Alibaba replaces longtime chief Daniel Zhang in management shake-up

Alibaba’s longtime leader Daniel Zhang is being replaced as chief executive and chair of the Chinese ecommerce giant, as the group races to reinvent itself by splitting into six separate entities.

Eddie Yongming Wu, the chair of Alibaba’s flagship ecommerce sites Taobao and Tmall, will replace Zhang as chief executive in September, the company announced on Tuesday. Alibaba co-founder and vice-chair Joseph Tsai will fill Zhang’s position as chair of the board. 

The leadership change comes at a critical time for Alibaba after it announced plans to break up its tech empire in March and refocus on its ecommerce roots. Alibaba will pursue separate listings for its logistics and grocery businesses within the next 18 months and spin off its cloud division.

Zhang, who has served as CEO for eight years, is to remain in charge of the cloud unit, which he took over in December as it struggled to maintain growth. “This is the right time for me to make a transition, given the importance of Alibaba Cloud Intelligence Group as it progresses towards a full spin-off,” said Zhang in a statement.

Investors cautiously welcomed the news. Shares in Alibaba, which had dropped almost 2 per cent prior to the announcement, pared losses to be down just 1 per cent in afternoon trading in Hong Kong. By comparison, the Hang Seng Tech index tracking Alibaba and its peers in the Chinese tech sector was down about 2.5 per cent.

Wu was part of the Alibaba founding team, joining as technical director in 1999 from Jack Ma’s previous venture China Pages after graduating from Zhejiang University of Technology. He later held the role of chief technology officer at payment platform Alipay and then Taobao.

Wu drove the launch of the Taobao shopping app, which quickly became a critical part of Chinese consumers’ daily shopping habits. He will continue to serve as chair of the wholly owned Tmall and Taobao subsidiary.

“Eddie is a well-trusted pair of hands. He has played a key role in most of Alibaba’s businesses and has a comprehensive understanding of the organisation,” said Brian Wong, a former Alibaba executive and author of The Tao of Alibaba. 

A person close to company management said: “Eddie is more quiet and analytical. He is not an extroverted personality like Jack Ma. But with Alibaba turning into a holding company of these businesses, you need someone who can think strategically about how they fit together rather than someone who is leading from the front.”

Zhang’s stint running the Chinese group has been rocky and complicated by Alibaba co-founder Ma’s run-in with Beijing, which led to the cancellation of sister company Ant Group’s blockbuster initial public offering more than two years ago.

Since then, Alibaba has been issued a record $2.8bn antitrust fine and surrendered market share in its core ecommerce business to new competitors including Pinduoduo and ByteDance’s Douyin.

Zhang said he would now seek to strengthen the cloud business by “making cloud computing and artificial intelligence more accessible for businesses of all sizes and industries”.

While the group’s annual sales have risen 11 times and profits are up nearly three times from the start of his tenure, Alibaba’s share price is roughly flat.

Investors are increasingly worried about the group’s unsteady position in the domestic ecommerce market, which brings in the bulk of its profits, as well as China’s tepid economic recovery and geopolitical frictions with the US.

“Alibaba wants to go back to its roots of serving SMEs [small and medium-sized enterprises]. There has been a consolidation over the years with large multinationals and SOEs [state-owned enterprises]. But the economy needs to nurture its SMEs. That’s where the growth and job creation will be,” said Wong.

Additional reporting by Hudson Lockett in Hong Kong