Alibaba to restructure as six separate companies

Alibaba Group is planning to split into six units, the company told Reuters. The different entities will seek fundraisings and market listings as China eases its crackdown on private enterprises.

The big restructuring will see the company split into six organizations - Cloud Intelligence Group (cloud solutions), Taobao Tmall Commerce Group (local online commerce services), Local Services Group (delivery services), Cainiao Smart Logistics Group (logistics), Global Digital Commerce Group (AliExpress) and Digital Media and Entertainment Group (gaming, motion pictures and web services).

Jack Ma, co-founder of Alibaba Group

The announcement comes a day after Jack Ma’s return to China, a move that is seen as an indication of Beijing’s softer approach towards private businesses. Alibaba has been under heavy scrutiny for the past two years after being a target of regulators.

In a letter to staff, Chief Executive Daniel Zhang said the intention is to make the organization “more agile, shorten decision-making links and respond faster”. He will continue as chairman and CEO of Alibaba Group, which will take a new role as a holding company management model.

Alibaba Group HQ

Each of the six businesses will have a CEO and a board of directors with the ability to raise capital outside of the umbrella company. One exception will be Taobao Tmall Commerce Group, which will be entirely owned by Alibaba Group.

Analysts see the restructuring as a step to soften the approach to US regulators and international investors. Jack Ma’s return to China, days after Li Qiang’s appointment as premier of China, could be one way to boost business confidence among local entrepreneurs that China’s tech crackdown is ending.

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