Summary:

Yahoo (NSDQ: YHOO) is facing a setback in its plans to build market share and revenue in Asia: Alibaba Group, which runs Yahoo China and is…

Yahoo China

Yahoo (NSDQ: YHOO) is facing a setback in its plans to build market share and revenue in Asia: Alibaba Group, which runs Yahoo China and is 39 percent-owned by Yahoo, is separating classified listings business Koubei.com from Yahoo China and adding it to its own retail site Taobao.com, as WSJ.com reports. Alibaba is slimming down Yahoo China as part of a restructuring drive and wants to re-focus the portal on entertainment content. As Liu Ning, analyst for Beijing research firm BDA China tells WSJ, “the feeling has been that Alibaba Group is putting all of its resources into Taobao.”

According to sources quoted by WSJ, Yahoo CEO Carol Bartz is less than pleased with Alibaba’s handling of Yahoo China and told Alibaba executives so in the spring, though she told investors in June at Yahoo’s annual meeting that the arrangement is more favorable to Yahoo going it alone in China and that to sell in this market would be difficult anyway.

Yahoo paid $1 billion for its stake in Alibaba in 2005 but since then Yahoo’s share of China’s search market has dwindled from 21 percent to just 6 percent in Q209, according to figures from Analysys International. In the same period, China’s search market leader Baidu (NSDQ: BIDU), which has a 62 percent share, and Google (NSDQ: GOOG) which has 29 percent, both increased their market share.

But, as Yahoo execs are fond of saying, the company’s strategy is not all about search: recent global product launches have focused on the personalization and discovery of web content. But to what extent is China part of Yahoo’s global plans? The country was notably left out of the recent search deal with Microsoft.

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