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June 21, 2023 : Alibaba Group surprised the business world by announcing that Eddie Wu will succeed Daniel Zhang as the company’s chief executive. This move will enable Zhang to concentrate on Alibaba’s cloud intelligence business. The decision is part of Alibaba’s broader restructuring plan, initiated in March, which involves dividing the company into six business groups. This reorganization aims to revitalize Alibaba after facing challenges from slower economic growth in the Chinese market and stricter regulations imposed by Beijing.
In an internal memo to Alibaba staff, Zhang emphasized the strategic significance of core technologies such as cloud computing, big data, and AI. He stated that the Cloud Intelligence Group is in the process of spinning off and approaching a crucial stage, making it the right time for him to focus entirely on the business. After the announcement, Alibaba’s shares dropped but later recovered, trading down 1% in Hong Kong.
In addition to the leadership change, Alibaba revealed that Joe Tsai, currently the executive vice chairman, will assume Zhang’s position as the group’s chairman. Zhang will continue to lead the Alibaba Cloud Intelligence Group as chairman and CEO. The transition is scheduled to take effect on September 10.
Alibaba intends to fully spin off its cloud computing unit within the next year, aiming to establish it as an independent publicly listed company. The company emphasized the need for a clear separation between the board and management team as the Cloud Intelligence Group progresses toward becoming an independent entity. Apart from cloud intelligence, the five other business units include Taobao Tmall, local services, Cainiao Smart logistics, global e-commerce, and digital media and entertainment.
Eddie Wu, one of Alibaba’s co-founders and current chairman of Taobao and Tmall Group, will step into the role of chief executive. Wu has held various positions within the company, showcasing his technology and venture capital expertise. Zhang’s exclusive focus on the cloud business reflects its significance for Alibaba’s future. The division has experienced remarkable growth, although recent challenges and increased competition necessitate a renewed strategy.
Zhang’s primary objectives will be to restore growth in the cloud business and prepare it for an initial public offering. Analysts and investors consider the leadership changes a sensible decision, allowing Zhang to fully dedicate his attention and resources to the cloud strategy while ensuring clear leadership roles for each business segment. By leveraging their respective strengths, Alibaba aims to maximize the potential of both its online retail and cloud divisions.
