KrASIA Weekly: Daniel Zhang to succeed Jack Ma in 2019

2018-09-16

Hi there, it’s Robin.

One of the major sources of Israel’s vibrant innovation ecosystem can be attributed to the creative thinking ability of the people of Israel. According to Ran Natanzon, Head of Innovation & Brand management at Israel’s Ministry of Foreign Affairs, the state of Israel’s founding generation was already innovating in the small nation that has scarce resources and many limitations.

And this idea where constraints breed creativity is exactly the same in China. We saw how Jack Ma responded to the ‘impossibility’ or limitations he faced as a man to see Alibaba through the company’s vision of becoming a 102-year-old giant. He crafted a 10-year succession plan that culminated with a big news this week: The appointment of Daniel Zhang to succeed as Alibaba’s chairman in one year’s time.

Alibaba effectively became the first Chinese tech conglomerate to answer a common worry amongst investors of big Chinese tech unicorns – the question of what is next for these companies after the first generation of leaders leaves.

Other Chinese tech giants like Tencent, Baidu, JD.com etc have no succession plans to date.

Would this set a precedent? Well, just a few days later, Xiaomi announced of its own version of a corporate restructuring plan. The main goals of this move include developing of young talents and strengthening its business functions etc to ensure Xiaomi’s survivability.

In any case, 2018 has seen the weakening performance of these Chinese tech giants. And this shows the importance that big tech giants should have a succession strategy in place in order to build a sustainable business model. The business environment, after all, is ever changing and also seems to be getting harder and harder.

Alibaba, for example, saw its shares falling by 15% since the beginning of 2018.

Tencent’s gaming business was also hit by changing stance amongst Chinese regulators. There has been a temporary freeze in the issuance of gaming licenses in China.

Pinduoduo – the e-commerce company that attracts lower-tier Chinese city consumers – saw its shares plummet even as it battles against the counterfeit controversy issues.

Chinese O2O platform giant Meituan who is heading for its upcoming IPO is badly in need of cash even as burn rate surges up with its battle against big players like Alibaba, Ctrip, and Didi Chuxing.

Similar pains have also started to be seen in Southeast Asia.

Despite all the hype, Indonesia, the biggest market of the region, is experiencing close to no-growth in seed funding for the last 4 years. This is worrying, as seed investments have to be approximately ten times of what they are at this point in order to breed real innovation In Indonesia.

An intensifying fight that leads to immense burn rates can be expected as Grab and Go-Jek fight for more market share in the region. Already, we are seeing Go-Jek launching in Vietnam, with Thailand coming next.

Nonetheless, Vietnam could possibly be the next country in the region to watch. It is actually home to one of the region’s silent unicorns – VNG, a tech firm that started out as a gaming company and now has interests in social networking, e-commerce, and payments.

Read on to find out more interesting stories from last week, and feel free to tip us if you have news clue or you just want to talk with us, email us at hello@kr-asia.com and we are looking forward to hearing from you.

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