Chinese Firm Alibaba Group to Divide itself into 6 Subsidiaries


Alibaba is dividing itself into six business groups in an effort to become more agile in responding to market changes and increasing the value of those units.

Alibaba Group Holding Ltd. shares jumped 8% at the opening bell.

The Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics, and Digital Media and Entertainment Group are the six new groups announced by Alibaba Group Holding Ltd. in a regulatory filing.

Except for Taobao Tmall Business Group, which will remain wholly owned by Alibaba Group, each group will be able to raise outside capital and potentially seek its own initial public offering, according to the company. Each group will be managed independently by its own CEO and board of directors.

Cloud, AI, and DingTalk are all part of the Cloud Intelligence Group. Taobao, Tmall, Taocaicai, and are all part of the Taobao Tmall Business Group.

Amap and are part of the Local Services Group, while Lazada, AliExpress, Trendyol, Daraz, and are part of the Global Digital Business Group. Youku and Alibaba Pictures are part of the Digital Media and Entertainment Group.

Short-video platforms such as Douyin and Kuaishou, which also provide e-commerce services, have increased their competition for Alibaba. Its US-listed stock has also fallen since a regulatory crackdown on the technology industry in November 2020, when regulators halted the IPO of its financial arm Ant Group and cracked down on anticompetitive practises across the industry.

After months of overseas travel, Alibaba founder Jack Ma has returned to China. Alibaba was founded in the 1990s by Ma, who was once China's richest man. Since November 2020, when he publicly criticised China's regulators and financial systems during a speech in Shanghai, he has kept a low profile with few public appearances.

After regulatory crackdowns on technology, education, online gaming, and financial firms, as well as harsh Covid-19 restrictions, the Chinese government has been attempting to restore confidence in the private sector.

Ma stepped down as chairman of Alibaba in 2019, saying he wanted to focus on philanthropy. In January, he relinquished control of Ant, the financial technology firm, as part of a restructuring of its shareholding structure.

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