Yahoo foray into China sparks Alibaba row

A foray by Yahoo’s Hong Kong unit into mainland China has reinvigorated tension between Alibaba, the Chinese e-commerce group that represents the US internet company in China, and Yahoo Inc, one of its main shareholders.

“We might have to further re-evaluate our relationship with Yahoo,” said John Spelich, for, the group’s listed flagship, on Thursday, after Yahoo Hong Kong said it had started taking advertising business from customers in mainland China.

The spat could reignite speculation over the future of Yahoo’s investments in Asia. Yahoo Inc owns 40 per cent of Alibaba Group, the unlisted parent that holds a 73 per cent stake in

However, relations between Jack Ma, Alibaba Group founder and chairman, and Yahoo Inc have soured as Yahoo’s brand has been marginalised in the Chinese search market under Alibaba’s management.

The South China Morning Post quoted a Yahoo Hong Kong executive this week saying that the company had been met with keen interest from small and medium-sized enterprises in China to place advertisements on Yahoo Hong Kong, one of the most popular Hong Kong websites. Such companies are the bedrock of Alibaba Group’s e-commerce empire.

“We are always looking for revenue growth opportunities,” Yahoo said in a statement on Thursday.

Carol Bartz, Yahoo chief executive, has been pressed by shareholders to monetise the company’s investments in Yahoo Japan and Alibaba Group or to do more in China, the world’s biggest internet market, on its own.

Alibaba executives added to that pressure by commenting earlier this year that they would be happy to buy back Yahoo’s stake in the parent.

But people close to Yahoo said the company was content to hold on to the stake.

If Yahoo Hong Kong is planning on doing substantial business on the mainland, that could be part of an effort to bring Alibaba to the bargaining table.

With or without such a development, it could also be the start of a new foray to extend Ms Bartz’s focus on building up Yahoo’s services in developing markets, where internet penetration is still rising quickly and the costs of acquiring customers is low.

A Yahoo official declined to comment on the company’s future plans.

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