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Alibaba will split into six units, reshaping Jack Ma’s business empire

<i>VCG/Getty Images</i><br/>Daniel Zhang will remain as CEO of Alibaba Group
VCG via Getty Images
VCG/Getty Images
Daniel Zhang will remain as CEO of Alibaba Group

By Catherine Thorbecke, CNN

Alibaba on Tuesday said it plans to split its business into six separate units, in a move that promises to radically reshape the sprawling Chinese e-commerce firm that Jack Ma founded nearly 25 years ago.

Each new business unit will be overseen by its own chief executive and board of directors, the company said. Five of the new business groups “will also have the flexibility to raise outside capital and potentially to seek its own IPO,” according to a company statement on Tuesday.

The major restructuring at one of China’s most iconic companies comes one day after Ma made a rare public appearance in the country and as Beijing has signaled that its regulatory pressure on the internet industry may be coming to an end.

Ma, once an outspoken billionaire in the country, has kept a very low profile since the Chinese government began a fierce crackdown on the tech sector more than two years ago.

In November 2020, Ant Group — a financial affiliate of Alibaba also founded by Ma — was forced to pull its $37 billion IPO at the last minute following a speech from Ma in which he criticized China’s banks and financial regulators. The next year, Alibaba was hit with a record fine from China’s antitrust regulators.

Alibaba’s shares suffered a steep decline during that period, with the company losing roughly 75% of its market value between its peak in October 2020 and the same month two years later.

But this year, there has been a change in sentiment. Ant Group won a key approval for capital expansion of its consumer finance unit and China has broadly adopted a more business-friendly posture.

On Monday, Ma was seen meeting with students and teachers at the Alibaba-funded Yungu School in Hangzhou, where he visited and “discussed the future of education with the campus directors,” per post from the school on WeChat.

Ma stepped down as CEO of Alibaba in 2013 and retired from his role as executive chairman in 2019.

With the shakeup, Alibaba appears to be taking a page from American tech companies like Google, which restructured as Alphabet. The goal, according to Alibaba, is to build more nimble companies that can ultimately unlock more value for investors.

“This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes,” Daniel Zhang, CEO and chairman of Alibaba Group, said in an email to employees.

The six newly-formed business units will be: a Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and a Digital Media and Entertainment Group.

Investors appeared to cheer the news on Tuesday, sending Alibaba’s US-listed shares up more than 10%.

— CNN’s Michelle Toh and Laura He contributed reporting.

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