SHENZHEN, China — A mistaken-identity panic over an arrested “Mister Ma” in China — which investors briefly feared might be the prominent billionaire founder of Internet giant Alibaba — reflected the skittishness in China’s tech industry as it suffers from a bevy of woes.
“The fact that the tech sector is on jitters over the recent detention of a guy named Ma — wholly unrelated to Jack or Pony — is more of a reflection of the lack of transparency and unpredictability in the regulatory system,” said James Zimmerman, a Beijing-based lawyer and former chairman of the American Chamber of Commerce in China. (Pony Ma, the founder of Chinese Internet giant Tencent, shares the common surname.)
The panic over Ma has cast a spotlight on the tense environment in China’s tech industry, which just a few years ago was the darling of Beijing officials and international investors. Now stock prices have collapsed as onerous regulatory restrictions, covid lockdowns and U.S. sanctions combine to weigh on business.
“I’ve never experienced this degree of pessimism,” said Duncan Clark, founder of Beijing-based consultancy BDA, who has been in the country since 1994. “I think it’s particularly grim because the fundamentals that have driven the sector are being undermined.”
Clark said the role of the private sector was being questioned in the tech industry, as the government rolls out increasingly tighter regulation. Covid lockdown disruptions to supply chains have compounded business woes.
Two executives in the high-tech hub Shenzhen, speaking on the condition of anonymity, said employees across the industry were eyeing the exits.
“People are afraid they will be laid off,” one of them said. “Morale is low.”
In Shenzhen, Tencent’s stock has lost more than half its value since February 2021, after the government announced much stricter regulations for children playing video games.
Across town, Huawei Technologies, the world’s largest telecommunications gear supplier, reported its first-quarter revenue fell 14 percent from a year ago, with its smartphone business crippled by U.S. sanctions.
Surveillance-camera maker Hikvision’s stock fell the maximum 10 percent daily limit on Thursday after the Financial Times reported the Biden administration was planning to place human rights-related sanctions on the company.
Adding to the sense of unease in China has been a social media crackdown on several outspoken members of the business community.
Last month, Wang Sicong, the son of Dalian Wanda Group founder Wang Jianlin, was banned from posting on the social media platform Weibo after complaining about frequent coronavirus tests and raising questions about whether a Chinese herbal medicine was effective in the treatment of covid. Wang had around 40 million followers, according to screenshots from before his suspension.
The head of research at China’s Bank of Communications International, Hong Hao, who had 3 million Weibo followers, also saw his account suspended. He had made bearish economic comments about the effects of the ongoing Shanghai lockdown, including commenting on Twitter, “Shanghai: zero movement, zero GDP.”
There was no official reason given for Wang and Hong’s Weibo suspensions, and Weibo did not immediately respond to a request for comment. Hong’s Twitter bio now says he has left the bank.
Jean Liu, president of China’s equivalent of Uber, Didi Chuxing, and her father Liu Chuanzhi, founder of the world’s largest personal-computer maker Lenovo, both removed their Weibo social media posts from public view in recent days. The two rank among China’s most prominent entrepreneurs.
As for the detained Mister Ma, state-run tabloid Global Times reported he was suspected of “colluding with outside forces and [trying] to subvert the state and split the country.” The man was a director of hardware research at a tech company in Hangzhou, the city where Alibaba is headquartered.
Alibaba’s founder, Jack Ma, once a fixture at China business events, has made few public appearances since October 2020, when he criticized Beijing’s financial regulators in a speech. His Internet finance juggernaut Ant Group was on track for the biggest IPO in history, but Beijing regulators halted it at the 11th hour and ordered Ma in for questioning.
Zhou Jiangong, former CEO of the Chinese financial media outlet Yicai, wrote in an online essay that the Mister Ma incident reflected how the business community was on edge.
“The market has become a frightened bird,” he wrote. “Entrepreneurs are full of fear.”