Taobao split into three companies


Alibaba Group announced its decision Thursday to split China’s largest e-commerce website Taobao into three separate companies.

The new companies are product search engine eTao, for searching across Chinese shopping websites; the business to consumer website Taobao Mall, for branded retailers to sell to consumers; and consumer to consumer website, linking individual buyers and sellers.

“We have witnessed disruptive changes in the social networking and e-commerce industry in the past two years. There are more and more new similar companies coming out,” Ma Yun, founder and CEO of Alibaba Group, said Thursday. “Alibaba Group will promote a ‘big Ali’ strategy instead of ‘big Taobao’ to better capture opportunities in the industry,” he added.

Ma also said he hadn’t shut out the possibility that there might be an initial public offering for Alibaba Group as a whole in the future, to reward the Alibaba staff and shareholders.

Taobao reported that it had more than 370 million registered users at the end of 2010 and that it now hosts more than 800 million product listings.

“We believe that Taobao reorganizing into smaller companies will create more value for the whole industry, and therefore, more value to our company and shareholders,” Ma said.

“It’s a good decision to split Taobao into three separate firms,” Cao Junbo, chief analyst with market research company iResearch, told the Global Times.

Cao said Taobao faces different problems when running as a whole, such as how to share the costs and competing to use resources. Cao said that operating independently would be good for the companies’ development.

The reorganization comes in the wake of a dispute over the spinoff of online payment business Alipay from Alibaba Group to an outside company controlled by Ma without the formal permission of Alibaba’s major shareholders, Yahoo Inc and Softbank Corp.

Alibaba held a press conference Tuesday to explain the Alipay dispute and said that negotiations over a settlement are still going on.

“It’s hard to say whether the reorganization is related to the Alipay dispute,” Feng Lin, an e-commerce expert with e-Business Center, told the Global Times Thursday. “There has been no sign to indicate they are related.”

Source:Global Times

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