Monday, 2024 June 17

Daniel Zhang calls time on Alibaba stint after 16 years

This year’s September 10 marked the 24th anniversary of Chinese tech giant Alibaba Group’s establishment. Nearly midway into its third decade of operation since Jack Ma first co-founded the organization, the occasion is not only a testament to Alibaba’s values of being customer-first, change-embracing, and innovative but also the transience of leadership.

Coinciding with the occasion is an announcement made by Joseph Tsai, chairman of Alibaba’s board of directors, that the organization’s planned handover of management duties has officially been completed.

This leadership transition sees Tsai and Alibaba co-founder Eddie Wu succeed Daniel Zhang, who has served as the organization’s chairman and CEO since 2019. Tsai has assumed the role of board chairman, while Wu has been appointed as Alibaba’s new CEO.

In June, Zhang announced that he planned to hand over the reins so that he can dedicate his full attention to Alibaba Cloud Intelligence Group, the conglomerate’s cloud computing arm and one of its six business units under Alibaba’s new “1+6+N” governance model. However, Reuters reported that Zhang, in a surprising move, will also depart from the cloud business following the leadership transition.

Following Zhang’s departure, Alibaba pledged to invest RMB 7 billion (USD 960 million) to establish a technology fund that will be used to support his future endeavors. The tech giant also awarded him the title of “emeritus”, a first in its history.

Zhang’s 16-year journey with Alibaba

Becoming an “Alibaba person”

Zhang’s journey with Alibaba began in 2007. At that time, Zhang was the CFO of Shanda Group (formerly known as Shanda Interactive). Tsai, who was Alibaba’s CFO at that time, played a key figure in convincing Zhang to leave his role at Shanda and join Alibaba. When Zhang eventually caved, he arrived at Alibaba as employee number 12,000+.

The early stages of his stint coincided with Jack Ma’s preparation for succession at Alibaba. During the organization’s 10th anniversary, Ma announced that the “18 Arhats” had collectively resigned from their roles as founders to usher in an open partner system, allowing both founders and outside executives to join. There is one key condition: each partner must be a true “Alibaba person.”

Alibaba co-founder Jack Ma was a proponent of the organization’s shift from the “18 Arhats” to an open partner system. Photo of Ma practicing tai chi.

This shift paved the way for Zhang, who was neither an Alibaba founder nor a manager nurtured by the organization, to ascend the ranks. Zhang, who at that time served as CFO of Taobao, Alibaba’s online shopping platform, already demonstrated his commitment to Alibaba’s vision and cultural values. Once, when Ma asked Zhang what made him decide to join Alibaba, the latter spoke of his wish to build a USD 30 billion company, having already built a USD 3 billion entity (Shanda Interactive). That laid clear his ambitions.

Nonetheless, Zhang, at that time, did not qualify to be an Alibaba partner. While his commitment was clear, the criteria proved overly stringent: partners needed to work at Alibaba for at least five years and must hold company shares with limited sales requirements, among other culture-related prerequisites.

By 2013, however, Zhang was finally recognized as an “Alibaba person” and officially promoted to become one of the tech giant’s 28 partners. A key factor was the way Zhang navigated the challenges concerning Taobao in the period leading up to his promotion.

Tmall, Singles’ Day, and the Siege of October

Earlier in 2009, Zhang had oversaw the split of Taobao into three separate units: the customer-to-customer (C2C) Taobao, the B2C-focused Tmall (formerly named Taobao Mall), and the e-commerce search engine eTao.

Amidst this restructuring, the person originally in charge had left, which led to a challenging period where the business was in disarray and in need of support. Zhang, who had only been with Alibaba for less than two years, volunteered—he became the president of Tmall with a tumultuous task on his hands.

Having understood that B2C was a promising trend and that Alibaba could not miss this opportunity, Zhang was well-noted as a key figure with sharp business acumen, coming up with strategies that helped set Tmall back on the right track. One of these strategies includes the “Double 11” shopping festival, inspired by the playful notion that singles could spend their free time shopping on Singles’ Day (November 11).

