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Alibaba's incoming chairman puts data at heart of business

Investor day webcast abruptly cut off during remarks by founder Jack Ma

Daniel Zhang, Alibaba chief executive and Jack Ma's successor, said the company will focus on data collection. (Photo from Nov. 11, 2017).    © Reuters

HONG KONG -- Alibaba Group Holding will revolutionize its way of doing business by focusing on data collection, chairman-in-waiting Daniel Zhang Yong told investors Tuesday as the future of China's most valuable company comes under the spotlight following the announcement of a leadership transition.

"How are we going to make it easy for others to do business? The answer is data and data technology," Zhang said at an investor day event in its headquarters in eastern city of Hangzhou, where live broadcast was available through webcast.

Alibaba's sprawling business empire includes retail, financial services, media and entertainment, and cloud computing. In Zhang's eyes, those businesses hold the most important key to the future -- customer data.

Earlier this month, Alibaba's charismatic founder and chairman, Jack Ma Yun, named CEO Zhang -- who created the e-commerce company's annual Singles Day shopping event -- as his successor who will take the reins in a year.

"Once we get data, we use this data in cloud [computing] and we use this to analyze and empower our business and clients," he said. "The core of this economy is data and data technology."

At the event, Ma gave Zhang's strategy his full support.

"Daniel thinks very logically, very clearly, [and] he knows what he is doing," Ma said. "[From] his vision and his belief, I know I'm getting old." The 54-year-old said he had been making preparations for a successor since 2009, by visiting companies, governments, even churches, to gain insight on running an organization.

"A few years ago, I told Daniel that for investments below 20 billion renminbi ($2.9 billion), do not even tell me. You have to make decisions," Ma recalled. "This year, when I left China for Europe and Africa for a couple of months and didn't get a phone call from the company, I knew they are ready."

The investor day was broadcast worldwide from Hangzhou via live webcast, but it was abruptly cut off during the question-and-answer session. 

Ma began to answer the second question from the floor, in which he was asked to what extent the Chinese government is able to tolerate Alibaba's business.

Ma related a conversation he had with a government official on the topic of the limits on the internet in China. Ma said the internet is like electricity and that it has no boundaries. He also described the internet as a way of thinking and doing things, and said "we are entering into a new period, a new era."

Ma's voice was clearly audible until he said, "I don't think we should think ... control ourselves. If it is good for the future of society ..."

The sound then faded out and was replaced by music, while the video was switched to the image of a clock and later blacked out. Alibaba did not immediately respond to questions from the Nikkei Asian Review on the sudden cutoff on Tuesday, but Alibaba spokesperson told Nikkei on Wednesday that the company has always kept the Q&A session to investors only and denied self-censorship.

Jack Ma gestures to an audience in Kuala Lumpur. Alibaba's founder will step down as chairman to concentrate on education and other activities.   © Reuters

Despite a 61% year-over-year increase in revenue in the April-June period, Alibaba faces a bumpy road ahead, analysts said. China's e-commerce landscape has become increasingly competitive in recent years, with new challengers such as group buying platform Pinduoduo expanding rapidly. The Nasdaq-listed company, which was established just three years ago, already has a market value of around $20 billion.

"First, we want to digitize brick-and-mortar [stores so] we can generate data," Zhang said. "We want to empower our partners through data. Digitalization cannot resolve all the issues, but digitalization [will] give us an opportunity to understand our customers' needs."

The company has also set its sights on expanding its offerings to governments. Zhang referred to a cloud computing-based service Alibaba provides called "Smart City" that uses big data and artificial intelligence to improve urban government.

In Hangzhou, where Alibaba is based, the platform has already enabled the municipal government to identify and respond to car accidents. The company has rolled out a similar service for the government of Kuala Lumpur.

The use of data is controversial though. The West has long accused Beijing of state surveillance and it is not rare for Chinese technology companies to see their overseas expansion plans thwarted by close ties with the government. In August, lawmakers in Australia banned Huawei Technologies from providing fifth-generation networks in the country due to national security concerns.

Nonetheless, globalization is still high on Alibaba's agenda. Zhang told investors that the company's long-term vision includes serving two billion customers around the globe, helping 10 million small and midsize enterprises worldwide and creating 36 million jobs in China and elsewhere.

Nikkei Asian Review chief business news correspondent Kenji Kawase contributed to this report.

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