Alibaba Reveals Extensive Chinese Government Stakes

Alibaba Group Holding Ltd. has unveiled a broader network of Chinese government stakes within its business units, shedding light on previously undisclosed ties following an inquiry by the US Securities and Exchange Commission (SEC).

The Hangzhou-based e-commerce giant, renowned for its pioneering role in the industry, disclosed in filings submitted in the US and Hong Kong over the weekend that over a dozen of its entities have partial ownership by Chinese state-owned enterprises or foreign sovereign wealth funds. The company clarified that these revelations were prompted by feedback from the SEC, leading to amendments to its earlier filing from July.

The timing of these disclosures coincides with China’s Communist Party signalling its intent to take a more prominent role in guiding the nation’s technological and scientific advancement. The increasing control exerted by Beijing over its tech sector in recent years has raised concerns among investors regarding potential scrutiny, particularly in international markets such as the US.

According to the filings, Chinese state-owned enterprises held shares in six of Alibaba’s direct-sales businesses, collectively contributing less than 6% of its total revenue in the fiscal year ending March 2023. Notably, five of these stakes were below 10%, with the remaining one falling below the 30% threshold.

Beyond direct-sales businesses, Alibaba revealed state-owned companies’ ownership in various entities spanning sports, health, logistics, and local consumer services. Furthermore, the filings disclosed minor stakes held by sovereign wealth funds from Singapore, Malaysia, the United Arab Emirates, and Qatar.

However, Alibaba refrained from specifying the exact entities involved in these arrangements. The company’s corporate structure is notoriously intricate and is currently undergoing restructuring, with considerations to spin off several core business lines into separate entities. Despite these disclosures, a representative for Alibaba remained unavailable for immediate comment.

These latest filings add to the growing roster of “golden shares” – nominal stakes typically amounting to 1% – acquired by Chinese government entities last year in units of prominent tech firms, including Alibaba and Tencent Holdings Ltd. Such share structures afford the government potential leverage to nominate directors or influence crucial company decisions, solidifying Beijing’s sway over key players in the global internet landscape.

Alibaba has faced significant challenges in recent times as it endeavours to overhaul its extensive e-commerce, logistics, and cloud infrastructure following setbacks in its ambitious restructuring efforts. Chief Executive Officer Eddie Wu has assumed direct oversight of the company’s core businesses, aiming to regain user confidence amid mounting competition and regulatory uncertainties both at home and abroad.

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