Alibaba Group to split in huge restructure

Alibaba Group, Jack Ma’s multinational company responsible for Alibaba, AliExpress, Tmall, TaoBao, and more has this week announced the biggest restructure in its 24 year history in a move designed to unlock shareholder value and foster market competitiveness.

The company will split into six business groups, Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and a Digital Media and Entertainment Group.

According to a post on Alibaba’s news site, AliZila, Daniel Zhang will continue to serve as Chairman and CEO of Alibaba Group, which will follow a holding company management model, while each of the six business groups will be managed by its own CEO and board of directors.  Zhang will also serve as the CEO of the Cloud Intelligence Group which will house all cloud, artificial intelligence activities, and businesses like DingTalk. Taobao Tmall Commerce Group with be led by Alibaba veteran Trudy Dai and will include China commerce activities such as digital marketplaces Taobao and Tmall, value-for-money platform Taobao Deals, community marketplace business Taocaicai, wholesale marketplace 1688.com and other businesses. The Local Services Group will have Yu Yongfu as CEO and encompass navigation platform Amap, delivery service Ele.me and other businesses. Wan Lin will continue as CEO of Cainiao Smart Logistics. The Global Digital Commerce Group, will be headed by Jiang Fan as CEO and span international commerce businesses Lazada, AliExpress, Trendyol, Daraz and Alibaba.com. Finally, Fan Luyuan will be CEO of Digital Media and Entertainment Group, inclusive of China’s third-largest online long-form video platform Youku, Hong Kong-listed Alibaba Pictures and other businesses.

“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 Alibaba employees. “This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes.”

Alibaba Group’s Chief Financial Officer Toby Xu addressed shareholder concerns following the announcement. “As these business units become independent companies, as they potentially go IPO, there’ll be even more ways that we can enhance value for shareholders,” said Xu, who will remain as CFO of the holding company after the group’s reorganisation.

Alibaba made headlines last year as the company held back on releasing its biggest sales event, Singles’ Day, results. Last month it released its third quarter results showing the company was in strong health, exceeding expectations with a revenue of  $247.76 billion Chinese yuan ($53,744 billion AUD), up 2 percent YoY. As Covid restrictions finally begin to ease in China, the company is set to impress with their Q4 results later this year if this restructure goes well.

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