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Chapter 489 0479 [Chen Guiliang's Business Empire]

Just as May began, Chen Guiliang received two messages at the same time.

The first piece of news is that Youpay has successfully obtained one of the first batch of payment licenses. (A total of several dozen were issued, including one for Alipay.)
The second piece of news is that Yahoo disclosed Alibaba's irregularities in forcibly separating Alipay from its VIE structure.

On the day this information was disclosed, Chinese concept stocks collectively plummeted.

This is because it not only concerns Jack Ma and Alibaba's reputation, but also exposes the huge risks and hidden dangers of the VIE structure.

Most Chinese companies listed in the United States use the VIE structure, which means that Chinese owners can break the agreement at any time.

百度下跌9.6%、字节下跌9.3%、新浪下跌7.6%、搜狐下跌7.4%、网易下跌5.7%。

Tudou.com, which has been struggling, also saw its stock price drop by 4.3%.

China.com, which has been continuously losing money, has seen its stock price plummet and has already filed for bankruptcy.

All Chinese IT companies listed in the US are furious with Jack Ma. This move has had a huge impact on Chinese companies, and capital markets worldwide are starting to pay attention to the legality and risks of VIE structures.

Ma Jieke's actions constitute a unilateral and blatant breach of contract!

But Jack Ma had no choice. If he didn't do this, Alipay wouldn't be able to obtain a license from the central bank. It wouldn't even qualify to apply, because the applicant must be a company located within China.

Of course, Jack Ma had other motives—he wanted to retain control of Alibaba.

Several founder protection clauses in the original investment agreement expired in October 2010. Yahoo's voting rights exceeded those of Jack Ma's team, and Yahoo's board seats were equal to those of Jack Ma's team. The clause guaranteeing that Jack Ma would not be dismissed was also about to expire. Jerry Yang, who had a close relationship with Jack Ma, had already been removed from Yahoo's board of directors.

If Jack Ma doesn't make some moves, he risks being fired by Alibaba's board of directors!

Forcibly separating Alipay is tantamount to seizing Alibaba's lifeline. Other shareholders are hesitant to act, and none dare to challenge Jack Ma again. If things fall out, he could crush Alibaba's very foundation.

Faced with Jack Ma's illegal actions, Yahoo had no choice but to accept the situation, no matter how aggrieved they felt.

Yahoo's announcement of this matter was merely an attempt to leverage public opinion and increase its bargaining power in subsequent negotiations.

Li Yanhong, whose stock price suffered a setback, complained at the Baidu Union Summit: "The past week has been a huge test for Chinese concept stocks... When such a company makes decisions, it can actually ignore shareholders and the board of directors and make decisions on its own. This makes us Chinese companies listed in the United States very worried."

Although he didn't directly name Jack Ma and Alibaba, everyone knows who Robin Li is referring to.

When interviewed by reporters at an event, Sina CEO Cao Guowei said, "(The risks of the VIE structure) require joint discussion and efforts from the industry. We also need to communicate with regulators to ensure the long-term sustainability of this structure."

Zhang Chaoyang posted a message on Sohu Weibo: "I find it hard to imagine that anyone would actually dare to do something like this. Don't they care about the reputation of the company and themselves?"

Chen Guiliang was also bombarded with requests from netizens, who all wanted him to give his comments.

Chen Guiliang posted on ByteDance's Weibo account: "What's there to say? ByteDance's stock price has fallen by 27% in a week. I'm definitely a victim. I don't want to comment on anyone's behavior. I only dare to guarantee that I will not violate any agreements. Not to mention written contracts, I've never broken a verbal promise. A man's word is his bond. I do what I say!"

Shi Yuzhu's Giant Interactive stock price also plummeted. He retweeted and commented on Chen Guiliang's Weibo post: "President Chen has a rough-and-tumble,江湖-like spirit; we're kindred spirits. Any promises I make while drunk will be kept once I sober up. Damn, that guy is utterly inexplicable!"

For the past week, Jack Ma has been the focus of discussion at high-end clubs, golf courses, and various business dinners.

Venture capital firms, in particular, and founders seeking IPOs, privately cursed Jack Ma's ancestors countless times.

Faced with overwhelming public opinion, Ma Jieke actually held a press conference, positioning himself as a law-abiding business operator: "The central bank is still asking us whether we have any agreements to control the economy. Others certainly have agreements to control the economy, but I don't care. Others break the law, but we can't break the law."

……

Chen Guiliang pressed the space bar to pause the news video playback.

"Is this guy fucking insane? He's a master at twisting the facts!"

Wu Yuke, the newly established CEO of Youpay, stared at Ma Jieke on the computer screen and complained.

Jack Ma's logic is that if Alipay continues to exist under a VIE structure, it violates Chinese law. As a law-abiding citizen, he has no choice but to disregard his personal reputation and operate illegally.

This argument is so absurd it can be illustrated like this: Because bigamy is illegal, I had no choice but to dump my first wife and marry someone else. When I dumped my first wife, I even stole and tore up the prenuptial agreement that was unfavorable to me. But I'm truly a law-abiding citizen!
Ma Jieke's public remarks caused many venture capitalists, financial experts, and legal experts to completely lose their composure.

