Jack Ma to step down as Alibaba CEO

Daniel Zhang will replace founder Jack Ma as chairman of Alibaba in September 2019, adding the role to his job as chief executive of China’s most valuable company. 

Background

Second, to only China’s Premier Xi Jinping, Jack Ma is one of the most recognizable faces in China. He is the CEO of the highly successful e-commerce service called Alibaba and is the richest man in Asia. His net worth is above $46.9 billion. 

His business continues to grow from strength to strength. Willy Lam, adjunct professor at Center for China Studies at the Chinese University of Hong Kong said, “(Ma) has displayed vision and gusto in expanding his e-commerce empire. Even more striking is his determination to leverage Alibaba's massive earnings to spearhead research in high-tech, particularly AI, cloud computing, "deep learning" and related know-how."

Alibaba Group Holding Limited is a Chinese e-commerce, retail and technology conglomerate founded in 1999 by Jack Ma and Leng Lei that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and data-centric cloud computing services. It also owns and operates a diverse array of businesses around the world in numerous sectors. 

In 2012, two of Alibaba's portals handled 1.1 trillion yuan ($170 billion) in sales. At closing time on the date of its initial public offering (IPO), 19 September 2014, Alibaba's market value was US$231 billion. As of September 2018, Alibaba's market cap stood at US$417.60 billion. It is one of the top 10 most valuable and biggest companies in the world. 

Analysis

Jack Ma, a former English teacher who founded the company Alibaba 19 years ago and built it into a business with a stock market valuation of $420bn, is set to retire as CEO. He said that he would focus his efforts on philanthropy and education.

“I still have lots of dreams to pursue,” Mr. Ma said in a letter to customers, staff and shareholders on Monday. “I also want to return to education, which excites me with so much blessing because this is what I love to do.” The 54-year-old will spend the next 12 months ensuring “a smooth transition of the chairmanship to Mr. Zhang”, Alibaba said. Mr. Ma, who owns 6.4% of Alibaba and has a net worth of more than $40bn, according to the Bloomberg Billionaires Index, will remain on the board until the 2020 annual general meeting. The transition has been a decade in the making, with Mr. Ma focusing on a long-term vision and playing a more ambassadorial role since stepping down as chief executive in 2013. He will remain a lifetime member of the 36-person Alibaba partnership, the torchbearer for corporate culture and mission, and a shareholder in the group.

News of Mr. Ma’s impending retirement comes at a time when sentiment towards Chinese tech has been under pressure both overseas, as trade tensions escalate between China and the US. Additionally, Beijing has been ramping up industry regulations in an attempt to formalise the remainder of the domestic tech sector. 

However, as a leader, Mr. Ma will be hard to beat. A natural performer, his demeanour contrasts sharply with the more reserved Mr. Zhang. Mr. Ma spends much of his time on the road, meeting heads of state as well as business partners and youthful entrepreneurs across the globe as the face of the company. 

Mr. Zhang, 46, joined Alibaba in August 2007 as the chief financial officer of Taobao Marketplace, the online e-commerce platform. An alumnus of Shanghai University of Finance and Economics, he has worked with PwC, the professional services firm, and an online game developer. Before becoming chief executive of Alibaba in 2015, he served as the chief operating officer. In his letter on Monday, Mr. Ma described his successor as showing “superb talent, business acumen and determined leadership”, adding that Mr. Zhang’s “analytical mind is unparalleled . . . and he has the guts to innovate and test creative business models”.

Mr. Ma has long spoken of building a company to last more than a century. “No company can rely solely on its founders. Of all people, I should know that” he concluded.

Assessment

Our assessment is that Jack Ma’s decision to retire will not negatively impact Alibaba’s stock prices or its day to day operations. Mr. Ma’s leadership and delegation of authority have enabled him to build a company which is durable and not reliant on a single central leader. We believe that Mr. Ma could pursue a path like Bill Gates, and start a non-profit philanthropic organisation to make the best use his vast personal fortune. We also feel that Alibaba represents a good model for rising tech companies to emulate.