Alibaba’s Change in E-commerce Leadership Sparks Speculation of Possible Sale

Recently, China’s Alibaba, which has reshuffled its e-commerce division leadership, has been caught up in rumors of major business sell-offs. The company’s performance has been lackluster due to the slow recovery of consumer sentiment in China, and its market position is said to be shaky due to the rapid rise of emerging competitors such as Pinduoduo (PDD Holdings).

According to China’s First Financial Daily on the 20th, rumors spread in the market that day that Alibaba Group is planning to sell off its food distribution platform, Hema, and its delivery service platform, Ele.me. The gist of the rumor is that Alibaba Group CEO Daniel Zhang, who has recently taken over as the head of the e-commerce division, is formulating a new management plan, which includes selling Hema and its stake in Ele.me, and even considering merging its video platform Youku with its video subsidiary Alibaba Pictures.

Alibaba immediately denied these rumors, stating, “It’s not true.” Hema also denied the rumors, explaining, “It’s not true, and we plan to continue opening stores this year.” Recently, Hema has been under scrutiny for its decision to withdraw its long-prepared initial public offering (IPO), causing concerns about a hiccup in its management plans. Ele.me and other business divisions also dismissed rumors of sell-offs as fake news. There were even specific rumors that Douyin (TikTok), China’s largest video platform, was in acquisition talks with Ele.me, but both companies denied the rumors.

Alibaba Group has been criticized recently for its shaky footing amid China’s economic slowdown and rapidly changing market order. The day before, the group appointed CEO Daniel Zhang as the head of the company’s main platform business, including Taobao and Tmall, in the e-commerce division, a move widely seen as a ‘dismissal’ of the former head, CEO Dai Shan, for poor business performance.

CEO Zhang, who has been serving as the chairman of Taobao and Tmall since May, succeeded Jiang Yong and ascended to the position of group CEO last September. Recently, he has also been serving as the acting CEO of Cloud Intelligence Group, a position unexpectedly vacated by former CEO Jiang Yong. The recent sell-off rumors seem to stem from speculation that CEO Zhang, who has taken a key position in the company, will be devising a new overall management strategy.

Alibaba, once the company with the highest market value in China, has now given up its ‘top market cap’ position to PDD Holdings, a start-up company that was established just eight years ago. PDD Holdings’ U.S.-listed shares have risen more than 80% this year, recording $195.8 billion (approximately 255.32 trillion won) as of the 30th of last month and surpassing Alibaba ($190.5 billion). PDD Holdings operates the low-cost e-commerce company Pinduoduo and the overseas shopping app Temu. Its sales growth rate reached 94% in the last quarter, while Alibaba’s sales increased by only 9% during the same period.

By. Hyun Jung Kim