Yahoo, one of the world's biggest Internet companies, is in negotiations to acquire a stake in Ali-baba.com, China's largest e-commerce company, according to people with knowledge of the talks.
The companies have held discussions for months and it is still unclear whether they will reach an agreement soon, these people say. The deal could be one of the largest foreign investments in a Chinese technology company, and would pose a strong challenge for the online auction giant eBay, which has been stepping up its presence in China.
Alibaba's primary business is in matching the needs of Chinese and foreign companies, for instance, in providing T-shirts or ball bearings made domestically to retailers or manufacturers overseas. But Alibaba also has a consumer-to-consumer auction site that has quickly become a contender to eBay's entrant in that fast-growing market in China. An alliance of Alibaba and Yahoo would sharply intensify that competition.
Officials at both Yahoo and Alibaba.com declined to comment on Monday on reports of the negotiations. But people who have been briefed on the discussions say Alibaba.com has been eager to raise more cash and find a partner before offering shares to the public; its auction site would also help create interest. Meanwhile, Yahoo has been seeking to make a larger push into China.
Forbes magazine, which was first to report the discussions, said on its Web site late on Sunday that Yahoo could spend up to US$1 billion to acquire a 35 percent stake in Alibaba.com.
Some of the world's largest technology companies are racing to extend their reach in China to profit from the explosive growth in Internet use.
In the last few years, most of the large US Internet companies have come here to cut deals: Amazon.com acquired China's largest online bookseller, Joyo.com, for US$75 million; eBay bought the Chinese auction site Eachnet for US$180 million; and Yahoo purchased the Chinese search engine 3721.