Date
11 December 2018
Can Daniel Zhang (right) fill in the big shoes to be left Alibaba chairman Jack Ma? Photo: Bloomberg/Reuters
Can Daniel Zhang (right) fill in the big shoes to be left Alibaba chairman Jack Ma? Photo: Bloomberg/Reuters

What will happen to Alibaba without Jack Ma?

Over the past two decades, Jack Ma has been the personification of Alibaba Group Holding Ltd. – in fact, of China’s e-commerce.

So his announcement on Monday that he will step down as chairman of the company he founded and nurtured into the multibillion-dollar business that it is now may signal the passing of an era, and significant changes ahead for the country’s internet economy as a whole.

On Sept. 10, 2019, chief executive Daniel Zhang will succeed Ma as group chairman, although Ma will continue to assume leadership over the next 12 months to ensure a smooth transition. He will also complete his current term as a member of group’s board of directors until its next annual general meeting in 2020.

While Ma has been preparing for the handover since the group named Zhang CEO in 2015, the announcement still surprised the market, sending Alibaba’s shares down over 3 percent on Monday.

Ma has been an outstanding entrepreneur. The e-commerce platform he established has contributed significantly to the transformation of China’s economy from a manufacturing and export economy to a services-driven one.

Under Ma’s leadership, Alibaba has been leading at the forefront of the nation’s progress in the internet economy, blazing the path in the fields of B2B, C2C and B2C commerce, financial technology, video streaming and many other pioneering e-businesses over the past two decades.

The journey has been far from a smooth ride, of course. Taobao.com has been accused of providing a marketplace for merchants that sell fake goods, but Alibaba has been doing its best to ensure the quality of products on its platform. At a time when online payment was only provided by foreign service providers like PayPal, Alibaba came up with Alipay that is now revolutionizing China’s financial market, particularly in the fields of investments and payments.

After years of tireless building and innovation, Alibaba’s ecosystem has expanded from e-commerce to financial services, entertainment, catering, and healthcare. Ma pursued a transaction-driven business model, generating revenue from commissions and service fees, instead of burdening consumers with subscription fees.

In fact, that’s one of the key differences between Alibaba and its main rival Tencent Holdings (00700.HK), whose main revenue comes from its mobile gaming business where users have to pay.

Although Alibaba has dominated the e-commerce business in China for two decades, it may have to work harder to solidify its presence in the mobile world, one of the key battlegrounds in the next-generation internet.

A recent survey found that Alibaba Group’s mobile app only ranked third in the market in terms of the time users spend on the platform, lagging behind Tencent and Bytedance Group. 

This is expected since people don’t have to spend a lot of time on the Alibaba app when making an e-commerce transaction. But Alibaba has been unable to surpass Tencent in entertainment offerings. Even after acquiring two major online video-streaming platforms, Tudou and Youku, the company was still behind Tencent in video services. 

Also, Alibaba is playing catch-up with Tencent’s WeChat, which has grown into a super app that offers so many uses in one’s daily life.

In short, even as it continues to grow and branch out into different businesses, Alibaba has pursued a platform business model, instead of operating as a conglomerate with its various business units achieving outstanding results in their specific markets.

Alibaba’s future growth engine will continue to be online shopping, payment and cloud businesses.

But with a new chairman, Alibaba could shift its focus to the mobile arena and catch up with the emerging 5G trend.

While Ma has served as the public face of Alibaba, the group is actually being run not just by himself but by a group of founders and senior managers such as Zhang.

Zhang is a latecomer to the group. He first joined the group as chief financial officer of Taobao Marketplace in August 2007. The following year, he became chief operating officer of Taobao Marketplace and general manager of Taobao Mall.

Under Zhang’s leadership, Taobao Mall rapidly became one of Alibaba’s most important businesses. When Taobao Mall was rebranded as Tmall and became an independent business unit, Zhang was named its president.

Zhang was also the key architect of the 11.11 Global Shopping Festival, Alibaba’s “Singles Day” promotion that comes every Nov. 11. It has since become the world’s largest online shopping event.

Zhang’s track record demonstrates his capability to innovate and pursue growth in the e-commerce business. 

He is in the best position to further exploit the power of the mobile internet and new technologies to take Alibaba to new heights.

– Contact us at [email protected]

CG

EJ Insight writer

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