On 21 November, two stories rocked China’s ecommerce scene, with global implications.
In this episode, we discuss the first story: Alibaba Group’s announcement to merge its domestic Chinese and international ecommerce businesses into the new Alibaba E-Commerce Business Group, led by Jiang Fan.
This move aims to streamline operations, foster synergies, and better position Alibaba against formidable rivals like Pinduoduo.
(The second story—PDD Group’s Q3 earnings miss—is covered in episode 102.)
In this episode, we explore:
- Jiang Fan’s journey from a mobile advertising entrepreneur to a pivotal leader at Alibaba;
- Challenges of navigating leadership amidst corporate restructuring;
- The significance of this merger in a rapidly evolving ecommerce landscape;
- How this merger mirrors Pinduoduo and Temu’s strategy
The ecommerce competition in China and globally is entering a very interesting and probably even more intensified phase now.
Watch the episode here:
Also available on Spotify and Apple Podcast
[AI-generated transcript]
Sabrina: [00:00:00] Hi everyone, and this is episode 101 of the Impulso podcast. So last week or more specifically last thursday two very big things happened in the e commerce scene in china right and today we’re going to be talking about the first big thing that happened Alibaba announced that it will be merging. It’s Chinese e commerce businesses. So this includes like Taobao, Tmall, Xianyu, as well as 1688, which is their B2B e commerce site, right? We’ll be merging with their international e commerce businesses like Lazada, Dara’s, Aliexpress, as well as Alibaba.
Sabrina: com.
Jianggan: You missed Xianyu.
Sabrina: Trendil. Yeah, Trendil is the one in Turkey. Turkey. Performed
Jianggan: very well.
Sabrina: Alibaba will be merging its Chinese e commerce business and its international e commerce business.
Sabrina: So Alibaba has decided to merge all these businesses and Jiang Fan, who is currently the CEO of Alibaba’s International Digital Commerce Group, AIDC, will be heading the new unit, which would be called the Alibaba E Commerce Business [00:01:00] Group.
Sabrina: So Jiang Fan has been in Alibaba since 2013.
Jianggan: Yeah. So this guy was born in 1985. So fairly young, as compared to many of the co founders of Alibaba. He started a company doing, I think, kind of mobile advertising, and that company was acquired by Alibaba in 2013, I think for 18 million allegedly USD.
Jianggan: So as a result, he joined Alibaba. And gradually, I think he took over the management of Taobao, Timo, basically the core e commerce platforms of Alibaba Group. So when he was there, I think he pushed for a number of initiatives that includes like commerce. I think he was the ardent supporter of like commerce, even though in early days, I mean, many of the initiatives didn’t make ROI sense.
Jianggan: So he still pushed for it. I think he was the one who drove the mobile transformation of Taobao. I think nowadays, especially in emerging markets, it’s very important. It’s quite natural for us to access all these platforms on mobile, but back then it was not certain. So he [00:02:00] drove that and I think for a while people believed that he would eventually succeed to become the CEO of Alibaba group as a whole.
Jianggan: I think so in 2019, 2020, he was managing Taobao, Timo, and both, uh, core e commerce platforms on Alibaba.
Sabrina: He was one of the youngest, like. When I searched, they call it partners of Ali Baba. He was one of the youngest few. So a lot of people felt that
Sabrina: he
Sabrina: has a lot of potential. But of course, in 2020 due to personal reasons, he was kind of demoted, right?
Jianggan: Yes
Jianggan: there was an interesting incident happening that year. So a famous influencer was saying that I think it was like making a public statement, which might lead people to assume that he is having an affair or no, sorry. I think his wife or something was making a public announcement about a potential affair he was allegedly having with, with the influencer. so that caused a dilemma for Alibaba group because I mean, whether this thing can be proven or not, it’s probably very hard to prove this. Alibaba had historically been trying [00:03:00] to uphold a very high standard for its employees. I mean, I think that’s them from the early days. when most of what it did was b2b sales and there was lots of corruption in it.
