Ma was spotted dining with Taobao CEO Jonathan Luk and other Alibaba executives at Fuki Sushi in Palo Alto last night, and a spokesperson for the company confirmed they were in town for meetings. Another source close to the company, who requested anonymity, said Alibaba was here to meet with several big Silicon Valley companies about potential partnerships with Taobao– and that a meeting with Yahoo was specifically not on the agenda.

Ma’s issues with Yahoo and desire to buy back Yahoo’s shares in Alibaba have been well documented. Also documented is Ma’s desire to explore other US  partnerships, even though the one with Yahoo has turned sour. His ecommerce and epayment properties are so dominant in China that international expansion is the natural next step.

A lot has changed since the last time Ma was in negotiations with Silicon Valley. Back then it was companies like Yahoo that were surging, while China seemed an uncertain gamble. Today, two of the five largest Internet companies are Chinese, and TaoBao and payments company Alipay are two of the hottest private assets on the global Web. As we saw with Tencent’s purchase of Riot Games this month, a decade after most Valley companies failed to do well in China, China is getting more aggressive about expanding in the US.

Carol Bartz’ loss seems to be John Donahoe’s gain. eBay’s CEO Donahoe was cozying up to Ma in China last fall, appearing on stage at a conference together, and apparently swapping caricatures. Donahoe called Ma a good friend, and Ma said, “We have the same dream, the same purpose, face the same group of SME clients… This is the case today, and even more so tomorrow. I believe Alibaba team and Taobao team are always cooperating with the eBay team, and I think in the future we will cooperate more closely.”

If you catch a sighting of the two, drop us a note at tips@techcrunch.com.

[Update: Yahoo PR notes that Bartz is in Barcelona, which is interesting but seems to miss the point of the post. Alibaba has still made a point to come here looking for Valley partnerships and not meet with the one company with which it has a partnership. There are certainly other members of the board and management team who aren't in Barcelona, and considering Alibaba is one of the main forces propping up Yahoo's stock price, you'd think they'd be open to a meeting if Ma were interested. The bad blood between the two is well documented by this point. I've asked Yahoo PR for any sign that's changed. No word.]

A couple of weeks ago, Yahoo Japan (Japan’s biggest website) and Taobao (China’s largest e-retailer) agreed to launch a cross-border initiative under which both services will link their online shopping services starting June 1.

Well, today’s that day.

Taobao, the largest online shopping website in China and a subsidiary of Alibaba, and Yahoo! JAPAN today began operating complementary online shopping services that connect Japanese consumers with Chinese merchants and Chinese consumers with Japanese merchants. Japanese consumers can now buy goods from Taobao merchants in China through Yahoo! JAPAN China Mall, a new website section.

In turn, Chinese consumers can buy Yahoo! JAPAN Shopping goods through the equally new TaoJapan website opened as part of Taobao. Consumers of both countries will be able to buy products available in the other country exactly in the same way as they normally shop from e-commerce platforms in their own country, bypassing the usual barriers such as language, laws, delivery logistics, and payment issues.

Sidenote: Yahoo Japan’s largest shareholder, telecom giant SoftBank, happens to own a 33% stake in Alibaba Group, Taobao’s parent company.

The initial service includes tens of millions of items on Yahoo! JAPAN China Mall and about 8 million on TaoJapan. Both companies intend to expand the number of products over time.

When the partnership was announced, Masayoshi Son, Yahoo! Japan’s chairman, said the combined transaction volume would represent 290 billion yuan ($42.5 billion – yes, billion) and 260 million users for both firms.

China’s search leader Baidu announced in January a joint venture agreement with Rakuten, a top Japanese online retailer, to launch a virtual shopping mall targeting the world’s largest online population. Rakuten also recently acquired Buy.com for $250 million.

Clearly, the e-commerce market in Asia is heating up quickly, and eBay and Amazon better keep watching developments closely.

For that purpose, Yahoo Japan will launch a so-called China Mall in its shopping section, carrying about 50 million products from China (in Japanese language) right from the beginning. Taobao plans to initially offer about 8 million products from Japan-based merchants on “TaoJapan”, a Chinese-language section on Taobao’s homepage.

Sellers and buyers are said to notice not much of a difference, as they will continue to list products, handle sales and pay for purchases just like they used to and in their native languages (product information will most likely be machine translated).

Rumors about negotiations between Yahoo Japan and Taobao first came to light early last month, and both companies sure have the power to pull this off. Yahoo Japan Shopping is the country’s second biggest e-commerce platform, while Taobao’s 190 million registered users generated a transaction volume of a whopping $29 billion last year.

