It may have been announced a year ago, but the resignation of Alibaba founder Jack Ma has left a global e-commerce giant in transition and industry watchers eager to see what China’s second-richest man will do next.
Ma’s handover to CEO Daniel Zhang has been underway since he last year announced that he would retire on 10 September 2019 – the 20-year anniversary of Alibaba’s founding from an apartment in Hangzhou.
“Teachers always want their students to exceed them, so the responsible thing to do – for me and the company – is to let younger, more talented people take over in leadership roles so that they inherit our mission ‘to make it easy to do business anywhere’,” Ma – who recently turned 55 – wrote in an open letter to staff announcing the move and outlining the “institutional ingredients” that had helped guarantee a bright future.
Those ingredients, he said, included a partnership-based management system that would allow the $US466b ($A667b) company to continue its heady growth into the future even after he had relinquished the helm.
The partnership system is a change from conventional top-down management, with 36 partners – including six of Ma’s co-founders – and others who have worked with Alibaba or its affiliates for at least five years.
Partners must be nominated by three existing partners and elected by 75 per cent of partners, with two retired every year and up to four new members admitted annually.
“In iterating our management model, we have experimented with and improved on the right balance between systems and individuals,” Ma wrote in his employee letter.
“Simply relying on individuals or blindly following a system will not solve our problems.”
A parting gift for Alibaba
Ma, who will remain on the company’s board of directors until 2020, has left his successors a busy to-do list.
Most recently, the company finalised a $US2 billion ($A2.9b) agreement with Chinese gaming and content giant NetEase, whose Kaola online mall will join Alibaba’s TMall Import and Export stores.
NetEase Kaola debuted in 2015 and sells household appliances, apparel, maternity, infant and personal care items. It is now China’s biggest shopping site, with iiMedia Research Group attributing it 27.7 per cent of the cross-border e-commerce market last year.
Alibaba’s Tmall Global has around 25.1 per cent market share – giving the combined entity around 60 per cent of China-based transactions for foreign brands, and an effective license to print money in the fast-growing segment.
“With the latest acquisition, Alibaba will be able to drive the top line and profit generation in the future,” analyst firm Zacks Equity Research concluded in an analysis of the deal that noted Alibaba’s 58 per cent of China’s e-commerce market.
Alibaba – whose $US14.5b latest quarterly profit marked a 44 per cent increase over the previous year –also agreed to invest $US700m ($A1b) in the NetEase Cloud Music service, complementing its own Xiami service and strengthening its competitive proposition in a streaming-music space currently dominated by rival Tencent.
Tencent Music – whose founder Ma Huateng recently pipped Ma for the title of China’s richest man – has a reported 652m monthly active users, compared with 139m for NetEase and around 18.4m for Xiami.
Given those numbers, Alibaba has a big fight on its hands – but this time, Ma will be watching from the sidelines.
From tour guide to reluctant e-commerce giant
Ma, a former tour guide and English teacher by training, founded Alibaba in 1999 after he left Chinese website company China Pages and identified the opportunity for an Internet platform that would facilitate business-to-business (B2B) commerce.
Within six years, Alibaba had grown so much that Yahoo! bought a 40 per cent share in the company and by 2007 it launched a $US1.7b ($A2.5b) IPO in Hong Kong.
In 2011, Alibaba split the firm into Taobao Marketplace; the Taobao Mall online shopping portal; and eTao shopping search engine.
Heady growth saw it propelled to a $US21.8b ($A31.7b) IPO on the New York Stock Exchange – giving it a market value of $US168b ($A244b) that made it the world’s most valuable Internet company.
Yet Ma was known for his humility, recently saying that he was happiest in life when he was making 91 yuan ($A18.70) per month as a schoolteacher.
He spoke of a retirement in which he would “die on the beaches, not in the office”, calling Alibaba his “biggest mistake” and lamenting the pressures of running a massive Internet company that he never expected would get so big.
“Every day is like being as busy as a president, and I don’t have a power,” he previously said.
As the dust settles from his departure, speculation has been mounting about where the 55-year-old might focus his interests – and resources – next.
He has previously telegraphed interests in philanthropy, environment, women’s empowerment, education and development.
His five-year-old Jack Ma Foundation has provided scholarships for students and funded entrepreneurs through initiatives such as the Africa Netpreneur Prize Initiative (ANPI) – which will award a shared $1m grant to ten entrepreneurs for each of the next 10 years.
This year’s ANPI cohort is currently being judged from a top-50 list that is sure to garner more attention from Ma in his retirement – but it’s clear he is far from done giving back.
“Early days were so tough for me,” he said in a recent interview. “Nobody helped us. Today I’m able to help. It would be an honour for me.”
In 2017, Ma gifted $26.4 million to University of Newcastle.