South China Morning Post
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Jack Ma, who officially stepped down as group chairman of Alibaba on Tuesday, gives a speech at a function to mark the 20th anniversary of the company he founded. Photo: Xinhua
Opinion
Editorial
by SCMP Editorial
Editorial
by SCMP Editorial

Successful transition at Alibaba lights the way for China firms

  • By handing over reins of e-commerce giant at 55, Jack Ma has shown that an orderly approach and refreshed vision of future not only benefits company but also nation’s progress
SCMP Editorial
SCMP Editorial
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The joint celebration of the 20th anniversary of mainland e-commerce giant Alibaba and the 55th birthday of ­ co-founder Jack Ma may have been remarkable in its own right. But what really set it apart is that Ma is stepping aside now to head in another direction. The media has long foreshadowed the planned early retirement of China’s richest man. That did not stop speculation about the reason. It is a case of a high-profile Chinese tycoon who has worked out a succession plan for an innovative multinational with 100,000 employees and stepped down while still in his prime. It is hard to find other companies, particularly hi-tech firms, where such a succession plan is in place. Daniel Zhang Yong, Ma’s successor as executive chairman of Alibaba Group Holding, owner of this newspaper, has pledged to advance globalisation, domestic consumption and a push into advanced technologies such as big data and cloud computing.

What does the future hold for Alibaba as Jack Ma bids adieu?

On a broader scale Ma’s description of his retirement as the “beginning of a succession system” is important to China. A lot of Western economies have had hundreds of years’ experience developing corporate governance and culture, including how to hand company operations to the next generation. In China a new generation of private entrepreneurs only started to appear in the 1980s and 1990s and the first generation often remains entrenched.

Despite China’s stellar growth and success in eradicating poverty among hundreds of millions, business transition remains a challenge for continued economic development. Indeed, it is estimated that if the generational transition is mishandled the adverse impact on the economy – particularly the private sector which generates most jobs and growth – could be a lasting drag to China’s progress.

With the economy facing headwinds, the government has become more supportive of the private sector. But successful transition cannot be driven by government support alone. Company founders are prone to keep working well into normal retirement years. This is not conducive to an orderly transition and an articulate vision of the future direction for a company and its employees. Worse for everyone, successors can take the reins when past their prime.

Ma has in a sense rendered greater service to the economy in engineering timely transition, rather than carrying on, though shareholders may differ. Far from suggesting retirees have nothing further to contribute, he says he feels young and ready for other challenges in education and the environment. For Hong Kong, of course, Alibaba is the one that got away when New York snared its huge initial public offering in 2014. This because of a rule against dual-class share structures designed to preserve control of the founders. Hong Kong has since amended its regulations and local investors are awaiting more news of a secondary listing by Alibaba.
This article appeared in the South China Morning Post print edition as: Successful transition at Alibaba lights the way for China firms
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