Alibaba replaces longtime boss Daniel Zhang in management shakeup

Alibaba is replacing Daniel Zhang as CEO and chairman of the Chinese e-commerce giant, with a top lieutenant to its former boss Jack Ma set to take the reins.

Eddie Yongming Wu, a co-founder of Alibaba and chairman of Alibaba’s flagship e-commerce sites Taobao and Tmall, will replace Zhang as CEO in September, the company announced on Tuesday. Wu served as a special assistant to Ma from 2014 to 2019. Alibaba founder and vice chairman Joseph Tsai will fill Zhang’s position as chairman.

The leadership changes come at a critical time for Alibaba after it announced plans in March to break up its tech empire and focus on its e-commerce roots.

Alibaba will pursue separate listings for its logistics and grocery businesses over the next 1[ads1]8 months and spin off its cloud division.

Zhang, who has served as chief for eight years, will 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 moves toward a full spin-off,” Zhang said in a statement.

Investors gave the news a cautious welcome. Shares in Alibaba, which had fallen nearly 2 percent before the announcement, pared losses to end around 1.5 percent down at the close in Hong Kong on Tuesday. By comparison, the Hang Seng Tech Index, which tracks Alibaba and its peers in the Chinese technology sector, fell 2.5 percent.

Wu became Alibaba’s CTO in 1999, after joining Jack Ma’s former venture China Pages, where he worked after graduating from Zhejiang University of Technology. He later held the role of chief technology officer at the payment platform Alipay and then at Taobao.

Wu spearheaded 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 chairman of Tmall and Taobao.

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

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

Wu’s appointment raises the possibility of Ma’s deeper involvement again in running Alibaba. The pair are very close, according to people who know them both. Ma currently sits on Alibaba’s partnership committee, which sets the company’s direction, but holds no formal position within the company.

In March, Ma returned to the city of Hangzhou, where Alibaba is headquartered, to help oversee the breakup of the group. In late May, he summoned top executives at the e-commerce business to talk strategy and plan a way forward amid an increasingly competitive environment in China, according to Chinese media.

He warned attendees that Alibaba could go the way of former industry giants Nokia and Kodak and urged them to refocus on growing Taobao, the e-commerce platform for small and medium-sized sellers.

Zhang’s task of leading the Chinese group has been difficult and complicated by Ma’s run-in with Beijing, which led to the cancellation of sister company Ant Group’s major IPO more than two years ago.

Since then, Alibaba has been hit with a record $2.8 billion antitrust fine and surrendered market share in its core e-commerce business to new competitors such as 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 to businesses of all sizes and industries”.

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

Additional reporting by Hudson Lockett in Hong Kong