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Wednesday, December 20, 2006
 eBay to Downgrade Presence in China
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Message Text: EBay announced that it will hand over control of its main website in China to Beijing-based TOM Online in the hope a local offering will prosper where the US firm floundered.

The San Jose, California, Internet auction house had operated its own site in China but said it would fold it into a joint business to be 51 percent owned by the Chinese Internet company, retaining 49 percent for itself.

While eBay insiders described the move as a strategic retrenching calculated to better tailor an online auction site to Chinese culture, industry analysts described it as a humiliating surrender in the booming China market.

China is openly coveted business terrain by Silicon Valley firms and the number of Internet users in that country is reported to be second only to the United States online population.

While half of eBay's business last year was in markets outside the United States, its use in China has been sluggish, company figures indicated.

EBay said that the launch of a joint auction site would mean that it was no longer going it alone in China, where it has struggled to wrest market share from Chinese rival Alibaba.com's TaoBao auction site.

TOM reportedly has 75 million active users and was described as being in tune with cultural nuances such as a preference for paying via escrow and heightened wariness regarding online auctions.

The TOM-eBay site had yet to be named and was to launch in China some time next year.

EBay said it would operate its own site for people in China interested in selling to buyers outside the country.

EBay will initially contribute 40 million dollars to the alliance and Tom will contribute 20 million dollars.

TOM Online, which is also listed on New York's Nasdaq market, styles itself as China's leading wireless Internet company.
 
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