Alibaba Group Holding is betting on its retail and cloud computing businesses to secure its future amid intensifying competition in the technology sector.
In an internal circular issued on Monday, chief executive Daniel Zhang announced that Alibaba is restructuring its Tmall e-commerce business and upgrading its Alibaba Cloud business unit.
The Tmall Business Group will be upgraded to “Greater Tmall” to include Tmall, Tmall Supermarket, and Tmall Import/Export business units. The company also set up a new retail technology business group led by the former executive of Tmall’s technology unit Wu Zeming. The new group will integrate technological support from Alibaba’s enterprise-facing units as well as Taobao and Tmall in a bid to consolidate its resources in supporting the New Retail business model for both online and offline platforms.
The Alibaba Cloud business group will be upgraded to Alibaba Cloud Intelligence business group. Alibaba Group chief technology officer Zhang Jianfeng is appointed as head of the unit. After the upgrade, Alibaba’s smart service capabilities such as data computing platform, advanced algorithms, database systems, infrastructure technology platform, and scheduling systems will be fully integrated with Alibaba Cloud and made available to all.
Alibaba is reinforcing the strategic importance of the cloud computing sector amid recent restructuring moves by Tencent Holdings to shift its focus from consumer internet to industrial internet amid regulatory hurdles being encountered by its online gaming business.
Alibaba’s restructuring will focus on two pillars: New Retail and cloud. The company is seeking to build a complete ecosystem that will allow its merchant clients to do business in a digital and smarter way.
Zhang said the company needs to constantly upgrade its organizational structure and capabilities to adapt to the fast-changing world.
Under the new corporate structure, Alibaba will fully embrace technology to promote business innovation, from consumer engagement, marketing, sales, supply chain and logistics to cloud computing.
Alibaba’s digital commercial operating system will be able to help brands and businesses to use innovative technology and business models to create a new ecosystem based on the New Retail model.
Alibaba Cloud is currently the third-largest cloud computing services provider for infrastructure as a service (IaaS), behind Amazon and Microsoft, and is the largest provider of cloud computing services in China. Data from its e-commerce businesses has helped the company to provide cloud-based industry solutions based on artificial intelligence and machine learning technologies.
While New Retail is at the forefront of serving customers, the cloud infrastructure serves as the backbone. The deep integration of technology and commerce will provide the engine for the company’s growth.
The restructuring is part of the moves the group is undertaking to pave the way for the exit of chairman Jack Ma and Zhang’s succession to the throne.
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