BEIJING (BLOOMBERG) - Jack Ma will step down as executive chairman of Alibaba Group Holding in exactly 12 months' time, with chief executive officer Daniel Zhang, 46, to succeed him at Asia's most valuable company.
Mr Ma will remain on the board until Alibaba's annual meeting of shareholders in 2020, the Hangzhou-based company said in a statement on Monday (Sept 10). His retirement as executive chairman will coincide with his 55th birthday.
Mr Ma has become synonymous with the company he helped found in his apartment nearly 20 years ago, and has used the chairman's post to develop managerial talent since ceding the CEO role in 2013.
He is moving on with Alibaba in a dominant position in China and pushing into overseas markets from South-east Asia to Russia. Leadership will now fall to Mr Zhang and 35 other partners who control the company.
"Starting the process of passing the Alibaba torch to Daniel and his team is the right decision at the right time, because I know from working with them that they are ready," Mr Ma said in the statement.
"Since he took over as CEO, he has demonstrated his superb talent, business acumen and determined leadership."
A former English teacher, Mr Ma started Alibaba.com in 1999 as a business-to-business marketplace with 17 co-founders. An investment from Japan's SoftBank Group Corp helped the company expand to allow consumers in China buy online, fuelling its rise.
Through the Taobao and Tmall platforms, it is responsible for billions of dollars in sales and last year saw daily package deliveries reach 55 million.
Alibaba has since moved beyond e-commerce into cloud computing, digital payments, healthcare, Hollywood movies and backing China's start-ups. Its share price has more than doubled since its record 2014 initial public offering, climbing to a market value of about US$420 billion (S$580 billion).
"Ma possesses an enviable clarity about how everything fits together," said Mr Mark Tanner, founder of Shanghai-based research and marketing company China Skinny.
"He has understood Chinese consumer needs better than anyone and provided online services to meet them through convenience, entertainment and efficiencies."
Mr Ma said in an interview with Bloomberg TV last week that he plans to shift his focus to philanthropy and education, taking him back to his profession before starting an e-commerce empire. He has created a foundation in his own name, modelled in part afte the efforts of Microsoft co-founder and fellow billionaire Bill Gates.
"I've prepared a Jack Ma Foundation. All these things that I've been preparing for 10 years," said Mr Ma, who is now China's richest man. "There's a lot of things I can learn from Bill Gates. I can never be as rich, but one thing I can do better is to retire earlier."
Mr Ma has remained the public face of Alibaba and is a charismatic advocate for his country's technology industry, showing off his wit and dispensing folksy wisdom on the global stage. That made him China's highest profile business leader, a rarity in a country where many come up through the ranks of state-owned enterprises, and is a staunch defender of its ruling Communist Party.
"There isn't a face or name more recognisable globally that represents the rise of China's Internet and its consumers than Jack Ma," said Mr Tanner.
Mr Ma has headlined conferences around the world and was one of the first foreign business leaders to meet US President Donald Trump after his election. He has struck a careful balance even as tensions between China and the US have risen over trade.
But he has also said in the past that he isn't happy being the wealthiest person in China, where vast personal fortunes have emerged only in recent years and are subject to intense scrutiny.
A number of high profile executives have vanished from public view only to turn up later in connection to corruption or criminal probes, including the heads of Anbang Insurance Group and CEFC China Energy. Such scandals haven't been associated with Mr Ma or Alibaba.
The e-commerce company has one of the strongest management teams in corporate China and, even if he steps down, Mr Ma is likely to still have a role in setting top level strategy, said Mr Brock Silvers, managing director of Kaiyuan Capital.
"On a day-to-day basis, Alibaba shareholders probably have little to fear," said Mr Silvers.
For a man who describes himself as an accidental executive, Mr Ma's return to his roots makes sense.
"I think some day, and soon, I'll go back to teaching. This is something I think I can do much better than being CEO of Alibaba," he said in his interview with Bloomberg.
Full text of Jack Ma's letter
The following is a re-formatted letter from Jack Ma to employees, customers and investors on his plans to retire as executive chairman of Alibaba Group Holding Ltd. in exactly 12 months’ time and hand leadership to Chief Executive Officer Daniel Zhang.
