The entrepreneur who runs Yahoo Inc.’s China-based Web portal has announced a new strategy based on promoting the site as a search engine, saying he is ready to spend heavily in a battle with Chinese-language search leader Baidu.com.
Ma Yun, chairman and chief executive officer of Alibaba.com, said the top priority for Yahoo in China is to build the best search engine for the Chinese community instead of an Internet portal like NASDAQ-listed Sina Corp and Sohu.com.
The US Internet giant had originally focused on the search engine business since entering China seven years ago, but it has been swaying between the search engine, advertising, and the portal before transferring China operations to Alibaba.com in August along with paying US$1 billion for a 40-per-cent stake.
Yahoo! China already enjoys a strong second place position in the China search market, on the heels of market leader Baidu by only 5% in terms of market share. According to the latest available independent study from iResearch Q1 2005, Yahoo! China’s search properties had a combined market share of 32% as measured by search queries, placing Yahoo! China in the No. 2 position behind Baidu 37% and well ahead of third-place Google 19% in China.
With a team of Chinese-speaking search engineers based in both China and Silicon Valley, the partnership between Alibaba and Yahoo! Inc. will allow Yahoo! China to offer the best Chinese-language search technology to China’s Internet users.
Yahoo has moved more than 2,000 computer servers from the United States to Beijing as part of its localization efforts in the search engine market in China. Ma expects another 5,000 servers to be moved to China next year.
Yahoo can now search 1 billion Chinese-language web pages, compared to 250 million before the acquisition, Ma added.
Yahoo! China’s new direction can be summed up in one key word –‘search‘, said Jack Ma, CEO of Alibaba.com, which in October acquired the China business of Yahoo! Inc. and became the exclusive licensee to the Yahoo! brand and search technology in China.
The refocus on the search engine business underlines a growing desire by Alibaba to build an Internet empire in the Chinese community.
Alibaba already has more than 9 million registered users in the B2B business to business e-commerce sector. Taobao.com, an online auction house operated by Alibaba, now has more than 11 million registered users.
Alibaba.com, based in Hangzhou city southwest of Shanghai, runs on-line commerce sites that link foreign buyers with Chinese wholesalers. Its popular consumer auction site Taobao.com competes with the Chinese arm of eBay Inc., the world’s top on-line auction company.
Ma said Alibaba hopes to use Yahoo’s search engine to direct customers to its commerce sites.
What we are doing is sending out a strong signal to China, to the Yahoo team: We are focused and we are coming, Ma told a group of reporters. He said Alibaba would cooperate with the communist authorities if they sought information on "politically sensitive information" sent by a Yahoo e-mail customer.
I’m not a political group, Ma said. I’m a businessman.
Human rights groups disclosed in September that Yahoo’s Hong Kong arm provided information about e-mail that led to a 10-year prison term for a Chinese reporter, convicted under state secrets laws.
Daily searches by Chinese Internet users are expected to jump from 360-million this year to 816-million in 2007, according to investment bank Piper Jaffrey. It expects annual revenues from advertising on search sites to reach US$1-billion (euro700-million) by 2010, up from US$134-million (euro100-million) now.
Ma said he believed Yahoo has less than a year to make itself China’s leading search engine. If we do not move fast, within eight to 10 months, we do not have a chance, he said.
Ma, a wiry, boyish former English teacher, is one of China’s best-known Internet entrepreneurs.