News of Alibaba co-founder and executive chairman Jack Ma laying out a succession plan to run the e-commerce conglomerate causes me to reflect on the near two decades that China’s first-generation Internet companies have been at the forefront of an era I first documented in Silicon Dragon.
Alibaba, the A of China’s BAT or Baidu, Alibaba and Tencent, is nothing like the business it was even just 12 years ago, when I interviewed Ma in Hangzhou at Alibaba’s headquarters, then a drab office building and now a sprawling corporate campus.
The business has morphed from e-commerce to entertainment to local services. And it’s gone from its home base in China to edge into Southeast Asia and the U.S. with strategic investments and acquisitions.
When Jack Ma does step down from running Alibaba next year, what will his successor and current CEO Daniel Zhang face?
Lots of competition from domestic Chinese rivals Tencent and Baidu – the B and T of the BAT – in far-flung fields that Alibaba has entered in a land grab of fast-emerging sectors.
In mobile payments, Tencent has been chipping away at the lead that Alipay holds in China’s huge market, coming close to Alipay’s 53 percent market share at 40 percent.
In e-commerce, Tencent is angling into Alibaba’s stronghold by integrating social elements into e-shopping. And Tencent and Alibaba main rival JD.com have teamed up to gnaw at the lead held by Tmall, Alibaba’s Chinese-language website for business-to-consumer online retail sales. Moreover, Tencent and JD have co-invested into China’s third-largest e-commerce contender, flash sales site VIPShop. Not left out, Baidu is funneling searches on its mobile app to items in a section for JD.com.
This picture misses another challenge Alibaba faces — that is Pinduoduo, the social commerce upstart that went from 0 to $23 billion in revenues in three years and scored a $1.5 billion initial public offering in New York in late July.
The speed at which Pinduoduo has ramped up shows the forces at work in China’s next-generation of emerging companies. It took Alibaba 16 years to reach $23 billion in revenues.
It will be hard for new leaders to take Alibaba into a next era of growth. In their favor is the fact that only 20 percent of China’s retail sales are online, so lots of room to grow.
And of course, in their favor is Jack Ma’s expansive vision of e-commerce and celebrity-style charisma that have brought Alibaba to a level that would have been hard to imagine at the turn of the millennial.
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