In one of the major and surprising news out of the Alibaba Group and China, it has just been announced that the Alibaba Group will split itself into six different entities. It is also worth noting that all these six different entities will have their own chairman and advisory boards and they will also have the option to release an IPO later in the future, the company announced. It is known that the ANT Group will still be able to control all these entities but they will be able to work independently for most of the times unless an intervention is needed.
The news is also interesting given the fact that Alibaba’s founder and former CEO Jack Ma was spotted in China after one year of staying outside the country where he explored many places and lived in Singapore and Hong Kong as well. One of the main reasons why Jack Ma was also out of China was due to the clampdowns that the ANT Group was facing due to Jack Ma’s public criticism of Chinese government’s industrial policies. It is now known that the Chinese government has eased its pressure on the ANT Group but it can also be said that the split into six different entities could also be due to the pressure from Chinese Government.
Having said that, a big company splitting into smaller companies can be a good thing as well because it will have room to grow whereas a big company faces tough challenges for growth and faces a lot of hurdles as well. Also, the ANT Group is following the footsteps of companies like Alphabet which was previously Google but split Google into a different entity under the Alphabet Group. We can say that Meta has done the opposite as it included all the companies such as Facebook, WhatsApp and Instagram into one entity few years back.
Current CEO and Chairman of Alibaba Group, Daniel Zhang, said “This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes,”. Investors also liked this announcement from Alibaba as its shares went up 10% immediately after.
