Alibaba Reorganizes, Jingdong Delays IPO 阿里巴巴重组，京东推迟上市
E-commerce leader Alibaba is quickly discovering that being big has its benefits, but it also comes with many challenges — a fact that’s reflected in a recent series of major reorganizations aimed at making the company more efficient. Meantime, Alibaba’s top rival Jingdong Mall is also grappling with its own issues, most notably its inability to earn a profit, which may be the reason behind its latest proclamation that it won’t make an initial public offering until 2015 at the earliest. Alibaba’s latest major restructure and Jingdong’s delay of its IPO plans are largely unrelated; but both developments do reflect the fact that each company has become quite large and diverse and needs some organizational makeover to maximize its appeal to investors before planned IPOs.
Let’s start with a look at Alibaba, whose founder Jack Ma has announced in an email to employees that the company has been reorganized into 25 business units, each headed up by a president or general business manager. (English article; Chinese article) The timing of the move is a bit unusual, since Alibaba just underwent another major reorganization less than a year ago when it divided itself into 7 main business groups.
This latest reorganization looks like a further refinement of that original restructure, and seems to reflect Ma’s growing concern that his company may be getting too big for him and his management team to effectively run. His concern is probably the result of the fact that Alibaba has entered a large number of new business areas in the last few years, including cloud computing, e-commerce search and even insurance, and it’s becoming more difficult for him to keep track of how all the new businesses are performing.
I don’t have any easy answers for the challenge he now faces of how to better manage his company, except to say that perhaps he should re-think some of his newer businesses that aren’t performing extremely well and consider closing them. This kind of obsession with better management is obviously important for the company’s short term performance, but Ma also runs the risk of losing his longer-term strategic vision and also hurting employee morale with too much change if he fixates on this kind of reorganization for too long.
Moving on, media are reporting that Jingdong’s talkative CEO Liu Changdong has said his company won’t make an IPO until 2015 at the earliest, and this year he will focus on improving performance. (Chinese article) He added that the company expects to turn profitable in the fourth quarter of this year.
Anyone who has followed Jingdong knows that Liu’s words aren’t exactly very reliable, as he and other company executives have given numerous conflicting dates in the past for a planned IPO. The company even went so far as to start the IPO process early last year, but quickly decided to delay any offering after meeting with little or no enthusiasm from investors. (previous post)
In this case I think it’s safe to say that Jingdong probably won’t try to make an IPO this year, and instead will focus on its own internal restructuring to help it achieve Liu’s goal of profitability by the end of 2013. But if it really achieves that goal, and if market sentiment is positive — 2 very big “ifs” — I wouldn’t be surprised to see Liu change his mind yet again and aim for an IPO sometime next year.
Bottom line: Alibaba’s new reorganization is aimed at making the company more manageable, while Jingdong Mall is unlikely to make another attempt at an IPO until 2014 at the earliest.
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