Fintech

China’s Alibaba Unwinds Corporate Links With Ant Group

 

As China cracks down on companies that pursue both finance and technology, Alibaba is unwinding its links to its fintech spinoff Ant Group.

After years of emphasising the groups’ synergy, Beijing’s harsh regulatory crackdown means Ant now stresses its autonomy, to the point that Alibaba might even compete with its one-time sister company.

The problems began with Ant’s proposed $37 billion initial public offering (IPO), which was cancelled at Beijing’s behest in late 2020.

Ant Group and Alibaba are independently seeking new business as the Jack Ma-founded companies navigate China’s devastating regulatory crackdown, sources said.

Alibaba created what would become payments and financial services provider Ant and spun it off in 2011, although it still retains a 33% stake and the two companies have some overlap in leadership.

The companies are trying to recover from a sweeping technology sector clampdown that has sliced hundreds of billions of dollars off their value, shrunk revenue, and led to a record $2.8 billion fine for Alibaba.

The affiliates have started to restrict access to each other’s services, compete for clients and even strike alliances with rivals, said the sources.

Ant declined to comment and Alibaba did not respond to a request for comment.

 

1.3 Billion Annual Users

Alibaba counts around 1.3 billion annual users across its marketplaces, which generated more than $1.3 trillion in gross merchandise value (GMV) for the year to March 2022.

The e-commerce behemoth also has a suite of other businesses ranging from cloud services, to video streaming to travel bookings.

Ant operates China’s ubiquitous mobile payment app Alipay, which has more than 1 billion users.

With Alibaba’s marketplaces recording more than double the GMV of US peer Amazon for the fiscal 2021 year, the group was once the pride of Chinese innovation.

Ma even boasted the group could become as large as the world’s fifth-biggest economy.

The moves by Ant and Alibaba towards operational separation underscore the new reality in China’s business landscape, as Chinese leader Xi Jinping’s government frowns upon concentration of power in the hands of private sector conglomerates.

Authorities are wary about once-freewheeling “platform economy” companies crowding out smaller rivals and the risks they pose, though there are signs now that the clampdown is being gradually eased.

“Having businesses sprawling in both finance and technology can be deemed as too powerful in China, therefore ‘politically incorrect’,” a Beijing-based fintech executive said.

 

  • Reuters, with additional editing by George Russell

 

 

 

 

READ MORE:

Alibaba’s India Arm Under Probe for Fabricating Documents – ET

China’s Ant Group to Launch ANEXT Digital Bank in Singapore

Ant Group Said to Revive IPO in Latest Sign of Easing Tech Crackdown

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

Recent Posts

FTX Crypto Fraudster Bankman-Fried Jailed For 25 Years

A US District Judge said the former billionaire wunderkid was responsible for one of the…

16 hours ago

China’s Big 5 Lenders Warn of Property Risks as Margins Shrink

Banks have been reluctant to deepen their exposure to the ailing real estate sector but…

17 hours ago

Chinese Biotech Giant WuXi ‘Sent US Client’s Data to Beijing’

US intelligence officials say Chinese pharma companies are risking national security at a time when…

21 hours ago

China’s BYD Delays EV Factory; Solid-State Batteries ‘Unsafe’

BYD has set back plans for an EV factory in Vietnam, while CATL has said…

21 hours ago

Yellen: China’s Green Energy Push a Threat to Global Jobs – AP

US Treasury Secretary Janet Yellen has accused China of ‘distorting prices’ with its increased green…

22 hours ago

Yen Fears Drag on Nikkei, Hang Seng Lifted by Policy Bets

Japan’s plunging currency and the threat of BoJ intervention sent Tokyo’s soaraway benchmark downwards

23 hours ago