Ma will continue as executive chairman at Alibaba over the next 12 months for a smooth transition of the chairmanship to Zhang, the company said in a statement. After that, he intends to stay on the Alibaba board of directors until the 2020 annual shareholders meeting.
In a letter to Alibaba's customers and shareholders, Ma said the transition "demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organizational excellence and a culture of talent development."
"Starting the process of passing the Alibaba torch to Daniel and his team is the right decision at the right time, because I know from working with them that they are ready, and I have complete confidence in our next generation of leaders," Ma wrote. He added that he plans to continue his role as the founding partner in the Alibaba Partnership, which is a group made up of 36 senior leaders entrusted with the company's mission, vision and values.
"I also want to return to education, which excites me with so much blessing because this is what I love to do," he said.
The move to appoint Zhang as a successor to Ma was not at all surprising, Gil Luria, director of research at financial services firm D.A. Davidson & Co, told CNBC's "Squawk Box."
"(Ma) stepped back five years ago to become chairman," Luria said, adding that Ma had left the stage for Zhang, Executive Vice Chairman Joe Tsai, Chief Financial Officer Maggie Wu and others to take over. "He's done, he's already worked on the succession for years. It seems to be going in a fairly orderly fashion."
Luria also said not to expect too many changes as a result of the leadership succession.
"The communication to the outside world beyond the investment community may be a little different without Jack Ma. He's a very colorful, charismatic figure, and that aspect of communication may go away," he said. But the strategies put in place at the tech giant, including an online-to-offline new retail strategy, belong to Zhang, Luria added. "It's his company now and as chairman, (Zhang) would most likely continue those strategies."
Ma, a former English teacher, co-founded Alibaba in 1999 and is considered one of China's richest men, with a net worth of $36.6 billion, according to Forbes. Alibaba, based out of Hangzhou, China, started as an e-commerce marketplace and expanded into other business areas, including cloud computing and digital payments through its affiliate Ant Financial. Ma stepped down as chief executive officer in 2013 to dedicate more time to philanthropy through the Jack Ma Foundation.
Last week, a report by The New York Times said that the billionaire was retiring on Monday from the company he helped found, and that it would've made him one of the first founders among a generation of prominent Chinese internet entrepreneurs to step down. On Saturday, the South China Morning Post, which is owned by Alibaba, quoted a spokesman saying the Times' report was factually inaccurate, and taken out of context.