US Internet giant Yahoo! will concentrate on search, auction and communication products in China, as it focuses on the world's second largest Internet market.

"The more we look at the capabilities and growth of the Internet industry here, the more we are determined to focus on the market," said Terry Semel, chairman and chief executive officer of Yahoo! in Beijing Tuesday.

Jerry Yang, co-founder, director and chief Yahoo!, says that he believes the Internet market in China has still not developed enough and the biggest business opportunities are still in the future.

Yahoo! entered China in 1999, but it lags behind local competitors such as NASDAQ-listed Sina Corp and Sohu.com Inc, mainly because of difficulties in localization and its focus on the US market.

Semel said search engines were becoming a key business for Yahoo!, which has spent more than US$2 billion acquiring search engine providers throughout the world, including the Hong Kong-based 3721 Network Software Co Ltd for US$120 million in November.

Yahoo! has integrated its search engine resources and launched its Yahoo! Search Technology (YST) in China.

About one third of Yahoo!'s online revenues and all its offline revenues come from search business.

The company will also set upservers in China and use development forces mainly acquired from 3721 to provide local services.

"The biggest challenge for us is localization, but our acquisition of 3721 brought us talented local people and co-operation with Sina Corp helped us launch our products quickly," said Yang said.

Yahoo! has appointed Zhou Hongyi, founder of 3721, as president of its China operation and aims to shrug off its slow progress of the past five years.

The US Internet company also unveiled its joint online auction venture with the Chinese Internet portal Sina yesterday.

Allan Kwan, managing director of Yahoo! North Asia, said the two companies aim to build the joint venture into the biggest marketplace in China.

He added that in the future, the company's website - 1pai.com.cn - will help both Chinese and foreign businesses to promote and trade their products on the Internet.

(China Daily April 14, 2004)