Huaxia Times reporter Lu Xiao reports from Beijing
It has been a year since Alibaba announced its "1+6+N" restructuring in March last year.
On April 10th, Alibaba founder Jack Ma published a post titled "To Reform and Innovation" on the Alibaba intranet under the name of a prominent figure, affirming the courage of the new management team composed of Cai Chongxin and Wu Yongming to change, stating that Alibaba has returned to a healthy growth track and supports continued reform. The reporter learned from Alibaba that this is the first time in five years that Jack Ma has shared his thoughts on the company's reform, innovation, and future prospects in a lengthy manner after retirement.
Alibaba needs reform and has gained consensus from everyone. But how to make changes is constantly changing. In the past year's restructuring journey, not only have the top personnel of Alibaba Group changed, but the direction and path of reform are also changing. The transformation achievements of this behemoth with a market value close to $186 billion under the leadership of the new management have also attracted external attention.
On April 10th, as of the press release by Huaxia Times, Alibaba's Hong Kong stock market was trading at HKD 73.75, up 4.61%. This price has dropped by approximately 12.5% compared to the closing price of HKD 84.25 when the restructuring was announced on March 28 last year.
Jack Ma speaks out
According to a reporter from Huaxia Times, after Pinduoduo released its Q3 financial report in November last year, its market value was only 10 billion US dollars lower than Alibaba's. An employee on Alibaba's intranet posted lamenting the changes in the industry, and Jack Ma rarely congratulated Pinduoduo under the post, stating that he firmly believed that Alibaba would change and that Alibaba would change.
In the latest internal network article, the new management team and young team were fully recognized by Jack Ma.
Jack Ma stated that over the past year, Cai Chongxin and Wu Yongming have led Alibaba with admirable courage and wisdom to carry out a series of future oriented changes. He stated in this internal letter that the new management team faces problems and the future, trusts young people, fully empowers the young team, and makes decisive and clear choices about what we want and what we don't want. Our idealistic sentiment and mission to make the world no difficult business will never change, but over the past year, the new management has made various changes, not only breaking through yesterday's fixed strategy, but also building the future of Alibaba.
He also emphasized, "The most crucial change of this year is not to catch up with KPIs, but to recognize ourselves and return to the customer value track. We have taken a step back from a slow decision-making organization to prioritize efficiency and market, making the company simple and agile again." Alibaba insiders said, "Although Mr. Ma has not been in a specific management position in recent years, as the founder, he always stood up at critical moments of the company's development, providing employees with clarification and encouragement."
Bringing more young people to the forefront is an important direction for Alibaba's current transformation.
According to reporters, on September 10th last year, 59 year old Cai Chongxin and 48 year old Wu Yongming respectively took over the positions of Chairman and CEO of Alibaba from retired Zhang Yong. The younger Wu Yongming subsequently took on the role of CEO of the core business of e-commerce and cloud, and focused on promoting the reform of a younger management team. A group of management teams born in the 1980s also took over comprehensively. Among them, former Chief Operating Officer of Ele.me, Chen Weiye, was transferred to be responsible for the Taobao business unit, while Wu Jia, born in 1985, was responsible for the Taotian User Platform business unit and Alibaba Mama business unit.
In addition to well-known e-commerce businesses, more new Alibaba businesses are also being pushed to the forefront. Last November, Wu Yongming announced Alibaba's first batch of strategic innovation businesses -1688, Xianyu, DingTalk, and Quark. These innovative businesses, mainly aimed at young people, are considered the future focus that Wu Yongming has set for Alibaba. They will operate as independent subsidiaries, while Alibaba will continue to invest in them over a period of 3-5 years.
Ding Daoshi, an Internet analyst, believes that Ma Yun has a large amount of internal information, and only an entrepreneur can admit his mistakes on his own initiative, can he correct his mistakes and further self innovate, but he also believes that this does not mean that Ma Yun wants to start again. Ding Daoshi told a reporter from Huaxia Times that Alibaba's key direction is to further reform, "allowing more young people to take the lead, more young businesses to run, and embracing change is an overall change for Alibaba."
