Internet search giant Baidu's new joint venture with Rakuten, the biggest online shopping mall operator in Japan, may fall short of reviving the mainland firm's flagging e-commerce operations, according to rival Alibaba Group. Baidu and Rakuten will jointly invest US$50 million over three years to build an ambitious, integrated business-to-business-to-consumer e-commerce service on the mainland. But John Spelich, Alibaba's vice-president for international corporate affairs, poured cold water on the plan, saying: 'So far, no one has seen a successful foreign-controlled internet joint venture in China.' Rakuten holds a majority 51 per cent stake in the operation. Recent examples include EachNet, which was wholly acquired by United States-based online auction firm eBay in 2003 and relaunched in 2006 as a joint venture with Tom Online, and Joyo, which was bought by online retailer Amazon.com in 2004. Both have had modest gains since taken over by foreign interests. However, Baidu and Rakuten claim their online marketplace, which is due to go live in the second half, will become the largest operation in the country, challenging global business-to-business e-commerce leader Alibaba.com and No1 domestic online shopping portal operator Taobao. Hong Kong-listed Alibaba.com, with more than 45 million registered subscribers worldwide, and privately held Taobao, with more than 145 million users on the mainland, are Alibaba Group's two main subsidiaries. Spelich said the Rakuten deal is 'an admission that Baidu doesn't have the core competence in e-commerce and it has given up trying on its own'. Although it is the largest Chinese-language internet search service, Baidu has failed to make its Youa consumer-to-consumer e-commerce operation a strong challenger to Taobao, which has about 80 per cent domestic market share. According to a JP Morgan report this week, Baidu is still searching for an e-commerce strategy. It launched Youa in 2007 to help large mainland merchants make products more available to consumers via its search service. 'These efforts have yet to show good results, particularly when comparing with Taobao, which saw over 100 per cent annual gross merchandise volume growth over the past few years,' JP Morgan said. By 2011, Taobao's gross merchandise volume is expected to hit 400 billion yuan (HK$455.12 billion), according to Goldman Sachs. The mainland e-commerce market is dominated by consumer-to-consumer online transactions. Unlike the auction-based setup in the US, the mainland online consumer retail business model takes a more fixed price and direct sales approach, a report by Credit Suisse says.