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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Introduction Contd...
"We don't want those not interested in business or making
money. They can go to Baidu. Our main focus is the high-end. We don't need to
compare ourselves with Baidu in market share," Ma said, describing the new
strategy.6
Yahoo! was not the only international Internet firm to have faced problems in
the Chinese market. eBay Inc. (eBay), one of the world's leading e-commerce
websites, too, for instance, was struggling to establish in China. In December
2006, eBay announced its partnership with Tom Online, a Beijing-based Internet
portal, to boost its position in China.7
Even Google, the world's leading search engine, had had problems in capturing a
substantial share of the Chinese online search market. Analysts said that Google
was able to make inroads into the high-end segment, but on the whole it lagged
behind the market leader, Baidu, which was popular among the youth, who
constituted the major chunk of Internet users in China.
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Some of the main reasons cited by analysts for the failure of
foreign companies in China were strong competition from local Internet firms,
the complexity of the Chinese language, the inability of these companies to
understand local culture and preferences, and rigid government regulations. Due
to these hurdles, most of the foreign Internet companies chose to collaborate
with local companies, which had a good understanding of local business and
culture.
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Background Note
Yahoo! was founded by two Stanford University Ph.D.
students, Jerry Yang (Yang) and David Filo (Filo) in 1994 in Sunnyvale,
California, USA8 Yahoo! initially
started out as "Jerry and David's Guide to the World Wide Web," a
website that featured a directory of many other websites. Yang and Filo
set up the website as they felt that there were many people who wanted
to go to a single place to find useful websites. Given the widespread
response to the website, Yang and Filo incorporated Yahoo! in March
1995. Its mission - to be a leading provider of Internet services to
consumers and businesses across the world (Refer to Exhibit II for
Yahoo!'s mission statement). |
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