China's Alibaba Grouup is rethinking its ties with Yahoo Inc as the two may compete in the mainland's online advertising market, Reuters reported Friday.
Yahoo Hong Kong's Managing Director, Alfred Tsoi Po-tak, told the South China Morning Post on Monday that the company was thinking of luring online advertisers from the mainland.
Yahoo has no direct presence in China and prefers to be represented on the mainland by Alibaba Group. But it conducts its own direct business in Hong Kong through its Hong Kong subsidiary, Yahoo Hong Kong, the report said.
Tsoi said Yahoo HK planned to attract small and medium enterprises from the mainland, which are also Alibaba's main customers. Such a move could put Yahoo HK in direct competition with Alibaba Group's subsidiaries, such as Alibaba.com.
Alibaba Group operates China's largest business-to-business e-commerce website, Alibaba.com, and its largest consumer e-commerce website, Taobao.
"If Yahoo begins to compete with Alibaba for customers in China, we will have to re-evaluate our relationship with Yahoo further in light of this activity and the intentions it implies," Reuters quoted Alibaba Group's spokesman John Spelich.
Yahoo said in an email statement that the company is always looking for revenue growth opportunities.
"China-based companies buying ads on the Yahoo Hong Kong network does not affect the investment (in Alibaba)", Yahoo was cited by the report..
Yahoo folded its search business in China and invested $1 billion in Alibaba Group in 2005 in exchange for the 40 percent stake. Yahoo has said publicly it views its now multi-billion dollar stake in Alibaba as a key investment in China.