China's Alibaba to split mega empire into six new units to reshape sprawling e-comm firm

The Chinese multinational technology company, Alibaba on Tuesday chalked out a major plan to split its business into six separate units in a bid to reshape the sprawling Chinese e-commerce firm. The company, which was founded nearly 25 years ago by Jack Ma, is now undergoing a major revamp to ease the regulatory crackdown and support its market hold. 

According to reports, each of the units that have come from the breakup of the Alibaba empire will be monitored and run by its board of directors and chief executive. The company on Tuesday also claimed that five of its new units will also look to raise market capital and seek its own Initial Public Offer (IPO). 

The six new units are Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and Digital Media and Entertainment Group. The decision to revamp the business structure was taken positively in the market as Alibaba’s US-listed shares rallied more than 10 per cent. 

Notably, the decision to break up the Alibaba empire into six units comes over two years after the Chinese government began a fierce crackdown on the technology sector by bringing in regulatory frameworks. However, the government has signalled that its regulatory pressure on the tech industry will come to an end soon. 

Jack Ma’s conflict with the Chinese govt 

Jack Ma, founder of Alibaba and an outspoken billionaire in China, has kept a very low profile since 2020 when the Chinese government imposed several restrictions on the tech sector. In November 2020, Jack Ma criticized the financial regulators and banks operating in the territory of China, which led him to pay an immense monetary penalty, imposed by China's antitrust regulators. 

It also affected the public listing of Alibaba as the company lost over 74 per cent of its market value in 2020 and 2021. However, the following year 2022 was of much relief for not only Alibaba, but the entire tech industry of China as the market saw a little stability. Jack Ma stepped down as the CEO and executive chairman of Alibaba in 2013 and 2019, respectively. The constant efforts to restructure the company are to retain the market value and bring more value for the investors.