(Ecns.cn)--Alibaba Group Chairman Jack Ma's controversial decision to transfer Alipay's ownership has aroused heated debates in the Chinese tech industry, especially when Yahoo, one of Alibaba's major stakeholders, said in May it wasn't informed until March 31 about the shift.
"I never thought media would interpret the transfer in such a way that the move concerns Alibaba's credibility and spirit of the contract," said Ma at a press conference on June 14 in Hangzhou, Zhejiang Province.
Ma's speech came amid negotiations with Yahoo and Softbank, the group's two large investors, which are seeking compensation for the spin-off of Alipay. A deal, according to Ma, was needed to expedite the application of an online payment license in China.
Is Ma wrong?
The debates became intense after Hu Shuli, founding editor of Caixin Media, China's leading finance and economics magazine, twittered that Ma had damaged the contract spirit of the market economy, which would harm Ma's personal reputation throughout the world and Alibaba's development opportunities in the future.
Meanwhile, Ma still had many supporters who suggested that media not make hasty judgments.
Yu Feng, founder of Yun Feng Capital said in his microblog: "Why not give Ma and his team more time and not make comments until the negotiations are done?" and "It is in the country's regulations to restrict foreign investors from controlling financial institutions and only allowing domestic online payment operators to apply for a license."
"It is against the law to have foreigners manage the financial data of hundreds of million people. Ma would not breach the law," added Yu.
On June 13, Ma held a briefing in Alibaba's headquarters to try to make him and his move more understood.
"Prior to the current negotiations, they exploited the imperfections of the company structure and engaged in stalling tactics," commented Ma, referring to Yahoo and Softbank's role on Alibaba's board for the Alipay online payment unit. "As shareholders, they were right, but as directors, they were both wrong."
CFO of Alipay, Jing Xiandong, also explained that Alibaba acquired from Alipay 70% interest on 167 million yuan in June 2009 and 30% on 165 million yuan in August 2010. But the 330 million yuan was merely a transfer price based on Alipay's net assets, not the entire compensation to the selling party.
Ma also revealed that the summary of a July 24, 2009 board meeting shows that Ma and other managers were given the right to reconstruct Alipay in order to get a license. But he did not mention whether the approval includes a spin-off and termination of the foreign investors' control of the unit.
A hidden peril six years ago
In August 2005, Alibaba acquired Yahoo China, through which Alibaba obtained a $1 billion yuan investment as well as the exclusive right to use the Yahoo brand.
The Yahoo China's assets package included Yahoo's search technology, the Yahoo China website, its communication and advertising business, as well as 3721.com, a Chinese-language search engine.
In return, Yahoo took 40% of Alibaba's shares but had 35% of the voting rights in the company.
However, the two sides' relations had deteriorated since 2010, when the proportion of Yahoo's voting rights increased to 39%, becoming Alibaba's biggest shareholder.
Later, Alibaba offered to buy back Yahoo's stake but was turned downed. As Yahoo's business declined facing big challengers from Google and Facebook, the ex-CEO of Alibaba once criticized Yahoo as a bankrupt company and said that Alibaba would not need Yahoo any longer.
Treat or trick?
Following Yahoo's statement, came speculations that the shift could be a trick from Yahoo and Softbank, or from Ma himself.
Hu Shuli said that "During the past five years, Alipay was operated by a foreign-invested company, and had never been a threat to the country's financial safety. Owners and operators are different. So are the financial data and the operational data. They could set up strict rules to protect the operational data from leaking to foreign owners. They had done this in the past and should apply the same method in the future."
Wang Pei, a media figure from Hangzhou, also commented online that Ma is a guy who likes the "kill two birds with one stone" game. With such a move, he not only gets the license, but also buys back some of the stake from Yahoo and Softbank.
