On the first anniversary of Ali's split, what happened to the six major business groups
It has been a year since Ali started the "1+6+N" organizational reform
On March 28, 2023, Alibaba Group ushered in the largest organizational transformation in its history, launching the "1+6+N" reform and establishing six business groups. According to the plan at that time, qualified business groups and companies have the possibility of independent financing and listing in the future.
The six business groups are Taotian Group, Cloud Intelligence Group, Alibaba International Digital Business Group, Cainiao Group, Local Life Group and Dawen Entertainment Group. The story of Ali's transformation has come to this day, just over a year. So, how has Ali developed this year?
Let's take a look at the financial data first, in February this year, Alibaba released its financial report for the third quarter of fiscal year 2024 as of December 31, 2023, with revenue of 260.348 billion yuan, a year-on-year increase of 5%, operating profit of 22.511 billion yuan, a year-on-year decrease of 36%, a net profit of 10.717 billion, a year-on-year decrease of 77%, and a net profit of 47.951 billion yuan, a year-on-year decrease of 4%.
Source: Alibaba announcement
In terms of business groups, for the quarter ended December 31, 2023, Taotian Group's revenue was 129.07 billion yuan, a year-on-year increase of 2%, Cloud Intelligence Group's revenue was 28.066 billion yuan, a year-on-year increase of 3%, Ali's international digital business group's revenue was 28.516 billion yuan, a year-on-year increase of 44%, Cainiao's revenue was 28.476 billion yuan, a year-on-year increase of 24%, local life group's revenue was 15.16 billion yuan, a year-on-year increase of 13%, and Dawen's entertainment group's revenue was 5.04 billion yuan, a year-on-year increase of 18%.
Source: Alibaba announcement
The revenue of the six major business groups has increased, but Alibaba is also facing the challenge of slowing revenue growth, operating profit and net profit.
Let's take a look at Alibaba's performance in the capital market. In November last year, Alibaba's market value was briefly surpassed by Pinduoduo, which was hotly discussed by the market. Now, Alibaba's market capitalization has opened a gap with Pinduoduo. At the close of the U.S. stock market on March 27, 2024, Alibaba's latest market capitalization is $179 billion. Pinduoduo's latest market capitalization is $155 billion.
Alibaba, Pinduoduo U.S. stocks Source: Baidu Stock Market
It is worth mentioning that in the year of Ali's organizational change, Ma Yun and Tsai Chongxin both significantly increased their holdings of Ali's shares. According to market sources, Jack Ma bought about $50 million in Alibaba shares in the fourth quarter of last year. According to documents disclosed by the US Securities and Exchange Commission, as of the fourth quarter of 2023, Tsai Chongxin's family fund BluePool bought a total of 1.9575 million shares of Alibaba, with a market value of about $152 million. After the increase, Jack Ma became the largest individual shareholder of Alibaba. There is no doubt that the actions of Jack Ma and Tsai Chongxin show confidence in Ali.
Alibaba announced the spin-off, and the listing plans of each business have received wide attention from the market. On May 18 last year, Alibaba announced that Cloud Intelligence Group would be completely spun off from Alibaba Group and go public, and Cainiao and Hema launched their listing plans. Among them, Alibaba Cloud plans to achieve spin-off and listing within 12 months, Cainiao is expected to complete it in the next 12 to 18 months, and Hema is expected to complete it in the next 6 to 12 months.
Time has come to the present, and the listing plans of Alibaba Cloud, Hema and Cainiao have changed. In November last year, Alibaba announced that it would not promote the complete spin-off of the Cloud Intelligence Group in view of various uncertainties. At the same time, the initial public offering plan of Hema Xiansheng has also been put on hold and the market situation is being evaluated.
At the end of September last year, Cainiao submitted an IPO application to the Hong Kong Stock Exchange, becoming the first business group to start the IPO process. On March 26 this year, Alibaba announced that it had decided to withdraw Cainiao's listing application and offer to acquire the equity of Cainiao's minority shareholders and the equity vested by employees. The acquisition is valued at $3.75 billion. Alibaba said it would strengthen the focus on e-commerce core business and logistics collaboration.
Source: Alibaba announcement
Alibaba Cloud will no longer be spun off, Hema IPO is suspended, and Cainiao withdraws its listing application, and the listing plans of these three major business groups have been significantly adjusted.
Ali must have had his own considerations when he made the adjustment. However, Alibaba's attitude towards the listing of various businesses is not without a trace. In February this year, Tsai Chongxin, chairman of the board of directors of Alibaba Group, mentioned in the earnings conference that Alibaba is not in a hurry to let Cainiao and Hema carry out IPOs.
