With Tom Online, eBay Returns to China Market

Jun 22, 09:26 AM

Current Headlines: By Victoria Shannon

EBay is on track to rejoin the online auction business in China this summer, with tight restrictions on sellers to clamp down on sales of counterfeit goods, the company's chief executive said this week. 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 until 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.

"Whatever we do elsewhere to assure trust and safety, in China we have to do more," Whitman said during an interview on a trip to Europe.

Despite eBay's previous failure in China, Whitman said the heavily local partnership with Tom Online, which owns 51 percent of the venture, may crack the increasingly wired Chinese market. "We have a good shot at it," she said.

But eBay has been burned in Asia before, besides the EachNet debacle. The company also pulled completely out of Japan in the face of the huge success of Yahoo Japan, which is owned by Softbank.

Whitman blamed eBay's collapse in Japan in 2000 on the company's late start, and indicated the company was not looking for a return there soon.

"It's the second-largest economy in the world, it's the second- largest Internet market in the world," Whitman said. "We need to think about it. If we go back, we can't go back with a look-alike product. We have to go back with something different."

Yahoo, in turn, recently said it would close its North American auction business, conceding the "first-mover advantage" to eBay in the United States. EBay also dominates the Internet auction business in Europe, though Whitman said the company was weak in Eastern Europe.

But eBay has also had some success in China. Skype, the Internet phone business that eBay bought two years ago, recently said it had more customers there than in the United States, and its growth rate in China is faster than anywhere else, Whitman said.

Outside of emerging markets, Whitman has seen overall revenue growth slow to a still healthy pace of about 30 percent. That has led investors and other observers to start to call eBay a "mature" Internet company.

Whitman conceded that in its best markets, like Germany, "we have all the Germans already."

The next task will be to get Germans, who give eBay its biggest single-country business outside the United States, to become more active as a community and as users of eBay's other networks, like Skype and the financial payment service PayPal.

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