Yahoo China says to grow in 2007, no layoffs

By George Chen

SHANGHAI (Reuters) - Yahoo China does not intend to sack staff and has an aggressive plan to boost its online news, search and community services to win more market share this year, according to its new president, Zeng Ming.

The company plans to set up an editorial platform to offer a real-time online news service this year, Zeng told his staff in an e-mail this month, which was seen by Reuters on Wednesday.

Zeng, who became acting president in November when his predecessor quit after barely 40 days on the job, denied persistent talk in China's Internet industry that the company might lay off staff this year.

"I have talked to most of our staff in the past two months and I believe we should just laugh at such a rumor," Zeng wrote.

Instead, he said, the company has hired 61 new staff members since the beginning of 2007. It now has about 900 staff.

Alibaba.com, China's largest e-commerce firm, has been reorganizing Yahoo China since it took over the company in 2005. Yahoo Inc. (YHOO.O) of the United States bought a 40 percent stake in Alibaba for $1 billion as part of that deal.

A Yahoo China spokesman said he could not comment on the e-mail.

China is the world's second-largest Internet market, but industry researchers say Yahoo China lags far behind the country's top online search engine Baidu.com Inc. (BIDU.O), which has roughly half of the market, and Google Inc. (GOOG.O).

Zeng, a former professor at a Chinese business school, wrote that Yahoo China would strengthen its online search services this year by launching a project called "Domino," about which he did not elaborate in the e-mail.

"We want Yahoo Search to gain more market share through distinguished services and brand promotion," Zeng wrote. "We will win big support from both Alibaba and Yahoo Global."

Zeng said Yahoo China would focus on its online community this year in cooperation with Alibaba, which provides an online trading platform.

Yahoo China already offers Internet-based instant messaging, photo-sharing and Web dating services to its online community, targeting young Chinese users in particular.

Global media and Internet companies, including Microsoft Corp.'s MSFT.0 MSN portal and News Corp.'s NWSa.N MySpace.com, see China as a huge opportunity for online community business, aiming to boost their Internet advertising revenue and develop new profit streams.

"If we don't fight this year, we will be washed out of the market," Zeng wrote.

"It's inevitable that every company will have to face big challenges in the course of making the business a success," he wrote, adding that staff should be confident of Yahoo China's prospects.

In September, Alibaba founder Jack Ma told Reuters that Yahoo China would become profitable in 2007 after a year of internal restructuring.

(Additional reporting by Sophie Taylor)