Work 1

Annotation 1

This piece of image is one of the weekly assignments created solely by me from the MSC 537 Information Design course. It is a report of COVID-19 real-time data on March 12, 2021. I combined what I have learned in the course of color matching, charts design, and information organizing, to create a summary infographic for the general public to understand what COVID-19 and some truths about the pandemic is.

Work 2

Benyu Chen

Professor Rick Morris

MSC 521 Current Issues in Law, Technology and Strategy

Jan 28, 2021

       I am familiar with both the SVoD model (Netflix) and the freemium model (iQIYI) since I lived both in the U.S. and China. The Netflix in India case raises a lot of interest for me due to the similarity of the Indian and Chinese markets. I read various problems for Netflix to solve, for example, the internet speed issue, the pirate bay issue, and the strong local competitors. Although Netflix remains positive for its market in India, I personally hold the opposite view.

       First, there are two advantages that Netflix has but other competitors do not. One is a high-quality video streaming service and the second one is a huge amount of Western video content. However, when Netflix entered India, it lost its only advantages. India does not have high-speed wifi infrastructure or unlimited cellular data; people just can’t watch high-quality videos. About this problem, Netflix offered a solution on its India mobile app called data-saving mode which is lowering the quality of video streaming to save data usage. Netflix puts the incidental before the fundamental by breaking its only advantage: the high quality of its streaming videos.

       What’s more, I don’t think now is a good time to enter the Indian market because everyone is using pirate bay to download free videos. Not until the government publishes the law against a pirate bay version of the content, Netflix will not have a chance to charge Indian users $7.5 or $12 per month. After all, India is a developing country now with a 2009 GDP per capita while U.S. citizens have 62,794 GDP per capita. It’s also unreasonable to charge two groups of people the same price.

       Nevertheless, the local competitors are too strong for Netflix to beat because of the complicity of the Indian market. India's streaming or TV market has more than 10 different languages and data shows that they are fond of local programs. Even though Netflix tries to cooperate with Sony or other companies to create Indian content, it is also hard for Netflix to beat Bollywood at the same time. On the contrary, Hotstar not only provides strong local films, videos, TV shows but also, provides a different model than Netflix which is the freemium model. The freemium model allows Indian users to watch some content for free but charge money for its premium content. For the Indian market, especially considering its GDP per capita, its consumption custom, the freemium model is a healthier way to operate than SVoD.

       Thus, I do not agree with Netflix’s bold strategy and its positive view of the Indian market. Even if Netflix wants to adapt freemium in India, it will backfire in the U.S. in the future. Maybe people just use a VPN to switch their country IP address to avoid subscription fees. Their strategy of localization may not work either due to the lack of video content and Netflix does not even offer their full library to the Indian users.

       I suggest Netflix stop huge promotions like free for one month and stay low spending in India. Instead of working with local filmmakers, maybe working with local governments to create a healthy law to prevent leaking of their video content is smarter. When people are getting used to paying for their entertainment, Netflix can try spending huge money on advertising or other promotions.

Annotation 2

This is a reaction paper one article about Netflix’s problem in India that I read from the MSC 521 Current Issues in Law, Technology, and Strategy course. I wrote this piece solely on January 28, 2021.

The assignment requires students to provide interesting points towards the reading material and use learned knowledge to analyze the problems, what’s more, solve the problems if possible.

Writing this assignment provides me ability to analyze the current issues and I learned some corporation laws during the learning process. Not only I summarize a complicated issue into a few paragraphs, but also, I found possible solutions for the company in the case study.

