Jack Ma makes his voice heard after five years

• Internal memo endorsed group’s structural reform
• Move signals an easing of tensions with China’s regulators
• Ma maintains influence although his shares fell from 6.2% in 2019 to 4%

Alibaba founder Jack Ma has not been heard in mainstream media since his outburst at the Bund Summit 2020 where he criticised the banking industry and financial regulations. The slap on the wrist came when regulators halted the initial public offering (IPO) of Ant Finance, a subsidiary of Alibaba that owns Alipay, and Ma was effectively prohibited from expressing any opinions about banking and Alibaba.

When Ma posted a memo on Alibaba’s internal forum on 10 April, it caught significant public attention. The importance of this event lies not in the content of the memo, but in the fact that he was permitted to post it at all.

The memo, marking the one-year anniversary of the group’s leadership reform, delivers a message that Ma’s voice is now acknowledged, suggesting that scrutiny of Ant Finance and the broader consumer finance industry may be diminishing.

This is seen as a positive signal to investors and the market, indicating potential stabilisation and continuity within Alibaba. Since 2020, Alibaba has been fined a total of $2.8 billion by regulators. Its stock price has plummeted from a high of $319 per share in 2020 to around $69. Ma’s shareholding in the company fell from 6.2% in 2019 to about 4% by the end of last year.

This easing of tensions could have broader implications for Alibaba’s operational freedom and its fintech affiliate, Ant Group, especially considering past regulatory actions that led to the suspension of Ant’s IPO.

Ma’s experience mirrors that of Xiao Feng, chairman of Wanxiang Blockchain. Following China’s 2017 crackdown on initial coin offerings (ICOs), Xiao withdrew from the ICO market to focus on behind-the-scenes investments in projects like PlatON. Xiao did not appear publicly until 2020, when he spoke at Shanghai International Blockchain Week.

Does Ma’s memo influence Alibaba’s business focus and innovation strategies? This could be particularly relevant as Alibaba competes globally and seeks to maintain its leadership in e-commerce and technology in China.

Another signal from the memo is Ma’s ongoing influence on Alibaba’s business decisions. Despite maintaining a low profile, Ma’s impact on Alibaba’s trajectory remains significant. His reappearance in Hangzhou in March 2023 was followed by strategic changes within the company. Last March, Alibaba announced a structural reform and management reshuffle. The group split into six major business units, with chairman and CEO Zhang Yong being replaced by Eddie Wu and Joe Tsai. This change occurred against a backdrop of stringent regulatory scrutiny and fierce competition from peers like Pinduoduo and Douyin.

One year after the reform, Jack Ma endorsed the new management team’s series of reforms by stating: “We are back on the right track.” In the past, Alibaba focused heavily on key financial performance indicators at the expense of delivering customer value. Joe Tsai, now chairman of the group, admitted in a recent interview: “We have fallen behind because we forgot who our real customers are.” This involves re-evaluating business practices to align them with customer needs; the company has reorganised its personnel and structure to focus on user experience and product development.

Ma urged Alibaba to continue innovating, stating: “Times have changed, and we must keep up.” The structural reformation allows for greater flexibility and a more dynamic market response. “We are addressing the ‘big company issue,’ transforming from an organisation with slow decision-making into one that prioritises efficiency and market needs, making the company simpler and more agile,” Ma said.

The most important message from Ma is that Alibaba has clearly identified e-commerce, cloud computing, and artificial intelligence (AI) as the core assets that will drive the company’s future. The decision to halt the spin-off of Alibaba’s cloud business was seen as a strategic move. With the rise of generative AI, Alibaba was among the first fintech companies to launch its large language model, Qwen. As Tsai pointed out: “The e-commerce business is one of the places where you can have the richest use cases for AI.” This includes using AI for virtual dressing rooms and self-generating product descriptions, all of which can significantly enhance the customer shopping experience.

Alibaba’s path to reform has not been without challenges. The company has faced stiff competition and seen its stock price fluctuate, reflecting market uncertainties. Over the past year, Alibaba has also had to manage a smaller workforce and address a lack of confidence. Ma’s memo is seen as a move to bolster confidence among the company’s management, employees, and investors; more importantly, it conveys a clear message of an easing regulatory environment in China, which not only reinforces Alibaba’s ability to innovate and grow despite adversity but also boosts the sentiment of the financial industry as a whole.