Jack Ma reshuffles Alibaba management to renew the company

Alibaba's unexpected decision to replace its chief executive this week comes as the Chinese ecommerce group attempts to restore confidence among investors, following months of bad news and a falling stock price. Combined with good quarterly earnings, the move seems - at least for the time being - to have done the trick.

The news that Daniel Zhang would succeed Jonathan Lu was hailed as a positive step by Barclays, which headlined its note on Thursday: "New Leadership to Drive Improvement".

The company wasted no time getting fluent English speaker Mr Zhang in front of investors to talk up the better numbers released on Thursday, in which revenues climb 45 per cent year-on-year to Rmb17.4bn ($2.8bn), beating Wall Street's forecasts of Rmb16.8bn.

But the latest reshuffle has raised questions about Alibaba's strategy just months after launching the most successful initial public offering on the New York Stock Exchange in September, which raised $25bn, particularly as it follows other moves this year.

In March, Alibaba replaced the head of its Tmall site as well as its Juhuasuan daily deals platform. A month later, a new head of the marketing unit was announced, while Mr Lu is stepping down after only two years in the role.

"Changing management so soon after its IPO, and before it has really even set itself on track after the IPO, may shake market confidence in the stability of the company," says Zhang Yi, head of Imedia, an ecommerce research company based in Guangzhou.

Shaun Rein, head of China Market Research Group, a Shanghai-based consultancy, says the move "shows a bit of desperation on Alibaba's part. Why would you want to replace a CEO so soon after an IPO?"

The only person who knows the answer is Jack Ma, Alibaba's founder and chairman who makes all major decisions and leads the company with a flair for the dramatic. In a series of austerity measures he announced in February that no one at Alibaba would get a Spring Festival bonus, and last week announced a hiring freeze in an attempt to improve efficiency.

The moves followed a recent run of bad news for the company. A Chinese government regulator released a highly critical report of Alibaba's business practices in January after a corporate social media account hurled abuse at it, accusing the SAIC of being a "crooked referee".

Combined with a poor December quarter, the news helped to send the share price tumbling.

Many believe a safe pair of hands like Mr Zhang, a soft-spoken former accountant, may be just the thing the vision-heavy company needs.

"The company is in need of more managers. He seems to be a guy who knows how to execute and how to make money," says Mr Rein. "So far everything that he has been involved with has done very well".

But a person close to Alibaba denied the move was timed to please the market, saying it had been planned months ago - something that seemed to be telegraphed when Mr Zhang and Mr Lu appeared together to brief journalists on Singles Day, the world's biggest shopping event, at Alibaba's headquarters in Hangzhou.

Mr Zhang joined the company in 2007, but the more important date is the year of his birth: 1972. "Alibaba Group is ready to completely hand over management leadership to those of you who were born in the '70s," Mr Ma said in his letter to staff circulated on Thursday, pointing to the need of elevating a younger generation into the senior positions.

"The group has a real need to transfuse young blood into its managerial level. Most of the decision-making power was in the hands of the post-60s generation, who were the pioneers in the 90s and the PC era, but they may have trouble keeping up with the mobile internet way of thinking," says Imedia's Zhang Yi.

Additional reporting by Ma Fangjing

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