increasing its share buyback programme from 15 billion to 25 billion dollars – at the time the largest buyback in the history of US-listed Chinese companies.

On 7 January 2023, Ant Group published its Announcement on Continuing to Improve Corporate Governance. It was the single most important structural adjustment of the entire affair.

The announcement stated that Ant had received a Notification Letter on the Adjustment of the Upper-Level Shareholding Structure from Hangzhou Junhan and Hangzhou Junao, and that, to further adapt to the requirements of a modern corporate governance system and to bring shareholders’ voting rights into line with their economic interests, the main shareholders and related beneficiaries intended to adjust the upper-level shareholding structure.

At the heart of the adjustment were voting rights. Before it, Hangzhou Junhan and Hangzhou Junao together held 53.46 per cent of Ant Group. Hangzhou Yunbo Investment Consulting Co., Ltd was the general partner of both, and enjoyed no economic interest derived from Ant Group. Jack Ma, Eric Jing, Simon Hu and Jiang Fang held 34, 22, 22 and 22 per cent of Yunbo respectively; under Yunbo’s articles and an Acting-in-Concert Agreement, Ma could in effect determine the outcome of votes at Yunbo’s shareholders’ meetings on matters relating to the exercise of shareholder rights in Ant – and thereby, through the Junhan and Junao entities controlled by Yunbo, indirectly control the voting rights over 53.46 per cent of Ant Group. Before the adjustment, therefore, Ma was Ant Group’s actual controller.

After the adjustment, instead of Ma and his concert parties exercising those voting rights jointly, ten individuals – including members of Ant’s management, employee representatives and the founder, Ma – would each exercise their voting rights independently. Once completed, each main shareholder would exercise its voting rights in Ant independently and without any acting-in-concert relationship; no shareholder, alone or jointly, would control Ant at the level of the shareholders’ meeting; and no shareholder would nominate more than half of the directors. As a result, there would no longer be any direct or indirect shareholder controlling Ant Group, alone or jointly.

Put most simply: Ma’s voting rights in Ant Group fell from 53.46 per cent to 6.208 per cent. He was no longer its actual controller.

The announcement also stressed that the adjustment would not change the economic interests of Ant’s shareholders and related beneficiaries.

For Western readers, this is an example worth examining closely. Ma’s property was not confiscated; his economic interest in Ant was largely preserved. What he lost was control. The announcement described the change as shareholders voluntarily adapting “to the requirements of a modern corporate governance system”. But in the regulatory climate of the time, the line between “voluntary” and “required” was hard to draw; from this book’s point of view, the change may have been closer to a concession made under pressure. Ownership was not taken away, but its most important element – the right to decide the company’s direction – passed to others under political and regulatory pressure.

Similar changes took place in less visible ways. In January 2023, the Financial Times and Reuters reported that state-owned investment vehicles – one linked to the Cyberspace Administration of China, the other to a Zhejiang state media group – had, according to business registration records, each acquired 1 per cent of an Alibaba subsidiary: so-called “special management shares”, or “golden shares”, with the right to appoint a director in at least one case. Such stakes are tiny, but they can carry a board seat or a veto over key decisions.

On 7 July 2023, the People’s Bank of China, the National Financial Regulatory Administration (the CBIRC’s successor) and the CSRC announced fines on Ant Group and its subsidiaries totalling 7.123 billion yuan (including confiscation of illegal gains), ordered Ant to shut down its improperly run mutual-aid health scheme Xianghubao, and required it to compensate consumers in accordance with the law.

The details: the National Financial Regulatory Administration confiscated 1.130 billion yuan of illegal gains from Ant and fined it 2.633 billion, 3.762 billion in all; the central bank issued eight penalty notices against Ant Group, Alipay and the responsible individuals, as well as Ant’s two big shareholders Hangzhou Junhan and Hangzhou Junao, with institutional fines totalling 3.287 billion; and the CSRC’s penalty decision fined Ant (Hangzhou) Fund Sales Co., Ltd 73.68 million yuan.

Ant responded that it “sincerely accepts and resolutely complies, and will further strengthen its compliance and governance”.

At almost the same time, Ant announced a buyback of some of its shares at a price implying a valuation of about 567.1 billion yuan – roughly 70 per cent below the value the market had expected before its 2020 listing. For employees and early investors who had held shares for years waiting for a listing to pay off, that figure spoke more plainly than any fine.

The same day, the financial authorities announced that most of the outstanding problems in platform companies’ financial businesses had been rectified, and that their focus would shift from driving concentrated rectification to normal, routine supervision. The market widely took this as a sign that several years of crackdown were drawing to a close.

