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Yahoo! eyes Chinese e-commerce company
Report: The Internet company is in talks to acquire stake in Alibaba.com and extend reach in China.
August 8, 2005: 1:21 PM EDT

NEW YORK (CNN/Money) - Web media company Yahoo! Inc. is negotiating to acquire a stake in Alibaba.com, China's largest e-commerce company, according to the International Herald Tribune Monday.

The two Internet companies have held discussions for months, but it is unclear whether they will reach an agreement soon, the paper said, citing people familiar with the matter.

The deal could result in a strong competitor in China for eBay (Research), the paper said.

Officials at Yahoo (Research) and Alibaba.com declined to comment on reports about the negotiations, according to the report.

Yahoo could spend as much as $1 billion to acquire a 35 percent stake in Alibaba.com, according to Forbes magazine.

China is the world's second-largest Internet market with about 100 million users, but e-commerce is still relatively underdeveloped, largely due to lack of effective payment channels. The number of Internet search users is projected to grow to 187 million in 2007, according to iResearch.

Some of the world's largest technology companies have been looking to extend their reach in China over the last few years in hope of profiting from the fast growing online market.

"Everyone's trying to tap into the high-growth Internet space in China," Dick Wei, the China Internet analyst at J.P. Morgan, told the Herald. "Right now only about 8 percent of the population is using the Internet. But it's growing very fast."

The shares of China's largest Web search company, Baidu.com (Research), soared over 350 percent Friday after its stock made its debut on the Nasdaq.

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