Work 3

Benyu Chen

Professor Rick Morris

MSC 521 Law, Technology, and Strategy

July 1, 2021

Alipay Faces Trouble From both the Chinese and U.S. Government

1. Executive Summary

       The following paper will present key evidence and insights to the board of directors of Alipay and Ant Financial. First, by unpacking recent information from literature surrounding Chinese markets, fintech regulation, and broader business considerations, some clear conclusions arise. Second, the paper will address the specific situation at Alipay in which regulations in both the United States and then China, stemming from government action, resulted in a cancellation of both an American IPO offering and even a domestic one. After consideration of these broad and context-specific factors, recommendations are made to the board in terms of how to move forward effectively to reduce negative impact of Jack Ma’s actions, excessive regulation, and a perceived contentious relationship with the Chinese government. Ultimately, Alipay and Ant Financial need to cooperate and be on good terms with the government and regulators, because the service relies on legitimacy and trust within the social ecosystem of China. The board should open up a dialogue with the government and regulators in order to not only address but have a stake in the regulations and negotiations that directly impact the business moving forward.

2. Macro Factors and US/China Relations

The United States and China have been engaged in a trade war over the last few years, especially under the Trump presidency, with his contentious perspective on China’s President Xi (Yang 1). At the core of the issue, beyond political temperament, is the fact that China has been consistently exporting far more goods to the US than it has imported, resulting in a trade deficit of nearly half a trillion with China alone (Yang 2). Technology is at the forefront of this issue, because major tech companies such as Apple rely on China’s manufacturing capabilities, with the two powers duking it out over “tech supremacy” (Yang 2-3). Beyond hardware manufacturing, China and the United States are also competing to lead the global technology industry by bringing apps and platforms to the fore, competing for the attention economy of users in countries all around the world. July 2018 saw new tariffs from the US on China of a record-high 25% with China responding in kind (Yang 3). Overall, the United States and Chinese economies are dependent upon one another, with the US using over $1 trillion in debt as capitalization for various projects (Yang 4). Moreover, “severe imbalances of trade and capital flows between China and the United States were rooted in complex social, behavioral, and institutional contexts” which the board of directors should understand as an inevitable fact of the global business world (Yang 9). ZTE and Huawei are two Chinese technology firms that were specifically caught in the cross-hairs of this technological trade war between the empires (Yang 11). While trade negotiations with other nations remained friendly with lower tariffs, China and the US continue to battle over tariffs that impact their GDP and economic bottom line (Yang 12-14). Alipay is also facing the last-minute Trump administration ban on its services in the United States, limiting its availability to customers, even as this move has been slammed by the business community and Chinese government alike (Berthiaume). However, this short-term ban will likely be overturned imminently by the new Biden administration, which exemplifies the need for the board to examine other more pressing strategies to reform the company that will result in the maximum impact and sustained growth.

Another key macro-condition impacting Alipay is the fact that business and political ties have varying effects on the market impact of firms. Based on a study of 241 Chinese firms, technological agitation and government support pitfalls are mediated through government ties, while business ties help in terms of certain legal considerations (Sheng, et al. 1-2). This key literature highlights the importance to board members of a strong relationship between government officials and Alipay. Government support would be invaluable to the company, because it does fall into this category of a technologically dynamic space, plus government oversight is necessary in many financial contexts. In a sense, China forces a marriage between enterprises and the force of government, meaning that sustained success is impossible without government approval and sponsorship in some iteration (Segal 14). However, “this does not give local officials justification to intervene whenever and however they want. Local governments had to provide a certain type of support […] that fell somewhere in between the spectrum of market-driven and state-led development strategies” (Segal 14). Thereby, the coordination between state interests and market interests overlaps in China in a manner that the board must take into consideration. Elsewhere, this is also true, but especially in the Chinese financial technology markets, it is impossible to effectively direct Alipay as a business organization without acknowledging and operating within the context of government frameworks.

