Strategy of “changing generals” at tech giant Alibaba

Old faces in new roles

In a surprise announcement, Alibaba announced that chairman and CEO Daniel Zhang will officially leave these positions as of September 10, 2023. Mr. Zhang will be replaced by Mr. Joseph Tsai as chairman, while the CEO will be Mr. Eddie Wu.

The name Joseph Tsai is no stranger to Wall Street, because Mr. Tsai is currently the owner of the Brooklyn Nets Basketball Club at the NBA, along with a number of other professional sports teams in the US. Mr. Tsai is also an investor familiar with the asset and digital currency markets. Even according to SCMP, his personal investment fund is also a shareholder of the FTX cryptocurrency exchange, which is run by young businessman Sam Bankman-Fried who has just been arrested.

Joseph Tsai is famous in the US as the owner of the Brooklyn Nets basketball club in the NBA (Source: CNBC)

Although he is a familiar figure to the business world in the US, the bond between Mr. Tsai and Alibaba has existed since the founding of this group. Of the 17 co-founders with billionaire Jack Ma, Joseph Tsai is the only one trained in the West. He served as Chief Financial Officer (CFO) for Alibaba until 2013, in charge of many of the group’s early fundraising negotiations, as well as M&A activities, and especially the IPO deal. Alibaba’s record $25 billion on the New York Stock Exchange.

Mr. Brian Wong, an early Alibaba employee and former assistant to Jack Ma, said: “Joseph Tsai’s chair is exactly what Alibaba needs as a large corporation with international ambitions. He has the skills. ability, platform and good position to act as a bridge for the company from China to the world and vice versa”.

Meanwhile, the new CEO Eddie Wu is a much more secretive name. Also with Alibaba since the early days, this former bachelor of computer science holds the position of chief technology officer (CTO) and is responsible for the development of many of Alibaba’s digital platforms, such as the advertising system and the purchase page. Shop Taobao online. He also played a role in building Alipay – an electronic payment application currently managed by Ant Group. After the group restructuring plan was announced in March, Wu took the position of chairman of e-commerce giant Taobao – Tmall, the only unit that will remain under Alibaba after the restructuring process.

New CEO Eddie Wu once led the development of Taobao and Alipay platforms (Source: CNBC)

Jacob Cooke, CEO of marketing firm WPIC said: “Eddie Wu is not a surprise name, because he has played a big role in both the technology development and profitability of Taobao and Alipay. The introduction of Wu. Becoming CEO shows that e-commerce will still have an irreplaceable role in Alibaba’s growth.”

More broadly, the appointment of these two “new and old” names at the same time to lead Alibaba is also seen as a determination to renew itself to overcome the difficult “overhaul” process of this group.

Since peaking in 2020, Alibaba’s market capitalization has lost more than 500 billion USD, amid China’s economic growth weakening, as well as the government’s moves to tighten control of the technology industry. In 2021, Alibaba received a fine of more than $ 2.5 billion due to allegations of monopoly. The emergence of new competitors such as Pinduoduo and ByteDance is also considered a challenge.

Alibaba’s market capitalization has dropped by more than 500 billion USD from its peak in 2020 (Source: CNBC)

In March, the company announced an ambitious restructuring plan, restructured the group into a parent company with 6 member units, in which besides Taobao – Tmall, other units will be mobilized. capital and listed on the stock exchange in the future.

However, according to experts, the “change of generals” is not what can convince investors that reform will go in the right direction. Vey-Sern Ling, managing director of UBP (Switzerland) private bank commented: “Alibaba is still a Chinese company and will be affected by the country’s geopolitical and economic challenges. is also facing increased competition from new platforms for e-commerce and short video.Unless Alibaba can recover profitability soon, investors will not be too concerned about change. change management personnel”.

Former leaders still have an important role

Leaving the position of chairman and CEO does not mean that Mr. Daniel Zhang will end his leadership role with Alibaba. Instead, according to a plan proposed by himself, Zhang will continue to lead the group’s cloud computing business (Cloud Intelligence Group) – a position he has held since the end of last year.

“The selection of Daniel Zhang to be in charge of the cloud segment shows his high confidence, with his desire to lead a most valuable business segment of the company to develop in the right direction in the current age of artificial intelligence. ” – Mr. Brian Wong commented.

Daniel Zhang sang the song “You raise me up” when accepting the chairmanship of Alibaba from Jack Ma in 2019 (Source: Alibaba)

Mr. Zhang – the successor to the chairmanship of Jack Ma in an emotional celebration in 2019, when the two leaders sang the song “You raise me up”, has also repeatedly affirmed that the field of public Cloud will be a key business segment of the company in the future. Under the restructuring plan, Mr. Zhang’s role with the cloud segment is even more important as this unit is trying to raise capital independently and go public in the near future.

In an internal newsletter to the group’s staff, Mr. Zhang said: “Cloud Intelligence Group is accelerating its spin-off plan, and is about to enter a pivotal phase of progress. So now is the right time for me to focus my time and energy on this department, to make it a public company soon.”

Mr. Zhang will focus on making Alibaba’s cloud business a public company (Source: CNBC)

Not only Daniel Zhang, but the role of founder – billionaire Jack Ma is also considered indispensable. Since handing over the chairman’s chair to Mr. Zhang, and especially after Ant Group’s IPO plan fell through, the billionaire who was once the richest man in China has been generally relatively quiet and rarely appeared in the media. transferred to many teaching positions – his old job.

Billionaire Jack Ma rarely appears but still has a big role in Alibaba’s restructuring plan (Source: Reuters)

However, according to the press, Mr. Jack Ma is still an important contributor to Alibaba’s restructuring plan. In May, he is also said to have met with key executives of the company, giving advice on some deeper reforms, such as reducing the middle management team at Taobao – Tmall. More importantly, the fact that close names like Joseph Tsai, Eddie Wu and even Daniel Zhang continue to hold important positions at the group and its subsidiaries, is a clear demonstration of the significant influence of this position. this billionaire to the technology group he founded.