| CEO and founder of Alibaba.com, Jack Ma, left, is all smiles after his deal with Yahoo CEO Daniel Rosensweig. |
THE EFFORTLESS INSOUCIANCE with which a web browser surfs the globe makes it tempting to assume that the internet as a commercial operation is as disdainful of borders. The reality is quite different, as many big US online companies are finding to their cost. No more so than in China, where all the top web destinations remain homegrown.
The difficulty of cracking what has turned out to be an idiosyncratic and unpredictable market, despite the dollars available, is one reason for Yahoo's deal with Alibaba, China's leading e-commerce business.
The headlines boast that, for $1 billion cash, Yahoo will acquire a 40% stake in Alibaba. It sounds straightforward, but there is a lot more behind the investment, as John Chi, managing director of Seraphin Capital, a boutique merchant bank that advised Alibaba, explains. "Alibaba will acquire all of Yahoo's businesses in China: that's search, portal, email, instant messaging and downloads," he says. "Plus, Alibaba gets the exclusive rights to Yahoo's technology and brand name in China."