Alibaba Group announces CEO succession plan

In a surprising announcement on Tuesday, Alibaba Group revealed that Eddie Wu will succeed Daniel Zhang as the company's chief executive, allowing Zhang to focus on Alibaba's cloud intelligence business.

This succession plan follows the e-commerce giant's previous statement in March, wherein it unveiled a major restructuring initiative.

Seeking to reinvigorate the company amidst a slowdown in China's economic growth and stricter regulations from Beijing, Alibaba planned to divide its operations into six distinct business groups.

Zhang, in an internal memo addressed to Alibaba staff, highlighted the significance of core technologies such as cloud computing, big data and AI, stating that they would profoundly transform society. "Cloud Intelligence Group is now full speed ahead on its spin-off plans, and we are approaching a crucial stage of the process, so it is the right time for me to dedicate my full attention and time to the business," he stated.

Alibaba's shares initially experienced losses following the announcement but later recovered, trading down 1 per cent in Hong Kong on Tuesday afternoon.

Alongside the CEO transition, the company also disclosed that Joe Tsai, the current executive vice chairman and owner of the Brooklyn Nets, will assume the role of group chairman.

Zhang will continue to lead the Alibaba Cloud Intelligence Group as chairman and chief executive following the change, which is set to take effect on September 10. The company aims to complete its cloud computing unit within the next year, intending to establish it as an independent publicly listed company.

"From a corporate governance perspective, we also need clear separation between the board and management team as Cloud Intelligence Group proceeds down the path to becoming an independent public company," Zhang added in the internal memo.