Just how cunning is the surprisingly cunning six-part, mid-flight de-segmentation of Chinese e-commerce giant Alibaba?

 

Baldrick:

Is it as cunning as a fox what used to be Professor of Cunning at Oxford University but has moved on and is now working for the U.N. at the High Commission of International Cunning Planning.

Blackadder:

Yes it is.

 

6-piece harmony

And now the e-commerce giant’s less-than-before CEO, Daniel Zhang, has told Chinese media to expect multiple IPOs after Alibaba splits into six units in what is a massive reboot of the e-commerce giant and perhaps the first act in an overhaul of Chinese tech.

Zhang said last week he hopes there will be “multiple listed companies emerging from the Alibaba system”.

Now Alibaba’s logistics arm, Cainiao Network Technology has reportedly sought out a few likely banks for what may become the first of several IPOs by the various units of the e-commerce giant, people familiar with the situation told Bloomberg over the weekend.

Cunningly conjured out of Jack Ma’s Hangzhou apartment more than 20 years before, the absolute commercial and technological monster – albeit one slightly stunted after two years of stagnation – Alibaba Group told employees in a letter this week there’ll be some changes.

Like some kind of actual corporate Mecha anime – or in the Japanese –  Robot anime (ロボットアニメ), the Chinese company will split up its businesses into six independently run body parts which can fly and do stuff on their own: Cloud Intelligence Group, e-commerce under Taobao-Tmall, Cainiao’s logistics operations, Local Services Group, Global Digital Business Group, and the Digital Media and Entertainment Group.

 

Beta then before

The decision to turn the US$250 billion giant robot, into one that can split apart and thus inflict more damage represents by far Alibaba’s biggest corporate restructuring since it became sentient.

Since the start of 2023, local investors have had some renewed interest in Asian tech names, according to Cameron Gleeson, senior investment strategist at Betashares.

“While rising rates have acted as a headwind for technology companies in the United States and Australia, China’s central bank has committed to “providing forceful financial support” to an economy where inflation is benign.

“This inflation and rate environment provide an attractive entry point for adding Asian technology names as part of a well-constructed portfolio, particularly given the more attractive valuation multiples available in Asian tech versus US tech.”

Cameron says it’s an historic move which will have “far reaching implications for Asian technology names”.

Most particularly if it means this is the end of China’s crackdown on the sector, he adds.

“It’s our view that the weakness Asian tech experienced across 2021 and 2022 was largely a result of actions of the Chinese Government – namely the strict enforcement of their Covid zero policy and the regulatory crackdown on the sector. Both of these factors may no longer act as a headwind for the sector.”

 

More drama

Crisis-addled investors cheered the surprise move from China’s largest technology conglomerate as evidence there’s still some corporate nous in Beijing, regardless of the heavy-handed corporate smackdowns the current administration likes to administer.

Meanwhile the restructuring brings its own dramas as a potential cloud gathers round the awesome powers of Ma’s replacement CEO Daniel Zhang.

Not only does he still have the whiff of Jack Ma about him but Zhang’s also a good fall guy for the fact Alibaba’s share price has been unworthy of a giant robot.

Now Alibaba will follow a holding company management model, overseen by Zhang as chair and CEO.

He also took over the underperforming Cloud Intelligence Group in January, so he’ll be stuck with that too.

In other appointments (I know of) top exec Jiang Fan will become the CEO of the Global Digital Commerce Group, which spans the Southeast Asian-focused Lazada, AliExpress, Trendyol, Daraz, and Alibaba.com.

While Alibaba’s (NYSE:BABA) shares traded 1.2% lower in pre-market, the move itself was met with some wonder across markets, catapulting the half-forgot shares of Jack Ma’s old toy and its remaining peers back into the stratosphere.

The ロボットアニメ’s shares jumped as much as 16% in Hong Kong on Wednesday, tracking a 14.5% rally in its US-listed shares.

Even the rusty old Hang Seng came back to life, the benchmark index gained more than 2% by the close.