China’s old tech guard gives way to new blood in the age of AI and crypto | Business and economy

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Taipei, Taiwan Justin Suns’ biggest lesson from his mentor, Alibaba Group founder Jack Ma, was how to use shared values ​​to quickly grow a business and manage a growing number of employees.

We learned a lot from Alibaba and Jack Ma about how to adapt our business, Sun, the founder of global cryptocurrency network Tron, told Al Jazeera in a recent interview.

Sun, 32, and Ma, 58, represent different generations of Chinese entrepreneurs. But they have both navigated in choppy regulatory waters amid a years-long campaign by the Chinese government to roll back the influence of its tech giants.

Ma, once the poster child for China’s entrepreneurship-fueled economic growth, saw the IPO of his Ant Group, which at $37 billion would have been the world’s largest, abruptly canceled by Chinese regulators in November 2020, marking the start of a broad regulatory crackdown. which introduced new rules governing everything from funding to cybersecurity.

Sun, who established a relationship with Ma at Alibaba’s elite founders’ business school in Hangzhou, completed his company’s initial coin offering (ICO) in 2017, raising $70 million. , just days before China banned such fundraisers and shut down all local cryptocurrency exchanges.

Since then, Beijing has sought to assure businesses that it intends to loosen its grip on tech companies as it seeks to revive the economy following the end of its crippling zero-COVID strategy.

Central bank official Guo Shuqing says Beijing’s crackdown on the tech sector is all but over [File: Tingshu Wang/Reuters]

Guo Shuqing, a senior central bank official and financial regulator, said in January that the tech crackdown that wiped some $1 trillion from the sector’s market value was all but over and that private companies would be encouraged to walk away. in the main economic markets. growth, job creation and global competition.

Around the same time, Beijing allowed ride-hailing app Didi to return to app stores, ending 19 months of regulatory purgatory, during which the company was fined 1.2 billion dollars and was forced to withdraw from the New York Stock Exchange after just six months. month of racing.

Still, questions remain about the extent to which the confidence of Chinese entrepreneurs has been eroded by the crackdown and how younger generations might want to reshape the tech industry. There is also uncertainty as to whether repression is really a thing of the past. In February, Bao Fan, one of China’s best-known investment bankers, was declared unreachable by his company, joining a long list of prominent Chinese businessmen who have apparently disappeared into the legal system. opaque from China.

Sun declined to directly discuss Beijing’s crackdown and its regulatory policy expectations, but like a growing number of Chinese entrepreneurs, he runs his business from Singapore. He also gave up his Chinese nationality in favor of a Grenadian passport, which he says facilitates international travel. In 2019, Chinese trade publication Caixin reported that Sun was being investigated by Chinese authorities and banned from leaving the country, claims it dismissed as false.

I always wanted to be a citizen of the world, said Sun, who served as Grenada’s official representative to the World Trade Organization (WTO).

That’s why, over the past 10 years, I’ve visited 100 countries around the world. And also, I believe that the success of cryptocurrencies is linked to globalization.

Sun sees a divide between his generation and Mas’s based on the areas in which they operate: While the older generation has been successful in areas such as e-commerce, real estate and finance, Sun’s peers are focusing on newer areas such as artificial intelligence (AI) learning and cryptocurrencies. These new fields offer more growth potential, Sun said, compared to fields that the Mas generation are focusing on and which are already mature.

Real estate, e-commerce, these traditional industries, have become full of competition, and they have reached the limits to develop their business in the future, but I think for blockchain, AI, nowadays (the potential) is limitless, he said.

Last week, the United States Securities and Exchange Commission announced civil lawsuits against Sun and three of its companies for alleged fraud and market manipulation. Eight celebrities, including actress Lindsay Lohan and rapper Akon, have been accused of promoting Suns cryptocurrencies without disclosing that they were paid to do so.

Suns’ public representative addressed inquiries about the case in a Twitter post in which the crypto entrepreneur said the accusations lacked merit and the SEC’s framework for crypto was underdeveloped.

