Yahoo! Inc will buy 10 percent of a share sale by Alibaba.com Ltd, China’s biggest e-commerce firm, as it steps up a battle with Google Inc and Baidu in the world’s second-biggest Internet market.
The U.S. Web giant, at the centre of a controversy over the jailing of two Chinese dissidents, is buying into a Hong Kong initial public offering expected to raise about $1 billion for Alibaba.com, which helps small firms market their products.
Yahoo already has a 40 percent stake in the Chinese firm’s parent, Alibaba Group, which took over Yahoo’s China operations in 2005 and has been reorganizing it since.
Yahoo China trails its main rivals in the search engine market, worth about $600 million a year, with a 12.5 percent share, compared with Google’s 21 percent and Baidu’s 58 percent, according to research firm Analysys International.
But Alibaba dominates the business-to-business segment, handling 69 percent of trade value, and fund managers believe the firm will get even stronger with Yahoo’s backing.
The industry is potentially lucrative if more of China’s 32 million small and medium-sized enterprises (SMEs) can be persuaded to use the internet.
Trade among Chinese SMEs reached $532 billion in 2007, and will grow by about 15 percent per year over the next five years, according to Shanghai-based consultancy iResearch. Around one-third of these firms use some kind of online service.
“Alibaba.com is the leader in B2B business. With Yahoo’s back-up, it’s easier for the company to gain market share,” said Kelvin Wu, principal partner at private equity firm AID Partners.
Source: Yahoo! & Alibaba
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