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20TH May 2011
Business Tricks - Creative problem Solving - Culture - Geopolitical - Mojiva - Timely
HEY I told you, that IS how we roll! China giant gives Yahoo the Heisman
Media mogul and best buddy Scott Carlin was in town this week and we went for all things Asian- dinner and discussion. I’ve been working on a JV in China for some time now, and as it winds its way near completion, my friends keep pointing out the cultural differences I’ll have to deal with. I’ve written about them before, but this week’s news certainly makes it worth level setting again.
So, for those that didn’t know it, one of Yahoo’s biggest assets on its book is AliPay. Which isn’t so interesting until someone from AliBaba says “by the way, you don’t own this anymore, and it happened a long time ago, but we can talk about it if you want… ok”?.
Looks like that just happened…
Yahoo, owner of the biggest U.S. Web portal, this week said it wasn’t informed until March 31 about an August 2010 transfer of Alipay equity to a vehicle outside of Alibaba in order to comply with restrictions on foreign ownership of payment services in China, which prompted the reorganization of Alipay, the nation’s biggest online payment service. For his part, Chairman Ma (seriously) said “the spinoff of the Alipay online payment business is “lawful” and “transparent,” after biggest shareholder Yahoo! Inc. claimed it wasn’t consulted on the transfer. “We are always committed to ensure our operations are 100 percent lawful,” Ma said today in Hong Kong. “The matter of Alipay is not settled yet” amid ongoing negotiations with Yahoo and Softbank Corp, Alibaba’s second-biggest shareholder, on the post-transfer commercial arrangements, Ma said. (Source: Bloomberg)
Yeah, I hope not.
Gone are the days of gunboat mercantilism, when British ships rings the harbors in defense of Jardine’s Opium trading. But Silicon Valley has weapons of their own now, not the least of which are direct flights to Hong Kong. I’m surprised Yahoo CEO Carol Bartz was not on a rocket to China the moment she heard the news. Rule of law in the US would have the transaction rescinded in an instant, and shareholder’s pallor cured shortly after. This one is going to play out a little longer, but the leverage is with Chairman Ma for the moment. CEO Bartz doesn’t look so good.
So what’s it mean. Well, China has some interesting ownership laws for one. And China has some fresh new perspectives on business leverage, ethics, and rule of law. But the economy is booming and the price of entry is to figure out ways to deal with a different culture. Really different. The dot.com bubble was similar in some ways. Hey, at least we’re fighting over technology these days, rather than water pipes.
Progress! Now you chan chime in with a poll..