Alibaba surges on restructuring plan

Chinese tech firms bounce back

Alibaba enjoyed its largest one-day rise on Tuesday since its Hong Kong listing, after announcing a substantial restructuring plan. 

Changing regulatory environment

At the start of the week, the e-commerce giant traded at half the price that it started in 2021, weighed down by a slew of regulatory crackdowns from the Chinese government. 

Without the need to safeguard the country’s leading tech giants from the Trump administration, China tightened data protection and antitrust regulation. This dovetailed with President Xi Jinping’s ‘Common prosperity’ initiative, which discouraged extravagant exhibitions of wealth and emphasised an increase in the wealth of all citizens. 

In April, Alibaba paid a $2.8bn (£1.7bn) fine following an antitrust investigation by the State Administration for Market Regulation (SAMR). In the third quarter, it reported an 87% year-on-year fall in net income to CNY3.4bn ($524m, £396m). At the same time, its global active consumer base rose by 20% year-on-year to 1.24 billion people. 

Although relations between Beijing and Washington have been less vocally antagonistic, Chinese regulators sought to discourage US listings of Chinese firms, famously investigating ride-hailing app Didi days after its New York listing. This month, the company announced its exit from the stock exchange.

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Restructuring plan

In an effort to navigate such waters, Alibaba announced this week that it will split its global and domestic e-commerce operations into two separate units. 

The company also announced that long-serving CFO Maggie Wu will be replaced by her deputy, Toby Xu. 

CEO and chair Daniel Zhang stated: “We will continue to focus on becoming a truly globalised company and we believe that overseas markets present many exciting potential and opportunities for us to capture. We have confidence in our local teams, and we are charting a path forward with a holistic strategic blueprint and organisational stability for winning our overseas markets.

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