Jack Ma's letter on Alibaba's intranet

The most well-known Chinese entreprenur, who in recent years remains out of public view, backs the e-commerce giant's new management and restructuring.

Chinese media are reporting that Jack Ma, under his pen name Feng Qingyang, has just posted a letter on Alibaba’s intranet.

What apparently - at least party - triggered the letter was a recent interview of Joe Tsai, Alibaba Group Holding co-founder and chairman, who acknowledged that the company had faced significant challenges in recent years, largely due to an overemphasis on rapid expansion at the expense of improving the user experience for its core e-commerce customers.

Tsai admitted Alibaba became too focused on building its empire and expanding into new business lines, and neglected the fundamentals of providing a great experience for our customers.

This realization has been a driving force behind Alibaba's recent restructuring efforts. Rather than continuing to spin off and list various business units, the company is now refocusing on strengthening its core e-commerce and cloud computing operations. Plans to publicly list the company's supermarket chain Freshippo and logistics arm Cainiao have been put on hold as Alibaba works to streamline its sprawling portfolio of over 20 business units.

Tsai emphasized the need to restore consumer confidence in China, noting that Chinese households have high savings rates but restrained spending habits. He said Alibaba has to win back the trust of Chinese consumers and show them that Alibaba is truly focused on their needs. That will involve simplifying Alibaba's organizational structure, empowering individual business leaders to be more nimble and responsive, and placing a renewed emphasis on improving the user experience.

Despite the challenges Alibaba has faced, Tsai remains optimistic about the company's future and its role in the global economy. He argued that a successful and thriving Alibaba is beneficial for international trade and commerce, as the company has helped transport a wide range of overseas goods to Chinese consumers, boosting cross-border commerce.

Tsai also emphasized Alibaba's commitment to compliance and good corporate governance, noting that the company is one of the most compliant globally in terms of its organizational structure. Tsai said Alibaba has worked hard to address regulatory concerns and ensure that its business practices are above reproach.

On the technology front, Tsai acknowledged that China currently lags behind the United States and other Western countries in the development of large language models (LLMs), the powerful AI systems that underpin many of the latest advancements in natural language processing. He thinks China is probably about two years behind the top LLMs developed in the US.

However, Tsai expressed confidence in China's ability to catch up, particularly in the area of domestic GPU manufacturing. China has the capability to produce high-end GPUs that can support the development of AI models and technologies, he said.

In the interview, Tsai also shared insights into his own personal background and the formative experiences that have shaped his leadership philosophy. Born in Taiwan, Tsai moved to the United States at the age of 13 to attend high school and later college. After graduating, he worked for the influential Wallenberg family in Sweden before joining Alibaba in 1999.

Below is a translation of Jack Ma’s letter posted on Wednesday, April 10.

To Reform, To Innovate

— Reflecting on Alibaba’s One-Year Anniversary of Restructuring

In the past few days, numerous individuals have shared videos of Joe's interview with me, in which it was pointed out that this video includes a substantial acknowledgment of our past mistakes :) Indeed, I am grateful for Joe's bravery and sense of responsibility. It is not the making of mistakes that is fearsome; everyone makes them. Rather, it is failing to recognize, admit, or rectify them that is truly daunting.

Over the last 25 years, Alibaba has realized numerous successes, innovations, and leadership moments; yet, during these 25 years, we have also encountered innumerable errors, and anticipate continuing this trend over the next 77 years. Confronting challenges calmly is not about denying the past but about responsibly searching for the path forward. We avoid placing blame on the past or on others, acknowledging that times have changed and we must evolve accordingly. It involves not only bravely acknowledging and promptly addressing yesterday's issues but also embracing reform for the future. This is precisely why we continue to advance.

Last year, I expressed through our internal network: Alibaba will change, Alibaba will evolve. Over the past year, Joseph Tsai and Wu Yongming have led Alibaba through a series of transformations aimed at the future, demonstrating commendable courage and wisdom.

This year's most significant change was not in pursuit of KPIs, but in a reevaluation of ourselves and a return to prioritizing customer value. We have addressed the "big company disease," transitioning from an organization characterized by slow decision-making back to one where efficiency and market leadership are paramount, making our company once again simple and agile. The new management confronts problems and the future directly, places trust in younger generations, grants full empowerment to young teams, and makes clear and decisive choices about what is and isn't essential. Our idealistic passion and the mission to "make it easy to do business anywhere" remain unchanged. However, the new management has implemented various changes over the past year, not just breaking away from yesterday’s entrenched strategies but also crafting the Alibaba of the future.

From B2B to Taobao, from Alipay to Alibaba Cloud, our innovation has never been driven by the pursuit of higher profits but by the need to survive in an era of rapid change. Our innovation aims not at changing others, but at transforming ourselves; it seeks not to outdo competitors, but to keep pace with the future. Innovation is not about following trends; it tests your genuine ability to survive. It requires you to fundamentally challenge your perceptions, to constantly push yourself, and to undertake tasks that others may hesitate to, refuse to, or have not yet embarked upon...

In this era of significant technological transformation, a span of three to five years in the internet domain feels like a century, ample time for groundbreaking changes to unfold. I believe that the e-commerce landscape three years from now will be markedly different from today’s. The focus should not be on catching up with competitors today, but on how tomorrow's e-commerce can improve the consumer experience... The AI era is just beginning; everything is starting anew, and we are perfectly timed.

This year, amid widespread skepticism and various pressures both internally and externally, I witnessed the emergence of a strong and courageous Alibaba team. The greatest fear in discussing reform and innovation is reducing them to mere slogans. Reform and innovation are arduous because reforms come at a cost, and innovation requires a gradual, painstaking effort. Organizational change and restructuring touch every employee. Thus, I extend my heartfelt thanks to all Alibaba staff for your commitment and responsibility this year, and to you and your families for continuing to believe and persevere through constant changes, including decisions as significant as an IPO. I salute you; your steadfastness has returned Alibaba to a trajectory of healthy growth.

The path of reform and innovation is seldom accompanied by applause, for it challenges our most cherished bad habits and vested interests... The journey is long, but together, we are not alone. Looking ahead, we need to be more proactive and quick to adapt, requiring more extensive reforms to cultivate a thriving future for Alibaba. Onwards, Alibaba!

Feng Qingyang

April 10, 2024