They will be listed individually on the stock market. The company, and its founder Jack Ma, have long been in the government’s sights. The group aligns with the antitrust regulations promoted by Xi. Foreign investors are still cautious about the future of their operations in China. They look to alternative markets like India and Vietnam.
Beijing () – Alibaba announced yesterday that it will divide its business into six entities: the new branches will be listed individually on the stock exchange. Since the end of 2020, the high-tech giant founded by Jack Ma has been in the crosshairs of the authorities, which on instructions from Xi Jinping launched an antitrust campaign, especially against the technology, real estate and private education sectors.
Alibaba’s announcement came a day after Ma reappeared in China. The well-known billionaire has not held any position in the group for a long time. He had lost track of her more than two years ago, after he criticized the country’s financial regulators: his words were followed by tensions between the government and the company.
In all likelihood, Xi is worried about losing political control to businessmen amassing enormous wealth. According to several observers, the campaign for “common prosperity” promoted by the general secretary of the Chinese Communist Party, which demands that big business contribute to the welfare of the less wealthy, is actually aimed at disempowering oligarchs like Ma.
Markets welcome Alibaba’s breakup: they see it as a sign that Xi’s crackdown on big business is coming to an end. Investors appreciate that newly spun off companies will be better able to defend themselves against regulations that only affect one of them.
Analysts say Alibaba’s competitors (Tencent and JD) could now also follow the same path of separation, with a holding company encompassing several separate companies, the best way to conform to antitrust laws introduced by Xi.
However, the heads of big foreign companies are wary of promises by the new Chinese government to foster better conditions for private investment. At the China Development Forum held in recent days, the CEOs of these companies stated that they expect concrete actions to back up those words.
Foreign investors, especially from the US and Europe, have long called on Beijing for greater access to the local market. In addition to excessive regulation, its assessment for future transactions includes aspects such as the decline in Chinese exports, the real estate crisis, the growing indebtedness of territorial governments and the technological war with the US.
Not surprisingly, Apple recently announced plans to open new plants in India and Vietnam: a way to reduce dependence on investment in China.
