Chinese Internet company Sina Corp and its US counterpart Yahoo
Inc. are working to enter the online auction market in China with
the establishment of a joint venture.
The two companies said Wednesday that they had reached a
definitive agreement on the establishment of the joint venture in
anticipation of good prospects for the e-commerce market in
China.
"Just like the fast growth of online advertising and wireless
messaging services in the past two years, we believe that this year
and the next, it will be e-commerce's turn,'' said Hurst Lin, chief
operating officer of Sina Corp, the biggest Chinese Internet portal
in terms of revenue.
Allan Kwan, managing director of Yahoo's North Asia business,
also said in an interview with China Daily yesterday that the 78
million Internet users in China and their enthusiasm for e-commerce
were good reasons Yahoo wanted to start the auction business with
Sina.
Both Lin and Kwan declined to reveal the financial details of
the joint venture, but said it will be based in Beijing with
capital and technology from Yahoo and capital and Internet traffic
from Sina.
The proposed joint venture will bear a separate company name and
start operations in the middle of this year, but its website will
have the logos of its parent firms, they said.
It will provide both a fixed-price and bid-price model for the
sale of consumer goods from small and medium-sized businesses and
individuals, and offer a range of services to facilitate
transactions, the companies said.
"Small and medium-sized businesses are an important part of an
economy, but Chinese businesses have been troubled with
difficulties in selling across the nation due the large land mass
of the country and their small scale, so our new venture will be a
big help in that regard,'' said Kwan.
He explained that Sina's popularity among Chinese Internet users
is the biggest attraction for Yahoo.
Sina's peak daily page views reached 300 million. It also has
more than 38 million registered users and 10 million frequent
subscribers.
Sina Corp, which does not have experience and engineers in
online auction, believes co-operation with Yahoo will solve these
problems.
Hurst Lin said that the partnership is an exclusive agreement,
so its cooperation with the Shanghai-based online auction website
EachNet will also terminate when the joint venture is formally
launched.
EachNet, controlled by US online auction giant eBay Inc, is a
major partner of Sina's online shopping mall and the huge traffic
of Internet portals like Sina has been an important channel for
EachNet to spread its reputation among netizens.
"We have not received any information from Sina to stop our
cooperation,'' said Wesley Bai, an EachNet spokesman. "Even if Sina
wants to do so, it must obey our contract.''
However, he declined to reveal the details of the contract.
He believes that the market potential of e-commerce in China is
huge, so more competition will be good for the industry.
Bai added EachNet's position in China's online auction market is
already well-established, so the entry of Yahoo and Sina should not
panic EachNet.
A Shanghai-based senior Internet industry analyst, who declined
to be named, believes the partnership of Yahoo and Sina faces many
challenges.
He said that since Yahoo and Sina are also competitors in the
portal and mobile messaging businesses in China, how they will
co-operate and how they will handle some conflicts of interests
still remains to be seen.
However, Yahoo's Kwan said that considering the almost
overwhelming dominance of Chinese companies like Sina, Sohu.com and
Netease.com in the portal business, Yahoo will not compete with
them face-to-face in that area and will concentrate on some
services in which Yahoo is very strong, like search engines.
The Shanghai analyst also pointed out that both Yahoo and Sina
do not have a lot of experience in operating the auction business,
especially in China, where people prefer to do business
face-to-face.
He estimated the online auction business in China was worth
about 200 million yuan (US$24 million) last year.
Sina's shares on the NASDAQ stock market in New York rose by
4.19 percent to US$42.97 on Wednesday, while Yahoo's shed 1.89
percent to US$48.80 and eBay gained 2.32 percent to US$65.59.
(China Daily January 15, 2004)
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