Jianggan: So as a result, they imposed all this like values, which they tried very hard to reinforce right before that incident. So it was the mid autumn festival. And you know what happens in China’s world for me, the autumn festival, you give
Sabrina: mooncakes.
Jianggan: Yes. And all this big internet firms give the employees mooncakes and somehow a few programmers, in a team.
Jianggan: wrote a script to get more mooncakes than their peers. And I think, I think the number was like, they got like 125 extra boxes of mooncakes or something. Which is quite odd because nobody actually eats the mooncakes.
Sabrina: Yeah, I was like, what are they going to do with all those boxes of mooncakes?
Jianggan: I don’t know, but these people were fired.
Sabrina: Oh, okay.
Jianggan: So when that alleged incident involving Jafran came out, and people were saying that, hey, can you apply the same standard to him?
Sabrina: Mm.
Jianggan: So obviously he was [00:04:00] capable, and whatever happened, I mean, it’s largely personal and it’s not proven.
Sabrina: Yeah. But he wasn’t fired, right? So he was just demoted, and then of course, earlier this year, they actually brought him back.
Sabrina: To
Sabrina: lead, , Alibaba International Digital Commerce, AIDC. And of course, while he was leading AIDC, he made a couple of changes, especially to the international platforms, right? So for Aliexpress, I think they kind of shifted their focus to more of a full consignment model.
Sabrina: And then of course Lazada also started focusing more on their customer experience and optimizing the supply chain. But what have you heard about Zhang Fan as a leader himself? So obviously he’s someone that a lot of people, not just in the organization, but outside of the organization, think has the potential to lead Alibaba in the future.
Sabrina: What have you heard about his leadership style?
Jianggan: I know a few people who used to work closely with him and actually in meetings with him regularly. So a couple of observations, first he likes to play with, his mobile phone. He probably lives on his mobile phone and people don’t see him really using a laptop or a [00:05:00] computer. And quite often in meetings he’s seemingly not paying attention.
Jianggan: But at key points he’ll always throw a comment which renders everybody else speechless because clearly that he was paying attention. Maybe half heartedly, and he can always get to the core of the problem. So I think when he came to manage AliExpress, I think you mentioned two things happened, right?
Jianggan: First is the full consignment model. We know that before Teemu came out, AliExpress internally, had been debating about this model for two or three years. And I think he led a execution. He said guys, enough discussion. Let’s just go. Let’s do it. Let’s do it.
Jianggan: If you look at that last, couple of quarters of results of one of our group, international business was a bright spot because art express was growing faster than China. And for the right reasons, right? Because these are the markets which are relatively untapped and you just need to be focused.
Jianggan: So he also did something for, I think, we all heard about. The layoffs earlier this year,, , I mean, which I think we blocked quite a bit in January [00:06:00] this year, and people are focusing too much on layoffs, not as much on the rationale behind it. Lazada as an organization was complex.
Jianggan: So a lot of initiatives were historically, inactive. But I think after a few years, nobody remembers what these initiatives were for, what these teams were for.
Sabrina: So everything just got very heavy.
Jianggan: So everything became very heavy and it became hard for executives , to exactly figure out where to get resources, where, how to move things. So one thing he did , with all these initiatives, let’s focus on two things. The user experience as well as the supply side.
Jianggan: Not to say that these two things are easy to do, but at least I think he was able to To look at the very complex picture and say that okay, these are the things we should focus on. The rest, Not important.
Sabrina: So he seems very sharp and very focused.
Jianggan: He’s pretty sharp. Yeah,
Sabrina: you guys are interested in the Lazada layouts We do have, I think, two podcast episodes that we did earlier this year when it was happening So I will link those down in the show notes below and you guys can check it out if you’re interested.
Sabrina: So this is [00:07:00] interesting because in 2019, right, Wang Seng, who is actually the founder of Meituan, he actually made a sort of prediction on social media, right? So he wrote, In the coming years, it will be fascinating to watch how the extremely intelligent Colin Huang of Pinduoduo and Jiang Fan of Taobao Tmall compete with each other.
