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Update: The WSJ says eBay plans to shutter its main site in China and replace it with a site run mostly by Tom Online, according to undisclosed sources. The report says Tom online will have a 51% stake and eBay a 49% stake, and the news could be announced as early as Tuesday.

It is the second Asian country where eBay has had to taste defeat. They had pulled out of Japan, where the market is dominated by Yahoo. It is a tough loss for eBay which has spend hundreds of millions of dollars on their China operation, and risked the ire of the paying local users.

We had posted about the eBay China shake -up earlier in the reporter’s log, but are now upgrading it to the front page.

Shanghai Daily reports that eBay China, which has been a bit of a laggard is likely to be split into three units - Eachnet, Paypal and Kijiji. eBay might sell stake in PayPal China to Tom Group, the news daily adds. Eachnet will be run by eBay while Kijiji, the free listings would be allowed to remain independent. Tom Group is owned by Li Ka-shing, a Hong Kong-based tycoon.

An earlier report had Tom Group looking at the entire China operation. We had reported about the likelihood of eBay getting out of China earlier, after struggling in that market. #via