Even Wang Ran of YiKai Capital, who has a good relationship with him, wrote an article saying: Jack Ma is wrong.

Chen Guiliang asked the legal department, "Ma Jieke said he abides by the law while everyone else is breaking it, which will definitely attract the attention of relevant departments. Is there any legal risk in having ByteDance invest in Youpay?"

The legal representative simply replied, "I don't know."

"Huh?" Chen Guiliang was confused. The legal representative explained, "The 'Administrative Measures for Payment Services of Non-Financial Institutions' issued last year, and the subsequent 'Implementation Rules,' do not have strict regulations for our type of operation."

"Article 8, paragraph 3 of the Management Measures states 'investors who meet the requirements of these Measures.' This is a vague clause, and it is not explained in the Implementation Rules either. The final interpretation right rests with the People's Bank of China."

"Whether ByteDance, a US-listed company with a VIE structure, legally invests in Upay through Xiyi Capital without controlling Upay is up to the central bank to decide. If the central bank strengthens supervision, it is illegal; if it does not strengthen supervision, it is legal."

Chen Guiliang said speechlessly, "Then let's not worry about it. If they strengthen supervision someday, we'll just do as the central bank says."

The reason why the central bank created a vague clause is that the bigwigs at the top are tacitly approving this operation at this stage, but leaving room for prohibition at any time.

Chen Guiliang understood the emperor's intention, so he obediently followed orders.

Wu Yuke used to be in charge of Youpay's operations at Youke, but now that Youpay is independent, he has become its CEO. After discussing the legal matters, he pulled up a series of photos: "This is Alipay's QR code payment that they are promoting. They actually beat us to it."

"We'll promote it according to plan," Chen Guiliang said.

Wu Yuke said, "In addition to products under ByteDance and Youke, I also need to cooperate with more third parties. Especially e-commerce platforms such as JD.com and Dangdang, to get them to accept our QR code payment."

Chen Guiliang said, "I personally contacted the CEOs of these e-commerce companies."

QR code payment isn't something you can just implement on a whim.

There are no technical difficulties; the main problem lies with the previous payment platform.

Both Alipay (founded by Ma Jieke) and Youpay (founded by Chen Guiliang) operate in a gray area, tacitly approved by the central bank. They can be legal, or they can be illegal.

If QR codes are promoted, it will inevitably attract the collective opposition of several major banks, and we may be subjected to inexplicable and unknown attacks.

Now it's possible, because the central bank has officially issued payment licenses, and Alipay and Youpay have changed from gray to white.

……

Young people who enjoy online shopping have suddenly discovered something new.

Major e-commerce platforms, as well as social products under ByteDance and several games under Youke, are all promoting something called QR codes.

First-time users of QR code payment can also receive a cashback offer on their purchases.

In Hangzhou, shopping malls, supermarkets, and cinemas have gradually started displaying QR codes. These QR codes belong to Alipay.

Meanwhile, QR codes have also appeared in various commercial venues in Beijing, and these QR codes belong to Youpay.

Chen Guiliang also integrated Youpay into the mobile clients of WeChat, Weibo, Renren.com, and HaiNei.com!
Those in the industry who are following this matter understand that Youpay and Alipay are engaged in a QR code war.

Hu Shuli, a well-known financial writer and founder and editor-in-chief of Caixin Media, wrote an article commenting: "Chen Guiliang has finally shown his fangs this year. Last year, he defeated Sina Weibo and fought against Apple and Nokia in the mobile phone market. This year, he is fighting a major battle with Tencent Weibo, as well as an instant messaging war (WeChat), and also waging a QR code payment war with Alibaba..."

"Two small companies, ByteDance and Youke, which were registered a few years ago, have unknowingly grown into behemoths..."

"Looking at Chen Guiliang's business layout, it started with online games and SNS websites, then expanded to payment platforms and smartphones, and also covers film and television, publishing, video websites, live streaming platforms..."

"Especially his previous acquisition of Discuz!, a seemingly abrupt transaction, provided ByteDance and Youke with a terrifying traffic portal. With Discuz! in hand, Chen Guiliang was already in an invincible position in the competition with Tencent and Sina..."

"I feel like I'm witnessing the rise of a business empire! And the emperor of this business empire is still two months away from his 26th birthday."

The article was titled "Chen Guiliang's Business Empire," and Chen Guiliang's photo was even used as the cover of Caixin Weekly magazine.

The photo is from ByteDance's Night event at the beginning of the year, a rare occasion where Chen Guiliang appeared in a suit.

In the photo, Chen Guiliang is sitting in the front row watching a performance, smiling and looking composed. Everyone else in the photo has been cut out, making it look like Chen Guiliang is sitting in his company office.

Caixin Weekly was selling very well at the time, with each issue selling more than 10 copies.

In 2011, a year of decline for traditional print media, a single issue selling 10 copies was absolutely a leader in the industry.

This signifies a huge industry influence, with many company owners and executives subscribing to it.

The owners of small and medium-sized companies flipped through the magazine and exclaimed in amazement: How come Chen Guiliang is so amazing?

(End of this chapter)