Beijing’s recent regulatory crackdown is a “wake-up call” for China’s corporate giants, which should not assume they are untouchable, says Charles Li, former CEO of Hong Kong Exchange and Clearing. China had stepped up its security, and the crackdown had been going on for quite some time.
Companies need to get used to the pace of reforms, Li said in an interview with CNBC’s Emily Tan.
“Because you can’t take for granted that when your company is powerful enough, nobody will be able to touch them,” said Li, who is now the founder of investment platform Micro Connect. “It is something that probably is a little bit of an awakening and wake-up call.”
Li said that China’s regulatory model is different from the U.S. — and that has an advantage for the Asian giant.
“When the U.S. government wanted to crack down on monopoly, it could take years and decades simply because of the institutional checks and balances,” he said.
“Regulators have tightened their hold on domestic tech giants for much of the past year, from the suspension of Ant Group’s $34.5 billion listing to Alibaba’s $2.8 billion antitrust fine, and a cybersecurity probe into ride-hailing firm Didi.”
“China’s model is slightly different — other people think it’s a lot different,” Li said. “That model allows them to do things quickly, identify issues decisively, and then make a policy right after that, and then move on to implement that.” He is the only one who is making all these comparisons. “This swing between fairness and equity and efficiency is a very healthy self-regulatory move that will allow us not to (become too excessive) and allow the society, allow the economy to move in greater harmony,” he said.