Alibaba: Who Benefits From Jack Ma Leaving Softbank’s Board?

Softbank’s CEO Masayoshi Son recently left Alibaba Group Holding Ltd‘s (NYSE: BABA) (SEHK: 9988) board of directors on 25 June.

Previously, Jack Ma had announced that he would step down from Softbank’s board on 25 June as well.

Perhaps Masayoshi Son left because Jack Ma left and Jack Ma left because he wanted to devote more time to philanthropy.

Or perhaps the two leaving could be about something more. Here’s what Son and Ma’s departures from their respective boards might really mean.

What Masayoshi Son leaving might really mean

I think one reason for Masayoshi Son leaving could be that Alibaba and Softbank will compete more in the future.

Alibaba has always wanted to expand overseas. The company has a goal of serving two billion people by 2036 and creating 100 million jobs in the process. To achieve its goals, Alibaba will need to go international.

Alibaba’s peer, ByteDance, has shown that it is possible to succeed internationally and Alibaba is owned by many international investors like Son.

China’s e-commerce market is also becoming more developed and competitors such as Meituan Dianping (SEHK: 3690), Pinduoduo Inc (NASDAQ: PDD), and Inc (NASDAQ: JD) (SEHK: 9618) are growing bigger.

Although the global tech market is huge, it is perhaps inevitable that a company like Softbank and a company like Alibaba will compete in certain markets.

To avoid added entanglements, Son and Ma each stepped down from the other company’s boards.

In terms of where it wants to expand, Alibaba has expanded in Southeast Asia, and it’s also targeting Europe.

Who benefits?

That Alibaba wants to expand internationally is good news for Alibaba shareholders.

It very likely means a faster-than-otherwise growth rate. Because Alibaba has a great management team, the company’s investments internationally could very well add value.

To a lesser extent, some financial firms that do business for Alibaba might also benefit. Alibaba might be interested in M&A in the future, and that might mean more potential business for China International Capital Corporation Limited (SEHK: 3908).

China International Capital Corporation Limited (CICC) wants to be a leading global investment bank and helping Alibaba do deals globally is a great way to achieve the goal.

Since the financial crisis, CICC has established operations in the UK, US, and Singapore and hired talent away from international investment banks. Aside from its leading reputation in China, CICC is partly owned by Alibaba.

In terms of where Alibaba might expand, I think going into the relatively undeveloped parts of the world and building e-commerce/digital infrastructure is a great way to earn value.

It not only potentially generates an attractive return on capital in the long run but it’s also social investing at its finest. It improves the lives of many people and gives Alibaba valuable market share.

Investing more into the next big secular trends early could keep Alibaba relevant and add growth. It also helps the economy.

Softbank, as it happens, is known for betting internationally and on emerging secular trends. Because Softbank still owns around a quarter of Alibaba, Softbank will nevertheless benefit if Alibaba were to succeed internationally via its stake.

Financially betting against Amazon isn’t a good idea. Amazon has great execution and Bezos has more than a trillion dollars in market cap to back him up.

Foolish takeaway

Softbank’s Masayoshi Son leaving Alibaba’s board is another potential sign of Alibaba planning to expand internationally.