Yahoo China Portal to Be Reorganized
Monday, January 08, 2007
By CHRISTOPHER BODEEN, Associated Press Writer
SHANGHAI, China Yahoo's China portal will be reorganized as a business-oriented search engine, the company's head announced Monday, saying it had to change or fail amid intense competition from domestic rivals.
Jack Ma, CEO of e-commerce company Alibaba Group, which runs Yahoo's China operations, said specialization would help ward off competition from search leader Baidu and popular Web portals such as Sina.com.
"If Yahoo is going to win, it has to do so in a new way," Ma said in an interview with The Associated Press in China's commercial hub of Shanghai.
"What's the point of building another Sina.com?" he asked.
Ma acknowledged Yahoo China was lagging and losing money _ although he declined to give any figures. However, he said company research showed its search engine attracted more affluent, business-oriented customers, while Baidu's users were largely students.
"We don't need to compare ourselves with Baidu in market share," Ma said.
He said Yahoo China will seek to capitalize on its appeal with high-income users and entrepreneurs. Ma gave no details, but the changes would apparently weight search results more heavily in favor of corporate or business oriented Web sites.
Ma also didn't say when the changes would take place at Yahoo, but said they would require major shifts in both technology and institutional culture.
"We don't want those not interested in business or making money. They can go to Baidu," he said. "Our main focus is the high-end."
The fine-tuning is only the latest twist for Yahoo in China, where it has struggled since establishing a local unit in 1999.
Seeking a proven local partner, Yahoo in October 2005 transferred its China operations to Alibaba, which dominates China's market for online commerce sites that link foreign buyers with Chinese wholesalers.
As part of that deal, Mountain View, Calif.-based Yahoo Inc. took a 40 percent stake in privately-held Alibaba, which also owns popular consumer auction site Taobao.com, and China's leading online payment service, Alipay.
Earlier Monday, Ma launched a new Web-based business software company, Alisoft, which will initially target Alibaba's 18 million users.
Yahoo is one of several foreign Internet companies seeking to adapt to the Chinese market.
Last month, EBay Inc. announced it was turning over control of its Chinese auction Web site to Beijing-based Tom Online Inc., the main competitor to Alibaba's Taobao.com.
Search giant Google, meanwhile, has been repeatedly blocked within China by the country's communist government, which maintains strict control over online content. To the dismay of critics, last year it launched a new site hosted on China-based servers that excluded information that could offend the government.
Yahoo too has been criticized by human rights groups for allegedly aiding the Chinese government's efforts to silence online critics. Ma said Yahoo China follows local law and doesn't think the company did anything wrong.
"History will keep the record," said the compact former English teacher who is one of China's best-known Internet entrepreneurs.
Internet searching is a huge and fast growing business in China and surveys show Yahoo lagging far behind the Nasdaq-listed Baidu. China's 123 million Internet users expected to conduct 816 million searches daily in 2007, while annual revenues from advertising on search sites to reach $1 billion by 2010, according to investment bank Piper Jaffray.
Both the changes at Yahoo and the launch of Alisoft appeared to be smart moves, said Paul Waide, an analyst and director of content with Shanghai-based technology consultants JLM Pacific Epoch.
"Selling to Alibaba's customers sounds like a great idea. You probably don't want to go up against Baidu and Google for search and Sina.com for news," Waide said.
And Waide said Ma's track record would inspire confidence.
"He seems to be unbeatable," Waide said. "He has the China market and he also has the business acumen."
Ma said the new company, Alisoft, aims to exploit demand from thriving small and medium size businesses that need to upgrade their backroom operations.
Such demands have become more urgent because the strengthening of the Chinese currency, the yuan, against the U.S. dollar has eaten away at profit margins by making Chinese exports relatively more expensive.
At the same time, the hosting of the software on the Internet avoids problems with rampant illegal copying, Ma said. Alibaba Group already has the brand, customer base, business channels and payment solution, and Ma said he expects Alisoft to start generating income virtually from the start.
"We see a huge opportunity here," Ma said.
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