Yahoo China's (latest) comeback plan

Posted by: Bruce Einhorn on January 9, 2007

Back to the drawing board for Yahoo China. Jack Ma, the Chinese entrepreneur who runs the company that owns Yahoo’s China operation, has unveiled his latest strategy to turnaround the troubled portal, which after almost a decade in China remains insignificant compared to local companies like Sina, Sohu and Baidu. Ma, CEO of Alibaba.com (which owns Yahoo China and in turn is 40% owned by Yahoo U.S.) just gave an interview to the AP (picked up here by USA Today) and said that the idea now is to make the Chinese portal a specialist, not a generalist, portal. In the rest of the world Yahoo may have built itself by appealing to just about everybody but in China the company is going to position itself as a website for the affluent. “”If Yahoo is going to win, it has to do so in a new way,” Ma told the AP. “What’s the point of building another Sina.com?” He went on to say that “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.”

Give Ma credit for facing up to reality. It’s been obvious for a while now that Yahoo China is in big trouble. As a portal, Yahoo is an also-ran behind market leaders like Sina.com and Sohu.com. As a search engine, it’s a very distant No. 3 behind Baidu and Google. The most recent president was on the job for barely a month before being shown the door by Ma, the entrepreneur who is chairman and CEO of Alibaba.com, the Chinese company that controls Yahoo China, late last year. (For more on Yahoo China’s problems, see this BW story from last month.)

Will this new strategy work any better than the many others that Yahoo China has tried over the years? I’ve underestimated Ma and his Alibaba team before – I had my doubts that they would be able to survive after the popping of the Internet bubble, yet here they are. Still, this latest plan does seem pretty far-fetched. As Baidu has demonstrated in China and Google has shown everywhere else, once one company establishes itself as the dominant player, it’s increasingly difficult for the laggards to get any breathing space. Yahoo China as a niche player? I find it hard to believe that Jerry Yang and other executives at Yahoo back in Silicon Valley had this in mind when they decided in 2005 to invest $1 billion in Alibaba.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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