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Alibaba Is Replacing Chairman and CEO Daniel Zhang

The Chinese e-commerce company has been struggling with slow growth and poor stock performance

Alibaba Group Holding BABA -0.11%decrease; red down pointing triangleis replacing top executive Daniel Zhang by naming company veteran and Brooklyn Nets owner Joe Tsai as the new chairman, as the Chinese e-commerce giant grapples with slow growth and poor stock performance.

The reshuffling at the top, effective on Sept. 10, also comes as Alibaba, which has emerged in recent months from Beijing’s clampdown on internet companies, undergoes a major reorganization. Alibaba is in the process of splitting itself into six independently run companies that could seek separate initial public offerings, a move that would break up the business empire that co-founder Jack Ma had built over two decades.

Eddie Wu, who heads the Taobao and Tmall domestic e-commerce business, will succeed Zhang as chief executive and replace Zhang on the board, the company said in a statement Tuesday.

Tsai—born in Taiwan and a graduate of Yale University—and Wu are both company veterans who have been with Alibaba since 1999 and, together with Ma, helped develop the group’s business strategies and corporate culture. 

A decade ago, Wu, who is a less-known co-founder led the company’s strategy to develop and give priority to its smartphone shopping sites as consumers shifted to using the mobile internet. 

Performance of Alibaba's American Depositary Receipts since listingSource: FactSet
May 2015: Daniel Zhang​becomes Alibaba CEOSept 2019: Zhang succeeds​Jack Ma as chairman2015'16'17'18'19'20'21'22'23255075100125150175200225250275300325$350

Zhang is currently heading Alibaba’s cloud-computing unit and will continue to do so, Alibaba said in its statement.

“It is the right time for me to dedicate my full attention and time to the [cloud] business,” Zhang said in a letter to employees that was seen by The Wall Street Journal. 

In May, Alibaba said it planned to fully spin off its cloud business and complete its public listing in the next 12 months. It didn’t immediately respond to a request for comment on Zhang’s letter.

Ma, the billionaire co-founder who in recent years kept a low profile after he appeared to fall out with Beijing, was recently in Hangzhou, where Alibaba is based. On Saturday, he attended an annual global mathematics competition that he started in 2018 and chatted with the finalists, according to a statement by Alibaba’s research unit. 

Ma remains the biggest shareholder of Alibaba and still cares very much about the company, Michael Evans, Alibaba’s president, said at a technology event in Paris last week.

Alibaba has been grappling with sluggish growth, facing a cooling domestic economy and rising competition from homegrown upstarts such as PDD Holding’s Pinduoduo e-commerce platform and ByteDance’s Douyin short-video platform.

In the January-to-March quarter, Alibaba posted the slowest revenue growth for the second straight quarter since it went public in 2014.

Alibaba listed in New York following a blockbuster IPO that remains one of the world’s largest-ever stock sales. Zhang was promoted from chief operating officer to CEO the following year and became the company’s executive chairman in 2019 when Ma stepped down. 

Under Zhang, Alibaba was for a time China’s most valuable publicly listed company, with a market capitalization that topped $850 billion at its peak in October 2020. Shortly after, its financial-services affiliate, Ant Group, was forced by Beijing to cancel plans for listings in Shanghai and Hong Kong. Chinese regulators amped up their scrutiny on Ant, Alibaba and the broader Chinese internet-technology sector. Alibaba was subsequently hit with a record $2.8 billion antitrust fine.

Its shares have lost close to $600 billion in market value from their record high and briefly fell below their New York IPO price last year. Longtime shareholder SoftBank Group of Japan recently unwound its stake in Alibaba

Alibaba’s Hong Kong-listed shares were 1.6% lower in Tuesday afternoon trading after the company mapped out its leadership succession plan. 

Alibaba’s restructuring culminates a yearslong shift inside the company to make it more nimble. Alibaba’s various businesses will be split up into six major areas: cloud computing, Chinese e-commerce, global e-commerce, digital mapping and food delivery, logistics, and media and entertainment.

Weilun Soon contributed to this article.

Author: Editors Desk

Source: WSJ:

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