Yahoo! in China: Local Problems for the Global Internet Giant

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Case Details:

Case Code : BSTR260
Case Length : 18 Pages
Period : 2000-07
Pub Date : 2007
Teaching Note :Not Available
Organization : Yahoo!
Themes : Business Strategy | International Expansion Strategies
Industry : Internet and e-Commerce
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Chinese Internet Market

As of 2006, China was the world's second-largest Internet market after the US. According to the China Internet Network Information Center¹³ (CNNIC), the number of Internet users in China had reached 137 million by the end of 2006 and the country had 104 million broadband connections as of 2006.¹⁴ On an average, the Internet user in China spent 17.9 hours online per week, when compared to the 11.4 hours per week spent online by a user in the US.¹⁵ The Internet users in China comprised only 10.5% of the country's population of 1.3 billion, which meant that there was a huge potential for future growth.¹⁶

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China was important for Internet companies not only because of its large market size, but also for its vast talent pool. "Whoever wins China, will win the world,"said eBay's CEO, Meg Whitman, describing the importance of China as a market for the Internet companies.¹⁷ (Refer to Exhibit VII for some facts on China).

Yahoo! in China

Yahoo! had launched the initial version of its Chinese portal in May 1998. This later became the platform for the other Chinese websites of Yahoo! such as Yahoo! Hong Kong, Yahoo! Taiwan, and Yahoo! China. In the same year, Yahoo! entered into a tie-up with Cofortune Information Technology Co., Ltd.²⁹, a subsidiary of the China International Electronic Commerce Center (CIECC), to assist Yahoo! in building its business in China. Yahoo! had also set up a team to sell advertisement space on its Chinese portal. Yahoo! China (www.yahoo.com.cn) was set up in 1999, much ahead of other foreign companies.

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13] The China Internet Network Information Center (CNNIC) is the state network information center of China, founded as a non-profit organization in June 1997. The Computer Network Information Center of the Chinese Academy of Sciences runs CNNIC. CNNIC looks after everything related to the Internet in China like domain names registration, IP addresses, relevant researches, surveys and information services, and international liaison and policy research.

14] "CNNIC: 137 Million Internet Users in China,"www.imnewswatch.com, February 05, 2007.

15] "China Surpasses US in Internet Use,"www.forbes.com, March 31, 2006.

16] "China to Have More Internet Users than US,"www.timesofindia.indiatimes.com, January 25, 2007.

17] Giovanni Navarria, "The Future of Dissent: Hacking Chinese Censorship,"www.opendemocracy.net, December 20, 2005.

29] Cofortune Information Technology Co., Ltd., established in July 1998, is promoted by China International Electronic Commerce Center (CIECC) under the Ministry of Commerce of China. It was one of the pioneering companies in China in IT, with a mission to provide value-added services to government and businesses in the e-commerce arena. (Source: http://en.ec.com.cn)