Sina Tech, 6/14/11
Jack Ma, chairman and CEO of e-commerce conglomerate Alibaba Group, said in a press conference in Hangzhou today that Yahoo co-founder Jerry Yang and Softbank CEO Masayoshi Son, members of Alibaba's board of directors, both believed that Alibaba's subsidiary Alipay could apply for a third-party payment license, despite not being 100% domestically owned as required by the People's Bank of China (PBoC). Ma stressed that the board of directors was informed about the asset transfer plan, and authorized senior management to obtain a third-party payment license by transferring Alipay's assets to another company, which Ma believes was the only correct decision.
In accordance with PBoC regulations, Zhejiang Alibaba E-Commerce Co., Ltd., a domestic company majority-owned by Ma, acquired a 70% stake in Alipay from Alipay E-Commerce Corporation, a British Cayman Islands registered subsidiary of Alibaba Group, for RMB 167 mln in June 2009, later acquiring the remaining 30% of shares for RMB 165 mln in August 2010.
Alipay CFO Jing Xiandong said that national regulations require foreign-invested payment companies to first obtain approval from China's State Council. Alipay applied in late 2010, and the State Council required the company to issue a statement declaring that Zhejiang Alibaba E-Commerce is the company's sole shareholder and that no foreign investor has a stake in the company.
Ma said that talks with Yang and Son are still underway, stating that their first priority was to ensure 100% legality and transparency so that Alipay can continue to operate smoothly, and now discussions have turned to the particulars of an agreement.
Ma added that should the PBoC relax its regulations, it might be possible to reintegrate Alipay into Alibaba Group.
Editor's Note: For more information on this topic, please see "Alibaba Transfers Ownership of Alipay to Domestic Firm," MD 5/12/11 issue.