Jack Ma, the pioneer of China’s internet industry, announced on his 54th birthday Monday that he would step down as Alibaba’s executive chairman in one year to make way for the next generation of leaders at the US$ 420 billion e-commerce giant.
While naming his trusted aide and CEO Daniel Zhang as his successor, Ma, one of China’s richest men with a net worth of US$ 39.9 billion, in a letter to customers, employees and shareholders said that, “No company can rely solely on its founders.”
“Alibaba was never about Jack Ma, but Jack Ma will forever belong to Alibaba,” he said.
Ma will remain Alibaba’s executive chairman during the year-long period to ensure a “smooth and successful” transition, and stay on as an Alibaba director until a shareholder’ meeting in 2020, the company said.
He will hand over the keys of his company to 46-year-old Zhang in a succession plan that will slowly take the focus off one of China’s most recognisable corporate names over the next 12 months, Hong Kong’s South China Morning Post, also owned by Alibaba, reported.
Zhang developed the company’s popular Singles’ Day promotion, which is the world’s biggest one-day online retail event. He will be promoted to the executive chairman on September 10, 2019, while Ma will remain a director on Alibaba’s board and a permanent member of the Alibaba Partnership, Ma’s letter said.
“This transition demonstrates that Alibaba has stepped into the next level of corporate governance from a company that relies on individuals, to one built on systems of organisational excellence and a culture of consistent talent development,” Ma said in his letter.
The succession plan being announced on his birthday came after confusing reports about Ma’s retirement.
The New York Times, which interviewed him, reported on Saturday that Ma planned to use his 54h birthday to announce his retirement to devote his time to philanthropy focused on education.
The report of his retirement came as a surprise, especially in the Chinese government circles as the NYT report said Ma was relinquishing as China’s business environment had soured, with the government and state-owned enterprises increasingly playing more interventionist roles with companies.
The NYT report was quickly denied by Alibaba whose spokesman told the Post on Saturday that Ma remains the company’s executive chairman and will provide transition plans over a significant period of time.
Ma, who grew from an English teacher to China’s top billionaires making Alibaba into US$ 420 billion company, always took care to not ruffle feathers of the ruling Communist Party of China (CPC).
He took care not to project himself bigger than the CPC leadership though he has emerged as modern China’s most revered corporate icon. He maintains a high profile, speaking at conferences around the globe and rubbing shoulders with world leaders.
Ma’s succession plan took 10 years to put together. It owed its inception to Alibaba’s formative years, long before the online marketplace forayed into cloud computing, cashless payments, artificial intelligence and Hollywood movies, the Post report said.
“This is merely the beginning of a succession strategy of creating a step ladder to groom the next generation of managers,” Joseph P H Fan, co-director of the Institute of Economics and Finance at the Chinese University of Hong Kong said.
“Jack Ma’s halo is too bright, and outshines whoever’s under him, so he needs to fade out. But for a company of Alibaba’s size, it’s a process that will take 10 years to complete,” he said.
Zhang was known to Alibaba employees as “Xiaoyaozi” (free and unfettered one), the name of a character from a Louis Cha wuxia novel, the Post report said.
Since Zhang, known as Zhang Yong in mainland China, was named chief executive in May 2015, “Alibaba has seen consistent and sustainable growth for 13 consecutive quarters.
“His analytical mind is unparalleled, he holds dear “our mission and vision, he embraces responsibility with passion, and he has the guts to innovate and test creative business models,” Ma said.
Zhang had previously served as Taobao’s chief financial officer, president of Tmall.Com and as Alibaba’s chief operating officer before succeeding Jonathan Lu as chief executive.
Ma started Alibaba.Com in 1999 as a business-to-business marketplace with 17 co-founders in his Hangzhou apartment turning the company into a global e-commerce giant with burgeoning cloud computing and package delivery businesses.
Alibaba’s sprawling businesses also include brick-and-mortar stores, online video, movies and other enterprises, and it has sought to expand in promising new markets like India and Southeast Asia.
Ma gave up the CEO role in 2013 and in recent years has found time to work on other projects, including philanthropy. He said on Monday that he wants to return to education, adding that he is still young and has “lots of dreams to pursue.”
Ma, with a personal fortune of US$ 39.9 billion figured 19th in the Bloomberg Billionaires Index topped by American technology entrepreneur and investor, Jeff Bezoz, who had a net worth of US$ 161 billion.