Yahoo to quit Japan?

Yahoo Inc is in advanced talks to exit its joint venture in Japan with Softbank corp, Japan’s number three mobile operator, the Reuters reported.

The deal is believed to be a transfer of Yahoo’s 35 percent stake in Yahoo Japan to Softbank. Softbank currently holds 42 percent and if the transfer were to materialize, it would give Softbank major control over Yahoo Japan. A spokesman for Softbank declined the claim but refused to comment whether a talk is currently ongoing.

So, why quit Japan? The reason is believed to be China. Yahoo plans to focus its attention to the 40 percent share it owns in Chinese e-commerce giant, Alibaba Group. As Yahoo loses ground to Google and Facebook in the U.S, it is only rational to turn its attention to China, where something positive is already brewing. Alibaba Group currently owns more than 50 percent of e-commerce market share in China. It wasn’t revealed what Yahoo plans to do in China. A Chinese search engine doesn’t seem feasible with Baidu dominating the market. But one thing for sure, Yahoo has to stick closely with Alibaba Group to grow in China.

The deal wouldn’t be finalized soon as Softbank also owns a stake in Alibaba. The triangular relationship between the three parties complicates the deal. Tax is also another problem that hinders the deal. A straight sale of Yahoo’s stake would cost a 38 percent of tax bill.

It’s an interesting move from Yahoo. So far this year, many technology companies including Facebook, Google, Groupon and now Yahoo have wooed China. I wonder how Alibaba would think about this deal, though.