What Jack Ma Fears The Most Has Become A Reality

摘要: “I fear nothing, except when a CFO becomes the CEO,” said Jack Ma.

(Chinese Version)

Jack Ma had once stated that he feared nothing, except when a CFO become a CEO. The reason for that fear is quite simple: CFO(Chief Financial Officer)’s main job is more about supervising and controlling, which can lead to the lack of foresight when the CFO becomes CEO.

This became a joke when Zhang Yong became Alibaba’s CEO. However, Jack Ma never doubts Zhang Yong’s ability as a CEO, who had been the CFO of SHANDA Group and Taobao. Zhang Yong’s success in the Double Eleven Shopping Festival is undeniable.

But coincidently, Ant Financial also announced that the former CFO Jing Xiandong to become the new CEO of the company just recently. TMTpost has reported this story.

Jack Ma stated in the email that Peng Lei would represent Ant Financial as the board chairman, focusing on the long-term development of the company, globalization strategy, talent pool and corporate culture, while CEO Jing Xiandong would lead the team on business and execution.

Jing Xiandong is one of the 27 partners of Alibaba, and also one the earliest elite managers that joined Alibaba. Before joining the Internet giant, Jing Xiandong was Guangzhou Pepsi Cola’s CFO. He was also the former financial director at Swire Coca Cola. After joining Alibaba in early 2007, Jing had been Alibaba’s senior CFO and vice president of finance. Jing was also Ant Financial’s CFO before he was appointed as Ant Financial’s COO in October 2014.

1/5 of CEOs were once CFOs

Some people consider CEOs as those that are much of a buzz-kill. As for CFOs, they are often considered as people of extreme rationality that only care about figures, tending to think about matters from the perspective of finance. Some believe that their extreme rationality kills innovations and makes it hard for carrying out plans.

Jack Ma has openly stated that he feared CEOs that were once CFOs, while many have also discussed the reasons why CFOs are not suitable to be CEOs on Zhihu, the Chinese Quora.

But that might not be the story at all.

A study from McKinsey shows that around 20% of the CEOs in America and UK were once CFOs. UK-based magazine CFO has also released similar figures, showing that 20% of the CEOs at fortune 100 companies used to be CFOs or at other similar positions.

The percentage is one fifth. It’s not that many, but also enough to make a point.

Such cases are not rare in the Chinese Internet industry either. Sina’s CEO Cao Guowei and One Ness Group’s CEO Gu Yongqiang had also been CFO before.

But Alibaba’s condition might be a little different from other cases. Zhang Yong had already described the differences when he was still the CFO of Taobao: “Alibaba is more diverse. There is no strict rule that define CFO’s responsibilities. In other companies it’s impossible for CFOs to also engage in business operation.”

Alibaba's Wang Anshi

Jing Xiandong’s nickname is Wang Anshi, the name of a famous Chinese literature master, one of the Eight Essay Masters of the Tang and Song Dynasties.

Jing Xiandong had been a CFO before, responsible for Ant Financial’s core businesses such as fortune and financial businesses, as well as works about investment, internal finance and legal issues etc.

In April this year, Ant Financial completed its B round financing at $4.5 billion, setting up the new highest record for the financing amount in the Internet company category. Up till now, Ant Financial has completed two rounds of financing, ending up with an investment of $6.5 billion. The master behind all these is Jing Xiandong.

Ant Financial is also having great performance in the investment sector. Ant Financial has undergone 30 investment projects by September 26th 2016, with one still waiting for approval from the regulator. However, the information revealed is not detailed enough. According to estimates, Ant Financial’s investment amount has reached over $3.39 billion.

The 30 investments Ant Financial has made include projects in banking, stocks, securities, insurances, foundations and consumer finance etc., as well as non-financial projects involving catering, media and film etc. Many use cases that don’t seem relevant to finance are included by the company. Koubei, Eleme, Didichuxing, Taobao Film, and YUM China etc. In the last six months Ant Financial has already invested ten companies.

China’s highest valued private company 

The sudden shift in the management team has sparked rumors about Ant Financial’s listing, though Ant Financial has denied such rumors.

In contrast to the current management structure, Peng Lei was both the CEO and board chair of Ant Financial, which was a sign of over centralization from the perspective of corporate governance structure. But now the board chair and CEO are operating separately, doing their own job. It fits more of a listed company.

At present, Ant Financial’s Alipay boasts a user base of 450 million, making it the largest third-party payment platform in the world. Alipay’s Yu’E Bao on the other hand is the money with the largest user base around the world. In April this year, Ant Financial was valued at $60 billion during its B round financing. “Ant Financial’s valuation has hit $75 billion,” Elinor Leung said, who’s the research director of the telecom and Internet industry study team at CLSA Asia-Pacific Markets Hong Kong.

As the private company with the highest valuation in China, once Ant Financial goes public, its market valuation would probably surpass Baidu, making it the third largest company in the Chinese Internet industry.

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[The article is published and edited with authorization from the author @Wild Horse Finance, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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