Ma Yun's most trusted person holds absolute power

Author: Liu Baodan

Editor: Zhang Xiaoling

Just 21 days after Pinduoduo surpassed Alibaba in market value, Alibaba is once again undergoing a major reshuffle of its core executives.

On December 20th, Alibaba announced through a company-wide letter that Group CEO and Taotian Group Chairman Daniel Zhang will also serve as Taotian Group CEO. This means that Daniel Zhang will become a key figure in leading Taotian.

Currently, Daniel Zhang holds the positions of CEO of Alibaba, Taotian Group, and Alibaba Cloud Intelligence Group, consolidating the real power of Alibaba's core business.

Daniel Zhang, nicknamed "Mother Zhang," is one of the earliest partners to follow Jack Ma. Internally, he is known for being low-key and "actions speak louder than words." In the organizational restructuring of Alibaba in March this year, as the person Jack Ma trusts the most, he and Joe Tsai returned to power, taking charge of Alibaba once again.

Facing the fierce competition from Pinduoduo, Jack Ma said that Alibaba will change. "The era of AI e-commerce has just begun, it is an opportunity and a challenge for everyone." Now it seems that Alibaba is making practical adjustments.

While Daniel Zhang oversees the core business, Alibaba is also shrinking its non-core businesses and continuously reducing its holdings in non-core companies to realize asset monetization.

In the era of e-commerce saturation, market competition is becoming increasingly fierce, and Alibaba must focus, be frugal, and live within its means.

The internet landscape is undergoing a major reshuffle, and whether Alibaba can regain its past glory through organizational changes and strategic adjustments is crucial at every step.

Leadership Change in Taotian

Since the start of the largest organizational restructuring in history in March, adjustments have become the norm for Alibaba.

As a key figure in Alibaba's organizational restructuring, Daniel Zhang, with a background in technology, has continuously gained more authority before becoming Taotian CEO.

In June, Daniel Zhang was confirmed as CEO of Alibaba Holding Group. In September, he took over as Chairman and CEO of Alibaba Cloud. In December, he took on the role of Taotian CEO, gradually taking control of Alibaba's most core and critical business sectors.

An Alibaba employee told Wall Street Journal that they have become accustomed to such changes. "Mother Zhang should be better than Shan Dai. Alibaba has had ecological advantages since its inception. After the spin-off, it lost this advantage by becoming too independent. Now, with the same person leading while ensuring independent operations, the ability to mobilize resources will be stronger."

In the letter, Alibaba Chairman Joe Tsai stated that Daniel Zhang's dual role as CEO of Alibaba Cloud and Taotian will help lead Taotian's transformation through technological innovation, ensuring unified command and high-intensity continuous investment in the two strategic focuses of e-commerce and cloud.

Last month, Daniel Zhang revealed the new strategic roadmap to the outside world for the first time, identifying three priorities for Alibaba in the next decade: technology-driven internet platform business, AI-driven technology business, and globalized commercial network. Based on this, Taotian Future's business development strategy is "user first, ecological prosperity, driven by technology". Currently, with the appointment of Wu Yongming, Taotian's technological strength as an e-commerce platform will continue to strengthen.

Since the beginning of this year, Taotian has started to explore AI business, with about 20 teams working on AI-related businesses at its peak. Taotian has also trained its own large-scale model products, mainly empowering search and browsing businesses. Recently, Alibaba integrated its AI teams into four teams, each responsible for Alibaba Mom, C-end consumers, B-end merchants, and industry-specific applications.

Another major business of Alibaba, Alibaba Cloud, is also a focus of Wu Yongming.

On November 16th, Alibaba announced that it will no longer pursue a complete spin-off of Alibaba Cloud and will increase its investment in it. The reasons for this are not only due to the US restrictions on the export of advanced computing chips, but also because as a technological foundation, Alibaba Cloud cannot be separated so clearly from the group, Taotian, and others.

At the end of last month, Wu Yongming stated that in the next five years, Alibaba Cloud will implement an AI-driven, public cloud-first strategy. He also established an infrastructure committee at the group level and personally oversees its management, with the aim of ensuring close collaboration between the group's various businesses and Alibaba Cloud.

