EBay Rethinks China; Will Close Own Sites, Open New One In JV With Tom Online: Report

Updated: The WSJ is reporting that eBay is making a major change in its China strategy, planning to shut its own main site and instead teaming with Tom Online in a JV. The Chinese content company would own 51 percent to eBay’s 49 percent; by contrast, eBay is expected to put up $40 million to $20 million from Tom Online. The new site would launch in 2007 with eBay holding to a site for “cross-border” trading. Tom CEO Wang Lei Lei head the JV as CEO while Jeff Liao, CEO of eBay EachNet, is expected to hold a management role and run the cross-trading site.
It’s the company’s second pullback from Asia although it comes several years after eBay’s 2002 admission of defeat in Japan. The WSJ runs some numbers: eBay has invested nearly $300 million on acquisitions and expansion in China but it is still a distant #2 to AliBaba.com’s TaoBao unit, which had 67 percent of the Chinese auction market in 1H06 compared to eBay’s 29 percent. EBay also lost a major exec in China this fall when CEO Martin Wu resigned unexpectedly – to outsiders, at least. EBay downplayed the departure at the time.
NYT: EBay CEO Meg Whitman is to make the announcement in Shanghai Tuesday. “Ina Steiner, the editor of AuctionBytes.com, an online newsletter, said that ‘a bailout in China would be a huge concession by eBay.’ She noted that last year, Ms. Whitman touted China as eBay