by Wolf Richter, Wolf Street:
A friendly chat among billionaires who presumably see eye-to-eye.
Carrot and Stick. That’s how China is approaching a pending trade war and all kinds of disagreements proffered by President-Elect Donald Trump. Here’s the carrot, as tweeted by CNBC:
NEW: Alibaba’s Jack Ma is meeting with Trump today about Alibaba’s latest US expansion plans, including creating 1M US jobs over next 5 yrs
A limp carrot? Jack Ma isn’t going to “create” jobs in the US; he will merely allow small US companies to get on Alibaba’s platform and sell directly to Chinese consumers, in competition with Chinese vendors and knock-offs that find their way on the site, which might, should, or could add maybe 1 million jobs in the US over the next five years.
So how exactly would those million jobs appear in the US? An Alibaba spokesman told Reuters in a phone call that each of the one-million small companies that would get on the platform would create one position. So that’s how the promised “1M US jobs,” as CNBC had put it, would materialize.
That was one of the carrots China offered: direct access to its consumers, even as American consumers have long been able to buy directly from Chinese vendors via Alibaba.
Jack Ma, the 15th richest person in the world, according to Bloomberg Billionaires, wasn’t the only corporate chieftain today to meet with Trump. There was a whole parade, including Bernard Arnault, CEO of luxury goods company LVMH, richest person in France, and 13th richest person in the world. Fashion site WWD:
“One of the great men, you know that, right? And they all love this country,” Trump said of Arnault after their meeting. “They’re going to do some wonderful things in this country,” he said, adding “jobs, a lot of jobs.”
WDD sprinkled in some food for thought:
Arnault does have a major financial interest in meeting with Trump in terms of the Louis Vuitton flagship at Fifth Avenue and 57th Street. Stores in the area around Trump Tower at Fifth Avenue and 56th Street have been severely impacted by all the security precautions put in place to protect the president-elect. Some retailers in the neighborhood have said their business has declined by 30 percent or more because shoppers are being scared off.
So Jack Ma’s meeting with Trump was not, per se, unusual. It fit the mold. Another multi-billionaire trying to get a foot in the door with the next administration.
But it has another component. This is best explained by what Ma did in December 2015. The New York Times:
The Alibaba Group, the Chinese Internet giant, is making an ambitious play to reshape media coverage of its home country, taking aim at what company executives call the “negative” portrayal of China in the Western media.
As the backbone of this effort, Alibaba agreed on Friday to buy the media assets of the SCMP Group, including one of Hong Kong’s most influential English language daily newspapers, The South China Morning Post. Alibaba is acquiring an award-winning newspaper that for decades has reported aggressively on subjects that China’s state-run media outlets are forbidden to cover, like political scandals and human-rights cases.
Alibaba said the deal was fueled by a desire to improve China’s image and offer an alternative to what it calls the biased lens of Western news outlets. While Alibaba said the Chinese government had no role in its deal to buy the Hong Kong newspaper, the company’s position aligns closely with that of the Communist Party, which has grown increasingly critical of the way Western news organizations cover China.
This acquisition was somewhat ironic in that Alibaba had raised billions of US dollars, including the capital needed for acquisitions, by selling its shares, or rather “American Depositary Receipts” (ADRs), to the American public in 2014 via the New York Stock Exchange.
So Jack Ma, emissary of the Chinese government? The whole meeting was surrounded by the now standard rhetoric.
Trump told reporters afterwards, when they emerged together, that they’d had a “great meeting” and that they would do great things together.
Ma said Trump was “smart” and “open-minded” and the meeting was “very productive.”
“We mainly talked about small business and young people and American agriculture products to China,” he said. “And we also think, that the China and US relationship should be strengthened, should be more friendly.”