Alibaba to overhaul China’s biggest tech conglomerate into 6 units to reignite their entrepreneurial mojo as ‘start-ups’

Alibaba will reorganise its businesses into six independently run entities to shorten its decision making process

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Zhou Xinin Hong KongandTracy Quin Shanghai

Published: 5:27pm, 28 Mar 2023Updated: 9:40pm, 28 Mar 2023

Alibaba Group Holding will overhaul its sprawling US$257 billion empire, as China’s largest technology conglomerate undertakes its biggest corporate restructuring since its establishment more than two decades ago in Jack Ma’s Hangzhou apartment.

The company will reorganise its businesses into six independently run entities: Cloud Intelligence Group, e-commerce under Taobao-Tmall, Cainiao’s smart logistics operations, Local Services group, Global Digital Business Group, and the Digital Media and Entertainment Group, according to a letter to employees on Tuesday.

Each of the business units will have to face the test of market forces individually, and find their own path to compete, including the possibility of seeking their own fundraising avenues through initial public offerings (IPOs), said Alibaba, owner of the South China Morning Post. The business units will separately set up their own boards of directors.

Alibaba will also set up corporate entities for other operations following a “1+6+N” structure, with 1 referring to the group, 6 referring to the six business units, and N referring to future business units, according to the letter.

Alibaba’s share price shot up 10.5 per cent to US$95.43 at the start of trading in New York following the announcement of the plan.

Alibaba’s group chief executive Daniel Zhang Yong will sit at the apex of the holding company, but will devolve all operational decisions including hiring and firing, research, profit and losses to the CEOs of each business unit, according to his letter to the company’s employees.