The recent retirement of Jack Ma, former chairman of the Alibaba Group, has set a positive example in China for entrepreneurs to plan succession, ensuring the long-term sustainability of their businesses, according to some analysts.
But others insist it is still too early to tell if the world’s largest e-commerce giant and its charismatic founder have since steered away from the clutches of the Communist Party, which seemingly views large private companies as a threat.
“They key thing here is not to be too confident about any outcome yet, because we’re simply too early in the cycle here. Jack can still retire and then find himself in a lot of problems later,” said Fraser Howie, co-author of three books on the Chinese financial system, including “Red Capitalism: The Fragile Financial Foundations of China’s Extraordinary Rise.”
On the heels of his official retirement last Tuesday, rife speculation remains that Ma was forced out because he had become “too powerful and influential” and posed a challenge to the authority of China’s top leadership. His tech empire remains under the government’s close scrutiny.
It is believed that through his retirement, Ma has avoided being caught up in the Chinese government’s crackdown of big dealmakers in recent years, such as HNA Group’s Wang Jian, Anbang Insurance Group’s Wu Xiaohui, and movie star Fan Bingbing. The latter two "disappeared" for months at one point, according to observers.
“He’s getting an airlift before the hammer falls because he clearly would have been the most high-profile scalp within the private sector,” said Howie, adding that Ma’s case also fires a warning shot across the bow of the country’s rich and famous.
Additionally, the fact that some of the country’s tycoons, including Ma, have pledged to hand over control of their businesses to the Communist Party, if needed, epitomizes the lopsided relationship between the state and the private sector under the leadership of President Xi Jinping.
For example, shortly after Ma expressed his intention to step down, Alibaba’s online payment platform Alipay inked an agreement with state-owned UnionPay to cooperate on cardless and barcode payments — a development that led to much speculation that Alipay eventually would be nationalized.
Xi has good reason to view Ma as a threat because the tycoon’s popularity among the public has outshone that of any government officials in China, said Emmy Hu, former executive editor-in-chief of Global E-Businessmen, an online media platform under Alibaba.
“He is one of the most popular and iconic figures in China. Shall democratic and free elections be held, he would have won most votes across China if he’s up to,” Hu said.
Ma is so popular in China that many fraudsters use the catchphrase “you’ll be the next Jack Ma” in an effort to entice victims, she noted.
It’s hard to imagine, therefore, that someone as hardworking, ambitious and successful as Ma would choose to step down at a young age of 55 if it weren’t for political pressure, according to Hu.
The journalist added that Ma’s success as a business leader, who has made a great contribution to the economy and provided a livelihood for more than 10 million vendors on Alibaba-owned online shopping site Taobao, made him an obvious target for the Communist Party as it tightened its grip on the private sector.
“The pressure that the state has exerted on private enterprises is getting more and more evident. That includes policies requiring companies to set up (Communist) party committees or business executives to join the party” to name a few, Hu said.
Apart from the impact of the U.S.-China trade war, the business environment in China has become increasingly hostile toward private companies that state-owned companies see as rivals and hope to edge out to expand market shares, she said.
Hu says from a purely business point of view, Ma set a marvelous example in Asia for businessmen to plan succession — an observation with which venture capitalist C.Y. Huang agrees.
“I think he is a role model who has completed a successful succession for peer mainland Chinese companies (to look up to). ... In five years, he has groomed his successors ... and proved that his company doesn’t necessarily rely on one person,” said Huang, a partner at FCC Partners, a Taipei-based investment bank.
Daniel Zhang replaced Ma as Alibaba’s chief executive in 2015. Last week, he also took over Ma’s chairmanship.
Huang underscored that all too often, founding patriarchs of Asian companies have refused to hand over the reins, which then creates barriers for businesses to modernize. He pointed out that on a personal level, Ma sets an example for business people to enjoy their lives, and pursue dreams and goals outside of their businesses.