On Sept. 10, Daniel Zhang, a little-known former accountant, will take over the chairman’s role at Alibaba Group Holding Ltd. from Jack Ma, the country’s most famous businessman. A full story on him and his strategy is in this week’s Bloomberg Businessweek. Below are excerpts from an extended interview with Zhang at the company’s headquarters, lightly edited for clarity. The 47-year-old was full of surprises, from the rationale for his controversial expansions to his fondness for the National Basketball Assn. and a player he sees as a “killer.” He spoke in English.
On how Alibaba will change as he takes over the chairman’s job.
We’ve planned this succession for a long time. This is our 20th year. We have already built a very solid foundation in e-commerce, in logistics, in payments and in cloud computing. For the next 20 years, every business is moving into the digital era. We will continue with our mission, which is to make it easy to do business anywhere. Now we need to figure out how to realize our mission in this digital era. We will develop more businesses, more services to address the pain points of our customers. We want to be the digital infrastructure for our business partners to empower them to succeed in this digital era.
On his early career plans.
I wanted to be a trader. China opened its stock market in about 1991 and that was the year I started my university. I was first generation for this stock market. I picked securities as my major because it was the first year it was offered at Shanghai University of Finance and Economics. But in 1995 as I was graduating, there were two big accidents. One is well known — Barings. I was interviewing for the Shanghai office, but they said in the second round interview no recruitment any more. The other one is very famous in China, which is China’s Barings. This company [Shanghai Wanguo Securities, then one of China’s biggest brokerages] also screwed up and was merged into another firm.
On following his father into the accounting profession.
My father used to be an accountant and he graduated from the same university. But he didn’t want me to be an accountant. This is very funny story. After I joined Arthur Andersen, I had a joke with him. I said, ‘For many years you don’t want me to be an accountant, then I became an auditor.’ I was never an accountant for even one day.
On learning of the demise of Andersen while in a satellite office, then getting absorbed into PricewaterhouseCoopers.
You are a like soldier at the frontier. Then your headquarters disappears, that’s a very unique experience. This experience is so important, so unique. Today, you know we do many mergers and acquisitions at Alibaba. I always say to my team, when we invest or acquire business, we need to understand the experience of the people in the acquired companies. We need to give them respect. We need to give them guidance, because they are good men, they are good people. If we don’t give them guidance, then they will basically go nowhere and maybe the best option is to leave. But if we can embrace them, then people will stay.
On the importance of starting new businesses.
I believe every business has a life cycle. You have to be innovative and create new businesses with new technology, with a new model. Then that can make our entire business sustainable. We always say that we want to build a sustainable, long-term business. But most of it is not evergreen. I strongly believe that if we don’t kill our existing business, someone else will. So I’d rather see our new business kill our existing business.
On competing with Meituan in the food-delivery business.
We don’t view this as a separate business. This is a very important consumption category and today more and more people need this more frequently. So this is a category expansion. Second, this is a very important development for digital payments — for restaurant on-site payment, for food delivery payment. Number three, local services, especially food delivery, helps form an on-demand delivery network, which is not only relevant to food delivery but also relevant to any store fulfillment and last-mile delivery.
On why he kept the Hema project, now known as Freshippo, in stealth mode.
When we started this Hema business, I put them in Shanghai. There were two reasons. First, if you can stay away from headquarters, then you can work quietly and try things out yourself. The second is for my convenience because I’m Shanghainese. I go back home every weekend. So I was working here in Hangzhou during the week and I spent my weekend with the team there in Shanghai to incubate a new baby.
This is not just a normal store, not simply brick-and-mortar. This is a new animal because over half of sales are from online. So people order online, the request is fulfilled in the store and they get groceries delivered to their homes in 30 minutes, all on demand. The primary purpose is not that we’re trying to own a store chain, but that we’re trying to incubate new retail technology and the business model.
On his vision for Southeast Asia and the Lazada business there.
Southeast Asia is the first area we explored outside China. In the next decade, we believe that globalization is a very important strategy for Alibaba so we want to go out of China. In Southeast Asia there’s a huge population, a very young generation that’s mobile driven and close to China in terms of culture and background. So that’s the reason we acquired Lazada a couple years ago. Since then we invested a lot in the company, not only in cash but also in technology and people.
On hosting a quarterly class to groom the future leaders of Alibaba.
Every year I spend quite a lot of time on people, including the recruitment of new people. I don’t do this for a specific position. If we have a vacant position, then that’s the job of my business executives and also our HR people. I’m not involved.
I want to find some people with good experience and good potential for the future. Every year I get a couple of people, not many, maybe four or five, six people to join us. If we look back three or four years, we’ve already got some people who are now leading one particular business in our group and becoming a new business leader. Our businesses are expanding and we need new leaders. We need young people with more energy and also different skill sets who also share the same values with us. We try to find people in different industries. I’m looking at people with very strong leadership skills and high potential.
On how he measures his own performance.
I have a self evaluation every year for myself. I look at how many new businesses I incubate, and secondly, how many new people I find.
On his fondness for the National Basketball Assn.
I’m a huge Rockets fan, starting from the Yao Ming days. Actually long before that I liked (Hakeem) Olajuwon when they became champions 1994 and 1995. I’m a big sports fan, I watch a lot of games. But my favorite star, in the entire NBA history, is Reggie Miller. He’s a killer.