Zhou Hongyi misses all those days he spent in Minghui Tea House, in the 1,000-year-old Dajue Temple.

He recalls the freedom he felt as he lounged in the ancient temple, in northwestern Beijing, and sipped Chinese tea, made with pure well water. He was able to feel the holiness of the Buddhist temple, and to enjoy the escape from the Earth's noise and troubles.

That was in 2003.

He can't afford the time now, even though he is a multimillionaire.

"I am just too busy, and I have no time to go there," said Zhou, general manager of Yahoo! China.

Turnaround

His hard work has paid off. Yahoo! China is experiencing a dramatic turnaround. That's remarkable, considering the firm was established, by US-based Internet giant Yahoo!, about six years ago.

"The happiest thing for me in 2004 was the fact we changed the image of Yahoo! in China, and that people's confidence in its development in China returned," said Zhou, also founder of search engine 3721.

The search engine was acquired by Yahoo! for US$120 million in November 2003.

While Yahoo! was widely considered to be an elephant in the world's Internet market, Zhou said Yahoo! China was just a rabbit that needed to run fast, rather than living on its parent's laurels.

In the past year, Zhou has travelled extensively the route between his office and the airport. He has travelled the country to meet and greet customers.

The combination of Yahoo!'s technological and capital strength and 3721's understanding of the domestic market has been crucial to Yahoo! China's progress.

The company launched its Chinese search website, Yisou.com, last June. It is based on Yahoo!'s proprietary Yahoo! Search Technology (YST).

With the website, Yahoo! China has built three lines of its search engine business: A search service on the website of Yahoo! China to target faithful Yahoo! users; Yisou.com, to focus on users who only want to search the Web; and 3721 Internet Explorer address bar search, to target enterprises.

Yahoo! last June moved more than 1,000 search engine servers to Beijing to provide faster, more secure services to Chinese users.

The experience of 3721 in the sales of the key word search service, attracted more than 400,000 enterprise customers to Yahoo!.

A report on China's search engine market, conducted last year by CCID Consulting, indicated Yisou.com ranked second in the market, with a 19.6-per-cent share, after domestic search engine service Baidu.com, which held 32.9 per cent of the market. The research services on Yahoo! China's portal and 3721 ranked the fourth and sixth respectively.

Shanghai-based professional Internet consulting firm iResearch, in its 2004 search engine report, wrote that Yahoo! ranked second, with a 22.72-per-cent of the market. That compared with Baidu.com's 36.29 per cent and Google's 21.22 per cent.

That marked the first time Yahoo! cracked the top three. Yahoo! previously lagged behind Chinese firms such as Sina Corp, Sohu.com and Baidu.com, in terms of the portal business, online advertising and provision of search engine services.

In addition, the Internet giant gained some ground in the provision of two other services: E-mail and instant messaging.

Last June, Yahoo! China expanded the capacity of its e-mail service from six megabytes to 100 megabytes. Two months later, it boosted the capacity to 1 gigabyte.

"We wanted to give a lesson to domestic Internet companies, and to show them the importance of basic Internet services, such as e-mail," Zhou said.

The move will raise the threshold of e-mail service providers and force small players out of the market, he added.

Yahoo! China, which had been a small player in the e-mail service market, partnered with vertical websites to expand its user base and gain ground in the e-mail and instant messaging market.

Last October, Yahoo! China teamed with more than a dozen Internet companies including NASDAQ-listed online travel service firm Ctrip International; game website Holdfast Online, in which the biggest Chinese online game operator, Shanda, is an investor; and software vendor Kingsoft.

Yahoo! provides free e-mail and instant messaging services to the companies, and shares user resources with the firms.

As a result of such co-operation, Yahoo! China has expanded the user base of its e-mail technologies to tens of millions, and has become one of the top three providers together with Sina Corp and NetEase.com, Zhou said.

Renewed focus

Despite the firm's progress in the past year, Zhou believes challenges remain, especially as Yahoo! China is poised to build its presence in the portal business this year.

In 2003, Yahoo! China said it would not compete head-to-head with China-based portals represented by Sina.com, Sohu.com, NetEase.com or Tom Online, all of which are listed on the tech-heavy NASDAQ in New York.

"We do not expect Yahoo! China is strong enough to beat them immediately, so we will adopt a follow-up strategy," Zhou said.

Yahoo! focused on portals and online advertising when it entered the Chinese market in 1999. But due to cultural differences and Yahoo!'s decision to shift its focus to its home market, the firm did not make a breakthrough in the portal business.

As a result, Sina.com, Sohu.com and NetEase.com became the big three in China.

Yahoo! has been recruiting in recent months. The firm plans to enrich the content on Yahoo! China.

Zhou said Yahoo! China wants to focus its staff and resources on some specific areas Internet users are most interested in, and advertisers are willing to spend money promoting their products alongside such content.

Yahoo! China conducted an online survey of elite business life for 2004 on its website. The survey began on December 31 and concluded last Tuesday.

Results of the survey -- including the rankings of cars, real estate projects, mobile phones, hotels, notebook computers, credit cards and travel - were published last Thursday.

Yahoo! China hopes the survey will help it expand its influence on netizens.

By aggressively developing Internet content, Zhou hopes his company will become one of the top four Internet portals in China.

(China Daily 01/26/2005 page16)