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The split marks the biggest restructuring in Alibaba’s history and comes days after founder Jack Ma made a rare public appearance in China.
Chinese e-commerce giant Alibaba is splitting its business into six separate units to increase value for shareholders and avoid anti-competition regulatory pressures.
Daniel Zhang, who will remain the CEO and chair of the Alibaba Group, told employees in an email yesterday (28 March) that each group will be managed by its own CEO and board of directors.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” Zhang wrote in the email.
Share prices soared around the early double digits in the immediate aftermath of the announcement, as industry analysts believe the split will allow different groups to respond to the needs of the market quicker as competition intensifies.
The move, which marks the biggest change in the company’s structure since it was founded 24 years ago, comes just days after Alibaba founder Jack Ma made a rare public appearance in China earlier this week. Beijing hopes the visit will increase confidence in China’s subdued tech sector.
Alibaba’s business took a hit after Ma publicly criticised China’s financial watchdog and banks in a 2020 speech that was soon followed by a regulatory crackdown on tech companies. His fintech company Ant Group’s IPO was suspended and Alibaba was handed a $2.8bn anti-monopoly fine.
Most recently, Ma ceded his majority control of Ant Group as part of the company’s restructuring efforts to appease Chinese regulators. The fintech runs Alipay, which has reportedly become the world’s largest payment system, reaching roughly 1.2bn users globally.
The latest split in Alibaba’s structure will see the company separate six sides of its business: cloud computing, ecommerce, local services, logistics, digital commerce and media.
“This transformation will empower all our businesses to become more agile, enhance decision making and enable faster responses to market changes,” Zhang said. “At 24 years of age, Alibaba is welcoming a new opportunity for growth.”
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