Beijing: Alibaba Group Holding Ltd’s billionaire co-founder Jack Ma will announce a succession plan on Monday to hand the reins of his sprawling empire to a new generation of leaders but will remain executive chairman for the time being.
Ma will announce the plan on his 54th birthday and the handover strategy will stretch over a significant period of time, the South China Morning Post newspaper — owned by Ma — reported citing a company spokesman. Earlier, the New York Times had reported that Ma was planning to step down from the Chinese e-commerce giant on Monday to pursue philanthropy in education in what appeared to be a change of the guard for the $420 billion (Dh1.54 trillion) internet company.
How did Ma set up Alibaba?
A former English teacher, Ma started Alibaba in 1999 and built it into one of the world’s most consequential e-commerce and digital payments companies, transforming how Chinese people shop and pay for things. That fuelled his net worth to more than $40 billion, making him China’s richest man.
A natural salesman and charismatic leader, Ma cofounded Alibaba with 17 others — some of them his students — out of his apartment in Hangzhou in eastern Zhejiang province in 1999. He is revered by many Chinese, some of whom have put his portrait in their homes to worship in the same way that they worship the God of Wealth.
Is the timing of Ma’s succession critical?
The leadership succession at Alibaba comes at a time when China’s business environment has soured, with state-owned enterprises increasingly playing more interventionist roles with companies. Under President Xi Jinping, China’s internet industry has grown and become more important, prompting the government to tighten its leash.
He stepped back from the CEO role about four or five years ago and very specifically made a comment about wanting younger people to lead the company.”
- Kevin Carter | Founder, The Emerging Markets Internet exchange-trade fund
Trade tensions also present a new challenge for Chinese tech firms, especially those like Alibaba which are rapidly expanding overseas. This year, regulators shot down a $1.2 billion bid for money transfer service Moneygram International Inc by Ant Financial on national security grounds, which the company said was related to “geopolitical” changes.
What is happening inside Alibaba?
For Alibaba, Ma’s succession plan completes a transition of power to other executives. Ma stepped down as Alibaba’s chief executive in 2013; the company’s current chief executive is Daniel Zhang, who is a candidate to succeed Ma.
Ma founded the Jack Ma Foundation, a philanthropic organisation devoted to education, in 2014. But he has remained very involved in the company he founded. When Alibaba debuted on the New York Stock Exchange in September 2014, Ma was on the podium to ring the opening bell.
Why is Alibaba so famous in China?
Often compared to Amazon.com, Alibaba’s parent company has e-commerce, online payment, banking, entertainment and cloud computing businesses. It also holds stakes in several Chinese media companies, including the microblogging site Weibo. Alibaba reported roughly $40 billion in revenue last year. In its most recent quarter, it reported about $10 million in e-commerce revenue. The company reported its annual active customer base hit 524 million.
Has Alibaba confirmed Ma’s succession plans?
Alibaba declined to comment but pointed towards the SCMP story when asked about Ma’s plans. While Ma’s plan to gradually step back is a milestone, analysts and industry professionals said it was unlikely his involvement would change significantly.
“He stepped back from the CEO role about four or five years ago and very specifically made a comment about wanting the younger people to lead the company,” said Kevin Carter, founder of The Emerging Markets internet exchange-trade fund. It’s very unusual for a Chinese executive to retire so young. But Ma last week told Bloomberg TV that he was mulling an early retirement similar to Bill Gates’ early exit from Microsoft. When asked if his retirement could happen as soon as this year, Ma smiled and said, “You’ll know very soon.”
What does Alibaba stand to lose when Ma steps down?
Ma’s eventual succession would put more distance between Alibaba and one of its most visible and charismatic spokesmen. Alibaba, while hugely successful in China, is not known as well overseas. Ma maintains a prominent international profile, frequently inviting global leaders to the company’s Hangzhou headquarters.
Last year, he met US President Donald Trump, who described him as “smart” and “open minded”. He also had dinner with Commerce Secretary Wilbur Ross, following a solo dinner with the president’s daughter and adviser Ivanka Trump. Ma helped broker a meeting of 20 US and Chinese executives in July 2017, to discuss economic rifts between the two countries.
(With inputs from AFP, Reuters, Bloomberg & New York Times)