Jack Ma calls on Alibaba employees to embrace change in rare memo, as the e-commerce giant loses momentum to rival PDD

The founder and retired chairman of Alibaba congratulates rival PDD for its decisions, execution and efforts in the past few years
The memo comes as the market value of PDD has surged to US$185 billion, just slightly below Alibaba’s US$195 billion

Alibaba

Tracy Quin Shanghai

Published: 2:30pm, 29 Nov 2023

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Jack Ma, the billionaire founder of Alibaba Group Holding who remains the spiritual leader of the tech giant despite keeping a distance from day-to-day business, has written a rare internal memo, encouraging staff to embrace change and stick to the company’s original vision.

According to employees who have seen the memo, Ma – who retired as chairman of Alibaba in 2019 – praised PDD Holdings, its younger and fast-growing rival.

PDD, operator of Chinese budget shopping platform Pinduoduo and its international sibling Temu, this week reported 94 per cent revenue growth in the third quarter, outpacing Alibaba’s 9 per cent sales growth in the same period.

“I believe that everyone at Alibaba today is watching and listening,” Ma wrote. “I firmly believe that Alibaba will change and adapt. All great companies are born in winter.”

“I have to congratulate PDD for their decisions, execution and efforts in the past few years,” he continued. “Everyone can be successful at some point, but only those who can change for the future and are willing to pay any price [to reach that goal] can be respected. Let’s go back to our mission and vision. Keep it up, Alibaba people!”

Pinduoduo is one of the largest e-commerce platforms in China. Photo: Imaginechina via AFP

The memo comes as the market value of PDD has surged to US$185 billion, just slightly below Alibaba’s US$195 billion, after its US-listed American depositary shares gained 18 per cent at market close on Tuesday.

The strong performance of PDD has triggered some soul-searching among Alibaba employees on the company’s internal discussion board, drawing the response from Ma, who no longer holds any official positions at Alibaba and signed the memo under the title “Alibaba partner”.

The stock price of Alibaba, owner of the South China Morning Post, has dropped three-quarters from its peak in late 2020, even as the e-commerce giant has delivered steady revenue and profit growth. Its operating profit in the September quarter rose 34 per cent from a year ago to 33.6 billion yuan (US$4.75 billion), twice that of PDD in the same quarter.

Ma’s office said earlier this month that he remains “very positive” about Alibaba and clarified that his family trust had not sold any of its stake in the company because the current stock price was way below the “fair value”.

Founded in 2015 – some 16 years after Alibaba was established – PDD has quickly become one of the biggest e-commerce players in China and set its sights on the international market. It launched Temu in September last year, competing against the likes of Beijing-based ByteDance’s TikTok Shop and Alibaba’s global business.

How Shein and Temu are changing the face of China’s vast export machine

Temu has expanded to more than 40 countries since last year’s launch in the US, where it ran a commercial during the annual National Football League championship game known as the Super Bowl, the most expensive night of the year to advertise on television in the country.

PDD has attributed the company’s soaring growth to improving consumer sentiment resulting from its efforts to “carry out a high-quality development strategy”.

“As one of the largest e-commerce platforms in China, we clearly felt a continuous recovery of the economy, as well as the potential and resilience of a consumption market,” Chen Lei, chairman and co-CEO of PDD, said in a conference call with analysts on Tuesday.