Where is Alibaba going
Alibaba's restructuring and reform did not follow the current path from the beginning.
On March 28th last year, Zhang Yong, then Chairman and CEO of Alibaba, announced the largest "1+6+N" reform in Alibaba's history. In his vision, Alibaba will fully implement holding company management, and its six major groups and various companies have the possibility of independent financing and listing. "If the conditions are ripe, one will go public.". In May 2023, Alibaba also announced the listing schedule for its three major businesses, Cainiao, Hema, and Alibaba Cloud.
But the path of "going it alone" changed after the new management took office.
In addition to Alibaba Cloud no longer being completely spun off and Hema temporarily suspending its IPO in Hong Kong, Cainiao, which has already been listed on the Hong Kong stock exchange, announced on March 26th this year that it has withdrawn its listing application. Alibaba stated in its announcement that this move is aimed at strengthening collaboration with Alibaba's e-commerce business and continuing to support Cainiao in expanding its global logistics network investment. In addition, Alibaba announced a tender offer to acquire the equity of a minority shareholder of Cainiao and the equity already owned by employees, involving a total amount of 3.75 billion US dollars. Jack Ma also mentioned in his internal letter on April 10th, "Organizational change and restructuring involve every employee. Thank you to all Alibaba people for their efforts and responsibilities this year, and thank you and your family for choosing to believe and persist in the constant changes and even the decision of IPO or not."
Alibaba is not only focusing on newcomers, but Wu Yongming has already proposed in February this year that "the highest priority for the group is to reignite the growth momentum of its two core businesses, e-commerce and cloud computing." He also serves as the CEO of both businesses.
Among them, Taotian is Alibaba's most core business, with a revenue of 129.07 billion yuan in Q3 of the 2024 fiscal year as of the end of December last year, accounting for about half of Alibaba's total revenue. However, under the "siege" of Tiktok, Kwai, Pinduoduo and other competitors, Alibaba's e-commerce business is no longer unique. In the above financial report, Taotian's revenue growth rate of 2% year-on-year ranked last in the group, and its adjusted EBITA growth rate of nearly 60 billion yuan in the current period was only 1% year-on-year. During a conversation with reporters, guest consulting partner Li Yingtao also believed that Taotian, which is now valuing small and medium-sized businesses, fundamentally faces a competitive situation where Pinduoduo is on the left and JD.com is on the right. How to balance resources and strategies is a test for it.
The new management is equally determined to withdraw from non core businesses.
In February of this year, when answering investors' questions about "selling non core assets", Cai Chongxin stated that Alibaba has completed the exit of $1.7 billion of non core assets in nine months from fiscal year 2024 to present. In addition, "Currently, there are still some traditional physical retail businesses on Alibaba's balance sheet that are not core focused businesses, and Alibaba's exit is reasonable. However, considering the current market situation, the exit may take time to achieve."
Compared to withdrawing from external investments such as Xiaopeng Motors and Focus Media, how Alibaba treats its internal "non core" businesses has attracted more attention from the outside world. Ele.me, Hema, Intime, RT Mart and other businesses have all appeared on the legendary sales list. The rumor that Alibaba intended to package Hema and RT Mart for 30 billion yuan and sell them to COFCO has been denied to reporters by Alibaba.
When communicating with the reporter of Huaxia Times, Ding Daoshi believed that Ali's strategic turn last year was based on different decisions made in different market environments
Ma Yun also said in his internal letter on the same day that from B2B to Taobao, to Alipay, to Alibaba Cloud, Alibaba's innovation has never been to pursue higher profits, nor to surpass rivals and catch up with fashion, but to strive to survive in the rapidly changing era, to catch up with the future, and to test the real viability.