Chinese President Xi Jinping has cracked down on Alibaba, which happens to be the best performing entrepreneur in China. The government wants to focus on strengthening its antimonopoly efforts, enabling it to curb the disorderly capital expansion among top businesses. Leading businesses have been monopolizing credit and other important resources, and the government wants that to stop.
Alibaba asked to conform
The government wants Alibaba to align itself with the state. Therefore, Alibaba has to focus some of its efforts and resources on championing major causes such as poverty eradication.
Alibaba needs to deal with the issues, including the correction of its anticompetitive behavior alleged by regulators, and the conformity to the government’s agenda. Market observers fear that the crackdown might end up dulling the competitive spirit that has over the years made China prevail in business. According to sources, efforts to get the company’s representatives to comment on the matter were futile as pressure continues piling up.
The crackdown seems rather severe for some businesses, for example, the Ant Group. This company is seen as posing significant risks to the country’s financial system, and the government is dealing with it in a very strong way.
Sources indicate that Alibaba might end up getting a softer treatment than the other businesses. However, the company will focus on distancing itself from its flashy and vigilant founder Jack Mar. The other requirement is that the company aligns itself with the Communist party.
The regulators intend to go easy on Alibaba for many reasons, one of them being fears of dulling a technology powerhouse popular globally.
Alibaba to pay a hefty fine
In 2015, Qualcomm was compelled to pay a fine amounting to $975 million for engaging in anticompetitive practices. The whip gees down on Alibaba this time around, and it is expected to pay a larger figure. Alibaba will set the record as the company to have so far paid the biggest fine in the country’s history.
The government crackdown is a painful move, but financial experts say that it won’t get anywhere close to crippling Alibaba. According to those experts, Alibaba is too big to be brought down by such a move.