Alibaba Initiates Significant Organizational Changes

On March 28, Daniel Zhang, the Chairman and CEO of Alibaba, sent a letter to all employees informing them about significant organizational changes that will be taking place.

Alibaba Group will establish six business groups, including Alibaba Cloud Intelligence, Taobao & Tmall Commerce, Local Services, Cainiao., International Digital Commerce, and Entertainment, and multiple subsidiary companies.

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Each business group and subsidiary company within Alibaba Group will operate under its own board of directors, led by a CEO. The Alibaba Group itself will function as a holding company. The following are the specific plans:

Apart from the six business groups and their subsidiaries, other eligible businesses within the organization can create additional subsidiary companies that operate independently under corporate management. This allows each business unit or group to confront market challenges directly while also providing greater potential for innovation incentives.

This organizational restructuring was initiated by Zhang and has been unanimously approved by all partners in the group and board members. This change begins at the top level to redefine governance relationships between all businesses within Alibaba; it is considered “the most important organizational change” in 24 years since its founding.

Currently, several businesses under Alibaba such as Alibaba Cloud and Cainiao are already leaders in their respective markets, with rumors circulating about financing rounds and IPOs for Hema Fresh and T-Head. For these six major business groups/subsidiaries, being able to operate independently should help companies better assess value on market trends and “let employees truly fight for their own business.”

Zhang wrote in the letter that “the market is the best indicator of success. In the future, qualified business groups and companies under Alibaba will have opportunities for independent financing and listing.” He also expressed his desire for all Alibaba employees to adopt an entrepreneurial mindset and be open to changes, as failure to do so could result in stagnation or falling behind.