BEIJING (AP) – Jack Ma, who founded e-commerce giant Alibaba Group and helped launch China’s online retailing boom, announced yesterday that he will step down as the company’s Chairman next September.
In a letter released by Alibaba, Ma said he will be succeeded by CEO Daniel Zhang, an 11-year veteran of the company. Ma handed over the CEO post to Zhang in 2013 as part of what he said was a long-planned succession.
Ma, a former English teacher, founded Alibaba in 1999 in an apartment in the eastern city of Hangzhou to connect Chinese exporters with foreign retailers. It expanded into consumer retailing, becoming the world’s biggest e-commerce company by total value of goods sold, as well as online finance, cloud computing and other services.
Ma, who turned 54 yesterday, became one of China’s most famous entrepreneurs and one of the world’s richest. The Hurun Report, which follows China’s wealthy, estimates his net worth at USD37 billion.
Alibaba’s USD25 billion initial public stock offering on Wall Street in 2014 is the biggest to date by a Chinese company.
Alibaba said Ma will remain a member of the Alibaba Partnership, a group of 36 people with the right to nominate a majority of its board of directors. That arrangement limits shareholder control, but Ma has defended it as a way to keep Alibaba focussed on long-term development.
“This transition demonstrates that Alibaba has stepped up to 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 talent development,” said Ma’s letter.
Ma said he wants to “return to education” but gave no details.
Alibaba is part of a group of companies including games and social media giant Tencent Holding Ltd, search engine Baidu.com Inc and e-commerce rival JD.com that have revolutionised shopping, entertainment and consumer services in China.
E-commerce sales in China rose 32.2 per cent last year to 7.2 trillion yuan, accounting for 20 per cent of total retail spending.
Alibaba was founded at a time when few Chinese used the internet. As internet use spread, the company expanded into retailing and services. Few Chinese used credit cards, so Alibaba created its own online payments system, Alipay.
Zhang, Ma’s planned successor, joined Alibaba in 2007 after working at Shanda Entertainment, an online games company. Zhang served as president of Alibaba’s consumer-focussed Tmall.com business unit.
Ma, known in Chinese as Ma Yun, appears regularly on television. At an annual Alibaba employee festival in Hanzhou, he has sung pop songs in costumes that included blonde wigs and leather jackets. He poked fun at his own appearance, saying his oversize head and angular features make him look like the alien in Director Steven Spielberg’s movie ET The Extraterrestrial.
Alibaba raised USD5 million from investors including Goldman Sachs and USD20 million from Japan’s Softbank in 1999.
The next year, Alibaba faced its biggest threat when eBay acquired EachNet, which had 80 per cent of China’s small retail e-commerce market.
Ma fought back by launching Taobao, an eBay-style consumer-to-consumer site. By 2006, Ma had won; eBay gave up and turned over its China operation to a local partner.
In 2005, Yahoo Inc paid USD1 billion for 40 per cent of Alibaba and turned over control of Yahoo China. Alibaba bought back half of Yahoo’s stake for USD7.1 billion in 2011 and the US company made billions more from the 2014 IPO.
Ma’s success was tempered by complaints Alibaba allowed counterfeiters to thrive on its sales platforms.
The US Commerce Department cited Alibaba.com and Taobao on its annual list of “notorious markets” from 2008 to 2011. Both were later removed but complaints from makers of luxury goods and other brand owners intensified. The luxury company Kering, owner of brands including Gucci and Saint Laurent, accused Alibaba in a 2015 lawsuit of facilitating counterfeit sales. The two sides settled the dispute last year with an agreement to cooperate in combating trafficking in fakes.
Also in 2015, a Chinese Cabinet agency accused Alibaba of profiting from misleading advertising and failing to deal effectively with fraud. In a reflection of the importance of Alibaba’s success to leaders, the agency said its report was written in mid-2014 but the release was delayed to avoid disrupting the IPO.
Alipay became a freestanding company, Ant Financial, in 2014. Alibaba also has expanded into entertainment, set up its own film studio and invested in logistics and delivery services.
Alibaba reported profit last year of USD9.8 billion. It said the total value of goods sold across all of its platforms rose 28 per cent over 2016 to USD768 billion.
In 2011, Alibaba faced complaints it had transferred control over Alipay to a company controlled by Ma without immediately informing shareholders including Yahoo and Softback.
Alibaba said the move was required to comply with Chinese regulations, but some financial analysts said the company was paid too little. The dispute was later resolved by Alibaba, Yahoo and Softbank.