Alibaba cleaved in two in efficiency drive

PUBLISHED : Tuesday, 24 July, 2012, 12:00am
UPDATED : Tuesday, 24 July, 2012, 12:00am

Mainland e-commerce giant Alibaba Group has split its recently privatised flagship company,, into two separate firms in a restructure designed to boost its operating efficiency.

It is the latest organisational change by Hangzhou-based Alibaba since June last year, when it split online retail services unit Taobao into three wholly owned subsidiaries, each focused on specific e-commerce market segments.

Group spokeswoman Florence Shih said, the world's biggest business-to-business e-commerce services provider, had been transformed into two new operations: International Business and Small Business.

Wu Minzhi was appointed president of the English-language international trading business, which had 27.34 million registered users as of March 31. Ye Peng is president of the Chinese-language, small business arm, which had 52.44 million users by the same date.

Both executives will report to Jack Ma Yun, the chairman and chief executive of parent Alibaba. Jonathan Lu Zhaoxi, who served as the chief executive of the previously Hong Kong-listed, was promoted earlier this month to chief data officer of the parent company.

The former publicly traded subsidiary withdrew its Hong Kong listing on June 20 after parent Alibaba bought the 27 per cent minority shares in the firm that it did not own for a total cash consideration of HK$19.6 billion.

In an internal e-mail sent to Alibaba's 25,000 employees worldwide on February 22, Ma said's business, which spans 240 markets, faced 'enormous challenges' because of the sluggish domestic and international economic environment. He said the subsidiary's 'transformation and upgrading needed to be accelerated' to better serve customers.

With the reorganisation of its business-to-business unit into two subsidiaries, Alibaba now runs seven major operations, including consumer-to-consumer online-shopping subsidiary Taobao Marketplace, business-to-consumer retail platform TMall, shopping search engine provider eTao, group-buying platform Juhuasuan, and Alibaba Cloud Computing, its information technology services division. Alipay, China's leading third-party online payments company, is majority owned by Ma and remains an affiliate of Alibaba.

Ma said in another e-mail to Alibaba employees that the group's adjusted structure would allow for business and IT systems to be shared by all subsidiaries.

'We must accelerate the implementation of the 'One Company' strategy ... to truly create a mechanism for openness, synergy and sharing,' Ma said. He now has a freer rein to determine the course of the e-commerce empire he co-founded in 1999.

In May, Alibaba reached a share buy-back deal with United States-based Yahoo after more than three years of talks. Alibaba agreed to repurchase in stages the shares that Yahoo acquired in 2005 for US$1 billion.