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Chinese authorities will force Alibaba to reduce financial risks and tariff rates
The planned restructuring of Ant Group’s business in the financial services segment implies the creation of a holding company whose activities will be regulated by the same rules as in the Chinese banking sector. Local authorities are concerned that Alibaba’s business in this area is not backed by financial reserves, and tariffs for customers are too high.
Image source: Reuters
Alibaba’s expansion into the financial services market, which competes with national banks and the digital yuan, is just one reason to open an antitrust investigation, the Nikkei Asian Review explains. It is still not decided whether the financial holding created at the request of the authorities will include Alipay, a payment service with more than a billion users. But the primary source states that Ant Group has not completely abandoned plans for a public offering of shares, although it is still difficult to say when it will take place under the new conditions.
Xiang Hu Bao Platform That Allows Alibaba Clients to Use Mutual Financial Assistance Fund for Health and Life Insurance Will Be Targeted by Chinese Regulators. Now the service is used by more than 100 million people, the authorities are concerned that at the current pace of expansion, the fund will not be able to pay insurance sums to everyone in need. Alibaba thinks the service will not be as effective financially under the standard insurance policy.
Ant Group’s lending business is based on mediation between clients and banks, the company receives a certain commission from each successful transaction. Regulators believe that the size of the commission is too high, since it does not allow regional banks to earn enough. In general, the Chinese authorities reproach Alibaba and its subsidiaries for increasing tariffs for services, which become burdensome for many customers.
Along the way, it is reported that Alibaba founder Jack Ma, who disappeared from the public sphere at the end of October, distributed a video in early December in which, in good spirits, he sang a song popular in China in one of the bars, which he co-owned. This demonstration was intended to calm the public, which is worried about the fate of the billionaire after the start of the antitrust investigation and the disruption of the public offering of the Ant Group.