Sabrina: It should be quite exciting. If Jiang Fang manages to win this round, he will undoubtedly become the successor to the Alibaba CEO role if he has any interest in taking on that position. And this was in 2019.
Jianggan: So he wrote that before the pandemic?
Sabrina: And also before the whole, scandal with Jiang Fan happened, right?
Sabrina: But I think it’s pretty similar to what we are seeing now. Obviously, one of Alibaba’s biggest competitors is Ping Duoduo in China. And of course, Timu outside of China, right? And he’s kind of predicted this.
Jianggan: So, I think Wang Xin, the founder of Meitai is known for very, very deep thoughts.
Jianggan: It was I think two years after the IPO of Pinduoduo and there was a time where I think most of Alibaba was still confident that, okay, I mean, Pinduoduo is [00:08:00] ready for like, no cheap goods and they’re not making money, et cetera, et cetera. And they’re just like, no pain to Google user numbers.
Jianggan: But I think the smart people inside took Pinduoduo very seriously. the question is that how do you, Move the whole organization to also take Pinduoduo execute, uh, against this formidable competitor.
Sabrina: But I think it’s interesting that he also pointed out Jiang Fan, right? So obviously now we are kind of seeing how Jiang Fan
Sabrina: will lead
Sabrina: the e commerce business unit of Alibaba to compete with Pinduoduo.
Sabrina: But I think that the merger is also quite interesting because last year in March, Alibaba announced one of their biggest restructuring, which is Pinduoduo. Essentially splitting their group into six business units, right?
Sabrina: So
Sabrina: we’d have a report on it if you guys are interested, it’s called Transforming Alibaba.
Sabrina: It will be linked in the show notes below. But essentially we talk about why Alibaba has decided to split its business units into the Cloud Intelligence Group, Taopao Timor Commerce Group, Global Digital Commerce Group, which of course includes Lazada
Sabrina: AliExpress,
Sabrina: [00:09:00] Tainel Smart Logistics Network, Local Services Group, and of course, lastly, Digital Media and Entertainment Group.
Sabrina: But of course, after this announcement, they have made multiple announcements after that, saying that they were going to reverse some of these
Sabrina: they are going
Sabrina: to reverse the splits and start merging them back together.
Jianggan: So Phyllis, if you could pull up that page in our transforming Annabelle report, which we published, I think, earlier this year, that was already like three quarters, uh, after the transformation kickstarted, they were already making some reversals to the split, right?
Jianggan: Initially, we said that, okay, we are going to, split that, the group into six and make each business accountable. I think that made logical sense in a way that, because they’re, I mean.
Sabrina: They’re a very heavy organization. Very hard.
Jianggan: 30 plus different businesses and Pinduoduo had three.
Sabrina: And I guess at some point they felt that it got too heavy and it was kind of hard for them to be very lean and make quick decisions, right?
Sabrina: Especially when your competitor is so
Jianggan: Yeah, it’s, it’s hard for them to move fast and it’s [00:10:00] also hard for them to make everybody accountable because there are, I mean, they probably knew that there are many businesses, which if you put them stand alone, they’ll probably not be able to survive. And it’s the other businesses which are subsidizing these businesses, but It’s very hard for for leaders to also make decisions on all these businesses, right?
Jianggan: So for instance Part to the transformation I think the co leaders are actually worked very hard to listen to reports Oh all this business and try to make decisions But I mean just how much attention can you have for all this different? in different areas. So that was challenging.
Sabrina: So that was the initial idea, but of course now they are kind of reversing, right? So in Alibaba groups CEO Eddie Wu’s internal note, he mentioned that all business units, heads of finance will now report directly to group CEO. So I think this. that they are kind of reversing their merging strategy.
Sabrina: I think the question here is, why, right? So, initially they wanted to split, because things were getting heavy So, why are they now reversing this I do think, I
Jianggan: [00:11:00] mean, I can put a page about the reversal So, earlier this year they already made a few changes to the initial strategy We’re dealing with something that is very unheard of.
