Alibaba Group is reportedly in the works of dividing itself into six separate companies.
According to Reuters, these units will pursue funding and public listings, as the Chinese government relaxes its regulation of private businesses.
The major reorganization will involve the creation of six organizations:
- Cloud Intelligence Group – focusing on cloud solutions
- Taobao Tmall Commerce Group – specializing in local online commerce services)
- Local Services Group – providing delivery services
- Cainiao Smart Logistics Group – logistics
- Global Digital Commerce Group – for managing AliExpress, and
- Digital Media and Entertainment Group – this will be covering gaming, motion pictures, and web services.
The development was made one day after Jack Ma’s arrival in China, which may suggest that the Chinese government is adopting a more lenient attitude towards private corporations.
Alibaba has faced intense regulatory scrutiny over the past two years.
In a message addressed to the employees, CEO Daniel Zhang expressed the desire to enhance the company’s agility, reduce decision-making layers, and speed up its response time.
He will maintain his position as Alibaba Group’s chairman and CEO, but the company will adopt a new management model as a holding entity.
Under the restructuring, each of the six companies will have its own CEO and board of directors, with the freedom to secure funding independently of the overarching company. However, Taobao Tmall Commerce Group will remain wholly owned by Alibaba Group.
Many experts view this restructuring as an attempt to ease tensions with US regulators and foreign investors.
Some believe that Jack Ma’s recent return to China and Li Qiang’s appointment as premier of China are intended to boost local business confidence and signal a potential end to the country’s crackdown on technology firms.
It will be interesting to see how this development will play out in the future.