Alibaba Group has decided to split into six different units to compete with the market. As China relaxes its crackdown on private enterprises, various entities will pursue fundraising opportunities and seek listings in the market, one of which will be Alibaba Group.
The company’s major restructuring involves dividing it into six organizations: These are:
- Cloud Intelligence Group (providing cloud solutions)
- Taobao Tmall Commerce Group (offering local online commerce services)
- Local Services Group (providing delivery services)
- Cainiao Smart Logistics Group (dealing with logistics)
- Global Digital Commerce Group (managing AliExpress)
- Digital Media and Entertainment Group (providing gaming, motion pictures, and web services)
The declaration was made a day following Jack Ma’s return to China, which is considered a signal of Beijing’s more lenient attitude towards private enterprises. Over the last two years, Alibaba has been subject to regulatory scrutiny, which has put them under immense pressure.
The CEO of Alibaba, Daniel Zhang, stated in a letter to the staff that the company’s goal is to become more flexible, reduce decision-making channels, and respond more swiftly. As part of this plan, he will remain the chairman and CEO of the Alibaba Group, which will assume a new role as a holding company management model.
Every one of the six businesses will have a CEO and a board of directors, with the independence to raise funds independently of the parent company. However, Taobao Tmall Commerce Group will remain fully owned by Alibaba Group.
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The restructuring is viewed by analysts as a measure to adopt a more conciliatory approach towards US regulators and global investors. By returning to China shortly after Li Qiang’s appointment as premier, Jack Ma might be attempting to boost the morale of domestic entrepreneurs and signal that China’s technology crackdown is coming to a close.
Hariharan, Managing Director of Global Macro Research, said, “By paving the way for Alibaba’s various new units to list, the Chinese government may be signalling less hostility towards its tech giants as a placatory message to U.S. and international investors.”
Tara Hariharan from NWI Management, an emerging market hedge fund, suggested that the decision may have been influenced by the US government’s investigation of Chinese technology companies, which highlighted national security apprehensions surrounding ByteDance and its subsidiary, TikTok.
On Monday, Alibaba’s shares were uplifted when its founder, Jack Ma, returned to China, as industry insiders interpreted his extended overseas absence as an indication of the subdued sentiment among the company’s private enterprises.