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Alibaba to face challenges head-on in post-Ma era

, May 14, 2013, 0 Comments

Alibaba changed its leader on Friday in what the company describes as “a year of transition” for the world’s largest retail giant.

Jack Ma, 48, stepped down as Alibaba CEO, with 43-year-old Jonathan Lu Zhaoxi taking over the reins at its headquarters in Hangzhou, eastern China’s Zhejiang Province. Keeping his position as board chairman, Ma said that he was “no longer young” enough for the Internet industry in his letter of resignation.

According to his own plan, 2013 is the “year of transition” for Alibaba with three major developments – platform, finance and data.With an initial public offering potentially on the cards, Alibaba faces three challenges – management, listing and innovation, according to industry insiders.

The news that Ma was to step down now was disclosed at the 10th anniversary celebration of, the country’s largest online shopping site, with 24 million transactions per day. It was expected sooner or later as Ma first announced his decision to step down on Jan. 15.. Alibaba chose Ma’s successor in March.

Lu, Alibaba executive vice president, has been at the group since 2000, founding the sales team and its online payment service, Alipay.
“Lu is definitely facing multiple specific challenges as a new leader of such a massive industry giant, which is large in size and extensive in its domains,” said Alamusi, the associate director of the Policy and Law Committee of China Electronic Commerce Association.

Alibaba saw transactions made on Taobao and Tmall, its two customer-to-customer and business-to-customer websites, exceed 1 trillion yuan (161.8 billion U.S. dollars) last year.Taobao handles over 90 percent of China’s consumer-to-consumer transactions. It has more than 800 million product listings and over 500 million registered users.

In spite of no timetable being disclosed for its listing plan, Alibaba has adjusted its company structure, expanding its digital maps and social media services.Regarded as Alibaba’s “spiritual leader,” Ma will continue to make strategic decisions.

Its biggest challenge before listing is how to realize rapid growth due to squeezed profit margins amid severe competition, said Fang Xingdong, board chairman of the Beijing-based IT think tank Fang said foreign firms such as Amazon and eBay have shown that e-business platforms enter a development plateau after a period of rapid growth.

Alibaba’s evaluation will be affected if there is a slow increase period in business before the company’s listing, Fang said. He suggested it attract more users to make up for squeezed profits, and look at new business areas such as Internet financial services.

“Mobile Internet appeared when we did not yet fully understand PC Internet. The Big data era comes when our eyes are on mobile Internet,” said Ma in a speech on Friday. Big data is a collection of data sets so large and complex it becomes difficult to process. “I am CEO of Alibaba until midnight and I will embrace my new life starting tomorrow [Saturday],” he said.

Alibaba can embrace change and innovative moves successfully with a process of de-idolization from the glamour and influences of Ma, said Zhang Zhouping, a senior analyst with China E-Commerce Research Center.Alibaba is not slow to respond to the changing Internet industry.

The e-business giant has taken large steps in terms of innovation to keep pace with the times. On Friday, it invested 294 million U.S dollars in China’s leading digital map provider AutoNavi Holdings Ltd., NASDAQ listed, and became its biggest shareholder by owning a 28 percent stake.

This was the second major investment in less than two weeks. On April 29, the company announced the purchase of 18 percent of shares in Weibo Corp., a wholly owned subsidiary of Sina Co., China’s Twitter-like social media provider.

In March, Alibaba announced its plan to integrate its payment and micro payment businesses to set up a microfinance service group.These moves have helped strengthen Alibaba in the mobile Internet and social media sectors. It remains to be seen what impact they will have, according to the insiders.

“In this industry, unimaginative competitors jump out all time. The slow movers will be quickly eliminated,” said Alimusi. He said crisis awareness is a critical challenge for such a massive company like Alibaba.