Alibaba unveils corporate restructuring – Variety

Alibaba, the Chinese e-commerce and media group, has unveiled a top-down corporate restructuring that it says aims to “unleash shareholder value and foster market competitiveness”.

The group, which has a current market capitalization of $228 billion, will split into six divisions of varying sizes. Each unit will have a CEO and board of directors and can pursue independent fundraising or even IPOs, when ready.

Currently, Alibaba has its shares and ADR shares listed in Hong Kong and New York. Parts of its media business also have their own Hong Kong stock listing, Alibaba Pictures. (And there’s a healthcare company with yet another stock listing.)

The six new areas of activity will be: Cloud Intelligence (cloud computing, IA and its equivalent Slack Ding Talk); Taobao Tmall Commerce (e-commerce and digital malls in mainland China); Local services (shipping and delivery); Cainiao intelligent logistics; Global digital trade (international trade); and digital media and entertainment.

Fan Luyuan will serve as CEO of Digital Media and Entertainment, covering Youku (the third largest SVOD platform in China), Alibaba Pictures and other unspecified businesses.

“This transformation will enable all of our businesses to become more agile, improve decision-making and respond more quickly to market changes,” Alibaba CEO Daniel Zhang said in a letter to employees and shareholders. .

Alibaba will reduce middle and back office functions to the group level, retaining only those functions necessary for listed company compliance. Relevant middle and back office capabilities will be transferred to relevant business groups and companies.

In the nine months to December 2022, Digital Media and Entertainment posted revenue of RMB 23.2 billion ($3.37 billion), down 4% year-on-year, and posted EBITDA losses of RMB 772 million ($112 million) – a marked improvement.

For the six months to the end of September 2022, Alibaba Pictures reported revenues of 1.83 billion RMB ($265 million) and losses of 22.9 RMB ($3.20 million).

Alibaba’s restructuring was announced just a day after local media reported that the group’s founder, Jack Ma, had returned to China after traveling abroad for about a year.

Chinese tech companies have resisted a series of regulatory crackdowns following Ma’s public criticism of the country’s financial regulatory system in October 2020. Ma’s company, Ant Group, to have its IPO canceled and famed businessman Ma was cut. . Under the weight of regulatory restrictions and China’s tough anti-COVID policies, Alibaba has seen its market value plummet by more than two-thirds. Its NYSE-traded ADRs are currently trading at $86.12, down from a high of $309 in October 2020.

A user comment on the Alibaba-owned South China Morning Post said on Tuesday: “He’s back because 1. the CCP needs private business and investment and 2. the business is now divided in 6 pieces and is no longer a threat”.

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