Tom Com to acquire Ebay China

it's not offical news up to now

[redstorm]

news from Chinese economic newspaper said today that www.tom.com will acquire Ebay China. Please note: it's not offical newsfrom any of the two parties.

[bill]

hmmm... Would that be an acquisition or a tie-up? Didn't we recently hear a lot of eBay bluster about standing firm in China and not retreating like they did in Japan?

If this comes through then it may shake a few things up in China. I guess we'll have to wait for the details.

[bill]

Here's an English language article that corroborates redstorm's report.

Report: Tom.com to buyout eBay China, PayPal [shanghaidaily.com]
HONG Kong-listed Tom.com is going to announce its takeover of eBay's China division and its PayPal service, the 21st Century Business Herald reported today, citing a well-informed source.

Tom Group is the distributor of Skype, eBay's online telephone service in China.

According to the previous agreement between eBay and Eachnet, eBay will sell its shares to the company before withdrawing from the Chinese market.

It looks like the Taobao strategy worked. I'm somewhat surprised that they were able to take so much market share from eBay in such a short time. Is price that much of a factor in China? Regardless, a lot of people are criticizing eBay for its inability to understand local markets in this part of the world.

This is probably not the end of eBay in China. There are still talks of them acquiring Tencent Holdings which operates the QQ Instant Messenger service, China's #1 instant messenging program.

[bill]

New reports now say that speculation of eBay's retreat from the China market may have been premature.

Rock-a-Buy eBay [msnbc.msn.com]
That may even be the secret ingredient to making things work in China. Just a few weeks ago, all of the rumor mill chatter was pointing to eBay bowing out of the Chinese market and handing over its auction and micropayment business there to TOM Online(Nasdaq: TOMO).

Retreat wouldn't be something new to eBay. It had no problem bowing out of Japan when it saw that Yahoo! Japan had built an insurmountable lead. However, China is too big and too early in its development to give up on so easily. In fact, eBay is committed to making its eBay-PayPal-Skype trifecta work as seamlessly as possible in China. Asia taking to Skype so well is just one more reason for it to keep a presence there.

[tedster]

Any more news on this?

[bill]

Not only is eBay not bowing out of China, they have teamed up with Baidu.

Baidu, eBay expand partnership in China [infoworld.com]
Chinese search engine Baidu and eBay's Chinese subsidiary have agreed to expand their cooperation in a bid to stave off growing competition from rival Alibaba.com.

Under terms of the agreement, announced on Tuesday, Baidu will promote eBay's PayPal payment service and will become the sole provider of text advertisements on eBay EachNet, eBay's Chinese Web site. In addition, eBay will optimize its Chinese Web site for Baidu's search crawlers and the two companies will offer a co-branded toolbar that users can download and install on their computers.

[bill]

So maybe the original rumor was more accurate than we were lead to believe. The eBay site will disappear in China and be replaced by the Tom.com site according to this new news.

EBay to replace China site with partnership-source [today.reuters.co.uk]
EBay could announce as early as Tuesday that it was taking a 49 percent stake in the new site, the person familiar with the matter told Reuters. Tom Online, an online portal and wireless operator, would hold 51 percent.

There has long been media speculation that eBay would forge an alliance with Tom Online to compete more effectively with Chinese auction leader Alibaba.com, a joint venture with Yahoo Inc and other local players.

[redstorm]

You are right, Bill. Our IT journalists will give you more details on this matter very soon. :)

[bill]

Bloomberg has put together a piece that summarizes the situation nicely:

EBay to Shut China Site, Join Tom Online [bloomberg.com]
The world's largest online auctioneer will pay about $40 million for a 49 percent stake in the venture with Li's Beijing- based Tom Online Inc., an Internet company that sells services such as ring tones for mobile phones, said the person, who declined to be identified because the agreement isn't public. Tom Online shares were suspended, pending an announcement.

EBay will shut the China site after almost five years in which it lost market share to local rivals that offer free services. The San Jose, California-based company started operating in China following the closure of its Japan site in March 2002, and a month after it opened in Taiwan. In June EBay closed its Taiwanese site to form an auction venture with PC Home Online.

This is still not official yet though... It seems there is more to come.

[redstorm]

Well, the press release has been finished at Shanghai where the Ebay China locates.
Ebay and Tom.com announced to build a joint venture company together in which Ebay will hold a share of 49%.
When interviewed by the media, High executives from China's dot com companies gave very positive comments on the new marriage.
While I am thinking: it will be a more smart way for the international IT giants if Yahoo china had choosed Tom.com and Ebay China had choosed Alibaba for the joint localization venture.

[bill]

Several months on and eBay is still waiting to kick-start its China business (again)...

EBay returning to China [iht.com]

Meg Whitman, chief executive of the Internet auction leader, said eBay's partnership with Tom Online is within a few months of starting, somewhat later than first planned. It is eBay's second attempt to crack the Chinese market, following the collapse of the company's EachNet venture, and the first with a local partner.

In order to win shoppers' trust, the new venture, Tom eBay, has decided to use an escrow service, where payments will be parked before buyers are satisfied with their purchases. The venture will also do more to assure the reliability of those holding the auctions and will institute restrictions on the number of luxury goods any individual can sell.