3. Alipay Market Context and Insights

The board should consider specific evidence when making its decisions on the best path to move forward and address this problem. Alipay, which is under parent group Ant Group or Ant Financial, declared that they will offer an IPO as of summer 2020 (Ledger Insights). The initial intention was to offer an IPO in 2020, but only offer it on the Hong Kong and Shanghai Stock exchanges, and not the US NYSE (Ledger Insights). This decision was made based on a May 2020 bill in which US regulators made financial institutions follow normative regulation and auditing properties for American companies if they were to be listed on American stock markets (Ledger Insights). Thus, the decision to only be publicly offered in Chinese markets was intentional in order to avoid foreign regulatory practices of their multi-billion dollar IPO. Yet, as of early 2021, the IPO for Ant Group has been suspended, since Chinese regulators also lashed out at the company after its founder, billionaire Jack Ma, publicly criticized Chinese banking regulations (Canales). The lending of credit was a main issue for the citation from the Chinese government, as this accounts for almost half of Ant’s revenue, and these loans were questionable in nature (Canales). Alipay is central to Ant’s lending and financial services, with over a billion Chinese customers (Canales). The core competencies of Alipay are its financial services, such as sending payments to other users, creating checking accounts, investing, purchasing insurance, receiving a credit card, and even ride-hailing services, plus the ability to pay virtually anywhere in China through Alipay on smartphones (Canales). But, when it comes to offering credit to customers, the issue is that the profiles of customers is quickly glossed over when compared to traditional credit establishments (Canales). Since Alipay offers so many services in one place, it is incredibly attractive to many generations of Chinese citizens.

Beyond the recent scuffle with the Chinese government over the IPO regulations of Alipay, the firm has also experienced difficulties from the government pertaining to making it especially difficult for foreign investors to invest into telecom in China, despite WTO agreement green-lighting (Shen 929). At the same time, China has been supportive of FinTech and digital financing services in the Mainland economy, despite concerns from regulators over practices that may negatively impact the financial realities for many Chinese citizens (Zhou 45). Alipay is the largest third-party online payment service in China, which provides the important dimension of trust to customers in the online shopping environment, although it is notable that only the convenience and safety of transactions are sustainable positive competencies of the services, meaning that room for improvement is possible (Choi & Sun 147).

Furthermore, Alipay has been able to dominate the market in small transactions across China based on their lack of direct competition with banking institutions, while capitalizing on this intermediary position in the market that would be lost if they sought to become a financial institution (in the traditional sense) in their own rite (Guo & Bouwman 56-8). Retaining focus on the micro-payments and ease of use is critical at Alipay. Another essential dimension of Alipay’s location in the market is their ability to bring in more Chinese citizens into financial services than was previously possible, through their technological edge and lack of barriers-to-entry, whether in regards to minimum threshold for account deposits or evaluations of creditworthiness (Kshetri 297-8).

4. Board Recommendations

       As per the ‘big picture’ and context-specific market research outlined above, the board of directors of Alipay should therefore implement several key strategies to address the issues relating to government sanctions on the part of the US and China, as separate but overlapping tenets. First, in grappling with the US issues, Alipay and Ant Group should trust that the strained US relations will likely cool off over time. Since COVID-19 has seriously hurt the US economy, the Biden administration and future administrations will be more focused on economic recovery than continuing their techno-war via tariffs against China. The end of the Trump era also signals an end to the purely America-first politics that resulted in these excessive sanctions. Therefore, it is safe to say that the banning of Alipay specifically and the broader tariff issues will dissolve over time, since, as noted in the literature, the United States is deeply dependent upon China for not only imports but also credit. Moreover, the Chinese economy already looms large and will more than likely surpass the US in the coming decade or two, meaning that the bargaining position of China will become increasingly dominant. Thereby, China and, by extension, Alipay is in a good position to expand their market to the United States and other Western nations in the coming years. Second, Alipay should not concern itself with the excessive regulatory bodies that are forcing them to undergo American audits in order to chart as an IPO on the NYSE. What makes Alipay success, as board members will recognize, is the ability for the service to help over a billion Chinese customers, and sustaining growth, meaning that the dependency upon a public offering is tertiary and not necessary for the company to continue in progressive growth and even other market expansion.

