(Bloomberg) – Alibaba Group Holding Ltd. revealed more information than previously known about the Chinese government’s stake in its business units following an investigation by the U.S. Securities and Exchange Commission.
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The Hangzhou-based e-commerce pioneer said in filings with the U.S. and Hong Kong over the weekend that more than a dozen entities are partially owned by Chinese state-owned enterprises or foreign sovereign wealth funds. He said that it has been done. The company said in a notice that the disclosure was made as an amendment to its July filing “in response to certain comments from SEC staff.”
The application comes after China's ruling Communist Party said this month it would play a greater role in leading the country's technological and scientific development. The Chinese government has tightened its grip on its tech companies in recent years, raising investor concerns and potentially increasing scrutiny in the United States.
Chinese state-owned enterprises have stakes in six of Alibaba's direct sales businesses and accounted for less than 6% of the company's total revenue in the fiscal year ending March 2023. Five of them had less than 10% stake, and the rest had less than 30% stake. According to the filing.
The company also said that state-owned enterprises have acquired ownership of several entities in sports, health, logistics and regional consumer services. Alibaba also announced small investments in some units by sovereign wealth funds from Singapore, Malaysia, the United Arab Emirates, and Qatar.
Alibaba did not identify specific companies in its filing. The company's corporate structure is very complex and is undergoing an overhaul as it considers splitting several major business lines into separate companies. Representatives for the company did not respond to requests for comment.
The filing adds to the so-called “golden stocks” — typically 1% nominal stakes — that Chinese government agencies acquired last year from Chinese tech leaders such as Alibaba and Tencent Holdings. This share structure theoretically allows the government to: Appointing board members and influencing key company decisions is seen as giving the Chinese government new tools to influence the world's biggest internet player.
Alibaba has struggled to revamp its vast e-commerce, logistics and cloud empire over the past year after an ambitious restructuring project fell through. Chief Executive Officer Eddie Wu will take direct control of the core business in a bid to win back users in the face of rising domestic and international competition and regulatory risks.
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