And both companies already have a close, albeit indirect, relationship. Yahoo Japan’s largest shareholder, telecom giant SoftBank, happens to own a 33% stake in Alibaba Group, Taobao’s parent company. Under the e-commerce tie-up, Alibaba subsidiaries in Japan and China are expected to manage functions like cross-border shipping, payment settlement, cloud computing services etc.

E-commerce players like Amazon or eBay should be looking closely at what was established in the world’s largest and third largest Internet market today. At the news conference announcing the Yahoo Japan-Taobao partnership in Tokyo, SoftBank President Masayoshi Son said the future marketplace will be visited by some 260 million people, which – according to him – will make it the world’s largest by potential customers.

And in January, China’s leading search engine company Baidu and Japan’s biggest e-commerce platform Rakuten announced plans to invest $50 million in a giant virtual shopping mall that is scheduled to go live later this year. Expect a lot more cross-border activity in Asia’s e-commerce sector in the near future.

George had the opportunity this weekend to attend Chinese e-commerce behemoth Alibaba Group‘s 10 year anniversary celebration, dubbed the “Alifest”.

Alibaba is best known for its international B2B e-commerce and sourcing market place Alibaba.com, but also operates Taobao – the “eBay of China” and largest C2C Internet retail web site, Alimama – an online advertising exchange and affiliate network – as well as Alipay, China’s most popular third-party online payment system modelled after Paypal but offering additional features such as escrow services.

Alibaba’s chairman Jack Ma, a former English teacher, founded Alibaba in 1999 out of his Hangzhou apartment. Ten years later the company has grown to China’s second largest Internet company, after digital entertainment giant Tencent. His company Alibaba.com’s 2007 IPO on the Hong Kong stock exchange was the second largest Internet offering ever after Google’s debut on NASDAQ in 2004.

Since 2005, Yahoo! is a strategic shareholder when it acquired 39% of Alibaba Group for US$ 1 billion. In return Alibaba operates the portal Yahoo! China, but the secondary role Yahoo! China plays for Alibaba became evident when Ma shared his vision for the next 10 years of Alibaba during this weekend’s press conference. This was once again underscored yesterday when Yahoo! sold $150 million worth of shares in Alibaba.com.

Jack’s dream is to focus on empowering and encouraging small and medium sized enterprises (SME’s) across the globe and it centers around 3 major goals for the next 10 years:

Goal 1: 10 million people “work at” Alibaba

By “working at” Jack symbolically referred to millions of SME entrepreneurs that will not literally be employed by Alibaba but are turned to “netrepeneurs” and independently utilize and work online with Alibabas trade platforms and software solutions:

Alisoft was established in January 2007 and offers software as a service solutions for SME’s. In July 2009, Alisoft was merged with Alibaba Group R&D Institute to lay a solid technology foundation to further develop Alibaba Group’s businesses. At the same time Alibaba Group this weekend announced the establishment of a new subsidiary focusing on cloud computing. In the medium run, it is evident that Alibaba will strive to emerge as a leading software solution provider for SME’s, eventually competing with Western players such as Salesforce.com.

Goal 2: 100 million new jobs created worldwide by Alibaba

A megalomaniac target at first glance, this could very well become reality when considering Alibabas resources and Jack Ma’s obviously wide-reaching personal connections that became more apparent to me through the course of Alifest.

In May 2007, Alibaba.com introduced the Ali-loan program offering financing to small Chinese businesses in partnership with leading Chinese banks. This model was now hinted to be extended across other countries in cooperation with Muhammad Yunus’ Grameen bank. The second corner stone to achieve this goal involves Alibabas training department, Ali-Institute that was upgraded this July to become a new profit-oriented business unit under Alibaba.com.

During the cleverly staged Alifest program speakers such as Nobel prize winner Muhammad Yunus, former president Bill Clinton (both over video) and Starbucks CEO Howard Schultz underpinned the importance of fostering SME development across developing nations and endorsed Alibabas global efforts. This is quite remarkably for a Chinese company. Provided, you still consider it as such: “In 10 years we wont make differences between local or international companies any more, but only between differences in integrity”, Jack Ma said during his speech this weekend.

All points considered Alibaba is indeed in a powerful position to shape the worlds economy in the coming decade. Taking Alibabas already undisputed status among SME manufacturers in what is soon to become world’s largest economy, even the third proclaimed goal by Jack Ma can seem plausible:

Goal 3: 1 billion people trading on Alibaba Group’s platforms

The roadway to Alibabas most eager goal was visualized to us impressively when Alibaba.com’s CEO David Wei gave us an exclusive tour of his company’s new headquarters. (Which by the way also has a basketball court inaugurated by another of Jack Ma’s friends Kobe Bryant, who was also present in Hangzhou this weekend)

David presented us Alibaba’s realtime trading statistics generated from the three pillars of its business: international trade, domestic Chinese wholesale and domestic Chinese retail. (the according graphs can be seen in the picture above from left to right).

