Recent investigative findings by The New York Times and The Wire China reveal a compelling and covert connection between Jack Ma and another influential Chinese businessman, Xiao Jianhua. This link involves investments exceeding $1 billion and sheds light on the intricate, often hidden aspects of China’s financial landscape.
Jack Ma’s Billion-Dollar Connection
Xiao Jianhua, a prominent billionaire with deep ties to China’s political elite, has been secretly investing in Jack Ma’s ventures over the past five years. Xiao’s Tomorrow Group has funneled significant amounts into Ma’s businesses, including Alibaba, Ma’s flagship e-commerce enterprise. The investigation, which examined over 2,000 confidential documents, indicates that there is no direct proof Jack Ma was aware of these investments. Xiao managed his financial activities through a complex web of shell companies and proxy shareholders to remain under the radar.
Secrecy Surrounding Jack Ma’s Investments
Xiao Jianhua’s investment strategy involved maintaining a high level of secrecy. By using offshore entities and proxy shareholders, he ensured his investments in Jack Ma’s companies were shielded from public and regulatory scrutiny. This approach is consistent with Xiao’s broader tactic of assisting China’s political elite in discreetly managing wealth and acquiring assets, thus allowing him to influence major businesses without drawing attention.
The Intersection of Jack Ma and Xiao Jianhua
The link between Jack Ma and Xiao Jianhua became more pronounced as Alibaba’s success attracted increased scrutiny from Chinese authorities. In September 2011, amidst rising Chinese interest in Alibaba, Xiao’s network began investing in the company. A British Virgin Islands shell company named Financial Giant, controlled by a proxy for Xiao, made a $25 million investment. This stake grew to $160 million when Alibaba went public in 2014.
Celebrity Connections and Jack Ma’s Ventures
The investigation also uncovered that Xiao’s investments in Jack Ma’s ventures were facilitated through influential figures within Ma’s circle. Huang Youlong, a friend and business partner of Ma, helped channel funds from Xiao’s network into Alibaba Pictures, a film and television company. Huang and his wife, Zhao Wei, invested around $400 million for a 9% stake in Alibaba Pictures, using money from Xiao’s companies. This connection illustrates the complex web of relationships involved in Ma’s business dealings.
One of the most revealing aspects of the investigation is Xiao’s substantial stake in Yunfeng Financial, a brokerage co-founded by Jack Ma in 2015. Xiao, through a network of offshore companies and a firm owned by Huang Youlong, controlled approximately one-third of Yunfeng Financial’s shares. This made Xiao the largest shareholder in the brokerage, surpassing even Ma’s ownership.
Ongoing Ties Post-Arrest
Even after Xiao Jianhua’s arrest in 2017 as part of China’s anti-corruption campaign, his financial ties to Jack Ma’s companies persisted. Documents show that Xiao’s network continued to hold significant stakes in Ma’s ventures, including more than $60 million in one of Ma’s companies. Additionally, during Ma’s attempt to launch an initial public offering (I.P.O.) for his e-payment company, Ant Group, in 2020, Xiao’s network still held a small but valuable fraction of Ant’s shares. This connection was impacted by the government’s decision to halt the I.P.O. following Ma’s public criticism of regulators.
Systemic Implications
The investigation into Jack Ma’s hidden financial ties with Xiao Jianhua offers a profound insight into the opaque and complex nature of China’s business and political systems. The intertwining of Ma’s and Xiao’s financial worlds illustrates how even prominent entrepreneurs like Jack Ma are not immune to the shadowy practices that characterize China’s elite financial networks.
These findings reveal a broader systemic issue where power, secrecy, and influence often intersect in ways that remain obscured from public view. The connection between Jack Ma and Xiao Jianhua highlights the pervasive and murky nature of China’s economic system, where elite connections play a significant role in business dealings.
