Jack Ma’s warning

Chinese billionaire Jack Ma has urged nations not to use trade as a weapon in countering geopolitical challenges. He warned that trade wars have devastating consequences on the society and are extremely difficult to end.

Background

Second to only China’s Premier Xi Jinping, Jack Ma is one of the most recognizable faces in China. He is the CEO of the highly successful ecommerce service called Alibaba and is the richest man in Asia. His net worth is above $46.9 billion. He is also a political force to be reckoned with both recent US Presidents – Donald Trump and Barack Obama. His business continues to grow from strength to strength. Willy Lam, adjunct professor at Center for China Studies at Chinese University of Hong Kong said, “(Ma) has displayed vision and gusto in expanding his e-commerce empire. Even more striking is his determination to leverage Alibaba's massive earnings to spearhead research in high-tech, particularly AI, cloud computing, "deep learning" and related know-how."

Alibaba Group Holding Limited is a Chinese e-commerce, retail and technology conglomerate founded in 1999 by Jack Ma and Leng Lei that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and data-centric cloud computing services. It also owns and operates a diverse array of businesses around the world in numerous sectors. In 2012, two of Alibaba's portals handled 1.1 trillion yuan ($170 billion) in sales. At closing time on the date of its initial public offering (IPO), 19 September 2014, Alibaba's market value was US$231 billion. As of November 2017, Alibaba's market cap stood at US$486.27 billion. It is one of the top 10 most valuable and biggest companies in the world.

The World Economic Forum (WEF) is a Swiss nonprofit foundation. It is headquartered in Geneva. It is committed “to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas". It was founded in 1971 by Klaus Schwab.

The Forum is best known for its annual meeting at the end of January in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland.

Analysis

Alibaba's founder Jack Ma is among the many business leaders currently attending the World Economic Forum in Davos. During the conference, he warned nations to not use trade as a weapon in the larger perspective of geopolitics. His statement comes during a period where analysts and experts have signaled concerns that the US is trying to restrict trade with Chinese conglomerates as tensions between the two nations grow.

"Don't use trade as a weapon," Ma said Wednesday at the World Economic Forum in Davos, Switzerland. "It's so easy to launch a trade war, but it's so difficult to stop the disaster of this war." He also added the trade is not something that can be stopped, and governments need to accept that as a reality. He added, “I think it is impossible to stop the trade," he said. "The world needs trade. If the trade stops, the wars start."

The US President Donald Trump has emerged as a key threat to globalization. Under his governance, the US has been pulled out of TPP treaty. It has also become increasingly clear that US might away from NAFTA as well. Only days earlier, President Trump slapped tariffs on imports of solar panels and washing machines.

Jack Ma, who is considered one of the most powerful men in China, said that there were dramatic risks that can from engaging in a trade war. "When you sanction the other country, you are sanctioning those small business, young people," he said. "Just like you're bombing somewhere… In the future, there will be no Made in China. No Made in America. No Made in Peru. It's going to be Made on the Internet."

In January 2018, US blocked the sale of money-transfer service Moneygram to Ant Financial, an affiliate of Chinese e-commerce giant Alibaba. The sale had been worth $1.2 billion.

Assessment

Our assessment is that Jack Ma’s warning could specifically be targeted at US and China, which are two of the largest economies in the world. US President Donald Trump has voiced an increasingly protectionist rhetoric and has complained often about unequal and unfair trade practices with regards to other nations, especially China. In the recent months, a number of acquisitions of US companies by Chinese conglomerates have been blocked.