China’s economy grew just 3% in 2022, one of its weakest performances in decades [File: Tingshu Wang/Reuters]

Beijing’s efforts to put tech repression in the rearview mirror appear to be part of a broader effort to revitalize the economy, which grew just 3% last year, its second-lowest rate in nearly 50 years. At its annual parliamentary session last month, China inaugurated a new prime minister Li Qiang, the former leader of Shanghai’s financial powerhouse party, and reshuffled its top economic team.

Speaking during China’s response to Davos last week, Li aimed to reassure foreign business executives, including Apple chief executive Tim Cook, that the country would open up further.

On the same day, Ma, who is believed to have lived in Japan since last year, made an appearance in the eastern Chinese city of Hangzhou, where he visited a school he co-founded and delivered a discourse on the importance of AI.

Karman Lucero, a fellow at Yale University’s Paul Tsai China Center, said the influence of the old guard of business leaders at tech giants such as Alibaba, Baidu and Tencent is likely gone, or at least considerably diminished compared to what it was before. as well as the culture they have built, heavily influenced by Silicon Valley.

The key question is what are [the new entrepreneurs] will he build instead, and will he succeed as they wish? Lucero told Al Jazeera.

While pundits and businesspeople say it’s too early to gauge exactly where China’s tech scene will go after the crackdown, there have been some clues.

Beijing has repeatedly signaled that it wants companies to focus on sectors of strategic value to the state, such as semiconductors, AI and advanced manufacturing, amid competition and growing animosity with the United States.

At the same time, officials expressed borderline disdain for areas of established tech champions, such as social media, e-commerce and gaming, the so-called platform economy.

In the parliamentary session earlier this month, Tencent founder Pony Ma was conspicuously absent from the list of delegates, while Robin Li, head of search giant Baidu, William Lei Ding, founder of gaming group NetEase , and Wang Xiaochuan, head of the online portal Sogou , were excluded from the list of top government advisers.

Instead, the delegate list was filled with representatives from AI and semiconductor companies, including Zhang Suxin, chairman of chipmaker Hua Hong Semiconductor, and Liu Qingfeng, chairman of AI group iFlytek.

The trend exemplified by Sun, Ma and other Chinese entrepreneurs moving their assets, businesses and families overseas is worrisome for China’s economic fiber, said Joerg Wuttke, president of the Union Chamber of Commerce. European in China.

These are the guys who have made the difference over the past 10 to 20 years in pushing China forward, Wuttke told Al Jazeera. [The crackdown] has been an incredible headwind for Chinese entrepreneurs, and there is still a long way to go to regain the trust of these people.

Baidu CEO Robin Li is among a number of prominent Chinese business leaders who were recently excluded from a list of top government advisers [File: Yingzhi Yang/Reuters]

However, not everything is always easy for Chinese entrepreneurs once they have settled abroad.

Rui Ma, a California-based tech company investor and advisor, said Chinese tech entrepreneurs in the United States she consults often express concern about discrimination and mistrust based on their identity, in a context of increasingly tense relations between Beijing and Washington.

They feel very strongly pressured not by Chinese politics but by international politics and fear that they will not be able to do business in international markets because they are judged unfairly because of their identity, she told AlJazeera.

In addition to operating in new areas of focus, Beijing also expects tech companies to be better social actors, Lucero said.

This includes a mix of needing to treat workers better; need to do a better job of being transparent about how they process consumer data; need to do a better job of censoring information and controlling content that the party might find unfavorable.

The key word is not repression but compliance, said Wang Huiyao, president of the Center for China and Globalization, a Beijing-based think tank. There are some adjustments for the tech giants to reflect the new reality, Wang told Al Jazeera.

From an overall policy perspective, Beijing wants its tech champions to play by the rules and support the government’s plan for balanced, high-quality growth in the coming decades, Wang said.

At the heart of this is President Xi Jinping’s campaign for common prosperity, intended to keep the wealth gap to a minimum, despite criticism that related policies stifle innovation.

Huang Weiping, a professor of economics at Renmin University, bluntly expressed the industry’s expectations.

If you dance to the main tune, there will be no problem; on the contrary, if you violate the main tune, there will obviously be a problem, Huang told Al Jazeera.

Let me say this, Huang added. It was not Jack Ma who created the era. It was the era that created Jack Ma.

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