China's leading technology company has announced a major change in leadership and is preparing to gradually reshape its system of functioning. Daniel Zhang will step down as CEO and will be replaced by Eddie Yongming Wu, chairman of Taobao and Tmall Group. Alibaba will be split into six separate business divisions, each with its own CEO and board of directors.
Taobao's Tmall Commerce Group, the company's largest unit, covers domestic e-commerce-focused markets, generating more than two-thirds of total revenue. Together with Tmall, it is China's leading e-commerce platform. Global Digital Commerce Group covers Aliexpress or Lazada and are among the company's fastest growing divisions. Alibaba holds a dominant position in China's domestic cloud computing sector, owns the Cloud Intelligence Group with its Aliyun service, and runs DAMO Academy as a research unit in the chip and artificial intelligence sector. The Local Services Group consists of food delivery service Ele.me and mapping app Amap. Cainiao Smart Logistics Group has investments embedded in various Chinese logistics companies. Youku, a YouTube-like streaming site, and film production unit Alibaba Pictures belong to the Digital Media and Entertainment division. These groups will get their own CEO and will focus on their own area of business.
Alibaba's strategy remains to focus on markets outside China, with a priority on Europe, where it wants to expand its network of local businesses. The company's founder Jack Ma withdrew from the public eye at the end of 2020, but remains its largest shareholder and, according to Alibaba's president J. Michael Evans, he still cares about the company. He currently teaches at the University of Tokyo.
Alibaba Group's stock performance over the past five years. (Source: Google)*
The company is already in need of some revitalization as the stock has not had a very positive run over the past five years. The cloud services unit is expected to be publicly traded within the next 12 months. The reshuffling of the company's management will give the portfolio more room for improvement, whether the entire group will thrive is questionable.Alibaba's Hong Kong shares fell 1.6% on the news. Big changes, on the other hand, could put new wind in the company's sails and lift the company's performance to a higher level.* The company's stock is down 1.6% on the news.
* Past performance is no guarantee of future results
[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
