Jack Ma, the co-founder and executive chairman of Chinese technology behemoth Alibaba, stepped down Tuesday. Having reshaped how people shop and make payments in China and beyond, China's richest man left critical questions concerning Alibaba's -- and the country's -- path for the generations that follow him.
Ma co-founded Alibaba 20 years ago. The e-commerce giant today serves over 700 million online shoppers and facilitates 500 million digital financial transactions daily. Alibaba's e-commerce platforms were responsible for more than 40 million jobs as of 2018 and brought online shopping to more than 5,000 rural villages and townships across China.
Alibaba "became an enormous driver to stimulate domestic consumer demand... and provided the commercial infrastructure for small and medium enterprises," said an official document issued last year by the Chinese Communist Party naming 40 outstanding individuals -- Ma among them -- to commemorate the 40th anniversary of the country's economic opening-up.
Alibaba is also a rare example among Chinese companies to have upheld corporate values including "customers first" and "integrity" consistently for two decades. The company let its B2B business CEO Wei Zhe resign in 2011 after he failed to completely clean up seller fraud. In 2016, Alibaba fired four engineers who inappropriately used their tech privilege to purchase extra moon cake gifts in a company lottery.
Ma's ambition, he has said, is for Alibaba "to become a company that lives for 102 years." Given that it was founded in 1999, this would span three centuries.
His well thought-out retirement plan is another reflection of Ma's long-term governance vision. The multiyear gradual transition and solid management talent pool make Alibaba the least exposed to senior personnel risk among all the Chinese tech giants.
Yet Ma is leaving some of the toughest questions to his successors. These include how Alibaba can keep innovating and how to manage government relationships as a private enterprise in an uncertain political environment.
Alibaba's main e-commerce business is shifting with lightning speed as competitors emerge. The rapid rise of Pinduoduo, a four-year-old business combining social networking with group buying, is the newest threat.
In third-party payments, Alipay continues to lose ground to Tencent's WeChat Pay. Even though research shows Alipay still leads by total transaction value, WeChat Pay recorded 2.3 times more transaction volume than Alipay in 2018.
Alibaba's overseas expansion is proving to be challenging too. Ma once said that Alibaba will one day generate half of its revenue from outside of China, but international business generated 7% of total revenue in 2019 and is growing more slowly than its core China business.
Indeed, Alibaba may find itself caught up in China's broader tech struggles.
China has failed to develop a self-sufficient chip industry since the 1950s. Alibaba set up its own chip unit last year, hoping to help reduce China's dependence on imported ones which are used in cellphones and consumer electronics. It may turn out to be the most challenging task for Ma's successors because semiconductors have the highest technological entry barrier, require time, money and expertise, and have a high degree of uncertainty as demand shifts.
Despite notable exceptions such as telecoms business Huawei, Chinese tech companies still mostly copy Silicon Valley pioneers, from ride-hailing and coworking to self-driving cars, as the safest path for entrepreneurs to succeed. None of the Chinese tech giants have truly global businesses, nor do they often lead in business model innovations or fundamental research breakthroughs.
Moreover, China's industrial policies are unlikely to sufficiently build domestic companies and reduce imports -- not least as the U.S. tries to choke off global supply chains.
Ma is stepping down with great timing. Alibaba is in a strong position right now, but the future looks treacherous. When it comes to government relations, Alibaba has reached a size that may lead to more friction with Beijing. For example, if the People's Bank of China issues a planned sovereign digital currency, this could quickly encroach on Alipay's e-money market share. Managing relationships with Beijing is about to get more complicated.
Ma is a cautious realist when dealing with the government. He has repeatedly said that businesses should be in love with but never get married to the government. As a Chinese Communist Party member for decades, Ma has kept an arms-length relationship with Beijing.
Unlike his tech-entrepreneur peers, Ma did not join any political consultative and representative bodies like the National People's Congress. Money and power "are like explosives and detonators, destined to explode when mixed," he has said.
His successors will need more wisdom like this to handle the challenges ahead if Alibaba is to live for 102 years.
Nina Xiang is the founder of China Money Network, a media platform tracking China's venture and tech sectors. She is also the author of "Red AI: Victories and Warnings From China's Rise In Artificial Intelligence."