If Alibaba Cloud carries Alibaba's long-term strategic investment in the AI era, then Taotian is Alibaba's largest application scenario in the AI era. This requires deep collaboration between Taotian and Alibaba Cloud, which is also the core reason why they are ultimately under the management of Wu Yongming.

More than half a month ago, Pinduoduo's market value surpassed Alibaba, which undoubtedly increased the pressure and sense of crisis for Alibaba.

Leveraging AI to bring new possibilities to performance is one answer given by Wu Yongming, but technological innovation is different from business model iteration, especially when it comes to AI in commercial applications, which is still in the exploratory stage. This is nothing short of a gamble.

As the CEO of three companies, Wu Yongming is undoubtedly one of the busiest CEOs in Alibaba's history. In addition to professional qualities such as strategy and execution, how to allocate time and energy is also a significant challenge.

Alibaba Streamlining

Facing rapidly changing markets, Alibaba must focus its energy on conquering its core e-commerce and cloud businesses. For non-core assets, Alibaba has begun to monetize them.

On December 15th, US Securities and Exchange Commission filings showed that Taobao China Holdings Limited plans to sell 25 million shares of Xiaopeng Motors. Recently, Hong Kong Stock Exchange filings showed that Alibaba has divested its shares in Kuaidi Dache in two separate transactions.

Alibaba officials stated that these measures are in line with their capital management goals. Shrinking non-core assets is in line with Alibaba's current development direction, and it also means that Alibaba will start to be more frugal.

In addition, in early December, in order to highlight the independent development of its core and non-core businesses, Alibaba also rearranged its holdings in several A-share companies. According to sources close to Alibaba, Alibaba (China) Network Technology Co., Ltd. has decided to implement a continuing separation, with Alibaba Network transferring part of its A-share listed companies to the newly established entity, Hangzhou Haoyue, in a form that complies with exchange requirements.

So far, Alibaba Network has exited its holdings in 8 listed companies, including Macalline, Liren Group, YTO Express, Home Inn, Qianfang Technology, Meinian Onehealth, Focus Media, and iQiyi.

According to Wall Street News, the number of shares held by Alibaba in the above-mentioned A-share listed companies has not changed before and after the transfer. However, the possibility of reducing holdings in the future cannot be ruled out.

After the split, the focus of the Alibaba Group has shifted to capital management. The company has established a Capital Management Committee under the Group's Board of Directors, which is mainly responsible for enhancing shareholder returns. In the second quarter earnings conference call on November 16th, Joe Tsai stated that Alibaba is focusing on unlocking value in capital management, and realizing the value of non-core assets is one of the important measures.

Joe Tsai stated that on the company's balance sheet, the total value of equity securities, other investments, and investments accounted for using the equity method is $67 billion. "Not all investments belong to core or strategic businesses. We are evaluating innovative methods to realize the value of these assets in order to return value to shareholders."

Currently, Xiaopeng Motors and Kuaidog are the targets for Alibaba's value realization. The common point between them is that they are both unrelated to Alibaba's main business and are purely investment activities for Alibaba. Moreover, both of them are in a loss-making state.

According to the financial report, Kuaidog Taxi had a loss of 643 million yuan in the first half of the year, and Xiaopeng Motors had a net loss of 3.89 billion yuan in the third quarter.

In addition, Dai Shan, the CEO of Taotianyuan, will be transferred to the group in the future. She will assist the group in establishing Alibaba Asset Management Company and forming a professional management team. This also means that Alibaba's efforts to optimize the return on capital will be further strengthened.

Not only Alibaba, in the past few years, Tencent has also significantly reduced its holdings in JD.com and Meituan. Earlier this year, Tencent distributed Kuaishou shares worth more than 2.6 billion Hong Kong dollars to shareholders through its investment entity.

The once huge Alibaba and Tencent ecosystems are becoming a thing of the past. The era of Internet capital expansion is coming to an end, and businesses will continue to streamline and focus on their core operations. This applies to Alibaba, Tencent, ByteDance, JD.com, and others.

As the fourth-generation CEO of Alibaba, Daniel Zhang bears the mission of Alibaba's resurgence in the new stage. This not only determines his personal success or failure but also determines whether Alibaba can become a century-old company. Therefore, he must give it his all.