Chinese e-commerce giant Alibaba, on Tuesday, announced it would split into six smaller business units, including online trading, media and cloud services.
The move by the $220 billion company, effectively turning itself into a tech holding company, is unusual in China.
Each unit will have its own executive board and it will be able to source external capital and a stock exchange listing.
The step came two years after the government acted to curb the tech company’s activities, Alibaba founder, Jack Ma, had fallen out of favour, media reports said.
A planned listing of the Ant Group fintech company, owned by the group, was cancelled and cartel proceedings opened.
However, there have been indications recently that Beijing has softened its approach to technology companies.
consequently, Jack Ma was seen in public in China, this week, for the first time in more than a year.
Alibaba said the group was proceeding with a planned cost-cutting programme, in spite of the split.
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It claimed it had become necessary after the government intervention put a brake on Alibaba’s growth and caused a sharp fall in market capitalisation.
Meanwhile, the domestic retail unit in China is to remain fully owned by Alibaba.
Shares listed in the United States rose nine per cent on the news in early trading.
The market was the best litmus test, Alibaba Chief Executive, Daniel Zhang, said in a staff email.
The restructuring would allow all units to react more quickly to market changes.
Zhang is to continue to head the group and will also head the cloud unit.
Analysts saw the split as an indication that Alibaba could seek fresh investment in capital markets.
They also saw signs that artificial intelligence (AI) technologies are to play a larger role.
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