Xiaoyaozi bids farewell to Alibaba Cloud

Author | Huang Yu

Editor | Zhang Xiaoling

After stepping down as Chairman of Alibaba Group, unexpectedly, Zhang Yong, also known as Xiaoyaozi, resigned as Chairman of Alibaba Cloud and completely withdrew from Alibaba. At this moment, it has been 16 years since he joined Alibaba.

On September 10th, there were unexpected changes in the long-planned management transition of Alibaba Group. When Cai Chongxin and Wu Yongming were scheduled to take over as Chairman of the Board and CEO respectively, Zhang Yong, who was originally supposed to go all in on Alibaba Cloud, suddenly chose to retire.

Zhang Yong's departure was somewhat unexpected, but his leaving does not affect the progress of Alibaba Cloud. As the business sector under Alibaba Group most likely to go public independently, the listing of Alibaba Cloud is still steadily progressing. Alibaba emphasized in the announcement that the plan to spin off Alibaba Cloud will continue.

The newly appointed CEO of Alibaba Group, Wu Yongming, took on the role of Chairman and CEO of Alibaba Cloud after Zhang Yong's departure. However, this is probably just a transitional arrangement, as Wu Yongming is still the Chairman of Taotian Group and a director of Local Life Group and International Digital Business Group. The future leader of Alibaba Cloud is expected to be clarified soon.

At this point, both Feng Qingyang and Xiaoyaozi, the two Chairmen of Alibaba Group, have chosen to leave. The new historical stage of Alibaba is also unfolding.

Continuous Listing

Let's go back to June 20th. At that time, Zhang Yong, who announced his resignation as Chairman and CEO of Alibaba Group, stated in an internal letter that he would focus full-time on being the Chairman and CEO of Alibaba Cloud Intelligence Group and "create a new arena".

At that time, Alibaba announced the launch of the "1+6+N" organizational transformation, and personnel adjustments were fully implemented. Zhang Yong was parachuted into Alibaba Cloud, and at the critical moment of Alibaba Cloud's spin-off listing, it was widely believed that Zhang Yong personally taking the helm could help the company achieve its listing goal quickly.

It is apparent that Alibaba's internal consensus was reached on this arrangement. Over the past six months, Zhang Yong has also devoted most of his energy to Alibaba Cloud, and AI and large models are the only topics he publicly discusses. On August 23rd, Zhang Yong even appeared at a closed-door meeting of Chinese entrepreneurs in the field of large models, hosted by Alibaba Cloud.

An Alibaba employee told Wall Street News that Zhang Yong's departure was indeed surprising, but upon further thought, it seemed reasonable, "It was his personal choice."

Zhang Yong, 51, has faced the greatest pressure in the past four years. Whether it is business transformation, platform rectification, or controversies surrounding Jack Ma, Zhang Yong, as Jack Ma's successor, has always been at the forefront.

Regarding being a CEO, Zhang Yong once joked that Jack Ma said being a CEO requires being prepared to go to hell. So being a CEO is hard work, and Jack Ma pushed him into "hell." In 2019, Zhang Yong also took over as Chairman of Alibaba Group, undoubtedly facing even greater pressure. After the split of Alibaba, Zhang Yong's decision to leave may be the best choice.

Alibaba has given Zhang Yong sufficient dignity by awarding him the first-ever "Meritorious Alibaba Person" honorary title.

Representing Alibaba, Cai Chongxin highly praised and thanked Zhang Yong for his dedication and contribution to the company over the past 16 years, using the words "remarkable achievements."

However, Zhang Yong's presence will be absent in the rapid listing of Alibaba Cloud in the future.

Based on the signals released by Alibaba, even with a change in leadership, the goal of Alibaba Cloud's separate listing within the next 12 months will not change.

Alibaba Cloud is not only regarded as the second growth curve by Alibaba but also bears the responsibility of creating another Alibaba. Zhang Yong has also expressed, "I hope that Alibaba Cloud, as an independent company, can grow as big as Alibaba Group today, or even bigger."

Alibaba Cloud firmly holds the first position in the domestic market share.

