39 Trillion Won Vanishes Over One Word... Billionaire Disliked by the Government [News Inside]

Criticism of Chinese Financial Authorities in Public
Ant Group's $34.5 Billion IPO Suddenly Postponed Indefinitely
Ma Yun, Alibaba Founder

▲Jack Ma, Founder of Alibaba [Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] "If you are poor until the age of 35, that is your responsibility. The reason you are poor is because you lack ambition."

This is the story of Ma Yun (English name Jack Ma), who founded the distribution company Alibaba at the age of 35.

He was not born to wealthy parents, had no special skills, and never received systematic management training, yet he was once able to become the richest person in China because of his belief that "if you try, you can do it" and his "conviction" that the internet era would come.

He was born in 1964 in Hangzhou, Zhejiang Province, China, as the son of a couple who performed traditional local theater. However, when the Cultural Revolution began in 1966 and performances were banned, Ma Yun's parents lost their means of livelihood and fell into severe poverty.

Although poor, his dreams were not impoverished. As a teenager passionate about English, Ma Yun rode his bicycle every morning for 45 minutes to a hotel in Hangzhou for nine years starting at age 12, catching passing foreigners to offer free city tours to improve his English skills.

His growth process was far from "success." He failed the college entrance exam twice and also failed three times in entrepreneurship.

His first entrepreneurial attempt was in 1994 when he opened an office translating Chinese to English, but it failed.

Ma Yun's second startup was "China Pages," a Chinese version of an internet industry-specific phone directory. It was considered China's first internet company but failed due to lack of preparation and insufficient internet infrastructure in China.

However, his conviction that the internet world was coming remained firm, and he prepared for his third startup using the two failures as stepping stones.

Then one day, a once-in-a-lifetime opportunity came to him. Between his third startup preparations, he briefly worked at the Ministry of Foreign Trade and was assigned to guide foreigners to the Great Wall. That foreigner was Jerry Yang, the founder of Yahoo. This led to Yahoo investing $1 billion in Alibaba in 2004 in exchange for a 40% stake.

Based on this, Ma Yun started his third startup in 1999 with 17 friends in his apartment, which was Alibaba. The company faced a crisis immediately after launch, failing to close a single deal, but the following year, it received a $20 million investment from SoftBank founder Masayoshi Son, marking a turning point.

Alibaba is a business-to-business (B2B) online shopping mall that allows global companies to purchase products made by Chinese small and medium-sized enterprises. Later, Alibaba created various companies such as "Taobao," a shopping mall for the general public, and "Tmall," an online shopping mall targeting the wealthy, dominating the Chinese online market. Eventually, it drove out the powerful competitor eBay from the Chinese market, and Alibaba affiliates monopolized 80% of China's online transactions.

The secret to Alibaba's success is its "customer-centric service." While eBay takes a commission from sales, Alibaba's affiliated shopping malls like Taobao charge no commission. Also, the unique payment system called "Alipay," which reassures Chinese consumers sensitive to fraud, is credited as a major contributor to Alibaba's success. When a consumer buys a product, the transferred amount is not immediately sent to the seller but held in Alipay. Only after delivery is completed does Alipay transfer the money to the seller, alleviating consumers' concerns. This system eased the worries of Chinese people about being scammed in online shopping. Alipay evolved into Ant Financial, enabling Alibaba to expand into fintech sectors such as digital credit cards.

Alibaba, which was on a successful path in China, went public on the New York Stock Exchange in September 2014. The initial public offering price was only $68, but the first trading price soared to $92.7, and at one point during the day, it nearly reached $100, with the market price rising 38% above the IPO price on the first day alone. Within about 50 days after listing, the stock price rose by 50%, setting the highest record in U.S. IPO history at the time. Ma Yun instantly became the richest person in China.

According to the Bloomberg Billionaires Index, Ma Yun's fortune is $54.7 billion (about 61 trillion won), ranking 20th in the world and 3rd among Chinese billionaires.

However, his seemingly unstoppable success recently hit a snag. Ma Yun, who holds effective control over Ant Group, criticized Chinese financial authorities in public, causing $34.5 billion (about 39 trillion won) to vanish overnight. On the 24th of last month, at an event in Shanghai, he sharply criticized, saying, "Chinese financial authorities are adopting overly conservative regulatory policies," and "Innovation without risk is an act that kills innovation." Suddenly, the Ant Group's IPO, valued at $34.5 billion and scheduled for listing on the Hong Kong and Shanghai stock exchanges, was postponed. Since Chinese authorities did not specify a concrete timeline, the listing appears to have been indefinitely delayed.