Alibaba is one of the top e-commerce companies in China, owning platforms such as Taobao, Tmall and Alipay, which are all very regularly used among the public.
One of its partners, Jiang Fan, has recently got involved with a scandal that he was having an extramarital affair with an internet celebrity, Zhang Dayi. This incident triggered massive discussion in China, that both the people and company involved were under pressure to give an explanation to the public.
According to the Financial Times, Alibaba decided to take action to penalise his actions by demoting and taking away his position as an Alibaba partner. One of the reasons that the company finally decided to take action since mid-April when the scandal broke out, was that stock value of both Alibaba and Ruhnn (which Ms Zhang is a stakeholder of and is invested by Alibaba) has been affected by it, that the stock value of Alibaba is 203.96 USD on 27 April, compared to the 209.50 USD on 17 April. Even though the stock value of everything would be decreasing now, as the ‘black swan’ incident of coronavirus decreased, the loss of confidence in people could mean that the recovery time of Alibaba from recession would be much longer than many of its competitors.
Not only scandals could affect current affairs economically, but it could also affect the political situation.
For example, scandals of 1963 deeply damaged the political situation of Macmillan at that time, eventually leading up to his resignation. The Profumo scandal and the Philby spy scandal both affected the reputation of the government and intelligent services and questioned the capability of Macmillan as the PM, which undermined his power in the government.
Similar things happened to Major in the 1990s, that David Mellor had an extramarital scandal and the Back to Basics campaign failed with scandals associated with Tim Yeo and Stephen Milligan. This was one of the key reasons why the conservatives lost the 1997 election.
Therefore, in conclusion, scandals do matter a lot in society, that it could affect where people’s confidence lies and would have a dramatic effect if it has been used well.
Yanjun Zhou
