Sources close to discussions between Chinese e-commerce site alibaba.com on Wednesday said Yahoo is very close to paying $1 billion for a 35 percent stake in the company. An announcement is expected within 24 hours according to reports.

Alibaba runs business-to-business auctions where foreign companies and individuals sell their products at wholesale to customers. Alibaba also has an eBay-like consumer component, taobao.com, which the company claims is the most popular e-commerce site on the Web in China.

Targeting the Chinese market has become popular for companies worldwide as they move to stake their claim in the growing online community. The Chinese government in July said that over 103 million citizens are now online, the second biggest group behind the U.S.

Yahoo had already been operating a Chinese subsidiary on its own in the country. However, Wednesday's news likely indicates that that group would be rolled into the newly combined company.

Yahoo isn't the first to have either bought or to own a controlling interest in a local Chinese company. eBay acquired Shanghai-based EachNet in 2003 and Amazon bought Joyo.com. Expedia owns 52 percent of eLong, and Monster.com has a 40 percent stake in ChinaHR.com.

Some believe an alliance between Alibaba and Yahoo could be a strike across the bow of eBay.

Niether Alibaba nor Yahoo are commenting on reports of the deal.