Alibaba to restructure into six separate companies

Alibaba Group plans to split into six units, company says Reuters. The various entities will seek fundraising and market listings as China eases its crackdown on private companies.

The major restructuring will see the company split into six organizations – Cloud Intelligence Group (cloud solutions), Taobao Tmall Commerce Group (local e-commerce services), Local Services Group (delivery services), Cainiao Smart Logistics Group (logistics), Global Digital Commerce Group (AliExpress) and Digital Media and Entertainment Group (games, motion pictures and web services).

Jack Ma, co-founder of Alibaba Group

The announcement comes a day after Jack Ma returned to China, a move that is seen as an indication of Beijing’s softer approach to private business. Alibaba has come under intense scrutiny for two years after being targeted by regulators.

In a letter to staff, Chief Executive Daniel Zhang said the intention was to make the organization “more agile, shorten decision-making ties and respond faster”. He will continue as Chairman and CEO of the Alibaba Group, which will take on a new role as a holding company management model.

Alibaba Group Headquarters

Each of the six companies will have a CEO and a board of directors with the ability to raise capital outside of the apex company. An exception will be Taobao Tmall Commerce Group, which will be fully owned by Alibaba Group.

Analysts see the restructuring as a step to soften the approach of US regulators and international investors. Jack Ma’s return to China, days after Li Qiang’s appointment as Chinese premier, could be a way to boost local entrepreneurs’ confidence in ending China’s tech crackdown.

Source