© Reuters. A sign of Alibaba Group Holding Ltd is seen outside its headquarters in Beijing, China, June 29, 2019. Photo taken on June 29, 2019. REUTERS/Stringer/FILE PHOTO
Written by Brenda Goh
SHANGHAI (Reuters) – Alibaba Group said on Tuesday that its chief executive and chairman Daniel Zhang will step down to focus on its cloud division, as the Chinese e-commerce giant pushes ahead with a plan to split into six business units.
Zhang has simultaneously served in three positions since December when he took over as head of the cloud unit after it suffered an outage that he described as “the longest-running large-scale failure” in more than a decade.
The CEO role will be handed over to Eddie Young-Ming Wu, Chairman of the Board Ali Baba (NYSE:) Taobao and Tmall Group, while Executive Vice President Joseph Tsai will take over as Chairman.
Alibaba said the appointments would take effect on Sept. 10.
The surprise cabinet reshuffle comes after two turbulent years that saw Alibaba hit hard by increased regulatory scrutiny and after the group announced in March it would restructure into six units, each with its own boards of directors and chief executives.
The 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. Alibaba said in May it aimed to complete a public listing of its cloud unit. over the next 12 months.
Zhang said, in a note to employees seen by Reuters, that the individual cloud business is approaching a critical stage and that this is the right time for him to devote his attention to the business.
“From a corporate governance perspective, we also need a clear separation between the board and the management team as the Cloud Intelligence Group forges its 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 separation process.”
Analysts have estimated the cloud unit to be worth between $41 and $60 billion, but said the reams of data it oversees could put it in the crosshairs of regulators at home and abroad.
Singles day
A former accountant, Zhang joined Alibaba in 2007 and is best known for being the architect behind the company’s flagship annual singles’ day shopping festival. He has been CEO since 2015 and assumed the presidency in 2019, succeeding both positions from Alibaba founder Jack Ma.
Alibaba thanked Zhang for his “extraordinary leadership in dealing with the unprecedented uncertainties that have affected the company’s business over the past few years.”
Hong Kong-listed Alibaba shares fell 1.5% after the announcement, in line with the benchmark’s 1.6% drop, as analysts saw the reshuffle as in line with the sweeping restructuring announced earlier.
“Under the new structure, the group will play a smaller role in setting strategies for the six business groups, so planting Alibaba founders Joe and Eddie as president and CEO will likely serve the purpose of ensuring a smooth transition of leadership and preservation of culture,” Shanghai-based Independent analyst Eric Chen said. Which is posted on Smart Karma, Reuters.
Alibaba said Wu, who co-founded Alibaba along with Ma and Tsai more than two decades ago, will continue to concurrently serve as chairman of Taobao and Tmall Group. His previous roles include Chief Technology Officer of Alipay and Chairman of the Board of Directors of Alibaba Health.
a race
Ma, China’s most well-known businessman, has kept out of the public eye since late 2020 after a speech criticizing the Chinese regulation, which is widely seen as launching an ensuing crackdown.
Ma left mainland China in late 2021 — appearing in photos in Japan, Spain, Australia and Thailand — and returned in March, the day before Alibaba announced its restructuring. He made no public comments during that time.
And last week, Alibaba Chairman J. Michael Evans said Ma remained Alibaba’s largest shareholder and cared very much about the company. He said Ma was studying at the University of Tokyo and also spending more time in China.
Chinese technology news agency LatePost reported on Monday that Ma held a meeting with leaders from Taobao and the 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 connected.
Alibaba did not respond to a Reuters request for comment on the LatePost report, which cited company sources.
