Alibaba Reveals CCP State Ownership of ‘Golden Shares’ in Over 12 Business Units

Alibaba, the Chinese tech giant, has revealed that several of its business units have state ownership by the Chinese Communist Party (CCP) in the form of “golden shares.” These shares give the CCP control over key company decisions and allow them to nominate directors. This new form of “joint state-private ownership” signifies a shift in the CCP’s strategy, where the state advances and private sectors retreat. Experts believe that this increased control by the CCP may have negative effects on private enterprises and discourage foreign investments in China.

Alibaba disclosed this information in response to an inquiry from the US Securities and Exchange Commission, filing documents in both the United States and Hong Kong. The company stated that Chinese state-owned enterprises hold shares in six of its direct sales businesses, accounting for less than 6 percent of Alibaba’s total revenue. The shareholding ratios for these businesses range from less than 10 percent to less than 30 percent.

The CCP’s “golden shares” have drawn attention as they provide a mechanism for the regime to exert influence over private Chinese technology companies. The shares, typically equal to about 1 percent of a firm, are obtained through state-backed companies or funds and allow the CCP to nominate directors or influence key company decisions.

This new form of control is seen as a continuation of the CCP’s efforts to tighten its grip on Chinese tech companies. Chinese Communist Party leader Xi Jinping recently emphasized the need for centralized and unified leadership over scientific and technological development. Analysts suggest that Alibaba’s disclosure of state ownership in its business units may be a result of this increased scrutiny.

Experts believe that the CCP’s strategy of “state advances while private sectors retreat” will have significant implications for private enterprises in China. The state’s indirect control through “golden shares” may discourage private entrepreneurs from making investment decisions and hinder the willingness of private enterprises to develop further. This tightening control may also deter foreign-funded enterprises from entering China and cause existing private enterprises to consider leaving the country.

The fate of Alibaba’s co-founder, Jack Ma, serves as an example of the challenges faced by Chinese private entrepreneurs. Ma has been targeted by the CCP, and his businesses have faced significant pressure in recent years. Analysts believe that private entrepreneurs like Ma may have limited control over business decisions in the future, as they will be required to comply with CCP decisions.

Despite these challenges, experts anticipate that private entrepreneurs will continue to find ways to resist CCP control. Some may choose to flee the country, while others may adopt a passive resistance strategy by refraining from making significant investments. The case of Jack Ma and Alibaba serves as a warning to other private entrepreneurs in China.

As the CCP tightens its control over private enterprises through “golden shares,” concerns about the business environment in China are likely to increase. Foreign-funded enterprises may become more reluctant to invest in the country, while Chinese private enterprises may consider fleeing to avoid being subjected to further control by the regime.

The disclosure of state ownership in Alibaba’s business units sheds light on the CCP’s efforts to exert control over private technology companies. This new form of “joint state-private ownership” represents a shift in the CCP’s strategy and has significant implications for the future of private enterprises in China. As the state advances and private sectors retreat, the entrepreneurial spirit that has fueled China’s economic growth may face significant challenges.