The Financial Times: Alibaba finds a way to reap the riches of online China (Paid subscription required)

Excerpt:

In Beijing last week, a locally-based internet entrepreneur was making his pitch to a visiting US venture capitalist when he reached the ever-awkward bit about how he would turn his wonderful idea into sales.

“Don’t worry about revenues – focus on your traffic,” the venture capitalist told him, in a comment redolent of the heady 1990s internet bubble, when banal business realities took a back seat to flights of online fancy.

“I was actually quite shocked,” says the entrepreneur, a veteran of bubble days. “It was, like, the world’s getting easier than I thought.” But perhaps he should not have been surprised. Recent weeks have shown investors’ willingness to put aside conservative approaches to valuations and business plans when it comes to China, the internet’s greatest untamed frontier.

On Thursday, Yahoo, the US portal, announced it would pay $1bn as part of a deal of gain a 40 per cent stake in Alibaba, a Chinese e-commerce company that had cash revenues of only $68m in 2004. The deal followed hard on the heels of a stunning Nasdaq debut this month by Baidu.com, the Chinese internet search company. Baidu’s shares quickly soared to levels that gave it a p/e ratio of more than 2,000.