Alibaba

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
(17-09-2021, 10:36 AM)ongweehiang Wrote: While cheap loans may be pro-consumer, it is on the back of the loans provided by the regional banks. The provision of loans by Ant post a systemic risk to the regional banks and the system and thus have to be curtailed. 

The CCP is usually worried about the systemic/macro risk in their policy decision. 

With most of the data residing in baba, it is logical to break up the parts and provide some check and balance in between. It may not be the most efficient system, but it allows competitors to spring up to serve different segment of the value chain.

My view is that the eco-system would be more robust post Ant when startups, private enterprise or banks come into the lending space since data is no longer the restraining factor.
  
OWH
www.weightedresearch.com

(1) The reason reginal banks trust Alibaba's credit score is probably because it has been working. ie Alibaba's credit score has been, statistically, a reliable indicator of credit worthiness. (this model is comparable/much better than current WallStreet darling Upstart Holdings)

I agree that a blackbox, private credit scoring system might pose an unknown risk to China's financial system; but I disagree that confiscation and nationalization of data entrusted to Alibaba by legislation is the solution.

(2) "The CCP is usually worried about the systemic/macro risk in their policy decision. "

Yes, but they should have regulated Ant differently. Secondly, beyond the official stated reasons, this move could also be more about reducing concentration of private wealth and power, and solidifying state control.

(3) On the surface and in the short-term, it opens up opportunity for smaller players. Bigger picture, the potential returns of innovating, being a first mover to take risks to build up valuable technology/platform/ecosystems will be diminished.

Remaining future investors/venture capital in China would need to assign a much higher risk premium, and expect much lower returns. A vicious cycle.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
Reply
Agree with Wildreamz, the fact that banks uses Ant's credit score system and not other institution or the national rating agency shows how good a product they have created which is used. Banks are profit entities and they will use the service of the one which gives them the best interest income margin.

(2) the act of the Communist Party taking away/regulating a product once it is widely accepted by their country has frightened investors. So a lot of investors will be putting a premium on ventures creating new innovative products because once it goes mainstream, the CCP is going to step in.

This stifles innovation and hence to me, I view that China will have difficulty being a number 1 powerhouse due to this mentality. AWS, Microsoft all came about because they created products they were domineering. China at best will only be able to develop an existing "good" to better through incremental progress. However, it will never be a country creating a "good product", with such a mindset
Reply
Don't know where to put this, I will put it here, as it relates to China's recent tech crackdown:

TikTok parent ByteDance adds time limit for kids under 14 on its video app in China

https://www.theverge.com/2021/9/19/22682...-app-china

Quote:The app’s youth mode keeps it in line with the Chinese government’s new restrictions on access to video games for younger children. Teens under 14 will be able to access Douyin between 6AM and 10PM, but won’t be able to use the app outside of that window, the company said. The rules will apply to “real-name authenticated users” under 14, and the company encouraged parents to help their children complete the real-name authentication process, or activate youth mode when prompted by the app.

Glad even China understands how social media works (dopamine). Pretty sure regulation will not stop here for China; will be interesting to see if and how the rest of the world catches up.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
Reply


Forum Jump:


Users browsing this thread: 4 Guest(s)