Alibaba's Jack Ma to step down

Co-founder of e-commerce giant to retire as China's business environment sours

By Li Yuan
  • Published 9.09.18
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Jack Ma

Hong Kong: Alibaba's co-founder and executive chairman, Jack Ma, said he planned to step down from the Chinese e-commerce giant on Monday to pursue philanthropy in education, a changing of the guard for the $420 billion Internet company.

A former English teacher, Ma started Alibaba in 1999 and built it into one of the world's most consequential e-commerce and digital payments companies, transforming how Chinese people shop and pay for things. That fuelled his net worth to more than $40 billion, making him China's richest man. He is revered by many Chinese, some of whom have put his portrait in their homes to worship in the same way that they worship the God of Wealth.

Ma is retiring as China's business environment has soured, with Beijing and state-owned enterprises increasingly playing more interventionist roles with companies.

Under President Xi Jinping, China's Internet industry has grown and become more important, prompting the government to tighten its leash. The Chinese economy is also facing slowing growth and increasing debt, and the country is embroiled in an escalating trade war with the US.

"He's a symbol of the health of China's private sector and how high they can fly whether he likes it or not," Duncan Clark, author of the book Alibaba: The House Jack Ma Built, said of Ma. "His retirement will be interpreted as frustration or concern whether he likes it or not."

In an interview, Ma said his retirement is not the end of an era but "the beginning of an era". He said he would be spending more of his time and fortune focused on education. "I love education," he said.

Ma will remain on Alibaba's board of directors and continue to mentor the company's management. Ma turns 54 on Monday, which is also a holiday in China known as Teacher's Day.

The retirement makes Ma one of the first founders among a generation of prominent Chinese Internet entrepreneurs to step down from their companies. Firms including Alibaba, Tencent, Baidu and JD.com have flourished in recent years, growing to nearly rival American internet behemoths like Amazon and Google in their size, scope and ambition. For Chinese tycoons to step aside in their 50s is rare; they usually remain at the top of their organisations for many years.

The departure of Ma is likely to jolt China's Internet industry, which has been reeling from the arrest last weekend of Liu Qiangdong, the billionaire founder of the online retailer JD.com. Liu, who goes by Richard Liu in the English-speaking world, was arrested on a rape allegation in Minneapolis during a business trip. He was released and has since returned to Beijing, where JD.com is based.

For Alibaba, Ma's retirement completes a transition of power to other executives. Ma stepped down as Alibaba's chief executive in 2013; the company's current chief executive is Daniel Zhang, who is a candidate to succeed Ma.

Yet Ma had remained active as the face of the e-commerce firm, as well as an architect of its long-term strategy. He owns a 6.4 per cent stake of Alibaba, according to securities filings, but has considerably more sway over the company thanks to its complicated legal structure.

Ma, a natural salesman and charismatic leader, co-founded Alibaba with 17 others - some of them his students - out of his apartment in Hangzhou in eastern Zhejiang province in 1999.

Alibaba started as an online marketplace for businesses to sell their products to other businesses. But it did not take off until it began the Taobao marketplace in 2003, which merchants used to sell goods directly to consumers.

Alibaba later rolled out Alipay, an online payment service, to facilitate transactions in a country where few people had credit cards. Alipay later became Ant Financial, the financial subsidiary that Ma also controls.

Today, Alibaba's empire encompasses e-commerce, online banking, cloud computing, digital media and entertainment - and even a corporate messaging service similar to Slack.

The company owns or holds stakes in some of China's most important media assets, including the Twitter-like social media site Weibo and the Hong Kong-based English-language newspaper The South China Morning Post.

Among China's biggest companies, Alibaba is viewed as one of the firms with the deepest ranks of management talent. Many of the co-founders are still around.

Last month, Alibaba reported a 60 per cent increase in quarterly sales, even as profits fell. The company's annual revenue totals about 250 billion yuan, or $40 billion.

While Alibaba has become dominant in China, it has faced a tougher time expanding internationally. The company has increased its presence outside of China by investing in e-commerce and online finance companies in India and Southeast Asia.

New York Times News Service