Alibaba boss takes direct control of struggling Chinese e-commerce business

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Alibaba boss Eddie Wu has strengthened his hold on the sprawling tech conglomerate, reshuffling management again to take direct control of its core e-commerce business as the company loses market share to rivals PDD Holdings and ByteDance.

After a year of restructuring, leadership changes and strategy changes at the Chinese company, Wu is now managing director of Alibaba’s e-commerce division as well as head of the cloud division and group CEO – positions he only took on in September.

Wu had unexpectedly taken over leadership of the cloud business, scuttling a succession plan that would have outgoing CEO Daniel Zhang take charge of the unit. The Financial Times reported in November that Wu forced him out.

“It is clear that there has been great tension internally between the competing factions. This move should unify things,” said Duncan Clark, founder of Beijing-based consultancy BDA China and author of Alibaba: The House That Jack Ma Built.

On Wednesday, the group announced that Wu would replace longtime executive Trudy Dai as chief executive of e-commerce platforms Taobao and Tmall. Together, the platforms offer the country’s largest online shopping services, but are steadily losing market share to PDD Holdings, owner of Temu and Pinduoduo, and ByteDance’s Douyin, the Chinese version of TikTok.

According to the group, Dai will help found a new asset management company. Alibaba previously said it would invest in a new $1 billion technology fund founded by Zhang.

Group leader Joseph Tsai, who took over from Zhang in September, said on Wednesday that “a new era requires a new strategic and organizational change.” He added: “I believe Alibaba will complete its transformation after this round of changes.”

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In March, Alibaba announced it would split into six divisions, some of which would aim for separate IPOs to “unlock shareholder value” as China emerges from zero-Covid-era restrictions. Alibaba shares have fallen about 75 percent since their peak three years ago, shortly before Beijing intervened and canceled the U.S. listing of subsidiary Ant Financial.

Alibaba’s restructuring plan was initially met with enthusiasm from investors, but this faded as pessimism about China’s economic recovery grew. Last month, Alibaba abandoned plans to separate its cloud business, citing new U.S. restrictions on key semiconductors. In addition, the IPO of its supermarket business was put on hold.

At his first investor call as CEO in November, Wu pitched the group’s cloud business as a future growth driver and pledged to invest in artificial intelligence to strengthen its core e-commerce business.

“Alibaba must first fix the e-commerce business and integrate it into the cloud. It’s unclear how they will do this, but the cloud business is important in the lead-up to an AI world,” Clark said.

Alibaba’s shares rose as much as 4.3 percent in Hong Kong on Wednesday after news of management changes. Alibaba, once Asia’s most valuable company, was overtaken in market capitalization last month by its rival PDD.