Alibaba Group, one of China’s largest and most influential e-commerce and technology companies, has recently announced a major restructuring plan that will split its business into six main units accordind to the Econ. The plan aims to make the company more agile, responsive and competitive in the fast-changing market, as well as to prepare for possible initial public offerings (IPOs) of some of its subsidiaries.
The six units are: Cloud Intelligence Group, which provides cloud computing and artificial intelligence services; Taobao Tmall Commerce Group, which operates Alibaba’s core e-commerce platforms in China; Local Services Group, which offers online-to-offline services such as food delivery and travel booking; Cainiao Smart Logistics Group, which runs Alibaba’s logistics network and delivery platform; Global Digital Commerce Group, which oversees Alibaba’s international e-commerce businesses such as Lazada and AliExpress; and Digital Media and Entertainment Group, which covers Alibaba’s content and entertainment platforms such as Youku and Alibaba Music.
According to Alibaba’s CEO Daniel Zhang, who will also serve as the CEO of Cloud Intelligence Group, each unit will have its own CEO and board of directors, and will retain the flexibility to raise outside capital and seek IPOs, except for Taobao Tmall Commerce Group, which will remain a wholly owned unit of Alibaba Group. Zhang said that the restructuring will allow each unit to focus on its core competencies and customers, and to pursue independent growth and innovation.
The restructuring comes at a time when Alibaba is facing increased regulatory scrutiny and competition in China’s tech sector. In 2020, Alibaba’s financial affiliate Ant Group had to suspend its planned IPO after regulators intervened over its compliance issues. In 2021, Alibaba was fined $2.8 billion by China’s antitrust watchdog for abusing its market dominance. Alibaba has also been challenged by rivals such as Tencent, JD.com and Pinduoduo in various segments of the e-commerce and internet market.
However, the restructuring also signals Alibaba’s confidence and ambition to expand its business scope and global presence. Alibaba’s founder Jack Ma, who had kept a low profile since his controversial speech in 2020 that criticized China’s regulatory system, recently made a rare public appearance in China, indicating his return to the spotlight. Alibaba’s stock prices in Hong Kong and New York have also rallied since the announcement of the restructuring.
Alibaba’s restructuring is expected to have significant implications for the company’s shareholders, employees, customers and partners, as well as for the wider Chinese tech industry and Hong Kong’s stock market. Analysts say that the restructuring will enhance Alibaba’s transparency, accountability and value creation, as well as create more opportunities for collaboration and competition among its units and with other players in the market.