Jianggan: I mean you start implementing a, say, restructuring and they are in a sector which is a very fast moving, so it’s not something that you can plan for five years. Most traditional industries, things don’t move fast and you can have. More sort of long term planning, five year, 10 year and even like two decades. But e commerce, things will move very fast and you need to make changes. I Alibaba’s core values is that the only thing that doesn’t change is change, right?
Jianggan: Change is the only constant.
Sabrina: Yeah,
Jianggan: So the thing is that when you try to move things and and quite often you’ll hit obstacle and you will need to make a quick decision saying, Hey, I Do I execute um over this obstacle or do I change course and pivot moving to something else? So I do think that they made a few of that decisions On some of [00:12:00] them I think I think I mean more of them made sense, right?
Jianggan: So you try to separate Chai Niao and you try to IPO Chai Niao The logistic arm and the market was not receptive. So what do we do, right?
Sabrina: Okay But also because obviously Chai Niao handles logistics, right? So it’s very closely integrated with the e commerce side So sometimes to merge them, I think it’s also difficult to just have like a clean split, especially when the business, all the business units all work so closely together.
Jianggan: Yeah, it is very hard because I mean, if you move some of the final functions away from the group, the group still need logistics and a cloud. It’s the same thing, right? I think last year close to top 11, there was a incident of a cloud outage for two hours. And then you start to think that, okay, do I really want the cloud to be a separate unit or do I want to have control over that cloud because the whole thing depends on it.
Sabrina: If you guys are interested we did have a couple of podcast episodes as well where we talked about Alibaba’s restructuring, as well as, Their [00:13:00] reversal of the restructuring. So I’ll link those down in the show notes. You guys can check it out. And I do think that from Alibaba’s standpoint at least, it makes sense for them to merge their international and domestic e commerce, especially considering their main competitor, Pintuatua, has one team leading
Jianggan: both.
Jianggan: Yes, and we are in Singapore, right? Yeah. And, uh, do we buy things from Taobao? Do we buy things from Lazada? Or do we buy things from I’m sorry, I have,
Sabrina: yeah, yeah, yeah, other competitors, much smaller competitors.
Jianggan: So this past 2011, we realized that there are actually a lot more people actually buying on Taobao.
Jianggan: And primarily because I think the infrastructure is there for cross border. And the second is that I think Taobao also did quite a number of dedicated promotions for this market. So should Taobao and Lazada Bing be competing against each other or should there be some synergy and, in a large organization, who should make that synergy?
Jianggan: I think there are lots of resources in Alibaba which are duplicate and there are lots of initiatives which are targeting the same sort of audience or the [00:14:00] same merchant base. I think having some kind of complete oversight would make it easier, I mean, not easier, but it would make it easier.
Jianggan: more sensible for them to dedicate resources. Not to say that it’s easy, because it’s still a large organization. Yes, but
Sabrina: Jiang Fan manages it. And of course, like what Wang Xin predicted, right? If he manages to do it well, it’s probably his stepping stone to being the next CEO of Alibaba.
Sabrina: Yeah,
Jianggan: he’s 10 years younger and uh, so, so obviously he has a much longer runway.
Sabrina: And of course, we also mentioned pink water, right? So in the next episode of the imposter podcast, we’re going to be talking about the second big thing that happened last Thursday in the Chinese e commerce scene, which of course is pink.
Sabrina: Don’t lose Q3 earnings where they announced that they actually missed revenue consensus. So we’ll be diving
Jianggan: care about consensus. I
Sabrina: know it seems like they wanted to miss you on purpose, but we will discuss more on that in the next episode. So if you guys are interested, do like, and. Subscribe to, and stay tuned for [00:15:00] the next episode of the Impaulso podcast.
Sabrina: See
Jianggan: you. Bye
Sabrina: bye.
—
Subscribe to our newsletter
