Alibaba Group Holding has revealed a broader extent of Chinese government ownership in its business units than previously acknowledged, prompted by an inquiry from the US Securities and Exchange Commission (SEC).
Bloomberg reports that the disclosure was made in filings submitted in the US and Hong Kong, indicating that Chinese state-owned enterprises or foreign sovereign wealth funds partially own more than a dozen of Alibaba's entities.
Alibaba then stated that these disclosures were made in response to feedback from the SEC staff, amending its earlier filing from July.
The timing of these filings coincides with the Chinese Communist Party's recent announcement of increased involvement in guiding the nation's technology and science development.
China's tightening control over its tech sector has raised concerns among investors and heightened the possibility of closer scrutiny in the US.
Government Stakes in Alibaba
Alibaba detailed that Chinese state-owned enterprises held stakes in six direct-sales businesses, contributing less than 6% of its total revenue in the fiscal year ending March 2023.
The ownership stakes ranged from below 10% to below 30%. Additionally, state-owned companies acquired ownership in various business entities focusing on sports, health, logistics, and local consumer services.
The company also disclosed minor stakes held by sovereign wealth funds from Singapore, Malaysia, the United Arab Emirates, and Qatar.
Despite the revelations, Alibaba did not specify the entities involved in its filing, citing its complex corporate structure currently undergoing restructuring.
At the moment, the company is considering splitting several core business lines into standalone entities. Notably, Chinese government entities acquired so-called "golden shares," typically 1% nominal stakes, in units of Alibaba and other leading Chinese tech firms, granting them potential influence over key decisions.
Over the past year, Alibaba has faced challenges in overhauling its extensive e-commerce, logistics, and cloud operations.
In response, CEO Eddie Wu has assumed direct control of core businesses to regain user trust amid intensifying competition and regulatory risks both domestically and internationally.
Join the Conversation