China’s Alibaba to break empire

Splits into six units days after Jack Ma’s return to China

SHANGHAI:

Alibaba Group is planning to split into six units and explore fundraisings or listings for most of them, it said on Tuesday, in a major revamp as China vows to ease a sweeping regulatory crackdown and support its private enterprises.

The US-listed shares of the Chinese e-commerce conglomerate, which have lost nearly 70% of their value since the curbs were imposed in late 2020, rose more than 14%.

Alibaba said the biggest restructuring in its 24-year history will see it split into six units – Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group.

The revamp comes a day after Alibaba founder Jack Ma returned home from a year-long stay abroad, a move that dovetailed with Beijing’s effort to spur growth in the private sector after two years of crackdown.

Analysts said the breakup could ease scrutiny over the tech giant whose sprawling business has been a target of regulators for years.

“The original intention and fundamental purpose of this reform is to make our organisation more agile, shorten decision making links and respond faster,” Chief Executive Daniel Zhang said in a letter to staff.

Each business group, he said, had to tackle the rapid changes in the market and each Alibaba employee had to “return to the mindset of an entrepreneur”.

Investors said the split signals the clearing of regulatory worries and allays concerns that Alibaba had lost the potential to grow.

Published in The Express Tribune, March 30^th, 2023.

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