Tuesday, August 23, 2005

A Critical View on the Yahoo-Alibaba Deal

From ChinaTechNews: Hold The Applause: Limits To Online Auctions In China

"Yahoo! says they are now a full-fledged media company, right? If we view the Yahoo.com online media property through the eyes of an offline magazine publisher, this is how the business deal would work:

1) Yahoo! wants to build a Chinese version of its website.
2) It seeks potential partners in China to deal with the Chinese localization, regulatory environment, management, and advertising sales.
3) Once it finds a Chinese partner, the partner pays Yahoo! a fee of some sort to buy the rights to Yahoo!'s brand for a certain number of years.

So, with this traditional publishing and media business model, which is also used for many websites, why is Yahoo! paying Alibaba? Shouldn't Alibaba pay Yahoo!? I'm sure there are many companies in China that would gladly pay Yahoo! to run its services. The biggest reason I can see for Yahoo! to pay others is that the Yahoo! brand, counter to the company's own statements that it is one of China's top sites, in China is suffering and a potential liability. Is this so? The high hopes that Yahoo! has for Alibaba are as fantastic as the stories in "A Thousand and One Nights"."

Read more:
Why eBay Must Win In China
Is eBay Dead in China?
China's New Internet King: Alibaba CEO Jack MaYahoo!

Fact Sheet on the Alibaba-Yahoo deal