Alibaba founder Jack Ma to step down as chair in September 2019

Jack Ma, who founded e-commerce giant Alibaba Group and helped launch China's e-commerce boom, announced Monday he will step down as the company's chair next September.

Ma will be succeeded by company's CEO Daniel Zhang

Alibaba founder Jack Ma listens during the annual meeting of the World Economic Forum in Davos, Switzerland, in January. Ma said he will be succeeded by CEO Daniel Zhang next September. (Markus Schreiber/ Associated Press)

Jack Ma, who founded e-commerce giant Alibaba Group and helped launch China's e-commerce boom, announced Monday he will step down as the company's chair next September.

In a letter released by Alibaba, Ma said he will be succeeded by CEO Daniel Zhang, an 11-year veteran of the company. Ma handed over the CEO post to Zhang in 2013 as part of what he said was a long-planned succession process.

Ma, a former English teacher, founded Alibaba in 1999 in an apartment in the eastern city of Hangzhou to connect Chinese exporters with foreign retailers. It expanded into consumer retailing, online finance, cloud computing and other services, becoming the world's biggest e-commerce company by total value of goods sold across all its platforms.

Ma, who turned 54 on Monday, became one of the world's richest entrepreneurs and one of China's best-known business figures. The Hurun Report, which follows China's wealthy, estimates his net worth at $37 billion US.

Alibaba's $25 billion initial public stock offering on Wall Street in 2014 is the biggest to date by a Chinese company.

Ma wants to return to education

Alibaba said Ma will remain a member of the Alibaba Partnership, a group of 36 people that has the right to nominate a majority of the company's board of directors.

"This transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organizational excellence and a culture of talent development," Ma said in his letter.

Donald Trump, then-U.S. president-elect, and Alibaba Executive Chairman Jack Ma speak with members of the news media after a meeting at Trump Tower in New York in January last year. (Mike Segar/Reuters)

Ma said he wants to "return to education" but gave no details of his plans.

Alibaba is one of a group of companies including Tencent Holding Ltd., a games and social media giant, search engine Baidu.com Inc. and e-commerce rival JD.com that have revolutionized shopping, entertainment and consumer services in China.

E-commerce sales in China rose 32.2 per cent last year to 7.2 trillion yuan ($1.1 trillion US), accounting for 20 per cent of total retail spending.

Biggest public offering by Chinese company

Alibaba was founded at a time when few Chinese used the internet. As internet use spread, the company expanded into consumer-focused retailing and services. Few Chinese used credit cards, so Alibaba created its own online payments system, Alipay.

Ma, known in Chinese as Ma Yun, appears regularly on television. At an annual Alibaba employee festival in Hanzhou, he has sung pop songs in costumes that have included blond wigs and leather jackets. He pokes fun at his own appearance, saying his oversize head and angular features make him look like the alien in director Steven Spielberg's movie E.T. The Extraterrestrial.

Ma performs during a music festival as part of a computing conference in Hangzhou, China, last year. (China Daily via Reuters)

Ma also became one of the best-known Chinese businesspeople abroad.

The company's $25 billion initial public offering on the New York Stock Exchange in September 2014 was the biggest to date by a Chinese company.

Struggle with counterfeit goods

Zhang, Ma's planned successor, is a former accountant who joined Alibaba in 2007 after working at Shanda Entertainment, an online games company. Zhang served as president of Alibaba's consumer-focused Tmall.com business unit.

Alibaba's e-commerce business spans multiple platforms including business-to-business Alibaba.com, which links foreign buyers with Chinese suppliers of goods from furniture to medical technology, and Tmall, with online shops for popular brands.

A man walks past the logo of Alibaba.com in Beijing in 2005. Founded in 1999 before few Chinese used the internet, the company made almost $10 billion US in profits last year. (Guang Niu/Getty Images)

Alibaba raised $5 million from investors including Goldman Sachs and $20 million from Japan's Softbank in 1999.

The next year, Alibaba faced its biggest threat when eBay acquired EachNet, which had 80 per cent of China's small retail e-commerce market.

Concerns about counterfeiters

Ma fought back by launching Taobao, an eBay-style consumer-to-consumer site. By 2006, Ma had won; eBay gave up and turned over its China operation to a local partner.

In 2005, Yahoo Inc. paid $1 billion for 40 per cent of Alibaba and turned over control of Yahoo China. Alibaba bought back half of Yahoo's stake for $7.1 billion in 2011 and the U.S. company made billions more from the 2014 IPO.

Ma's success was tempered by complaints Alibaba allowed counterfeiters to thrive on its sales platforms.

The U.S. Commerce Department cited Alibaba.com and Taobao on its annual list of "notorious markets" from 2008 to 2011. Both were later removed but complaints from makers of luxury goods and other brand owners intensified.

Accusations of misleading advertising

The luxury company Kering, owner of brands including Gucci and Saint Laurent, accused Alibaba in a 2015 lawsuit of facilitating counterfeit sales. The two sides settled the dispute last year with an agreement to co-operate in combating trafficking in fakes.

Also in 2015, a Chinese Cabinet agency accused Alibaba of profiting from misleading advertising and failing to deal effectively with fraud. In a reflection of the importance of Alibaba's success to communist leaders, the agency said its report was written in mid-2014 but the release was delayed to avoid disrupting the IPO.

Alipay became a freestanding company, Ant Financial, in 2014. Alibaba also has expanded into entertainment, set up its own film studio and invested in logistics and delivery services.

Watch: Jack Ma woos Canadian e-commerce

Chris Brown looks at the reaction of Canadian businesses to China’s online giant Alibaba 2:42
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Alibaba reported profit last year of $9.8 billion. It said the total value of goods sold across all of its platforms rose 28 per cent over 2016 to 4.8 trillion yuan ($768 billion US).

In 2011, Alibaba faced complaints it had transferred control over Alipay to a company controlled by Ma without immediately informing shareholders including Yahoo and Softback.

Alibaba said the move was required to comply with Chinese regulations, but some financial analysts said the company was paid too little. The dispute was later resolved by Alibaba, Yahoo and Softbank.