His idea profoundly changed shopping habits in China and ostensibly around the world. Despite initial skepticism, with only 27 participating merchants in the first year, the festival contributed significantly to Tmall’s sales, raking in RMB 50 million (USD 6.87 million) in sales. That figure rose to RMB 936 million (USD 128.6 million) the following year. In 2021, Singles’ Day sales broke the RMB 200 billion mark at RMB 213.5 billion (USD 29.3 billion).

Yet, Zhang’s stewardship of Tmall is, admittedly, blemished by the “Siege of October” in 2011, when he decided to increase the technical service fees and default deposits for merchants. The move aggravated smaller merchants who didn’t want to pay more, while Zhang, who wanted to position Tmall as a premium mall, refused to compromise.

The “Siege of October” was eventually resolved with the intervention of Ma, who lowered the service fees to end the crisis. For Zhang, however, he saw it as a turning point of his career at Alibaba, remarking that Tmall might not have developed into what it is today, had he compromised early on in the crisis.

Venturing into “new retail”

Zhang’s contributions would go on to catapult him to the role of president of Alibaba’s new retail business group, where, starting in 2015, he was tasked to create a new data and tech-driven commerce model that would integrate online and offline retail.

This strategy materialized in several ways. Under Zhang, Alibaba launched Cainiao Network, a global logistics platform, brought Tmall onto the global stage, co-founded Hema Fresh—Alibaba’s supermarket business—and introduced mobile access to Taobao, subsequently making it the world’s largest mobile e-commerce platform.

These maneuvers oversaw significant year-on-year growth in Alibaba’s revenue. In Q1 2023, ending June 30, the conglomerate’s revenue reached RMB 234.16 billion (USD 32.3 billion), 14% higher than the previous year. The adjusted net profit also grew to RMB 44.9 billion (USD 6.17 billion), a 48% increase year-on-year.

Zhang’s many successes at Alibaba leading up to 2018 positioned him as the favorite to take over the reins following Ma’s retirement. He had served the tech giant for 11 years, was an Alibaba partner, and secured sustainable growth for 13 consecutive quarters, naturally making him the top candidate.

While there were initial concerns that Zhang may share the same pull as Ma did, Zhang-led Alibaba performed well following his succession in November 2019 as the head of the organization, booking a 40% surge in sales for the first quarter after he took charge.

Alibaba Group CEO Daniel Zhang took over as chairman of the board after company founder Jack Ma retired in 2019. Photo: Reuters via SCMP

Venture capitalists take the helm

Alibaba’s new leaders, Tsai and Wu, are well-known venture capitalists:

  • Tsai, who initially joined Alibaba in 1999, took a bet on Ma’s vision and played a crucial role in leading Alibaba’s venture into professional financing, managing negotiations with SoftBank and Yahoo.
  • Wu is the tech giant’s first-generation programmer and is also known as Wu Mama for leading Alimama, Alibaba’s algorithmic marketing technology platform. Currently, Wu also leads a RMB 10 billion (USD 1.37 billion) fund at Vision Plus Capital, investing in the likes of Chinese automotive company Li Auto and grocery e-commerce platform MissFresh.

An Alibaba led by Tsai and Wu is expected to similarly adopt forward-looking strategies focused on tapping into the potential of advanced and disruptive technologies, as Zhang did while he helmed the organization.

In a memo sent to Alibaba staff on September 12, Wu emphasized the organization’s imminent shift toward an artificial intelligence-first approach, in tandem with the promotion of younger employees to form the core of its business management teams in the coming years. Alibaba also announced that it would provide public access to its AI model, Tongyi Qianwen, reflecting Alibaba’s commitment to embracing innovation as it moves forward under new leadership.

36Kr Global Writers
36Kr Global Writers
The tech ecosystem is roaring. Unicorns valued at billions of dollars have emerged worldwide, while venture capital and strategic investors are constantly on the lookout for the next big thing. 36Kr Global is committed to establishing ties between global stakeholders and providing the most vital information about China’s tech scene and capital markets.
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