Alibaba Chief’s Next Move May Reveal a Chinese Game Plan

Alibaba chairman Jack Ma’s surprise announcement last week that he would step down as head of the world’s biggest e-commerce company, has sparked animated discussions on what would be his next career move and whether the Chinese government was behind the decision.

Some analysts have suggested the government was keen to enhance its influence over global giants from China like Huawei and the so-called BAT club, Baidu, Alibaba and Tencent. Such a move would leave little space for high-profile and largely independent players like Jack Ma.

“The Chinese government seems to be wanting to have a more direct ‘say’ into the BAT, particularly in Alibaba and Tencent,” said Lourdes Casanova, director of Emerging Markets Institute at Cornell. “The government is saying, ‘You have become so powerful because we have protected you against the big world players. It is time to give us back,’” she said trying to analyze the government’s viewpoint.

Ma and the Chinese government have not publicly commented on this speculation about the motivation for his announcement.  

Many believe Beijing needs to enhance its economic diplomacy at a time when it faces severe trade challenges from the Trump administration in the United States, and would like to see domestic companies take a policy driven approach instead of merely focusing on profit making.

The government may also be worried about the rising influence of American, European and Japanese investors who have either struck collaboration deals with Chinese companies or bought heavily into their shares.

Internationally established Chinese companies are a key part of Beijing’s economic diplomacy. They cut major deals in different countries timed with the visit of the country’s leaders. Alibaba has been particularly effective because it is buying stakes in a range of foreign companies and assisting in the export of Chinese goods through its online channels.

The latest instance is Chinese President Xi Jinping’s visit to Russia this week, which was marked by a deal signed by Alibaba and the Russian Internet group, Mail.ru.

 

Analysts believe Ma’s next career move would reveal if his decision was related to a Chinese game plan in the field of economic diplomacy.

 

Ma’s soft power

A lot of issues ride on his next move. Ma has not just represented China’s soft power to the world, but also played a crucial role as an economic diplomat.

He is formally relinquishing his position a year from now, and has named his successor, David Zhang, for the post. Industry players are asking whether he will continue playing this ambassadorial role for China or simply walk away from the spotlight.

“He is not going to stop being a businessperson. He still owns a large, majority shares. What we are talking really is about stepping away from that role of being a chairman and being an executive chairman,” Jacob Cooke, CEO of consulting firm, Web Presence in China.

Ma’s influence goes far beyond the narrow confines of the company’s business, which include diverse investments in different parts of the world. Alibaba’s online sales platforms opened up new markets, fed new ideas and helped thousands of small and big Chinese companies to innovate and grow over the past three decades.

The government is believed to have laid down rules about celebrity behavior favoring the low-profile approach and is opposed to business leaders developing a huge fan following for themselves.

“While many business leaders in China keep a low profile, Jack Ma shined not only in China but all over the world,” Casanova said.

 

Next move

Ma will continue to play an important role in the business world, experts said.

Some analysts expect him to become an investment banker, which will make him the second big Chinese force after the government-run China Investment Corporation in worldwide investment business.

“He’s going to basically move away from Alibaba into what is going to be a Chinese Warrant Buffet,” Cooke said. “Looking at South China Morning Post, e-commerce, block chain, I mean, portfolio investments.”

Ma met Trump and offered to help him create one million new jobs as soon as the new president was elected. But there are no signs Trump took up the offer.

And yet, he will not gladly accept a government role to deal with the trade and investment challenges from Washington although he has deep connections in the United States, analysts said.

Ma caused a bit of a surprise on Tuesday when he commented on the ongoing trade war between the U.S. and China calling it a “mess” which might go on for the next 20 years. “It’s going to last long, it’s going to be a mess,” he said.

Casanova thinks Ma is taking a genuine break and will make up his mind on the next move after some time. “I think we should not say ‘no’ to the possibility of his going back to Alibaba too much,” she said.  

 

 

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