• Alibaba’s “1+6+N” restructuring move could lead the trend for other tech conglomerates to follow suit. Should more companies successfully go public domestically or overseas, the venture ecosystem in China will benefit from increased liquidity and potential return of nondomestic investors.

• By splitting into six units, each with its own CEO and board, the newly created Alibaba subentities will be able to independently raise new debt and equity, including via IPO. Alibaba claimed the move was to build an agile organization, but it also likely broke down into standalone entities to circumvent further government scrutiny and crackdowns.

• The public market rallied at Alibaba’s announcement, sending Alibaba and SoftBank’s share prices soaring the next day due to perceived signs of stronger government support in the tech sector.

• During the past couple years, Beijing has cracked down on the internet sector in the name of data security, leading to shaken investor confidence, nondomestic investment pullback, and a decline in venture activities.

• While Beijing’s stance on tech giants remains unclear, the Chinese government faces a challenging task: revitalizing an economy battered by the COVID-19 pandemic. This pressing need will likely push the one-party regime to lessen regulatory burdens on companies and further open the domestic market.

• On April 1, a registration-based IPO system resembling that of the US market was officially rolled out across all domestic exchanges in China. In tandem, the CSRC announced reform measures to provide clarity and streamline the filing report process for overseas IPOs. These measures send a powerful, encouraging signal to the regional IPO market, which may see a boost later in 2023.