eBay China starts joint venture with Chinese e-commerce firm

20 December 2006 15:22 GMT / By Amber Maitland

Ebay seems to have realised it doesn’t understand the way the Chinese use the internet, and is instead turning into a joint venture with Beijing-based Tom Online.

Ebay will only retain a 49% stake, while Tom Online will hold a controlling 51% share.

The venture will result in an entirely new auction website to launch next year, and be under the control of Tom Online CEO Wang Leilei.

Taobao, run by Chinese e-commerce business Alibaba.com, has taken away much of eBay’s trade in China. Up until 3 years ago, eBay held a 79% share in the online auctions market.

That share dropped to 36% after the launch of Taobao in 2003.

“One thing we’ve learned operating here for three or four years is that actually we’re going to be better served by tapping into a local partner who has local knowledge”, eBay CEO Meg Whitman told Reuters.

Ebay seems to be pinning its hopes on the fact that Tom Online already has an internet presence, and can tap into its 75-million mobile phone user base.

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