Since the Chinese government began a fierce crackdown on the tech and internet sector in the late of 2020, Jack Ma had been spending time overseas and keeping himself a low profile. The news of Alibaba’s landmark restructuring just came shortly after the return of co-founder Jack Ma to mainland China in a high profile. The restructuring of the internet conglomerate has sent its shares soaring 12% in Hong Kong on Wednesday and surge 14% on Wall Street overnight.
Alibaba’s business will be split into six units: domestic e-commerce, international e-commerce, cloud computing, local services, logistics, and media and entertainment. The restructuring plan is the most significant restructuring in the company’s history.
In October 2020, Jack Ma the once high-profile entrepreneur criticized the country’s financial regulatory system for being too rigid and unfriendly to small business. As a result, the Chinese authorities shelved Ant Group’s IPO at the last minute. After that, a sweeping regulatory crackdown on Big Tech Conglomerates in China.
Some analysts perceived China may need Alibaba now to boost a flagging economy at a critical moment, but just it’s not nearly as powerful as it was. Chinese authority’s major concern is that private tech firms have become too big and powerful and the government sought to reduce the monopolistic nature of many prominent tech companies. Alibaba’s restructuring plan offers a way to limit monopoly power and platform sway. The restructuring plan could serve as a model for other big tech giants going forward.
Investors and analysts have cheered Alibaba’s restructuring. It is a symbol of the Chinese government’s support for private business. Jack Ma’s presence is perceived as evidence of a more supportive approach to the private sector. Come analysts welcomed the move and believed it will lead investors to reassess the valuation of Alibaba.