2023-06-21 05:30:00
Alibaba Group Holding Limited (9988.HK, BABA, or Alibaba) named Brooklyn Nets owner Joe Tsai as chairman of the Chinese e-commerce giant . Alibaba is looking to shake off sluggish growth amid stiff competition. Tsai is close comrade-in-arms with fellow co-founder Jack Ma.
In the eyes of analysts and Alibaba insiders, Tsai Chongxin, 59, is closely related to Jack Ma. Jack Ma, Alibaba’s largest shareholder, stepped down as chairman of the board in 2019; he has kept a low profile since appearing to anger the Chinese government when regulators began to crack down on the tech industry.
The close relationship between Cai and Ma might give Tsai Chongxin more leverage than outgoing chairman Daniel Zhang to help push through the reorganization of Alibaba into separate companies and return the e-commerce business to growth track plan.
Mr Zhang’s chief executive role will be taken over by Eddie Wu, another Alibaba co-founder who currently oversees the domestic e-commerce businesses of Taobao and Tmall. These adjustments will take effect on September 10.
Tsai, who was born in Taiwan and educated in the United States, worked as a lawyer and private equity investor following graduating from Yale University. He co-founded Alibaba with Jack Ma in 1999 as chief financial officer and became executive vice chairman of the board in 2013. Tsai and Ma are the only two permanent members of the Alibaba Partnership, the top decision-making body for the e-commerce giant and its affiliates.
Tsai’s close ties to the United States are rare among Chinese business leaders today, although he has previously faced criticism in the United States for aligning himself with Beijing on some controversial issues. He played high school football at Lawrenceville School in New Jersey, lacrosse at Yale University and began buying the basketball team, the Brooklyn Nets, in 2018. He also owns the San Diego Seals hockey team and the New York Liberty women’s professional basketball team. He is eligible for passports from Hong Kong and Canada, the latter due to his parental ties.
The adjustment is likely to preserve the leverage of Jack Ma, who traveled overseas for much of the year before the plans were announced, remotely orchestrating the breakup of the e-commerce empire. On Saturday, he participated in the annual Alibaba Global Math Competition he launched in 2018 in his hometown of Hangzhou, and chatted with the finalists. Hangzhou is also where Alibaba is headquartered.
Last month, Ma met with executives from Alibaba’s China e-commerce unit to discuss the increased competition it faces, people familiar with the matter said. He urged the department to adjust its business strategy and governance, these people said, warning that the methods that Alibaba has relied on for success in the past may no longer work.
Alibaba President Michael Evans said at a tech event in Paris last week that Jack Ma remains Alibaba’s largest shareholder and still cares deeply regarding the company.
Charlie Chai, a technology-focused analyst at securities research firm 86Research, said the reshuffle suggested Ma was returning to exercise more direct control.
Given that Alibaba’s dominance is facing strong challenges from rivals, and that the group’s resurgence might boost consumption in China and accelerate the development of artificial intelligence, the Chinese government may welcome Jack Ma’s continued influence, he said.
In Alibaba’s early days, Tsai helped win investments from Goldman Sachs and SoftBank and built an in-house venture capital team from scratch.
Joey Tsai is popular with investors and his appointment as chairman of the board should be viewed as good news, said William Ling, senior Asia tech adviser at Union Bancaire Privée. But Ling said the move was unlikely to boost Alibaba’s stock price, as geopolitical issues and concerns regarding the Chinese economy were the main drag on the stock, rather than any doubts regarding management.
Alibaba’s market cap, which peaked at more than $850 billion in late 2020, had shrunk severely to regarding $238 billion before the latest leadership change was announced. Alibaba’s New York-listed American depositary receipts fell 2% pre-market on Tuesday.
Wu Yongming, who will take over as chief executive, was previously in charge of Alibaba’s strategy to develop and prioritize a smartphone shopping platform, which is designed to adapt to the shift in consumers’ use of the mobile internet for various activities. Wu Yongming, who majored in computer science at university, has since served as chief technology officer for various business units of Alibaba, including Taobao and digital payment platform Alipay.
Wu Yongming is relatively unknown among Alibaba executives. Wu Yongming’s appointment might help Alibaba use technology, including artificial intelligence, to revive its stagnant e-commerce business, people familiar with the personnel changes plan said.
Zhang Yong will continue to lead Alibaba’s cloud computing unit, its second-biggest business by revenue following its domestic e-commerce unit; Alibaba is now betting on cloud growth. Alibaba said in May that it plans to completely spin off its cloud business and complete a public listing within the next 12 months.
Zhang Yong worked as a financial advisor at PricewaterhouseCoopers before joining Alibaba in 2007, where he was responsible for Taobao’s finance and operations, and became Alibaba’s chairman in 2019. People familiar with the matter said that Zhang Yong was called a “doer” by senior colleagues, but he was not comfortable in controlling the powerful veterans in Alibaba.
In a letter to employees reviewed by The Wall Street Journal, Mr. Zhang said chairman and chief executive of Alibaba was a job he never imagined. He said that the work of Yunzhi Group’s complete spin-off and listing from the group has already started, and it is at the most critical moment.
In order to enhance the flexibility of the company’s operations, Alibaba has been undergoing internal transformation and reform in recent years, and this reorganization is the climax of this reform. Alibaba will be split into six business groups: Cloud Intelligence, Taobao Tmall Commerce, International Digital Commerce, Local Living, Cainiao and Dawenyu.
Alibaba has grappled with lackluster growth of late as it faces a slew of challenges, including a slowing domestic economy and competition from PDD Holdings’ (PDD) e-commerce platform Pinduoduo and Bytedance’s short-video platform Competition from local up-and-comers such as Douyin.
Alibaba’s January-March quarter was one of its slowest growth quarters since it went public in 2014.
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