It doesn’t take much to irritate a Chinese internet titan. Alibaba Group, the country’s largest e-commerce company, had already fallen out with its biggest shareholder, Yahoo, over a Google-government hacking dispute. (Yahoo backed Google, Alibaba said be quiet.)
Now Alibaba has reacted angrily to a report that Yahoo’s Hong Kong site might compete with its own Alibaba.com for advertisers.
Currently Yahoo Hong Kong does not look for advertising from the mainland, where Alibaba.com is the biggest wholesaler-to-retailer website.
Yet that may change, according to the South China Morning Post, which this week quoted Yahoo HK’s managing director, Alfred Tsoi Po-tak, saying Yahoo HK may look for advertising from small and medium-sized Chinese businesses. Yahoo has not confirmed or denied the comments.
If true, Yahoo HK’s expansion would come as an unwelcome distraction for Alibaba: rather than having to watch its back in China, it’s recently has been spending time expanding into the US. An Alibaba spokesman told Reuters:
If Yahoo begins to compete with Alibaba for customers in China, we will have to re-evaluate our relationship with Yahoo further in light of this activity and the intentions it implies.
Could a “re-evaluation” imply changes to Yahoo’s 40 per cent shareholding? It’s conceivable.
But a stake in Alibaba is crucial for Yahoo, given the predictably enormous potential of the Chinese internet market. As well as Alibaba.com, Alibaba owns online marketplace Taobao and e-pay system Alipay – both market leaders in China.
Over the past three years, the number of Chinese people with internet access tripled, Boston Consulting Group estimates. Meanwhile, according to a McKinsey survey, the portion of Chinese consumers who think online advertising is credible has almost doubled within a year – to 56 per cent.
Alibaba’s reaction shows how keen it is to preserve its share of the action – and if that involves having a short temper, so be it.
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