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Alibaba’s former chief executive Daniel Zhang has also stepped down as head of the company’s cloud division as the Chinese ecommerce group commences its break-up into six units.
The company said on Monday that Zhang had given up his role as head of Alibaba’s cloud division, which he took over last year, in an unexpected move. Zhang has also ceded Alibaba’s chairmanship to co-founder Joseph Tsai and the position of group chief executive to Eddie Yongming Wu.
Alibaba announced in March that it would break up its business empire, which spans ecommerce and entertainment and has a market capitalisation of $230bn.
Zhang, who served as chief executive for eight years, was appointed to lead the company’s cloud business, with the group citing his move as testament to the unit’s “importance”. Wu will now take over as head of the cloud division.
“The company will continue to execute its previously announced plan to spin off Alibaba Cloud Intelligence Group under a separate management team to be appointed,” the group said in a statement.
Zhang is leaving the cloud unit, one of China’s largest by market share, before it is set to be spun off from Alibaba.
“The timing is peculiar on the day the transition was set to take place,” said one Alibaba insider, adding that cloud division employees were “very surprised at the announcement”.
“If you’re going to do a graceful transition, there is a question about why the announcement is coming on the day the planned changes were set to take place,” the person added.
Alibaba did not immediately respond to a request for comment.
Zhang took over from Alibaba’s charismatic co-founder Jack Ma as chief executive in 2015, and as chair in 2019. The last years of his tenure were mired by a regulatory crackdown on the internet sector, with Beijing targeting Alibaba for its anti-competitive behaviour and fining it $2.8bn for abusing market dominance.
Rivals ByteDance and Pinduoduo are also challenging Alibaba in its core domestic ecommerce business after it was forced to stop its alleged monopolistic business practices.
“After taking the helm as chair four years ago, Daniel confronted myriad challenges, including the Covid-19 pandemic and dramatic changes in the business environment. Yet, with his steady hand, Alibaba navigated and overcame challenges with grace and fortitude,” incoming chair Tsai wrote in a letter to employees seen by the Financial Times.
Tsai also announced in the letter that Alibaba would invest $1bn in a new technology fund founded by Zhang.
Wu is a close associate of Ma, having served as his special assistant before leading the group’s healthcare arm and launching venture capital firm Vision Plus Capital.
His appointment as chief executive is widely seen by analysts and company insiders as a move to allow Ma to reassert control over the group.
Ma has kept a low profile since the initial public offering of Alibaba’s fintech arm Ant Financial was cancelled following a speech he gave in 2020 lambasting China’s financial watchdog and banks. The company leadership hopes the group’s overhaul will unlock value for shareholders after its share price has fallen 70 per cent since its peak three years ago.
News of Zhang’s departure sent Alibaba’s shares down 3.5 per cent in Hong Kong on Monday morning.
“The stock reaction likely reflects concerns [that] this delays the Alibaba Cloud spin-off, given the Hong Kong Stock Exchange’s rules around management continuity prior to listing,” said Bernstein’s China internet analyst Robin Zhu.
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