(Bloomberg) — In a surprising internal memo, Jack Ma urged Alibaba Group Holding Ltd. to make fundamental changes to its operations. The billionaire co-founder, who has been hands-off in the company since 2020, caught employees off guard by responding to a staff post on Alibaba’s internal forum. He praised PDD Holdings Inc.’s recent decisions to gain market share from Alibaba and expressed his conviction that Alibaba needs to “correct its course” as the AI era for e-commerce begins.
Ma’s message comes as Alibaba faces internal and external turmoil, with a weaker-than-expected economic recovery and competition from up-and-coming rivals like PDD and ByteDance Ltd. undermining its once-dominant online retail business. The company has undergone internal changes, including a plan to break up the corporation into six smaller pieces and the shelving of its cloud arm’s spinoff and listing.
It’s unclear what prompted Ma’s call for change, but his unusual memo indicates a need to address the company’s direction. This public activity from the once-private billionaire follows China’s crackdown on his businesses. He recently set up a new company, Hangzhou Ma’s Kitchen Food, to process and sell farming products.
Alibaba’s shares in Hong Kong narrowed losses after Ma’s comments, which came after PDD reported strong results. The company, founded by billionaire Colin Huang, saw a surge in revenue, outpacing competitors like Alibaba and solidifying its position in the market.
Part of PDD’s success can be credited to its shopping app Temu, which has become a disruptive force in global e-commerce. In contrast, Alibaba has faced challenges in its overseas markets despite its dominant position in China’s e-commerce landscape. Ma’s memo congratulated Pinduoduo for their decision-making and emphasized the importance of organizations willing to reform and sacrifice for the future.
(Updates with details from the memo from the second paragraph)
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