Alibaba Group is undergoing the most significant restructure in its 24-year history with plans to split the company into six groups, each of which will have its own leadership team and financial structure.
The move is designed to “unlock shareholder value and foster market competitiveness,” according to the company, which has seen the price of its U.S.-listed shares drop nearly 70% since late 2020 amid China’s economic slowdown and a regulatory crackdown on internet firms in the country.
There are bright spots on the horizon though: Chinese officials are indicating an end to the more than two-year tech clampdown and Alibaba Founder Jack Ma has returned to China after a prolonged absence, which has been seen by some as a sign of a more business-friendly Chinese environment. News of the reorganization caused U.S.-listed shares of Alibaba (the company is also listed in Hong Kong) to jump nearly 10% on March 28, 2023.
Daniel Zhang will continue to serve as Chairman and CEO of Alibaba Group, which will adopt a holding company management model with each of the six business groups managed by its own CEO and Board of Directors — and assuming full responsibility for company performance. As such, each group will gain the flexibility to raise outside capital and seek an initial public offering, with the exception of the Taobao Tmall Commerce Group, which will remain a wholly owned Alibaba Group unit.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” said Zhang in an email to employees. “This transformation will empower all our businesses to become more agile, enhance decision-making and enable faster responses to market changes. At 24 years of age, Alibaba is welcoming a new opportunity for growth.”
The six business clusters will be:
- Cloud Intelligence Group — as previously announced, this group will be led by Zhang himself in addition to his role at the head of Alibaba Group. The group will house all cloud and artificial intelligence activities, as well as businesses like DingTalk, an enterprise communication and collaboration platform;
- Taobao Tmall Commerce Group — this unit will include all China commerce activities, including the digital marketplaces Taobao and Tmall, the value-for-money platform Taobao Deals, the community marketplace business Taocaicai, wholesale marketplace 1688.com and other businesses. The group will be led by Alibaba veteran Trudy Dai;
- Local Services Group — this unit will encompass navigation platform Amap, delivery service Ele.me and other businesses and will be led by Yu Yongfu;
- Cainiao Smart Logistics — Wan Lin will continue as CEO of this division;
- Global Digital Commerce Group — this unit will span international commerce businesses, including Lazada, AliExpress, Trendyol, Daraz and Alibaba.com, and will be headed by Jiang Fan; and
- Digital Media and Entertainment Group — this unit will include China’s third-largest online long-form video platform, Youku, the Hong Kong-listed Alibaba Pictures and other businesses, and will be led by Fan Luyuan.
With these changes, Alibaba plans to slim down middle- and back-office functions at the group level, retaining only the functions that are necessary for listing compliance, with other middle- and back-office capabilities transitioning into the relevant business groups and companies.