Chinese tech giant Alibaba has announced a major corporate re-organisation which will see the company split into six separate companies.
The announcement comes as the company faces the triple headwinds of China’s slowing economic growth, increased regulation and an unsuccessful attempt at going public in the US.
Alibaba has seen its share price drop around 70 percent since it peaked in October 2020, wiping $600bn off its value.
The most significant change in governance throughout the company’s inception 24 years ago is seen by industry commentators as a means of unlocking shareholder value and putting the company back on track.
Indeed, after the company announced it would split into six separate entities, its share price leaped 14 percent on the New York Stock Exchange.
In addition, the move will address widespread accusations of anti-competitive behaviour levelled, across the board, at Big Tech companies, both in the US and China. Alibaba has been facing increased regulatory scrutiny from Beijing, of late.
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The Hangzhou-based company will divide into six separate businesses along the same lines as its existing business groups. The new companies will be called Cloud Intelligence Group, Taobao Small Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics, and Digital Media and Entertainment Group.
Daniel Zhang will continue to serve as chairman and CEO of the Alibaba Group which will remain a holding company for the six new entities. Each of the six business groups will be managed by a separate CEO and board of directors, according to the company.