July 23, 2012 3:20 pm

Ma takes firmer grip of Alibaba

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Alibaba, China’s largest ecommerce company by revenue, announced an internal restructuring on Monday as the group seeks to refocus management control in the hands of founder Jack Ma.

The company’s two online marketplaces for trade between businesses – one Chinese and one international – have been transformed into two business groups that will report directly to Mr Ma. This in effect dissolves Alibaba.com, the marketplace for business-to-business deals that had been operating the two websites and which the group took private last month.

The changes follow a deal in May for Yahoo’s exit as a shareholder in Alibaba Group and are seen as part of a transformation that could eventually pave the way for a listing of the entire group.

Alibaba.com will no longer have a separate chief executive. Jonathan Lu, who had taken the job in February 2011 after a fraud scandal at the listed company, will be promoted to chief data officer at the group level.

Under the new structure, Alibaba Group has seven business groups. Apart from the two B2B units, Alibaba International Business Operations and Alibaba Small Business Operations, they include Taobao.com, a consumer-to-consumer trading site, eTao, the group’s ecommerce search engine, TMall, its online shopping mall, Juhuasuan, its group buying site, and the computing and IT unit.

Although Alibaba, through Taobao and TMall, dominates China’s consumer ecommerce market and already has the world’s largest marketplace for business between companies, the group’s management thinks future expansion hinges on building a seamless ecommerce system spanning suppliers to consumers.

In the past few years, it has experimented with different growth strategies.

As consumer ecommerce in China grew rapidly, Mr Ma split the related operations in order to isolate TMall from the lower-end business on Taobao.com.

An aggressive attempt at expanding the customer base of Alibaba.com ran aground in 2010 when staff were found to have helped prospective customers circumvent credentials checks. Since then, Alibaba has put a lot of effort into building more effective controls across the entire group.

“We must accelerate the implementation of the ‘One Company’ strategy and effectively integrate B2B’s [small to medium-sized enterprises] system with Taobao’s market system so as to truly create a mechanism for openness, synergy and sharing,” Mr Ma said in an email to employees.

Chen Shousong, ecommerce expert at Analysys, a Beijing-based internet research and consulting company, said about the restructuring step: “The original B2B operations are completely fading out of the core business. Jack Ma’s ecommerce group starts to feel like an ecosystem.”

John Spelich, Alibaba Group spokesman, said: “In the wake of the Alibaba.com privatisation, we have just removed a layer of management for which there had been a regulatory requirement.”

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