Shanghai Government is releasing per batch the list of qualified high-tech companies. The first batch was published in August, and the second batch was in September. But one of Jack Ma's fintech corporations and a notable mobile payment in the country were not seen on the list.
An Alipay logo is seen next to the Shanghai office building of its parent company, the Ant Group, in Shanghai on November 3, 2020. - China's Ant Group on November 3 suspended its record-breaking IPO in both Hong Kong and Shanghai as the fintech giant faces growing pressure from Chinese regulators over potential risks. HECTOR RETAMAL/AFP via Getty Images
Alipay's Removal to the List
Alibaba Group Holding's Alipay was removed by the Shanghai Government from the high-tech company list, as reported first by South China Morning Post. The reason for its removal was because the company failed to meet the spending requirements for research and development.
This will be the latest problem for the company after Ant's record initial public offering was halted by the government in the middle of its 2020 planned debut.
Alipay is currently restructuring for them to meet the demands of Beijing which include the decision of increasing the company's capital base and the preparation for applying for a financial holding company license.
Possible Outcome
Intelligence Analyst Francis Chan said via Bloomberg that this may lead to the company losing certain tax benefits. He stated that "China is placing more emphasis on chip self-sufficiency when it comes to high-tech development."
The company's research and development spending has been increasing since 2018 with an annual rate of more than 39% as Yahoo! Finance reported. Since then, Ant has been very committed to improving the firm and has been putting money into blockchain, privacy computing, databases, and security.
This picture taken on October 28, 2020 shows an Alipay QR payment code (L-in blue) and a Wechat QR code (R-in green) displayed at a shop in Beijing for customers to scan to make electronic payments for items -- a system which millions of consumers young and old use to make daily purchases across China -- from restaurants or grocery stores to streetside vendors. NICOLAS ASFOURI/AFP via Getty Images
Last year, Alipay was included on the list of several China Apps that were banned by the White House and labeled as "risky." The official order states that China used a certain "bulk data collection" for them to improve the country's economy. This order also includes that this was a part of China's national security agenda.
Alongside Alipay, more applications were banned including QQ Wallet, SHAREIt, CamScanner, Tencent QQ, WeChat Pay, VMate, and WPS Office.
