Yahoo! is paying US$1 billion for a 40 per cent stake in e-commerce giant Alibaba.com and handing control of its China operations to Alibaba chief executive Jack Ma in the biggest foreign online investment in the mainland to date. Mr Ma and Yahoo! chief operating officer Dan Rosensweig announced the deal, negotiations for which began earlier this year when Mr Ma and Yahoo! co-founder Jerry Yang met on California's Pebble Beach golf course. As a privately held company, Hangzhou-based Alibaba does not disclose its financial structure or earnings but claims to be China's largest e-commerce company with a valuation of more than US$4 billion. Yesterday's deal makes Yahoo! Alibaba's largest strategic investor with 35 per cent of voting rights and a seat on its four-person board to be occupied by Mr Yang. Mr Ma will be board chairman with another Alibaba executive and a representative for Japanese venture capital firm Softbank taking the other two seats. Softbank, an early investor in Yahoo! and Alibaba, holds 27.4 per cent of Alibaba and can boost that to 30.5 per cent by exercising convertible bond rights. The deal comes less than a week after mainland search engine Baidu's initial public offering on the Nasdaq Stock Market, where its share price more than quadrupled. Alibaba management said the company had no plans to list in the short term. 'We will definitely go public one day but not in the immediate future,' Mr Ma said. Alibaba, which was founded in 1999, runs a business-to-business e-commerce site and an online consumer auction site called TaoBao that competes with eBay. The e-commerce operations handled US$4.5 billion in domestic and international transactions last year while TaoBao handled US$200 million in the second quarter this year. Alibaba generated cash revenue of US$68 million last year. Yahoo!'s China business, which it is injecting into Alibaba, consists mainly of search engine 3721.com, which it bought two years ago for US$120 million. The partnership also hands Alibaba the exclusive rights to advertising revenue from mainland companies on Yahoo!'s international sites. 'For a business in east coast China, if they want to advertise on Yahoo! UK or through the Overture network, all those revenues derived from Chinese businesses will go to Alibaba.com,' said Alibaba spokesman Porter Erisman. 'This is probably the knockout blow for eBay. They're yesterday's news.' According to Mr Rosensweig, China will overtake the United States to become the world's largest internet market within the next five years. The number of internet users in the mainland passed the 100 million mark last month. 'We are going to be very patient because it's a very early market,' Mr Rosensweig said.