Understanding China, One Blog at a Time

An American in China

Archive for October 21st, 2014

Buy Alibaba and Support Chinese Communists

Posted by w_thames_the_d on October 21, 2014

Some weird looking guy called ‘Jack’ Ma created a mashup Chinese internet company. The communists in Beijing helped him by saying ‘close sesame’ to foreign firms, giving him monopoly rights in China. Such a favor has a cost, however, and now Jack Ma is paying Beijing back. For the right to be the richest man in China, Ma has had to dole out the cash. For example, he just bought a ‘company’ run by the wife of a Chinese Military General, with a $500 million price tag. But that was just part and parcel of the communist payoff, check this out:

“To say, however, that Ma’s gargantuan success only comes from simple opportunism and bootstrapping know-how is disingenuous. What some investors who rushed to pick Alibaba stock may not know is that the company is hugely reliant on the Chinese government for continued success. The same government that brutally admonishes civil rights, enforces mass censorship, and creates inherently unfair economic playgrounds is now using Ma as a consulate to the world economy.

Jack Ma, far from being an everyman, has a “lips-to-teeth” relationship with Communist leaders in China, and it’s a relationship that has proven profitable for both ends. Because of how Ma has structured Alibaba, the tech superpower can withhold the power most investors will assume they have upon purchasing a share.

Contrary to the “one share, one vote” system of most publicly traded companies, Ma and his Board of Directors are able to hold impenetrable power over the company while actually holding very few shares.

This is not just dangerous to U.S. investors; it sets a precedent that, for most American companies, would be entirely unacceptable. Who does control Alibaba outside of Ma himself is a far more complex question.

Through a dense thicket of shell companies, Caribbean tax havens, and Alibaba’s opaque management system, Communist Party leaders regularly are given favor by Ma in a way that can prove dangerous to U.S. investors and companies.

Back in July, the New York Times reported on how Alibaba’s IPO “could be a bonanza” for members of the Politburo Standing Committee, one of the centers of power in the Chinese government. In short, four Chinese firms—all headed by sons or grandsons of members of the PSC—were selectively sold Alibaba shares so the company could buy back part of what it sold to Yahoo.

This is the perfect example of how Alibaba is structured: to take advantage of a lack of law enforcement within Chinese commerce to the detriment of a U.S. firm.”

So there you have it. Jack Ma is making communists fat and happy and we Americans are footing the bill.

I don’t know about you, but giving billions to the same guys who have threatened us with nuclear war is a little scary. Shouldn’t we be discouraging this sort of thing? Does it make sense for us to fellate members of that government which has said that they cannot peacefully coexist with us?

Time will tell just how stupid we are, but to me its pretty obvious. America is for sale and China is buying.

Posted in Uncategorized | Tagged: , , | Leave a Comment »