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Chinese Pressure on Jack Ma will Affect Indonesian Startups

Chinese Pressure on Jack Ma will Affect Indonesian Startups

China is putting pressure on Jack Ma’s business by issuing new rules, investigating Alibaba’s alleged monopoly, and asking Ant Group to overhaul the venture. This pressure is considered to have an effect on Southeast Asian startups, including Indonesia.

This is because Alibaba Group and its affiliates Ant Group invest in many startup sectors in Indonesia. Meanwhile, the Chinese government issued a new antitrust rule in early November which has an impact on the technology giant.

“The regulation was introduced so that the government can assert its supremacy over Jack Ma,” said CEO at fintech startup from the United States (US), Capital, Blair Silverberg, as quoted by Business Insider, Tuesday (5/1). Meanwhile, Jack Ma has not appeared in public since late October or after speaking at the Bund Summit in Shanghai.

Chinese Pressure on Jack Ma will Affect Indonesian Startups

During the meeting, Ma said that Beijing is hindering innovation, especially in the financial sector. The Chinese tycoon was also summoned by Beijing in early November (2/11/2020). Ma has not appeared in public since then. In addition, the government has asked Ant Group to postpone its initial public offering, aka IPO.

Alibaba under Investigation for Alleged Monopoly

Beijing is also investigating Alibaba for a suspected monopoly since late December. Meanwhile, the Chinese central bank or PBOC called the Ant Group and asked the company to change its business, so that it only focused on payment financial technology (fintech).

“We will study seriously and strictly to comply with all regulatory requirements and fully commit to fulfilling all related work,” said Ant Group in its official statement, quoted from the South China Morning Post (SCMP), late last month (24/12/2020).

Momentum Works founder and CEO Li Jianggan considered that the policy would affect Southeast Asian startups, including Indonesia. Momentum Works is a venture builder company based in Singapore.

Chinese Pressure on Jack Ma will Affect Indonesian Startups

“The full impact of the regulatory wave in China will take time to resolve. This will keep the Ant Group officials busy for a while. Business plans, including international expansion, may be stopped,” he was quoted as saying by Channel News Asia, late last month (29/12/2020).

Li noted that Alibaba and Ant Group are actively investing in Southeast Asia. Ant Group invests in eMonkey Vietnam, Touch N Go Wallet Malaysia, GCash Philippines, TrueMoney Thailand, Wave Money Myanmar, and M-daq Singapore. The fintech giant has also purchased the HelloPay payment service from Lazada.

Ant Group will Aggressively Target Southeast Asian Financial Markets

Ant Group also reportedly wants to invest in a subsidiary of Grab, namely Grab Financial. Meanwhile, Alibaba is said to be in discussions to invest in Grab. Li estimates that investment from Alibaba and Ant Group will slow down due to new Chinese regulations.

“Ant’s leadership will focus on restructuring its business by 2021. This means executives in regional offices may be inclined to take a wait-and-see approach to any new strategic move or major acquisition,” he said.

Chinese Pressure on Jack Ma will Affect Indonesian Startups

In addition, Li predicts that Ant Group will aggressively target Southeast Asian financial markets through the digital banking business. This Alibaba-affiliated company has indeed obtained a digital bank license from the Singapore authorities at the end of last year.

Ant Group is also considered to be relying on joint ventures to attract more consumers in each country in Southeast Asia, rather than acquisitions. “Those (joint ventures under Ant) who have strong local leadership, where Ant’s role is limited, are likely to be successful compared to acquisitions,” Li said.

In addition, Chinese investors shifted from India to Indonesia due to government policies in Bollywood. Two of them are Shunwei Capital owned by the founder of Xiaomi and BAce Capital supported by the Ant Group.

Shunwei Capital plans to close more deals in Indonesia. This is because the Indian government issued new rules for Chinese investors and banned the application of the Bamboo Curtain Country.