INTERNET: Alibaba Taps Ex Goldman Exec to Lead Global Charge

By newsdoug on August 10, 2015

Bottom line: Alibaba’s naming of a westerner and former top Goldman Sachs executive as its new president looks like a smart move to boost its struggling global expansion, and could bring more focus to the division over the next year.

New Alibaba president to lead international efforts

After muddling around on the global stage for a while without much to show for its efforts, I’m happy to see that e-commerce giant Alibaba (NYSE: BABA) has finally taken the step of hiring someone with extensive experience outside China to spearhead its international expansion. The company’s naming of a former Goldman Sachs executive as its new president should help to bring some focus to an international drive that to date has been quite fragmented and hasn’t produced any solid results.

More broadly speaking, the naming of Michael Evans as the new president of Alibaba Group marks the second major appointment for the company in the last 3 months, as founder Jack Ma installs a new executive team to head his $200 billion company. His decision to name foreigners to some of the top spots mirrors a similar strategy by PC giant Lenovo (HKEx: 992) and also Tencent (HKEx: 700), one of Alibaba’s chief rivals.

I’ve always been a fan of Alibaba’s strategy in China, where it has more than a decade of experience including an early major David-and-Goliath style victory over US giant eBay (Nasdaq: EBAY). The company clearly understands what motivates Chinese online shoppers and merchants, and has used that knowledge to build an enviable position as China’s leading e-commerce company with more than half of the market.

But on the global stage Alibaba faces much stiffer competition, and is also handicapped by its lack of experience and knowledge in such unfamiliar places. The company suffered an early major setback in Japan, despite strong ties with Japanese partner Softbank. More recently it dumped its US site 11 Main just a year after opening it, after the site failed to gain much traction. (previous post)

This latest appointment looks aimed at filling a big knowledge gap in its global experience, and Alibaba says quite directly that Evans will be tasked with leading and executing the company’s international strategy. (company announcement; Chinese article) Evans has ties to Alibaba as one of its independent board directors, and will remain on the board following his appointment as company president. His previous titles include chairman of Goldman’s Asian operations.

Third in Line

Evans will report to Alibaba CEO Daniel Zhang, who himself was named to that position back in May. Zhang, of course, reports directly to Jack Ma, credited as the visionary who saw the early potential of China’s e-commerce market. Lenovo has found success with a similar structure, keeping Chinese executive Yang Yuanqing as its CEO while letting US-based senior vice presidents focus on business in western markets. Tencent founder Pony Ma is also clearly in charge as his company’s chairman, but his president and clear number-two is Martin Lau, a Hong Konger and former investment banker.

Shareholders seemed cautiously optimistic about Alibaba’s new appointment, bidding up the shares by 1.1 percent in the latest trading session to $78.87. Still, at its current level Alibaba’s stock is just 16 percent ahead of the price from its blockbuster IPO nearly a year ago, even though it once traded as high as 75 percent higher. In addition to lack of progress on the international front, investors have also been concerned following a scandal involving sale of pirated goods on Alibaba’s Taobao C2C site early this year.

I’m not familiar with Evans in terms of his experience and capability as a manager, so I can’t comment too much on how well he’s likely to do in his new position. But more broadly speaking, I do like the fact that Jack Ma is finally putting a well-qualified person in charge of his international operations that will be key to the company’s future growth. I expect we’ll see some major changes in Alibaba’s international strategy over the next year, which could help to bring some excitement back to the company and its stock.