Alibaba, the enormous Chinese e-commerce company set to IPO in the U.S. soon, faces threats from Chinese regulators and state-owned banks.
Alibaba and other companies working in China’s fast-growing, trillion dollar mobile payments space want to offer services traditionally handled by banks, like virtual credit cards and online investment funds. Banks have slowly been releasing restrictions and regulations that could hinder their progress.
For example, four state-run banks have placed monthly limits on the amount of money that people can spend on their smartphone through mobile payment products like Alibaba’s Alipay, according to The Wall Street Journal. Alibaba, of course, wants citizens transferring as much money as possible through Alipay, especially if they’re buying products from its two huge Web stores, Tmall or Taobao. Presumably, people don’t want their banks telling them how much they can spend. Limits are hovering around the equivalent of $US1,500 a month.
Alibaba’s online investment fund, Yu’e Bao, which has traditionally had better returns than those of state-run banks, might have to start holding minimum reserves on the deposits they collect. Yu’e Bao now has more investors than the country’s equity markets. The Wall Street Journal also reports that Yu’e Bao users with money in the Industrial Commercial Bank of China are having trouble transferring money into the fund from their accounts, with the bank saying that it’s “cutting back on resources needed to process such transfers.”
Chinese regulators say that new measures come out of a concern for information security. Jack Ma, founder and current chairman of Alibaba, however, makes it clear he thinks that these decisions are politically motivated.
“Let the users decide who wins the game, not monopoly and power,” Ma said in a comment on Alibaba’s messaging app Laiwang. “The market is not scared of competition. But it does fear injustice.”