Alibaba to Split Itself into 6 Business Groups

The Chinese e-commerce behemoth Alibaba is dividing itself into six business divisions in an effort to be more responsive to market developments and boost the value of those units.

With the opening bell, shares of Alibaba Group Holding Ltd. increased by 8%.

The six new organisations will consist of the Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics, and Digital Media and Entertainment Group, according to an announcement issued by Alibaba Group Holding Ltd. on Tuesday.

Each group, with the exception of Taobao Tmall Business Group, which will continue to be wholly owned by Alibaba Group, will have the ability to raise outside funding and possibly pursue its own initial public offering, according to the company. Each group will be run autonomously by a CEO and board of directors of its own.

Cloud, AI, and DingTalk are all parts of the Cloud Intelligence Group. Taobao, Tmall, Taobao Deals, Taocaicai, and 1688.com are all part of the Taobao Tmall Business Group. Amap and Ele.me are part of the Local Services Group, whilst Lazada, AliExpress, Trendyol, Daraz, and Alibaba.com are part of the Global Digital Business Group. The Alibaba Pictures and Youku divisions of the Digital Media and Entertainment Group.

Short-video sites like Douyin and Kuaishou, which also provide e-commerce services on their platforms, have exacerbated the rivalry facing Alibaba. Since a regulatory crackdown on the internet sector began in November 2020, which saw regulators stop the IPO of its finance subsidiary Ant Group and push down on anticompetitive behaviours in the technology sector, its U.S.-listed shares has also been declining.

After months of travel, Alibaba founder Jack Ma returned to China on Monday. Ma, who was once China's richest man, started Alibaba in the 1990s. After giving a lecture in Shanghai in November 2020 when he openly lambasted China's banking and regulatory systems, he has maintained a low profile and made few public appearances.

When the economy was hampered by regulatory crackdowns on technology, education, online gambling, and financial businesses as well as severe COVID-19 limitations, the Chinese government has been attempting to restore trust in the private sector.

In 2019, Ma resigned as chairman of Alibaba, stating that he wanted to devote more time to philanthropy. He relinquished leadership of the financial technology company Ant in January amid changes to its shareholder structure.