Alibaba will reorganize its business into six companies

Alibaba will reorganize its business, including its spin-off, into six companies, each with the flexibility to raise external capital and consider an IPO. This is the most significant transformation in the company's 24-year history. 

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As reported by the group on its news website AlibabaNews, the move better positions Alibaba's businesses to take advantage of market opportunities and stimulate growth. The turnaround has sent Alibaba shares soaring on Wall Street by nearly 14% to $98 at mid-session.

According to the plan, under Alibaba Group, six main business groups and several business companies will be established, including Alibaba Cloud Intelligence, Taobao Tmall Business, International Digital Business, Local Life, Cainiao and Dawen Entertainment, and other companies will also be independently operated and managed accordingly. 

Similarly, Alibaba Group will remain a holding company with Daniel Zhang as chairman and CEO, while its CEO and board of directors will manage each of the six business groups. 

Each business group will retain the flexibility to raise external capital and conduct an IPO when they are ready, except Taobao Tmall, which will continue to be owned by Alibaba Group.

Alibaba wants to be more ‘agile’ in its business

Over the past two years, Daniel Zhang has repeatedly emphasized internally and externally that "agile organization is the way to achieve efficient governance of ultra-large multi-business and multi-format enterprises." 

In a letter to employees, Zhang has explained that "every business group and enterprise must actively face rapid changes in the market and technology, form their development strategies, make quick decisions, strive for progress, be courageous in innovation, and face the test of the market." "The market is the best litmus test. In the future, qualified business groups and enterprises will have the possibility of independent financing and listing," the CEO has apostrophized.

Zhang, in addition to being CEO of the holding company, will also serve as the top executive of Alibaba Cloud Intelligent Group, which will house all cloud activities, artificial intelligence and businesses such as DingTalk, the multinational has detailed. 

Trudy Dai will lead Taobao Tmall and will include commercial activities in China, such as the Taobao and Tmall digital marketplaces, the Taobao Deals platform, as well as Taocaicai, the 1688.com wholesale marketplace and other businesses.

Local Life and Amap have new heads 

The Local Life Group will have Yu Yongfu as CEO and will take over the Amap navigation platform, delivery service Ele.me, and other businesses, while Wan Lin will continue as CEO of Cainiao Group. In addition, Jiang Fan will be the top executive of the Overseas Digital Business Group, which will encompass international trading companies Lazada, AliExpress, Trendyol, Daraz, and Alibaba.com, while Fan Luyuan will be CEO of Dawen Entertainment Group, including Youku, Alibaba Pictures and other businesses "To solve the development of productive forces and create differences, we must first start with the reform of production relations. This is also the starting point of Alibaba's organizational change," the group's top executive has asserted.

At the same time, Alibaba Group's functional departments will also usher in orderly changes. According to the letter sent to employees, "the group's middle and back office will be completely light and lean, meaning that the 'big middle office' capabilities established by Alibaba since 2015 will be gradually absorbed by a stronger front office to serve more diversified development needs in a more agile manner."

Between October and December last year, the third fiscal quarter for Alibaba, the group's attributable net profit rose 69% to 46.815 billion yuan (€6.384 billion), while its sales grew 2.1% to 247.756 billion yuan (€33.783 billion).