Introduction
On March 28, 2023, Alibaba's Chairman and CEO, Daniel Zhang, announced the most significant organizational restructuring in the company's 24-year history. This restructuring involves the establishment of a "1+6+N" organizational structure, creating six major business groups and several subsidiary companies under the Alibaba Group umbrella. This move aims to enhance agility, shorten decision-making processes, and allow the company to respond more quickly to market changes, ultimately unlocking the full potential value of Alibaba's various businesses.
Alibaba Company History Brief Introduction
Alibaba Group is a Chinese company, established in 1999 by Jack Ma, has evolved from an alibaba e-commerce platform into a global technology conglomerate, offering a wide range of services, including e-commerce, cloud computing, digital entertainment, and more. Over the years, Alibaba has expanded its presence both domestically and internationally, becoming one of the world's leading technology companies.
Reasons That Alibaba Split Into 6 Units
Why does Alibaba split into 6 Units? Under the new organizational structure, Alibaba Group will establish six major business groups, each led by a CEO who will be responsible for independent operations and decision-making. The six business groups are:
- Alibaba Cloud Intelligence Group (including cloud computing, artificial intelligence, DingTalk, etc.), with Chairman and CEO Zhang Yong serving as CEO.
- Taobao Tmall Business Group (including Taobao, Tmall, Taoxi, Taocai Cai, https://1688.com, etc.), with Dai Shan as CEO.
- Local Services Group (including Gaode Maps, Ele.me, etc.), with Yu Yongfu as CEO.
- International Digital Commerce Group (including Lazada, AliExpress, (What is Aliexpress?) Trendyol, Daraz, Alibaba.com., etc.), with Jiang Fan as CEO.
- Cainiao Network, with Wan Lin as CEO.
- Alibaba Digital Media and Entertainment Group (including Youku, Alibaba Pictures, etc.), with Fan Luyuan as CEO.
Each business group will operate independently, with its own governance structure, allowing them to better adapt to market dynamics and innovate.
About the 6 Units of Alibaba IPO
Notably, except for the Taobao Tmall Business Group, which will remain wholly owned by Alibaba Group, each business group will have the potential to seek independent financing and pursue separate listings. This move towards full independence is expected to facilitate better valuation of each business unit and provide opportunities for innovation and growth. Alibaba's various business units, including Alibaba Cloud, Cainiao, and others, have already achieved significant market prominence and success in their respective fields.
Currently, several of Alibaba's businesses, such as Alibaba Cloud and Cainiao, are market leaders. According to Alibaba Group's announcement, Alibaba Cloud has already become the third-largest global and the largest in the Asia-Pacific region in terms of cloud computing services. Cainiao's globalization of the industrial internet is accelerating, with core capabilities such as international express delivery, warehousing and distribution, and logistics continuously strengthening. During last year's Chinese 11.11 shopping festival, Cainiao reached a peak daily parcel processing volume exceeding 18 million.
Four Benefits of Alibaba Splitting Into 6 Companies
The restructuring of Alibaba Group offers several advantages:
- Faster Profit Turnover: With each business group operating independently, non-China business units may achieve faster profit turnover.
- Lower Headquarters Costs: Streamlining backend operations and reducing overhead costs at the headquarters level.
- Value Appreciation: Different parts of Alibaba's business may see increased value appreciation, particularly its independent China business and Alibaba Cloud.
- Employee Stock Ownership Plan (ESOP) Implementation: If applied at the subsidiary level, ESOP could lead to lower dilution of employee ownership of Alibaba stock.
Conclusion
Alibaba's decision to restructure its organization reflects a strategic shift aimed at enhancing operational efficiency, fostering innovation, and maximizing shareholder value. By empowering each business group with greater autonomy and accountability, Alibaba is positioning itself for continued success and growth in an increasingly competitive global market landscape.
FAQs
This move aims to enhance agility, shorten decision-making processes, and allow the company to respond more quickly to market changes, ultimately unlocking the full potential value of Alibaba's various businesses.
