E-Commerce Giant, Alibaba to Split

Chinese e-commerce giant Alibaba Group Holding Ltd. says it plans to split itself into six independently run companies that could seek separate IPOs.

This comes just as co-founder, Jack Ma returned to China after spending some months overseas.

Under the restructuring, Alibaba’s various businesses will be split up into six major areas: cloud computing, Chinese e-commerce, global e-commerce, digital mapping and food delivery, logistics, and media and entertainment, the company said.

The reorganisation of one of China’s largest private-sector companies, once valued at more than $800 billion but now worth about a quarter of that, comes after Chinese authorities signaled in recent months they were winding down a sweeping regulatory clampdown aimed at reining in the country’s powerful tech sector.

Each business group would have its own CEO reporting to a board of directors and be fully responsible for the group’s performance. Alibaba Group is set to become a holding company overseen by Alibaba Chairman and Chief Executive Daniel Zhang.

Those business groups will be allowed to raise external capital and seek initial public offerings when they are ready, Alibaba said. Its domestic commerce business will remain a wholly owned unit of Alibaba, it added.

Mr. Ma, a co-founder who built Alibaba into one of the world’s biggest e-commerce companies on China’s rising affluence, was once known for his outspoken views.

But since China embarked on its campaign to tame internet companies, the billionaire has largely kept a low profile and remained abroad.

He returned to mainland China in recent days for the first known time in almost a year, visiting a school in the eastern city of Hangzhou where Alibaba is based.

Alibaba’s restructuring culminates a yearslong shift inside the company to make it more nimble after Mr. Ma stepped back from the company’s helm in 2019.

It reverses a centralisation drive he embarked upon before his departure in which he sought to bring the company’s subsidiaries and affiliates into closer alignment.

The power of tech titans such as Mr. Ma and their influence over society caused unease in Beijing: Companies such as Alibaba have a grip on data of more than a billion users and investments across a range of companies in China. Beijing has in the past criticized the “disorderly expansion” of the country’s biggest internet companies.

“If you don’t change yourself, you will be defeated by the times,” Alibaba Chairman and Chief Executive Daniel Zhang said in a letter to employees reviewed by The Wall Street Journal. He added that Alibaba’s various businesses are facing different challenges and market conditions.

WSJ/Hauwa Abu