Alibaba selects a former Goldman Sachs exec to lead its global expansion
August 4, 2015 09:29 AM
Alibaba Group Holding Ltd. built up a huge pile of cash as it came to dominate e-commerce in China over the past decade. As the company seeks to expand beyond China it today hired someone with vast experience in buying, selling and investing in large companies.
Alibaba announced today that it has hired J. Michael Evans as president of Alibaba Group, with responsibility for global expansion. Evans has 30 years of experience in global finance, including 20 years at Goldman Sachs, the big New York investment bank. He was vice chairman of Goldman Sachs from 2008 to 2013 and chairman of its Asia operations from 2004 to 2013.
Since Alibaba’s record-breaking $25 billion initial public offering of stock in September, Evans has served as an independent director on Alibaba’s board.
The selection immediately prompted speculation that Alibaba will employ its huge cash hoard--$17.45 billion as of March 31—to go after major acquisitions.
“Given Mike Evans’ solid financial background, it suggests that Alibaba may be preparing some aggressive international investments and acquisitions to fuel its growth, rather than simply relying on expanding organically,” says Porter Erisman, a former Alibaba executive and author of the book “Alibaba’s World.” “Evans' appointment could even be a prelude to some bold moves into the U.S., including acquiring Yahoo or even making a bid for eBay.”
Another close observer of Alibaba says the move makes it even more urgent that Western retailers and brands begin working now with Alibaba, for example, by selling on its Tmall marketplace in China designed for larger brands. “I’ve been advising retailer and brand clients for two years now to get in with Alibaba now,” says Michael Zakkour, vice president and China/APAC practice lead for supply chain consulting firm Tompkins International. “They’re not just going to carry you into China. Their coattails will carry you around the globe.”
Another close observer of Alibaba, Frank Lavin, former under secretary of the U.S. Commerce Department and now CEO of Export Now Inc., which helps foreign brands sell on Alibaba's Tmall marketplace, also expects some bold moves from Alibaba executive chairman Jack Ma and his global team. "I can tell you this about Jack Ma: He does not believe in standing still," Lavin says. "With Mike Evans on board, Alibaba has the team, the model, and the finances to play a role in any market in the world. Exactly what role they play is still to be decided, but Jack is a visionary and I would advise e-commerce players in other markets to fasten their seatbelts."
Alibaba’s top executives made clear in announcing the appointment that they are counting on Evans to expand the company’s reach beyond China.
“As we connect Alibaba and the rest of the world, we are turning to a proven international leader who has been connecting China and the rest of the world for most of his career,” said executive chairman Jack Ma. “Through his work on our board, he has built the trust and respect of our management team, and I have no doubt that he will make a significant contribution to our business.”
Evans will report to Alibaba CEO Daniel Zhang. Zhang said of the hire, “Globalization is Alibaba Group’s most important strategy for the coming decades, and our goal is to help 10 million global businesses and serve 2 billion consumers around the world,” Zhang said. “We have been laying the foundation for many years and now we need a global team in place with best-in-class talent to bring our vision to fruition.”
A Wall Street analyst who follows Alibaba and other e-commerce companies called Evans “an interesting choice.” “if I had to guess, I would assume the rationale for Mike to run the international business include his global corporate relationships and cross-border experience,” says Colin Sebastian of R.W. Baird & Co. “More specifically, he can be Jack and Daniel’s eyes on the ground outside of China, and build a team of managers to lead specific business units (e.g. e-commerce, cloud computing, financial services). It’s also possible that Mike could help communicate with Wall Street and Alibaba’s investors given his experience at Goldman Sachs.”
Alibaba signaled its intention to expand internationally as it prepared for its IPO last year on the New York Stock Exchange. The company, which is registered in the Cayman Islands, said in its prospectus that none of the money raised through the stock offering would be repatriated to China. In fact, Alibaba itself took in about $8 billion from the IPO, with the remainder going to investors, such as U.S.-based Yahoo Inc. and Japanese investment firm Softbank.
The Chinese e-commerce giant has not made big investments in U.S. e-commerce, though Alibaba did invest $56.2 million in May to raise its stake in apparel e-retailer zuilily to 9.3%. A month later Alibaba sold to a rival its 11Main.com online marketplace, its first foray into selling online in China, although it retained a stake in the buying company, Open Sky.
However, Alibaba has been making much bigger investments around the world in entertainment—its an investor in the movie Mission Impossible: Rogue Nation—in mobile technology, cloud computing and e-commerce companies in Asia and elsewhere. In all the company reported $8.6 billion in investments in its fiscal year ended March 31.
Evans, a native of Canada, won a gold medal as a member of that country’s 8-man rowing team in the 1984 Olympics.