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Home / Business / Jack Ma's retirement leaves Alibaba strong but faces challenges

Jack Ma's retirement leaves Alibaba strong but faces challenges



Jack Ma, co-founder and executive chairman of Chinese technology behemoth Alibaba, resigned on Tuesday. After reshaping how people trade and pay in China and beyond, China's richest man left critical questions about Alibaba – and the country's – for the generations that follow him.

Ma was co-founded Alibaba 20 years ago. The e-commerce giant today serves over 700 million online shoppers and facilitates 500 million digital financial transactions daily. Alibaba's e-commerce platforms were responsible for more than 40 million jobs as of 201

8, bringing e-commerce to more than 5,000 villages and villages throughout China.

Alibaba "became a tremendous driver to stimulate demand from domestic consumers … and provided the commercial infrastructure for small and medium-sized businesses," states an official document issued last year by the Chinese Communist Party that names 40 outstanding individuals – Ma among them – to commemorate the 40th anniversary of the country's economic opening.

Alibaba is also a rare example of Chinese companies that have maintained corporate values ​​including "customers first" and "integrity" for two decades. The company let its B2B business manager Wei Zhe resign in 2011 after failing to clear up seller fraud. In 2016, Alibaba fired four engineers who inappropriately used their technological privilege to buy extra moon cake gifts in a company lottery.

Ma's ambition is for Alibaba "to become a company that lives for 102 years." Given that it was founded in 1999, this would last for three centuries.

His thoughtful retirement plan is yet another reflection of Ma & # 39; s long-term management vision. The multi-year gradual transition and solid leadership talent pool make Alibaba the least exposed to the risk of senior personnel among all the Chinese tech giants.

Still, Ma leaves some of the toughest questions to his successors. These include how Alibaba can continue to innovate and how to handle government relations as a private enterprise in an uncertain political environment.

Alibaba's main e-commerce business shifts with lightning speed as competitors emerge. The rapid rise of Pinduoduo, a four-year-old business that combines social networking with group buying, is the latest threat.

In third-party payments, Alipay continues to lose ground for Tencent's WeChat Pay. Although research shows that Alipay still leads with total transaction value, WeChat Pay recorded 2.3 times more transaction volume than Alipay in 2018.


Alipay continues to lose ground for Tencent's WeChat Pay.

© Imaginechina / AP

Alibaba's expansion abroad proves challenging as well. Ma once said that Alibaba will someday generate half of its revenue from outside China, but international business generated 7% of total sales in 2019 and is growing slower than its main Chinese business.

Alibaba can actually find its way into China's broader technological struggles.

China has not been able to develop a self-sufficient tile industry since the 1950s. Alibaba established its own chip unit last year, hoping to help reduce China's dependence on imports used in mobile phones and consumer electronics. This may prove to be the most challenging task for Ma & # 39; s successors because semiconductors have the highest technological input barrier, require time, money and expertise, and have a high degree of uncertainty when demand shifts.

Despite notable exceptions such as telecommunications. Huawei, Chinese technology companies still largely copy Silicon Valley pioneers, from ride-hailing and coworking to self-driving cars, as the safest way for entrepreneurs to succeed. None of the Chinese tech giants really have global businesses, nor do they often lead to business model innovations or basic research breakthroughs.

Moreover, China's industrial policy is unlikely to adequately build domestic companies and reduce imports – not least as the United States tries to stifle global supply chains.

Ma pulls down with great timing. Alibaba is in a strong position right now, but the future looks treacherous. When it comes to government relations, Alibaba has reached a size that could lead to more friction with Beijing. For example, if the People's Bank of China issues a planned sovereign government currency, this could quickly enter Alipay's market share for e-money. Managing relationships with Beijing is becoming more complicated.

Ma is a cautious realist when she works with the government. He has repeatedly said that businesses should fall in love, but never marry the authorities. As a Chinese Communist Party member for decades, Ma has maintained an arm's length relationship with Beijing.

Unlike her peers, Ma did not participate in any political advisory and representative bodies such as the National People's Congress. Money and power "are like explosives and detonators, destined to explode when mixed," he said.

His successors will need more wisdom like this to deal with the challenges ahead if Alibaba is to live for 102 years.

Nina Xiang is the founder of China Money Network, a media platform that tracks China's investment and technology sectors. She is also the author of "Red AI: Victories and Warnings from China's Increase in Artificial Intelligence."


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