Ma’s retirement sparks concerns over Alibaba future

Source:Global Times Published: 2018/9/11 23:18:39

The retirement plan announced by Alibaba Group's founder Jack Ma Yun has sparked heated discussion online over whether the decision will affect the growth of the firm, and experts said that the company's long-term performance will be determined by China's economic fundamentals.

Alibaba's shares rose by 0.34 percent to $156.69 at 10: 30 am on Tuesday (US time).

Monday's announcement said Alibaba CEO Daniel Zhang Yong will become the new executive chairman in September 2019 as part of a succession plan to maintain sustainable growth at Alibaba.

Ma's move became one of the hottest discussed topics on China's Sina Weibo, a twitter-like service, on Monday. Many wished Ma the best for his new focus, which Ma said would be teaching.

There are other worries about the development of Alipay, the online payment system of the broader Alibaba system.

"Will Alipay keep rolling out so many benefits as it does now?" a user named Meikaiguobaomaderen said in a post.

Li Chengdong, an independent analyst, said that when it comes to listed companies, investors will take the departure of a chairman or founder as bad news, and the company's stock performance is a reflection of such sentiment.

"The departure of the face and voice of a company is seen by investors as a blow to the company," Li said.

There are other concerns as well. Tim Culpan, a Bloomberg columnist, wondered whether Zhang will be able to lead Alibaba to achieve more on the basis of existing business models.

Culpan noted that Microsoft entered a lost decade after founder Bill Gates left and said the one-year transition given to Ma's successors is too short.

Another concern is Ma's future role as the "unofficial boss" of Alibaba, raising the possibility of unclear management responsibilities.

Zheng Chunhui, another independent IT observer, said the concerns over management and the company's development are generally unnecessary.

Zhang is a company veteran and there were management reshuffles last year, Zheng said.

"The transition should be smooth and the many business fields into which Alibaba has expanded, such as finance, logistics and cloud service, should have time to mature. Asking that they be profitable now is too harsh a demand," Zheng said. Eventually, these sectors will become profitable. 

The company's long-term performance will be determined by China's economic fundamentals, Li said.

In an open letter on Monday, Ma said "this transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a firm that relies on individuals, to one built on systems of organizational excellence and a culture of talent development."

Ma adds that the plan has been in the making for ten years.



Posted in: ECONOMY,COMPANIES

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