Yahoo's Chinese connection

Web search giant Yahoo has paid $1bn (£556m) for a stake in China's
biggest e-commerce firm, Alibaba.com. The US company will now hold a 40% stake-and
35% of the votes-in the Chinese firm, which runs the country's biggest
auction and trading sites.

Alibaba.com is also competing in the field of online payments, an area in
which eBay has a huge stake, thanks to its ownership of US payment broker Paypal.

The investment positions Yahoo to compete with world auction leader eBay in a
key market. The Chinese firm, in which Yahoo is now the biggest single investor,
as well as the biggest investor in the sector in China to date, employs some
2,000 people in the eastern city of Hangzhou. It is best known for its online
auction site Taobao.com, as well as flagship trading site Alibaba.com, which
helps small and medium-sized companies find customers.

The Chinese government last month reported that the number of people in the
country using the Internet had reached 103 mn, putting it second only to the US.
Leading overseas companies have recently been investing heavily in China's
booming online market. eBay paid $180 mn for Shanghai-based Eachnet and US web
firm Interactivecorp-which owns Expedia-paid $168 mn for a majority stake in
Chinese online retailer Elong. Yahoo already leads eBay in Japan via its
relationship with Softbank.

Courtesy: BBC News

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