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Alibaba Group announces split of business into six units, eyes value unlocking

Alibaba Group

Alibaba Group – business split into 6 units

The e-commerce behemoth announced on Tuesday that Alibaba Group is considering to split into six units and investigate fundraising or listings for most of them.

A day after co-founder Jack Ma returned to China from a year-long absence abroad and as China promises to soften a broad regulatory crackdown and promote its private enterprises, the conglomerate’s reorganization was unveiled.

According to Reuters, the Chinese conglomerate would be divided into six units in the largest restructuring in its 24-year history, including the Cloud Intelligence Group, Local Services Group, Taobao Tmall Commerce Group, Global Digital Commerce Group, Digital Media and Entertainment Group, and Cainiao Smart Logistics Group.

As a result of the news development, shares of the US-listed company increased by roughly 8%. The price of Alibaba stock has fallen 72% since October 2020, nevertheless.

Alibaba Group

The initial idea and main goal of this change, according to Zhang’s letter to staff seen by Reuters, is to make our organization more flexible, cut decision-making chains, and respond more quickly.

According to him, each business unit needed to actively address the market’s rapid changes, and each employee of Alibaba needed to “return to the mindset of an entrepreneur.”

According to Reuters, Daniel Zhang will continue to lead the holding company-managed Alibaba Group as chairman and CEO while also leading the Cloud Intelligence Group.

Each of the six business groups will reportedly have its own CEO and board of directors, as well as the freedom to raise money from other sources and pursue an IPO, according to the article.

One exception would be Taobao Tmall Commerce Group, which manages its China-related activities and will continue to be a fully owned subsidiary of Alibaba Group.