Caixin
Apr 28, 2020 10:09 PM
TECH TALK

Opinion: Alibaba Clips Highflyer’s Wings, but Is It for Real?

It seems it takes a scandal these days to stir me from my Tech Talk hibernation, as the latest brouhaha surrounding former Alibaba rising star Jiang Fan has inspired me to write only my second column since the coronavirus outbreak began. This latest scandal certainly has plenty of sizzle, as it involves a wunderkind falling for an internet celebrity, leaving behind a bitter wife who vented her frustrations on the internet for the world to see.

But this column isn’t really the place for such idle chatter. So while I’ll recount the basic details, I’ll refer folks who want the more juicy side of the story to Weibo, China’s version of Twitter, where “Jiang Fan expelled from the partnership,” or #蒋凡被除名合伙人, was one of the top trending phrases as of this writing.

Instead of focusing on the steamier details of the major setback for a young hotshot believed to be a strong candidate as Alibaba’s next leader, I’ll focus on what kind of message the e-commerce giant may be trying to send with Jiang’s demotion and also what it could mean for the company’s future.

All that said, I do need to give at least the bare details of the affair, no puns intended, to give this story some context. Things burst into public view earlier this month when Jiang’s wife posted a message on her Weibo account calling on an internet celebrity who uses the online name Zhang Dayi to leave her husband alone. The post was later deleted, but tongues had already begun to wag by then and the die had been cast.

As the commotion built, Alibaba conducted its own investigation and determined that Jiang hadn’t done anything wrong in terms of business conduct. But it also decided that Jiang’s “inappropriate handling of family affairs” had “triggered a serious public opinion crisis which created a major impact on the company’s reputation,” according to an internal note on the matter cited by Reuters.

Following that verdict, Alibaba demoted Jiang from senior vice president to vice president, though it allowed him to retain his position overseeing the company’s two main consumer-facing e-commerce platforms. And perhaps more importantly, Jiang was officially kicked out of a core group of 38 partners who chart Alibaba’s strategic direction. Jiang, born in 1985, made headlines a year ago when he was promoted to senior vice president and became the youngest member of the partnership.

All that said, we’ll spend the rest of this column looking at why Alibaba was moved to take the action it did, and what it might say about the future of both the company and Jiang.

I’ll start off with my favorite interpretation, which was shared by the few contacts I polled, which is that this move represents a sort of rap on the knuckles for a wunderkind who got just a bit too big for his britches. Another image I like is perhaps a scene from a “Godfather” movie where the smart-aleck being groomed for future leadership gets called in to the Star Chamber for a dressing down for behavior unbecoming of the clan.

Down but not out

Under this metaphor, Jiang is given a second chance, with hope from the elders that this kind of public shaming will teach him some humility. He’s clearly being tested at this point, so there’s no guarantee he will come back. But if he learns his lesson, I and several of my contacts all agreed there’s no reason he couldn’t be invited back into the central partnership and regain his old title somewhere down the road, most likely when less people are looking.

The fact of the matter is that Alibaba has been quite public about the whole thing, even though it’s trying to act like it’s all an internal affair. Another fact is that it really is a jungle out there when it comes to this kind of young buck in China’s internet realm, and people need to be careful about their actions.

If Jiang is truly a potential heir, three equally fierce contemporaries he will probably have to deal with sooner rather than later are Zhang Yiming, founder of super-unicorn ByteDance; Wang Xing, head of online-to-offline services giant Meituan Dianping; and Colin Huang, head of e-commerce up-and-comer Pinduoduo. I haven’t met any of these three men personally, but I get the impression that all are incredibly driven and would never get caught up in this kind of public embarrassment.

The second point I want to cover concerns Alibaba’s desire to be accepted by the global business community, which is reflected in its recent strong focus on Environmental, Social, and Governance, or ESG, which is quickly becoming a yardstick for measuring a company’s long-term prospects.

Here I should point out that several of my sources and I agreed that Alibaba’s treatment of this particular case looks suspiciously like a veiled swipe at archrival JD.com. JD’s founder Liu Qiangdong, also known as Richard Liu, was involved in a high-profile scandal in late 2018 when he was briefly detained in the U.S. after a student accused him of rape following a boozy banquet.

The prosecutor ultimately decided not to file criminal charges against Liu, though the accuser did file a civil lawsuit. So against that backdrop, this latest move by Alibaba seems to be saying that any behavior of that sort is unacceptable if it brings unfavorable attention to the company, which was certainly the case with JD.com and was again the case with Jiang Fan.

One of my sources pointed out that ESG attempts to identify which companies have what it takes to thrive over the longer term, and obviously a corporate culture that encourages social responsibility is probably a significant part of that. At the same time, Alibaba and its internet rivals are coming under growing pressure to show they can succeed outside China, which will be key to their future growth as their home market becomes increasingly saturated.

Thus this latest move could be seen as the company’s attempt to show the world that it’s a cut above companies like JD.com, at least in terms of executives’ personal behavior. That could be an increasingly important distinction it’s trying to make as it tries to do business in more developed Western markets where antics one sometimes sees in China might not go over as well.

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com

loadingImg
Register to read this article for free.
Register
Share this article
Open WeChat and scan the QR code