"Dear Alibaba customers, Aliren, and shareholders,
Today, as we mark the 19th anniversary of Alibaba, I am excited to share some news with you: with the approval of our board of directors, one year from today on September 10, 2019 which also falls on Alibaba’s 20th anniversary, Group CEO Daniel Zhang will succeed me as chairman of the board of Alibaba Group. While remaining as executive chairman in the next 12 months, I will work closely with Daniel to ensure a smooth and successful transition. Thereafter, I will stay on the Alibaba board of directors until our annual shareholders meeting in 2020.
I have put a lot of thought and preparation into this succession plan for ten years. I am delighted to announce the plan today thanks to the support of the Alibaba Partnership and our board of directors. I also want to offer special thanks to all Alibaba colleagues and your families, because your trust, support and our joint enterprise over the past 19 years have prepared us for this day with confidence and strength.
This transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organizational excellence and a culture of talent development.
When Alibaba was founded in 1999, our goal was to build a company that could make China and the world proud and one that could cross three centuries to last 102 years. However, we all knew that no one could stay with the company for 102 years. A sustainable Alibaba would have to be built on sound governance, culture-centric philosophy, and consistency in developing talent. No company can rely solely on its founders. Of all people, I should know that. Because of physical limits on one’s ability and energy, no one can shoulder the responsibilities of chairman and CEO forever.
We asked ourselves this question 10 years ago – how could Alibaba achieve sustainable growth after Jack Ma leaves the company? We believed the only way to solve the problem of corporate leadership succession was to develop a system of governance based on a unique culture and mechanisms for developing consistent talent and successors. For the last 10 years, we kept working on these ingredients.
Having been trained as a teacher, I feel extremely proud of what I have achieved. Teachers always want their students to exceed them, so the responsible thing to do for me and the company to do 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.” Carrying out this mission in order to help small businesses, young people and women around the world is my passion. This is not only our intent from day one but I feel blessed to have this opportunity. To realize the dream behind this mission requires participation by a lot more people than just Jack Ma and persistent effort by generations of Aliren.
Alibaba is amazing not because of our business or scale or accomplishments. The best thing about Alibaba is that we come together under a common mission and vision. Our partnership system, unique culture and talented team have laid a strong foundation for the legacy of our company. In fact, since I handed over the CEO’s responsibilities in 2013, the company has run smoothly for five years on the back of these institutional ingredients.
The partnership system we developed is a creative solution to good governance and sustainability, as it overcomes several challenges faced by companies of scale: continuous innovation, leadership succession, accountability and cultural continuity. Over the years, in iterating our management model, we have experimented with and improved on the right balance between systems and individuals. Simply relying on individuals or blindly following a system will not solve our problems. To achieve long-term sustainable growth, you need the right balance among system, people and culture. I have full confidence that our partnership system and efforts to safeguard our culture will in time win over the love and support from customers, employees and shareholders.
Since the founding of the company in 1999, we have been of the view that Alibaba’s future will need to depend on “droves of talent” to enable us to iterate on our management succession plans. After years of hard work, today’s Alibaba has a world-class talent pool in quality and quantity. The teacher in me feels extremely proud of our team, our leadership and our unique mission-driven culture, as well as the fact that we continue to develop exceptional business leaders and professional talent like Daniel Zhang.
Daniel has been with Alibaba Group for 11 years. Since he took over as CEO, he has demonstrated his superb talent, business acumen and determined leadership. Under his stewardship, Alibaba has seen consistent and sustainable growth for 13 consecutive quarters. His analytical mind is unparalleled, he holds dear our mission and vision, he embraces responsibility with passion, and he has the guts to innovate and test creative business models. Deservedly, China’s business news media has named him the No.1 CEO in 2018. For these reasons, he and his team have won the trust and support of customers, employees and shareholders. Starting the process of passing the Alibaba torch to Daniel and his team is the right decision at the right time, because I know from working with them that they are ready, and I have complete confidence in our next generation of leaders.
As for myself, I still have lots of dreams to pursue. Those who know me know that I do not like to sit idle. I plan on continuing my role as the founding partner in the Alibaba Partnership and contribute to the work of the partnership. I also want to return to education, which excites me with so much blessing because this is what I love to do. The world is big, and I am still young, so I want to try new things – because what if new dreams can be realized?!
The one thing I can promise everyone is this: Alibaba was never about Jack Ma, but Jack Ma will forever belong to Alibaba.
September 10, 2018"