Alibaba set for 'big challenge' as flamboyant chairman retires

Mr Jack Ma is known for stunts like a Michael Jackson-inspired dance at an Alibaba anniversary celebration two years ago.
Mr Jack Ma is known for stunts like a Michael Jackson-inspired dance at an Alibaba anniversary celebration two years ago.PHOTO: AGENCE FRANCE-PRESSE

SHANGHAI • Alibaba Group chairman Jack Ma will step down from the Chinese firm today, leaving his handpicked successor a daunting task of steering the US$460 billion (S$635 billion) juggernaut at a time when the market for its core e-commerce business has slowed sharply.

As Mr Ma, who turns 55 today, holds centre stage at his farewell party in the 80,000-capacity Hangzhou Olympic Sports Centre stadium to the accompaniment of music and celebrity performances, attendees will be hoping to get clues on how Alibaba will be run under his heir Daniel Zhang.

An accountant by trade, soft-spoken Alibaba chief executive Zhang marks a stark contrast to Mr Ma, whose flamboyant style and charismatic leadership made him the most recognised Chinese entrepreneur since the former English teacher founded the company 20 years ago in a small shared apartment in Hangzhou city in eastern China.

"He has the logic and critical thinking skills of a super computer, a commitment to his vision, the courage to wholeheartedly dare to take on innovative business models and industries of the future," Mr Ma said of Mr Zhang last year in a message announcing his appointment.

One of Mr Zhang's major challenges will be finding new areas of growth as China's e-commerce sector matures, analysts said.

Last week, Alibaba announced investments of US$2.7 billion in luxury goods retail platform Kaola and a music streaming firm in moves that partly demonstrated its flexibility in adopting new strategies.

"If Alibaba wants to find new innovations or trends, this is going to be more difficult than before," said Mr Liu Yiming, an analyst at the research division of 36kr, a Chinese tech publishing group. "For Daniel Zhang, this will be a big challenge."

China's online retail sales grew just 17.8 per cent in the first half of this year, about half the 32.4 per cent growth of the prior year, according to the national statistics office.

MA'S LEGACY

The resignation plan announced by Mr Ma last year was perceived as unusual as it is rare for a founder of such a big and transformative tech firm to retire this early.

Under Mr Ma's leadership, Alibaba has grown to become Asia's most valuable listed company, with a current market capitalisation of US$460 billion. It employs over 100,000 people, and has expanded into financial services, cloud computing and artificial intelligence.

When Mr Ma makes his farewell speech, investors would like to hear how he will be involved in management and whether he will continue to steer the company's broad strategy. Mr Ma has said that he will continue to mentor management.

After his resignation, Mr Ma, China's richest man with a net worth of US$38.4 billion according to Forbes, is set to spend more time on philanthropy and education.

Yet he will remain a member of Alibaba's partnership, a corporate governing group of 38 individuals that is separate from the board of directors.

While the story of Mr Ma's success has become legend in China, he has also suffered some setbacks that Mr Zhang would need to repair.

Mr Ma struggled to expand Alibaba internationally, with the failed US$1.2 billion acquisition of remittance provider MoneyGram marking a key disappointment.

Its Taobao marketplace has been accused by overseas luxury goods sellers of being a haven for counterfeit products. It is on a US list of "notorious markets" for goods that infringe on American intellectual property, a main source of friction in an escalating trade war between Beijing and Washington.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 10, 2019, with the headline 'Alibaba set for 'big challenge' as flamboyant chairman retires'. Print Edition | Subscribe