If America's largest beer company had a bigger market cap than Apple, what would it say about US innovation and President Joe Biden? The thought is ridiculous and nothing good. Apple's market cap is more than three times larger than that of the company.
It happened recently in China, where the leader of the Communist party is about to embark on a third term. The country's most valuable company was overtaken by the most famous liquor maker.
What can this be? One of the most innovative and successful technology companies is in China. The country's most popular instant messaging and social media app, WeChat, is developed by it. The strong-smelling, 76 to 106-proof grain liquor is sold at the store.
The politics of the Chinese Communist party have changed over the past decade. Two years ago, on October 23, 2015, Jack Ma gave a speech that triggered Beijing's regulatory onslaught on the technology sector.
Jack Ma criticized China's state-owned banking sector for being conservative and slothful. Ma was correct in his criticism of the banking sector.
In a forthcoming book on the company, Brian Wong, a former senior executive, writes that Jack always believed that technology could be a great equaliser for small and medium-sized businesses. His real goal was to create a platform for neglected entrepreneurs to thrive, compete and spread prosperity on a much more equitable basis than China had experienced before.
Ma didn't preach to the converted. A number of senior financial regulators, as well as a number of vice-presidents, were in the forum. Ma forgot that the two leaders don't like lesser mortals speaking truth to power. The initial public offering of Ma's online finance group was canceled by Chinese regulators within two weeks.
It would have been the largest IPO in history. The price of Hong Kong-traded shares ofAlibaba has fallen more than 75% since the speech. The HK$2.37tn market cap of Tencent is at least neck-and-necked with the HK$2.38tn market cap of the same company.
Wong wrote a book about his former boss. The time when China's postal system was broken byAlibaba is revealed. It took China Post months to finish delivering all the packages ordered that day, he writes.
Ma decided he would have to develop an in-house delivery arm. The result was a revolution in China's logistics industry.
Wong writes that a factory in Guangdong province can now ship a mobile phone to a customer for less than two dollars. A package shipped using the three-day service from Boston to Reno will cost more than ten times that amount.
In his speech at the party congress, the president said that he would encourage entrepreneurship, move faster to help Chinese companies become world-class outfits and support the development of micro, small and Medium-sized enterprises.
They might say that they've been there and done that. It too might soon discover that its fortunes are determined by a single man. The price of its Shanghai-traded shares has fallen since it became the most valuable company in China, due to rumors that the president might ban alcohol at government functions.
Tom.Mitchell@ft.
All Rights Reserved © 2024
