Alibaba co-founder Joe Tsai to take over as chairman as Daniel Zhang steps aside to focus on cloud business

Zhang is relinquishing his roles as chairman and CEO after steering the tech giant through its transition following founder Jack Ma’s departure
Tsai will take over the chairman role from Zhang, who previously ran Taobao and is credited with starting the Singles’ Day shopping festival

Alibaba

Tracy Quin ShanghaiandAnn Caoin Shanghai

Published: 12:29pm, 20 Jun 2023

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Daniel Zhang Yong, the 51-year-old Chinese business executive, has announced his resignation as Alibaba Group Holding chairman and chief executive to focus on Alibaba Cloud, the digital technology and intelligence backbone of the group.

Zhang will be succeeded as chairman by Joseph C. Tsai, who is currently executive vice-chairman, and Eddie Wu Yongming, chairman of Taobao & Tmall Group, will become CEO. Zhang will continue on at the company as chairman and CEO of Alibaba Cloud Intelligence Group, the company said in a statement on Tuesday. The change will take effect September 10.

Zhang took over as CEO in 2015 and as chairman in 2019, after Jack Ma relinquished his corporate roles at the e-commerce giant he started in 1999. Alibaba owns the South China Morning Post, and Tsai is chairman of the newspaper.

“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,” Zhang said in a company statement.

Alibaba CEO Daniel Zhang Yong seen during AliDay in May. Photo: Weibo

In an internal memo seen by the Post, Zhang said that it would be “inappropriate” for him to continue serving as chairman and CEO of both Alibaba and Alibaba Cloud as the cloud unit prepares for an initial public offering. “From a corporate governance perspective, we also need clear separation between the board and management team as Cloud Intelligence Group proceeds down the path to becoming an independent public company,” he wrote in the letter.

Zhang “has made exceptional contributions to the development of Alibaba Group since joining the company in 2007”, Tsai said in the company statement. “He demonstrated extraordinary leadership in navigating unprecedented uncertainties affecting our business over the past few years. We believe there is no better leader than Daniel to steer Alibaba Cloud Intelligence Group into the next chapter of its journey and future growth.”

Alibaba’s stock price closed 1.5 per cent lower in Hong Kong on Tuesday, in line with the 1.54 per cent fall for the broader Hang Seng Index, pairing back some morning losses after news of the reshuffle was announced.

Wu, another Alibaba co-founder, was the chief technology officer for several of the e-commerce giant’s key businesses, including taking the role in 2004 at Alipay, the popular mobile payment app now operated by the fintech spin-off Ant Group. He also spearheaded the launch of the Taobao mobile app.

Wu became chairman of Taobao & Tmall Group in May, after the business became an independent business unit under the restructuring, a role he will keep after taking over as Alibaba CEO, the company said.

As China’s 618 shopping festival loses steam, Alibaba touts merchant numbers

The new leadership comes after Alibaba’s largest ever restructuring in March, when it announced plans to split into six independently run entities, each free to pursue its own fundraising through initial public offerings. The corporate shake-up is meant to inject new competitive pep into the company.

During an informal meeting in May, Ma advised the company to refocus its efforts on Taobao, the online marketplace made up of third-party sellers, in order to weather fierce competition and economic headwinds, Chinese media reported.

“It is too early to say how much it will change the company,” said Shawn Yang, managing director of boutique investment bank Blue Lotus Capital Advisors. “[Alibaba] is losing market share [across multiple categories] … Jack Ma is anxious about this. It is possible that the founder will impact the company more, just like at JD.com.”

Liu Qiangdong stepped down as JD.com CEO last year, but he has remained the influential public face of the firm he founded, which has become Alibaba’s biggest domestic e-commerce rival.

Joe Tsai, executive vice-chairman of Alibaba, speaks to journalists in Shanghai during the Singles’ Day shopping festival on November 11, 2018. Photo: AP

Li Chengdong, founder and chief analyst at Beijing-based e-commerce consultancy Dolphin, said the leadership change “will have a significant impact on Alibaba internally” as a continuation of corporate restructuring. “Business units will need to operate individually, instead of all relying on Taobao’s traffic,” he said. “However, it is still hard to change the competitive landscape. The pressure brought by Pinduoduo and [ByteDance’s] Douyin is high.”

On the sidelines of a digital economy conference where Zhang spoke on Tuesday, employees expressed shock at the announcement.

“It must be a surprise to all Alibaba employees, as we received the email today all of a sudden,” said one Alibaba staff member at the event in Hangzhou who asked not to be named as she is not authorised to speak with news media. “Joe Tsai has been away from Alibaba’s day-to-day business for a few years, and I hope his return will breathe new life into the company.”

Zhang personally took over Alibaba Cloud last December after a major service breakdown in Hong Kong. Under the corporate restructuring, Alibaba will spin off the cloud unit at some point in the next year through a “stock dividend distribution to shareholders”, turning its cloud business into an “independent, publicly-listed company”.

Cloud computing has been a particular bright spot for Big Tech firms in recent years, and Zhang has repeatedly said in the past that Alibaba Cloud has high potential.

In a conference call in February, Zhang emphasised the company’s commitment to cloud computing, noting the impact of new technologies like virtual reality and generative artificial intelligence. “We expect to see exponential growth in the demand for compute power, so for us as a cloud vendor, I think the story is just getting started,” he said at the time.

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Employees often refer to Zhang as Xiaoyaozi, meaning the “free and unfettered one”, in reference to a character from a wuxia novel by Chinese martial arts writer Louis Cha. Zhang previously served as chief financial officer at Taobao Marketplace, president at Tmall and as Alibaba’s chief operating officer, before succeeding Jonathan Lu Zhaoxi as CEO.

Zhang, a Shanghai native, first joined Alibaba in 2007 and played a key role in driving Taobao to profitability. He is best known for starting Singles’ Day, the country’s largest shopping festival. Originally taking place on November 11, and sometimes referred to as “Double 11”, the event now typically runs from late October to mid-November.

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