Fall of Alibaba’s rising star shows impact of stronger governance and succession planning mechanisms

The public demise of rising Alibaba Group Holding star Jiang Fan is a reminder that nobody is too big to fall and experts say the case highlights how big Chinese companies have put in place stronger mechanisms to improve corporate governance and succession planning in recent years.

Jiang, president of Alibaba’s e-commerce platforms Taobao and Tmall, was removed from its company partnership of 38 people on Monday, after an internal investigation into allegations of improper behaviour, according to several people familiar with the matter. He was also demoted from senior vice-president to vice-president, and had to forfeit a year’s worth of financial incentives.

A spokeswoman for Alibaba, which owns the South China Morning Post, declined to comment.

“For diffusely-held Chinese companies such as Alibaba, Huawei, Lenovo, and Vanke … the challenge has been how to partition and allocate a founder’s concentrated rights and responsibilities to the next generation of leaders and governance bodies [such as the partnership assembly and committee of Alibaba] while maintaining productivity and checks and balances,” said Joseph Fan, a professor at the Chinese University of Hong Kong, who specialises in leadership succession and corporate governance.

Jiang, born in 1985, was recently promoted to Alibaba’s partnership after having served as president of Taobao since December 2017 and taking on a similar role at Tmall in March 2019. As head of Alibaba’s two-biggest e-commerce businesses, Jiang is one of the youngest, high-flying senior executives at the company, which is currently headed by Daniel Zhang, who succeeded co-founder Jack Ma last year in a well-planned leadership change.

The investigation and decision to demote Jiang followed speculation on Chinese social media about his relationship with a prominent female social media influencer and whether he had used his influence at Alibaba to ensure preferential treatment to merchants associated with the e-commerce company where the influencer worked.