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ALIBABA GROUP HOLDING LIMITED

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Alibaba Switches Lazada CEO Again in Tough E-Commerce Market

06/26/2020 | 08:25am EST

By Liza Lin and Phred Dvorak

SINGAPORE -- Alibaba Group Holding Ltd. replaced the chief executive of its Southeast Asia e-commerce unit for the third time in just over two years, as the Chinese technology giant continues to struggle to get its international business on track.

Alibaba said it has tapped Chun Li, the head of Lazada's Indonesia operations, Southeast Asia's biggest market, to take on the CEO post as well. The move puts a tech expert and veteran of one of Alibaba's domestic online markets atop Lazada. He succeeds Pierre Poignant.

Singapore-based Lazada operates in six markets in the region.

Alibaba has for years been trying to replicate its huge success at home in markets outside of China. The Hangzhou-based company, which owns China's two largest e-commerce platforms, has sought to expand its operations overseas as growth in its domestic market begins to slow.

Lazada is Alibaba's most high-profile and costliest investment outside of its home market. It was the biggest e-commerce company in Southeast Asia -- a region where demand for such services is expected to explode -- when Alibaba bought a controlling stake in 2016. The Chinese company has poured in at least $4 billion in investments, revamped Lazada's technology and sent a host of Alibaba executives to help lead the unit.

Yet Lazada's revenue growth rate overseas has lagged behind Alibaba's growth in Chinese retail markets, and it has fallen behind local and regional rivals in important markets -- most notably Shopee, the e-commerce unit of Singapore-based Sea Ltd., which counts another Chinese tech giant, Tencent Holdings Ltd., as a backer.

About 3% of the region's $587.5 billion in total retail purchases were conducted online, according to a joint report by Bain & Co. and Facebook Inc. this year, leaving a lot of space for the e-commerce market to grow.

During the past year, Lazada fell behind Shopee in the fast-growing markets of Vietnam and Malaysia in terms of the average number of people who use the app every month, according to rankings from data tracker App Annie. Lazada continues to lag behind in Indonesia, although it has recently shown faster growth there, analysts and market watchers said.

"The political, economic and cultural differences of the various Southeast Asian markets makes it difficult for a one-size-fits-all strategy, as Alibaba has been accustomed to in China," said Tan Yinglan, a managing partner at Insignia Venture Partners.

Part of Alibaba's challenge has been culture clashes and a failure at times to understand local markets, people familiar with the operations said.

The appointment of Mr. Li is an attempt to bridge those cultural gaps, since he has spent time both in Alibaba's Hangzhou headquarters, as well as in the region with Lazada, Mr. Tan said.

Mr. Li had made "huge impact contributions" to Lazada since joining in 2017, said Lucy Peng, the company's chairman in a letter to its staff. A former chief technology officer in Alibaba's enterprise e-commerce unit, Mr. Li had overseen a major technology upgrade at Lazada and had held the fort for the company in a tough and competitive market such as Indonesia, Ms. Peng said.

Lazada's new CEO faces both rising competition and opportunity in the Southeast Asian market, said Florian Hoppe, a partner at Bain in Singapore. The coronavirus pandemic has led to a huge wave of new users entering the Southeast Asia e-commerce market, providing tremendous opportunities for all the players in the market.

Still, the company continues to face a fierce fight with Shopee and local operators within individual Southeast Asia for market share, and the new CEO will need to help Lazada retain the new users it has attracted recently, Mr. Hoppe said.

Write to Liza Lin at Liza.Lin@wsj.com and Phred Dvorak at phred.dvorak@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -1.02% 261.32 Delayed Quote.24.47%
FACEBOOK INC 0.34% 287.52 Delayed Quote.39.61%
INSIGNIA SYSTEMS, INC. 0.00% 1.04 Delayed Quote.42.45%
SEA LIMITED 3.66% 183.88 Delayed Quote.341.02%
TENCENT HOLDINGS LIMITED -0.69% 574 End-of-day quote.52.82%
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Sales 2021 699 B 107 B 107 B
Net income 2021 150 B 22 809 M 22 809 M
Net cash 2021 434 B 66 150 M 66 150 M
P/E ratio 2021 32,4x
Yield 2021 -
Capitalization 4 693 B 714 B 715 B
EV / Sales 2021 6,09x
EV / Sales 2022 4,54x
Nbr of Employees 122 399
Free-Float 99,7%
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Last Close Price 1 734,68 CNY
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NameTitle
Yong Zhang Executive Chairman & Chief Executive Officer
John Michael Evans President & Director
Wei Wu CFO, Director & Head-Strategic Investments
Li Cheng Chief Technology Officer
Chung Hsin Tsai Executive Vice Chairman
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