ali baba said on Tuesday it would split its company into six business groups, each with the ability to raise outside funding and go public, in the most significant restructuring in the history of the Chinese e-commerce giant.
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Each business group will be managed by its own CEO and Board of Directors.
Alibaba said in a statement that the move is “designed to unlock shareholder value and foster market competition.”
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Alibaba shares jumped in the US and closed up more than 14%
The move comes after a difficult two years for Alibaba, which has faced slowing economic growth at home and tougher regulation from Beijing, which has resulted in billions being wiped off its share price. Alibaba has been struggling with growth for the past few quarters.
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Alibaba is now looking to reinvigorate growth with restructuring.
Business groups will revolve around their strategic priorities. These groups are:
- Cloud Intelligence Group: Alibaba CEO Daniel Zhang will head the business that will drive the company’s cloud and artificial intelligence activities.
- Taobao Tmall Commerce Group: It will cover the company’s online shopping platforms including Taobao and Tmall.
- Local Service Group: Yu Yongfu will be CEO and the business will cover Alibaba’s food delivery service Ele.me as well as its mapping.
- Canio Smart Logistics: Wan Lin will continue as CEO of this business, which houses Alibaba’s logistics service.
- Global Digital Commerce Group: Jiang Fan will serve as CEO. The unit includes Alibaba’s international e-commerce businesses, including AliExpress and Lazada.
- Digital Media and Entertainment Group: Fan Luyuan will be CEO of the unit that includes Alibaba’s streaming and movie businesses.
Zhang said each of these entities could independently raise funds and prepare for a public listing.
The exception is Taobao Tmall Commerce Group, which will remain wholly owned by Alibaba.
$600 billion wiped out
Nearly $600 billion in value has been wiped off since Alibaba’s share price peak in October 2020. Since then, the Chinese government has cracked down on private technology businesses, introducing regulation and increasing scrutiny on the practices of domestic giants.
Alibaba’s fintech affiliate Ant Group was forced by regulators to cancel its mega public listing in November 2020. And in 2021, Alibaba was fined $2.6 billion as part of an antitrust investigation.
Alibaba is now looking to reinvigorate growth. The company has grown into a giant that includes businesses ranging from e-commerce to cloud computing to streaming and logistics.
The company sees the creation of six businesses as a way to be nimbler.
“This change will enable all of our businesses to become more agile, enhance decision making and respond faster to market changes,” Zhang said in a statement.
The restructuring also comes at a time when there are signs Beijing is warming back to technology businesses, as the government seeks to revive economic growth in the world’s second-largest economy.
Jack Ma, the outspoken and charismatic founder of Alibaba who had been out of the public eye and traveling abroad for several months, has returned to China in a move perceived by Beijing as an olive branch.
