Status: 03/28/2023 4:55 p.m
China’s online trading giant Alibaba will in future consist of independent companies that could go public separately. Shortly before, co-founder Jack Ma had appeared in the Chinese public for the first time in a long time.
Alibaba, Amazon’s Chinese competitor, is planning a radical restructuring and split into six independent companies. Each of them should examine the possibility of IPOs or other forms of raising capital, while Alibaba itself will operate as a holding company in the future, the group said.
“The intention and the basic purpose of this reform is to make our organization more flexible, to shorten the decision-making paths and to react faster,” wrote Group CEO Daniel Zhang in an employee circular today.
Back to “an entrepreneurial mindset”
In the future, the technology giant will consist of independent groups: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group. Each company will have 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.
Alibaba stocks listed in the US rose more than six percent premarket. “This brings an element of flexibility and adaptability to a company that is currently something of a behemoth,” said Stuart Cole, chief economist at brokerage firm Equiti Capital. However, it will certainly take quite a while to turn one company into six.
Jack Ma reappeared
The announcement comes just a day after the company’s co-founder, Jack Ma, was spotted back in China for the first time in years. Economist Cole sees this as no coincidence: “For me, this indicates that Alibaba has been nurturing this plan for some time and has been waiting for a good opportunity.”
Prominent billionaire Ma criticized regulation in his home country in 2020, which was seen as the trigger for increased government pressure on the private sector. As a result, the planned IPO of Ant Financial, the financial service provider that operates the Alipay payment service and belongs to Alibaba, failed. After this setback, Ma disappeared from the scene for several months, losing his status as the richest Chinese and control of Ant in the process.