China’s e-commerce giant Alibaba announced on Tuesday that it would replace chairman and CEO Daniel Zhang with current executive vice chairman Joseph Tsai in September. This is the latest in a string of management shakeups at Alibaba. It has been rocked by slowing growth and cutthroat competition while facing intense regulatory scrutiny from Beijing as it tries to rein monopolistic behavior in the domestic technology sector.
Tsai is a former investment banker who has been at the company since its founding in 1999 and profoundly understands Alibaba’s business operations and market dynamics, according to the company. He will focus on bolstering Alibaba’s cloud computing unit, which has already been approved for a complete spin-off. The move is a clear sign that the company is prioritizing its cloud businesses as it embarks on a significant overhaul to its overall business structure to better adapt to rapidly evolving technologies.
It needs to be clear how the reshuffle will impact Alibaba’s core e-commerce operations, which are responsible for its burgeoning user base. However, the company recently announced that it would split its businesses into six separate trade groups to better adapt to changing industry trends and boost growth at a time when the Chinese economy is cooling down after Beijing lifted restrictions on commerce following the end of the pandemic a half-year ago.
The core Taobao and Tmall platforms currently run Alibaba’s e-commerce divisions. This is where Alibaba sees most of its revenue and profit. The company has also been attempting to strengthen its presence in the Chinese consumer credit sector with a new service that provides loans and cashback on purchases. The new service is a significant departure from the traditional way that Alibaba does business, as it has been providing services to consumers for years rather than selling its products directly.
The company’s other big business is its cloud computing unit, one of the first divisions to see substantial growth. The division has been making much noise in the markets, and investors have been excited about its prospects. The company is still expected to post strong growth for its cloud business this year, but it will take more work for the division to compete with rivals like Amazon and Microsoft shortly.
This is a critical time for the Alibaba cloud unit to continue its growth, and it would be wise for the company to put a dedicated leader in place as it prepares to spin off its advanced cloud computing business fully. The appointment of Eddie Wu, who currently chairs Alibaba’s e-commerce units Taobao and Tmall Group, as the firm’s new CEO could provide some comfort to investors looking forward to receiving their share in this highly dynamic unit via stock dividends. The move is expected to be effective from September 10. NDTV initially published this article.
