SEO

Ebay China Sells Business to Tom Online

It has been hanging in the air for sometime now. Back in September 2006 the rumor circus already pointed at Tom online as the likely candidate and it’s now decided.

From Reuters

EBay said it will fold its China business, acquired when it purchased local auction site EachNet for $180 million (91 million pounds), into a venture with Tom Online, a Beijing-based Internet portal and wireless services firm.

Under the deal, eBay will invest $40 million and have a 49 percent stake in the venture, while Tom Online will invest $20 million and have a 51 percent stake. The companies will split revenue and any profits according to their respective stakes.

The deal reminds me of the Yahoo/Alibaba deal. Last year Yahoo bought a 40% stake in Chinese e-commerce firm Alibaba.com. (Alibaba is the owner of b-to-b website Alibaba.com, online auction site Taobao.com and has it’s own online payment system, Alipay) They paid $1 billion in cash. Additionally Alibaba got ownership of Yahoo’s China business.

The money changing hands is maybe less but the scenario is the same. You want to do business in China, give me cash and ownership and I’ll see if I can help you out.

Ebay looses control over it’s China operation and the question is whether Tom Online is in it for the long haul. (From inside Tom Online there are those that say that Tom will sell it later on and make a nice buck but that is part speculation).

It’s easy to say now, eBay just didn’t get it in China as they forgot to adapt themselves to the local situation and make themselves appealing to Chinese customers.

Well, let’s be easy, it’s the major reason they now surrender and the question is whether this will be a good move future wise.

eBay CEO Meg Whitman stays up beat:

“We’re very committed to the China market. You have to remember we withdrew from Japan when eBay was a much smaller market,” Whitman said. “Today we are a very big company with resources enough to continue investing in China.”

“China is a small part of eBay’s overall business, but we hope it won’t be in five to 10 years.”

Maybe enough resources and commitment but not anymore in control.

Gemme van Hasselt is an Internet Marketing Consultant, living in Shanghai, China.

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