Yahoo China, the Chinese arm of Yahoo (NASDAQ:YHOO) has shut down its China web portal. The move follows last month’s shut down of Yahoo’s email services in China. The site now redirects visitors to now.taobao.com, a news portal run by Taobao, a part of the Chinese internet services giant, Alibaba. A message on the Yahoo China site states that the closure of services is in accordance with a 2012 agreement between Yahoo and Alibaba under which Alibaba could use Yahoo-branded properties for 4 years following Yahoo’s investment in Alibaba. It is believed that all of Yahoo China’s employees will now move on to new positions within the Alibaba group. This closure of Yahoo China’s portal is one of the last steps in Alibaba Group’s decision to gradually take down the Yahoo-branded services it operates in China. Yahoo’s decision to shut down its Chinese services is largely due to the fact that US companies have faced an uphill task in the Chinese market due to various factors including government censorship, failure to localize effectively and the rapid rise of Chinese companies like Baidu and Tencent. Hence shutting down of the Yahoo-branded properties and the resulting transfer of users to Alibaba will increase the latter’s online presence among the fast growing Chinese internet population. Yahoo will indirectly benefit from the rise of Alibaba as it holds a 24% stake in the fast growing Chinese internet giant. Yahoo’s stake in Alibaba is currently valued at $14 Billion, more than half of Yahoo’s current market cap.
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