20 February 2019
Jack Ma's decision to give up the chairman's role at Alibaba may have been motivated by several factors. Photo: Reuters
Jack Ma's decision to give up the chairman's role at Alibaba may have been motivated by several factors. Photo: Reuters

Why Jack Ma is handing over control of his Alibaba empire

Jack Ma, the charismatic co-founder of China’s largest e-commerce firm Alibaba Group, has unveiled a plan to step down as chairman in one year’s time.

Ma, who turned 54 on Monday, will continue to mentor senior management as part of an advisory board called the “Alibaba Partnership”.

This well-known internal partnership structure actually allows the group of founders and senior employees to keep control over the makeup of the board. Therefore, the partners group is effectively the highest decision-making body of Alibaba.

Alibaba had a total of 36 partners as of the end of last year, most of them co-founders. But members of the partner group change over time to allow new blood to come in. For instance, Hu Xi, the 37-year-old researcher of Ant Financial data unit, joined the group last year and is now the company’s youngest partner.

Election of new partners requires the approval of at least 75 percent of all of the partners.

Except for company founder Jack Ma and chief financial officer Joseph Chung-Hsin Tsai who are both permanent partners, partners would retire automatically when they reach 60.

As Ma will remain a partner even if he steps down as chairman next year, and all the existing partners are his loyal followers, his relinquishment of the top post is not going to change the overwhelming control that Ma has over the company.

If so, why did Ma decide to step down?

I guess there could be a number of possibilities. One is to ensure smooth succession. Secondly, Ma may want to free up more time to pursue his other personal interests.

As chairman, Ma has to devote much of his time to deal with all kinds of formalities, like visits from government officials, both domestic and foreign. After stepping down, he can leave that to his colleagues.

Alibaba and Tencent are two super conglomerates in China’s internet space. Their businesses have expanded into finance and other livelihood industries, which make them vulnerable to policy risks.

Without the official title, Ma can deal with policy changes in a more flexible way from behind the scene, providing a buffer zone for his company.

Finally, known to be rather unspoken, Ma does not have to worry too much about saying the wrong thing in front of the media once he is no longer the chairman.

This article appeared in the Hong Kong Economic Journal on Sept 12

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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