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Yahoo China to be geared to business

From the Associated Press

Yahoo Inc.'s China portal will be reoriented as a business-focused search engine, the company’s head announced Monday, saying the firm had to change or fail amid intense competition from domestic rivals.

Jack Ma, chief executive of e-commerce giant Alibaba Group, which runs Yahoo’s China operations, said specialization would help ward off competition from search leader Baidu.com 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.

Ma acknowledged that Yahoo China was lagging and losing money -- although he declined to give any figures. He said company research, however, showed that its search engine attracted more affluent, business-oriented customers, while Baidu’s users were largely students.

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He said Yahoo China would seek to capitalize on its appeal with high-income users and entrepreneurs. Ma gave no details, but the changes would apparently weigh search results more heavily in favor of corporate or business-oriented websites.

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 the country’s market for online commerce sites that link foreign buyers with Chinese wholesalers.

As part of that deal, Sunnyvale, Calif.-based Yahoo took a 40% stake in privately held Alibaba, which also owns popular consumer auction site Taobao.com, and China’s leading online payment service, Alipay.

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Ma on Monday launched a 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 website to Beijing-based Tom Online Inc., the main competitor to Alibaba’s Taobao.com.

Search giant Google Inc., meanwhile, has been repeatedly blocked within China by the country’s communist government.

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To the dismay of critics, last year Google launched a site hosted on China-based servers that excluded information that could offend the government.

Yahoo also has been criticized by human rights groups for allegedly aiding the Chinese government’s efforts to silence online critics. Ma said that Yahoo China followed local law and that he did not think the company did anything wrong.

Internet searching is a huge and fast-growing business in China and surveys show Yahoo lagging far behind the Nasdaq-listed Baidu. Annual revenue in China from advertising on search sites is expected to reach $1 billion by 2010, according to investment bank Piper Jaffray.


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