Alibaba announces historic restructuring
Chinadaily.com.cnMar 28, 2023
China's E-Commerce Giant Alibaba to Split into Six Groups
The Facts
China's iconic e-commerce company Alibaba on Tuesday announced a major restructuring plan that will break up its business into six separate units, allowing five of them to raise outside capital and potentially launch their own IPOs.
US-listed shares of the conglomerate — which have lost around 70% of their value since stricter controls were imposed on tech companies in China in late 2020 — rose more than 10% following this announcement.
The Spin
Pro-China narrative
The biggest restructuring plan in Alibaba's history has been advanced solely by its chairman and CEO Daniel Zhang and is based exclusively on the company's urgent need to adapt to survive in the current tech landscape. By splitting the group into six units, the organization will become more agile and better able to tackle rapid changes in the market.
Anti-China narrative
While the announced restructuring has improved confidence in the company and its future, the nature of the overhaul is a sign that Beijing's tirade against Big Tech has, fundamentally, remained the same. Fearful of the potentially monopolistic power of tech companies, the Chinese government is orchestrating this dilution of power, while at the same time emphasizing private businesses' responsibility to boost the economy. The Chinese Communist Party still seems fixated on diminishing the power of private business, despite the consequent costs of this strategy to China's economy.
Nerd narrative
There's a 50% chance that the combined annual revenue of Baidu, Alibaba, and Tencent will be at least $220B in 2023, according to the Metaculus prediction community.