The 48-year-old Jack Ma has stepped down as CEO of Alibaba Group Holdings Ltd. Carlos Barria / Reuters

Internet magnate hands reins of company to a younger generation

The Chinese Internet magnate Ma Yun has a new career - to enjoy life.

Ma, 48, also known as Jack Ma, revealed his plan on May 10 as he stepped down as chief executive officer of the e-commerce giant Alibaba Group Holding Ltd.

The next day Jonathan Lu, Alibaba's chief data officer, became the new chief executive. Ma remains chairman.

Ma delivered his farewell speech to an audience of 35,000 on a rainy night in a stadium in Hangzhou, where Alibaba has its China headquarters.

"I have been expecting this day for years," he said. "I am proud of what I have done over the past 14 years of business. I have no regrets in my life."

Ma says he would never resume the post of CEO because it is the younger generation's turn to shoulder responsibility.

"From tomorrow my career is to enjoy life. I will do things I am interested in, like education and environmental protection."

Analysts say the transition is unlikely to bring big changes because Ma will still make the strategic decisions.

During the farewell event, Ma called for a society with clean water, blue skies and safe food.

Chinese media reported that Ma will become China director of The Nature Conservancy, a private group based in Washington. It has global assets of $3.7 billion (2.9 billion euros) and entered China in 1998.

May 10 was the 10th birthday of Alibaba's consumer-to-consumer business website Taobao. Alibaba also operates another two e-commerce sites, Alibaba.com and the business-to-consumer platform Tmall.

Before Ma's departure Alibaba had just delivered a glowing financial report. The company overtook Tencent Holdings Ltd to become the most profitable Internet company in China in the fourth quarter last year.

Alibaba's net profit nearly tripled, to $642 million, during the period, on the back of an 80 percent rise in revenue, the latest regulatory filing by the shareholder Yahoo Inc said.

Tencent reported net profit of $552 million in the fourth quarter, up 36 percent from a year earlier, its financial report showed.

"But it is still hard to say Alibaba will secure the top position, because Tencent conducts businesses in multiple areas," says Xie Wen, a Chinese IT expert and former president of Yahoo China. "So far, the expertise Alibaba has demonstrated has been limited in e-commerce."

Alibaba appears still to be on the lookout to expand into new fields.

"Big Internet companies are always looking for possible new revenue sources, or launch mergers and acquisitions to beef up product lines directly," says Hong Bo, an analyst in Beijing and founder of the IT consultancy IT5G. "Alibaba does both."

In previous interviews, Ma reiterated Alibaba's ambition to move into the fields of finance and data.

In March the company said it plans to set up Alibaba Small and Micro Financial Services Group to consolidate its online payment and micro loan businesses. It will provide financial services to individuals and to small and micro enterprises with annual turnover of less than 30 million yuan ($4.8 million; 3.8 million euros).

Qiu Lin, a stock analyst with Guosen Securities Co in Hong Kong, said Alibaba might have greater scope for growth after entering the financial services industry.

"The net profit of China's Internet companies was roughly 100 billion yuan last year, while that of major listed Chinese banks was about 1 trillion yuan."

With hundreds of millions of users, Alibaba produces a huge volume of data. "Alibaba is born to be a big data company," said Che Pingjue, chairman of Alibaba's internal data committee, at a conference in Hangzhou last month. "Unexpected values will emerge through data analysis."

Becoming the Amazon of the US may be a model for Alibaba. It has already started to gain revenue from big-data technology by selling advertisements and making tailored-for-client marketing strategies.

However, analysts say that in the short run, e-commerce business is still the major growth engine for Alibaba.

Combined sales of Alibaba's Tmall and Taobao surpassed 1 trillion yuan last year, and the momentum is likely to continue.

By 2020 China's e-commerce industry will be worth about 47.8 trillion yuan a year, Alibaba Research estimates. Last year it was worth about 8.2 trillion yuan. The 2020 figure is just 4 trillion yuan shy of the country's gross domestic product last year.

Alibaba is also stepping up its activity in mergers and acquisitions. The same night Ma stepped down, AutoNavi Holdings Ltd, a Chinese digital mapping and navigation company, said Alibaba was set to take a 28 percent stake, worth $294 million, of the company. The Nasdaq-listed AutoNavi is said to have more than 100 million users.

Earlier in the month Alibaba announced it would acquire an 18 percent stake in Sina Weibo for $586 million.

Analysts said the Sina deal could help Alibaba greatly expand its reach to mobile Internet, where Tencent is said to be gaining strength.

"Some deals are happening and some remain rumors," Xie says. "Many people feel Alibaba's acquisition plan is confused because the targets are in many different fields."

Of China's best known Internet companies Baidu, Alibaba and Tencent, the latter has the most complete product lines, Xie says, while the other two are "more or less one-wheel driven".

"People say Baidu is for search and Alibaba for e-commerce. But in a fierce competition environment in China, Alibaba has to move early and gain an upper hand in other fields."

shenjingting@chinadaily.com.cn

(China Daily 05/17/2013 page21)