Mr. Tsai also mentioned in an interview that since the restructuring was announced in March last year, market sentiment has been sluggish, and conducting capital market transactions has not actually been able to bring transparency to the potential value of the business. Therefore, we decided not to spin off the cloud business, but to focus on the synergies that the cloud can bring to the core business, and second, in the current market environment, for rookies, we hope to wait for a better time to go to market.
Alibaba is getting younger and younger
At the same time as Alibaba's organizational structure is adjusted, personnel are also constantly adjusted. Judging by the trend, Ali is becoming more and more "young".
In September last year, Wu Yongming officially succeeded Daniel Zhang as CEO of Alibaba Group. Wu Yongming's nickname is "East Evil", according to public information, he was born in 1975 and is the youngest "Eighteen Arhats". Immediately afterwards, Wu Yongming issued a letter to all employees, putting forward the requirements of the younger management team, "Within 4 years, we should let the post-85s and post-90s as the main managers refresh the business management team, and create a mechanism and cultural environment for more young Ali people to become the core force of Alibaba." ”
Wu Yongming Source: Alibaba Group's official website
To promote the rejuvenation of the management team, Wu Yongming is not just talking. In December last year, Wu Yongming concurrently served as the CEO of Taotian Group, and soon Taotian Group underwent large-scale organizational adjustments. Next, Taotian will be fully taken over by six young managers, Wu Jia, Chu Duan, Jia Luo, Yiman, Shaoyou, and Daofang.
Ali Local Life Group has also ushered in a young management team. In March this year, Wu Yongming issued a letter to all employees announcing that Yu Yongfu would step down as chairman of Local Life Group and CEO of Ele.me at the end of Alibaba's current fiscal year (March 31). Among them, the chairman of Ele.me will be replaced by Wu Zeming (nickname: Fan Yu), CTO of Local Life Group, and the CEO will be taken over by Han Liu, the head of Hummingbird delivery, and the chairman of AutoNavi will be replaced by President Liu Zhenfei, and COO Guo Ning will be the CEO of AutoNavi.
It is understood that Wu Zeming and Han Liu are both post-80s. It is reported that Wu Zeming is a post-80s generation and one of the youngest post-80s partners of Alibaba who grew up from a front-line technical position. Born in 1988, Han Liu is one of the youngest post-85s business presidents in Alibaba Group.
Hema will also usher in new changes. On March 18, Wu Yongming issued an internal email saying that from now on, Hou Yi will step down as CEO of Hema and retire with honor from Freshippo, and CFO Yan Xiaolei will also serve as CEO of Freshippo. According to public information, Yan Xiaolei is a post-80s generation who joined Hema as CFO in 2018.
After taking stock, we can see that Wu Yongming is taking practical actions to make Ali younger. Ali founder Ma Yun once said that to believe in young people is to believe in the future, Ali started the change, towards the direction of youth, and there may be more changes and opportunities in the future.
Alibaba focuses on the field of e-commerce
Reform is an ongoing process that will not be achieved overnight. March 28, 2024, is the year since Ali started the reform, but the results of the change have not yet been fully revealed. Judging from Alibaba's actions, it is necessary to focus on the core business, especially the development of the e-commerce business.
In February this year, after Ali released its latest financial report, it mentioned that reviving Taotian Group is one of Alibaba Group's top priorities. Recently, Tsai Chongxin also mentioned that Ali's primary goal is to win in the field of e-commerce.
In order to promote the growth of e-commerce business, Alibaba has made a lot of moves. Take the recent withdrawal of Cainiao's listing application as an example, e-commerce and logistics are closely related, and Alibaba's move is intended to achieve deep integration between Cainiao's operations and e-commerce business and improve market competitiveness.
Not long ago, Alibaba's 1688 platform announced full access to Taobao. It is understood that in the early stage, 1688 will open three stores on Taobao, namely Yanxuan Taobao store, enterprise self-selected Tmall store and industrial expert selected Tmall store. In the future, these stores will be integrated into a channel similar to Tmall Supermarket, and 1688 will be launched on Taobao to carefully select the original factory goods.
Nowadays, consumers are more rational and autonomous, and have higher requirements for the price and quality of goods. In recent years, 1688 has become popular among young people by relying on "big-name replacement". Directly connected to the source manufacturers, 1688, which eliminates intermediate links, naturally has a price advantage, or will become a sharp weapon for Ali in the industry competition, helping Ali win users and win more market share.
In general, it is not easy for the elephant to turn around. However, the attempt is the beginning of the story, and now that Ali has been reforming for a year, let's wait and see how Ali will promote the change and what the results of the reform will be.
Author | Pandora