China’s biggest e-commerce platform, Alibaba, has announced that the empire worth $220 billion will be split into six groups, in one of the most significant overhauls of a leading Chinese tech firm to date.
The action follows reports that Jack Ma, the founder of Alibaba, returned to China this week after an extended hiatus. Jack Ma hasn’t been seen in public much in the last three years.
The six business units will concentrate on e-commerce, cloud computing, entertainment, logistics, and two other areas that provide services to multinational corporations.
Cloud Intelligence Group: Daniel Zhang, the CEO of Alibaba Group since 2019, will oversee the company’s cloud and artificial intelligence operations.
Local Services Group: Yu Yongfu, who was just named the next CEO of Alibaba’s Local Life division in November 2021, will be in charge of the company’s mapping and food delivery service Ele.me.
Global Digital Commerce Group: Jiang Fan will lead the Global Digital Commerce Group, which comprises AliExpress, a cross-border retail platform, and Lazada, an e-commerce platform for Southeast Asia. Jiang Fan has already been in charge of both of these businesses.
Trudy Dai, a seasoned executive, will be in charge of the company’s online shopping platforms, including Taobao and Tmall.
Wan Lin will remain in his role as CEO of the company Cainiao Smart Logistics, which specializes in Alibaba’s smart logistics service.
Fan Luyuan will serve as CEO of the division that houses Alibaba’s streaming and movie businesses, the Digital Media and Entertainment Group.
MOST SIGNIFICANT STEP
In its 24-year existence, the corporation hailed the restructure as the “most important” organizational change.
Each business group and firm can seek autonomous financing and IPOs when they are ready, according to CEO Daniel Zhang. “The market is the finest litmus test,” he added.
What motivated the revamp? Analysts suggested breaking up the monolith into several components might make Alibaba more flexible and protect some of the company from government repression.
JUMP IN SHARE PRICE
Shares of Chinese technology giant Alibaba have jumped after it announced a plan to break up the company.
Alibaba shares rose more than 14% on Tuesday in New York and more than 13% on Wednesday in Hong Kong.
The price of its US-listed shares has decreased by nearly 70% since 2020 as a result of concerns over Beijing’s crackdown on the Technology sector.
This action represents a break from the internet giant’s custom of managing the majority of its operations under the main Alibaba umbrella, which included everything from supermarkets to data centers. After losing more than $500 billion due to the Xi Jinping administration’s crackdown on internet realms, it is also a message that Alibaba is eager to engage with investors and the public markets.
SOURCE- BBC NEWS
HARSH NATURE OF CHINESE GOVERNMENT
The Chinese government seems to have a critical nature against business moguls in the country. There have been various incidents in the past around such business persons in exile.
According to a report this week in the Alibaba-owned South China Morning Post newspaper, Jach Ma, the founder of Alibaba, recently returned to China after spending more than a year abroad.
The publication reported that he visited the Yungu School in Hangzhou, where Alibaba is based, where he spoke with faculty members and saw classrooms.
The most well-known Chinese millionaire to vanish during a crackdown on technology entrepreneurs was Mr. Ma.
After denouncing China’s financial regulators in 2020, the 58-year-old has maintained a quiet profile. In September 2019, he gave up his position as Alibaba’s chairman.
Two days after announcing the largest restructuring in the company’s history, Group CEO Daniel Zhang has just announced that the group will look to monetize non-core assets and is considering giving up control of some businesses.