When we talk about the merger of Microsoft and Yahoo!. it's imperative that we consider the international market. Yahoo! has developed successful businesses in Asia, including China.

China Internet is still in the age of local heroes: a few successful China websites dwarf the many foreign ventures that have entered China, including Yahoo! and MSN. When Yahoo! realized this situation, they merged their China branch with Alibaba, one of the leading vendors in the China Internet. Now Yahoo! has a 40% share of Alibaba group, and Yahoo! China is part of Alibaba. The Alibaba group is one of the most important assets that Yahoo! owns in Asia.  Alibaba alone has over a US$ 10 billion market capitalization. The Alibaba group includes:

· Yahoo! China (www.yahoo.cn) ranked #3 search engine by market share, behind Baidu and Google China. Also, Yahoo! China is one of the most important news portals in China.

· Alibaba (www.alibaba.com) is a leading B2B site worldwide, with 2.4 million registered storefronts. In Nov 2007, Alibaba.com held a successful IPO in HongKong stock market. Its currently market value is about US$ 12 billion.

· Taobao (www.taobao.com) is the largest online auction site in China, with over 30 million registered users and lion market share.

· Alipay (www.alipay.com) is the largest online payment tool in China, like Paypal. in 2006, Alipay has garnered 33 million registered users.

· Alimama (www.alimama.com) is an online ad network,. It was only launched in 2007, but it has developed very quickly, and it may become one of the top 3 ad networks in 2008.

· Alisoft (www.alisoft.com), launched in 2007, provides online software services (SaaS) to SME clients. It enables its users to access and manage their inventory, sales, finance and marketing activities via the Internet.

It is really a little complicated to value the total Alibaba group, just like it is very hard to value the monetization potential of over 200 million China Internet population, We believe that Alibaba can serve China users well, like Google, Yahoo, Ebay and Salesforce can serve U.S. users well. Considering that Yahoo! is the biggest shareholder of the Alibaba group, can we say that $44.6 billion may be too low a price to pay for Yahoo!??

Yahoo! used a particular model to develop business in China, and the integration of Yahoo! China and Alibaba is still in process. We can project that the merger of Microsoft and Yahoo! will be complicated, especially in China.

If Microsoft merges with Yahoo!, the integration of their China assets will be very critical. If Alibaba gets support from Microsoft, they will have more advantage in the future, in capital or in technology. But, if Microsoft wants to integrate Alibaba into their online business, there will be more risks than opportunities, as MSN China is just one of top ten news portals striving for traffic and advertisers’ attention, the most successful product of MSN in China is MSN Messenger (still dwarfed by QQ, a China Instant Messaging service). Microsoft does not have adequate Internet experience or the management team in China to handle above all various businesses.

Also, don't forget that Alibaba has a strong corporate culture, like Silicon Valley startups. Jack Ma (founder and chairman of Alibaba) is the spiritual leader of Alibaba, and his attitude is also very important to consider.

Talk of a Microsoft-Yahoo! merger may be premature, but it is important to consider the booming Chinese Internet business, which is frequently forgotten or undervalued in the west. The hidden reality of Yahoo! in far east Asia is often ignored, but it must be considered if we are to understand the true value of Yahoo!