What are the six divisions of Alibaba? ›
Since launching its first website helping small and medium-sized enterprises in China to sell internationally, Alibaba is a holding company of six major business groups: Taobao and Tmall Group, Alibaba International Digital Commerce Group, Cloud Intelligence Group, Local Services Group, Cainiao Smart Logistics Network ...
What is Alibaba spin off 6? ›
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 Tuesday.
Did Alibaba break itself up in six? ›
On March 28th Alibaba announced that it would be creating six independent business units. Executives say this will yield a more agile overall business, by speeding up decision-making across smaller and more focused operations.
What happens when Alibaba splits? ›
Alibaba said Tuesday it will split its company into six business groups, each with the ability to raise outside funding and go public, in the most significant reorganization in the Chinese e-commerce giant's history. Each business group will be managed by its own CEO and board of directors.
Why did Alibaba split into 6 units? ›
This move aims to enhance agility, shorten decision-making processes, and allow the company to respond more quickly to market changes, ultimately unlocking the full potential value of Alibaba's various businesses.
What are the six value Alibaba? ›
These act as the subsidiaries and the cornerstone of the Alibaba Company. The company focuses much on its core values that are the customers, cooperation and teamwork, passion, integrity, change embracing and employees honoring their job.
Will Alibaba be as big as Amazon? ›
Alibaba Group
However, Alibaba is still a lot smaller than its American counterpart. Analysts expect Amazon to generate more than three times as much revenue as Alibaba this year, and its market cap of $1.7 trillion dwarfs Alibaba's market cap of approximately $333 billion.
Do Chinese people still use Alibaba? ›
The largest Chinese e-commerce company Alibaba had another strong quarter in the beginning of 2022. The annual active consumers on its online shopping properties in China reached 903 million by the first quarter of 2022, increasing from 882 million in the previous quarter.
Why is Alibaba declining? ›
Its net income for the quarter ended March was 3.3 billion yuan ($453 million), down 86% compared to the same time last year and missing analyst estimates. Alibaba said this was primarily due to a lower market value of its equity investments.
After repeated rejection from various job sectors, he finally decided to start his new E-commerce venture, Alibaba. Ma Yun tasted failure over and over again, much before he realized what success tastes like. He failed his middle school exams thrice. This was only to be followed by further failures.
Does Jack Ma still control Alibaba? ›
Ma stepped down as CEO and chairman of the company years ago and retains no executive role anymore. He isn't even on the board of the company although he remains a major shareholder with a stake of 3.7 percent.
What happens to my money if Alibaba is delisted? ›
In the last few years, many major U.S.-listed Chinese companies like Alibaba , Baidu and JD.com have completed secondary stock offerings in Hong Kong. In the event of a stock's delisting from New York, investors could exchange their U.S.-listed shares for the Hong Kong-listed ones.
What are the six units of Alibaba? ›
The six newly-formed business units will be: a Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and a Digital Media and Entertainment Group.
Why is Alibaba shares so cheap? ›
The company has been weighed down by multiple factors, including a slowing Chinese economy and mounting competition from new e-commerce players.
What are Alibaba's business segments? ›
Founded on 28 June 1999 in Hangzhou, Zhejiang, the company provides consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services via Chinese and global marketplaces, as well as local consumer, digital media and entertainment, logistics and cloud computing services.
How many categories does Alibaba have? ›
One-Stop Sourcing
Alibaba.com brings you hundreds of millions of products in over 40 different major categories, including consumer electronics, machinery and apparel.
What does the Alibaba group consist of? ›
Founded in 1999 by Jack Ma, Alibaba Group refers to the parent company of Alibaba.com. Headquartered in Hangzhou, Zhejiang province, China, it comprises many well-known companies, such as AliExpress, Alipay, Alibaba Cloud, Taobao, Tmall, and of course, Alibaba.com.
