Alibaba Group Holding Ltd's chairman and CEO Zhang Yong will step down from his current roles to focus on its cloud division, the Chinese tech heavyweight said on Tuesday.

Industry analysts said the move is in line with the company's overall restructuring plan and will improve corporate governance amid mounting competition from local rivals.

Joseph Tsai, Alibaba's executive vice-chairman, will succeed Zhang as chairman, while Wu Yongming, chairman of Taobao and Tmall Group, will be the chief executive officer. Both appointments will take effect on Sept 10, Alibaba said.

Zhang will continue to lead Alibaba's Cloud Intelligence Group as its chairman and CEO. He has been concurrently serving as chairman and CEO of Alibaba as well as the head of the cloud unit since December.

Zhang said in a letter to employees that the Cloud Intelligence Group will go full speed ahead on its spin-off plans and it is at a crucial stage in the process. So, it is the right time to dedicate his full attention and time to the business, Zhang said.

"It will be inappropriate for me to continue serving as chairman and CEO of both companies at the same time during the spin-off process," he said. Zhang said he is committed to strengthening the cloud unit's market leadership by making cloud computing and artificial intelligence more accessible for industries and businesses as they continue their digital transformation.

In addition to taking on the role of Alibaba's CEO, Wu will continue to serve as chairman of Alibaba's wholly owned subsidiary Taobao and Tmall Group.

The latest reshuffle in executive leadership indicates that Alibaba hopes to adjust its operational strategy, quickly respond to external changes and reduce costs in the face of slowing growth in the e-commerce segment and fierce competition from domestic rivals such as Pinduoduo and JD, said Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School.

The succession plan comes after Alibaba said in March that it would split its business into six main units, with each separate business having the flexibility to raise outside capital and seek its own initial public offering, the most significant organizational change to the company in its 24-year history.

Alibaba said last month that it had approved a full spin-off of its cloud intelligence unit, aiming for the division to become an independent publicly listed company within the next 12 months.

"Alibaba's cloud business has become a key growth engine and pivot apart from its core e-commerce unit, but it also faces sluggish growth in revenue," said Zhang Zhouping, a senior analyst of business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy.

The challenge for Alibaba Cloud is how to maintain growth under an increasingly complex environment, he added.