China's Tech Entrepreneurs Need to Watch Their Backs
2017年6月29日 - 7:04PM
Dow Jones News
By Li Yuan
Amazon.com Inc.'s recent bid to acquire Whole Foods Market Inc.
inflamed concerns in the U.S. about big tech companies taking over
America.
In China, that's already happening. Alibaba Group Holding Ltd.
and Tencent Holdings Ltd. are online-offline conglomerates each
with hundreds of millions of users. The pair--directly or through
companies they invest in--provides services and products across a
range of businesses from retail, media and entertainment to health
care, payment, banking, logistics and transportation.
Their market capitalizations, Alibaba at $358 billion and
Tencent at $350 billion, are much higher than those of the
state-owned enterprises that dominate the Chinese economy. The
country's biggest bank, Industrial and Commercial Bank of China, is
valued at $261 billion; the telecom titan China Mobile is valued at
$218 billion. The tech giants, with their wide reach into many
facets of daily life, touch ordinary Chinese in ways state
companies don't.
As their size and influence grow, Alibaba and Tencent are
entering uncharted territory: Never in nearly seven decades of
Communist Party rule have private-sector companies held such sway
over the economy and society. How well they handle relationships
with competitors, old-line companies and, ultimately, an
authoritarian government that isn't used to sharing power will be a
top challenge in coming years.
"The most important counterbalancing force against Alibaba and
Tencent will probably not come from their direct competitors but
the government and the traditional industries they disrupt," says
Yin Sheng, an independent technology consultant who owns shares in
both companies. As the two tech companies push further into other
sectors, Mr. Yin believes established businesses will lobby the
government to enforce tax, antimonopoly and other rules.
A Tencent spokeswoman said the company "views our peers in the
internet sector and traditional industries as partners" and "the
healthy growth of the internet industry will benefit users,
industry players" and the economy. Alibaba didn't respond to
requests for comment.
Alibaba and Tencent need to tread carefully. Some of China's
wealthiest businessmen ended up in jail, often when they appeared
to fall out of favor with the government. Earlier this month, the
government said it was investigating the borrowings of some
highflying private conglomerates to rein in runaway debt.
Bitterness from the old guard is already spilling into view. On
a popular business program on national TV late last year, beverage
tycoon--and once China's richest man-- Zong Qinghou dismissed as
"nonsense" Alibaba Chairman Jack Ma's idea that a new world is
being created as data and growing computing power transform
industries from retail to manufacturing.
"He's not in the physical economy. What does he make?" Mr. Zong
said. The other two panelists, heads of two biggest electronic
appliance makers, concurred. An Alibaba executive was quoted in
Chinese media at the time as saying that Mr. Zong's comments were
illogical.
Mr. Zong is one of the more outspoken among a cadre of
traditional entrepreneurs raising questions about whether the
internet businesses should continue to benefit from preferential
policies. Online shops operated by individuals and small
businesses, for example, pay extremely low to no taxes under a
policy that was aimed at nurturing a fledgling e-commerce sector.
But that sector is now huge.
Members of this business lobby raised the e-commerce taxation
issue during spring meetings of the legislature and a top
government advisory body. They noted that current tax rules put
traditional retailers at a disadvantage and urged the government to
heed their complaints because they employ more people than the
online firms.
Big tech firms have also been called bullies and monopolists
because of their treatment of competitors. When Uber Technologies
Inc.'s China operation was battling Didi Chuxing Technology Co.
more than a year ago, for example, Tencent, a Didi investor,
blocked some of Uber China's service accounts on WeChat, its
popular messaging app. Some online commentators excoriated Tencent
for abusing its power. Uber sold its China operation to Didi last
year.
Above all, there's their delicate relationships with the
government. As I wrote earlier, once disrupters, China's internet
companies are now part of the system. But still, they're private
enterprises founded by ambitious men.
"The question is whether these companies will demand more say in
things as they grow bigger," says Jingzhou Tao, managing partner of
China practice at law firm Dechert LLP.
Mr. Tao points out that private ownership is increasingly at
odds with the current political environment. The Communist Party is
strengthening its command of state-owned businesses and building up
its presence in private and multinational companies. "Will it come
to a point that the party committee will take charge of private
enterprises too?" he says.
For now, neither side is testing the line in the sand. The
government knows these companies are important and globally known.
The companies are being supportive of Beijing's goals. Alibaba's
Mr. Ma recently traveled to America to talk up the benefits of
China-U. S. trade, and Tencent's Pony Ma organized a forum on
improving the competitiveness of Hong Kong, a former British
colony, and the surrounding area.
Both sides are fumbling for "the best way to coexist," says an
executive who has worked on government relations for decades.
Write to Li Yuan at li.yuan@wsj.com
(END) Dow Jones Newswires
June 29, 2017 05:49 ET (09:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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