This paper aims at identifying the inside reasons of M&A(Merger and Acquisition) of online industry in China between international Internet giants and local companies and exploring the basis on which online industry can develop steadily and thus have a successful and sustainable business model. In the meanwhile, a case study will be made by analyzing the causes of the merger of Yahoo China into Alibaba from the perspectives of both parties. Then, this paper points out the possible effects of this merger on China’s online industry. In the end, some conclusions will be made on how to build up core competence in online industry in a unique business circumstance in China. US Internet giant Yahoo ended its six years of independent operations in China since August 2005 and joined forces with Chinese leading e-commerce company Alibaba.com. Yahoo China will transfer all operations in China including an Internet portal, e-mail services, instant messaging, Internet search services and its keyword services to Alibaba as well as paying US$1 billion for a 40 per cent stake in Alibaba. This Merger is not only a single commercial buying case but also a symbol for creation of new revenue model in China.
Qiu, Bin; Sun, Shaoqin; Fan, Cunyan; and Chen, Shujen, "Causes and Effects of Online Industry M&A between International Internet Giants and Local Companies—Evidence from China" (2005). ICEB 2005 Proceedings. 40.