During the time of our visit last Friday evening at around 7pm Chinese time, 2.87 million concurrent users were active on Alibaba.com’s B2B portal. According to David the daily average concurrent user number is 4 million, around 10% of its 42.8 million worldwide registered users. The groups domestic C2C e-commerce marketplace Taobao holds around 78% of the online consumer market in China. As of mid-2009, it served 156 million registered users. Transaction volume on Taobao reached nearly US$ 11.8 billion in the first half of 2009, and by that exceeded the largest retailer in China in transaction volume during the same period.

David continued to say that “Alibaba’s combined trading statistic give us 3-6 months lead time to predict Chinas domestic trade and export volumes”. These are without doubts immensely powerful insights to possibly the biggest driver of our current world economy. Not without reason, Alibaba’s founder Jack Ma was one of the first to recognize the economic downturn in February last year, when he predicted “a though (economic) winter is coming, dark clouds are forming and the thunder is coming closer” during the annual Alibaba all-employee conference. “Today, the darkest period for Chinese exporters is over”, Alibaba’s CEO David Wei confirmed to us.

I asked David to tell us more about AliExpress – a new international wholesale platform for small-sum orders from its Alibaba.com database of Chinese manufacturers. He confirmed “the platform is still in beta but bound to launch in rather weeks than months from now”. The service offers minimum orders as low as 1 item, escrow payment and delivery with full tracking. Advertising “factory prices on even the smallest orders” the service is de facto a B2C marketplace just like Amazon and in part eBay that connects the Chinese manufacturers on Alibabas existing B2B portal Alibaba.com with the US consumer market. It will also be the first international roll out of Alibaba’s online payment and escrow system Alipay now competing with PayPal China in fight for Chinese SME merchants. Alipay currently facilitates about 4 million online payments worth up to US$100 million per day. It surpassed 200 million registered users in early July 2009.

With AliExpress the company for the first time attacks eBay directly in its home market. In China the US company already lost against Alibabas Taobao, giving up its domestic eBay platform and partially selling it to Chinese Internet group TOM Online in 2006. Not included in that sale, however was eBays and PayPals cross-boarder business of Chinese merchants selling to US consumers, that continues to be operated by PayPal China itself. This remaining eBay asset is now under serious threat, with Alibaba entering the B2C export business.

The move nevertheless comes with many risks for Alibaba. Only in December last year, Alibaba’s competitor Global Sources Direct, a division of NASDAQ-listed online sourcing platform Global Sources, announced it would discontinue its wholesale services. The platform was established in 2005 as a joint venture between Global Sources and eBay. A major part of the failure was attributed to the fact, that in such a cross national market place setting, it is impossible for its operator to guarantee quality, availability and delivery times. Instead it has to rely on the goodwill of its merchants, which in a developing market like China is a huge challenge. It remains to be seen how Alibaba can solve this problem better than its competitors.

Additionally to its international challenges Alibaba Group is under constant attack from rising Chinese rivals such as Baidu’s new C2C e-commerce platform Youa. Since the end of last year China’s number one search engine Baidu.com has blocked all Taobao merchants offers in its natural search results, leading to a huge loss of search volume. In retaliation Alibaba Group, previously one of the biggest ad spenders on Baidu, stopped all its PPC campaigns.

In the “Art of War”, Chinese military strategist Sun Tzu writes “concentrate your energy and hoard your strength”. However, Alibaba’s Jack Ma seems to ignore this advice by competing on multiple battlefields both at home and abroad, potentially stretching his company’s resources too thin. Yet the man reinforced his modesty in yesterdays closing speech when he said “looking back we are now a big company, but looking ahead we are still a very small company”. Having seen Ma passionately in action this weekend, it is clear that he’s lost none of the tireless energy that has made him successful, instead gaining in charisma and determination that will be necessary for the next 10 years ahead.

According to local reports, the investigation into Google includes evasion of business and personal tax, and tax on employee options.

At least some of the investigation relates to how Google has previously treated transactions from Chinese customers to its US head office. Between 2000 and 2003 Google offered Adwords services to Chinese citizens that did no go via the local subsidiary, resulting in no local records from which authorities can check for tax avoidance. A further allegation suggests that domestic customers until 2007 could use agents to place Adwords ads, avoiding a formal invoice and auditable paper trail, possibly in breach of Chinese tax law.

Sina.com (in Chinese) received some sort of confirmation from the Chinese tax authorities that the investigation was underway, and went on to say that the investigation could widen to include other online companies operating in China, including Taobao, Baidu and Yahoo.

Thanks to Billsdue for the tip