The chairman and founder of Chinese tech giant Alibaba Group Holding Ltd. has announced his plans to step down, in a letter released by the company on Sept. 10.
Jack Ma, 54, will retire next year on Sept. 10, passing the baton to current CEO Daniel Zhang.
Alibaba operates one of China’s biggest e-commerce platforms, is responsible for launching and marketing the country’s largest online shopping holiday, and has footprints in mobile payment services, cloud computing, artificial intelligence, and entertainment.
Zhang, who has been CEO since 2015, is known as a key architect of Alibaba’s “Singles Day.” The event held annually on Nov. 11 has become the world’s largest online shopping event.
Ma, a former English teacher with no technical background, said he will continue to mentor the company’s management as part of the “Alibaba Partnership,” a 36-member group of core company managers.
The group has the ability to nominate the majority of directors on the company’s board. Currently, five of Alibaba’s 11 board members were nominated by the partnership.
Ma, who co-founded Alibaba in 1999, has become one of China’s richest people, with a net worth of $36.6 billion, according to Forbes.
Ma’s early retirement is unexpected for an entrepreneur of his stature in China.
“There’s only Bill Gates who has done the same. No other tech founder in the world has just resigned like that at the top,” said Rupert Hoogewerf, the Shanghai-based founder of the Hurun Report, which publishes an annual list of China’s richest people.
Hoogewerf added that in China, Ma is a figure like no other, with friends ranging from movie stars to billionaire moguls, though he often outshines them all. “He’s the big one. He’s the one that brings them together,” he said.
Zhang will be inheriting some challenges for the company. Despite soaring sales, Alibaba’s profit margins have been squeezed by rising competition and heavy investment to fend off rivals. The company’s shares are down more than 10 percent this year after peaking in June.
Ma’s resignation comes at a time when Beijing is trying to rein in private firms. In June, the Chinese Communist Party (CCP) mandated that all of the country’s publicly listed companies must set up Party organizations for its employees.
These organizations are often set up in the workplace to monitor employees and ensure workplace decisions toe the Party line.
Among the guidelines was a condition requiring “rules regarding Party-building work be written into the company charter.”
Last year, Chinese state media estimated that roughly 70 percent of China’s 1.86 million private firms have set up Party organizations.
As many of China’s biggest firms have expanded their portfolios through risky investments overseas, the CCP has been cracking down on such capital outflows. In December 2017, the Party mandated that all businesses report their foreign investments to the central authorities.
In the meantime, many of the wealthy businessmen behind China’s biggest conglomerates have fallen under the Chinese regime’s ax in recent months.
Wu Xiaohui, former chairman of China’s largest insurance conglomerate, Anbang Insurance Group, was sentenced to 18 years in prison in May. Anbang had made several massive overseas acquisitions, including New York’s Waldorf Astoria hotel.
The billionaire founder of Tomorrow Group, Xiao Jianhua, has gone missing, after being placed under investigation by Chinese authorities.
Ye Jianming, former chairman of CEFC China Energy, China’s largest privately held energy company, was arrested in May and also placed under investigation for economic crimes. His company’s assets were liquidated in order to repay its massive debt.
Meanwhile, Beijing has continued to prop up state-owned enterprises despite many being bankrupt “zombie” firms.
China observers like Chen Pokong believe that Ma may have seen his fate coming and chosen to resign early to avoid it.
Chen, in a video on his YouTube channel, mentioned a report published in April this year on China’s fintech industry, in which an official at the People’s Bank of China, the country’s central bank, severely criticized the industry for its problems.
“Especially for the big organizations that have influence on the market, they should set an example by following laws and regulations,” said Fan Shuangwen, assistant bureau chief of a department in charge of payments and clearing accounts, in the report. “Do not think that you are so big that you cannot fail, or that you are so big that you cannot be managed.”
It was seen as a warning to big shots in the industry such as Alibaba’s Alipay, a popular mobile payment platform.
China scholar Chen Xiaonong told New York-based NTD that many entrepreneurs in China were able to become successful through political connections with powerful Party officials. But if the regime starts investigating those corrupt officials, those businessmen connected to them will also be ensnared.
Reuters contributed to this report.