Alibaba, a Chinese tech behemoth, said on Tuesday that it will change its top executive in a surprising move at the e-commerce juggernaut as it attempts to rebound from years of poor growth caused by weak consumer spending and a regulatory crackdown. Alibaba has been trying to recover from years of slow growth caused by weak consumer spending and a regulatory crackdown.
This decision comes as the dominant player in the industry gets ready to undertake a significant reorganization of its broad commercial activities, which include artificial intelligence, cloud computing, e-commerce, and logistics, as well as media and entertainment.
As a result of the reorganization, Joseph Tsai will take over as chairman, and Eddie Wu will take over as CEO. Previously, both responsibilities were held by Daniel Zhang. The 10th of September will mark the beginning of both appointments.
As Alibaba prepares to carry out a comprehensive spin-off of its sophisticated cloud computing subsidiary, Zhang stated in a statement that it was the “right time” for him to stand down as CEO of the company.
The CEO has been instrumental in the growth of the firm over the last ten years, and from its inception in 2009, she has been the driving force behind the Singles’ Day shopping festival, which has now become an international phenomenon.
According to the announcement made by the firm, Zhang will maintain his roles as chairman and CEO of Alibaba Cloud Intelligence Group after the transfer.
Alibaba has fallen on hard times as a result of Beijing’s imposition of more controls on the domestic technology industry, in addition to sluggish consumer spending, which led to the company recording its third straight quarter of single-digit sales growth earlier this year.
And in a move that caught everyone off guard, Alibaba announced at the end of March that it would be dividing itself into six distinct business units, marking one of the most major organizational shifts ever made by a large Chinese technology company.
Zhang stated at the time that the reorganization would enable the individual business divisions to pursue separate funding and public listing ambitions. He believed that this would be made possible as a result of the restructuring.
This week’s shake-up “looks like the second half” of that reorganization, according to Jeffrey Towson, partner at TechMoat Consulting, who stated on a call that the reorganization was a “smart move.”
According to Towson, “the cloud business that Alibaba operates is the company’s most significant growth engine outside of its e-commerce business.”
Making this Zhang’s entire emphasis “is a smart move,” he said further.
Zhang had “demonstrated extraordinary leadership” in managing the “unprecedented uncertainties” that had been hurting our company over the last several years, according to a statement released by the incoming chairman of the board, Tsai.
Tsai, a seasoned employee who was also a member of the company’s founding team, has a wealth of expertise in a variety of finance-related responsibilities, one of which includes serving as the previous chief financial officer of Alibaba.
Tsai’s selection as chairman will likely “facilitate communication with Wall Street investors and maintain confidence in the stock price,” according to Li Chengdong, founder of Dolphin, a tech-focused think tank located in Beijing. Chengdong told AFP that he came to that conclusion after considering Tsai’s history.
Under the terms of the new agreement, each division will be run by its own chief executive officer and board of directors.
Alibaba has said that one of its goals is to establish a “more nimble” organizational structure in order to sustain its competitiveness in the face of increased regulatory difficulties and growing constraints on the global economy.
According to statistics provided by China’s Ministry of Industry and Information Technology, the combined income of China’s internet enterprises decreased by slightly more than one percent in 2022, reaching a total of 1.46 trillion yuan ($212 billion). This was the first decline in revenue in nearly a decade.
Since late 2020, when a speech he delivered slamming Chinese regulators was followed by Beijing putting the plug on a planned IPO by Alibaba affiliate Ant Group, Alibaba founder Jack Ma has kept a quiet profile. Ma made the speech attacking Chinese regulators after Beijing pulled the plug on an IPO that Alibaba subsidiary Ant Group had planned.
In the end, the computer giant was hit with a record-breaking punishment of $2.75 billion for what was deemed to be unethical business practices.
In January, Ant Group announced that Jack Ma no longer owned controlling ownership in the firm. This change, which experts felt may have helped take Ant and Alibaba out of the regulatory doghouse, was announced in January.