On Tuesday, Alibaba announced its plans to restructure the company into six separate business groups, each with the possibility of going public in the future.
This marks the most significant reorganization in the Chinese e-commerce giant's history. Under this new structure, each business group will have its own CEO who will be fully responsible for the group's performance and will report to a board of directors.
The six business groups are as follows:
- Cloud Intelligence Group, which houses Alibaba's cloud and artificial intelligence activities, will be given top priority and will be headed by Daniel Zhang, Alibaba's CEO.
- Taobao Tmall Commerce Group, responsible for the company's domestic online shopping business, will be led by Trudy Shan Dai. Dai joined Alibaba in 1999 as a member of the founding team and has served as president of the domestic e-commerce business since January 2022.
- Local Services Group, which covers Alibaba's food delivery service Ele.me and mapping, will be led by Yu Yongfu. Yu was named head of local services in November 2021, after overseeing Alibaba's various businesses such as gaming, digital media and entertainment, eWTP (a venture capital fund backed by Alibaba and Saudi Arabia's Public Investment Fund), etc.
- Cainiao Smart Logistics, which operates Alibaba's logistics services, will be led by Wan Lin, who has been the division's CEO since 2020.
- Global Digital Commerce Group, which includes Alibaba's international e-commerce businesses such as AliExpress and Lazada, will be led by Jiang Fan. Jiang was appointed head of the international e-commerce division in 2021, after serving as president of domestic retail platform Taobao since December 2017 and president of Tmall since March 2019.
- Digital Media and Entertainment Group, which includes Alibaba's streaming and movie business, will be led by Fan Luyuan. Fan has been the CEO and chairman of Alibaba Pictures since 2017.
In a letter to Alibaba employees, Daniel Zhang stated that each business group can pursue independent fundraising and a public listing when they’re ready, emphasizing that "the market is the best litmus test."
In addition to these six groups, other businesses may be reorganized into similar independent entities in the future, with research, data management, finance, and human resources teams spread across subsidiaries, according to Zhang.
Industry analysts, such as Thomas Chong at brokerage Jefferies, have noted that this reorganization has the potential to unlock the sum-of-the-parts (SOTP) valuation of different business segments, providing greater value to investors.
Zhang also stated that this restructuring will help to make Alibaba's businesses more agile, improve decision-making processes, and allow for faster responses to market changes.