Chinese e-commerce company Alibaba is replacing Daniel Zhang as chairman and CEO, the tech giant announced on June 20, following a slowdown in sales and mass layoffs.
In a news release, the company said that Joseph Tsai, its current executive vice chairman, will step into the role of chairman on Sept. 10, after which Zhang will continue to lead Alibaba Cloud Intelligence Group as its chairman and CEO.
Meanwhile, Eddie Wu, who currently serves as chairman of Alibaba’s core Taobao and Tmall online commerce divisions, will take over as chief executive of the e-commerce giant and replace Zhang on the company’s board of directors on the same date.
“It has been an incredible honor and privilege to lead Alibaba Group as CEO over the past eight years and chairman over the past four years. This is the right time for me to make a transition, given the importance of Alibaba Cloud Intelligence Group as it progresses toward a full spin-off. I look forward to working closely with Joe and Eddie in the coming months to ensure a seamless transition,” Zhang said in a statement.
The former chairman and CEO said he remains “committed to strengthening Alibaba Cloud Intelligence Group’s market leadership by making cloud computing and artificial intelligence (AI) more accessible for businesses of all sizes and industries as they continue their digital transformation.”
“The emergence of generative AI has also opened up exciting new opportunities that Alibaba Cloud Intelligence Group is well-positioned to capture,” he added.
Sales Plunge After Covid
Monday’s announcement comes as Hangzhou-headquartered Alibaba has faced an array of challenges in the wake of Beijing’s strict COVID-19 restrictions coupled with U.S. sanctions in China and a volatile economic environment that has seen sales plummet.The company reported sales of 208.2 billion yuan ($29.08 billion) for the three months ended in March, compared with analysts’ expectations of 209.2 billion yuan ($29.14 billion) and marking an increase of just 2 percent year over year.
Net income was 23.5 billion yuan ($3.3 billion), reversing losses a year prior, although that was primarily due to one-off gains from increases in the market prices of its equity investments in publicly-traded companies.
The Beijing’s clampdown on the tech industry, which began in late 2020, has further added to Alibaba’s woes.
Its co-founder, Chinese billionaire Jack Ma, was critical of the Chinese Communist Party’s financial regulators during a speech that same year, delivered just weeks before Ant Group, the owner of the world’s largest mobile payment platform Alipay, and a subsidiary of Alibaba, was set to go public in what would have been the biggest initial public offering in history.
The IPO was subsequently called off by Beijing’s regulators who cited “significant issues” and Ma withdrew from public events and left China at the end of 2021, only to return in 2023, days before the company announced a major restructuring plan under which it would split into six business groups.
Alibaba Denies Layoffs
In a regulatory filing at the time, the company said the move was aimed at empowering all its businesses to “become more agile, enhance decision making, enable faster responses to market changes, and promote innovation to capture opportunities.”According to the company, the six new groups will be made up of the Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics, and Digital Media and Entertainment Group.
In that same month, reports emerged that Alibaba was looking to lay off thousands of workers, although it later denied such reports, adding that it planned instead to hire 15,000 new workers.
However, payroll data cited by the South China Morning Post shows that employee headcount was down at the end of March by 4,524 people, at 239,740, from December’s 235,216.
In announcing the shock decision Monday, Tsai credited Zhang for his “exceptional contributions to the development of Alibaba Group” since he joined in 2007, adding that 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,” Tsai added.
Shares of Alibaba were down 1.51 percent at the time of publication.
