Chinese e-commerce giant Alibaba Group Holding has frozen pay for senior executives in 2021 and is instead giving junior staff bigger salary increases, sources said, in an effort to preserve its workforce amid a regulatory clampdown.
Hundreds of top-tier executives at Alibaba are not entitled to salary hikes this year, unless they performed extraordinarily, four sources familiar with the matter said.
The Hangzhou-based company, though, has offered considerable wage increases to junior staff, they said.
The Beginning Of The End?
Industry experts have been watching Alibaba since the government slapped the e-commerce company with a record $2.81 billion fine over anti-monopoly violations.
Analysts believe Alibaba's fate is just the beginning of a decline in the domestic internet economy.
The company, established by billionaire Jack Ma, is set to present revamped market practices it hopes will get favor from regulators who decided Alibaba was monopolizing the industry.
For Leo Sun, a technology specialist at The Motley Fool, Alibaba and other internet companies can still grow their core businesses. However, Sun believes there will be more eyes watching these companies' future acquisitions and investments.
Alibaba's core business is e-commerce. It has been broadening its business portfolio.
After Alibaba, Ant Group Is Shackled
Alibaba got into trouble with its spin off of Ant Group.
Earlier this week, Ant was "forced" to develop a restructuring plan that will see the digital payments provider offer more bank services.
China technology analyst Rui Ma, who also co-hosts podcast Tech Buzz China, said regulators were becoming more futuristic in handling companies "in an attempt to regulate an industry that is moving so fast."
Some critics have called the recent moves against Alibaba and Ant politically driven as the China Communist Party doesn't want the companies to have so much influence.
Jack Ma And His Fallout With The Party And Public
When news emerged of the government's crackdown on Alibaba's alleged monopoly, the Chinese public was largely divided over "Daddy Ma."
The public response was mirrored by the Alibaba founder's fallout with Beijing just weeks after he called out Chinese banks for lending only to those who had collateral.
Before Alibaba and Ant were hit with the crackdown, Ma was a hero to young entrepreneurs.
Since his criticism of the Chinese financial system in October, Ma disappeared for about three months. He appeared via video, in late January.
Ma was spotted in February playing golf in Hainan. On the other hand, it is believed that the billionaire is trying to keep a low profile because of the trouble.
Who's Next?
On Thursday, regulators ordered 13 companies, most in the technology sector, to rethink their industry practices.
Industry analysts believe there will be more companies on the list, not just internet companies like Tencent and JD.com.
Some observers are also expecting the government will continue to demand "loyalty" and more alignment with Beijing's goals as the internet economy grows.