On 29 December 2023, the People’s Bank of China published on its website a Public Notice of Licensing Information on Changes to Major Matters at Non-Bank Payment Institutions, approving a change whereby Alipay (China) Network Technology Co., Ltd would have no actual controller. Ant said the plan to adjust the voting structure of its main shareholders, announced in January 2023, had now completed the necessary procedures and been closed.

The symbolism was direct: Alipay no longer “bore the surname Ma”.

On 28 March 2023, Alibaba announced “the most important organisational change in our 24-year history”: it would be split into six business groups, each with its own chief executive and board, able to raise funds and seek a listing independently. Apart from the Taobao and Tmall Commerce Group, which would remain wholly owned by Alibaba, all the groups would be allowed to look for outside capital.

The restructuring was widely interpreted as marking “farewell to the Jack Ma era”. The New York Times noted that it was announced the day after Ma, the founder, returned to mainland China after a year away.

But the restructuring quickly ebbed away in execution. On 16 November 2023, Alibaba announced that it was abandoning the full spin-off of its Cloud Intelligence Group and putting the listing of its Freshippo (Hema) supermarkets on hold, citing tighter US export controls on advanced chips, which had clouded the outlook for the cloud business’s valuation. After the announcement, Alibaba’s shares fell by as much as 10 per cent. A Bloomberg commentary said the decision marked a “dramatic reversal” for Alibaba, casting doubt on its historic six-way restructuring.

On 26 March 2024, Alibaba announced that it was withdrawing the IPO application for its Cainiao smart logistics network and offering to buy out all of Cainiao’s minority shareholders. With that, the spin-offs and listings of the most important of the six groups could no longer proceed as planned.

On 30 August 2024, SAMR announced that Alibaba Group had completed its three years of rectification.

The notice said that over the three years SAMR had stepped up its supervision of Alibaba’s compliance rectification, carried out thorough inspections of its implementation, and commissioned a third-party institution to assess the effectiveness of enforcement. Inspections and assessments showed that Alibaba, as required by the Administrative Penalty Decision and the Administrative Guidance Letter, had completely ended its “choose one of two” monopolistic conduct, strictly regulated its own business practices, conscientiously fulfilled its responsibilities as a platform, improved its compliance management systems, and raised the standard of service to merchants and consumers on its platforms; its compliance rectification had achieved good results, the online retail market environment had improved, and the order of fair competition had been effectively restored.

The notice drew far less public attention than the 18-billion-yuan fine of three years before. But it may have mattered more than the fine itself: it marked the relationship’s passage from confrontation to normality.

 

Chapter 27: How Much Wealth Was Really Lost?

The most widely repeated claim about Ma’s fortune is that it “shrank by 240 billion yuan”. The figure needs a source and an explanation.

The first thing to understand is a basic fact: the great bulk of Ma’s personal wealth is not cash but shares. His fortune swings so violently not mainly because his assets have shrunk but because the share prices of listed companies have moved.

Alibaba’s share price hit its all-time high in October 2020. From then until the end of 2022 it fell by more than 70 per cent. That fall alone was enough to wipe out most of his wealth on paper.

According to Bloomberg in December 2020, Ma’s net worth had already fallen by nearly 11 billion dollars in the roughly two months since late October. And that was only the first stage.

His holdings in Ant Group are more complicated. According to the Bloomberg Billionaires Index, Ma was credited, on the basis of Ant Group’s 2020 prospectus, with an interest of about 9.9 per cent in Ant; while according to Alibaba’s 2014 IPO prospectus, he expected to reduce his interest in Ant to no more than 8.8 per cent. These are proportions of economic interest, and are a different matter from voting rights: the restructuring of 2023 changed voting rights, not economic interests.

Ma’s fortune later recovered with the share price. In 2025, Alibaba’s shares rebounded strongly on the wave of enthusiasm for artificial intelligence; according to the Bloomberg Billionaires Index, by early 2026 Ma’s net worth was about 45 billion dollars. Compared with a peak of about 60 billion dollars in October 2020, his fortune had still shrunk, but nothing like the dramatic “240 billion yuan” of popular legend. These figures vary widely between dates and between compilers, because they depend on that day’s share prices.

Two important clarifications are needed here, however.

First, a shrinking fortune is not bankruptcy. Tens of billions of dollars is still the wealth of one of the richest people in the world. He is in a completely different situation from entrepreneurs who have sunk into debt crises, had their assets frozen or been forced into fire sales. The core of his wealth has been preserved.

