Jailed man mistaken for Jack Ma, causing Alibaba to lose $26 billion

For Chinese tech mogul Jack Ma, freedom comes at a price: $26 billion.

Alibaba, the Chinese e-commerce giant co-founded by Ma, saw its Hong Kong-listed shares tumble as much as 9.4% last Tuesday after Chinese state media reported that an individual surnamed “Ma ” in the city of Hangzhou – where Alibaba is headquartered – was detained on national security grounds.

According to Chinese state broadcaster CCTV, the suspect was placed under “mandatory measures” on April 25 on suspicion of “collusion with hostile anti-China forces abroad” to “incite secession” and “incite the subversion of state power.” ”.

The one-sentence report, which was quickly picked up by other state-run media and alerted on Chinese news platforms, triggered panic selling in Hong Kong, erasing an estimated $26 billion from Alibaba’s market cap within minutes.

Amid the frenzy, Hu Xijin, former editor-in-chief of the state-run nationalist tabloid Global Times, was quick to clarify on China’s Twitter-like Weibo that the report was misleading because the name of the suspect in question is three characters long.

Jack Ma’s Chinese name, Ma Yun, has only two characters. CCTV later silently updated its original report to match Hu’s assessment.

To further allay concerns, the Global Times reported that the accused was born in 1985 in Wenzhou (while Jack Ma was born in 1964 in Hangzhou) and worked as a director of hardware research and development at an IT company.

The clarifications led to a rally, with Alibaba recouping most of its losses by the end of the day.

The market’s rollercoaster reaction is the latest sign of how nervous investors are fearing China’s embattled tech sector, which has been the target of heavy regulatory crackdowns by the Chinese government since late 2020.

Despite recent signs from the Chinese government that it is preparing to reverse stance due to the economic impact, as first reported by The Wall Street JournalTuesday’s market frenzy indicates that investor confidence remains shaken.

“I thought it was a bit of a strange episode,” said Victor Shih, a professor of political science at the University of California, San Diego.

“Whether this was a wake-up call for the tech industry as a whole, or maybe Jack Ma personally. Who knows? But it certainly demonstrated that the government doesn’t even need to arrest a senior technology executive to erase tens of billions of dollars from a company’s market valuation. She just needs to release some kind of information,” Shih added.

“This is very powerful. And certainly what happened yesterday was a clear illustration of that power, whether it was delivered or not.”

But the fact that investors were so quick to believe that Jack Ma, once China’s most famous billionaire, would run afoul of state security officials reveals something of the political reality many Chinese tycoons now live in.

“It doesn’t matter if it’s really him anymore. The important thing is, a lot of people think it’s him, a lot of people expect it to be him, now that’s interesting,” said a popular comment on Weibo, which attracted 57,000 likes.

The turnaround in public sentiment against Ma is almost as spectacular as her rags to riches story. Until about three years ago, the English teacher-turned-billionaire was widely adored for his charisma, directness, and self-taught success. (He was even nicknamed “Daddy Ma” by some fans.)

But as tech companies like Alibaba have expanded their business empires, they have become the target of growing frustration and resentment among young Chinese workers who are fed up with long working hours, high pressure and stagnant wages. Jack Ma’s endorsement of China’s so-called “996” work culture, which means working from 9 am to 9 pm six days a week, drew intense criticism in 2019.

As the tech giants have come under the crosshairs of the Chinese government, “evil capitalists” have increasingly been blamed for a variety of social ills, from relentless competition, skyrocketing property prices to lack of social mobility.

“In just a few years, ‘Daddy Ma’ has been labeled a ‘rotten capitalist’ in public opinion, and many people are anxious about Ma’s downfall,” Xiang Dongliang, a blogger, wrote on WeChat.

“But the question is, will overthrowing capitalists and driving out (so-called) foreign forces really make life better for everyone?”

Jack Ma has all but disappeared from public life and has kept a low profile since Ant Group’s US IPO was halted by regulators in late 2020. 25 million followers, as of October 2020.

His latest Weibo post, about a meeting of about 100 school principals to discuss the future of education in China, was awash with critical commentary.

“I won’t be surprised if old Ma gets arrested one day,” said the top comment. “You’re just a capitalist! Don’t pretend to be a good person!” another comment shouted.

Jack Ma remained silent throughout Tuesday as rumors against him circulated on the Chinese internet. Hashtags about the arrest of the suspect surnamed Ma were among the top trending topics on Weibo, attracting hundreds of millions of views.

“He has only silence, which is a ‘special way of existing,’” columnist Zhang Feng wrote in a widely shared article on WeChat after the incident.

“This kind of silence is of deep meaning. For a public figure, his own speech is an ‘extension’ of his existence. When a person no longer speaks, even though he is still alive, still doing things, at least part of him has ‘disappeared’.”