Chinese e-commerce giant Alibaba is undergoing a metamorphosis 24 years after its founding. The company, one of China’s largest private companies, will split into six separate companies, each of which will have its own stock exchange listing where possible. Alibaba will continue to exist as the umbrella holding company.
Alibaba, founded in 1999, is best known in the Netherlands as the parent company of online marketplace AliExpress – where small entrepreneurs in China can sell products online to foreign customers. In addition to AliExpress, Alibaba has developed a range of companies in various industries, with a focus on e-commerce.
For example, it has an online cloud division that researches the possibilities of artificial intelligence. It is also involved in logistics, local services such as meal delivery and navigation software, and has a media division. In 2022, the company served more than 1.3 billion customers, one billion of them within China. The total value of the items sold was more than 1,300 billion dollars.
All companies come under one of six separate parts, each of which has its own board of directors and is allowed to raise capital itself. Separately, they would be better able to adapt to developments in the market and have a better chance of becoming bigger, CEO Daniel Zhang said in an email to employees. “The market is the best litmus test,” said the chairman of the board, who will also head the holding company. Alibaba fully owns the most profitable e-commerce platforms Taobao and Tmall.
Splitting up and becoming independent is the path that industrial companies such as Siemens, Philips and General Electric have already taken. While this is more common in Western business, it happens considerably less often in China – although Alibaba’s competitor JD.com has already followed the same path.
The break-up of Alibaba ties in well with the Chinese government’s efforts to contain the rapidly growing power of Chinese tech companies. The Beijing authorities have become increasingly fierce in recent years against tech companies.
In 2020, for example, the Chinese authorities blocked the IPO of Ant Group, the financial technology arm of Alibaba. Shortly before, founder Jack Ma had publicly criticized the financial regulators, after which he went missing for a period and eventually reappeared abroad. After him, several leaders within the Chinese tech world disappeared.
News of the split comes a day after Ma made a surprise visit to his home country. He would have attended a school in Huangzou – coincidentally also the place where Alibaba’s headquarters are located.
Satisfied shareholders
Shareholders are reacting enthusiastically to the announcement. Chinese tech stocks such as JD.com and Tencent posted strong price gains. Amsterdam-listed Prosus, which has a large stake in Tencent, ended up as the biggest riser of the day.
Alibaba’s US-listed share shot up more than 11 percent. That was also allowed: the past two years have been a struggle for the shareholders. Since Jack Ma’s disappearance, the stock has fallen about 70 percent in value.