• The company also announced Joe Tsai will take Zhang's place as the group's chairman.
• Zhang will continue to lead the Alibaba Cloud Intelligence Group as chairman and chief executive after this change, which the company said will take effect Sept. 10.

Alibaba Group said in a surprise announcement Tuesday Eddie Wu will succeed Daniel Zhang as its chief executive.

This succession plan comes after China's largest ecommerce company said in March it will split its company into six business groups. The company explained at that time this will allow each business group to raise outside funding and go public in the most significant reorganization in its history.

"As everyone is well aware, the development of core technologies such as cloud computing, big data and AI will lead to a tremendous transformation of our society and is of utmost strategic significance," Zhang said in an internal memo to Alibaba staff.

"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 added.

Alibaba shares pared losses after the announcement and is trading down 1% in Hong Kong.

The company also announced Joe Tsai will take Zhang's place as the group's chairman. Zhang will continue to lead the Alibaba Cloud Intelligence Group as chairman and chief executive after this change, which the company said will take effect Sept. 10.

Alibaba shake-up

Other than cloud intelligence, the other five business units include its Taobao Tmall business; its local services arm focusing on food delivery and mapping; Cainiao Smart logistics business; its global e-commerce business including AliExpress and Lazada; and its digital media and entertainment business.

"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.

Zhang's successor Wu is one of Alibaba's co-founders and currently chairman of Taobao and Tmall Group. Brooklyn Nets owner Tsai is currently Alibaba's executive vice chairman.

Wu has held a multitude of roles in his time at the company, including heading technology at Alibaba's inception, as well as chief technology officer at Alipay and Taobao. He was also director of Alibaba Health Information Technology and founded Vision Plus Capital, a venture capital firm focused on investing in advanced technologies, enterprise services and digital healthcare.

Zhang has been Alibaba Group's chief executive since 2015 and chairman since 2019, taking over both roles from founder Jack Ma.

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