What is happening to Alibaba?

Why did the stock price jump over 10% in a day?

According to a regulatory filing by Alibaba Group, Alibaba is splitting into six business groups. This will allow each entity to raise outside funding and go public. 

What are the six business groups?

  1. China Commerce Group
  2. Cloud Intelligence Group
  3. International Commerce Group
  4. Cainiao Smart Logistics
  5. Local Services Group
  6. Digital Media and Entertainment Group
alibaba revenue breakdown of its core operations
Source: Alibaba | Reuters

China Commerce Group

Source: Dao Insights

Alibaba’s China Commerce Group will handle its domestic e-commerce platforms, which account for more than 67.6% of Alibaba’s total revenue. Taobao, Tmall, Taobao Deals, Taocaicai, and 1688.com are among the companies that make up the China Commerce Group.

After the restructure, China Commerce Group will remain completely controlled by Alibaba Group. This is distinct from other units in that, other units are allowed to pursue funding and listing opportunities.

Trudy Dai, a member of Alibaba’s founding team, will lead this unit. As the corporation reorganized its internal and local e-commerce companies in December 2021, Trudy was selected to oversee the domestic e-commerce businesses.

Cloud Intelligence Group

Source: Canalys

Alibaba’s Cloud Intelligence Group will cover all cloud and Artificial Intelligence (AI) activities which includes Aliyun/ Alibaba Cloud – the company’s cloud computing unit. Alibaba Cloud retains a commanding market position in cloud infrastructure services in 2022, accounting for 36% of total consumer expenditure on cloud infrastructure services, despite a 7% year-on-year increase.

Moreover, this unit also houses DAMO Academy, Alibaba’s semiconductor and AI research arm. This unit also includes Dingtalk, the company’s workplace messaging app.

Alibaba CEO Daniel Zhang, current chairman and CEO of Alibaba Group, will house the Cloud Intelligence Group.

International Commerce Group

Lazada is the 3rd most used web retailer app in Southeast Asia region
Source: WebRetailer

Alibaba’s International Commerce Group will comprise of its overseas e-commerce marketplaces such as Lazada which serves Southeast Asia and AliExpress which is popular throughout Russia, Latin America and parts of Europe. 

This unit has tremendous development opportunities but is now experiencing tough local competition in markets they operate in outside of China such as the likes of Shopee and Tokopedia. Additionally, Alibaba’s International Commerce Group accounts for 7.7% of Alibaba’s total revenue.

Jiang Fan, who has led Alibaba’s e-commerce activities since December 2021, will be the group’s CEO following the restructure. Jiang Fan was formerly in charge of Taobao and Tmall.

Cainiao Smart Logistics

Cainiao was formed in 2013 as a result of Alibaba’s investments in a number of logistics companies. It is currently a major logistics provider in its own right in China, serving both Alibaba and third-party customers. Cainiao makes up about 6.4% of Alibaba’s total revenue. 

Wan Lin will remain as CEO of this unit which houses Alibaba’s logistics service.

Local Services Group

Source: Statista

Alibaba’s Local Services Group will comprise food and grocery delivery services such as Alibaba’s Ele.me app as well as Amap, its mapping app. This group now accounts for around 5.7% of Alibaba’s total revenue.

Alibaba’s Ele.me competes directly with Hong-Kong listed Meituan (HKG: 3690) in China’s cut-throat food delivery sector. 

According to a research done by CBNData and Trustdata in 2021, Ele.me took up 27% of China’s Food Delivery Market while Meituan still retains the majority of them with 67%.

Yu Yongfu will be CEO and the business will cover Alibaba’s food delivery service Ele.me as well as its mapping.

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 won the Academy Award for Best Picture in 2019 with “Green Book,” a road trip comedy film it co-produced.

The unit’s CEO will be Fan Luyuan.

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Disclaimer: The information provided by LearnToInvest serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. 


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