Alibaba’s Daniel Zhang

Alibaba’s Daniel Zhang

Thanks to Alibaba’s rise to prominence as a global powerhouse in the retail, ecommerce and technology sectors, Jack Ma, founder and chairman of the China-based multinational conglomerate, is one of the world’s most well-known business leaders.

It’s small wonder then that when he announced he was stepping down as chairman of Alibaba, the news turned heads around the world. On 10 September 2019, Alibaba’s CEO Daniel Zhang since 2015 will assume the additional responsibility of chairman of the board. But who is Zhang and what lies behind his rise to the top of one of the most influential businesses of recent times?

Perhaps the first thing to note is that Zhang is almost never referred to as Mr Zhang at Alibaba. Instead, he is known as Xiaoyaozi, or the “free and unfettered one”.

Singling out a success

It was 2007 when Zhang first joined Alibaba Group. He was hired on as chief financial officer of Taobao, a Chinese online marketplace, which allows makers and sellers to connect with customers directly. He went on to become president of Tmall, which was spun off from Taobao as a platform for brands and retailers to sell their products. Tmall grew quickly into China’s largest B2C marketplace.

Eventually, he became chief executive of Alibaba Group in 2015, having served as chief operating officer immediately beforehand.

One of Zhang’s most notable and celebrated achievements came in 2009 with the creation of what is now known as Singles’ Day. Held each year on 11 November, and variously referred to as Double 11 or single sticks holiday, Singles’ Day is now the largest shopping day anywhere in the world. Singles’ Day 2018 saw $30.8 billion worth of products sold by Alibaba – the cumulative value of the good sold, calculated by multiplying the number of items sold by the price they were sold at, which is also known as GMV.

Alibaba has in the region of 93,000 employees and is one of the biggest business success stories of the 21st century. Its founders famously launched the company from Ma’s apartment in 1999 and paid themselves tiny salaries in the earliest days of the business. Today, its annual GMV is an astonishing $768 billion and in the three months ending 30 September 2018, the Group’s revenue reached $12.4 billion – an increase of 54% on the same period last year. For the 12 months ending 30 September 2018, it has 601 million annual active consumers, an increase of 25 million from the previous year.

Its annual revenue growth has outperformed its technology peers both homegrown and international, and Alibaba’s stated ambitions include:

  • Reaching $1 trillion in GMV by 2020
  • Serving 2 billion consumers globally by 2036
  • Supporting 10 million profitable small and medium sized businesses
  • And creating 100 million jobs

Free and unfettered, and humble

But while those colossal numbers might summon up ideas of hard-nosed management techniques, Zhang’s pen name of Xiaoyaozi indicates otherwise.

Alibaba executive vice-chairman Joseph Tsai, who was one of the company’s founders, has this to say about him: “I’ve worked closely with Daniel since 2007 when he first joined us as chief financial officer of Taobao. On intellect and energy, I can barely keep up with him. But it’s his thoughtfulness and humility that is most impressive as a leader.”

Jack Ma also has nothing but praise for Zhang, “Since he took over as CEO, he has demonstrated his superb talent, business acumen and determined leadership. Under his stewardship, Alibaba has seen consistent and sustainable growth for 13 consecutive quarters. His analytical mind is unparalleled, he holds dear our mission and vision, he embraces responsibility with passion, and he has the guts to innovate and test creative business models.”

One of Zhang’s primary challenges will be to deal with increasing competition from two of China’s other home-grown successes, Baidu and Tencent. Both of these rivals are huge successes in their own right. Tencent is the business behind WeChat, the messaging app that claims around 1 billion users, and its mobile wallet service, WeChat Pay. It also owns a slew of games franchises including Call of Duty and World of Warcraft. Baidu is China’s dominant search engine provider, and is investing in smart connected-devices and artificial intelligence.

Before joining Alibaba, Zhang worked at PwC and was chief financial officer at online games developer Shanda Interactive Entertainment. The succession plan which will see him take on the Alibaba Chairmanship role, has been developed over a period of 10 years. This careful approach will no doubt have reassured investors and other important stakeholders, for whom change of leadership can be a time of risk and uncertainty. Further stability is offered by Ma’s role as a lifetime partner in the Alibaba Partnership, which was set up in 2010.

On the topic of his decision to step aside, Ma says in a statement on the Alibaba website: “The one thing I can promise everyone is this: Alibaba was never about Jack Ma, but Jack Ma will forever belong to Alibaba.”

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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