Written by Casey Hall
SHANGHAI (Reuters) – Alibaba Group said on Wednesday its chief executive officer would directly oversee its domestic e-commerce unit, with the unit's former head looking to divest from non-core assets to counter the group's slowing profit growth. He announced that he would focus on management.
According to the company, group CEO Eddie Wu will become CEO of domestic e-commerce unit Taobao and Tmall Group with immediate effect, and will have direct control over the group's core businesses. Management power will be strengthened.
Wu has been group CEO since September, the same month he was appointed CEO of the company's cloud business from former chief Daniel Zhang. The appointment means that Mr. Wu will not only lead the group as a whole, but also its two most important business units: cloud and domestic e-commerce.
Alibaba's Hong Kong-listed shares were trading 3% higher at 0630 GMT on Wednesday.
The company's domestic e-commerce platforms Tmall and Taobao remain the largest in China, but they have lost market share in recent years to fast-growing competitors such as PDD Holdings' Pinduoduo.
This year in particular, Taobao and Tianjin have been hit hard by weak consumer sentiment in China caused by economic uncertainty and a slower-than-expected recovery in the retail industry after the lifting of coronavirus restrictions a year ago. It created what former Cat Group CEO Trudy Dye described as a “value system.” Because of the fight for money.”
An internal letter seen by Reuters and signed by Joseph Tsai, who took over as group chairman, said Dai would help set up a new asset management company “as part of our continued efforts to improve return on capital.” He plans to change his role in order to do so. Mr. Zhang in September.
Mr. Dai, Mr. Wu and Mr. Tsai are all co-founders of Alibaba Group and longtime lieutenants of former CEO Jack Ma.
An Alibaba spokesperson confirmed that the company plans to form a new asset management company and that Mr. Dai will be involved.
Alibaba said in a regulatory filing that the new company will focus on managing the group's non-core assets.
Wu explained Alibaba Group's future strategy to analysts last month, saying the company would conduct a review to differentiate between “core” and “non-core” businesses.
“The core business is where we focus our long-term focus, invest resources intensively, pursue research and development, and improve the user experience,” he said on a post-earnings conference call.
In the biggest reorganization in Alibaba's 24-year history, the company was split into six divisions managed by the group as a holding company in March.
The company announced in May that its cloud division would be one of the first to spin off and go public. The plan was shelved last month, citing uncertainty over U.S. restrictions on exports of chips used in artificial intelligence applications to China.
(Reporting by Casey Hall; Editing by Jacqueline Wong, Muralikumar Anantharaman and Jamie Freed)
