Alibaba reshapes cloud strategy amid evolving US export controls and share divestitures

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Alibaba, the Chinese e-commerce titan, has paused its plan to separate its cloud business from the parent company and float it as an independent listed entity. The move comes as Washington expands export controls on advanced computer chips and semiconductor equipment, prompting Alibaba to reassess its diversification strategy. Last October, the United States broadened rules to curb the sale of cutting-edge microprocessors and manufacturing gear to China. The company disclosed that JC Properties and JSP Investment, the family trusts of co founder Jack Ma, intend to reduce their stake by selling 10 million shares next week for about 870.7 million dollars. Each of Jack Ma’s family vehicles plans to divest five million shares. Alibaba’s filings with the U S Securities and Exchange Commission indicate that the sale aligns with a divestiture plan dated August 16, 2023. Following the announcement, Alibaba shares on the New York Stock Exchange dropped more than ten percent, with a late trading decline around nine to ten percent in some markets.

Strategy change

The contest for technological leadership between the United States and China is intensifying, and Alibaba has responded with a bold corporate shift. The cloud unit is valued at roughly 11 billion dollars, highlighting the potential impact of new export restrictions. Alibaba stated that an outright spin off of the cloud business might not automatically boost shareholder value. The firm warned that stricter U S export controls on semiconductors could undermine Cloud Intelligence Group’s ability to deliver products and services under existing agreements, potentially weighing on results and financial health. The company added that the evolving policy landscape could materially impact its operations and outlook.

Investors in New York reacted quickly, with Alibaba posting its steepest one day decline in more than a year. The company remains in a recovery phase after the pandemic and faces stiff competition from larger global players in the e commerce space, including Amazon, in terms of service quality and efficiency as a global platform.

The group reported revenue of 458.946 billion yuan in the first half of the year, with a year over year comparison showing strong growth in the second fiscal quarter. In the period from July to September, Alibaba posted a net profit of 27.706 billion yuan, reversing a loss of 20.561 billion yuan a year earlier. These figures illustrate the company’s ongoing efforts to balance growth with profitability amid a shifting regulatory and competitive environment.

Visible

Despite the turbulence, Alibaba remains active on the strategic front. In the same week, the company announced the acquisition of Visable, a B2B platform operator. Visable runs well known platforms such as wlw, a leading B2B portal in the DA CH region, and europages, a European B2B directory with millions of registered companies. The combined footprint reaches millions of B2B buyers each month seeking in depth information about businesses and products, with a large daily search volume. Visable broadens Alibaba’s reach in the business to business market and strengthens the group’s ecosystem by offering additional marketing capabilities to merchants and manufacturers seeking greater online exposure.

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