UPDATED 10:34 EDT / FEBRUARY 24 2011

Fraudsters Put Alibaba in Jeopardy, Will New Alibaba CEO be Redeemed?

Alibaba has received massive blows on credibility as some 2,300 top sales agents commit fraud. This scandalous issue has also forced its top executives, CEO David Wei and COO Elvis Lee to resign immediately. Although they were not directly involved in the deceit, both opted to leave their posts to give way to fair investigations. With the exit of its senior leaders, Alibaba.com welcomes new head in Jonathan Lu, CEO of sister company, Taobao—one of China’s largest e-commerce site. The COO position is still vacant as of this time.

Lu’s arrival at Alibaba.com’s seat of power brings mixed commentary. He has never run any public company, as Wei has. But, Lu is a veteran of the Alibaba Group—many experts think this is a good move to bring back the organization into its roots and revive the culture that placed them into the ace of their games. Financial biggies JP Morgan Chase and Standard Chartered also expressed confidence in this transition. However, some analysts believe that redemption can only be accomplished if Jack Ma, founder of Alibaba will hire an outsider. This, according to an article of P.J. Louis will prove to the world that they are sincere in solving the fraud cases with someone that has no bone to lose within the company.

In a rare poignant email that Ma sent Alibaba’s staff on Monday, he reminded everyone of the strength there is in embracing their core values and principles: “Only through holding onto our ideals and our principles will we be able to become the pride of this era! If not now? When? If not me? Who?”

Controversies surrounding the company right now have not entirely stalled operations. In fact, Alibaba.com recently inked a strategic agreement with China Unicom to collaborate on telecommunication, cloud computing and e-commerce. However, this incident that caused tremors within the enterprise has created opportunities for competitors to be seen. RenRen, China’s Facebook, went public with its 160 million users and plans to have IPO later this year. The IPO is looking at penetrating the US market and raise $500 million additional funds.

Competition within the Chinese land was made steamier with the fraud activities that nearly made Alibaba.com collapse. As they welcome a new “old” leader, they would have to undergo some policies and strat re-engineering.


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