SHANGHAI (Reuters) – Chinese e-commerce giant Alibaba Group announced on Tuesday it will split into six business units, each with its own CEO and board of directors, and adopt a holding company management model, in the biggest revamp of its 24 year history.
Alibaba has long relied on e-commerce as its core business, with smaller divisions in sectors such as cloud computing and entertainment.
The company’s CEO Daniel Zhang said the business units will each be free to pursue funding and IPOs independently, which points to a possible carving out in the future.
Below are the six divisions:
TAOBAO TMALL COMMERCE GROUP
The Taobao Tmall Commerce Group will cover Alibaba’s domestic-facing e-commerce marketplaces, which make up over two-thirds of Alibaba’s total revenue. Taobao and Tmall are China’s dominant e-commerce marketplaces in China.
Despite the scale of Alibaba’s e-commerce operations, growth in the business has slowed.
Last quarter, revenue in Alibaba’s China Commerce category fell 1% year-on-year, reflecting maturation in China’s overall e-commerce sector but also the impact of the country’s COVID curbs, stiff competition from rivals, and slowing economic growth.
Taobao Tmall Commerce Group will remain wholly owned by Alibaba Group after the restructuring, the company said, even as the other units will be free to seek fundraisings and listings.
It will be led by Trudy Dai, a member of Alibaba’s founding team. Dai was appointed to lead the domestic e-commerce businesses in December 2021 when the company reorganised its international and local e-commerce businesses.
GLOBAL DIGITAL COMMERCE GROUP
Alibaba’s Global Digital Commerce Group includes its overseas e-commerce marketplaces such as Lazada, which serves Southeast Asia, and AliExpress, which has become popular in Russia, Latin America, and parts of Europe.
These platforms face fierce local competition in the markets they operate in outside of China and make up just 8% of Alibaba’s total sales.
However, together with Alibaba’s other overseas e-commerce platforms, they are some of the company’s fastest-growing divisions.
After the restructuring, the group’s CEO will be Jiang Fan who had been leading Alibaba’s international e-commerce businesses since December 2021. Jiang previously oversaw the Taobao and Tmall businesses.
CLOUD INTELLIGENCE GROUP
Alibaba’s Cloud Intelligence Group includes Aliyun, the company’s cloud computing unit. The company is the dominant player in China’s domestic cloud computing sector, with a 36% market share, according to research firm Canalys.
The division is also home to DAMO Academy, Alibaba’s research arm for chips and artificial intelligence, as well as Dingtalk, the company’s workplace messaging app.
Alibaba recently confirmed that DAMO has begun testing a ChatGPT-esque app that it plans to integrate with Dingtalk.
Daniel Zhang, current chairman and CEO of Alibaba Group, will serve as CEO of the Cloud Intelligence Group.
LOCAL SERVICES GROUP
This division includes food and grocery delivery services such as Alibaba’s Ele.me app as well as Amap, its mapping app.
Alibaba competes with Hong Kong-listed Meituan in the country’s cut-throat food delivery sector.
According to research firms CBNData and Trustdata, in 2021 Ele.me occupied 27% of China’s food delivery market compared to 67% from Meituan.
Local services currently make up just 5% of Alibaba’s total revenue.
Its CEO will be Yu Yongfu.
CAINIAO SMART LOGISTICS
Alibaba formed Cainiao in 2013 by making investments in a number of Chinese logistics companies.
The unit is now a major logistics provider in its own right in China, serving both Alibaba and third-party customers.
Cainiao makes up 7% of Alibaba’s total revenue.
Wan Lin will continue as Cainiao’s CEO, the company said.
DIGITAL MEDIA AND ENTERTAINMENT GROUP
Alibaba’s Digital Media and Entertainment Group will house Youku, the company’s YouTube-esque streaming video site, as well as Alibaba Pictures, its film production unit.
The latter division scored a victory in 2019 when “Green Book,” a road trip comedy movie it co-produced, won the Academy Award for Best Picture.
Its CEO will be Fan Luyuan.
(Reporting by Josh Horwitz; Editing by Brenda Goh and Christina Fincher)
