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Former Alibaba CEO Zhang Yong has unexpectedly resigned as head of the company’s cloud computing unit as the Chinese e-commerce group begins to split into six divisions.
The move is part of a leadership transition at Alibaba, which has previously said Zhang would relinquish the group chairmanship to co-founder Joe Tsai and hand over the group CEO role to Wu Yongming.
Alibaba said in March it would spin off its $230 billion business empire spanning e-commerce and entertainment.
Zhang, who served as Alibaba CEO for eight years, is expected to continue leading the company’s cloud business through a planned spin-off, with the group underlining the importance of the unit. Wu will now take over as head of the cloud unit, which has one of the largest market shares in China.
“The company will continue to implement the previously announced plan to spin off Alibaba Cloud Intelligence Group and put it in charge of an independent management team that will be appointed soon,” the group said in a statement.
Zhang handed over his team role to Wu and Cai on Sunday.
“The timing is special on the day the transition is planned,” said an Alibaba insider, adding that employees in the cloud division were “very surprised by the news.”
The person added: “If you are going to have a graceful transition, then the question arises why the announcement was made on the day the planned changes were to take place.”
Alibaba did not immediately respond to a request for comment.
Mr Zhang succeeded Alibaba’s charismatic co-founder Jack Ma as chief executive in 2015 and became chairman in 2019. The final years of Mr Zhang’s tenure were marred by a regulatory crackdown on the internet industry, with Beijing targeting Alibaba for anti-competitive behavior and fining it $2.8 billion for abusing its market dominance.
Rivals ByteDance and Pinduoduo are also challenging Alibaba in its core domestic e-commerce business.
“After taking over as Chairman four years ago, Daniel faced numerous challenges, including the Covid-19 pandemic and dramatic changes in the business environment. However, with his steady hand, Alibaba navigated and overcame the challenges with grace and tenacity, “Incoming chairman Tsai Ing-wen wrote in a letter to employees seen by the Financial Times.
Tsai Chongxin also stated in the letter that Alibaba will invest US$1 billion in the new technology fund founded by Mr. Zhang.
Wu is a close associate of Ma, having served as his special assistant before leading the group’s healthcare arm and founding venture capital firm Vision Plus Capital.
Analysts and company insiders generally believe Wu’s appointment as CEO is an effort to put Jack Ma back in control of the group.
Ma has kept a low profile since the initial public offering of Alibaba’s fintech unit Ant Financial was called off, after giving a speech in 2020 lambasting Chinese financial regulators and banks.
The company’s shares are down 70% since their peak three years ago, and the company’s leadership hopes a shakeup of the group will unlock value for shareholders.
News of Mr. Zhang’s departure caused Alibaba’s shares to fall 2.7% in Hong Kong on Monday.
“Given the Hong Kong Stock Exchange’s rules on management continuity before listing, the stock reaction may reflect concerns that this will delay the spin-off of Alibaba Cloud,” said Robin Zhu, China internet analyst at Bernstein.
Hong Kong Exchange rules generally require companies to have the same management for three years before listing.
