regular-article-logo Friday, 24 May 2024

Alibaba will split into six units

The firm said each unit would have its own chief executive and board of directors to allow for quicker decision-making

Daisuke Wakabayashi New York Published 29.03.23, 05:14 AM
Big change

Big change Sourced by the Telegraph

China’s Alibaba Group said on Tuesday that it would become a holding company with six different business groups, in a major reshuffle that signaled the potential breakup of the country’s biggest e-commerce firm.

Alibaba described the restructuring as the “most significant” organisational overhaul in its 24-year history. It said each unit would have its own chief executive and board of directors to allow for quicker decision-making.


The units will be allowed to seek outside capital with an eye toward eventual initial public offerings. Only its China e-commerce unit, Taobao Tmall Commerce Group, will remain a wholly owned Alibaba entity. In early trading, Alibaba’s US-listed shares rose 8 per cent.

The experience of Alibaba, an internet conglomerate with a variety of businesses that include online shopping and cloud computing, has become a cautionary tale for the cost of challenging China’s ruling Communist Party and the extent of Beijing’s campaign to curb the power of its technology giants.

Alibaba’s decision to potentially break up the company into several smaller entities may also ease the government’s concerns about the concentration of power and influence among the country’s sprawling web giants.

But the restructuring comes at a time when the government appears to be relaxing its regulatory stronghold on the technology sector after a tumultuous three years — a period marked by the disappearance of Alibaba’s billionaire founder, Jack Ma, from the public eye. He was driven underground after criticising Chinese regulators in 2020 for stifling innovation at Ant Group, Alibaba’s financial technology sister company.

Once a gregarious and outspoken figure, a symbol of China’s ability to compete globally, Ma has maintained a low profile in recent years, choosing to spend most of his time abroad. The whereabouts of Ma, China’s most famous businessman, had become a source of intrigue.

Earlier this week, he resurfaced in mainland China for the first time after a prolonged absence. It is not clear how the timing of Ma’s return affected Alibaba’s announcement.

He retired from the company in 2019, but he remains one of its largest individual shareholders.

After Ma’s remarks in 2020, Chinese officials suspended Ant Group’s plans for an initial public offering. Chinese regulators forced Ant to register as a financial holding company and to separate its payment app from its financial services. The public listing never took place. Subsequently, regulators fined Alibaba $2.8 billion for abusing its dominance.

In January, Ant Group said Ma had planned to relinquish control of the company. Around the same time, the top Communist Party official at China’s central bank said the so-called rectification campaign into the biggest technology companies was “basically complete.” NYTNS

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