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Alibaba Group Holding Ltd. is replacing eight-year veteran chief Daniel Zhang at the helm of a Chinese e-commerce leader bleeding market share and struggling to revive growth in the post-COVID era.
Executive Vice Chairman Joseph Tsai, a longtime confidant of billionaire co-founder Jack Ma, will take Zhang’s position as the chairman of the board. Eddie Wu, now chairman of Alibaba’s core Taobao and Tmall online commerce divisions, will take over as chief executive of the US$240 billion company.
Zhang’s unexpected departure comes after Alibaba announced a six-way restructuring to try and juice growth and create a family of standalone leaders in businesses from cloud computing and logistics to international commerce. He unveiled his grand vision in detail just as Alibaba posted its third consecutive quarter of single-digit revenue growth, reinforcing concerns that a Chinese consumer spending rebound may be farther out than anticipated.
Alibaba’s shares fell 2.4 per cent during premarket trading in New York on Tuesday.
“The good thing is that the new CEO and chairman are all co-founders of the company and are the closest to Jack Ma. That means Ma remains the spiritual leader of Alibaba,” said Kenny Wen, head of investment strategy at KGI Asia Ltd. “I don’t think the management change signals a big strategy change.”
Alibaba’s Leader Change Good for Cloud, IPO Plans: Street Wrap
Zhang will remain head of the cloud business. He took the helm in 2015 after rising to prominence as one of the architects of Alibaba’s “new retail” initiative, intended to marry physical and online retail and extend the company’s dominance into areas from malls to supermarkets. He became chairman a few years later as growth surged and Alibaba at one point became China’s most valuable company.
Then in 2020, regulators cracked down on Ma and his Ant Group Co. after the billionaire angered regulators. Beijing began a clampdown on the privately owned tech sphere shortly after, accusing Alibaba of monopolistic behavior before levying a record fine for the alleged violations.
The company thereafter never regained its stratospheric growth, particularly as new entrants such as ByteDance Ltd. and PDD Holdings Inc. sapped its core business. It began to lose market share in the cloud, its other engine of growth, to state-backed rivals.
Wu, an Alibaba co-founder, is credited with helping the development of the company’s digital advertising platform Alimama and its PayPal-like Alipay, now part of Ant. It’s unclear whether the new management will reconsider ways to hive off the most valuable parts of the Alibaba empire via separate listings.
In addition to growing competition, Alibaba is also suffering from macroeconomic uncertainties in China. A post-Covid rebound in the world’s second largest economy is faltering fast, partly hurt by Washington’s efforts to restrict China’s access to critical technologies.
While Beijing has promised to support the private sector after its blistering crackdown essentially obliterated the internet sector’s once-heady pace of growth, those pledges haven’t yet translated into meaningful policy.
The Chinese e-commerce giant’s latest maneuver brings “old Alibaba management back to the stage again,” said Willer Chen, a senior research analyst at Forsyth Barr Asia. “Not sure whether it is a good thing for Alibaba given now the key should be new growth drivers and the restructuring plan.”
--With assistance from Ville Heiskanen.