Second, the wealth figures conceal a change in control. After the 2023 adjustment, Ma’s economic interest in Ant was largely preserved, but his voting rights fell from 53.46 to 6.208 per cent. A man can still hold an enormous fortune and yet no longer decide the direction of the company he founded – a cost that does not show up in the figure for “how much is left”.

What really made this fall seem so harsh was not the money. It was three other things: he lost control of the company he had built with his own hands; he lost his voice in public life; and he lost his place in society’s esteem.

Of the three, losing his voice may have been the hardest to accept. Because Ma is, in essence, a communicator rather than a manager. His gift lies in explaining complicated things clearly, persuading a group of people, turning a vision into a consensus. When that gift can no longer be exercised in public, what he loses is not merely a stage but the very means by which he realises his own worth.

 

Chapter 28: The Three Layers of the Fall

Setting out what happened between 2020 and 2024, one can see that the “fall” in fact took place on three different levels, each completely different in nature.

The first layer was regulatory.

This is the hardest layer, and the only one with a clear institutional basis, verifiable documents and a timeline. The antitrust investigation and the 18.228-billion-yuan penalty, the suspension of Ant’s IPO, the new online micro-lending rules, the requirement to rectify as a financial holding company, the 7.123-billion-yuan fine, the change at Alipay to having no actual controller: all these were public administrative acts, with a legal basis and a clear regulatory logic.

But “a legal basis” is only half the question. The other half is procedure: whether rules were published in advance, whether enforcement was transparent, whether the companies had a chance to make their case and to seek redress. As earlier chapters showed, on these points the answers are far from satisfactory.

On this level, it can be said that Alibaba and Ant Group did have substantive problems: a platform using its dominant market position to restrict competition; financial businesses that had crossed reasonable boundaries in capital and data; and a corporate governance structure highly concentrated in the founder.

The second layer was political.

This layer is far murkier than the first, but there is credible evidence of its existence. Besides the Reuters and Wall Street Journal reports on decision-making at the top, it shows itself in several facts. Ma’s speech of October 2020 was seen as an open challenge to regulatory authority. His international influence at certain moments eclipsed the presentation of official diplomacy. The money, data, media assets and network of entrepreneurs in his hands constituted a highly concentrated social force.

It is on this level that outside interpretations diverge most widely. Some see it as a question of “who is really in charge”; some as a structural dilemma about the boundary between capital and politics; and some as a question about the real place of private enterprise in China’s system.

All a biographer can do is set out the facts. In that speech, Ma did directly criticise China’s financial regulatory system. After that speech, a series of events did unfold targeting him and his companies. The reasons officially given were always technical and legal, and never once mentioned the speech itself.

The third layer was personal.

This layer is the easiest to overlook. On the evidence of his public words and deeds, Ma seems always to have attributed his success mainly to personal will and effort.

He attributed his success to will, persistence and hard work. That attribution carried him through every hard time, and let him persuade others to bear those hardships with him. But when he understood wealth and influence in the same way, he overlooked a basic fact: his business empire had grown up within a particular set of historical conditions, a particular policy environment and a particular public mood. And those conditions change.

More specifically, he had three traits that he failed to correct in time.

First, his infatuation with public speaking. He needed a stage, and believed his judgements could win support through expression. That was an asset in the start-up years and a risk once the empire had taken shape. Because when what you represent is no longer a company but a system with hundreds of millions of users, every word you say is taken as a position.

Second, his insensitivity to boundaries. The spinning-off of Alipay, the founding of Hupan University, the high profile on the international stage, the dealings with political figures of every stripe – each, taken alone, had its own justification. But accumulated together, they created the impression of someone who “wants to do everything and can do anything”. In a society that places a high value on order, that impression is itself a problem.

Third, his misreading of the public mood. He said 996 was a blessing, said “I have no interest in money”, said “stupidity can’t be cured”. In the early 2010s these lines would have been taken as gems; by 2019 they had become arrogance. A man at the top who goes on speaking in the language of the top will sooner or later be dragged down by the weight of that language itself.

So Ma’s journey from summit to trough is not the story of a bad man brought down, nor of a good man wronged. All three layers were at work at once: his companies did have problems that needed regulating; he personally failed to adapt in time to a changing environment; and what decided how it all ended was a form of power seldom constrained by procedure. Look only at the first two layers, and everything is laid at Ma’s door; look only at the third, and one overlooks the real financial risks and his own mistakes.

 （To be continued in the next volume II）