The new site, called Yisou — which translates into "No. 1 search" in English — follows Google's acquisition last week of a minority stake in Baidu.com Inc., China's biggest independent Internet search engine and one of Google's strongest rivals here.
"Yahoo believes the introduction of Yisou will help extend our reach into the rapidly growing search market in China," Yahoo’s David Lu told XBiz.
Lu told XBiz that China's Internet market is expected to grow to 111 million subscribers by the end of this year from 81 million a year ago.
That would make China second only to the U.S. market. More than 200 million Americans had access to the Internet from home, according to the latest Nielsen//NetRatings survey.
Yahoo had increased its presence in the Chinese market with its acquisition late last year of search firm 3721 Network Software for $120 million.
Mountain View, Calif.-based Google has offered Chinese-language searches since 2000.
Industry analysts said the investment clearly split China's online search market into the Google/Baidu and Yahoo/3721 camps.
Meanwhile, Sunnyvale, Calif.-based Yahoo announced that it has scrapped its fee-based instant messenger service for businesses, saying that it would instead focus on boosting the number of individuals who use its free IM service.
Yahoo Business Messenger included features not available with Yahoo's free IM, such as message encryption, message archiving, 24-hour customer support and online meeting software. Business Messenger was sold on an annual subscription for about $30 per individual user.
America Online said that it was going to unveil new online meeting and voice conferencing features for its IM service this month. Of roughly 36 million active users of AOL's free IM service, about 15 million use it at work.
At least 255 million people will use IM at work in 2005, up from 65 million in 2002, research firm IDC said.