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2 posts from August 2014

These days, the questions my clients ask me most often are how bad is the corruption in China and to what degree will Xi continue to fight it. Before I answer these questions I tell them stories from my personal experience. I want to share one story here from one of my typical trips to China a couple of years ago. My client was a private owner of a business that manufactures surveillance products. His top customers are government institutions in China. My team and I were chauffeured to a restaurant’s private room for dinner at the end of the day. At the table, we drank, ate and chatted. As dinner continued, my client started to open up and to carry out conversations with more substance, partly because of all the wine he had consumed. When we asked about how he successfully acquired government institutions as his clients, he winked his eyes and mimicked a gesture of counting dollar bills with his fingertips. Seeing that we didn’t fully understand, he gave us a long lecture. A private business owner, he had little to leverage when starting out to build his small empire. In comparison with mammoth State-Owned-Enterprises (SOEs) his company... Read more →

Yahoo! can Laugh at Last as Alibaba's IPO in the U.S. is Getting Close

No market than China sees American Internet companies fail so terribly. Google was kicked out of China, part of it because it offended the Chinese government, part of it because it lost to its local competitor Baidu. eBay pulled out of the market voluntarily after realizing it was losing ground to Alibaba's Taobao. Yahoo!'s business barely took off in China after years of struggling and trying in China. Facebook or Twitter, even worse, never got a chance to try the market out. What's more, their domains are blocked in China. Yahoo! struck a deal with Alibaba in 2005 to form a joint venture, in which Yahoo! invested $1 billion cash and Yahoo! China assets, which was valued $700 million, for a 40% stake. The whole joint venture deal was valued at $4 billion. At Alibaba's coming IPO, analysts estimate it may be valuaed around $200 billion. Even though Yahoo! was forced to reduce its share at Alibaba to 23% in 2012, Yahoo! is still going to do extremely well. Sue Decker, former Yahoo! president, looked back at what Yahoo! had done right and wrong in China in her" An Insider's Account of the Yahoo-Alibaba Deal" in Harvard Business Review Blog... Read more →