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Yahoo! China released a statement that their President Xie Wen, had resigned, only 42 days after he joined the company. This development was just the latest in a series of problems that Yahoo! had faced in China. In the past, Yahoo! China had encountered many hurdles - from regulatory troubles to problems in localisation. Yahoo! China was struggling in the Chinese search market. Xie wanted to try a Web 2.0 strategy of addressing the huge demand for user-generated content but Jerry Yang, Co-founder of Yahoo!, wanted to stick to the company''s portal model and was unimpressed by Xie''s strategy. This led to a divide in top management and ended in Xie''s resignation. Yahoo! China had tried management changes, outsourcing, and local tie-ups to establish itself in China, but none of them yielded any results. Yahoo! was one of the first US Internet companies to move into China. In 1999, it entered China by launching a Chinese website, cn.yahoo.com, and tied up with a local company through a strategic partnership with Beijing Founder Electronics Co Ltd, a leading information products maker in China, to tap the emerging on-line advertisement market. Yahoo! China faced immense competition from local portals like Sina.com, Sohu.com and Netease.com, who had already won the loyalty of Chinese Net users. By 2003, these three players were thriving while Yahoo! China was struggling to come up. Yahoo! China could not make an impact on the Chinese Internet market as it did not localise its strategies. So the company changed direction and purchased a popular local search company, 3721.com, for US$120 million. This move did not yield much result and so Yahoo! China tried the new strategy of outsourcing that promised to solve its problem. It decided to team up with a local player who could understand China better. Yahoo! China sold its China operations to Alibaba, the leading Chinese business-to-business portal. Although Alibaba had achieved significant success in the Chinese e-commerce market, the deal did not yield significant increase in traffic. The main issue the case tries to highlight is how Yahoo! China will face increasing competition in the search engine market in China.