Jack Ma opened up here about the Chinese regulators and received...

Jack Ma Can only regret at the moment what he said on Saturday, a week and a half ago, at a financial conference in Shanghai. Just before the huge IPO of his fintech company Annette Group, Ma has blatantly criticized Chinese financial regulators for their outdated mentality. “We can not run an airport like we run a train station and we can not use yesterday’s methods to run the future,” Ma said in relation to financial regulation in China.

Ma also added and attacked the Chinese government banks, which he said operate as “pawnshops that require collateral and guarantees on loans.” According to Ma, credit should be given based on customer information, as Annette Group does based on artificial intelligence and big data to make credit decisions, rather than through collateral collection.

In every other country these criticisms were not too influential, but in China they dragged down a chain of events that led to an astonishing and unexpected postponement of the Annette Group issue, just two days before the stock was due to start trading on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Annette Group was expected to raise at least $ 34.4 billion on both exchanges, in what was planned to be the largest IPO in history.

While Chinese regulators have long been formulating stricter rules for overseeing fintech companies like Annette Group, they did not appear to have any intention of interfering with the giant issuance to continue as a series. After Ma’s critique, the direction of things suddenly changed.

In response to Ma’s criticism, Chinese regulators have published a series of articles addressing the threat posed by companies such as Annette Group, which provides credit to private clients and small businesses, on the stability of the financial system. The most blatant article was by Gw Weeping, who is in charge of consumer protection at the banking regulator, who attacked Annette Group directly.

Gove claimed that Annette charges too high commissions from consumers and provides fast credit that puts young people and low-income people in a debt trap. Gw further argued that the products marketed by Annette are similar to those of the banks and therefore should be subject to regulation similar to that of traditional finance companies.

The revenge of Chinese regulators did not end with writing articles. Yesterday (Monday), four Chinese financial regulators, led by the central bank, invited Ma, controlling shareholder Bant, and two other senior executives at the company for questioning. This inquiry led the Shanghai Stock Exchange to announce today (Tuesday) to Annette Group that it is postponing the offering as there has been concern that information on the developments has not been fully disclosed to investors. The Hong Kong Stock Exchange later announced the postponement of the offering. It is difficult for the rest that the regulators were not aware of the consequences of their decision to summon Ma to a closed meeting, just before the IPO.

The richest man in China and also one of the most revered

Jack Ma has influenced the daily lifestyle of Chinese more than almost anyone else through the two companies he founded, Alibaba and Ant Group. Alibaba accustomed the Chinese to buy online whatever they wanted and thus allowed every Chinese, no matter what remote place he lived in, to have access to products from all over the world. Annette Group, which was set up as an affiliate within Alibaba before being split into a separate company in 2011, taught the Chinese to pay by phone for every product and service, however small, and also to invest, buy insurance and get credit at the click of a button in the app.

These successes have made Ma the richest man in China but also one of the most revered and beloved people in the country. In the rigid Chinese communist system, one of the great secrets of Ma’s success over the years has been his ability to maneuver politically and adapt to the needs and demands of the Chinese government and ruling party. Although Ma sometimes visited the authorities, he was equally able to quickly advance the issues that were important to the administration. His critique of Chinese regulators this time proved that even the political senses may no longer be as sharp as in the past.

Ma announced in September 2018 his resignation as Alibaba’s active chairman and a year later this retirement took effect. Ma then denied that government pressures led to his retirement, but many in China estimated that the Chinese government thought the successful entrepreneur had become too popular and pushed him to lower his profile. He lowered his profile a bit for a while, but Annette’s IPO and criticism brought him back to the center of the stage.

Whatever the reason behind the rejection, the result is a shameful fiasco not only for Ma but for China itself. The Annette Group issue was supposed to register as a dizzying success for China. Naturally the New York Stock Exchange or NASDAQ were also supposed to be the place where Ma’s successful fintech project would be issued, but amid the trade war with the US and the bad blood between the two countries Annette chose to go public in Shanghai and Hong Kong. Ma himself said this week at the same forum in Shanghai that it was a “miracle” that such a large offering was taking place outside of New York.

Ma’s reputation led to a huge $ 2.8 trillion issuance of customers in mainland China, with demand for shares among Chinese private customers surpassing supply 872 times. That in the end China actually kicked the bucket itself with the cancellation of the IPO at the last minute.Even if the IPO resumes at a later date, the damage to the Chinese image has already been done.