When it comes to the regulations from China, more decisive action is required from the members of the board. Based on Jack Ma’s own personal conduct, there was turbulence with the Chinese authorities, leading to the cancellation of the IPO on the Shanghai and Hong Kong exchanges. Therefore, the board should force Jack Ma to apologize and make amends with government authorities. Even while there is likely a strong reason for his criticism, as the literature evidences, the board must acknowledge the need for a smooth relationship with the Chinese government in order to continue to guarantee success. While the origin of the controversy and government regulation of Alipay comes from public expression against regulation, there is the need to establish a dialogue. Therefore, the board should meet with critical financial members of the state in order to discuss their mutual interests and potential concerns. In doing so, this is an effective means of dismissing the negative PR from Ma’s conflict with the government, will allow for the company to achieve more freedom and potentially still issue the domestic IPO, while simultaneously addressing certain underlying issues. For example, it is a legitimate concern that the government seeks to understand how the credit system at Alipay is operating when it is doing so for clients that would otherwise not be eligible or would not receive traditional loans from brick-and-mortar banking institutions.

The board of directors should present their insights from the market analysis to government officials, as their interests almost certainly overlap. Engaging more Chinese citizens into crediting and financial services, plus engaging with an increased number of foreign investors is only going to prop up Chinese economic growth even more exponentially than it is already experiencing. The government ultimately seeks to support and engage with these major corporations, meaning that there is no avoidance or autonomy for the company to circumvent the government without courting major disaster. By engaging more of the populace into the financial market, even in small payments, investments, and savings, there is a positive total economic output based on Alipay’s profile, since that does directly and indirectly add to the GDP. Furthermore, Alipay must acknowledge that the regulations that Jack Ma decried in his public statement might be here to stay, meaning that the company should be above-board in terms of all necessary audits and financial measurement tools so that compliance is assured. In doing so, the company will be able to issue their IPO in the Shanghai and Hong Kong markets, while potentially opening up the offering to other markets, such as the NYSE.  

China has and will continue to generate various regulations in the financial technology industry. Alipay and Ant in general should focus on working in cooperation with the government and accept these regulations as inevitable while finding ways to strategically operate as unencumbered as possible. Ultimately, the government can become an asset to help propel Alipay to even greater heights of success and must be cooperated with to increase market share while creating a positive and mutually beneficial relationship. Furthermore, this is even more important, since Alipay is operating in a rather volatile market with a high level of technological competition and government assistance will become an asset. Moreover, as noted in the portion regarding the United States, board members should consider the long term since the Chinese government will most likely be at the helm of the global economy within decades. Thus, Alipay is positioned to take on an even greater global position outside of China, expanding to markets and customers in the United States and beyond. Although there will be some necessary level of adjustment to create a software interface that works seamlessly with various global cultural, the company’s approach to fintech should be able to match the dynamic environment that it is currently dominating in the Chinese market alone.

       Jack Ma’s actions should be reversed by the board by issuing a statement of regret regarding his criticism of the Chinese government and regulatory bodies. In doing so, a positive PR message will be dispersed while signaling cooperation with the government. Additionally, a different spokesperson should be hired by the company to promote a strong PR campaign. Unfortunately, Ma’s approach backfired because his criticism landed heavy sanctions on Alipay, meaning that the board must operate within the context of damage control and move forward in a productive way that will represent the best interests of the board. While Ma’s statement is based in truth, the method of his approach was damaging towards the company, as exemplified in the abruptly halted IPO: by coming to the table with the government and opening up negotiations and communications, there will be a legitimate and private forum to question and potentially alter these regulations that will favor Alipay. Simply speaking out against these regulations did nothing except damage the company’s reputation and cause backlash. This could be further alleviated with a new spokesperson who represents a younger generation in China, such as famous singer and idol, Kris Wu. By reaching out to more customers, Alipay can continue to build its brand and attract clients just entering into the financial markets while encouraging those with more experience to try the Alipay user experience. With these considerations in place and strategies in action, the board can help Alipay to grow exponentially and continue to dominate the fintech market in China.

Annotation 3:

       This piece is an article focus on the current issues that Alipay is facing from both U.S. and China governments. It talks about the cause of the issues and possible solutions for the company. I wrote it solely on March 7, 2021. The purpose of the assignment is to pick a current event that is related to the course materials and apply the knowledge in the course to help the company to solve the problems. By completing the assignment, I succeeded to showcase my ability to analyze the real-life issues and provide suggestions for them. I also master laws of technology and company and applied them in the assignment.