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Wed, Apr 14, 2004 - Page 12 News List

Yahoo turns aggressive in China

HOME-GROWN COMPETITION The Internet company has found it hard in the past to outdo rivals such as Sohu.com, but top officials say that is about to change


US Internet giant Yahoo Inc said yesterday that it plans an aggressive push into China, where it has so far had limited success in the face of stiff competition from local portals such as Sina.com.

Paid search services and online auctions are future key focal points as the company seeks to expand its presence in China, according to Terry Semel, Yahoo's chairman and chief executive.

"China clearly is right at the top of the list of that next wave of countries that Yahoo could and should be more aggressive about, do a better job in and provide better services in," he told reporters in Beijing.

The potential rewards for Yahoo and anyone else doing business on China's Internet are enormous as an online population of roughly 70 million makes it the world's second largest market after the US.

"You've started to see in the past few months Yahoo make moves in China that go beyond what Yahoo had done before," Semel said. "You will see other things coming from Yahoo."

Until last year, all Yahoo had in China was its portal yahoo.com.cn with free e-mail, as well as ringtone downloads, news, chatrooms and matchmaking.

Its popularity paled in comparison with home-grown portals such as Sina.com, Sohu.com and Netease.com.

But its renewed drive into the market started late last year when it paid US$120 million for 3721 Network Software Co, which provides the technology for the popular search engine 3721.com.

Yahoo aims to use 3721 to build up its paid search business and localize its own Yahoo Search Technology (YST).

"We are now entering the business of using keywords to help ... small and medium-sized businesses ... find customers, transactions,

enable e-commerce," said Yahoo co-founder Jerry Yang (楊致遠).

In January, Yahoo announced its online auction joint venture with Sina.com.

"We will introduce that service in the next few months to consumers in China," Yang said.

The online auction market in China is booming, with industry experts forecasting the volume of transactions will surge 75 percent to 3.4 billion yuan (US$410 million) this year.

eBay Inc currently dominates China's online auction industry with an estimated 80 percent market share through Shanghai-based Eachnet, which it bought last year.

Yahoo is also looking at the online games market in China, which IT consultancy IDC estimates will grow 64 percent to US$262 million this year.

"We are doing some gaming outside of Europe but not nearly as much as we should. This is definitely an area that has experienced real growth, has real potential up ahead on a worldwide basis," Semel said.

While Yahoo has found two partners with strong brand recognition for two of its main busi-nesses -- search and auction -- it is still struggling with its Web-based communications.

"In China, there's always been the challenge of how do you overcome some of the local players," Allan Kwan, Yahoo's managing director of North Asia, said. "That's one of the reasons why we decided to focus on search and market place. Those are the two pillars that we believe will allow us to re-enter China in a major way."

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