Alibaba’s longtime leader Daniel Zhang is being replaced as chief executive and chair of the Chinese ecommerce giant, as the group races to reinvent itself by splitting into six separate entities.
Eddie Yongming Wu, the chair of Alibaba’s flagship ecommerce sites Taobao and Tmall, will replace Zhang as chief executive in September, the company announced on Tuesday. Alibaba co-founder and vice-chair Joseph Tsai will fill Zhang’s position as chair of the board.
The leadership change comes at a critical time for Alibaba, which is embarking on a massive reorganisation to break up its tech empire into six entities over the next 18 months and refocus on its ecommerce roots.
Zhang, who has served as CEO for eight years, is to remain in charge of one of those entities, the cloud unit, which he took over in December as it struggled to maintain growth. Alibaba plans to spin it off by distributing shares in the business to existing shareholders.
“This is the right time for me to make a transition, given the importance of Alibaba Cloud Intelligence Group as it progresses towards a full spin-off,” said Zhang in a statement.
Investors cautiously welcomed the news. Shares in Alibaba, which had dropped almost 2 per cent prior to the announcement, pared losses to be down just 1 per cent in afternoon trading in Hong Kong. By comparison, the Hang Seng Tech index tracking Alibaba and its peers in the Chinese tech sector was down about 2.5 per cent.
Wu was part of the Alibaba founding team, joining as technical director in 1999 from Jack Ma’s previous venture China Pages after graduating from Zhejiang University of Technology. He later held the role of chief technology officer at payment platform Alipay and then Taobao.
Wu drove the launch of the Taobao shopping app, which quickly became a critical part of Chinese consumers’ daily shopping habits. He will continue to serve as chair of the wholly owned Tmall and Taobao subsidiary.
Zhang’s stint running the Chinese group has been rocky and complicated by Alibaba co-founder Jack Ma’s run-in with Beijing, which led to the cancellation of sister company Ant Group’s blockbuster initial public offering more than two years ago.
Since then, Alibaba has been issued a record $2.8bn antitrust fine and surrendered market share in its core ecommerce business to new competitors including Pinduoduo and ByteDance’s Douyin.
Zhang said he would now seek to strengthen the cloud business by “making cloud computing and artificial intelligence more accessible for businesses of all sizes and industries”.
While the group’s annual sales have risen 11 times and profits are up nearly three times from the start of his tenure, Alibaba’s share price is roughly flat.
Investors are increasingly worried about the group’s unsteady position in the domestic ecommerce market, which brings in the bulk of its profits, as well as China’s tepid economic recovery and geopolitical frictions with the US.
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