Jack Ma is the founder of Alibaba, China’s version of Amazon. After experiencing a big drop in wealth this year due to an economic slowdown, Jack Ma is urging the Chinese government to make bolder moves when it comes to their economy – like stimulating the rural markets by cutting taxes and setting up free universal businesses. Jack Ma’s estimated fortune has shrunk by $14 billion since January, when Alibaba’s Hong Kong IPO made him the richest man in China. The drop in value of Alibaba, which is partly due to the trade war with the US, has hit Ma hard. But while he may have lost a lot of money this year, Ma is still one of the richest men in China – and he’s using his platform to call for change. In a recent speech, Ma called on the Chinese government to do more to stimulate the rural economy, including by cutting taxes and setting up free universal businesses. Ma’s comments come as China’s economy is facing increasing headwinds, with growth slowing to its weakest pace in nearly three decades. The country is also grappling with the US-China trade war, which has put pressure on Chinese exports. Despite these challenges, Ma remains optimistic about China’s future. In his speech, he called on the government to embrace bold reforms and said he believes that China can still achieve its goal of becoming a prosperous nation.
A $14 trillion wealth drop
In September of 2018, Jack Ma, Alibaba’s Founder and Executive Chairman, was worth an estimated $39.8 billion. By January 2019, his net worth had fallen by $14 trillion to $25.8 billion. The drop in Ma’s fortunes came as the Chinese government enacted new regulations on the online lending sector, which Alibaba is a major player in. The Chinese government’s crackdown on online lending began in early 2018 when it issued guidelines that placed stricter controls on the industry. These guidelines included limiting loan terms to no more than one year and capping interest rates at 24%. The effect of these regulations was immediate and dramatic, with the value of online lending companies falling by billions of dollars. Alibaba was not spared from the carnage. In addition to Ma’s personal wealth decline, the company’s stock price fell by 10% in the wake of the new regulations. The company has since rebounded somewhat, but this episode highlights the risks associated with doing business in China. For foreign companies operating in China, strict adherence to government regulations is essential to avoid costly setbacks. An uncertain future The fate of Alibaba’s online lending business is far from certain. The Chinese government’s crackdown on the industry has put pressure on the company to reform its practices. In response, Alibaba has been shifting its focus away from online lending and towards other areas of its business. It remains to be seen whether this will be enough to appease the Chinese government and keep Alibaba in the good graces of regulators. Meanwhile, Jack Ma has taken a step back from his day-to-day involvement in Alibaba’s operations. He announced in September 2018 that he would be retiring from the company in one year. Ma has said that he wants to focus on philanthropy and education. His departure comes at a time when Alibaba is facing increased regulatory scrutiny. It remains to be seen how Ma’s departure will affect the company’s future.
How the super rich are hurting
Some of the world’s richest people have seen their fortunes shrink by $1 trillion since mid-March as the Covid-19 pandemic upended global markets. Among those who have taken the biggest hits are Amazon.com Inc. founder Jeff Bezos, Microsoft Corp. co-founder Bill Gates and Warren Buffett, the legendary investor and chief executive of Berkshire Hathaway Inc. Chinese tycoons have not been spared either, with Alibaba Group Holding Ltd. co-founder Jack Ma losing more than $25 billion from his net worth. The world’s 500 richest people are now worth a combined $8 trillion, down from $9 trillion in mid-March, according to the Bloomberg Billionaires Index. The decline comes as economies around the world have been brought to a standstill by the novel coronavirus, which has infected more than 2 million people and killed more than 150,000. The virus has also hammered the stock market, with the Dow Jones Industrial Average losing more than 30% of its value since February.
Chinese entrepreneurs are hurting just like everyone else
It’s no secret that the Chinese economy is slowing down. And that has entrepreneurs like Jack Ma, who is worth an estimated $29.5 billion, feeling the pain. “The current situation in China is very severe,” Ma said at a conference in Hangzhou on Thursday, according to a Bloomberg report. “Chinese entrepreneurs’ confidence has been greatly shaken.” Ma isn’t alone in his assessment. A recent survey by the American Chamber of Commerce in China found that 43 percent of member companies say they are less optimistic about the business environment than they were last year. The biggest concerns cited by respondents were China’s economic slowdown, increased costs and regulatory uncertainty. These worries have translated into slower growth for Chinese startups. A report released by CB Insights last month found that venture capital investment in Chinese startups fell to $13.4 billion in the first quarter of 2016, down from $15 billion in the fourth quarter of 2015. Read More: 7 Chinese startups that will be billion-dollar companies in 2016 36 hours in Hangzhou with Alibaba’s Jack Ma For the first time, most unicorns are from Asia
Why Jack Ma’s net worth dropped by $2.6 billion
According to Forbes, Jack Ma’s net worth dropped by $2.6 billion this year, making him the biggest loser on the list of China’s richest people. The Alibaba founder saw his fortune tumble as the e-commerce giant he founded faced regulatory scrutiny in China. Ma is not the only one who has seen his wealth decline this year. According to the Hurun Report, a total of 100 Chinese billionaires have seen their fortunes dwindle in 2018. The report attributes the decline in fortunes to the country’s slowing economy and trade tensions with the United States. The drop in Ma’s net worth is a far cry from last year when he was crowned China’s richest man with a fortune of $39 billion. He has since been overtaken by Tencent founder Pony Ma, who is now worth $37 billion. It is not all doom and gloom for Ma, however. He still ranks as the 20th richest person in China with a fortune of $35.6 billion.