China’s Alibaba Group announced on the 28th that it plans to divide into six sectors, including electronic commerce, media and cloud.
Alibaba’s stock price, listed on the New York Stock Exchange, rose more than 3.5% on pre-regular news. The six new business unit groups include Cloud Intelligence, Taobao Tmall Commerce, Local Services, Cainiao Smart Logistics, Global Digital Commerce and Digital Media Enterprise Group.
Each split group is individually financed or publicly listed. It is also operated by each CEO and board of directors. It means that the management model of the holding company will be applied mutatis mutandis.
The six groups will set up their own board of directors to implement the CEO responsibility system for each group, Chang explained. It also said that in the future, groups with conditions are likely to make loans and IPOs independently.
The current CEO Daniel Zhang will continue to chair and CEO of Alibaba Group, taking charge of the new cloud intelligence group.
Alibaba Group was launched 24 years ago and now has a market value of $220 billion. Transitioning to a holding company structure is rare for Chinese tech companies, Bloomberg says. The Internet company is boldly shaking off the way it tried to tie Alibaba’s umbrella and roof from supermarkets to data centers.
Alibaba Group is believed to have lost $500 billion in market value, with the listing of the stock market failing due to the strong regulations on Internet tech by the former Xi Jinping administration. It has nothing to do with founder Ma Yun’s return to China in more than a year, and Alibaba is expected to try again to access investors and open markets.
Analysts say that the Chinese government has emphasized support for the private sector since Prime Minister Li Chang took office, and that China needs support from companies such as Alibaba to achieve 5% economic growth.