The resignation of Yahoo! China's president has put the US Internet giant's development in China at a crossroads.

Zhou Hongyi, president of Yahoo! China, said late on Wednesday that he would resign from his post on August 31, but remain a strategic advisory for the Chinese operation of the US Internet behemoth.

"After working at Yahoo! for one and a half years, maybe I should have a rest and spend more time with my family," Zhou said on Wednesday.

Zhou, founder of the Chinese key worked search firm 3721, which was acquired by Yahoo! in 2003 for US$120 million, signed an agreement to lead Yahoo! China until August 31.

After the acquisition, Zhou led his team and joined Yahoo!. With his aggressive local approach, good connections in the Chinese Internet industry, Yahoo! China broke even for the first time in its six-year history. It became one of the top three search engine providers and e-mail providers in the country, with the distribution channel of 3721.

The management of Yahoo! China, mainly brought to Yahoo! from 3721, will remain unchanged and report to Allan Kwan, managing director of Yahoo! North Asia.

Some industry observers point out that Zhou's departure will again leave Yahoo! China at a crossroads in terms of localization.

Lacking Zhou's influence on employees and distributors of Yahoo! could likely lead to difficulties, they note, adding that the firm was clumsy with its localization in its first four years. Yahoo! needs to carry on with its localized strategy, so a strong leader with a local background is key for Yahoo! to win and develop trust from the Chinese Government and its partners.

Zhou, a famous and aggressive entrepreneur, could start a new career and that might be another challenge to Yahoo!.

Lu Weigang, a freelance Internet analyst, said news of Zhou's resignation had been circulating for a long time and Yahoo! must have made good preparations for that eventuality. Jim Sun, an analyst with British Evolution Securities, also believes distributors will care more about products and services at Yahoo!, rather than simply following Zhou.

(China Daily July 8, 2005)