Factbox: How Alibaba's six main new business units stack up

Damai Entertainment Holdings

11/09/2023 10:15

(Updates to add details from Alibaba's cloud unit leadership
change)
       Sept 11 (Reuters) - Alibaba Group Holding  9988.HK  has
said that its former group CEO Daniel Zhang has decided to leave
its cloud computing unit in a surprise move that has raised
concerns about the business' spinoff plans and potential discord
at the top. 
    The e-commerce giant announced in March it will split into
six main business units, each with its own CEO and board of
directors, and adopt a holding company management model that it
dubbed "1+6+N", the biggest revamp of its 24-year history.
    Below are details about the six divisions:
    
    CLOUD INTELLIGENCE GROUP
    Alibaba's Cloud Intelligence Group includes Aliyun, the
company's cloud computing unit. The company is the dominant
player in China's domestic cloud computing sector, with a 34%
market share, according to research firm Canalys.
    The division is also home to Alibaba's artificial
intelligence large language model Tongyi Qianwen, as well as
Dingtalk, the workplace messaging app. Sources had told Reuters
in August that DingTalk was set to be split off. 
    In December 2022, Alibaba Cloud experienced what it called
its "longest major-scale failure" in more than a decade after
its Hong Kong and Macau servers suffered a serious outage that
affected many services in the region including ones belonging to
crypto exchange OKX.
    Weeks after the outage, Zhang took over as head of the cloud
unit, concurrently holding the role with his group positions.
    In May, Alibaba said it had approved a full spinoff of the
Cloud Intelligence Group via a stock dividend distribution to
shareholders and aimed to complete the public listing within the
next 12 months. 
    After Zhang's departure, Alibaba said its group CEO Eddie Wu
will become acting CEO and chairman of the cloud unit. The plan
to spin off the cloud unit under a yet-to-be-appointed
management team would also continue, Alibaba said. Earlier this
year, it said it would complete the process by May 2024.
    The cloud unit is Alibaba's second-biggest revenue source
after domestic e-commerce. 
    
    TAOBAO TMALL COMMERCE GROUP
    The Taobao Tmall Commerce Group covers Alibaba's
domestic-facing e-commerce marketplaces, which make up over
two-thirds of Alibaba's total revenue. Taobao and Tmall are
China's dominant e-commerce marketplaces in China.
    Despite the scale of Alibaba's e-commerce operations, growth
in the business has slowed, reflecting the maturation of China's
overall e-commerce sector and the impact of COVID curbs, stiff
competition from rivals, and slowing economic growth.
    Taobao Tmall Commerce Group will remain wholly owned by
Alibaba Group after the restructuring, the company said, even as
the other units will be free to raise funds and list.
    Trudy Dai, a member of Alibaba's founding team, is CEO. Dai
was appointed to lead the domestic e-commerce businesses in
December 2021 when the company reorganised its international and
local e-commerce businesses.
    The company currently counts grocery arm Freshippo as part
of its China commerce segment. In May, it said it would kick off
an IPO process for Freshippo. 
     
    GLOBAL DIGITAL COMMERCE GROUP
    Alibaba's Global Digital Commerce Group includes its
overseas e-commerce marketplaces such as Lazada, which serves
Southeast Asia, and AliExpress, which has become popular in
Russia, Latin America, and parts of Europe.
    These platforms face fierce local competition in the markets
they operate in outside of China and make up just 8% of
Alibaba's total sales.
    However, together with Alibaba's other overseas e-commerce
platforms, they are some of the company's fastest-growing
divisions.
    The group's CEO is Jiang Fan who had been leading Alibaba's
international e-commerce businesses since December 2021. Jiang
previously oversaw the Taobao and Tmall businesses.
    In May, Alibaba said its board had approved the process to
start external financing for the unit.  
     
    LOCAL SERVICES GROUP
    This division includes food and grocery delivery services
such as Alibaba's Ele.me app as well as Amap, its mapping app.
    Alibaba competes with Hong Kong-listed Meituan  3690.HK  in
the cut-throat food delivery sector.
    According to research firms CBNData and Trustdata, in 2021
Ele.me occupied 27% of China's food delivery market compared to
67% from Meituan.
    Local services currently make up just 5% of Alibaba's total
revenue and the unit's CEO is Yu Yongfu. 
     
    CAINIAO SMART LOGISTICS
    Alibaba formed Cainiao in 2013 by making investments in a
number of Chinese logistics companies.
    The unit is now a major logistics provider in its own right
in China, serving both Alibaba and third-party customers.
    Cainiao makes up 7% of Alibaba's total revenue.
    Wan Lin will continue as Cainiao's CEO, the company said. In
May, it said that Cainiao will explore an IPO in the next 12-18
months.
     
    DIGITAL MEDIA AND ENTERTAINMENT GROUP
    Alibaba's Digital Media and Entertainment Group will house
Youku, the company's YouTube-like streaming video site, as well
as Alibaba Pictures, its film production unit.
    The latter division scored a victory in 2019 when "Green
Book", a road trip movie it co-produced, won the Academy Award
for Best Picture.
    Its CEO is Fan Luyuan.
    
    

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Alibaba stock slides after ex-CEO abruptly quits cloud unit
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 (Reporting by Brenda Goh and Josh Horwitz; Editing by Neil
Fullick and Miral Fahmy)
 ((mailto:Josh.Horwitz@thomsonreuters.com; +86 21 20830007;))