China Economic Review
Charting China’s changing economic terrain · Since 1990
Yahoo will not go solo in China
September 22, 2009
Yahoo has launched a new advertising campaign around the world to try and reestablish the brand. But the Chinese government’s harsh treatment of Google and other internet groups during the past six months has deterred Yahoo from attempting to conquer this market. In theory, China would have been a natural target for Yahoo. The company has experimented there for years and Carol Bartz, who took over as chief executive in January, has made international expansion a high priority, especially in countries where internet penetration still has a long way to go.
But the experience of Google appears to have chilled Yahoo’s ambition.
After struggling for years with having its global website blocked in China, Google established a local business in 2006. Since then, its market share has risen to more than 20% but remains behind Baidu, the local online search leader that holds more than 60%.
This year, the Chinese government began a crackdown on Google. The site was blocked for a period and YouTube, Google’s video-sharing website, has been unavailable in China since March. A senior executive at Yahoo, said, "This shows us that things are not getting better in China for foreign internet companies and that there is no level playing field emerging, not even for Google."
In her first month as chief executive, Carol Bartz committed to investing money in countries where internet growth is expected to rise, even though it is trimming costs in other markets.
A Yahoo executive said: "Carol felt strongly that Yahoo is much better off not to directly operate in China."
Financial Times reports that the only continued connection with China for Yahoo will be its ties with Alibaba. Google will be left to fight it out on its own.