China’s Zhejiang Alibaba Netease Feng and Taiwan’s Morning Post Announce Joint Venture
Earlier today, China Zhejiang Alibaba Neteasefeng Morningpost announced a joint venture with Taiwanese media conglomerate Morning Post. The two companies will invest about $1.55 billion in media assets and operations of Zhejiang Netease Feng. It is the latest in a spate of investments by Chinese companies that are seeking to become more relevant in a world of digital media and information technology.
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About the joint venture
Known as the Hehuoren Institution, Alibaba’s lakeside partnership is a new structure that consolidates decision making authority within a small China-based leadership group. It also has the unique ability to shape the board’s composition.
The institution was created in July 2010, and it is named after Alibaba founder Jack Ma’s home. It was created with the intention of facilitating collaboration and public-private dialogue. It was designed to make business operations easier.
Among other things, it’s meant to make the most of consumer data from Alibaba’s parent companies, Tencent and WeChat. The companies have massive user bases. Using this data, the new JV will be able to predict where consumers are going to use ride-hailing services.
Alibaba and CIC also reached a deal on further share-buying during the IPO. The companies will pour about $1.5 billion into the new company. Currently, the joint venture is staffed with 40 people. They don’t disclose when they’ll launch ride-hailing services.
Media assets of Alibaba Group
During a meeting last year, Chinese regulators expressed concerns about Alibaba’s media holdings. They didn’t name specific assets, but the Chinese government did cite media influence as a direct challenge to the Communist Party’s rule. They asked Alibaba to cut back on its media holdings.
The regulators said they were particularly concerned about the company’s influence over Chinese public opinion. They also said that the size of the company’s media holdings was too large. They asked Alibaba to come up with a plan to slash its holdings, without naming specific assets to be sold.
Alibaba’s assets are extensive, including stakes in major news outlets, social media sites, and television production companies. It also owns a major stake in the Twitter-like Weibo platform. It also owns the South China Morning Post, the leading English-language newspaper in Hong Kong.
Chinese officials are reportedly interested in Alibaba’s entertainment division. They want to dilute its influence over social platforms, such as WeChat and Youku Tudou, and might even require the company to sell some of its media holdings.
Xi Jinping’s ‘common prosperity’ program
Xi Jinping’s Common Prosperity campaign is a key policy of the Chinese Communist Party. Its aim is to increase per capita incomes, reduce inequality, and boost consumption. It also has the potential to reduce reliance on exports and investment.
The new policy is expected to be further elevated during the Party Congress next year. It may also signal a fundamental shift in the party’s policy platform. However, there are several important aspects of the initiative that remain undefined.
The Common Prosperity campaign is a major development that will affect the lives of Chinese citizens in the coming years. It is also a course correction that has been long overdue. However, there are several obstacles to its success.
The program is likely to fail because of the economic and implementation difficulties. Its success would depend on innovation and total factor productivity. These are difficult to achieve, especially with state imperatives.
Xi Jinping has also been targeting the high-tech industry. The regulatory crackdown is a way of reasserting government control.
