Abstract

This case is about the challenges faced by Yahoo! Inc. (Yahoo!), a leading international Internet portal, in the Chinese Internet market. Yahoo! was one among the first few international companies to enter the Chinese market. Even though the company modeled its Chinese portal on the lines of its globally successful portal, it failed to attract the Chinese consumers. Yahoo! also found itself in tough competition with local Internet firms like Sina Corporation (Sina), Sohu.com Inc. (Sohu), Baidu.com, etc. Yahoo! even lagged behind arch-rival Google Inc., in the online search market in China. The complexity of the Chinese language, the inability of foreign companies to understand local culture and preferences, and rigid government regulations were also other factors that affected Yahoo!'s performance in China. Recognizing the need for having a local player who was more attuned to the needs of the local customers, Yahoo! handed over the management of its Chinese operations to the Alibaba Group, in 2005. The case discusses the strategies adopted by Yahoo! China to increase its market share and the future challenges faced by the company in the highly competitive Chinese market.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the problems in the business model of Yahoo!
• Examine the strategies adopted by Yahoo! to improve its business operations in China
• Understand the business environment in China from the point of view of a foreign Internet company.

Keywords

Yahoo! Inc., China, Internet, Baidu.com, Sohu.com, Google Inc., Jack Ma, Alibaba Group, Online Search Market, Localization, business-oriented search engine, eBay Inc, China Internet Network Information Center, Music Download, Chinese Youth , e-commerce, Online auction, Government Regulation, Music recording industry, Terry Semel, Panama interface, Yahoo! Go