Authoritarian states are not the best place to build a business empire. Many large companies operating in countries where the government controls everything have been good proof of this statement. Authoritarian governments closely monitor the activity of big enterprises, especially those with high net profit. Therefore, market participants are not surprised by a new move of China’s government against Jack Ma, the co-founder, and CEO of Alibaba Group.
The Chinese authorities have long been trying to get a bigger slice of Ma’s empire as they have already done many times with other successful companies. At the same time, neither the government nor local regulators, including the People's Bank of China, can find a legal reason to squeeze the business. Therefore, they just use rather general statements, calling on Ma to "change the situation within his business" and "restructure it." Being a country with a communist ideology, people have a long-running resentment of the rich. No wonder, Ma with his dazzling success has become the bone in the throat for China's government.
In November, the country's authorities, having no legal grounds, prevented Ant Group, the financial division of the parent structure of Alibaba Group, from entering the IPO. The event could be the largest in history but Chinese regulators warned Ma that the company may not meet important requirements of national legislation.
However, the authorities cannot just steal the business. This is why they are going to boost their presence at Alibaba smiling and declaring that the innovative spirit has helped strengthen China's technological position in the world.