According to the research firm IDC's 2022 global cloud computing tracking data, the top three cloud providers globally are Amazon, Microsoft, and Alibaba Cloud. Among them, Alibaba Cloud ranks third globally with a 6.2% market share, and first domestically. Huawei Cloud, China Telecom, Tencent Cloud, China Mobile, and Baidu Cloud rank from sixth to tenth in terms of market share.

However, despite Alibaba Cloud's leading position in the domestic cloud computing race, it still faces the situation of significantly slowing revenue growth as the stock reaches its peak.

Since reaching a high point of 175% revenue growth in the first quarter of 2016, Alibaba Cloud has experienced consecutive declines, with year-on-year growth dropping to single digits of 3.5% in the 2023 fiscal year.

In order to compete for market share, Alibaba Cloud, Huawei Cloud, Tencent Cloud, and other leading cloud service providers have launched a round of price wars in the first half of this year.

In fact, whether it is initiating a price war, increasing investment in large models and AI model community services, or open sourcing and establishing a community ecosystem, Alibaba Cloud is accelerating to create a larger valuation space for its listing.

Only with more imaginative business stories can Alibaba Cloud gain more funding in its separate listing and accumulate chips for future market competition.

Retreating with the trend

The pseudonym Xiaoyaozi (meaning "carefree wanderer") already reveals Zhang Yong's inner longing for a certain kind of life. Letting go of Alibaba and completely leaving Alibaba Cloud, Zhang Yong has become a true Xiaoyaozi.

In Alibaba's announcement, we can see Zhang Yong's determination. He is not attached to Alibaba Cloud's listing dream. He has already experienced a grander scene, which was the global internet feast when Alibaba went public.

Sixteen years ago, Zhang Yong jumped from Shanda Network to Alibaba. Throughout his career, he has demonstrated his astonishing business acumen and decisiveness multiple times, steadily rising to the highest position in Alibaba Group.

He created the widely known global consumer carnival, Double 11, led Tmall's rapid development, and promoted the comprehensive internetization of brand enterprises. At the same time, he successfully led Alibaba to transition into the wireless era and expand its presence in various fields and globally. In 2015, Zhang Yong gained the trust of Alibaba Group and Jack Ma, and took over as CEO of Alibaba Group from Lu Zhaoxi, officially assuming the second-in-command position of this internet giant.

In the same year, Zhang Yong proposed the concept of an agile organization, hoping that Alibaba would be as agile as a leopard. This organizational strategy, known as "Big Middle Platform, Small Front Platform," has been leading the internet industry for six years, solving the efficiency problems of rapid platform development and trial and error.

Since then, Alibaba has entered a period of rapid development. It is no longer just an e-commerce company, but gradually transforming into a digital economy driven by big data, with e-commerce, finance, logistics, cloud computing, and entertainment as its core scenes. Those were the best days for Alibaba, as its market value soared from HKD 560 billion in 2015 to a historical high of HKD 6 trillion in 2020.

Jack Ma highly recognized Zhang Yong's abilities and, after retiring in 2019, appointed Zhang Yong as the Chairman of the Alibaba Group Board of Directors.

However, starting from 2020, Alibaba's glory began to fade. Faced with challenges such as platform regulation, fighting against the pandemic, and consumer downgrading, Alibaba also encountered the reality of slowing business growth. In Alibaba's core e-commerce business, the consumer upgrade that Zhang Yong once led showed signs of fatigue under the siege of competitors like Pinduoduo.

It wasn't until March of this year when Jack Ma returned to China that Alibaba embarked on its largest organizational transformation ever, known as "One Divides into Six." Each business unit operates independently and will be spun off for separate listings. Alibaba veterans such as Cai Chongxin once again "come out of retirement" and regain power. Jack Ma also proposed a return to Taobao, a return to users, and a re-engagement with small and medium-sized merchants.

During this process, Zhang Yong chose to step back gradually until he eventually left.

However, he found a new way to stay connected with Alibaba. According to a letter from Cai Chongxin to all employees, Alibaba has decided to invest $1 billion to support Zhang Yong in establishing a future-oriented technology fund, assisting Alibaba in creating a better ecological environment for its future technological layout.

In 2016, Zhang Yong completed his historical mission at Alibaba, and the "Xiaoyaozi era" of Alibaba came to an end, bidding farewell to the industry.