Company Shutdowns Services of Yahoo China
Last Sunday Yahoo China which is operated by Alibaba Group have stop providing news and community services which signals the shutdown of one of the strongest Internet presence in China. The team that used to run Yahoo China will now be responsible for the public welfare program of Alibaba.
People logging in Yahoo China will now be automatically redirected to Taobao.com that public welfare website also under Alibaba. The closure of Yahoo China’s news and community services followed after it shut down email services last August. The US based company still remains strong in home turf, but the news and email services in China lost much of their popularity. In the past years Yahoo China’s business have declined as its number of users and market shares dropped. This decrease was largely attributed to its failure to localize. The company failed to consider its Chinese users preference and habits when designing the website along with local companies acting as a challenge to Yahoo once it consolidated their market shares.
While Tencent’s email and news businesses grew because of its large user base, Alibaba didn’t make any effort to develop the Yahoo China business since they were focusing on propriety brands. Upon announcing that they will be closing its email services Yahoo China users can register an account with Aliyun, Alibaba’s email platform.
Yahoo entered China in 1998 and reached its peak by early 2000, then in 2005 Alibaba started to operate Yahoo China after trading around US$ 1 billion and a 40 percent stake in Alibaba within the same year. Then in September 2012, Alibaba bought back 21 percent of its stake with the agreement that it can operate Yahoo China for four more years.
This closure marks a big loss for Alibaba Group, which spent a considerable amount to acquire Yahoo China, but have not yielded any results in large profits. It will be also a challenge for Yahoo to restart the business in China after Alibaba turn over the brand back to them.