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Jack Ma denies stepping down under political influence, lauds partnership model
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Jack Ma of Alibaba Group denied conjectures that his decision to step down as executive chairman was influenced by “political factors”, responding to what he says “rumors from outside China” which claimed the Chinese government was cracking down on high-profile entrepreneurs in the private sector. Meanwhile, Ma explained the succession was a long-term strategy facilitated by the e-commerce giant’s unique management mode - Alibaba partnership.

One week after Jack Ma announced his plan to retire from Alibaba’s chairmanship in one year’s time, on Monday, the tech billionaire once again elaborated on the unexpected decision at an Alibaba event—Investor Day conference in China.

In his keynote speech, Ma said from 2005 to 2009, he and Joe Tsai, the company’s executive vice chairman, had been discussing the topic of “business succession” and they visited many enterprises and institutions to find out secrets of building a long and well-established business. “We finally designed our own mode - partnership mechanism,” he said.

Based on Alibaba’s official statement, the partnership system was announced in 2009 and put into practice in 2010. In order to become a partner, the applicant has to work for Alibaba or its subsidiaries for at least five years, and conform to the corporate culture and values. And the new partner’s designation must be agreed by over 75 percent of the existing partners.

Now, Alibaba has a total of 36 partners with 12 of them being female. Every year, new partners will be elected and it’s believed with every of them holding corporate stocks, their wealth is representative of the whole group’s market value.

At the conference, Joe Tsai also delivered a speech, further elucidating how the partnership works and what it’s used for. “(We use it) to build moral standards, choose successors and avoid risks (related to relying on) key men,” he said.

Tsai, who’s known to be the “man behind Jack Ma’s back” and one of the 18 co-founders of Alibaba, pointed out the system puts an emphasis on moral traits of partners. So, every new partner would be put under a probation period of three years and they need to gain 75 percent of votes among incumbent partners. Every partner is entitled to one vote.

In Tsai’s view, the system could also avoid management risks through collective decision-making in case some key leaders suddenly depart due to personal misfortune.

At the beginning of September, it was widely reported that Liu Qiangdong, the founder and CEO of JD.com, one of China’s largest online retailers, was arrested in Minnesota for alleged sexual misconduct. Although Liu was released one day later, the company’s market value was believed to bear the brunt of the incident.

The accident is generally regarded as a test of JD.com’s stability, as well as the ability of a Chinese technology company to rebound from the problems of its leaders, reported the New York Times at the time. “China’s most powerful technology companies are still tightly controlled by their founders, so the fortunes of businesses worth tens or even hundreds of billions of dollars are closely intertwined with the fates of a small number of executives,” according to the report.

Back in 2014, Joe Tsai had published an article to reveal the thinking behind the Alibaba “partnership”, saying “many excellent companies rapidly fell apart after their founders left, and many successful founders made ‘deadly’ mistakes. Our mechanism intends to replace a few founders with a group of partners. The logic is quite clear: with a bunch of partners with shared values and goals, it’s easier to pass on and spread good culture.”

Some Alibaba people previously told the National Business Daily that within the Alibaba group, succession was emphasized not just at the CEO level. “The company demands executives from directors’ rank to find and nurture their own successors. If the job is not well done, annual performance rating would be seriously affected even if the executive has done a good job in his position. In Alibaba, it is common practice to realize a successful succession,” the insider was quoted as saying.

Finding right successors has long been a problem for self-made entrepreneurs. It was a common practice in the past for business founders to pass their companies on to their families. So, in a long term, family management style dominated the country’s private sector.

“For Jack Ma to put Daniel Zhang, Alibaba’s CEO, at the helm, it’s the result of many years’ internal restructuring,” Tang Xingtong, an expert with the research arm of the China Electronic Commerce Association, told the National Business Daily. He warned businesses not to blindly copy the Alibaba model but to learn from its foresight in choosing the right successors early.

The Alibaba Investor’s Day conference is believed to have been attended by the largest number of Alibaba partners - the core management of the group. About his successor Daniel Zhang, Jack Ma said, “I know it’s not an easy job to manage a group company like Alibaba, but I’m 100 percent sure Daniel will do a better job than me.”

“Like playing the game of go, master players do not just find out their next one move. Instead, in their head, they ponder over the next 14 or 15 moves beforehand, that’s what we call strategy,” said Jack Ma, citing Chinese philosophy to explain the idea. In his words, Alibaba is working on a ‘big plan’, which is to decide on the group's future.  

 


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