Alibaba's $32 billion Singles Day shopping extravaganza

 Alibaba Group Holding Ltd.’s overhaul could serve as a template for a restructuring of China Tech itself: a shake-up that achieves Beijing’s aim of carving up the country’s tech titans while unlocking potentially billions of dollars in pent-up shareholder value.

China’s online commerce leader surprised markets by announcing Tuesday plans to split its $220 billion empire into six units that will individually raise funds and explore initial public offerings. In executing the biggest overhaul in its history, Alibaba manages to address two objectives that have eluded many of its rivals — appeasing both a government distrustful of Big Tech and investors traumatized by a years-long regulatory crackdown. Its shares soared over 16% in Hong Kong, a tad more than it managed in New York, adding more than $30 billion to its market value. Rivals including Tencent Holdings Ltd. also surged, on anticipation that Alibaba’s peers might explore similar actions in a loosened regulatory regime. 

The shift to a holding company structure is rare for major Chinese tech firms and could present a template for peers such as WeChat operator Tencent. Xi Jinping’s administration had long criticized the influence of online platforms, worried that concentrating power and data among a few tech companies suppresses innovation and threatens the Party’s grip on power. Alibaba and Tencent invested in hundreds of startups over the years, often helping shape entire segments of the consumer internet from ride-hailing to grocery delivery.

Alibaba’s restructuring marks a departure from the internet company’s traditional preference for keeping most of its operations under one roof, running everything from supermarkets to datacenters under the main Alibaba umbrella. Decentralizing the company’s business lines and decision-making power addresses one of Beijing’s primary goals during its sweeping crackdown. Another key priority is jumpstarting growth after years of Covid Zero restrictions depressed activity across the world’s No. 2 economy.

“For Beijing, it addresses the concern over the abuse of monopolistic power by internet behemoths,” Evercore ISI analysts Neo Wang and Gin Wang wrote. “The split-up could also serve as a template for Alibaba’s peers, but we don’t expect any imminent similar move.” Alibaba’s announcement Tuesday coincided with the return of its billionaire co-founder Jack Ma to China after more than a year abroad. The timing spurred speculation that the government was finally taking the shackles off one of the country’s best-known corporate names — before unfettering other corners of the private sector to try and rejuvenate a country shattered by years of punishing pandemic restrictions.

It’s also a strong signal that Alibaba is ready to tap investors and public markets, after the Xi Jinping administration’s clampdown on internet spheres wiped out more than $500 billion of its value. Tuesday’s overhaul frees up Alibaba’s main divisions from e-commerce and media to the cloud to operate with far more autonomy, laying the foundation for future spinoffs and market debuts.