SHANGHAI, June 20 (Reuters) – Alibaba Group (9988.HK) on Tuesday it said its chief executive officer and chairman, Daniel Zhang, will step down to focus on its cloud division as the Chinese e-commerce giant moves forward with a plan to split into six business units.
Zhang has been serving in three roles simultaneously since December, when he took over as head of the cloud unit after it suffered an outage that he described as its “longest large-scale failure” in more than a decade.
The CEO role will go to Eddie Yongming Wu, chairman of Alibaba’s Taobao and Tmall Group, while Executive Vice President Joseph Tsai will take over from Zhang as chairman.
Both appointments will take effect on September 10, Alibaba said.
“Daniel’s appointment to focus on running the cloud is really a sign of confidence in him to take the most precious business and run it to develop it in the right way given this age of generative artificial intelligence (AI),” he said. Brian Wong, former Alibaba employee and author of the book “The Tao of Alibaba.”
“The idea or expectation that one person could manage the crown jewel of the company, Cloud, and at the same time manage the entire Alibaba Group is an unreasonable expectation.”
The surprise shakeup comes after a tumultuous two years in which Alibaba came under increased regulatory scrutiny and after the group announced in March that it would restructure in six unitseach with their own boards of directors and chief executive officers.
Its China-facing e-commerce division, which includes marketplaces Taobao and Tmall, will remain wholly owned by Alibaba, but the other five units will be spun off, and Alibaba said in May that it aimed to complete the public listing of its cloud drive within the next 12 months.
Zhang, in a memo to staff seen by Reuters, said the cloud spin-off was nearing a crucial stage and the time was right for him to turn his attention to the business.
“From a corporate governance perspective, we also need a clear separation between the board and the management team as Cloud Intelligence Group moves down the path to becoming an independent public company,” he said.
“It would be inappropriate for me to continue to serve as Chairman and CEO of both companies at the same time during the spin-off process.”
Analysts have estimated that the cloud unit will be to worth $41 billion to $60 billion, but they have said the vast amount of data it oversees could put it in the crosshairs of foreign and domestic regulators.
SINGLE DAYS
(1/3) Alibaba Group CEO Daniel Zhang (Zhang Yong) speaks at the World Internet Conference (WIC) in Wuzhen, Zhejiang province, China November 23, 2020. REUTERS/Aly Song/FILE PHOTO
Zhang, a former accountant, joined Alibaba in 2007 and is known for being the architect behind the company’s annual “Singles Day” shopping festival. He has served as chief executive since 2015 and became chairman in 2019, replacing both roles from Alibaba co-founder Jack Ma.
Alibaba thanked Zhang for his “extraordinary leadership in navigating unprecedented uncertainties that have affected the company’s business in recent years.”
Alibaba’s Hong Kong-listed shares fell 1.5% after the announcement, in line with a 1.6% drop in the benchmark index. (.HSI)as analysts considered the reorganization to be in line with the previously announced general restructuring.
“Under the new structure, the group will play a lesser role in setting strategies for the six business groups, so instilling Alibaba founders Joe and Eddie as chairman and CEO will likely serve to ensure a leadership transition.” smoothly and maintain the culture,” said the Shanghai-based Independent. analyst Eric Chen, who publishes on Smartkarma, told Reuters.
Wu, who co-founded Alibaba with Ma and Tsai more than two decades ago, will continue to serve simultaneously as chairman of Taobao and Tmall Group, Alibaba said. His previous roles include CTO of Alipay and Chairman of Alibaba Health.
Wu’s rise to CEO “is a natural transition and signals the unwavering importance of e-commerce in the company’s roadmap,” said Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, a United Kingdom-based e-commerce consultancy. Beijing.
Cooke said he did not see the leadership changes as a sign of a major strategic change within Alibaba, given that the people are co-founders and close associates of Ma.
“If anything, it emphasizes the growing importance of AI in the company’s approach, while underscoring that e-commerce is the core business unit.”
COMPETENCE
Ma, China’s best-known businessman, has remained out of the public eye since late 2020 after a speech criticizing Chinese regulation is widely seen as triggering a subsequent crackdown.
Ma left mainland China at the end of 2021, appearing in photos in Japan, Spain, Australia and Thailand, returning in March, a day before Alibaba announced its restructuring. She has not made any public comments during that period.
Last week, Alibaba Chairman J. Michael Evans said that Ma remained Alibaba’s largest shareholder and I cared a lot About the company. He said that Ma was teaching at a university in Tokyo and was also spending more time in China.
Chinese tech news outlet LatePost reported on Monday that Ma convened a meeting with leaders from Taobao and Tmall Group where he highlighted stiff competition and discussed the need to refocus on users, the Internet and Taobao, whose merchants are mostly individuals. or small businesses, to stay relevant.
Alibaba did not respond to a Reuters request for comment on the LatePost report, which cited company sources.
Reporting by Abinaya Vijayaraghavan in Bengaluru and Brenda Goh in Shanghai; Additional reporting by Scott Murdoch in Sydney and Anne Marie Roantree and Josh Ye in Hong Kong; Edited by Muralikumar Anantharaman and Christopher Cushing
Our standards: The Thomson Reuters Trust Principles.
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