Jack Ma created digital shopping in China, and now he is stepping back
Beijing: When the Chinese go shopping, they use a smartphone. But Alibaba’s virtual marketplace is so pervasive that the digital wallets the company created to boost online shopping have now also largely replaced cash offline in China, too.
On Monday, Alibaba chairman Jack Ma announced that in a year’s time, on the 20th anniversary of the co-founding of his company, he would step down. He wants to return to teaching and philanthropy. He named a successor, chief executive Daniel Zhang.
Such is Ma’s celebrity profile as a torch bearer for digital China that his open letter explaining his reasons was soon trending on Chinese social media.
“From a global perspective, I don’t think any face or name represents the rise of online China and the Chinese consumer more than Jack Ma,” says Mark Tanner, a digital marketing expert at China Skinny. “He really read Chinese consumers incredibly well and gave them the tools.”
Among the 8624 comments on Ma’s letter an hour after he posted it, one commenter wrote: “It is teacher Ma who enabled me to make money at home. It is teacher Ma who enabled me to transfer money without lining up in the bank. It is teacher Ma who taught me online shopping.”
Another said: “Teacher Ma Yun has become a symbol of this era”.
With a market capitalisation of $591 billion, Alibaba ranks as Asia’s most valuable company, commanding 58 per cent of China’s e-commerce market. Forbes lists Ma as China’s third-richest man with a personal wealth of $US38.6 billion ($52 billion).
AustCham Shanghai chief executive Jack Brady said Alibaba has been “pivotal” in the success of Australian companies selling products ranging from vitamins to milk powder to China. “Three to four years ago we weren’t talking about e-commerce, but it has grown rapidly and they have been number one,” says Brady.
In his letter, Ma wrote: “When Alibaba was founded in 1999, our goal was to build a company that could make China and the world proud and one that could cross three centuries to last 102 years. However, we all knew that no one could stay with the company for 102 years.”
Ma’s successor, Zhang, 46, carries a business card with the title “xiaoyouzi”, or free and unfettered one, according to Hong Kong’s South China Morning Post newspaper (bought by Alibaba in 2015).
Zhang is credited with creating China’s biggest online shopping event, Double Eleven or Singles Day, that drove $US25.3 billion in purchases within 24-hours last year. Alipay, the digital wallet, processed 1.48 billion transactions. Alipay and rival WeChat Pay have replaced cash for most Chinese shoppers.
uring the shopping spree, Ma appeared on stage with celebrities including Nicole Kidman and screened his vanity kung fu movie project as part of a nationally televised gala concert.
China’s second largest e-commerce company is JD.com, with a 16 per cent market share.
Chinese business media drew comparison’s between Ma’s announcement for an orderly succession at Alibaba, and last week’s equally headline grabbing news that JD.com founder Richard Liu had been briefly arrested in the US and may still face rape charges.
JD.com, a Nasdaq-listed company, lost $US7.2 billion in market value as shareholders realised Liu alone controlled decision making at the company.
Teacher Ma Yun has become a symbol of this era.
“The fact that there is no apparent leader that could replace Liu, if it comes to that, reveals a risk for the company’s long-term growth,” Lu Zhenwag of Shanghai Wanqing Commerce Consulting told The Global Times.
Private speculation was rife in China as to the timing of Ma’s surprise announcement.
Alibaba’s marketers said it was timed for Teacher’s Day in China, but the recent woes of JD.com may have highlighted the benefits for a company of having a clearly articulated plan for a tech titan’s exit.
In his letter Ma emphasised: “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.”