Yahoo! will pay $1b in cash for a 40% stake in China's biggest online retailer, Alibaba.com.
Yahoo! will pay one billion US dollars in cash for a 40 percent stake in China's biggest online retailer, Alibaba.com. It's the largest online acquisition in China. CRI's Shanghai coorespondent explores what the partnership will mean for both companies and how it will affect China¡¯s online industry.
Under the deal, Alibaba will take control of Yahoo¡¯s Chinese internet operations.
Yahoo will get about 40 percent economic interest with 35 percent voting rights, making it the largest strategic investor in Alibaba.com.
The partnership will also allow both companies to leverage Alibaba.com's strong community of more than 15 million businesses and consumers. Yu Yang, chief consultant at Analysys International, a technology market research company, says this will make Yahoo the biggest beneficiary of the deal.
"Yahoo's Chinese operation is not as good as it works in Europe and America. The partnership will give Yahoo an opportunity to redefine its position in this market and promote its business, based on the strong customer base of Alibaba."
He says this will also give Alibaba much needed cash to prepare for a public listing on Nasdaq.
Alibaba is based in the eastern city of Hangzhou, about two hours ride from Shanghai. It's main China operations include a business-to-business e-commerce site and an online auction site called TaoBao, which competes with Ebay's Eachnet in China.
Yahoo's main China business consists of its search service, which it got two years ago when it purchased local search site 3721.com. The largest search engine in China is Baidu.com.
Yu Yang says the convergance of Yahoo and Alibaba is a setback to their rivals.
"Ebay will be the first to be affected. Taobao's auction business closely follows Ebay, and it will perform better with fund support. Next is Baidu.com, as Yahoo's search engine will be consolidated with Alibaba's customers. And then, it will be the portals like Sohu.com."
China's growing number of internet users has made it one of the most intense battlefields in the online industry.
Yahoo's main rivals, Microsoft and Google, have both launched services in the country.
Although denied by Alibaba's CEO Ma Yun, analysts believe Yahoo will further expand its business by eventually buying Alibaba.
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Producer: Han Wei 
Yahoo! will pay one billion US dollars in cash for a 40 percent stake in China's biggest online retailer, Alibaba.com. It's the largest online acquisition in China. CRI's Shanghai coorespondent explores what the partnership will mean for both companies and how it will affect China¡¯s online industry.
