Almost two decades ago, in 1999, when China was a small player on the global landscape, and Japan was the only economic rival of the mighty United States, Masayoshi Son, the CEO of SoftBank Group met Jack Ma, the founder of Alibaba in Hong Kong.
By then, Jack Ma had an idea of what Alibaba would look like but no source of capital to invest in the startup and no revenues. Son was a celebrated investor and a billionaire in the early 1990s who owned a major stake in Yahoo! the shining star of the early technology boom. However, he lost more than 70 billion dollars in the dot com bubble and was poorer compared to the earlier version of self by then.
Son agreed to invest 20 million dollars in Alibaba after speaking for 5 minutes to Jack Ma. “I saw charisma in his eyes,” he explained later. Today, Alibaba group has a market valuation of more than 550 billion dollars and 20 million dollars invested by Son for 30 percent share now value around 120 billion dollars.
Since the last two decades, Ma and Son have been close friends, personally and professionally. But, the outbreak of Coronavirus has soured their professional relations. Jack Ma has now resigned from the board of SoftBank for unexplained reasons. According to Son, Jack Ma stepped down “on his own”.
“That’s sad, but we still keep in contact directly and right before the Covid-19, we met face-to-face every month to have dinner, to talk about businesses, to talk about lives. And we will remain friends for the rest of our life, I believe,” said Son about Jack Ma in a press briefing.
The reason for stepping down is still unexplained, but looking back at the set of events in the last few weeks, one can find a convincing explanation.
Since the outbreak of the Coronavirus, the relations between Japan and China have deteriorated. There have been geopolitical tensions earlier before Coronavirus, but both countries never let these events to impact business relations among their companies. But after the outbreak of the virus, Jack Ma stood firmly behind Chinese Communist government and is heading dragon’s image makeover strategy.
China sent PPEs and other medical equipments to countries around the world was his idea. He opened a Twitter account in the middle of the outbreak and debuted with a message of- “One World, One Fight!” Alibaba Group is among the largest donors in the fight against the pandemic, and Jack Ma is helping China write off the outbreak as a mistake.
On the other hand, Son, a Japanese national of Korean ethnicity, and friend of Jack Ma, found himself helpless in this situation. Abe, the Japanese Prime Minister, has taken a firm stance against China and wants all the Japanese businesses and manufacturing units to exit from the Western neighbor. The Japanese government also announced a package worth billions of dollars to the companies shifting factories from China to Japan, and also for the companies shifting to other countries like India. Chinese government is trying to placate Japan but all efforts went in vain, as Japan changed its pacifist constitution and increase defense budget.
Therefore, Jack Ma and Son find their countries against each and others, and none of them could do much about this. SoftBank’s global business interest lies primarily in countries like the United States, Europe, and India- all of which stood firmly against China.
Although 65 percent of SoftBank’s value comes from stocks in Alibaba, the company is an investor in hundreds of American companies, and given the fact American government is in no mood on being lenient on even foreign companies which have business interests in US or use American technology, as seen in the case of Huawei, Son is forced to retreat from Chinese interests.
In the last few years, SoftBank has consistently offloaded Alibaba shares worth billions of dollars to invest in new ventures based in the United States and India; and to make up for the loss posted by its Vision Fund- SoftBank’s arm which invests in startups. Yesterday, the company said that it would tap 11.5 billion dollars from Alibaba stakes to make up for the latest losses.
The national loyalties and business interests have forced the long time collaborators to call off their professional relationship, although the friendship might survive.