The media fallout of the billion-dollar Yahoo! Alibaba deal is still rolling in. There’s a good piece in the WSJ about how eBay is trying to avoid a repeat of Japan (the first market where Yahoo! out-eBayed eBay).
And there is a Q&A in Business Week with Yahoo! CEO Jerry Wang. Wang says, “this Alibaba arrangement is a unique model of partnership for us. We believe that to be successful in China, we absolutely have to have strong local management, and [Alibaba CEO] Jack Ma and his team are the best-of-breed Internet management team inside China.”
A lot of people are wondering how a company like Yahoo! can spend a billion dollars on a company not making very much money and still not get a majority stake in the company. And then it hands over management of its own in-country operation to that very same company.
But let me refer you to the Lenovo purchase of IBM’s computer unit. Lenovo pays a steep price for this money-losing brand and instead of dismissing all those execs in New York, it lets them run the show. Why? Just as Yahoo! knows that it needs the people with the most local expertise running China operations, Lenovo knows that it needs the people with the most global expertise running its global operations. Lenovo wanted a global brand and Yahoo! wanted a local brand. And both brands didn’t come cheap.