Chinese tech giant Alibaba said Tuesday it will replace its top boss, in a surprise move at the e-commerce titan as it looks to recover from years of slow growth caused by weak consumer spending and a regulatory crackdown.
The move comes as the market leader prepares to undergo a fundamental reorganization of its sprawling business operations, which span cloud computing, e-commerce, logistics, media and entertainment, and artificial intelligence.
Under the reshuffle, Joseph Tsai will serve as chairman and Eddie Wu as CEO – replacing Daniel Zhang, who holds both roles. Both appointments will take effect on September 10.
Zhang said in a statement it was the “right time” for him to step down as Alibaba looks to implement a full spin-off of its advanced cloud computing unit.
The executive has played a vital role in the company’s success in the past decade, spearheading the now hugely popular Singles’ Day shopping festival since its first edition in 2009.
After the transition, Zhang will continue to serve as chairman and CEO of Alibaba Cloud Intelligence Group, the company said.
Alibaba has hit on hard times as Beijing imposed tighter restrictions on the domestic tech sector, while weak consumer spending saw it record its third consecutive quarter of single-digit revenue growth earlier this year.
And in a shock announcement, Alibaba said in late March that it would split into six business groups — one of the most significant overhauls of a leading Chinese tech firm to date.
Zhang said at the time that the restructuring would give the individual business units the ability to pursue independent financing and public listing plans.
– ‘Smart move’ –
Jeffrey Towson, a partner at TechMoat Consulting, said in a call that this week’s shake-up “looks like the second half” of that reorganization.
“The biggest growth engine that Alibaba has outside of its e-commerce business is their cloud business,” Towson said.
Making this Zhang’s sole focus “is a smart move,” he added.
Incoming chairman Tsai said in a statement that Zhang had “demonstrated extraordinary leadership in navigating unprecedented uncertainties affecting our business over the past few years”.
Tsai, a company veteran who was part of its founding team, brings extensive experience in various finance-related roles, including as former Alibaba chief financial officer.
Given that background, Li Chengdong, founder of Beijing-based tech-focused think tank Dolphin, told AFP that Tsai’s appointment as chairman would likely “facilitate communication with Wall Street investors and maintain confidence in the stock price”.
Under the new arrangement, each unit will be managed by its own CEO and board of directors.
Alibaba has said it aims to achieve a “more nimble” structure in order to maintain competitiveness in the face of new regulatory challenges and mounting pressures on the global economy.
Combined revenue at China’s internet companies shrank by just over one percent to 1.46 trillion yuan ($212 billion) in 2022, the first contraction in almost a decade, according to data from the Ministry of Industry and Information Technology.
Alibaba founder Jack Ma has kept a low profile since late 2020 when a speech he made attacking Chinese regulators was followed by Beijing pulling the plug on a planned IPO by Alibaba affiliate Ant Group.
A record fine of $2.75 billion was later imposed on the tech giant for alleged unfair business practices.
In January, Ant Group said Jack Ma no longer held controlling rights in the company – a move analysts speculated might have helped pull Ant and Alibaba out of the regulatory doghouse.