Alibaba, a key e-commerce player in China, is planning to split up into six businesses, which will become separate public companies, according to ABC News.
The move, which comes after regulators in China clamped down on the tech industry, targeting companies including Alibaba, marks a new phase for the e-commerce conglomerate. Since 2020, Jack Ma, Co-Founder of Alibaba Group, has been out of the public eye. This move undoes the centralization that he led and effectively breaks up his business empire.
Alibaba’s CFO Toby Xu said the company would evaluate the strategic importance of each unit after they go public and decide whether or not to retain control. The restructuring plan could also allay past antitrust concerns since it would create looser connections between the business units, which is in line with the regulatory stance of encouraging competition.
This type of move is not unheard of in the business world. Other large companies, such as Google, General Electric, Siemens, and Samsung, have also created holding companies for their various businesses. The goal of these companies is to simplify their corporate structures, improve financial transparency, and enhance shareholder value. The move could allow each business unit to pursue independent fundraising and IPOs, perhaps result in higher valuations for each unit. However, this scenario with Alibaba is different in that it was clearly compelled by government regulators, and is because the government felt that the private sector was developing too much centralized power.