China’s Alibaba Names Jonathan Lu as Next CEO
HONG KONG—Alibaba Group Holding Ltd. named Jonathan Lu to succeed founder Jack Ma as chief executive amid growing expectations that the Chinese e-commerce company is gearing up for a potential multibillion-dollar initial public offering.
The company portrayed Mr. Lu as a Mr. Fix It—an experienced manager put in place to run Alibaba’s growing operations. Alibaba on its website emphasized Mr. Lu’s operational abilities and said he “shuns the spotlight,” putting him in contrast with Mr. Ma, who long has been an outsize figure on China’s Internet scene. Though Mr. Ma has been stepping back from the day-to-day operations of Alibaba over the past year, many analysts expect him to maintain a strong influence over the company’s strategic direction.
Mr. Lu’s background as an executive vice president running important Alibaba units will be put to the test in his new role. The company faces increasing challenges from logistical complexities and competition from companies such as Beijing Jingdong Century Trading Co., which runs the 360buy.com site. Bankers say Alibaba is likely contemplating an IPO as early as this year, although the company hasn’t specified a time.
One of the tasks for Mr. Lu will be to make use of the massive amounts of data Alibaba collects on transactions and users. He also will need to expand beyond Alibaba’s command of e-commerce via personal computers to attract China’s growing number of smartphone users to the company’s mobile services.
“Serving as Alibaba Group CEO is an extremely challenging and difficult job, especially succeeding a founder CEO like me,” Mr. Ma said in an email to employees Monday. “Jonathan has impressed with his curiosity and ability to grasp new ideas, his judgment and decisiveness, and his strong execution capabilities.”
Alibaba said Mr. Lu, who takes his new position May 10, wasn’t available for comment.
Alibaba said in January that Mr. Ma, 48 years old, would step down as day-to-day chief of the company he founded but would remain chairman. With no background in business or technology, the former English teacher founded from his apartment in 1999 what is now China’s largest e-commerce company by sales. The Hangzhou-based company has more than 23,000 employees.
Last year the company took private Alibaba.com, which had been listed on the Hong Kong Stock Exchange, in a move that many analysts saw as a way to consolidate control ahead of a group IPO. Alibaba Group in May struck a roughly $7 billion deal to buy back around half of Yahoo Inc.’s YHOO +1.75% 40% stake in the group. The agreement created an incentive for Alibaba to list its shares before December 2015.
Mr. Lu, 43, has been the group’s chief data officer since last year, overseeing the company’s Aliyun smartphone operating software, a source of conflict with U.S.-based Google Inc. GOOG -0.12% When Taiwanese PC maker Acer Inc. 2353.TW 0.00% tried to introduce a smartphone using Aliyun last year, the U.S. company objected, saying that Alibaba created its system by making changes to Google’s Android operating system. Alibaba disputed Google’s allegation, though the phone wasn’t released.
Mr. Lu’s appointment comes as Alibaba has taken steps in the past year to streamline management of the company. Alibaba in January unveiled a reorganization that aimed to boost efficiency and give more independence to business units.
“With this appointment, Jack will be freed up to focus on maintaining the company’s good relationship with the government,” said Duncan Clark, chairman of BDA China, an investment advisory firm specializing in the Internet and e-commerce. He said Alibaba needs to ensure that the government won’t raise issues with the dominant market share held by Alibaba’s Taobao and Tmall shopping sites.
Taobao accounts for the vast majority of transactions among Chinese online shopping sites, similar to eBay Inc.’s EBAY +0.66% site, that cater largely to small merchants, mostly offering inexpensive, nonbranded goods and novelties. Tmall hosts online storefronts for branded products, including for U.S.-based Gap Inc. GPS +0.68% Taobao and Tmall last year surpassed one trillion yuan, or roughly $160 billion, in transactions, from which the sites generated revenue from advertising, services and commissions, the company said.
In the past decade, Alibaba took market share from eBay’s Chinese unit, mainly by undercutting the U.S.-based company on commissions. Ebay largely withdrew from China in 2006.