Yahoo Inc. will pump US$1 billion into China's largest e-commerce website Alibaba.com, it was announced on Thursday in Beijing.
Yahoo will acquire 40 percent of Alibaba's shares but have only 35 percent of the voting rights in the company.
Under the terms of the agreement, Alibaba will have exclusive rights to use the Yahoo brand and its operations merged with Yahoo China's.
Yahoo China's assets include Yahoo's search technology, the Yahoo China website, its communication and advertising business, as well as 3721.com, a Chinese language search engine.
Ma Yun, CEO of Alibaba, will retain his post in the new company.
Ma denied that his company made the deal with Yahoo in preparation to going public, saying that the investment from Yahoo will be spent on the development of search engines.
As the second largest Internet market in the world, China has over 103 million netizens. A report from Beijing-based Analysis International estimated that China's e-commerce market will be worth 620 billion RMB (US$76.5 billion) in 2005.
"Future e-commerce will depend on online searching and Alibaba's goal next year is to give Chinese people access to a world-class search engine," Ma said.
Ma said Alibaba and Yahoo are aiming to create search engines more powerful than Google's.
The new Alibaba Company will have four seats on its board -- two from Alibaba, one from Yahoo and one from SoftBank, a major investor in Alibaba.
Alibaba, headquartered in Hangzhou, was founded in late 1998 and operates the world's largest online marketplace for both international and domestic trade.
Yahoo runs 24 websites in 12 languages globally. Yahoo's website in China was launched in September 1999.
(Xinhua News Agency August 12, 2005)
