The group wants to split into individual companies for online trading and cloud business, among other things.
(Photo: Reuters)
Hangzhou The Chinese Amazon rival Alibaba wants to split into six independent companies. Each of them should explore the possibility of IPOs or other forms of raising capital, Alibaba itself will act as a holding company in the future.
“The intention and fundamental purpose of this reform is to make our organization more flexible, to shorten decision-making processes and to react faster,” CEO Daniel Zhang wrote in an employee circular seen by Reuters news agency on Tuesday.
The tech giant will consist of Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group. Every company has its own CEO and board of directors. The Alibaba Group, which is managed by Zhang, hovers above everything as the holding company. He will also head the Cloud Intelligence Group.
Zhang called on workers to “return to an entrepreneurial mindset.” He also announced that the administration would be thinned out, but gave no details about job cuts.
The plans were well received on the stock exchange. Alibaba stocks listed in the US rose more than six percent premarket. “This brings an element of flexibility and adaptability to a company that’s kind of a behemoth right now,” said Stuart Cole, chief economist at brokerage firm Equiti Capital. However, it will certainly take quite a while to turn one company into six.
Alibaba founder Jack Ma is back in China
The split announcement came a day after company co-founder Jack Ma was spotted back in China for the first time in years. That doesn’t appear to be a coincidence, commented Economist Cole. “To me, this suggests that Alibaba has been nurturing this plan for some time, waiting for a favorable opportunity.”
The prominent billionaire Ma had criticized the regulation in his home country in 2020. This speech is considered the trigger for the intensified state pressure on the private sector, which, among other things, caused the IPO of Ant Financial to fall victim. The financial service provider operates the Alipay payment service and belongs to Alibaba.
The Alibaba founder has been seen in China for the first time in years.
(Photo: AP)
After this setback, Ma disappeared from the scene for several months. At the same time, he lost his status as the richest Chinese and had to relinquish control of Ant.
More: Alibaba founder Jack Ma is back in China