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Because Alibaba will bend over backwards

1 year ago babelfish

Because Alibaba will bend over backwards

Alibaba founder Jack Ma has returned home and his $220 billion empire will be divided into six different units, all of which will be able to go public. Here's how the e-commerce giant will transform itself and what it means for the Chinese economy according to analysts

Renovation air in the Alibaba home. The Chinese e-commerce giant founded by Jack Ma has announced plans to divide its $220 billion of assets into six different units, each of which will have the ability to raise funds and go public.

The move, as stated by the multinational, "is designed to unlock shareholder value and promote market competitiveness".

In fact, it must be remembered that in October 2020 about 600 billion dollars of the company's stock market value had been wiped out by the collapse of the share price and in 2021 the giant had been fined for 2.6 billion as part of an investigation of the Antitrust.

HOW WILL THE ALIBABA HOLDING COMPANY BE LIKE

Alibaba, after two difficult years in which it struggled to grow due to both the economic slowdown and the tightening of regulation by Beijing, now wants to make a comeback by becoming a holding company.

The plan calls for the businesses to be unpacked into six companies, each of which will have its own CEO and board of directors.

"This transformation will enable all of our companies to become more agile, improve decision-making and respond faster to market changes," said Alibaba CEO Daniel Zhang.

THE 6 COMPANY GROUPS

The corporate groups, as reported by CNBC , will revolve around strategic priorities and will be divided into:

  • Intelligence Cloud group, will host the company's cloud and artificial intelligence activities. Its CEO will be Zhang;
  • Taobao Tmall Commerce Group, will cover the company's online shopping platforms, including Taobao and Tmall, and will be the only one to remain wholly owned by Alibaba;
  • Local Services Group, will cover Alibaba's Ele.me food delivery service and its mapping. The managing director will be Yu Yongfu;
  • Cainiao Smart Logistics, will host Alibaba's logistics service and continue to be led by its CEO Wan Lin;
  • Global Digital Commerce Group, will encompass Alibaba's international e-commerce businesses, including AliExpress and Lazada. The CEO will be Jiang Fan;
  • Digital Media and Entertainment Group, will bundle Alibaba's streaming and film businesses. At the head will be Fan Luyuan.

THE REACTION OF THE STOCK MARKET

Stocks welcomed Alibaba's reorganization as shares soared yesterday and closed more than 14% up in the US.

Even the Hong Kong Stock Exchange, boosted by technology stocks and by the leap of the e-commerce giant, closed the session sharply higher, with the Hang Seng index gaining 2.06%, settling at 20,192.40 points.

WHAT ANALYST THINKS

The revamp comes a day after Alibaba founder Jack Ma returned home after spending the last year overseas, a symbol of Beijing's intention to boost private sector growth after a two-year crackdown.

According to some analysts interviewed by Reuters , the unpacking could in fact ease the grip on the tech giant, whose vast business has been in the crosshairs of regulators for years, and allay fears that Alibaba has lost its growth potential.

For Tara Hariharan of emerging-markets hedge fund NWI Management, the decision could also be partly a consequence of US scrutiny of Chinese tech firms raising national security concerns over TikTok and its parent company ByteDance.

"By paving the way for the listing of Alibaba's various new units, the Chinese government could signal less hostility towards its tech giants as a soothing message for US and international investors," Hariharan said.

According to Jon Withaar , head of special situations in Asia at Pictet Asset Management, it is probably the sign "that we are nearing the end of regulatory scrutiny over Alibaba and we expect the company to get back into the good graces of regulators and policy makers".

Furthermore, as explained by Tina Teng, an analyst at CMC Markets, "the Alibaba split could pave the way for other Chinese tech giants to similarly restructure."

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/alibaba-si-fa-in-sei/ on Thu, 30 Mar 2023 10:50:12 +0000.