The ruling Chinese Communist Party (CCP) has taken further steps to curb e-commerce giant Alibaba with the launch of an antitrust investigation into the tech company headed by tycoon Jack Ma.
“Based on tip-offs received by the State Administration for Market Regulation in recent days, the administration will be investigating Alibaba … for suspected monopolistic activities,” the administration said in a statement on its website.
The statement was reportedly linked to a policy forcing sellers using Alibaba.com to commit to using that platform exclusively, preventing them from also using rival platforms JD.com and Pinduoduo.
Alibaba issued a statement saying it would actively cooperate with the regulatory body, and that company operations would continue as normal.
The news prompted an eight percent fall in the value of the company’s shares on the Hong Kong Stock Exchange onThursday.
The announcement came amid ongoing scrutiny by financial market regulators of Ma’s Ant Group, which runs the Alipay payments system.
“Today, Ant Group received a meeting notice from regulators,” the company said in a statement onThursday.
There are indications that the decision to go after Ant and Alibaba is coming from highest echelons of the CCP leadership.
‘Anti-monopoly work’
An article in the CCP’s official mouthpiece, the People’s Daily, touted “anti-monopoly work” as leading to “better development,” based on recent calls from the CCP’s Politburo.
The Politburo was of the opinion that the government should “strengthen anti-monopoly work and prevent the disorderly expansion of capital,” the paper said.
Internet finance industry insider Song Qing said the investigation is part of CCP plans to nationalize both Ant Group and Alibaba.
“There will definitely be an outcome, now that they have started the investigation,” Song told RFA. “This is probably coming from the highest levels.”
“Just a couple of weeks ago, they set out plans to nationalize Ant Group and Alibaba; the timing was deliberate,” Song said. “Those plans all came from the central leadership.”
“These nationalizations are definitely happening, and [the antitrust investigation] will likely speed up that process,” Song said. “It’s also, I think, about making an example of [Ant and Alibaba].”
Central government investigators had already set up camp in Alibaba headquarters by the end of November, according to industry sources.
The company will also be called to follow-up meetings with the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange after regulators slammed the brakes on Alibaba’s New York listing in early November.
Investigative teams are also in place at the offices of social media giant Tencent and e-commerce company Meituan.
Healthy development
A Nanjing-based economist surnamed Qian said China’s tech companies actually promote economic health and development.
“Tax rates for traditional businesses are too high, and online businesses have lower transaction costs, as well as being more convenient [for the customer],” Qian said. “The internet industry … is actually a healthy thing for the market economy.”
Lin Jiaqi, director of Hong Kong Honghui Asset Management, said he expects that the Alibaba investigation will help the CCP to form future policy towards the country’s tech giants.
“I think the central government will keep going with more investigations of other companies,” Lin said. “We will see more and more antitrust investigations, and the sanctions for [alleged] monopolies will gradually increase.”
State media have been keen to paint the government’s targeting of Ma’s tech empire as a campaign to subject the nation’s super-rich to public scrutiny and regulation.
“They are targeting this huge company … because they want people to hate the super-rich,” commentator Guan Xingwang told RFA.
“They are using this propaganda to justify expanding state control of the economy, and diminishing the power of the private sector,” he said. “This is another step towards nationalization.”
CCP general secretary Xi Jinping unveiled plans at the end of October to move China to a state-controlled, “circular” economy based on domestic demand, and away from the export-based model that has fueled rapid growth since 1979, when late supreme leader Deng Xiaoping ushered in four decades of market-based economic policy.
Analysts have said there a widespread expectation that Xi will move to change the current system of property ownership.
Reported by Qiao Long for RFA’s Mandarin Service. Translated and edited by Luisetta Mudie.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
