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Alibaba plans units for expansion

By HE WEI in Shanghai | China Daily | Updated: 2021-12-07 09:37

The headquarters of e-commerce giant Alibaba Group in Hangzhou, capital of East China's Zhejiang province. [Photo by Niu Jing/For China Daily]

Move of e-commerce giant aims to enhance agility, better take on rivals

Alibaba Group Holding Ltd is restructuring its businesses under two digital commerce umbrellas and reshuffled several key leaders, amid high-profile management and organizational changes of the e-commerce company.

From Jan 1, Alibaba will create two new units, China Digital Commerce and International Digital Commerce, to host its core e-commerce business for better agility, the company said in a statement on Monday, as the two pillars of its growth would be domestic consumption and globalization.

"As we continue to build a multi-engine approach to drive future growth, a 'diversified business governance' will become Alibaba's new organizational strategy as we look toward the future," Chairman and CEO Daniel Zhang said in an open letter to employees. "We want to explore new business governance approaches to drive more innovation and creativity across our teams and businesses."

The domestic business, composed of its flagship Taobao and Tmall portals, business-to-customer retail and domestic trade, will be headed by Dai Shan, who had led a number of teams including customer service, the business-to-business unit and the community marketplace.

Jiang Fan, who had overseen Taobao and Tmall, will take the helm at the newly established IDC arm, which includes foreign trade platforms like AliExpress, Alibaba.com and the company's Southeast Asian e-commerce subsidiary Lazada.

In its last quarterly earnings, the company announced its annual active consumers overseas reached 285 million and reiterated an ambitious goal of serving 2 billion consumers globally.

"It's evident from its latest earnings report that Alibaba is under mounting pressure given growing competition from rivals like JD and Pinduoduo, as well as changing shopper preferences," said Mo Daiqing, senior analyst at consultancy Internet Economy Institute. "It's only reasonable that it embraced organizational structures to cope with the changing situations, both market wise and regulatory environment related."

Separately, the company appointed Xu Hong as chief financial officer effective April 1, 2022, succeeding long-standing incumbent Wu Wei. Alibaba said the personnel change is part of its well contemplated succession plan.

Xu joined Alibaba three years ago from PricewaterhouseCoopers LLP, where he was a partner, and was appointed deputy CFO of Alibaba in July 2019. Wu, who helped lead three Alibaba-related company public listings as CFO, will continue to serve as executive director on Alibaba's board.

"The markets will always have ups and downs, but Alibaba has ambitious long-term goals," Wu said. "We are in a relay race and we must have new generations of talent to take the company forward."

At home, Alibaba is facing mounting pressure from rivals like Pinduoduo, which boasts a domestic shopper base on par with Alibaba. There are also upstarts like short video player ByteDance which employs livestreaming and has been taking on Taobao.

Last month, the company forecast revenue growth to rise between 20 percent and 23 percent, the slowest rate of growth since its stock market debut in 2014. The Nov 11 shopping festival, its signature annual shopping gala since 2009, also recorded the most marginal growth in years.

"We estimate Alibaba will have a 47.1 percent (e-commerce market) share this year in China, which is still far ahead of its competitors," said Ethan Cramer-Flood, senior forecast writer at consultancy eMarketer. "Alibaba's loss has mostly been Pinduoduo's (13 percent) gain, although JD (17 percent) is gaining share marginally as well."

The consultancy said China's social commerce figures are already 10 times what they are in the United States at $351.65 billion. But the new story is livestreaming social commerce, which will grow by 95.5 percent this year and account for more than 50 percent of social commerce by next year.

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