Yahoo China begins shutdown

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(Global Times) 10:40, September 02, 2013

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Yahoo China, operated by China's e-commerce company Alibaba Group, stopped providing news and community services Sunday, indicating the shutdown of the once strong Internet presence in the country.

The team that ran Yahoo China will be responsible for Alibaba's public welfare program, the Internet giant said in a statement Saturday.

Yahoo China's website now automatically redirects to now.taobao.com, a public welfare website under Alibaba.

The shutdown of news and community services follows Yahoo China's closure of its e-mail service on August 19.

The US-based Yahoo remains strong in its home country, while its news and e-mail services in China used to enjoy great popularity.

However, Yahoo China's business declined over the past few years, with both its number of users and market share dropping, which was largely attributed to its failure to localize, said Wang Jun, an analyst with the Internet consultancy Analysys International.

Yahoo China failed to take Chinese Net users' habits and preferences into consideration when designing its website, while local companies posed a greater challenge to Yahoo after consolidating their market shares, Wang said. "Tencent's news and e-mail businesses grew quickly due to its big user base; Sohu and Sina also offer good online news."

Alibaba has not made big efforts in developing Yahoo China's businesses, as it only focuses on its proprietary brands, Feng Lin, an analyst at the Hangzhou-based China e-Business Research Center, told the Global Times.

When Yahoo China said in April it would close its e-mail service, it said its users could register an account on Alibaba's e-mail platform Aliyun.

It is a big loss for Alibaba after spending a lot to acquire Yahoo China, Xie Wen, a senior Internet observer and former general manager of Yahoo China, told the Global Times, adding that the acquisition has yielded no results.

Companies should understand that acquisition of big brands doesn't necessarily mean large profits, Xie said.

Entering China in 1998, Yahoo's business reached a peak in the early 2000s.

Alibaba began to operate Yahoo China from 2005 after Yahoo traded $1 billion and its assets for a 40 percent stake in Alibaba in 2005. Alibaba bought back 21 percent of the stake at a price of $7.6 billion in September 2012, agreeing that it can operate Yahoo China's brand for up to four years.

It will be challenging for Yahoo to restart its business in China when Alibaba returns the brand to the parent company, Xie said.

The number of Yahoo China's employees is now fewer than 100, down from 2,000 from 2006 to 2007, noted Xie, who resigned in 2006.