Alibaba Holding Co. (BABA) - Get Report slipped modestly lower in pre-market trading Monday following news that its charismatic co-founder Jack Ma, one of the world's richest men, will step down from his role as chairman next year to concentrate on educational philanthropy.
Ma, who stepped down as CEO in 2013 from the company he and 18 others founded two decades earlier, has been the face of China's most successful tech giant and one of the most recognizable men in the global industry. The former English language teacher, who had no formal training in technology, helped build a company that is now worth nearly half a trillion, with operations in 200 countries and 66,000 employees, while amassing a personal fortune of around $36 billion, according to Forbes' estimates, making him China's third-richest man.
"I have put a lot of thought and preparation into this succession plan for ten years," Ma said in a letter to shareholders published on the company's website. "I am delighted to announce the plan today thanks to the support of the Alibaba Partnership and our board of directors. I also want to offer special thanks to all Alibaba colleagues and your families, because your trust, support and our joint enterprise over the past 19 years have prepared us for this day with confidence and strength."
"This transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organizational excellence and a culture of talent development," Ma said.
Alibaba's U.S.-listed shares were marked 2.01% lower in pre-market trading Monday, indicating an opening bell price of $159.10 each, a move that would extend their year-to-date decline to around 7%.
Ma, who will remain on the Alibaba board until 2020, will hand the position of executive chairman to current CEO Daniel Zhang, who has largely steered the group's international expansion since taking over as CEO in 2015. Zhang, 46, is relatively unknown to investors, but has led the group's investor conference calls for a number of years and is credited with the creation of the company's 'Single's Day' sales that is now the world's biggest annual online shopping event.
"Under (Zhang's) stewardship, Alibaba has seen consistent and sustainable growth for 13 consecutive quarters," Ma said. "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."
"Starting the process of passing the Alibaba torch to Daniel and his team is the right decision at the right time, because I know from working with them that they are ready, and I have complete confidence in our next generation of leaders," Ma added.
That generation, however, may face stiffer headwinds in both growth and profits than it predecessors, given President Donald Trump's aim to narrow China's $375 billion trade surplus with the United States and crackdown on the theft of intellectual property, that some have alleged has underpinned the recent growth of China's international tech firms.
Chinese officials, as well, are starting to worry about the strength and influence of the sector, particularly on the nation's youth, and the aggressive overseas expansion of some China-based firms that has driven capital out of the world's second-largest economy. China has issued new limits on the online gaming sector, as is reportedly attempting to reign-in overseas buying by investment firms such as HNA and Ant Financial, which is also controlled by the billionaire Ma.