Business

Alibaba and its Group of 6 Business

What’s the news?

China’s biggest e-commerce site Alibaba has taken a decision to become a holding company with its six business groups. This means Alibaba will not be a single company anymore. And its earnings will be divided into 6 halves.

Reason Behind This Decision

The company is claiming this decision to be “most significant” move and it will be in favor of the company itself. The company also say that is a very drastic decision that the company every made in its business history of 24yrs.

It is being said that every unit of the company will have a separate chief executive officer and board of directors which will help in quicker decision making and smooth running of the business as well.

Alibaba

Credit: Google

This will also ensure that no unit has to dependent on any other for any decisions.

The company units will be granted permission to pursue external funding opportunities, keeping in mind their eventual initial public offerings.

Nonetheless, the Tao-bao Tmall Commerce Group, which is Alibaba’s China e-commerce unit, shall remain under complete ownership of Alibaba. Announced in the wee hours of the trading day, the US-listed shares of Alibaba observed an increase of 8 per cent.

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More in Detail

The experience of Alibaba, a prominent internet conglomerate engaged in multiple ventures such as online shopping and cloud computing, serves as a stark reminder of the repercussions involved in challenging the ruling Communist Party of China.

It also sheds light on the extent of Beijing’s aggressive efforts to diminish the influence of its technology giants.

Alibaba’s proposed plan to divide the company into multiple smaller entities may assuage the government’s apprehensions around the excessive concentration of power and impact among the country’s vast web behemoths.

Alibaba

Credit: Google

However, this reorganization occurs during a time when the government appears to be lessening its regulatory hold on the tech industry, following a turbulent period of three years that saw the disappearance of Alibaba’s billionaire founder, Jack Ma, from the public eye.

Ma’s retreat from the limelight followed his sharply-worded criticism of Chinese regulators in 2020 for limiting innovation at Ant Group, Alibaba’s fintech subsidiary.

In the past, Ma was a sociable and vocal personality and was regarded as a symbol of China’s competitiveness on a global scale. However, in recent years, he has been keeping a low profile and has chosen to spend most of his time outside China.

It became an intriguing mystery to track Ma, who is China’s most distinguished business figure. This week, after a long absence, he made a public appearance in mainland China. The influence of Ma’s return on Alibaba’s announcement remains obscure. Despite retiring from the company in 2019, Ma still holds significant shares as an ‘individual shareholder’.

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Following comments made by Ma in 2020, Chinese authorities halted Ant Group’s initial public offering plans and compelled the company to register as a financial holding entity. In order to comply with regulations, Ant was also required to separate its payment application from its financial services. These measures ultimately prevented the planned public listing from taking place.

Alibaba

Credit: Google

Later, Alibaba was fined a sum of $2.8 billion due to allegations of dominance abuse.

In January, Ant Group announced that Ma was to relinquish control of the firm, coinciding with the announcement from a top Communist Party official at China’s central bank that the rectification campaign of the largest technology firms was “largely finished”. This update was shared by the New York Times News Service.

Seeing the scale of business, the decision made is a positive move and could be in the favour of the company. But when governing body increases the mindset also gets multiplied and later these could create a cold war. So, Alibaba have to be very precise and careful which appointing any members to any groups.

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